Babe Investments v. Arizona Corp. Com'n

• Decision Date: 01 May 1997
• Docket Number: CA-CV,Nos. 1,s. 1
• Citation: 939 P.2d 425,189 Ariz. 147
• Parties: , 242 Ariz. Adv. Rep. 10 BABE INVESTMENTS, an Arizona general partnership; Aero Automatic Sprinkler Company, Inc., an Arizona corporation, Plaintiffs-Appellees, v. ARIZONA CORPORATION COMMISSION; Atchison, Topeka and Santa Fe Railway Company, a Delaware corporation, Defendants-Appellants. BABE INVESTMENTS, an Arizona general partnership; Aero Automatic Sprinkler Company Inc., an Arizona corporation, Plaintiffs-Appellees, v. ATCHISON, TOPEKA and SANTA FE RAILWAY COMPANY, a Delaware corporation, Defendant-Appellant. 95-0499, 1 96-0466.
• Court: Arizona Court of Appeals

Page 425

939 P.2d 425

189 Ariz. 147, 242 Ariz. Adv. Rep. 10

BABE INVESTMENTS, an Arizona general partnership; Aero Automatic Sprinkler Company, Inc., an Arizona corporation, Plaintiffs-Appellees, v.ARIZONA CORPORATION COMMISSION; Atchison, Topeka and Santa Fe Railway Company, a Delaware corporation, Defendants-Appellants.

BABE INVESTMENTS, an Arizona general partnership; Aero Automatic Sprinkler Company Inc., an Arizona corporation, Plaintiffs-Appellees, v.ATCHISON, TOPEKA and SANTA FE RAILWAY COMPANY, a Delaware corporation, Defendant-Appellant.

Nos. 1 CA-CV 95-0499, 1 CA-CV 96-0466.

Court of Appeals of Arizona Division 1, Department E.

May 1, 1997.

Reconsideration Denied June 18, 1997.

[189 Ariz. 148] Folk & Associates, P.C. by P. Douglas Folk, Denise H. Troy, Phoenix, for Plaintiffs-Appellees.

[189 Ariz. 149] Arizona Corporation Commission--Legal Division by Peter Breen, Phoenix, for Defendant-Appellant Arizona Corporation Commission.

Fennemore Craig, P.C. by C. Webb Crockett, Timothy Berg, Theresa Dwyer, Phoenix, for Defendant-Appellant The Atchison, Topeka & Santa Fe Railway Company.

OPINION

TOCI, Judge.

The Arizona Corporation Commission("Commission") dismissed a complaint filed by Babe Investments ("Babe") and Aero Automatic Sprinkler Company, Inc.("Aero") against the Atchison, Topeka & Santa Fe Railway Company("Santa Fe").The complaint alleged that Santa Fe violated Ariz.Rev.Stat. Ann.("A.R.S.")section 40-285 by removing a switch and section of railroad track ("siding") without first obtaining Commission approval.¹The Commission found no violation of the statute and further found that A.R.S. section 40-326 did not require Santa Fe to reinstall the siding.Babe and Aero commenced an action in the superior court for administrative review of the Commission's decision.The superior court vacated the Commission's order dismissing the complaint.Santa Fe and the Commission now appeal from the superior court's ruling, and the Commission also asks us to vacate the court's award of attorneys' fees entered against it pursuant to A.R.S. section 12-348.

On appeal, Santa Fe and the Commission argue that the superior court erred when it remanded this action for a hearing before the Commission.²We agree, vacate the order of the superior court, and reinstate the Commission's order.

I.FACTS AND PROCEDURAL HISTORY

In 1969, Santa Fe agreed to construct, operate, and maintain siding ("1969 agreement") to serve certain real property owned by Ray Meyer in Maricopa County.In October 1987, and after Meyer's death, the real property was conveyed without an assignment of the 1969 agreement.In September 1989, Santa Fe mailed a letter to Meyer at the address set forth in the agreement, terminating the 1969 agreement and advising that it intended to remove the siding to eliminate any obligation to further maintain it.The post office returned the letter to Santa Fe as undeliverable.

In December 1989, Babe acquired the real property, and shortly thereafter Aero began doing business on it.In March 1990, Santa Fe canceled the 1969 agreement and removed the siding, which had not been used since 1987.In September 1991, Aero asked Santa Fe to reestablish rail service to the property, but Santa Fe refused to do so unless Babe or Aero paid an estimated $25,000 to cover the cost of reinstallation.Babe and Aero refused.

Babe and Aero then sought an administrative hearing to determine whether the Commission should compel Santa Fe to reinstall the siding.At the hearing, Babe and Aero did not claim relief under either the 1969 agreement or A.R.S. section 40-326.³Instead, they argued only that Santa Fe violated A.R.S. section 40-285(A) when it removed the siding without first obtaining the Commission's permission.When given the opportunity to present evidence of their use or nonuse of the siding, the attorney representing Babe and Aero declined, claiming that such evidence was not relevant.

The hearing officer denied relief to Babe and Aero.He adopted the parties' stipulated facts, including the fact that the siding had not been used since 1987.He also noted that the parties refused to present testimony on the use of the siding and declined an offered continuance.The Commission ultimately dismissed Babe and Aero's application, concluding that Santa Fe did not violate A.R.S. section 40-285 when it removed the siding and that Babe and Aero were not entitled to relief under A.R.S. section 40-326.

Babe and Aero appealed the Commission's order to the superior court, requesting that it order Santa Fe to reinstall the siding or remand the complaint to the Commission for further proceedings.They again argued that A.R.S. section 40-285 required Santa Fe to obtain the Commission's prior approval before removing the siding.Judge Gottsfield granted summary judgment to Babe and Aero.He also vacated the Commission's order and remanded the case to the Commission for an "abandonment hearing" in which Santa Fe would have to prove that the siding was not "necessary or useful in the performance of its duties to the public."

II.DISCUSSION

Babe and Aero assert that pursuant to A.R.S. section 40-285, "a public utility [must] request approval from the Commission prior to disposing of any part of its plant or facility."(Emphasis added.)They contend that because the express terms of the statute void any disposition made without authorization of the Commission, the superior court did not err in vacating the Commission's order.

Under A.R.S. section 40-254(E), the burden of proof in the superior court was on Babe and Aero to show clearly and convincingly that the Commission's order was unlawful.In an appeal from the superior court, we review that decision, not that of the Commission.Tonto Creek Estates v. Corporation Comm'n, 177 Ariz. 49, 55, 864 P.2d 1081, 1087(App.1993).But, both the superior court and this court may depart from the Commission's legal conclusions or interpretation of a statute and determine independently whether the Commission erred in its interpretation of the law.SeeSanders v. Novick, 151 Ariz. 606, 608, 729 P.2d 960, 962(App.1986).In a case with undisputed facts, we review the record to ascertain whether the superior court correctly applied the law to the facts.Havasu Heights Ranch v. State Land Dep't, 158 Ariz. 552, 555, 764 P.2d 37, 40(App.1988).

Here, the court found that neither case law nor statute"abrogate[d] the obligation of Santa Fe to proceed with an application for abandonment under Section 40-285."It remanded the case to the Commission "to hold the abandonment hearing required by § 285," and placed the burden of proof on Santa Fe.The court's order was apparently based either on a conclusion that the Commission did not apply A.R.S. section 40-285 or that the hearing it conducted did not meet that statute's requirements.These are issues of law that we independently review.Sanders, 151 Ariz. at 608, 729 P.2d at 962.

We begin by examining the relevant statutes.A.R.S. section 40-285 provides in part:

(A) A public service corporation shall not sell, lease, assign, mortgage or otherwise dispose of or encumber the whole or any part of its railroad, line, plant, or system necessary or useful in the performance of its duties to the public ... without first having secured from the commission an order authorizing it so to do.Every such disposition, encumbrance or merger made other than in accordance with the order of the commission authorizing it is void.

....

(C) Nothing in this section shall prevent the sale, lease or other disposition by any such corporation of property which is not necessary or useful in the performance of its duties to the public, and any sale of its property by such corporation shall be conclusively presumed to have been of property which is not useful or necessary in the performance of its duties to the public as to any purchaser of the property in good faith for value.

The above language clearly indicates that the legislature did not intend to require Commission approval every time a public service corporation disposes of property.⁴These sections only require a public service corporation to obtain permission when it disposes of property that is "necessary or useful in the performance of [its] duties to the public."Subsection C specifically authorizes dispositions if the property is "not necessary or useful in the [corporation's] performance of its duties to the public."To impose a requirement of Commission approval in every case of property disposal would read out of the statute the modifying phrase in subsection C.This we cannot do.In interpreting statutes, we attempt to avoid rendering any of the statutory language superfluous, void, contradictory, or insignificant.SeeState v. Tarango, 185 Ariz. 208, 212, 914 P.2d 1300, 1304(1996);State v. Johnson, 171 Ariz. 39, 42, 827 P.2d 1134, 1137(App.1992).

The legislature enacted A.R.S. section 40-285 to prevent "looting" of a utility's facilities and impairment of service to the public.American Cable Television v. Arizona Pub. Serv., 143 Ariz. 273, 277, 693 P.2d 928, 932(App.1983).The qualifying "necessary or useful" language is to protect public service corporations from the expense of administrative proceedings when disposing of useless or unnecessary property.Subsection C allows them to initially determine whether a given piece of property is necessary or useful.

Here, Santa Fe determined that the siding was not necessary or useful to its operations, and the statute therefore did not require it to secure permission before removing it.SeeA.R.S. § 40-285(A).But, because Babe and Aero were interested parties who alleged that the disposition was of property that was necessary or useful, the Commission retained the power to review Santa Fe's decision.SeeA.R.S. § 40-285(A).

When the superior court remanded this case, it presumably concluded that A.R.S. section 40-285 required Santa Fe...