March 16, 2016
From Anderson County R. Keith Kelly, Circuit Court Judge
Patrick Spruill and Boyd Benjamin Nicholson Jr., both of
Haynsworth Sinkler Boyd, PA, of Greenville, for Appellant.
H. Gibbes, III, of Gibbes Burton, LLC, of Spartanburg, and J.
Franklin McClain, of Anderson, for Respondent.
declaratory judgment action, Appellant West Anderson Water
District (the District) seeks review of the circuit
court's order interpreting a contract between the
District and Respondent City of Anderson, South Carolina (the
City) that allowed the City to provide water service to a
certain site within the District's boundaries. The
District argues the individuals serving on the District's
governing board at the time the contract was executed did not
have authority to bind successor boards. The District also
argues the circuit court's interpretation of the disputed
contractual provision substantially compromised the
District's central, primary function, i.e., the provision
of water and sewer service. We affirm.
to February 2002, Duke Energy Corporation (Duke) owned and
operated a water system serving wholesale and retail water
customers throughout various parts of Anderson County. On
February 20, 2002, Duke sold the system's retail
component to the City and its wholesale component to the
members of the Anderson County Joint Municipal Water System
(the Joint System). The Joint System was created pursuant to
the Joint Municipal Water Systems Act,  S.C. Code Ann.
§§ 6-25-5 to -170 (2004), which allows two or more
municipalities to form a joint municipal water system to meet
the needs of their service areas or to create a finance pool.
S.C. Code Ann. § 6-25-30 (2004). The Joint System's
members include the District; the City; the municipalities of
Clemson, Pendleton, and Williamston; Starr-Iva Water and
Sewer District; Sandy Springs Water District; Powdersville
Water District; Hammond Water District; Homeland Park Water
District; Broadway Water and Sewerage District; and Big Creek
Water and Sewerage District.
March 21, 2002, the Joint System entered into an agreement to
sell water to its members (the Water Sale and Purchase
Agreement). Included in this agreement was a provision
in which the District consented to the City providing water
service to a facility owned by Michelin North America, Inc.
(Michelin) and at least partially located within the
District's historical service area. The agreement also
included a provision referencing an attached territorial map
designating the respective new service areas for each party.
The attached territorial map designated the property on which
the Michelin facility was located as included within the
City's new service area.
2012, the District learned Michelin was building a second
facility on the property it occupied. Subsequently, the
District received a letter from the City stating the City
would be providing water service to the second facility and
requesting the District to "cease contact with Michelin
regarding water service to the site." The District later
filed a summons and complaint seeking a declaratory judgment
that the City may not provide water service to Michelin's
second facility and an injunction against the City's
provision of water service to the second facility. The City
answered and filed a counterclaim seeking a declaration that
it was entitled to provide water service to Michelin's
second facility pursuant to the Water Sale and Purchase
circuit court conducted a bench trial and subsequently issued
an order declaring that the Water Sale and Purchase Agreement
authorized the City to provide water service to
Michelin's second facility. In its order, the circuit
court concluded the District's enabling legislation
authorized the District to bind members of future boards to
the terms of the Water Sale and Purchase Agreement. The
circuit court also concluded the District's delegation of
power to the City to provide water service to the Michelin
property did not substantially compromise the District's
central, primary function. The circuit court denied the
District's motion to amend its order pursuant to Rule
59(e) of the South Carolina Rules of Civil Procedure. This
1. Did the circuit court err in finding the Water Sale and
Purchase Agreement allowed the City to provide water service
to the entire Michelin site?
2. Did the circuit court err in concluding the District's
board could bind successor boards to the Water Sale and
3. Did the circuit court err in concluding the District's
delegation of its power to the City would not substantially
compromise the District's primary function?
judgments in and of themselves are neither legal nor
equitable. The standard of review for a declaratory judgment
action is therefore determined by the nature of the
underlying issue." Kinard v. Richardson, 407
S.C. 247, 256, 754 S.E.2d 888, 893 (Ct. App. 2014) (citation
omitted) (quoting Campbell v. Marion Cty. Hosp.
Dist, 354 S.C. 274, 279, 580 S.E.2d 163, 165 (Ct. App.
2003)). "An action to construe a contract is an action
at law reviewable under an 'any evidence'
standard." Pruitt v. S.C. Med. Malpractice Liab.
Joint Underwriting Ass'n, 343 S.C. 335, 339, 540
S.E.2d 843, 845 (2001). "In an action at law, tried,
without a jury, the appellate court's standard of review
extends only to the correction of errors of law."
Sherlock Holmes Pub, Inc. v. City of Columbia, 389
S.C. 77, 81, 697 S.E.2d 619, 621 (Ct. App. 2010) (quoting
Pope v. Gordon, 369 S.C. 469, 474, 633 S.E.2d 148,
Construction of the Water Sale and Purchase
District contends the circuit court erred in finding the
Water Sale and Purchase Agreement allows the City to provide
water service to the entire Michelin site. The District
argues the Water Sale and Purchase Agreement allows the City
to provide service to only those customers existing when the
agreement was executed and Michelin's second facility, a
new "customer, " did not exist when the agreement
was executed. We disagree.
interpreting a contract, a court must ascertain and give
effect to the intention of the parties." Laser
Supply & Servs., Inc. v. Orchard Park Assocs., 382
S.C. 326, 334, 676 S.E.2d 139, 143 (Ct. App. 2009). "To
determine the intention of the parties, the court 'must
first look at the language of the contract . . . .'"
Id. (quoting C.A.N. Enters. v. S.C. Health &
Human Servs. Fin. Comm'n, 296 S.C. 373, 377, 373
S.E.2d 584, 586 (1988)).
the language of a contract is clear and unambiguous, the
determination of the parties' intent is a question of law
for the court. See Hawkins v. Greenwood Dev. Corp.,
328 S.C. 585, 592, 493 S.E.2d 875, 878 (Ct. App. 1997)
("The construction of a clear and unambiguous contract
is a question of law for the court."). Whether an
ambiguity exists in the language of a contract is also a
question of law. S.C. Dep't of Nat. Res. v. Town of
McClellanville, 345 S.C 617, 623, 550 S.E.2d 299, 302-03
(2001). "A contract is ambiguous when the terms of the
contract are reasonably susceptible to more than one
interpretation." Id. at 623, 550 S.E.2d at 302.
"Once the court decides the language is ambiguous,
evidence may be admitted to show the intent of the
parties." Id. at 623, 550 S.E.2d at 303.
"The determination of the parties' intent is then a
question of fact." Id.
the circuit court concluded the Water Sale and Purchase
Agreement was ambiguous due to the conflict between the
"prefatory clause" in the "Background and
Findings" section of the agreement and section 6.02 of
the agreement, which discusses territorial
boundaries. The prefatory clause states,
It is presently intended by the parties hereto that the City
of Anderson will serve (1) two industries; BASF and
Owens-Corning, located within the boundaries of Starr-Iva
Water and Sewer District; and (2) the industrial
facilities of Michelin, which are located within the
boundaries of West Anderson Water District. Both Starr-Iva
Water and Sewer District and West Anderson Water District
consent to the City of Anderson's providing such services
to these industries. However, such consent is strictly
limited to the provision of service to these named
industrial customers and no further provision of service
by the City of Anderson shall be made to any customer located
within the boundaries of Starr-Iva Water and Sewer District
or within West Anderson Water District without the written
consent of such Purchaser.
(emphases added). On the other hand, section 6.02 of the
In order to successfully plan and finance additions to each
Purchaser's System, and to avoid future disputes, the
parties have agreed upon a Territorial Map of the territories
of the parties to this Agreement in order to set out the
areas each intends ...