Sanitary District No. 2 of the Town of Shelby v. City of La Crosse

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
May 29, 2026
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2025AP20 Cir. Ct. No. 2024CV288

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

SANITARY DISTRICT NO. 2 OF THE TOWN OF SHELBY,

PLAINTIFF-APPELLANT,

V.

CITY OF LA CROSSE,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for La Crosse County:
RAMONA A. GONZALEZ, Judge. Affirmed.

Before Blanchard, Kloppenburg, and Nashold, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

¶1 PER CURIAM. The City of La Crosse (“the City”) provided the
Sanitary District No. 2 of the Town of Shelby (“the District”) with sewage
No. 2025AP20

treatment services pursuant to a 2004 agreement between the municipalities.
Under the agreement, the District could add, as needed, new sewer connections.
When the 2004 agreement expired in 2020 and the City and the District could not
reach a new agreement, the City continued to provide the same level of service
that it had at the time the contract expired. But going forward, the City refused to
provide service for new sewer connections in the District. The District brought an
action against the City, claiming that the City has a common law duty to serve,
which the District argued requires the City to continue to provide services
consistent with the expired agreement, including for new sewer connections. The
circuit court granted summary judgment in favor of the City and the District
appeals.

¶2 We conclude that, under City of Racine v. Town of Mount Pleasant,
61 Wis. 2d 495, 213 N.W.2d 60 (1973), the City is not subject to a common law
duty to serve that would require the City to continue providing services to the
District consistent with the expired agreement because the City provided sewage
treatment services to the District pursuant to an intergovernmental contract,
namely, the 2004 agreement. Accordingly, we affirm.

BACKGROUND

¶3 The District is a town sanitary district within the Town of Shelby
that was created as a municipal corporation by the Shelby town board under WIS.
STAT. ch. 60 (2023-24).1 See WIS. STAT. § 60.71(1)(a) (authorizing town boards
to establish town sanitary districts); WIS. STAT. § 60.77(4) (stating that sanitary

1
All references to the Wisconsin Statutes are to the 2023-24 version unless otherwise
noted.

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districts “may project, plan, construct and maintain a water, solid waste collection
and sewerage system … necessary for the promotion of the public health, comfort,
convenience or welfare of the district”). The District borders the City.

¶4 The City owns and operates a sewage system that includes a
collection system and treatment plant. For decades, beginning in the 1950s, the
District contracted with the City for the treatment of sewage generated in the
District. Most recently, in 2004, the District and the City entered into an
agreement pursuant to which the City agreed to treat and dispose of sewage
generated in a geographically defined area of the District. Under the agreement,
the City provided services for both existing and also new connections to the
sewage system, and the District paid the City based on the number of residences
receiving services. The parties ultimately extended the 2004 agreement to March
2020.

¶5 The District and the City were unable to reach an agreement for the
treatment of sewage in the District after the 2004 agreement expired in 2020. The
City then enacted ordinances that addressed the manner in which the City would
provide sewage treatment services to municipalities with expired contracts, such
as the one between the City and District. Each of the ordinances limits the scope
of the City’s obligation to provide sewage treatment services to those services that
were provided when the applicable sewage treatment contract expired. The
ordinances also state that the City will not permit any increase in the volume of
sewage treated from the adjoining municipality with an expired contract, and that
the City will not accept for treatment any sewage from any extension or new
connection to the other municipality’s collection system. Consistent with these
ordinances, the City has refused to provide services for new sewer connections in
the District.

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¶6 The District brought this action against the City, alleging that the
City has an obligation to continue to provide sewage treatment services to the
District consistent with the expired 2004 agreement because the City has a
common law duty to serve the District. The District also alleged that because of
this common law duty to serve, the City’s ordinances violate WIS. STAT.
§ 66.0813(3)(a). See § 66.0813(3)(a) (“[A] city, village or town may by ordinance
fix the limits of utility service in unincorporated areas.… No ordinance under this
paragraph is effective to limit any obligation to serve that existed at the time that
the ordinance was adopted.”).

¶7 Both the District and the City moved for summary judgment. The
circuit court granted summary judgment in favor of the City. The District appeals.

DISCUSSION

¶8 Summary judgment is proper when the summary judgment materials
“show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” WIS. STAT. § 802.08(2). “We
review summary judgment decisions de novo, applying the same methodology as
the [circuit] court.” Kiss v. General Motors Corp., 2001 WI App 122, ¶9, 246
Wis. 2d 364, 630 N.W.2d 742. Here, the parties agree that there is no genuine
issue as to any material fact and that summary judgment is thus appropriate, but
they dispute which party is entitled to summary judgment. This, in turn, depends
on whether the City has a common law duty to provide the District with the same
services it provided under the expired contract. For the reasons that follow, we
conclude that the City has no such common law duty and that the court therefore
properly granted summary judgment in favor of the City.

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¶9 A public utility’s duty to serve is codified in Wisconsin’s Public
Utilities Law, WIS. STAT. ch. 196, at WIS. STAT. § 196.03(1), which states
generally that “a public utility shall furnish reasonably adequate service and
facilities.” See, e.g., City of Sun Prairie v. PSC, 37 Wis. 2d 96, 100, 154 N.W.2d
360 (1967) (referring to the predecessor to ch. 196 as “the Public Utilities Law”).
Our supreme court has interpreted this language as being “plainly declaratory of
the common law,” pursuant to which “persons or corporations who … carry on the
business of a public utility” have “a legal duty to furnish reasonably adequate
service at reasonable rates and without discrimination to all who are entitled to
apply for service.” Krom v. Antigo Gas Co., 154 Wis. 528, 533, 140 N.W. 41, 43-
44, modified on reargument, 154 Wis. 528, 143 N.W. 163 (1913). Notably, WIS.
STAT. § 196.01(5)(a) specifically excludes a governmental unit from the definition
of a “public utility” in this context. It defines “public utility” as including “any
person, except a governmental unit, who furnishes services by means of a
sewerage system either directly or indirectly to or for the public.” (Emphasis
added.) The parties do not dispute that the City, in providing sewage services to
the District, falls under this exception and is therefore not a “public utility” under
§ 196.01(5)(a). Consistent with this, the parties agree that the City is not subject
to a duty to serve under ch. 196.

¶10 Instead, the District argues that the City has a common law duty to
provide treatment services to the District consistent with the expired 2004
agreement. We reject this argument as foreclosed by City of Racine: specifically,
because the City was providing sewage treatment services to the District pursuant

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to an intergovernmental contract (the 2004 agreement), the City is not subject to a
common law duty to serve.2

¶11 In City of Racine, the City of Racine provided sewage treatment
services to the Town of Mount Pleasant under a contract between the
municipalities pursuant to the precursor statute to WIS. STAT. § 66.0301(2), which
allows municipalities to contract for services or for the joint exercise of any power
or duty required or authorized by law. Id. at 503. A dispute arose as to whether
the City of Racine could, under the contract, retroactively adjust what it charged to
reflect its actual costs. Id. at 500. In arguing that the City of Racine could adjust
its rates under the contract only prospectively, the Town of Mount Pleasant argued
that the City of Racine, “by providing sewage treatment, [is] subject to the same
duties and obligations as a public service system or utility,” and that as a result it
could adjust its billings only prospectively. Id. at 503. Our supreme court
rejected that argument, stating: “The City is not acting in the relationship of a
public service system or utility with the Town. Rather, the City is acting under an
agreement with the Town made pursuant to [the predecessor to § 66.0301(2)],
which permits certain co-operative intergovernmental activities.” Id. The court
concluded, “The relationship of the Town and the City under such an arrangement

2
The City argues in the alternative that it is entitled to summary judgment because
utilities’ service obligations are governed solely by statute, specifically, WIS. STAT. chs. 196 and
197. According to the City, if there were a common law duty to serve that applied to municipal
sewage services, the explicit exclusion of municipal sewage services from the definition of
“public utility” in WIS. STAT. § 196.01(5)(a) would abrogate that duty. Because we conclude that
no common law duty to serve applies here, we need not address whether the common law duty
has been abrogated by statute. See Barrows v. American Fam. Ins. Co., 2014 WI App 11, ¶9,
352 Wis. 2d 436, 842 N.W.2d 508 (2013) (we need not address every issue when one is
dispositive).

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is strictly that of contracting parties. The relationship contended by the [the
Town] is in no way involved.” Id.

¶12 Here, the City argues that City of Racine controls and forecloses the
District’s argument because the City provided sewage services to the District
pursuant to an intergovernmental contract. We agree. In City of Racine, as stated,
the parties contracted with one another pursuant to the predecessor to WIS. STAT.
§ 66.0301(2), the same statute pursuant to which the City and the District
contracted with each other here. And as the District does here, the Town of Mount
Pleasant argued that the City of Racine was serving as a public utility and was
therefore subject to the duties and obligations of a public utility. Id. In rejecting
this argument, the City of Racine court explicitly concluded that when
municipalities contract for the provision of sewage treatment services, their
relationship “is strictly that of contracting parties” and that “the relationship of a
public service system or utility” is “in no way involved.” Id. at 503.

¶13 The District argues that City of Racine does not control here because
the court in that case did not address the duty to serve and reached the above-
quoted conclusion when deciding a different issue—namely, whether the City of
Racine could, under the contract, make retroactive billing adjustments to reflect
actual costs for the previous year or whether it was limited to adjusting its billings
prospectively because it was acting as a public utility. However, in rejecting the
Town of Mount Pleasant’s argument discussed above, the court more broadly
stated that a municipality providing services to another municipality pursuant to an
inter-municipality agreement is not subject to the duties and obligations of a public
utility. It is precisely one of those duties, the common law duty to serve, that the
District here seeks to impose on the City. The broadly stated conclusion in City of
Racine resolves the issue in this case. Under City of Racine, because the City

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provided services to the District pursuant to an intergovernmental contract, no
common law duty to serve applies.

¶14 The District also argues that City of Racine does not control
because, after stating that the relationship between the Town of Mount Pleasant
and the City of Racine was “strictly that of contracting parties” and that a public-
utility relationship was “in no way involved,” the City of Racine court cited WIS.
STAT. § 196.01(1), which at that time defined “public utility” and, as now,
excluded municipal sewage systems from that definition. See id. at 503;
§ 196.01(1) (1971-72). The District argues that “[this] citation demonstrates that
[City of] Racine holds only that a [sewage] treatment facility is not within [WIS.
STAT. ch.] 196’s definition of ‘public utility.’” The District further notes that both
now and at the time that City of Racine was decided, ch. 196 specifically
prohibited public utilities from billing retroactively. See WIS. STAT. § 196.37;
WIS. STAT. § 196.37 (1971-72); see also Kimberly-Clark Corp. v. PSC, 110
Wis. 2d 455, 463, 329 N.W.2d 143 (1983) (“Section 196.37(1) [(1975)] …
expressly limits the PSC’s authority to setting rates prospectively only.”). From
these points, the District argues that the City of Racine court based its conclusion
on the statutory definition of “public utility” because the court was addressing an
obligation that was imposed by statute, whereas here, the District relies on an
obligation—the duty to serve—which the District argues is imposed at common
law. Therefore, according to the District, we should narrowly interpret City of
Racine to stand for the proposition that the statutory prohibition on retroactive
billing in § 196.37 (1971-72) did not apply because the City of Racine was not a
“public utility” for purposes of ch. 196. We now explain why we reject the
District’s arguments that are based on the single citation to WIS. STAT. § 196.01 in
City of Racine.

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¶15 We first observe that the statutory prohibition on retroactive billing,
WIS. STAT. § 196.37 (1971-72), is not mentioned in the City of Racine opinion.
Moreover, nothing in the opinion suggests that there could be a different outcome
based on the application of common law rather than WIS. STAT. ch. 196. Indeed,
an equally plausible interpretation of the City of Racine court’s citation to the
definition of “public utility” in WIS. STAT. § 196.01(1) is that the only duties and
obligations to which a public utility is subject are those found in ch. 196, and, as
stated, municipal sewage systems are not included in the statutory definition of
“public utility” in § 196.01. Further, the holding in City of Racine is far broader
than the District’s narrow interpretation: the court stated without qualification that
when one municipality contracts with another to provide sewage treatment
services, the municipality providing services is not subject to the duties and
obligations of a public utility, and the relationship is only that of contracting
parties. City of Racine, 61 Wis. 2d at 503. Regardless of the authorities relied on
in making these statements, we are bound by the language that the court used. The
court could have limited its conclusion to a public utility’s obligation to bill
prospectively. It did not, and instead the court determined that none of the duties
and obligations of a public utility apply.

¶16 We reject the District’s challenge to the City’s ordinances based on
the same reasoning. This challenge also relies on the premise that the City has a
common law duty to serve. Because we conclude that the City is not obligated to
continue to provide sewage treatment services pursuant to the contract after the
contract’s expiration, it necessarily follows that the City has not violated WIS.
STAT. § 66.0813(3)(a), which states: “[A] city, village or town may by ordinance
fix the limits of utility service in unincorporated areas.… No ordinance under this

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paragraph is effective to limit any obligation to serve that existed at the time that
the ordinance was adopted.”

¶17 For these reasons, we affirm.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

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