Judge hears motion to dismiss lawsuit
AZTEC – A district court judge heard oral arguments Wednesday afternoon in connection to a city of Farmington motion to dismiss a city of Bloomfield lawsuit alleging breach of contract in relation to Bloomfield's attempt to acquire an electric utility system from Farmington.
Judge Bradford Dalley granted Bloomfield an additional 10 days to review and respond to new material, including case law, that Farmington officials presented during the hearing. After that, Farmington will have 10 days to review Bloomfield's response. That means a decision on whether to dismiss the lawsuit will not be made until early next year.
The city of Farmington's case rests on the statute of limitations on a 1960 judgment and decree known as the Culpepper Decree. The Culpepper Decree outlined Farmington's rights to the utility formerly owned by a corporation known as Basin Light & Power Co. The Culpepper Decree also stated that Aztec and Bloomfield would have the right to purchase utility infrastructure located within their limits if they wanted to form their own municipal utility. Within seven months of the Culpepper Decree, Aztec moved to create an electric utility, and it has operated that entity since 1961.
Sunny Nixon, an attorney for Farmington, argued in court that Bloomfield would have had the rights to the Basin Light & Power Co. infrastructure within its limits if it had sought to acquire the utility within 14 years of the Culpepper Decree. But because it did not attempt to buy the infrastructure before 1974, the year in which the statute of limitations expired, it does not have rights to the system under the Culpepper Decree, she argued.
Bloomfield argued that it has contractual rights to acquire the electric utility system as it exists today and that the contractual rights are not subject to the statute of limitations. It also argued that the judgment was not a monetary judgment and therefore was exempt from the statute of limitations.
Bloomfield argued that that contractual right comes from a 1960 stipulation that predated the Culpepper Decree by 10 days.
Nixon argued that the stipulation was later incorporated into the Culpepper Decree, which made it subject to the statute of limitations.
Bloomfield cites franchise agreements between the two municipalities that it claims recognize its right to purchase the infrastructure. Bloomfield and Farmington have made two such franchise agreements, the first in 1960 and the second in 1985. Bloomfield attorney Nann Winter compared franchise agreements to a landlord-tenant contract. The city of Farmington pays Bloomfield a fee for rights of way that are necessary to operate the utility within Bloomfield's borders.
Those agreements have stated that "at any time during the existence" of the franchise or "during the continued operation of said system within this municipality" by Farmington following the franchise's expiration, or during another franchise agreement, Bloomfield has the right to acquire the infrastructure within its city limits in conformity with the Culpepper Decree.
The 1985 franchise agreement expired in 2010, but Farmington has continued to pay franchise fees twice a year and operate the electric utility within Bloomfield's borders.
"They are a good tenant," Winter said.
Winter cited the continued payments and operation of the utility system within Bloomfield as proof that Farmington recognizes implied terms of the 1985 franchise agreement as still being in effect. But Farmington attorney Henry Bohnhoff argued that state statute holds that implied terms only exist up to 25 years from the start of the agreement, and that time period ended in 2010.
"All we have is a license," Bohnhoff said regarding Farmington's legal rights to operate the utility within Bloomfield's limits.
When Dalley asked why Farmington still continues to operate the utility within Bloomfield limits, Bohnhoff said a 1959 statute that gave Farmington the right to own the utility also requires it to provide electricity to Bloomfield residents.
Winter argued that Farmington's continued payment of franchise fees is an acknowledgement of the implied terms of the expired contract.
"The statute does not require them to pay rent," Winter said. "The contract requires them to pay rent."
Winter also argued that letters from Farmington officials, including City Manager Rob Mayes, reinforce Bloomfield's right to acquire the utility.
In a letter to former Bloomfield City Manager David Fuqua dated Dec. 3, 2014, Mayes wrote that Bloomfield had the right to acquire the utility and that the right was provided to Bloomfield through the Culpepper Decree.
"What is clear is that at least through December 2014, Farmington acknowledged this right," Winter said.
Nixon said because the city of Farmington did not waive its right to the statute of limitations, the letters Bloomfield are using as evidence do not apply.
"They're simply irrelevant, no matter what the content," Nixon said.
Hannah Grover covers Aztec and Bloomfield, as well as general news, for The Daily Times. She can be reached at 505-564-4652.