Comm'rs of the Powell-Clinch Util. Dist. v. Util. Mgmt. Review Bd.

• Decision Date: 13 November 2013
• Docket Number: No. M2012–01806–COA–R3–CV.,M2012–01806–COA–R3–CV.
• Citation: 427 S.W.3d 375
• Parties: The COMMISSIONERS of the POWELL–CLINCH UTILITY DISTRICT v. UTILITY MANAGEMENT REVIEW BOARD.
• Court: Tennessee Court of Appeals

427 S.W.3d 375

The COMMISSIONERS of the POWELL–CLINCH UTILITY DISTRICT

v.UTILITY MANAGEMENT REVIEW BOARD.

No. M2012–01806–COA–R3–CV.

Court of Appeals of Tennessee.

March 26, 2013 Session.

July 31, 2013.

Application for Permission to Appeal Denied by Supreme Court Nov. 13, 2013.

Charles Taylor, Pro Se.

Charles Oldham, Pro Se.

Jerry Shattuck, Pro Se.

Robert E. Cooper, Jr., Attorney General and Reporter, William E. Young, Solicitor General and Ann Louise Vix, Senior Counsel, for the Appellee, Utility Management Review Board.

OPINION

DAVID R. FARMER, J., delivered the opinion of the Court, in which HOLLY M. KIRBY, J., and J. STEVEN STAFFORD, J., joined.

DAVID R. FARMER, J.

Respondent utility district commissioners appeal the trial court's determination that a ground for removal from office added to Tennessee Code Annotated § 7–82–307(b)(2), as amended effective June 2009, may be applied retrospectively to acts occurring prior to the effective date of the amendment to remove them from office. They also appeal the trial court's determination that the additional ground for removal of commissioners, “failing to fulfill the commissioner's or commissioners' fiduciary responsibility in the operation or oversight of the district,” is not unconstitutionally vague. We reverse retrospective application of the additional ground for removal contained in the statute, as amended; hold that the statute is not void for vagueness; and remand.

This dispute requires us to determine whether a 2009 amendment to Tennessee Code Annotated § 7–82–307(b)(2), which adds “failing to fulfill the commissioner's or commissioners' fiduciary responsibility in the operation or oversight of the district” as a ground for the removal of a commissioner from a utility district, may be applied retrospectively to remove utility district commissioners from office for acts allegedly committed prior to the effective date of the amendment. The facts relevant to our disposition of the issues raised on appeal are not disputed.

Charles Taylor (Mr. Taylor), Charles Oldham (Mr. Oldham) and Jerry Shattuck (Mr. Shattuck, collectively, “the Commissioners”) are members of the Powell–Clinch Utility District (“the District”), a gas utility district. On June 15, 2011, the Tennessee Utility Management Review Board (“the UMRB”) initiated a contested case hearing seeking to remove the Commissioners from office pursuant to Tennessee Code Annotated § 7–82–702(13) and § 7–82–307(b). In its petition, the UMRB stated that, pursuant to section 7–82–307(b)(2)(A), the Comptroller of the Treasury (“the Comptroller”) had forwarded the results of an October 2010 investigative audit report concerning the District to the UMRB for review, and that on April 7, 2011, the UMRB unanimously voted to conduct a contested case hearing to remove the Commissioners from office. The UMRB specified multiple findings of the Comptroller in its petition, including the District's failure to reconcile bank accounts and customer accounts receivable on a timely basis; reimbursement to the Commissioners for unnecessary transportation costs; the failure to review or oversee charges and purchases; the failure to adequately supervise the former District manager, resulting in the misappropriation of approximately $100,000 from the District; the failure to supervise employee receivables and purchasing programs; the failureto implement adequate safeguards to prevent abuse of District assets and property; the failure to adequately supervise and review adjustments to customer bills; over-spending for parties and unapproved conferences; payment for spouses and guests to travel to a Costa Rica resort; and retaliation against individuals providing information leading to the Comptroller's audit. The UMRB alleged 28 separate counts of the failure to fulfill fiduciary responsibilities in the operation and oversight of the District as grounds for removal from office pursuant to Tennessee Code Annotated § 7–82–301(b)(2)(B).

Acting pro se, the Commissioners answered in July 2011, denying allegations of wrong-doing. The Commissioners also filed six motions to dismiss the UMRB's petition. In their motions, the Commissioners asserted that the UMRB lacked jurisdiction to remove them from office because the Administrative Procedures Act (“APA”) is not applicable to utility districts, and that an April 2011 UMRB vote rescinded the decision to remove them from office and was final and binding. The Commissioners also asserted that the alleged ground for removal “constitute[d] impermissible disparate treatment [of the Commissioners] from other similarly situated public officials,” and that the terms “fiduciary responsibility” and “fiduciary responsibility in the context of the operation or oversight of a utility district” were not defined by the statute. They further submitted that, under Tennessee Code Annotated § 8–47–101, public officials in Tennessee may be removed from their positions only upon a finding that they knowingly or willfully committed misconduct in office, or knowingly or willfully neglected to perform a required duty. The Commissioners asserted that, prior to June 11, 2009, the effective date of the amendment to section 7–82–307, utility district commissioners likewise could be removed from office only for knowingly or willfully committing misconduct in office, or knowingly or willfully neglecting to fulfill any duty imposed by law. The Commissions moved to dismiss the UMRB's petition on the basis that the UMRB impermissibly sought to apply the June 2009 amendments retroactively to acts that allegedly occurred prior to the effective date of the amendment. They further asserted that, prior to the June 2009 amendment, a contested case proceeding before the UMRB could be brought only upon a request for removal brought by twenty percent of the district customers, and that the 2009 amendment provided that a contested case proceeding also could be commenced based upon an investigative audit report from the Comptroller. The Commissioners asserted that the amendments to the section were substantive where they altered the procedural mechanism for bringing a contested case proceeding and added an additional ground for the removal of commissioners from office. The Commissioners further asserted that the UMRB exceeded its authority where it alleged facts outside the parameters of the Comptroller's investigative report. The Commissioners additionally asserted that two of the UMRB's members were biased and had conflicts of interest.

The UMRB treated the Commissioners' motions as motions for summary judgment where they were supported by documents and affidavits outside the pleadings, and the matter was heard by an administrative law judge (“ALJ”) in September 2011. The ALJ determined that the UMRB is a “state board” and that the APA therefore controlled the matter. It dismissed the Commissioners' motion on that basis. The ALJ also dismissed the Commissioners' motion on the basis of the UMRB's April 2011 actions, determining that the UMRB chose to delay ouster proceedings but did not decide to abandon the matter. The ALJ also determined that, although the 2009 statutory amendments added a new, additional procedural mechanism to oust commissioners from office, the amendment did not affect any substantive legal rights where the removal of an official for misconduct “is certainly not new in Tennessee.” It accordingly dismissed the Commissioners' motion on that basis. The ALJ also dismissed the Commissioners' motion alleging that the UMRB exceeded its authority by identifying grounds for removal that were not included in the Comptroller's audit. The ALJ stated that it was without authority to determine whether Tennessee Code Annotated § 7–82–307(b)(2), as amended, is unconstitutional or was being applied in an unconstitutional manner, but determined that the Commissioners offered no factual support of their constitutional allegations and accordingly denied their motions predicated on constitutional grounds. The ALJ finally determined that the Commissioners had failed to allege any facts in support of their assertion that members of the UMRB were biased or had any direct interest in the matter, and denied their motion on that basis. The ALJ entered its order denying all six of the Commissioners' motions on October 19, 2011, and the Commissioners sought interlocutory appeal and a stay of the matter. The UMRB did not oppose the motion for stay.

The Commissioners filed a petition for interlocutory appeal in the Chancery Court for Davidson County in November 2011. In their petition, the Commissioners asserted that the term “fiduciary responsibility” contained in the June 2009 amendment to section 7–82–307 is unconstitutionally vague where the statute neither defines the term nor explains what it constitutes. The Commissioners also asserted that the amendment adding the failure to fulfill fiduciary responsibility as a ground for removal from office resulted in an impermissible disparate treatment of utility district commissioners where it applies only to those commissioners and not to other public officials. They additionally asserted that the UMRB's attempts to remove them from office on the basis of a failure to fulfill fiduciary responsibility resulted in a prohibitive retroactive application of the 2009 amendments where the UMRB sought removal based on acts which allegedly occurred prior to the effective date of the amendment. The Commissioners finally asserted that the UMRB exceeded its statutory authority and rules set forth by the UMRB itself by considering acts not contained in the Comptroller's investigative report.

The UMRB replied in February 2012 and the matter was heard by the trial court in April 2012. Finding no rule or statute governing review of an ALJ's ruling on a motion for summary judgment, the trial court reviewed the matter in accordance with the Tennessee Rules of Civil Procedure governing summary...