PUBLIC SERVICE CO. OF NM v. City of Albuquerque

• Decision Date: 06 February 1991
• Docket Number: Civ. No. 90-0084 JC.
• Citation: 755 F. Supp. 1494
• Parties: PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, Petitioner, v. CITY OF ALBUQUERQUE, a New Mexico municipality, Respondent, State of New Mexico, ex. rel. Attorney General Hal Stratton, Respondent in Intervention.
• Court: U.S. District Court — District of New Mexico

755 F. Supp. 1494

PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, Petitioner, v. CITY OF ALBUQUERQUE, a New Mexico municipality, Respondent State of New Mexico, ex. rel. Attorney General Hal Stratton, Respondent in Intervention.

Civ. No. 90-0084 JC.

United States District Court, D. New Mexico.

February 6, 1991.

William B. Keleher, Richard B. Cole, Arthur O. Beach, Thomas C. Bird, Keleher & McLeod, P.A., Albuquerque, N.M., for petitioner.

David S. Campbell, Margot Steadman, Albuquerque City Atty., Albuquerque, N.M., Marvin S. Cohen, Randall S. Yavitz, Sacks, Tierney, Kasen & Kerrick, P.A., Phoenix, Ariz., for respondent.

Thomas S. Udall, Nann Houliston, Atty. Gen. of New Mexico, Santa Fe, N.M., for respondent in intervention.

James C. Martin, Lee W. Huffman, New Mexico Public Service Com'n, Santa Fe, N.M., for petitioner for intervention.

MEMORANDUM OPINION AND ORDER

CONWAY, District Judge.

THIS MATTER comes on for consideration of Respondent City of Albuquerque's Motion to Dismiss, Respondent in Intervention State of New Mexico's Motion to Dismiss, and the New Mexico Public Service Commission's (NMPSC) Motion to Intervene. The Court, having reviewed the memoranda of the parties, and being otherwise fully advised in the premises, finds that Respondent City of Albuquerque's Motion to Dismiss is well-taken and will be granted. Respondent in Intervention's Motion to Dismiss and NMPSC's Motion to Intervene will be denied as moot.

A. Background

The Public Service Company of New Mexico (PNM) filed its Petition for Declaratory Judgment in this Court on January 25, 1990. PNM's Petition sets forth the following facts and allegations. PNM is a public utility generating, transmitting and distributing electricity within specific service areas in the State of New Mexico. Respondent City of Albuquerque is located within one of PNM's service areas. Since 1917, PNM has supplied electricity to consumers within the City of Albuquerque, and PNM continues to supply such electricity pursuant to a Franchise from the City of Albuquerque by virtue of Albuquerque City Ordinance No. 8-1967. This Franchise is limited to 25 years and expires on or about January 23, 1992.

It is apparent to any reasonably observant individual that a vast network of poles, wires, insulators and other equipment is necessary to distribute electricity from a utility's generating plants to its customers. Over the course of this past century, PNM has installed such self-styled "transmission and distribution assets" upon the alleys, streets and other public places within the City of Albuquerque. PNM estimates that the value of its "integrated system" for generating and distributing electricity is in excess of two billion dollars ($2,000,000,000).

In its Petition for Declaratory Judgment PNM alleges that an actual controversy exists between it and the City of Albuquerque as to the effects of the expiration of the Franchise Ordinance on the ownership of transmission and distribution assets installed by PNM on property owned by the City of Albuquerque.¹ By Resolutions dated June 6, 1988 and March 6, 1989, the Albuquerque City Council has directed the City Attorney and its legal department to undertake research concerning the question of ownership upon expiration of the Franchise Ordinance of the transmission and distribution assets installed by PNM on Albuquerque city property. PNM alleges that this controversy concerning ownership of the transmission and distribution assets upon expiration of the Franchise Ordinance is "impedeing the progress of negotiating a renewal of the Franchise Ordinance." Petition for Declaratory Judgment at ¶ 16. Therefore, PNM seeks a declaration from this Court "to the effect that the expiration of the Franchise will not vest title to the PNM Assets in the City and that the City, its officers, representatives, agents, employees or attorneys must not exercise ownership over the PNM assets without first paying to PNM full and adequate compensation for the PNM Assets...." Petition for Declaratory Judgment ¶ at 23A. PNM also asks the Court to enter "an injunction barring the City ... from initiating a proceeding in any other forum directed at establishing ownership rights to the PNM Assets in the City upon expiration of the Franchise." Petition for Declaratory Judgment at ¶ 23B.

Respondent City of Albuquerque now moves this Court to dismiss PNM's Petition for Declaratory Judgment. As grounds for its motion to dismiss, the City asserts several alternative theories. First, the City argues that this Court lacks subject matter jurisdiction both because the issues presented are not yet ripe and thus present no case or controversy within the meaning of Article III of the United States Constitution, and because PNM's petition presents no substantial federal question. Second, the City contends that even if the case is justiciable and the court has jurisdiction, the Petition should be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Finally, the City insists that should the Court not find that dismissal is warranted under either of these theories, it should nevertheless exercise its discretion to decline to hear this case. In light of the Court's determination that PNM's Petition for Declaratory Judgment is not ripe for determination and that, alternatively, the Court will not exercise its discretion to hear the petition, the Court has no occasion to consider the City's other arguments in support of its Motion to Dismiss.

B. Standard for Declaratory Judgment

Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202 and Rule 57 of the Federal Rules of Civil Procedure, this Court, "in a case of actual controversy within its jurisdiction ... upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. "Whether or not to entertain a justiciable declaratory judgment action is a matter committed to the sound discretion of the trial court." Kunkel v. Continental Casualty Co., 866 F.2d 1269, 1273 (10th Cir. 1989).

The decision whether or not to entertain a petition for declaratory judgment is thus two-fold. First, as with any action pending before this Court, the Court must determine that it has the requisite subject matter jurisdiction. Even if it is established that the petition presents a justiciable action within the subject matter jurisdiction of the Court, however, the Court must additionally decide whether or not to exercise its discretion and hear the action.

c. Subject Matter Jurisdiction: Ripeness

1. Overview

Federal courts are prohibited by Article III of the United States Constitution from deciding "abstract, hypothetical or contingent questions." Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 461, 65 S.Ct. 1384, 1389, 89 L.Ed. 1725 (1945). Article III's grant of subject matter jurisdiction extends only to "cases" and "controversies." Of course, the distinction between a justiciable actual controversy and a merely hypothetical dispute not yet ripe for decision is often less than obvious. The question becomes even more nettlesome in the context of an action seeking a declaratory judgment, since the purpose of the latter is to "settle actual controversies before they ripen into violations of law or a breach of duty." United States v. Fisher-Otis Company, Inc., 496 F.2d 1146, 1151 (10th Cir.1974).

In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826 (1941), the United States Supreme Court said that in each case the test is basically "whether ... there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id. at 273, 61 S.Ct. at 512. More recently, in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), the Supreme Court articulated a more focussed inquiry with which to make a ripeness determination. "The problem is best seen in a twofold aspect, requiring us to evaluate both the fitness of the issue for judicial decision and the hardship to the parties of withholding court consideration." Id. at 149, 87 S.Ct. at 1515. The Tenth Circuit has said that, "whether or not a question is ripe for decision requires an examination of `the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.'" ACORN v. Tulsa, 835 F.2d 735, 739 (10th Cir.1987). In undertaking this analysis the Court must be mindful of the admonition that, in all cases involving issues of justiciability, "restraint should be exercised to avoid rendition of an advisory opinion." McCombs v. Federal Energy Regulatory Commission, 705 F.2d 1177, 1181 (10th Cir.1980), vacated, McCombs v. Federal Energy Regulatory Commission, 710 F.2d 611 (10th Cir.1983).

PNM directs the Court's attention to a number of facts which, it contends, indicate that an actual controversy exists in this case. First, PNM points to the two resolutions passed by the Albuquerque City Council directing the city's attorney to research the issue of ownership of the transmission and distribution assets upon termination of the Franchise. Second, PNM also points to "a number of other resolutions" considered, but apparently not passed, by the Albuquerque City Council "relating to PNM and electric utility matters and the various options that may be available to the City upon expiration of its Franchise Ordinance." Petition for Declaratory Judgment at ¶ 13. Furthermore, PNM notes that "certain citizens and elected public officials," Petition for Declaratory Judgment at ¶ 14, have suggested that the City seek its own declaratory judgment concerning this matter. Finally, PNM contends that the...