S. Ala. Gas Dist. v. Knight

• Citation: 138 So.3d 971
• Decision Date: 02 August 2013
• Docket Number: 1110996.
• Parties: SOUTH ALABAMA GAS DISTRICT v. Kerry W. KNIGHT et al.
• Court: Supreme Court of Alabama

138 So.3d 971

SOUTH ALABAMA GAS DISTRICT

v.Kerry W. KNIGHT et al.

1110996.

Supreme Court of Alabama.

Aug. 2, 2013.

Robert W. Poundstone IV, Phil Butler, and William C. McGowin of Bradley Arant Boult Cummings LLP, Montgomery; and Marc James Ayers of Bradley Arant Boult Cummings LLP, Birmingham, for appellant.

Wyman O. Gilmore, Jr., and R. Edwin Lamberth of Gilmore Law Firm, Grove Hill; and J. Jefferson Utsey of Utsey & Utsey, Butler, for appellees.

R. Bernard Hardwood, Jr., of Rosen Harwood, P.A., Tuscaloosa, for amici curiae Southeast Alabama Gas District, Cullman–Jefferson Counties Gas District, Marshall County Gas District, and Clark–Mobile Counties Gas District, in support of the appellant.

MOORE, Chief Justice.

South Alabama Gas District appeals to this Court from an order of the Clarke Circuit Court enjoining it from selling liquified petroleum (“LP”) gas and related appliances outside its member cities. We dismiss the appeal and order the trial court to vacate the injunction.

I. Facts and Procedural History

To facilitate the provision of natural gas to rural areas in Alabama, state law authorizes two or more municipalities to create a “gas district.” § 11–50–390 et seq., Ala.Code 1975. These districts have significant competitive advantages over private providers of natural gas. As a condition for operating outside the cities composing the gas district (known as “member cities”), a gas district must provide notice and a buy-out offer to any preexisting “plant and system” with which it might compete. See § 11–50–266, Ala.Code 1975, made applicable to gas districts by § 11–50–399, Ala.Code 1975. In 1961, the cities of Evergreen and Monroeville formed the Conecuh–Monroe Counties Gas District, which in 2001 changed its name to South Alabama Gas District (“SAG”). In 1999, SAG began selling LP gas outside its member cities. SAG, however, did not provide notice and buy-out offers to competitors.

On May 18, 2010, four individual taxpayers and Fletcher Smith Butane Co., Inc., sued SAG, seeking both an injunction and damages for SAG's alleged violation of § 11–50–266, as made applicable to gas districts by § 11–50–399. The trial court bifurcated the claim for injunctive relief and the damages claim and on October 7, 2011, held a bench trial on the claim for injunctive relief. SAG argued that the notice and buy-out provisions did not apply to it because LP gas is not a “manufactured gas” within the terms of the statute. The trial court found otherwise and enjoined SAG from selling LP gas and related appliances outside its member cities if it did not comply with § 11–50–266.¹ SAG appealed the injunction to this Court.

We first address the claims of the individual taxpayers.

II. The Taxpayer Plaintiffs

In their amended complaint plaintiffs Kerry W. and Christy Knight and Kirklyn and Regina Gwin identify themselves as adult residents of the City of Thomasville and of Clarke County. They allege “standing to bring this claim contesting the legality of South Alabama Gas' activities because the City of Thomasville and Clarke County are deprived of the tax and other revenue to which they are entitled.” In particular, they claim harm resulting from the tax advantages provided to SAG as a public corporation. See Henson v. HealthSouth Med. Ctr., Inc., 891 So.2d 863, 868 (Ala.2004) (noting that “a taxpayer has standing to challenge a tax abatement conferred upon another taxpayer ... so long as the taxpayer can demonstrate a probable increase in his tax burden from the challenged activity”).

The trial court in its order of April 2, 2012, found that the taxpayers had failed to carry their burden of proving that “tax increases probably resulted from SAG's tax reduction.” Thus, they “lack[ed] standing to challenge SAG's appliance sales.” Although the trial court limited its findings to the topic of appliance sales, logically the taxpayers' failure to prove harm requires dismissal of all their claims.

III. Fletcher Smith Butane Co., Inc.A. Fletcher Smith's Admissions

On April 5, 2012, SAG appealed the injunction to this Court. See Rule 4(a)(1)(A), Ala. R.App.P. In its opening brief SAG argues, among other things, that Fletcher Smith no longer has standing because it has “sold its assets and is no longer engaging in the LP gas business.” SAG's brief, at 54. ² As proof, SAG cites Fletcher Smith's October 10, 2012, responseto “Requests for Admissions of Fact,” which is included in the record on appeal. The relevant requests and Fletcher Smith's responses are as follows:

“1. Admit that Plaintiff Fletcher Smith Butane Co., Inc., a corporation, is no longer in the business of selling or distributing propane gas.

“RESPONSE: ... [Fletcher Smith] states that it is not currently selling or distributing propane gas due to the asset sale described herein.

“2. Admit that the assets of Fletcher Smith Butane, Co., Inc., have been recently sold and assigned.

“RESPONSE: [Fletcher Smith] admits that it has sold assets to Parden Gas.

“3. Admit that the sales agreement for Fletcher Smith Butane Co., Inc., listed the assets sold with assigned value to each asset.

“RESPONSE: ... [T]he sales agreement speaks for itself....

“....

“6. Admit that Fletcher Smith Butane Co., Inc., present [sic] has no tangible assets.

“RESPONSE: ... [T]he Company has no current real or personal property.

“....

“10. Admit that Fletcher Smith Butane Co., Inc., is not in competition with South Alabama Gas.

“RESPONSE: Denied.”

These admissions raise a question we must examine as to whether the necessary adversity of interests still exists between Fletcher Smith and SAG for this action to continue. “A plaintiff must be so situated that he or she will bring the requisite adverseness to the proceeding. A plaintiff must also have a direct stake in the outcome....” Hamm v. Norfolk Southern Ry., 52 So.3d 484, 500 (Ala.2010) (Lyons, J., concurring specially). If Fletcher Smith, having left the propane business, can no longer benefit from prospective relief against SAG, the injunction is moot. “[W]e must inquire, as a threshold matter ... whether this case involves a justiciable controversy or whether it has been mooted....” Underwood v. Alabama State Bd. of Educ., 39 So.3d 120, 126 (Ala.2009).

Fletcher Smith in its response brief in this Court does not deny the existence of the admissions. It instead attempts to mitigate their effect, stating that “these responses [to requests for admissions] do not state that [Fletcher Smith] is no longer in [the LP gas] business. Instead, the responses state that [Fletcher Smith] is not currently selling LP gas.” Fletcher Smith's response brief, at 50. Fletcher Smith also refuses to admit that it is no longer in competition with SAG. Id. We do not consider these responses adequate to rebut the allegation of mootness. Although Fletcher Smith did not directly admit that it “is no longer in the business of selling or distributing propane gas,” its response that “it is not currently selling or distributing propane gas due to the asset sale described herein” indicates that it lacks prospective injury from SAG's sales of propane, i.e., LP gas. Its bare denial that it is not in competition with SAG hardly counterbalances its admissions that it sold its assets to Parden Gas via a sales agreement that left it with “no current real or personal property.”

B. Effect of the Admissions

When an action becomes moot during its pendency, the court lacks power to further adjudicate the matter.

“ ‘ The test for mootness is commonly stated as whether the court's action on the merits would affect the rights of the parties.

’ Crawford v. State, 153 S.W.3d 497, 501 (Tex.App.2004) (citing VE Corp. v. Ernst & Young, 860 S.W.2d 83, 84 (Tex.1993)). ‘A case becomes moot if at any stage there ceases to be an actual controversy between the parties.’ Id. (emphasis added) (citing National Collegiate Athletic Ass'n v. Jones, 1 S.W.3d 83, 86 (Tex.1999)).”

Chapman v. Gooden, 974 So.2d 972, 983 (Ala.2007) (first emphasis added). See also Steffel v. Thompson, 415 U.S. 452, 459 n. 10, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974) (“[A]n actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.”).

Although Fletcher Smith may have viable legal claims based on SAG's past actions, it is not entitled to injunctive relief if SAG's future sales of LP gas can cause it no harm. See American Fed'n of State, Cnty. & Mun. Emps. v. Dawkins, 268 Ala. 13, 18, 104 So.2d 827, 830 (1958) (“To be entitled to claim equitable relief, the complainant must show a controversy which will cause actual harm to him.”). See also O'Shea v. Littleton, 414 U.S. 488, 495–96, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974) (“Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief ... if unaccompanied by any continuing, present adverse effects.”). The trial court's injunction order indicates that it desired to mitigate the adverse effects upon Fletcher Smith of SAG's tax advantages and also to require SAG to follow the notice and buy-out provisions of the gas-district statutes. This relief is meaningless if Fletcher Smith is no longer a participant in the LP gas market.

“ ‘The duty of this court, as of every other judicial tribunal, is to decide actual controversies by a judgment which can be carried into effect, and not to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it.’ ”

King v. Campbell, 988 So.2d 969, 976 (Ala.2007) (quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 40 L.Ed. 293 (1895)).

C. Mootness on Appeal

Events occurring subsequent to the entry or denial of an injunction in the trial court may properly be considered by this Court to determine whether a cause, justiciable at the time the injunction order is entered, has been rendered moot on appeal. “[I]t is the duty of an appellate court to...