Coates v. City of Tacoma
| Decision Date | 10 December 2019 |
| Docket Number | No. 51695-1-II,51695-1-II |
| Court | Washington Court of Appeals |
| Parties | Edward E. (Ted) COATES; Michael Crowley; Mark Bubenik and Margaret Bubenik d/b/a Steele Manor Apartments; Thomas H. Oldfield; and Industrial Customers of Northwest Utilities, an Oregon nonprofit corporation, Respondents, v. CITY OF TACOMA, Petitioner. |
Elizabeth Thomas, Mark Stephen Filipini, Kari Lee Vander Stoep, K&L Gates LLP, 925 4th Ave., Ste. 2900, Seattle, WA, 98104-1158, Kenneth Wendell Masters, Masters Law Group PLLC, 241 Madison Ave. N, Bainbridge Island, WA, 98110-1811, Daniel-Charles Van D Wolf, K&L Gates LLP, 70 W Madison St., Ste. 3300, Chicago, IL, 60602-4243, for Petitioner.
David Florian Jurca, Andrew James Kinstler, Emma Kazaryan, Helsell Fetterman LLP, 1001 4th Ave., Ste. 4200, Seattle, WA, 98154-1154, for Respondents.
Melnick, P.J. — ¶ 1 In 1996, a City of Tacoma ordinance granted Tacoma Power the authority to build a telecommunications system. Under the ordinance, Tacoma Power would utilize a portion of this system to operate a TV and internet business, later named the Click! Network (Click!). The ordinance also established that the telecommunications system would be organized financially as a sub-unit of Tacoma Power and thus would share expenses and revenue with Tacoma Power’s electric utility.1
¶ 2 Before implementing the system, the City of Tacoma filed a declaratory judgment action to determine the lawfulness of the ordinance. The taxpayers of the City of Tacoma and ratepayers of Tacoma Power opposed it. After two summary judgment rulings, the superior court entered a declaratory judgment that the ordinance was lawful. The taxpayers and ratepayers never appealed.
¶ 3 In 2017, Plaintiffs Ted Coates, Michael Crowley, Mark and Margaret Bubenik, Thomas Oldfield, and Industrial Customers of Northwest Utilities (collectively, the Ratepayers) sued the City alleging that, due to Tacoma Power’s financial structure as it related to Click!, the funds from Tacoma Power’s electric utility were unlawfully funding and subsidizing Click!. The superior court agreed and granted summary judgment in the Ratepayers’ favor.
¶ 4 We reverse.
FACTS2
¶ 5 The City of Tacoma owns Tacoma Public Utilities (TPU). TPU is governed by the Public Utility Board and consists of Tacoma Power, Tacoma Water, and Tacoma Rail. Click! is one of six sub-units that comprise Tacoma Power. The other five sub-units consist of more traditional electric-distribution functions like generation, power management, and technology services. Tacoma Power’s expenses and revenues are accounted for in the City’s Power Fund. Financially, Click! is intended to operate independently, and as a result, Click! maintains a sub-fund within the Power Fund. This fund collects Click!’s revenues and pays its expenses. In recent years, however, Click! has not been independently profitable, and the Power Fund has been used to offset Click!’s net losses.
¶ 6 In the mid-1990s, the electric-distribution market underwent changes because of, among other factors, technological developments and changing consumer-demand market forces. Tacoma Power established a team to explore how it could respond to these changes. It decided "the best option was to construct a hybrid fiber coaxial telecommunications system." Clerk’s Papers (CP) at 926.
¶ 7 The fiber part of the telecommunications system would improve Tacoma Power’s generation, distribution, and transmission efficiencies, and the coaxial part of the system would support smart-metering functionality. The smart-metering functionality would allow Tacoma Power to monitor data in real time, which would make billing, connection and disconnection, and pay-as-you-go electricity consumption programs run more efficiently.
¶ 8 The primary reason for building the telecommunications system "was to provide a platform for more efficient use and control of Tacoma Power’s generation, transmission, and distribution assets and to allow for the installation of smart meters." CP at 971 n.1. However, these features did not consume the entire load of the system. Tacoma Power realized that it could maximize revenue from the system by utilizing the remaining load and decided to do so by selling cable TV and internet service. Thus, the idea for Click! arose.
¶ 9 In 1996, the City passed an ordinance that created "a separate [telecommunications] system as part of the Electric System." CP at 122. It established infrastructure improvements and discussed the functions served by the new system. The first nine functions all related to traditional electric utility functions. The final three functions provided TV service, internet service, and the transport of other signals including video on demand and high-speed data. The ordinance contemplated that the infrastructure improvements would serve all of the functions listed.
¶ 10 Regarding financial arrangements, the ordinance provided that the TV and internet business would be organized as a sub-unit of Tacoma Power and would share revenue with Tacoma Power. Additionally, to provide part of the funds necessary to finance the project, the City proposed issuing $1 million in bonds.
¶ 11 In 1996, before implementing the telecommunications system, the City filed a declaratory judgment action in superior court seeking to establish the legality of the ordinance. The taxpayers of the City and ratepayers of Tacoma Power opposed it.
¶ 12 After two summary judgment motions, the court declared that the City had the authority to provide cable TV service, "lease telecommunications facilities and capacity to telecommunications providers," and issue bonds to help finance those operations. CP at 789.
¶ 13 As a result of the court’s rulings, the City implemented the telecommunications system. The portion of the system used to sell TV and internet service was later called Click!.
¶ 14 At its inception, the telecommunications system allowed for efficient and remote operation of Tacoma Power’s infrastructure. Subsequently, technological changes in the electric-distribution industry impacted how beneficial the system was to Tacoma Power’s electric utility. As an example, although Tacoma Power initially intended the system to be used for smart metering, the industry switched to primarily using wireless meters. Tacoma Power itself stopped installing wired meters in 2009 and stopped replacing existing wired meters in 2015.
¶ 15 However, more recent data shows that the telecommunications system still serves a portion of its anticipated electric-distribution functions. Tacoma Power continues to use it to gather certain information and to control certain operations of electric generation, distribution, and transmission. It also still connects the remaining 14,240 wired smart meters.
¶ 16 The telecommunications system also continues to be utilized for Click!-related purposes. Click! utilizes the excess capacity on the system as a TV retailer and as an internet service wholesaler.
¶ 17 In 2017, the Ratepayers filed a lawsuit for declaratory relief against Tacoma Power alleging that it was unlawfully subsidizing Click!. The Ratepayers alleged that Tacoma Power’s financial structure violated the local government accounting statute, RCW 43.09.210, and Tacoma City Charter art. IV, § 4.5.3
¶ 18 The Ratepayers moved for partial summary judgment. The City opposed the motion and also cross-moved for summary judgment.
¶ 19 After hearing argument, the trial court granted the Ratepayers’ motion. The City sought discretionary review, which we granted.
ANALYSIS
¶ 20 We review an order for summary judgment de novo, performing the same inquiry as the trial court. Aba Sheikh v. Choe , 156 Wash.2d 441, 447, 128 P.3d 574 (2006). "We consider all facts submitted and all reasonable inferences from the facts in the light most favorable to the nonmoving party." Rublee v. Carrier Corp. , 192 Wash.2d 190, 199, 428 P.3d 1207 (2018). "Summary judgment is proper when the record demonstrates there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Munich v. Skagit Emergency Commc’ns Ctr. , 175 Wash.2d 871, 877, 288 P.3d 328 (2012).
¶ 21 We review questions of statutory interpretation de novo. Flight Options, LLC v. Dep’t of Revenue , 172 Wash.2d 487, 495, 259 P.3d 234 (2011). In interpreting statutes, "[t]he goal ... is to ascertain and carry out the legislature’s intent." Jametsky v. Olsen , 179 Wash.2d 756, 762, 317 P.3d 1003 (2014). We give effect to the plain meaning of the statute as "derived from the context of the entire act as well as any ‘related statutes which disclose legislative intent about the provision in question.’ " Jametsky , 179 Wash.2d at 762, 317 P.3d 1003 (quoting Dep’t of Ecology v. Campbell & Gwinn, LLC , 146 Wash.2d 1, 11, 43 P.3d 4 (2002) ).
¶ 22 If a statute’s meaning "is plain on its face, then we must give effect to that meaning as an expression of legislative intent." Blomstrom v. Tripp , 189 Wash.2d 379, 390, 402 P.3d 831 (2017). However, if "after this inquiry, the statute remains ambiguous or unclear, it is appropriate to resort to canons of construction and legislative history." Blomstrom , 189 Wash.2d at 390, 402 P.3d 831. "A statute is ambiguous if ‘susceptible to two or more reasonable interpretations,’ but ‘a statute is not ambiguous merely because different interpretations are conceivable.’ " HomeStreet, Inc. v. Dep’t of Revenue , 166 Wash.2d 444, 452, 210 P.3d 297 (2009) (quoting State v. Hahn , 83 Wash. App. 825, 831, 924 P.2d 392 (1996) ). "Whenever possible, statutes are to be construed so ‘no clause, sentence or word shall be superfluous, void, or insignificant.’ " HomeStreet, Inc. , 166 Wash.2d at 452, 210 P.3d 297 (internal quotation marks...
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