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Qwest Corp. v. City of Chandler - 8/27/2009

Arizona Court of Appeals Division One Holds That A Pre-Statehood Franchise for Electric Telegraph Service Does Not Exempt Franchise Holder From Paying Relocation Costs for Telephone and Cable Lines That Interfere With a Public Purpose.

As part of its redevelopment of a designated downtown area, the City of Chandler informed Qwest Corporation that Qwest would need to relocate cable and television lines, at Qwest's own expense. Chandler agreed to allow Qwest to relocate the lines while still retaining the right to seek reimbursement from the City. Qwest filed an action against the City seeking declaratory relief and damages, asserting claims for  inverse  condemnation under the Arizona and United States Constitutions, as well as under 42 U.S.C. § 1983. Qwest based its arguments on its status as a successor to telecommunications entities that operated in Arizona before it became a state. Qwest argued that it held a franchise under an 1877 Law permitting franchise holders to construct and maintain telegraph facilities on public roadways in Arizona. The superior court granted summary judgment Qwest’s favor, and the City appealed.

The Arizona Appeals Court reversed, and directed that summary judgment be entered in favor of the City. The Court held that the common law duty requiring utilities to relocate their property from a public way when necessary to make street improvements, at the utility’s own expense, applied to Qwest's franchise. The Court explained that such duties exist unless a statute otherwise provides, or a city has specifically agreed to pay the utility for the relocation. The Court rejected Qwest's arguments that the 1877 law granting the franchise either abrogated the common law rule, predated the common law rule, or that more recent Arizona statutes are inconsistent with the common law rule. The Court also rejected Qwest's argument that the 1877 law granted it an irrevocable contract to use the areas where it had placed its lines. The Court also held that there was no taking, because Qwest's contract under the 1877 Law had not been impaired, since it continued to enjoy its franchise right to operate in the City and never had a permanent right to any given location for its facilities.

Judge Kessler authored the opinion; Judges Norris and Gemmill concurred. 

Posted On: 9/1/2009