In re Waitsfield-Fayston Telephone Co.

• Decision Date: 29 June 2007
• Docket Number: No. 2005-498.,2005-498.
• Citation: 928 A.2d 1219,2007 VT 55
• Parties: In re PETITION OF WAITSFIELD-FAYSTON TELEPHONE COMPANY, INC., d/b/a Waitsfield Telecom, d/b/a Waitsfield Cable and d/b/a Champlain Valley Telecom, to Establish a Rate for Rental of Space on Poles Owned by Green Mountain Power Corporation.
• Court: Vermont Supreme Court

928 A.2d 1219

2007 VT 55

In re PETITION OF WAITSFIELD-FAYSTON TELEPHONE COMPANY, INC., d/b/a Waitsfield Telecom, d/b/a Waitsfield Cable and d/b/a Champlain Valley Telecom, to Establish a Rate for Rental of Space on Poles Owned by Green Mountain Power Corporation.

No. 2005-498.

Supreme Court of Vermont.

June 29, 2007.

Harriet Ann King of King & King, Waitsfield, for Appellant Green Mountain Power Corporation.

Paul J. Phillips of Primmer Piper Eggleston & Cramer PC, St. Johnsbury, for Appellee Waitsfield-Fayston Telephone Company, Inc.

John J. Cotter, Montpelier, for Appellee Department of Public Service.

Present: REIBER, C.J., DOOLEY, SKOGLUND and BURGESS, JJ., and CRAWFORD, SUPR. J., Specially Assigned.

¶ 1. DOOLEY, J.

¶ 1. Appellant Green Mountain Power Corporation (GMP) appeals a Public Service Board order requiring GMP to refund to appellee Waitsfield-Fayston Telephone Company, Inc. (WFTC) "make-ready" charges paid by WFTC over a period of years. The charges, which were separate from annual rental charges, were for making ready poles owned by GMP to accept telephone lines in addition to the electric lines already on them. GMP raises a host of arguments against the make-ready refund, including that it was time-barred and that GMP lacked sufficient notice that the make-ready charge issue was in the case before the Board. We agree that no claim for the refund of make-ready charges was properly in the case and therefore reverse.

¶ 2. WFTC is a Vermont corporation that provides telephone and cable television services that are regulated by the Board. GMP is an electric utility provider whose services are also regulated by the Board. GMP owns electricity distribution poles to which WFTC sought to attach its telephone and cable television lines; thus, in 1983 the parties entered into a contract setting the annual rent WFTC would pay to share thousands of GMP poles.¹ The contract, by its terms, summarized the parties' agreement as to charges for poles. Apart from the contract price, GMP billed WFTC for make-ready charges for approximately twenty years.

¶ 3. Years after the parties' contract, in 2001, the Board adopted revised Rule 3.7 governing pole attachment rates that a "pole-owning utility," such as GMP, may charge to an "attaching entity" such as WFTC. Public Service Board Rule 3.702(B), (F). In light of the lower rates generally provided for in the rule, WFTC terminated the contract with GMP in February 2003 and, in December 2003, petitioned the Board to set new rates pursuant to Rule 3.7. At the time of WFTC's petition, GMP charged WFTC $35.19 per pole in annual rent for approximately 3900 poles, and $25.13 per pole for approximately 4300 poles.² The $35.19 rate was the highest pole rental rate GMP charged to any "attaching entity" in the state.

¶ 4. WFTC's 2003 petition was not the first time the parties brought a rate dispute to the Board. In 1997, CVT, which subsequently merged into WFTC, similarly challenged GMP's pole attachment charges in Board Docket No. 5960. The parties to Docket No. 5960 entered into a stipulation for pole attachment rates for 1994 through 1997. Ultimately, due to uncertainty while the Board developed its rule on pole attachments, the parties continued the effectiveness of the stipulation indefinitely pending adoption of the new rule.

¶ 5. The 2003 WFTC petition asked the Board to set annual pole rental rates pursuant to Rule 3.7, and to order a refund of WFTC's overpayment since January 1, 2002—the effective date of rates set by the new rule. Public Service Board Rule 3.711. As to the refund specifically, WFTC asked the Board to order a reimbursement of its "overpayment of pole rental charges" from January 1, 2002 to December 30, 2003. The petition never mentioned make-ready charges and sought no relief with respect to them, apparently because the new rule specifically provided for make-ready charges and established the basis for calculating them. See Public Service Board Rule 3.708(G).

¶ 6. Following prefiled testimony and an evidentiary hearing, the hearing officer granted WFTC's request and recommended an annual rate of $16.00 per pole, but generally rejected WFTC's request for overpayments going back to 2002.³ He also found that because the parties' contract was "intended to include all the costs of pole attachments, including make-ready costs," GMP should return to WFTC all make-ready payments predating January 1, 2002, and he gave WFTC an opportunity to make an additional filing showing that amount.

¶ 7. WFTC made the additional filing to capture the make-ready charge refund, but it could find records of these payments only going back to 1992. It proposed a make-ready reimbursement figure of $386,984.10, which the hearing officer adopted. The Board affirmed the hearing officer's recommendations and ordered the refund, including the refund of the make-ready costs.

¶ 8. On appeal, GMP contests only the make-ready charge refund order, raising ten separate arguments against this part of the Board's order. Because one of GMP's claims resolves this appeal, we address it alone.

¶ 9. GMP's ninth and most troubling argument is that the Board did not provide GMP sufficient notice of the make-ready refund. Here, GMP claims that the Board's order violated its constitutional right to procedural due process, as well as its right against governmental takings, and violated a provision of Vermont's Administrative Procedure Act, which requires parties to a contested case to be given the opportunity "to respond and present evidence and argument on all issues." 3 V.S.A. § 809(c). We look to the statutory argument first. Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 347, 56. S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring) ("[I]f a case can be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, the Court will decide only the latter.").

¶ 10. In reviewing the adequacy of notice pursuant to 3 V.S.A. § 809(c), "we must examine whether or not the parties were given an adequate opportunity to prepare and respond to the issues raised in the proceeding." In re Twenty-Four Vermont Utils., 159 Vt. 363, 369, 618 A.2d 1309, 1312-13 (1992) (quotation and citation omitted). In implementing the command of the statute, the Board has, at least in part, adopted the Vermont Rules of Civil Procedure subject to modification where statute or specific Board rules provide. In re Twenty-Four Vermont Utils., 159 Vt. 339, 356, 618 A.2d 1295, 1305 (1992); Vermont Public Service Board Rules 2.103, 2.105.

¶ 11. Our analysis begins, as this case did, with WFTC's petition. The term "make-ready" does not appear. WFTC's petition asked the Board to: (1) set a rental rate pursuant to revised Rule 3.7, and (2) "require GMP to Refund Overpayments of Pole Rental Charges Made by WFTC." Specifically, WFTC sought overpayment refunds from pole rental charges paid during the period from January 1, 2002 to December 31, 2003.

¶ 12. Vermont Rule of Civil Procedure 8(a) requires that a complaint contain a statement of each claim. A pleading is sufficient under the rule if it gives "`fair notice of the claim and the grounds upon which it rests.'" Limoge v. People's Trust Co., 168 Vt. 265, 274, 719 A.2d 888, 893 (1998) (quoting Molleur v. Leriche, 142 Vt. 620, 622, 458 A.2d 1139, 1140 (1983)). Failure to plead a claim means that the claim is not in the case, and the court may not grant relief on it unless the claim subsequently comes before the court. See Molleur, 142 Vt. at 622, 458 A.2d at 1140.

¶ 13. A claim may be added by amendment of the complaint. V.R.C.P. 15(a). Pursuant to Rule 15(b), a claim may enter the case without formal amendment:

(b) Amendments To Conform to the Evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party's action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

V.R.C.P. 15(b). The Board has specifically held that Rule 15(b) applies to its proceedings. In re Dep't of Pub. Serv., No. 7195, Order re: Motion to Alter or Amend at 4 n. 3 (Dec. 8, 2006). Under the terms of the rule, we take the Board's decision in this case as a ruling that the issue of refunding make-ready charges entered the proceeding either with GMP's implied consent or over its objection because it was not prejudiced. In that light, we examine more closely the proceedings after the filing of the petition.

¶ 14. The first reference to make-ready charges occurred during the cross-examination of one of GMP's witnesses, through whom WFTC's counsel sought to admit two letters dealing with make-ready charges. Counsel for GMP objected to the admission of the letters, stating: "[a]s I understand [WFTC's] petition in this proceeding it is not related to make-ready charges. It simply requests the Board to set the rate for the annual rental charge for attachments to GMP's poles." Counsel for GMP continued: "[i]f there is another issue relating to make-ready, finding out about it at the technical hearing doesn't seem to be conducive to an efficient resolution of this dispute." Counsel...