Beaver v. Qwest, Inc.

• Decision Date: 07 September 2001
• Docket Number: No. 20000140, No. 990268., No. 990771
• Citation: 2001 UT 81,31 P.3d 1147
• Parties: BEAVER, Box Elder, Cache, Carbon, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, Salt Lake, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber Counties, on behalf of themselves and all other persons or entities similarly situated, Plaintiffs and Appellants, v. QWEST, INC., Defendants and Appellees. Beaver, Box Elder, Cache, Carbon, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, Salt Lake, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber Counties, on behalf of themselves and all other persons or entities similarly situated, Petitioners, v. Utah Public Service Commission ex rel. Qwest, Inc., Respondent.
• Court: Utah Supreme Court

31 P.3d 1147

2001 UT 81

BEAVER, Box Elder, Cache, Carbon, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, Salt Lake, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber Counties, on behalf of themselves and all other persons or entities similarly situated, Plaintiffs and Appellants, v. QWEST, INC., Defendants and Appellees.

Beaver, Box Elder, Cache, Carbon, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, Salt Lake, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber Counties, on behalf of themselves and all other persons or entities similarly situated, Petitioners, v. Utah Public Service Commission ex rel. Qwest, Inc., Respondent.

Nos. 990771, 20000140, 990268.

Supreme Court of Utah.

September 7, 2001.

Bill Thomas Peters, David W. Scofield, Salt Lake City, for the Counties.

George M. Haley, Robert L. Stolebarger, Jessica L. Dillon, Christine T. Greenwood, Gregory B. Monson, David L. Mortensen, Salt Lake City, for Qwest Public Service Commission, amicus curiae.

Michael L. Ginsberg, Sandy J. Mooy, Salt Lake City, for the Public Service Commission.

HOWE, Chief Justice:

¶ 1 We have consolidated an appeal by Beaver County and twenty-four other counties of this state (the Counties) from a district court judgment with the Counties' petition for review of a Utah Public Service Commission (PSC) decision. At issue in both cases is the proper disposition of an award of $16.9 million made to U.S. West Communications, Inc. (now Qwest, Inc.), by the Utah State Tax Commission for an overpayment of property taxes made by Qwest to the Counties. The district court held that jurisdiction over the issue lies solely in the PSC and dismissed the complaint, Court costs were also awarded to Qwest and are challenged on appeal. In the review, the Counties assail the refusal of the PSC to issue a declaratory order that Qwest should refund the amount of the award to its ratepayers.

BACKGROUND

¶ 2 Qwest filed appeals to the Tax Commission from the Counties' assessment of its property for each of the years 1986 through 1998. The Counties either intervened or otherwise maintained that their economic interests would be affected by any resolution of these proceedings. Qwest, the Tax Commission, and the Counties reached a stipulation settling upon an adjusted assessed value for each disputed year. The stipulation required the Counties to refund $16.9 million to Qwest.

¶ 3 The Counties repostured and simultaneously asserted before the district court and the PSC that Qwest had already recouped the amount of taxes it had paid on overvalued property through rates charged to its customers. The Counties contended that allowing Qwest to keep the refund would therefore amount to double recovery. The Counties sought to obtain the refund for themselves and the members of the class of similarly situated ratepayers. The Counties were granted an ex parte order to have the $16.9 million deposited with the district court rather than delivering it to Qwest as ordered by the Tax Commission.

¶ 4 Qwest moved in the district court to dismiss the Counties' complaint for lack of subject matter jurisdiction, asserting the case should be before the PSC because the decision would require an assessment of rates. Following a hearing on the motion, the district court entered an order dismissing the complaint with prejudice for lack of subject matter jurisdiction pursuant to rule 12(b)(1) of the Utah Rules of Civil Procedure. The district court reasoned that dismissal was appropriate for three reasons: (1) the remedies sought by the Counties required rate making or an adjustment of rates, both of which are within the exclusive jurisdiction of the PSC; (2) rate making and rate adjustments are legislative functions delegated exclusively to the PSC and the court's exercise of the rate making function would violate the constitutional principle of separation of powers; and (3) the Counties have a clear and adequate remedy at law in the form of administrative proceedings before the PSC, which precludes them from invoking the equity jurisdiction of the courts for purposes of imposing a constructive trust. The district court granted Qwest's request for the costs incurred for the preparation of certain exhibits used at the hearing on the motion to dismiss.

¶ 5 The PSC did not respond to the Counties' request for a declaratory ruling, and as a result, it was deemed denied after sixty days of the filing of the request. See Utah Code Ann. § 63-46b-21(7) (1997). Rather than petitioning the PSC for a review or rehearing of its request under section 54-7-15, the Counties filed a petition for writ of review in this court.

¶ 6 We granted the Counties' motion to consolidate the appeal of the district court's dismissal with the Counties' petition for writ of review from the PSC's "deemed denial" of the request for a declaratory ruling. We subsequently consolidated the appeal of the district court's award of costs to Qwest with those cases.

¶ 7 The Counties present five issues for review: (1) whether the district court erred in holding that the PSC had exclusive subject matter jurisdiction over this matter; (2) whether the court erred in dismissing the matter with prejudice; (3) whether the court erred in determining the $16.9 million surety bond should be released to Qwest; (4) whether the court erred in granting Qwest's claim for costs, and (5) whether the Commission erred in not granting the Counties' petition for declaratory action.

STANDARD OF REVIEW

¶ 8 The determination of whether a court has subject matter jurisdiction is a question of law, which we review for correctness, according no deference to the district court's determination. Schwenke v. Smith, 942 P.2d 335, 336 (Utah 1997).

ANALYSIS

I. DISTRICT COURT JURISDICTION

¶ 9 First, we address whether the district court had subject matter jurisdiction to determine whether the property tax refund to Qwest should be returned to the ratepayers. The Counties contend that since rates set by the PSC are based partially on amounts Qwest incurs for property taxes, any refund should be returned to the ratepayers; otherwise, Qwest receives double recovery. Qwest contends, and the district court agreed, that the PSC is the exclusive forum for resolution of this dispute. The district court reasoned that because Qwest is a public utility subject to comprehensive rate regulation by the PSC, any resolution of the Counties' claim would require inquiry into Qwest's rate structure and other regulatory matters. The district court also reasoned that it was unfit and without jurisdiction and authority to properly adjudicate the issue.

¶ 10 As long ago as 1944, we stated that the PSC's general jurisdiction is "broad and sweeping in scope." Utah Power & Light Co. v. Pub. Serv. Comm'n, 107 Utah 155, 183, 152 P.2d 542, 555 (1944) (citing and interpreting precursors to current section 54-4-4 of the Utah Code). We have also held that courts are prohibited from exercising the powers properly belonging to the PSC, which is an arm of the legislative branch of government. See Mulcahy v. Pub. Serv. Comm'n, 101 Utah 245, 117 P.2d 298 (1941) (citing art. V, § 1 of the Utah Constitution in relation to limited judicial power to review PSC determination). ¶ 11 The legislative branch possesses the police authority to regulate public utilities and the power to fix public utility rates in order to secure for the public just, uniform, and nondiscriminatory rates. See Utah Copper Co. v. Pub. Util. Comm'n, 59 Utah 191, 201, 203 P. 627, 631 (1921). This authority is delegated to the PSC by statute:

The commission is hereby vested with power and jurisdiction to supervise and regulate every public utility in this state, and to supervise all of the business of every such public utility in this state, and to do all things, whether herein specifically designated or in addition thereto, which are necessary or convenient in the exercise of such power and jurisdiction. . . .

Utah Code Ann. § 54-4-1 (2000). In addition to the broad powers, the legislature specifically outlined rate making as a delegated function exclusive to the Commission:

The commission shall have power to investigate a single rate, fare, toll, rental, charge, classification, rule, regulation, contract or practices, or any number thereof,. . . of any public utility, and to establish, after hearing, new rates, fares, tolls, rentals, charges, classifications, rules, regulations, contracts or practices, or schedule or schedules in lieu thereof.

Utah Code Ann. § 54-4-4(2) (2000); see also § 54-4-2 (granting PSC authority to investigate prices, charges, fares, tolls and rentals of any public utility); § 54-4-4(1) (outlining PSC's power to determine just, reasonable or sufficient rates for public utilities); § 54-7-12 (mandating procedure for PSC to increase or decrease rates); § 54-8b-11 (instructing PSC to ensure provision of telecommunications services at just and reasonable rates).

¶ 12 We have consistently adhered to the legislature's intent in delegating adjudication of the rate making function to the PSC. See Mountain States Tel. & Tel. v. Pub. Serv. Comm'n, 107 Utah 502, 512-14, 155 P.2d 184, 189 (1945) (Wolfe, J., concurring) (stating that given court's limited authority to review rate orders of PSC, scope of review is confined to determination of proper exercise of PSC's powers); U.S. Smelting & Ref. & Milling Co. v. Utah Power & Light Co., 58 Utah 168, 186, 197 P. 902, 909 (1921) (recognizing that the PSC may regulate utility rates); Utah Copper, 59 Utah at 209, 203 P. at 635 (declining to express opinion on whether utility rates appropriate because such issues should be determined by PSC alone); Salt Lake City v. Utah Light & Traction Co., 52 Utah 210, 227, 173 P. 556, 563 (Utah 1918) ("The Legislature has ... not seen fit to clothe ...