City Of Newberry v. Newberry Electric Coop. Inc

• Decision Date: 05 April 2010
• Docket Number: No. 26795.,26795.
• Citation: 387 S.C. 254,692 S.E.2d 510
• Court: South Carolina Supreme Court
• Parties: CITY OF NEWBERRY, Petitioner,v.NEWBERRY ELECTRIC COOPERATIVE, INC., and Wal-Mart Stores East, L.P., and Wal-Mart Real Estate Business Trust, Respondents.

387 S.C. 254

692 S.E.2d 510

CITY OF NEWBERRY, Petitioner,v.NEWBERRY ELECTRIC COOPERATIVE, INC., and Wal-Mart Stores East, L.P., and Wal-Mart Real Estate Business Trust, Respondents.

No. 26795.

Supreme Court of South Carolina.

Heard Nov. 3, 2009.

Decided April 5, 2010.

Rehearing Denied May 14, 2010.

Robert T. Bockman, of McNair Law Firm, of Columbia, for Petitioner.

Frank R. Ellerbe, III and Bonnie D. Shealy, both of Robinson, McFadden & Moore, of Columbia; Thomas H. Pope, III and Kyle B. Parker, both of Pope and Hudgens, of Newberry, for Respondents.

James M. Brailsford, III, of Edisto Island, for Amicus Curiae Municipal Association of South Carolina and the South Carolina Association of Municipal Power Systems.

Chief Justice TOAL.

In this case, we granted a writ of certiorari to review the court of appeals' decision holding that the Newberry Electric Cooperative, Inc. (Cooperative) could provide electric service to an area annexed by the City of Newberry (City). We reverse and remand.

Facts/Procedural Background

This case concerns which electric provider, the City or the Cooperative, has the legal right to provide service to approximately 26 acres of land. When Wal-Mart began negotiations to construct a store on this site, the area was assigned to the Cooperative by the Public Service Commission (PSC), but the Cooperative was not providing services to any premises in the area. Wal-Mart wished for its property to be annexed into the City, but, nonetheless, wanted to obtain its electric services from the Cooperative.

In May 1999, the Cooperative initiated a suit in the PSC to enjoin the City from annexing the site and providing electric services. On June 21, 1999, the Cooperative and Wal-Mart entered into agreements for Wal-Mart to purchase its service from the Cooperative. The following day, the Cooperative voluntarily dismissed its case with the PSC as moot because of the service contracts; the City agreed to the dismissal. On July 27, 1999, the City annexed the property.

In January 2000, the Cooperative began supplying electric services for the construction site. In June 2000, the Cooperative began supplying electric services to the completed Wal-Mart store. The City did not object to this provision of services until January 2003. On June 2, 2003, the City filed the summons and complaint that initiated this action, seeking declaratory relief, an injunction, and damages.

The circuit court made several findings: (1) the statute of limitations barred the City's claim, (2) the City consented to the Cooperative's service, and (3) several equitable principles also proscribed the City's requested remedies. The court of appeals affirmed, holding that the Cooperative had the right to continue serving the property because it had a contract with Wal-Mart to provide electricity and the City's suit was barred by the statute of limitations. City of Newberry v. Newberry Elec. Coop., Inc., Op. No.2008-UP-200 (S.C. Ct.App. filed Mar. 24, 2008).

Standard of Review

Statutory interpretation is a question of law. Bryant v. State, 384 S.C. 525, 683 S.E.2d 280, 282 (2009). The cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature. Id. (citing Mid-State Auto Auction of Lexington, Inc. v. Altman, 324 S.C. 65, 69, 476 S.E.2d 690, 692 (1996)).

Analysis

I. Right to Provide Electric Service

A. Section 33-49-250

The City argues that once it annexed the property, it had the sole right to provide electric service to the property, and any service provided by the Cooperative was unlawful. We agree.

The Cooperative is purely a creature of statute, and so has only such authority as the legislature has granted it under the Electric Cooperative Act, S.C.Code Ann. §§ 33-49-10 et. seq. (2006 & Supp. 2008). See S.C. Elec. & Gas Co. v. Pub. Serv. Comm'n, 275 S.C. 487, 489, 272 S.E.2d 793, 794 (1980) (stating that “regulatory bodies are possessed of only those powers which are specifically delineated”).

The Electric Cooperative Act provides that an electric cooperative has the authority to provide electricity only in rural areas. S.C.Code Ann. § 33-49-250. Section 33-49-250 provides two exceptions: the “annexation exception” and the “principal supplier” exception. The annexation exception states that if a cooperative is providing electricity to premises in an area that is later annexed by a municipality, that cooperative may “continue serving all premises then being served.” S.C.Code Ann. § 33-49-250(1). The principal supplier exception states that if a cooperative is serving a city or town of less than 2,500 persons, it will continue to have the right to serve that area even if the population later exceeds 2,500 persons. Id.

Neither of these exceptions applies here. Although the area had been assigned to the Cooperative, the Cooperative was not providing electric service to any premises in that area prior to the annexation.¹ Thus, the Cooperative does not have the right under the statutes to serve the Wal-Mart premises.

B. Contract for Services

The Cooperative contends, and the court of appeals held, that its service contract with Wal-Mart entitles it to continue providing service after annexation. We disagree.

In City of Camden v. Fairfield Electric Cooperative, Inc., this Court held that a cooperative did not have the right to serve the premises post-annexation when the cooperative was not providing service to any premises pre-annexation. 372 S.C. 543, 643 S.E.2d 687 (2007). In City of Camden, Lowe's was planning to build a store in an unassigned area and had chosen Fairfield Electric Cooperative (Fairfield) as its supplier. However, the City of Camden annexed the property, and at the time of annexation, Fairfield was furnishing electric service only to a security light on the unimproved lot. This Court held that the statutes require a cooperative to be serving electricity to a “premises” prior to annexation, and that a security light is not a “premises” as defined in S.C.Code Ann. § 58-27-610(2).² This Court determined that a security light was not a structure within the contemplation of the annexation exception of section 33-49-250. Because Fairfield could not satisfy one of the statutory exceptions, this Court held that it had no legal right to serve the annexed property.

Here, the court of appeals determined that City of Camden is not controlling because: (1) the property was unassigned in that case, whereas the property in the instant case was assigned, and (2) Lowe's had merely selected Fairfield for its future service, but in this case Wal-Mart and the Cooperative entered into a contract for services.

The court of appeals incorrectly distinguished City of Camden, which is controlling here. First, the fact of assignment is irrelevant to the present analysis. Clearly, pre-annexation the Cooperative had the legal right to serve the area. However, after annexation the Cooperative could only provide service if it met one of the two explicit exceptions in section 33-49-250, which it did not.

Second, contrary to the court of appeals' conclusion, a contract to provide services to a building that will exist sometime in the future does not function as “existing service” under the statutes to trigger the annexation exception. Section 33-49-250 clearly requires existing electrical service to existing premises at the time of annexation. The plain language of the statute simply does not allow the result reached by the court of appeals.

Notwithstanding the clear language of the section 33-49-250, the court of appeals determined section 58-27-670(1) ³ “precludes the City from interfering with an existing contract for services.” This analysis is incorrect. In City of Camden, this Court was concerned that allowing Fairfield to provide service to the annexed area would “allow cooperative providers to effectively circumvent the statutory scheme set up by the Legislature simply by placing security lights in any areas in which it has distribution lines.” 372 S.C. at 549, 643 S.E.2d at 690. If we followed the court of appeals' analysis, we would be allowing cooperatives to simply contract around a municipality's post-annexation rights as established by the Legislature, a situation very similar to the one we aimed to avoid in City of Camden. Thus, we reiterate our central holding in City of Camden that a cooperative must be providing existing electrical services to an existing premises prior to annexation to continue serving that premises after annexation. Otherwise, the cooperative does not satisfy the annexation exception.

In this case, the Cooperative only had a contract for services and was not actually providing electricity to the completed premises at the time of annexation. Therefore, we hold the City has the legal right to serve the annexed area because the Cooperative was not providing service to existing premises at the time of annexation.

II. Statute of Limitations

The court of appeals held the three year statute of limitations found in S.C.Code Ann. § 15-3-530 applies to this action, and the statute began running when the City annexed the property. To the extent a statute of limitations applies here, we find it did not begin running until the Cooperative began providing service to the completed store.

To hold otherwise, as the dissent urges, would mark a departure from our current jurisprudence. We have repeatedly held that a statute of limitations begins to run when the party either knew or should have known that some legal right had been invaded. See Epstein v. Brown, 363 S.C. 372, 376, 610 S.E.2d 816, 818 (2005) (stating a statute of limitations begins to run when a party through the exercise of reasonable diligence would be put on notice that a legal right had been invaded); Dean v. Ruscon Corp., 321 S.C. 360, 363, 468 S.E.2d 645, 647 (1996) (“The statute runs from the date the injured party either knows or should have known by the exercise of reasonable diligence that a cause of action...