Appeal from Marengo Circuit Court. (CV-92-23). Claude D. Neilson, TRIAL JUDGE.
Released for Publication December 7, 1994.
Houston, Hornsby, C. J., and Shores, Steagall, Kennedy, and Ingram, JJ., concur. Almon, J., concurs in the result.
The opinion of the court was delivered by: Houston
Ronald Alan Avery and his wife, Darlene Avery, individually and doing d/b/a Starmont Water System a/k/a Starmont Water Company (hereinafter collectively referred to as "the Averys"), sued the Marengo County Commission; Freddie Armstead, Leon Glass, Billy Miles, Charles Moore, and James Hopson, individually and in their official capacities as members of the Marengo County Commission; the Sewer Board of the City of Demopolis; and Billy Traeger, Stewart Reynolds, Barney Zanders, Ludie Pearson, and Austin Caldwell, individually and in their official capacities as members of the Sewer Board of the City of Demopolis. *fn1 The complaint alleged that the defendants were extending the City of Demopolis's water lines into the Starmont subdivision, which was exclusively serviced by the Averys' privately owned water system; the Averys sought relocation expenses, claiming that they were "displaced persons" within the meaning of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; they sought damages under the theory of inverse condemnation; and they sought a declaration as to the constitutionality of Ala. Code 1975, §§ 37-4-60 through -65. The defendants filed summary judgment motions, which the trial court granted, holding that under Alabama law the Averys were not entitled to recover; that they were not displaced persons entitled to relief under the Uniform Relocation Assistance and Real Property Acquisition Policies Act; and that they were not entitled to compensation for inverse condemnation under Alabama or federal law, because they "did not have real property taken or displaced by the Defendants." The Averys appeal from the summary judgment. We affirm.
The Averys own and operate a private water company known as Starmont Water System, which was the exclusive water source for approximately 43 customers who reside in the Starmont subdivision. The subdivision is located in Marengo County and is approximately three miles south of the corporate limits of Demopolis.
They acquired the water system in 1984 when they purchased the water wells, pipes, pipelines, tanks, meters, and related equipment for $15,000. Since that time, the Averys have maintained, repaired, and improved the system, at a cost of $15,000-$16,000. They have also read the meters and sent out and collected bills from their customers.
The privately owned water system operates under a "certificate of public convenience and necessity" issued by the Alabama Public Service Commission, which regulates the rates at which the Averys may sell their water. Three water lines of the privately owned water system are located on county rights-of-way; and the roads and streets where the mains are located are maintained by Marengo County.
In June 1990, the Marengo County Commission applied to the state for a "Community Development Block Grant" pursuant to the Housing and Community Development Act of 1974, seeking Federal financial assistance in extending the City of Demopolis's water lines to certain unincorporated areas of the County, including Starmont subdivision. In its application, the Commission gave written assurance that it would comply with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended. Thereafter, Marengo County received $300,000 in grants to assist it with the costs of design and construction of the water line extension. The construction was approved by the director of the State Highway Department, and it complied with State and Federal requirements, regulations, and other guidelines.
In the fall of 1991, Freddy Armstead, a Marengo County commissioner, advised the Averys that the Demopolis Water Works would be extending its lines into Starmont subdivision. When Armstead asked the Averys how much it would cost the county to purchase the private water company, they told him $90,000. Armstead later informed the Averys that the county would not be purchasing it.
Subsequently, in January 1992, the public water lines for the Marengo County project were extended south along U.S. Highway 43. The lines were placed in either the State right-of-way or in the county right-of-way and were tapped into the same aquifer as the Starmont Water System. All easements were granted before the construction.
The Averys do not contest the right of the Demopolis Water Board and Marengo County to extend the city water lines into unincorporated areas of the county. In fact, they concede that Ala. Code 1975, § 11-50-5, expressly permits municipalities to extend water lines outside the corporate limits of the municipality. However, according to the Averys, "the problem here ... is that [their] private water system will, for all practical effects, be destroyed as a going business ... [because] the Demopolis Water Works is not subject to taxation ..., nor is it subject to regulation by the Alabama Public Service Commission." They maintain that the extension of municipal water lines into the area served by their privately owned water company under a certificate of convenience and necessity resulted in loss of business to that company and therefore constituted inverse condemnation, in violation of § 23 and § 235 of the Alabama Constitution of 1901. They argue, therefore, that they are entitled to compensation.
In Alabama Power Co. v. City of Guntersville, 235 Ala. 136, 143-45, 177 So. 332, 339 (1937), following the reasoning of the United States Supreme Court in Skaneateles Waterworks Co. v. Village of Skaneateles, 184 U.S. 354, 46 L. Ed. 585, 22 S. Ct. 400 (1901), the Court stated:
"The proper rule ... is, that just compensation must be made by municipal corporations and other corporations and individuals invested with the privilege of taking property for public use, when, by the construction or enlargement of 'its' works, highways, or improvement, there will be occasioned some direct physical disturbance of a right, either public or private, which the owner enjoys in connection with his property, and which gives it an additional value, and that by reason of such ...