## Facts

- John M. Bagford and Fae H. Bagford owned and operated a private garbage collection and disposal business, Sanpete Valley Disposal and Landfill, in Sanpete County, Utah.
- The Bagfords provided residential and commercial garbage services in Ephraim City and elsewhere in the county.
- The Bagfords served customers under informal, oral arrangements; customers were billed for pickups actually requested and could stop service at any time.
- In 1989, Ephraim City decided to arrange citywide garbage-collection services to bring the City into compliance with federal and state health and safety requirements.
- The City solicited bids for residential garbage-collection services; the Bagfords submitted a bid but did not receive the residential service contract.
- In October 1989, the City enacted Ordinance 10-412, which added a charge for the City-arranged garbage service to residential electric bills.
- Under the ordinance, residents were required to pay the charge whether or not they used the City-arranged garbage service.
- After the ordinance took effect, the Bagfords’ 176 residential customers in Ephraim City stopped using the Bagfords’ service; the Bagfords retained 32 commercial customers in the City.
- The Bagfords filed an inverse-condemnation action, alleging that the ordinance took or damaged their property without just compensation in violation of article I, section 22 of the Utah Constitution, because their oral customer agreements and customer base were protected property interests.
- The district court entered judgment for Ephraim City, concluding the Bagfords did not have a compensable property interest and that they were not barred from competing.

## Issues

1. Whether the Bagfords’ informal, terminable-at-will oral arrangements with residential customers (and the expectation of continued patronage) constituted “private property” protected by Utah Constitution article I, section 22.
2. Whether Ephraim City’s ordinance requiring residents to pay for City-arranged residential garbage service, which caused the Bagfords to lose most residential customers in the City, effected a compensable taking or damaging of the Bagfords’ property.

## Decision

- The Utah Supreme Court affirmed the district court’s judgment for Ephraim City.
- The court held the Bagfords lacked a protectable property interest in their at-will, informal residential customer arrangements or in continued residential patronage.
- The court concluded the ordinance did not take or damage the Bagfords’ property within the meaning of article I, section 22 because the City did not appropriate the Bagfords’ tangible assets or impair any enforceable contract rights.
- The court treated the Bagfords’ loss of residential customers as a noncompensable economic consequence of the City’s provision of municipal services and resulting competition, not a constitutional taking.
- The court also rejected any claim based on an expectation of obtaining a public service contract, explaining that an expectation of award or renewal of a public contract is not, by itself, a compensable property right for inverse-condemnation purposes.

## Legal Principles

- “Property” for takings purposes can include intangible rights (such as contracts and franchises), but only when the claimant has a legally enforceable entitlement rather than a mere expectation of future benefits.
- A contract interest supports a takings claim only when it establishes rights more substantial than a unilateral expectation; terminable-at-will relationships generally do not create a vested property right in future business.
- An expectation that a public contract will be awarded, renewed, or continued is not a compensable property interest; disappointment of that expectation does not itself support inverse-condemnation damages.
- Government action that changes market conditions or creates competition—without seizing, physically invading, or legally extinguishing a protected property interest—does not amount to a compensable taking or damaging under Utah Constitution article I, section 22.

## Conclusion

The Utah Supreme Court held that Ephraim City’s mandatory-fee residential garbage program did not require compensation under article I, section 22 because the Bagfords’ informal, at-will customer relationships and anticipated future patronage were not protected property interests, and the City’s entry into residential garbage service caused noncompensable economic loss rather than a taking or damaging of enforceable rights or tangible property.


Bagford v. Ephraim City, 904 P.2d 1095 (1995)