Ingleside Equity Group, LP v. City of St. Albans, VT

Filing 35

OPINION AND ORDER granting in part and denying in part 27 Motion for Summary Judgment; denying 28 Motion for Summary Judgment. Signed by Judge William K. Sessions III on 5/21/2014. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

INGLESIDE EQUITY GROUP, LP,
Plaintiff,
v.
CITY OF ST. ALBANS,
Defendant.

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Case No. 2:13-CV-53

Opinion and Order
Plaintiff Ingleside Equity Group (“Ingleside”) brings suit
against the City of St. Albans (“City”) for its refusal to grant
a wastewater allocation to its proposed development in the Town
of St. Albans (“Town”).

Plaintiff entered into a Purchase and

Sale Agreement in 2012 to sell and develop the parcel of land in
question; the Agreement was contingent upon receiving a water
and wastewater allocation from the City.

The City denied

Ingleside’s allocation request based on a 2011 Moratorium on new
water and wastewater allocations outside the City, and Ingleside
lost the contract.

Because the Moratorium has an exception for

a specific district within the Town (which Ingleside’s parcel is
not in), Ingleside claims that the City acted discriminatorily
when it denied the allocation request.

Ingleside filed suit

against the City asserting that (1) the City unlawfully
discriminated against Ingleside in violation of Chapter 1
1

Article 7 of the Vermont Constitution and its equal protection
rights under the Fourteenth Amendment; (2) the City’s actions
amounted to unlawful extraterritorial zoning and were therefore
ultra vires; and (3) the City breached its statutory obligations
under Title 24.
Before the Court are cross motions for summary judgment.
For the reasons stated below, the Court denies Ingleside’s
motion for summary judgment, ECF No. 28.

The Court grants in

part and denies in part the City’s motion for summary judgment,
ECF No. 27.

Summary judgment is granted as to the state law

claims but denied as to the Equal Protection claim.

This claim

must be determined by a finder of fact.
BACKGROUND
I. Ingleside Equity
On or about June 6, 2012, Ingleside entered into a Purchase
and Sale Agreement (“Agreement”) with John P. Larkin for the
sale of approximately two acres of land located in the Town.
The parcel of land is located near Exit 19 off I-89 at Route 104
and was under contract to be sold and developed as a Hampton Inn
(“Hampton Inn Parcel”).

The Agreement was contingent on

Ingleside receiving a conditional use permit (“CUP”) from the
Town and a wastewater and potable water allocation from the
City.

Ingleside received a CUP from the Town on August 31,

2012.
2

On January 31, 2013, the City sent a letter notifying
Ingleside that its request for a water and wastewater allocation
had been denied pursuant to the City’s Moratorium on new water
and wastewater applications for properties located outside the
City.

The Moratorium, adopted on May 2, 2011, prohibits the

City from providing new water and/or wastewater allocations to
anyone outside of the legal limits of the City, with the
exception of “properties that are part of the Route 7 North
Sewer District (“Sewer District”) as adopted by the Town of St.
Albans on August 27, 2001.”
2).

See Moratorium § 3 (City’s SUF Ex.

Because the Hampton Inn Parcel is located outside the City

and the Sewer District, the City found that the allocation was
proscribed by the Moratorium and refused Ingleside’s application
on this basis.
Prior to the enactment of the Moratorium, the City
frequently granted allocation applications to Town property
owners outside the Sewer District, including Ingleside.

In

2005, Ingleside completed a project on property located at I-89
and Route 104 for a Co-Op and Maplefields Store (also known as
the “Milk & Maple” project).

The Milk & Maple project is

located in the same development as the Hampton Inn Parcel.

The

City granted Ingleside a water and wastewater allocation for the
Milk & Maple project in 1999.

Even though Ingleside only

received an allocation specifically for the Milk & Maple
3

project, when Ingleside received this allocation, it built water
and wastewater infrastructure sufficient to serve the projected
needs of the entire development area.
Ingleside $430,994.27.

This infrastructure cost

According to Ingleside, it built this

substantial infrastructure based on the understanding that it
would be permitted to seek allocations from the City for future
projects in the development area.
Ingleside argues that this reliance was reasonable based on
several alleged representations made by the City to this effect.
In 2004, Ingleside obtained Act 250 approval for a development
plan based in part, according to Ingleside, on the
representation that it would be serviced by the City’s water and
wastewater facilities.

It is undisputed that the City was a

noticed party in the Act 250 proceedings.

Ingleside also

contends that it built this infrastructure pursuant to
construction requirements set by the City.

Specifically,

Ingleside submits that the City requested that Plaintiffs
include a 10-inch main sewer and 8-inch water main in their
infrastructure in order to accommodate the projected future
needs of the development.

Because these mains would not have

been necessary to service solely the Milk & Maple allocation,
Ingleside argues that it relied on the City’s representations
that it would be permitted to seek allocations for future
developments when it invested in this infrastructure.
4

According to the City, it did not require Ingleside to use
a specific sized pipe for the infrastructure.

Then-City Manager

William Cioffi stated in an affidavit that he never indicated to
Ingleside that the City required a specific size of
infrastructure or pipe, nor did anyone from the Department of
Public Works.

In fact, he stated that “it is not regular

practice for the City of St. Albans to determine the required
sizing of pipes for infrastructure construction.”
¶7.

Cioffi Aff.

Instead, sizing requirements are made by the state through

the Act 250 process, and engineers for specific projects would
make recommendations for sizing depending on the particular
details of a given project.
In addition to these 2005 projects, Plaintiff alleges that
the City denied permits to Ingleside’s owners regarding
unrelated projects during the 1990s based on personal animus.
II.

The Moratorium
The Moratorium, adopted on May 2, 2011, prohibits the City

from providing new water and/or wastewater allocations to anyone
outside of the legal limits of the City, with the exception of
“properties that are part of the Route 7 North Sewer District
(“Sewer District”) as adopted by the Town of St. Albans on
August 27, 2001.”

See Moratorium § 3.

The Moratorium also

provides that “allocations that were previously granted outside
the legal limits of the City will not be renewed upon expiration
5

unless the property is located in the Route 7 North Sewer
District.”

Id. § 6.

The Moratorium was created with the understanding that the
City has no duty to provide such services to Town residents
except as modified by “specific agreement to do so,” such as in
the case of the Sewer District.

It contains an outline of why

it was enacted, in particular, it cites the anticipated costs to
upgrade the City’s water treatment plant weighed against the
fact that the Town does not contribute to the tax base that
would pay for such upgrades.

The concerns underlying the

Moratorium also include that:


The City of St. Albans owns the water and wastewater
infrastructure but presently has no long term agreement to
provide water and sewer services to the Town of St. Albans.
The Town has no obligation to help upgrade the plant to
accommodate the demands of its residents. Moratorium § 2 ¶
4.



The City is experiencing an erosion of its tax base through
businesses that are choosing to expand in the Town rather
than the City while still accessing the City’s water and
wastewater. Id. ¶ 8.



In the absence of a long term agreement, granting water and
wastewater allocations in the Town of St. Albans (a)
increases the likelihood that City ratepayers will have to
pay more to reduce phosphorous discharges in order to
facilitate growth in the Town; and (b) decreases the
competitiveness of City development lots when the chief
advantage of a City property (water and sewer) is also
available in the Town. Id. ¶ 9.

Based on these findings and others, the Moratorium prohibits the
granting of new water or wastewater allocations or renewals

6

outside the legal limits of the City except to properties that
are part of the Route 7 North Sewer District.

Id. §3, 16.

The

Moratorium itself does not explain why the Sewer District is
exempt from its reach.
The Sewer District was established through the Town of St.
Albans Sewer Allocation Ordinance, adopted August 27, 2001.

The

Ordinance indicates that the Town established a sewer district
subject to an initial one-year wastewater allocation from the
City.

The allocation reserved 100,000 gallons per day (“gpd”)

of capacity for the Sewer District.

According to a deposition

of the current City Manager, Dominic Cloud, in return for the
City’s grant of 100,000 gpd of wastewater capacity, the Town
“created a special district within their town, built the
infrastructure, and levied a tax assessment against those
properties to service the bonds that paid for the construction
of the district.”

Cloud Dep. 8:14-9:5.

The City concedes that

there is no specific, written agreement governing this
arrangement.

However, the course of dealing between the City

and the Town has since been that the Water District has a
“reservation” of up to 100,000 gpd in capacity, and the City
maintains that it has observed this reservation consistently
since 2001.
Because of this agreement, the City contends that
properties located in the Sewer District differ from other Town
7

properties that are located outside the Sewer District.
According to the City, this 2001 wastewater reserve fostered
reliance by properties located within the Sewer District.

As

Cloud testified, there was “extensive on-the-ground investment
by private parties on the belief . . . that the two local
governments [had] agreed to provide water and wastewater
services within the Route 7 North Sewer District.”
9:13-24.

Cloud Dep.

This reliance and resulting investment made these

properties different from the rest of the Town where there was
never any promise to provide such services.

Thus, when the

Moratorium was enacted, this reliance was taken into account.
According to Cloud, the exemption was included in the Moratorium
because “trying to undo what had been in place for over a decade
was not something that we gave a whole lot of thought to or
seriously considered [in passing the Moratorium].

It was so

embedded within the framework and the rules of the game as to
how development occurs in [the area].” Cloud Dep. 9:18-24.
Ingleside counters that the Moratorium does not state why
the District was excluded, nor does the City present evidence of
any agreement regarding the District other than the Ordinance
itself.

While Cloud’s deposition presents the aforementioned

explanation, this explanation is not included in the text of the
Moratorium.

However, Ingleside does not actually dispute the

initial 100,000 gpd allocation, though it does point out that
8

the Sewer District never renewed its allocation after it expired
in December 2002.
Other than the agreement to reserve wastewater capacity for
the Sewer District, the City has no obligation to provide water
or wastewater to the residents of the Town outside the District
such as the Hampton Inn Parcel.

It is undisputed that, since

the Moratorium was enacted, all applications for water and/or
wastewater allocations regarding properties located outside the
City have been denied unless they were located in the District
or they had a preexisting allocation.

At least two property

owners in the District have taken advantage of their exclusion
from the Moratorium and received allocations since the
Moratorium went into effect.
III. Legal Proceedings
After the City refused to grant Ingleside its requested
allocation, Ingleside filed suit against the City alleging that
(1) the City unlawfully discriminated against Ingleside in
violation of Chapter 1 Article 7 of the Vermont Constitution and
its equal protection rights under the Fourteenth Amendment; (2)
that the allocation resulted in ultra vires and unlawful
extraterritorial zoning; and (3) that the City breached its
statutory obligations under Title 24.
cross motions for summary judgment.
DISCUSSION
9

Before the Court are

I. Standard of Review
The parties have cross moved for summary judgment under
Rule 56.

The Court may grant summary judgment if “the movant

shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56.

Summary judgment is appropriate where “the

record taken as a whole could not lead a rational trier of fact
to find for the non-moving party.”

Konikoff v. Prudential Ins.

Co. of Am., 234 F.3d 92, 97 (2d Cir. 2000) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986)).

Where there are cross motions for summary judgment,

“each party's motion must be examined on its own merits, and in
each case all reasonable inferences must be drawn against the
party whose motion is under consideration.”

Lumbermens Mut.

Cas. Co. v. RGIS Inventory Specialists, LLC, 628 F.3d 46, 51 (2d
Cir. 2010) (quotations omitted).
II.

Equal Protection Clause of Fourteenth Amendment
Ingleside’s first claim is based on the argument that the

allocation denial constituted unlawful discrimination under the
Equal Protection Clause of the Fourteenth Amendment.

The Equal

Protection Clause prohibits states from denying any person the
equal protection of the laws.

U.S. Const. amend. XIV, § 1.

It

is traditionally applied to classifications that treat certain
groups differently than others; however, the Supreme Court has
10

allowed “class of one” claims where a single individual can
claim a violation of equal protection based on arbitrary
disparate treatment.

See Village of Willowbrook v. Olech, 528

U.S. 562, 564 (2000); Fortress Bible Church v. Feiner, 694 F.3d
208, 221 (2012).

“Class of one” equal protection claims are

proper where a plaintiff can demonstrate that it “‘has been
intentionally treated differently from others similarly situated
and that there is no rational basis for the difference in
treatment.’”

Ruston v. Town Bd. for the Town of Skaneateles,

610 F.3d 55, 58 (2d Cir. 2010) (quoting Olech, 528 U.S. at 564).
Here, Ingleside challenges the denial of its allocation and
seeks to bring such a class-of-one discrimination claim against
the City.
“[C]lass-of-one plaintiffs must show an extremely high
degree of similarity between themselves and the persons to whom
they compare themselves.”
144, 159 (2d Cir. 2006).

Clubside, Inc. v. Valentin, 468 F.3d
Thus, to succeed on its claim,

Ingleside must establish that “‘(i) no rational person could
regard the circumstances of the plaintiff to differ from those
of a comparator to a degree that would justify the differential
treatment on the basis of a legitimate government policy; and
(ii) the similarity in circumstances and difference in treatment
are sufficient to exclude the possibility that the defendants

11

acted on the basis of a mistake.’”

Ruston, 610 F.3d at 60

(quoting Valentin, 468 F.3d at 159).
As a general rule, whether persons or businesses are
similarly situated is a factual issue that should be submitted
to the jury.

See, e.g., Graham v. Long Island R.R., 230 F.3d

34, 39 (2d Cir. 2000) (“Whether two employees are similarly
situated ordinarily presents a question of fact for the jury.”);
Kirschner v. Zoning Bd. of Appeals of Valley Stream, 924 F.Supp.
385, 394 (E.D.N.Y. 1996) (holding that issue of whether two
shops are similarly situated is “classic” issue of fact
precluding summary judgment).

However, the Second Circuit has

found that “this rule is not absolute” and thus a court may
grant summary judgment “where it is clear that no reasonable
jury could find the similarly situated prong met.”

Harlen

Associates v. Inc. Vill. of Mineola, 273 F.3d 494, 499 n.2 (2d
Cir. 2001).
In support of its claim, Ingleside argues that the Hampton
Inn Parcel is similar in all material respects to developments
located within the Sewer District, and that there is no rational
justification to support the City’s wastewater allocation to one
and exclusion of the other.

In particular, it notes that both

the properties within the Sewer District and the Hampton Inn
Parcel are

12

(i) located in Regional and Town of St. Albans Designated
Growth Districts directly off of Interstate 89; (ii) have
approved Act 250 permits for development of multiple
parcels; (iii) have received Town approval for commercial
uses; (iv) have water and wastewater infrastructure that
was built in reliance on allocations being granted; (v)
have infrastructure which can service additional
development; (vi) have owners who followed the same
required procedures to apply for allocations; and (vii)
are not benefited by any contract which required the City
to grant allocations.
Pl.’s Mot. Summ. J. 5.

In opposition, the City contends that

Plaintiff was not similarly situated because the Hampton Inn
Parcel is subject to the Moratorium while developments in the
District are not.

Because it is undisputed that the Moratorium

was the basis for the denial of the allocation, the
determinative issues are the basis for the exemption and whether
this basis differentiates businesses in the Sewer District from
the Hampton Inn Parcel such that it makes them dissimilarly
situated.
On this point, there are numerous factual disputes that
preclude summary judgment in favor of either party.
reason for the exemption is disputed.

First, the

The City contends that

the Sewer District was created subject to a commitment by the
City to reserve 100,000 gpd to service the properties located in
the Sewer District and that there was
extensive on-the-ground investment by private parties
on the belief . . . that the two local governments
[had] agreed to provide water and wastewater services
within the Route 7 North Sewer District, and trying to
undo what had been in place for over a decade was not
something that we gave a whole lot of thought to or
13

seriously considered [in passing the Moratorium]. It
was so embedded within the framework and the rules of
the game as to how development occurs in [the area].
Cloud Dep. 9:13-24.

Thus, according to the City, the exception

was included in the Moratorium implicitly on the grounds that
the District had acted and invested in reliance on the 100,000
gpd allocation from 2001.
Plaintiff disputes the City’s reliance-based explanation on
several grounds.

Ingleside notes that while the Moratorium sets

out several specific reasons for its enactment, it does not
actually provide any express bases for excluding the Route 7
North Sewer District.

This alone raises a factual dispute as to

the actual reasons behind the exemption.

Furthermore, while

Ingleside does not dispute the Sewer District’s initial 100,000
gpd allocation, it notes that the City has provided no written
agreement or document which expressly grants an extension of the
original allocation; the reservation has not been renewed since
it expired in 2002.

Thus, in addition to challenging the

reasons underlying the original exemption, Ingleside also
disputes whether the supposed reliance interest justifies the
Sewer District’s exemption from the Moratorium in light of the
fact that the reservation no longer exists.

Without such a

reliance interest, Ingleside contends, there is no reason to
find the Hampton Inn Parcel dissimilarly situated.

14

This is

another factual dispute that precludes summary judgment at this
juncture.
Even if the Court were to concede the City’s reliance
explanation, Ingleside puts forth facts suggesting that it had
similarly relied on representations made by the City.
Ingleside cites the allocations it received for its Milk & Maple
project and its ensuing investments in infrastructure, on the
theory that it also relied on past promises from the City as a
result of these allocations.

At the time of the Milk & Maple

project, Ingleside invested $430,994.27 in infrastructure that
far exceeded what was necessary for its initial development.
According to Ingleside, this investment was based on the
understanding that it would be able to seek wastewater
allocations from the City for future developments.

Ingleside

contends that this understanding arose from the initial
allocation to Milk & Maple, the City’s alleged piping
requirements for the infrastructure, and the City’s
participation in the Act 250 proceedings.

While the City

disputes whether its agents ever made such indications to
Ingleside, this is another factual dispute that makes judgment
as a matter of law on this issue premature.
Thus, there are clearly numerous factual disputes
outstanding with regard to whether Ingleside was similarly
situated to the Sewer District.

Because the determination of
15

whether a party is similarly situated should be made by a finder
of fact except where “where it is clear that no reasonable jury
could find the similarly situated prong met,” Harlen Associates,
273 F.3d at 499 n.2, Plaintiff’s Equal Protection claims cannot
be decided at summary judgment in favor of either party.
III. Common Benefits Clause (Vermont Constitution)
Ingleside brings similar discrimination claims under the
Common Benefits Clause, Chapter 1, Article 7 of the Vermont
Constitution, which guarantees the right of the people to a
government that does not favor any one person over another.

Vt.

Const. ch. I, art. 7 (“[G]overnment is, or ought to be,
instituted for the common benefit, protection, and security of
the people, nation, or community, and not for the particular
emolument or advantage of any single person, family, or set of
persons.”).

A plaintiff seeking damages for violation of the

Common Benefits Clause must prove three “core” elements:
First, of course, a plaintiff must show the denial of
a common benefit. In doing so, the plaintiff must show
disparate and arbitrary treatment when compared to
others similarly situated. Second, the plaintiff must
show that the denial directly favors another
particular individual or group. Finally, because we
must defer to any “reasonable and just” basis
supporting a discretionary judgment by a governmental
decisionmaker, a plaintiff must demonstrate not only
that that the decision was wholly irrational and
arbitrary, but also that it was actuated by personal
motives unrelated to the duties of the defendant's
official position, such as ill will, vindictiveness,
or financial gain.

16

In re Town Highway No. 20, 2012 VT 17, ¶ 37, 45 A.3d 54, 68
(2012) (quoting Baker v. State, 744 A.2d 864, 879 (Vt. 1999)).
The court in Town Highway No. 20 went on to explain that this
third factor requires a “showing that the discriminatory
treatment of the plaintiff was not only irrational, but
motivated solely by an actual desire to harm the plaintiff or by
other unjustified personal motives such as self-enrichment or
the enrichment of others.”

Id. ¶ 38.1

Ingleside’s claim under the Common Benefits Clause plainly
fails on the third factor as a matter of law because even
viewing the evidence in the light most favorable to Ingleside,
the record does not suggest that the allocation was denied based
on an “unjustified personal motive” or desire to harm — instead,
it is undisputed that the Moratorium formed the basis of the
refusal, and there is no evidence on the record to suggest that
the Moratorium was driven by personal motives.

1

The Vermont Supreme Court, in adopting this standard, relied on case law in
the federal courts regarding “class-of-one” equal protection cases. While
the Supreme Court has not required such a strenuous showing, Justice Breyer
in a concurrence noted that “vindictive action, illegitimate animus, or ill
will” is necessary in the class-of-one context. Olech, 528 U.S. at 566
(Breyer, J., concurring). Since Olech, several circuit courts have applied
Breyer’s reasoning to “class of one” equal protection claims, though none in
this circuit. See, e.g., Nevel v. Vill. Of Schaumburg, 297 F.3d 673, 681
(7th Cir. 2002) (requiring “totally illegitimate animus” in class-of-one
equal protection claim); Lakeside Builders, Inc. v. Planning Bd. of Town of
Franklin, No. Civ.A. 00-12170-GAO, 2002 WL 31655250, at *4 (D. Mass. Mar. 21,
2002) (requiring class-of-one plaintiff to show deprivation based on “reasons
of a personal or improper nature”). Absent guidance from this circuit, the
Court declines to apply this strenuous standard to Plaintiff’s federal
constitutional claim; however, as it has been adopted by the Vermont Supreme
Court, the Court will apply this standard to Plaintiff’s claims arising under
the Vermont Constitution.

17

While Ingleside introduces evidence of past animus by the
City against Plaintiff, such as past instances in which
Ingleside’s owners were denied permits for unrelated
developments, Ingleside does not allege that this animus formed
the basis for the Moratorium.

Ingleside provides no evidence,

nor does it even allege, that the Moratorium or the exemption
for the Sewer District was “actuated by personal motives” or ill
will.

Instead, in its own Statement of Undisputed Facts,

Ingleside cites testimony stating that exception was included
because of the “extensive on-the-ground investment by private
parties on the belief” that they were granted a wastewater
reservation.

Pl.’s SUF ¶ 44.

Thus, even when viewing the facts

in the light most favorable to Ingleside, it cannot sustain a

claim for damages under the Common Benefits Clause, and the
Court grants summary judgment to the City on this claim.
IV.

Unlawful Extraterritorial Zoning under Smith
In addition to its federal and state constitutional claims,

Ingleside also asserts that the City’s actions are unlawful and
ultra vires under Smith v. City of St. Albans, No. S360-89 FC
(Vt. Super. Ct., May 17, 1994).

In Smith, the Vermont Superior

Court held that the City may not make wastewater allocation
decisions that amount to extraterritorial zoning.

While it is

undisputed that the City has the authority to provide and
discontinue water and sewer to towns outside the City, see Vt.
18

Stat. Ann. tit. 24, §§ 3410, 3503, the Smith court found that
the City was prohibited from differentiating unreasonably in
rates or manners of services when it elects to serve nonresidents.

Id. (explaining that “a municipality choosing to

supply a utility service beyond its borders can discriminate
between applicants for utility services who otherwise appear to
be similarly situated when there is some reasonable basis for
differentiation between the applicants with regard to the
services sought”).

The court further held that the City’s basis

for refusal “must be related to the service sought, and not some
collateral matter.”

Id.

Ingleside thus claims that the City

violated Smith here because its refusal to grant an allocation
to Ingleside was based, in its view, on considerations unrelated
to capacity.
It is undisputed that the Moratorium contemplates some
issues unrelated to capacity.

However, Smith does not actually

stand for a broad prohibition on any consideration of noncapacity considerations.

At most, it indicates that allocation

decisions cannot be based solely on collateral issues.

In

Smith, the City denied approval of a water and sewer allocation
for a project in the Town based on traffic and concentration
concerns; its decision made no mention of wastewater capacity.
The court found this impermissible not just because the decision
was based on collateral concerns, but particularly because the
19

denial was based on zoning considerations and the City is not
permitted to make zoning decisions outside its borders.

The

court also placed great emphasis on the fact that this was the
first time a Town project had ever been turned down for a
wastewater allocation, and there were substantial indicia that
this unusual move was based on personal ill will.

One of the

alderpersons involved in making the decision was a neighbor to
the applicant development project.

This alderperson had

personally mounted an opposition to the project, yet did not
recuse himself from the allocation decision for conflict of
interest.

Because of all of these factors, the court found that

the City’s allocation denial constituted an unlawful and ultra
vires action.
Here, Ingleside claims that the City has violated Smith by
granting allocations to developments in the exempt Sewer
District but not outside it.

Ingleside contends that because

the Moratorium contemplates some criteria unrelated to capacity
concerns, it also results in impermissible zoning outside the
City limits as proscribed by Smith.

However, this case is

distinguishable from Smith on several bases.

First, it is

undisputed that the City has the authority to adopt such a
Moratorium.

Vt. Stat. Ann. tit. 24A, §11-18(11)-(14),(16); Vt.

Stat. Ann. tit. 24, §§3625, 3313.

The City is not required to

provide wastewater allocations to properties located outside the
20

City.

Second, the Moratorium itself is not violative of Smith

because it does not result in de facto extraterritorial zoning.
The Moratorium does not discuss the types of considerations the
court rejected in Smith (such as traffic and concentration) and
indeed lists many underlying justifications related to capacity,
such as the concern that the wastewater plant would require
upgrades and expansions that would not be covered by the Town
tax base.
Most importantly, the special exemption for the Sewer
District also does not amount to extraterritorial zoning.
Unlike in Smith where zoning-type considerations formed the
basis of the decision, here the facts indicate that the
exemption was based on the District’s reliance on the initial
allocation.

Cloud’s deposition makes clear that the District

would not have been exempt absent the District’s longstanding
reliance on the allocation it had already been granted by the
City and Ingleside does not present any evidence to dispute this
fact.

Thus, neither the Moratorium nor the Sewer District

exemption amount to extraterritorial zoning.

Finally, it is

undisputed that the denial of the allocation was based solely on
the Moratorium, which means that any concerns regarding personal
ill will — a significant factor in Smith — are not at stake
here.

Thus, even viewing the facts in the light most favorable

to Ingleside, the Moratorium does not constitute the
21

extraterritorial zoning that the Superior Court deemed
impermissible in Smith and summary judgment is granted to the
City on this claim.
V. Breach of obligations under Title 24
In its final claim, Ingleside asserts that the City
breached its statutory obligations under Title 24.

Under

Vermont law, municipalities have the authority to contract for
sewage disposal with any corporation or individual, and may
regulate such service.

See Vt. Stat. Ann. tit. 24, §§3611(a),

3305; Vt. Stat. Ann. tit. 24A, §§11(18)(11-16).
must be “fair, equitable, and reasonable.”
598 A.2d 114, 118 (Vt. 1990).

Such regulation

Handy v. Rutland,

The Vermont Supreme Court has

found that it is inequitable or discriminatory for a City to
charge different rates to similarly situated users.

Id. at 117.

Ingleside thus argues that the City has violated Title 24
because the court’s holding in Handy, when read in conjunction
with In re Town Highway No. 20, “clearly establish that a
municipality may not discriminate against similarly situated
parties when it provides services pursuant to Vermont’s
Constitution and common law.”

Pl.’s Mot. Summ. J. 11.

Both parties concede that the City has the authority to
enact a moratorium on allocations outside the City.

Thus,

Ingleside is not claiming that the Moratorium itself is
unlawful.

Instead, Ingleside’s Title 24 claim turns on whether
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the City discriminated against similarly situated parties when
it granted the exemption to the Sewer District and denied the
allocation to the Hampton Inn Parcel.

As explained above, the

Vermont Supreme Court has applied a stringent standard to such
discrimination claims under the Common Benefits clause.
Town Highway No. 20, 2012 VT 17 ¶ 37, 45 A.3d at 68.

In re

As the

Court has already determined that Ingleside cannot sustain its
claims under the Vermont Constitution, its claims under Title 24
on the same theory must also fail.

The Court therefore grants

summary judgment to the City as to Ingleside’s Title 24 claims.
CONCLUSION
The Court denies Ingleside’s motion for summary judgment in
full and grants in part and denies in part the City’s motion for
summary judgment.

Summary judgment is granted to the City with

regard to Ingleside’s state law claims, and these claims are
dismissed.

However, summary judgment is denied with regard to

the Equal Protection claim because this claim implicates factual
questions that must be determined by a finder of fact.
DATED at Burlington, in the District of Vermont, this 21st
day of May, 2014.
/s/William K. Sessions III
William K. Sessions III
United States District Judge

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