## Facts

- Developers owned, or held options to purchase, property located in an unincorporated area of Yuma County outside the City of Yuma’s limits.
- The City installed water and sewer lines immediately adjacent to the property.
- Developers alleged the City’s adjacent infrastructure effectively left them no practical alternative for water and sewer service other than contracting with the City.
- Developers sued for declaratory judgment seeking rulings that the City (1) could not require payment of development fees as a condition of providing service and (2) must provide water and sewer service at specified rates in the City’s fee schedule.
- The City moved to dismiss under Rule 12(b)(6) for failure to state a claim, asserting there was no contract and no legal obligation to serve non-resident property.
- The superior court dismissed the complaint; Developers appealed.

## Issues

1. Whether a municipality has a legal duty to provide water and sewer service to property outside its boundaries absent a contract, statute, or other specific legal obligation.
2. Whether a city’s placement of utility lines adjacent to out-of-city property, and the alleged impracticability of obtaining service elsewhere, can create a legally enforceable duty to serve.
3. Whether declaratory judgment can be used to impose service obligations and financial terms (rates and development fees) in the absence of an underlying legal duty.

## Decision

- The Arizona Court of Appeals affirmed the Rule 12(b)(6) dismissal.
- The court held the City had no legal obligation to provide water or sewer service to property outside city limits without a contract, statute, or other specific legal duty.
- The City’s construction of adjacent utility lines, even if it made alternative service options impractical, did not create a judicially enforceable duty to provide service.
- Because no enforceable right or obligation existed, declaratory relief could not be used to require service or to dictate rates or the absence of development fees.

## Legal Principles

- An Arizona municipality operating a utility generally has no duty to provide water or sewer service to non-residents outside its corporate limits absent a contract, statute, or other specific legal obligation.
- The existence or proximity of municipal utility infrastructure does not, by itself, transform discretionary service to non-residents into a mandatory duty.
- Declaratory judgment declares existing legal rights and duties; it cannot be used to create new service obligations or impose financial terms where no underlying legal duty exists.
- On a Rule 12(b)(6) motion, courts accept well-pled facts as true but dismiss where the alleged facts do not support relief under any cognizable legal theory.

## Conclusion

The court held that, without a contract or other legal mandate, the City was not required to extend water and sewer service to property outside its limits, and declaratory judgment could not be used to compel service or set the economic terms of service.


Yuma Valley Land Co., LLC v. City of Yuma, 227 Ariz. 228, 256 P.3d 625 (Ariz. Ct. App. 2011)