Metropolitan Development & Housing Agency v. South Central Bell Telephone Co.

562 S.W.2d 438, 1977 Tenn. App. LEXIS 259
CourtCourt of Appeals of Tennessee
DecidedOctober 28, 1977
StatusPublished
Cited by7 cases

This text of 562 S.W.2d 438 (Metropolitan Development & Housing Agency v. South Central Bell Telephone Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Metropolitan Development & Housing Agency v. South Central Bell Telephone Co., 562 S.W.2d 438, 1977 Tenn. App. LEXIS 259 (Tenn. Ct. App. 1977).

Opinion

OPINION

DROWOTA, Judge.

In this suit for declaratory judgment, plaintiff Metropolitan Development and Housing Agency urges that a state statute which requires it to reimburse defendant utilities for the cost of relocating their equipment to further certain urban renewal projects is an unconstitutional impairment of several of plaintiff’s contracts.

Plaintiff Metropolitan Development and Housing Agency, formerly the Nashville Housing Authority, is recognized at § 18.04 of the Charter of the Metropolitan Government of Nashville and Davidson County as both a city and county housing authority created pursuant to T.C.A. §§ 13-901 — 13-919 and §§ 13-1001 — 13-1011, respectively. These sections of the Code provide that such an agency is a “public body corporate” and charge it with carrying out the provisions of the Housing Authorities Law, Chapters 8 through 11 of Title 13 of the Code. The agency is vested by the State with a number of powers, many of which appear to have been designed to allow the agency to improve housing conditions in its area by the construction of new housing projects. See T.C.A. §§ 13-804 — 13-805.

Pursuant to its statutory authority, plaintiff in the 1960’s and 1970’s has embarked on three urban renewal projects in Nashville which have given rise to the instant suit. These projects are financed by loan and grant contracts between plaintiff and [440]*440the federal Department of Housing and Urban Development (HUD). These contracts provide that the federal government will furnish ⅜ of the funds needed for the projects while the local authorities furnish the remaining ⅛. The local authorities receive “in-kind” credits toward their ⅛ share for work they actually do on the projects. Relocation of lines and equipment by defendant Electric Power Board, known as Nashville Electric Service (NES), an independent agency of the Metropolitan Government of Nashville and Davidson County (Metro), would qualify for this in-kind credit if paid for by NES. Also involved in these projects are so-called “cooperation agreements” between plaintiff and Metro, contracts in which Metro agrees to cooperate with plaintiff and aid the urban renewal projects in specified ways.

In addition to the contracts between HUD and plaintiff and between Metro and plaintiff, a third set of contracts is important in this litigation. These are the franchise agreements entered into between Metro and each of the defendant utilities except NES. The franchises in each case are agreements in which the city gives the utility the right to maintain its facilities and do business within the municipal limits and on municipal rights of way, and which set forth various conditions with which the utility is required to comply. These franchise agreements are currently-in force between Metro and the following defendant utilities: South Central Bell Telephone Company (South Central Bell), Nashville Gas Company (Nashville Gas), Colonial’ Pipeline Company (Colonial), and Western Union Telegraph Company (Western Union). NES, the only other defendant in the case, does not operate under a franchise agreement but, as an independent agency of Metro government, is controlled by provisions set forth in Appendix III to the Metro Charter.

The three urban renewal projects in question required the relocation of some equipment of all of the defendants in order to proceed. At common law, that is, in the absence of any valid legislative enactment to the contrary, the cost of such relocation is a non-compensable harm to the utility and must be borne by it. See Pack v. Southern Bell, 215 Tenn. 503, 387 S.W.2d 789 (1965). In the instant situation, the urban renewal plans were developed and most of the contracts discussed above were made when this was the state of the law. In 1971, however, the State legislature passed T.C.A. §§ 13-828 — 13-831, the statutory provisions attacked by plaintiff in this case. After stating its findings and defining its terms in §§ 13-828 and 13-829, the legislature goes on to require utilities to be reimbursed for the cost of relocating their facilities for urban renewal as follows:

13-830. Reimbursement of cost of moving utility facilities. — Whenever a municipality, housing authority, or other public body of this state determines that the relocation of public service facilities of a utility within a redevelopment or urban renewal project area is necessary to the carrying out of a redevelopment or urban renewal plan pursuant to the provisions of the housing authority law, the municipality, housing authority, or other public body shall reimburse the utility for the cost of relocation of such facilities.
13-831. Exceptions. — Sections 13-828— 13-831 shall not apply to any taking or damaging of property for which the utility is entitled compensation pursuant to the constitution of Tennessee or the United States or pursuant to any binding agreement inuring to the utility’s benefit.

On October 31, 1973, plaintiff filed this suit for a declaratory judgment against defendant utilities. The gist of the complaint was that T.C.A. §§ 13-828 — 13-831 impair the obligations of plaintiff’s contracts in violation of Article I, § 10 of the United States Constitution and Article I, § 20, of the Tennessee Constitution. Plaintiff claims that, insofar as the statute attempts to compel plaintiff to bear the burden of the cost of relocating facilities of defendant utilities to make way for the three urban renewal projects discussed above, it unconstitutionally impairs obligations in plaintiff’s contracts with HUD, in plaintiff’s contracts with Metro, and in Met[441]*441ro’s franchise agreements with defendant utilities. Specifically in regard to the franchise agreements, it is plaintiff’s contention that they create a contractual obligation on the part of each utility to pay for relocation of its facilities, that plaintiff is a party that can enforce that obligation because it is an agency of Metro, and that this obligation is unconstitutionally impaired by the requirement of §§ 13-828 — 13-881 that plaintiff pay the relocation costs. With regard to plaintiff’s contracts with HUD and its cooperation agreements with Metro, plaintiff also alleges unconstitutional impairment, most notably by the loss of the in-kind credit that would have accrued to the local authorities had NES paid its own relocation costs. Plaintiff asked the court to declare that the statute could not constitutionally require it to reimburse these defendants because of the pre-existing contractual relationships between the parties. In addition to presenting its contract clause arguments, plaintiff also urged that the court hold NES equitably estopped to claim reimbursement under the statute because it had submitted estimates of its relocation costs that were used in planning the urban renewal projects.

Defendants’ answers argued in support of the validity of §§ 13-828 — 13-831 as applied in the instant situation. Several defendants had entered “non-prejudice” agreements with plaintiff prior to this suit, whereby plaintiff agreed to pay their relocation expenses without prejudice to the rights of either party in the event of litigation over the statute’s validity. Defendant NES, which had entered such an agreement but apparently had not been paid, included in its answer a counterclaim asking judgment in the amount of past relocation expenses as well as an adjudication of its entitlement to be reimbursed for those incurred in the future.

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Cite This Page — Counsel Stack

Bluebook (online)
562 S.W.2d 438, 1977 Tenn. App. LEXIS 259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metropolitan-development-housing-agency-v-south-central-bell-telephone-tennctapp-1977.