Evans v. Empire Dist. Electric Co.

• Citation: 346 S.W.3d 313
• Decision Date: 31 May 2011
• Docket Number: No. WD 73376.,WD 73376.
• Parties: James EVANS, et al., Appellants,v.EMPIRE DISTRICT ELECTRIC COMPANY, et al., Respondents.
• Court: Court of Appeal of Missouri (US)

346 S.W.3d 313

James EVANS, et al., Appellants,

v.EMPIRE DISTRICT ELECTRIC COMPANY, et al., Respondents.

No. WD 73376.

Missouri Court of Appeals, Western District.

May 31, 2011.Motion for Rehearing and/or Transfer to

Supreme Court Denied July 5, 2011.

Application for Transfer

Denied Aug. 30, 2011.

Henry B. Robertson, St. Louis, MO, for appellants.Diana C. Carter, Jefferson City, MO for respondent Empire District Electric Company.James R. Layton, Jefferson City, MO, for respondent Missouri Public Service Commission.Before Division One: GARY D. WITT, Presiding Judge, JAMES E. WELSH, Judge and ALOK AHUJA, Judge.GARY D. WITT, Judge.

James Evans, Kelly Cardin, and Power Source Solar appeal the trial court's Final Judgment of Dismissal of their claims against Empire District Electric Company and the Missouri Public Service Commission. We affirm.

Factual Background

James Evans, Kelly Cardin, and Power Source Solar (“Appellants”) filed suit against Empire District Electric Company (“Empire”) and the Missouri Public Service Commission (“PSC”) seeking a declaratory judgment that section 393.1050 ¹ (the Renewable Energy Standard) is invalid. To understand that statute and the Appellants' claim below, we must first provide a cursory explanation of adoption and the subsequent statutory scheme for the Renewable Energy Standard. At the General Election on November 4, 2008, Missouri voters approved an initiative petition designated Proposition C, (“Proposition C”) which established by statute a “Renewable Energy Standard” for utility companies operating in Missouri. The statutory scheme mandates certain levels of energy production from renewable resources and provides incentives for compliance and penalties for noncompliance for utility companies operating in Missouri. See sections 393.1020– 393.1035. Section 393.1050, the statute being challenged, was not contained in Proposition C, and is an exemption from certain aspects of the statutory scheme (established by Proposition C) for utility companies that meet certain renewable energy standards. Section 393.1050 was passed by the Missouri General Assembly on May 16, 2008, and was signed by the Governor and became effective on August 28, 2008, three months prior to the adoption of Proposition C by Missouri voters.

Appellants sought the same relief—a declaratory judgment that section 393.1050 is invalid—on three theories. First, they argued the General Assembly lacked authority to amend Missouri's Renewable Energy Standard by enacting section 393.1050 before Proposition C, which established Missouri's Renewable Energy Standard, had been passed by Missouri voters. Second, they argued section 393.1050 was in irreconcilable conflict with Proposition C, and, as Proposition C was the later-enacted law, section 393.1050 was repealed by implication. Third, they argued that section 393.1050 only applied to Empire and no other electrical company and there was no rational basis for exempting Empire but no other electrical corporation from the requirements of Missouri's Renewable Energy Standard and, therefore, section 393.1050 was an unconstitutional special law.

Both Empire and PSC filed motions to dismiss. The trial court agreed with Empire that Appellants were first required to address their complaints concerning the statute before the PSC which has “primary jurisdiction” over Empire and the application of section 393.1050.

Standard of Review

“The standard of review for a trial court's grant of a motion to dismiss is de novo.” Lynch v. Lynch, 260 S.W.3d 834, 836 (Mo. banc 2008). “When this Court reviews the dismissal of a petition for failure to state a claim, the facts contained in the petition are treated as true and they are construed liberally in favor of the plaintiffs.” Id.Adams v. One Park Place Investors, LLC, 315 S.W.3d 742, 753 (Mo.App. W.D.2010).

Analysis²

The trial court granted Empire and the PSC's motions to dismiss because it found that the PSC had “primary jurisdiction” over the case. This court has described the doctrine of “primary jurisdiction” in this way:

Under the doctrine of primary jurisdiction, a court will not decide a controversy involving a question within the jurisdiction of an administrative tribunal until after the tribunal has rendered its decision “(1) where administrative knowledge and expertise are demanded; (2) to determine technical, intricate fact questions; [and] (3) where uniformity is important to the regulatory scheme.” Killian v. J & J Installers, Inc., 802 S.W.2d 158, 160 (Mo. banc 1991). The doctrine of exhaustion of remedies is a jurisdictional requirement that all remedies be exhausted at the administrative level before applying to the courts for relief. Pettigrew v. Hayes, 196 S.W.3d 53, 56 (Mo.App. W.D.2005) (citing Green v. City of St. Louis, 870 S.W.2d 794, 796 (Mo. banc 1994)). “If all administrative remedies have not been exhausted, the circuit court lacks subject matter jurisdiction to judicially review the administrative decision.”

Oanh Thile Huynh v. King, 269 S.W.3d 540, 543–44 (Mo.App. W.D.2008). However, in light of the Missouri Supreme Court's holdings in J.C.W. ex rel. Webb v. Wyciskalla, 275 S.W.3d 249 (Mo. banc 2009) and McCracken v. Wal–Mart Stores East, LP, 298 S.W.3d 473 (Mo. banc 2009), a re-examination of the concept of “primary jurisdiction” is in order.

In Webb the Missouri Supreme Court made clear that there are only two types of jurisdiction: personal and subject matter. Webb, 275 S.W.3d at 252. “[T]he subject matter jurisdiction of Missouri's courts is governed directly by the state's constitution. Article V, section 14 sets forth the subject matter jurisdiction of Missouri's circuit courts in plenary terms, providing that ‘[t]he circuit courts shall have original jurisdiction over all cases and matters, civil and criminal.’ ” Id. at 253. Insofar as prior cases have held that the failure to exhaust administrative remedies is a question of subject matter jurisdiction, those cases have been overruled by the Supreme Court. “When a statute speaks in jurisdictional terms or can be read in such terms, it is proper to read it as merely setting statutory limits on remedies or elements of claims for relief that courts may grant.” Id. at 255. Therefore, the concept of “primary jurisdiction” is really a question of whether the trial court has a statutory right to proceed. See Coleman v. Missouri Sec'y of State, 313 S.W.3d 148, 154 (Mo.App. W.D.2010).

The distinction between whether the circuit court has subject matter jurisdiction or the statutory authority to proceed is more than a semantic one. McCracken, 298 S.W.3d at 477. Subject matter jurisdiction cannot be waived and can be addressed for the first time during trial or on appeal. Id. (citing Gunn v. Dir. of Revenue, 876 S.W.2d 42, 43 (Mo.App. E.D.1994)). Other non-jurisdictional defenses are matters of trial error and are waived if not raised in a responsive pleading or otherwise under Missouri law. See id. at 476 (“[I]f a matter is not jurisdictional but rather is a procedural matter required by statute or rule or an affirmative defense of the sort listed in Rule 55.08, then it generally may be waived if not raised timely.”) (Emphasis added).³ This issue was timely raised in the case before us and there is no argument that this issue has been waived.

The PSC has been given the authority, per statute, over regulated entities in the first instance. Accordingly, the issue of whether the circuit court has the statutory authority to proceed before the matter is brought before the PSC “should be raised as an affirmative defense to the circuit court's statutory authority to proceed with resolving his claim.” Treaster v. Betts, 324 S.W.3d 487, 490 (Mo.App. W.D.2010) (quoting McCracken, 298 S.W.3d at 476–77). Affirmative defenses “must be pleaded and proved as provided in Rules 55.08 and 55.27. It is not a defense that may be raised in a motion to dismiss.” Id. (quoting McCracken, 298 S.W.3d at 479). “A pre-trial dismissal based on an affirmative defense must be granted under the standards of summary judgment.” Id. (citing Fortenberry v. Buck, 307 S.W.3d 676, 679 (Mo.App. W.D.2010)). An exception exists, however, whereby a defendant may properly file a motion to dismiss for failure to state a claim under Rule 55.27(a)(6) ⁴ when it appears from the face of the petition that an affirmative defense is applicable. Fortenberry, 307 S.W.3d at 679 n. 2. This is the case at bar. The trial court granted Empire's motion to dismiss based on the affirmative defense that the PSC had “primary jurisdiction” over Empire and the application thereto of section 393.1050.

In Point One, the Appellants argue that the trial court erred in granting Empire's motion to dismiss their Petition ⁵ because Appellants have no adequate remedy to exhaust before the PSC in that agency remedies need not be exhausted where the validity of a statute is in issue, and a complaint before the PSC would not be an adequate remedy since the PSC has no jurisdiction to declare a statute invalid, as it would have to do before compelling Empire to file a solar rebate tariff.

Generally, a litigant must exhaust his available administrative remedies before a court will assume jurisdiction (now authority over an action). Premium Standard Farms, Inc. v. Lincoln Tp. of Putnam Cnty., 946 S.W.2d 234, 237 (Mo. banc 1997). “Our Supreme Court has determined that the regulation and fixing of rates or charges for public utilities, and the classification of the users or consumers to whom the rates are chargeable is the function of the [PSC].” Inter–City Beverage Co., Inc. v. Kansas City Power & Light Co., 889 S.W.2d 875, 877 (Mo.App. W.D.1994) (citing State ex rel. Kansas City Power & Light Co. v. Buzard, 350 Mo. 763, 168 S.W.2d 1044, 1046 (Mo. banc 1943)).

Chapters 386 and 393 [...] set forth the scheme by which the [PSC] is granted the exclusive jurisdiction to determine, in the first instance, the interpretation...