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Tuesday, March 23, 2021

Court Upholds Home Rule City's Water Billing Ordinance

An Appellate Court recently upheld a municipality's water billing ordinance in Souza v. City of West Chicago.

In 2011, West Chicago contracted with Water Resources, Inc. to replace residential water meters and update meter equipment. After some customers experienced years of deficient, inaccurate, and/or missing water meter readings, the City terminated its contract with Water Resources in 2016. 

In 2019, two individuals filed a class action lawsuit against the City and Water Resources alleging that the City engaged in unlawful billing practices by charging customers for water and sewer services outside of the 12-month period prescribed by the water-utility billing provision in state statute (specifically, section 65 ILCS 5/11-150-2 of the Illinois Municipal Code). While the lawsuit was ongoing, the City amended its local water billing ordinance so that the local ordinance: (1) would control over state statute; (2) apply retroactively to any and all billed or unbilled charges incurred for water usage prior to and subsequent to the amended ordinance’s effective date; and (3) apply to all causes of action that have accrued, will accrue or are currently pending. 

The circuit court ruled against the water customers, finding that the City’s amended water billing ordinance was a valid exercise of its home rule powers.

The customers appealed, and the Second District Appellate Court upheld the ruling in favor of the City. Specifically, the appellate court noted that the City’s ordinance was a valid exercise of its home rule powers to regulate an area of vital local interest (the funding and operation of the City’s water utility system). The court rejected the customers' argument that state statute "preempted" the local ordinance finding no preemption language in the statute. 

The appellate court also rejected the customers' argument that applying the ordinance retroactively deprived them of a vested right. 

Finally, the appellate court rejected the customers’ claim that they were entitled to recover economic damages for all service charges wrongfully billed and/or collected by the City because of Water Resources' breach of its contract with the City. The appellate court found that the customers were not parties or third-party beneficiaries to the contract so could not bring a breach of contract claim against Water Resources.

Post Authored by Eugene Bolotnikov & Julie Tappendorf, Ancel Glink


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