Public Utility Com'n of Texas v. Southwestern Bell Telephone Co.

• Decision Date: 11 September 1997
• Docket Number: No. 03-96-00717-CV,03-96-00717-CV
• Citation: 960 S.W.2d 116
• Parties: PUBLIC UTILITY COMMISSION OF TEXAS and The City of McKinney, Texas, Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 116

960 S.W.2d 116

PUBLIC UTILITY COMMISSION OF TEXAS and The City of McKinney, Texas, Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Appellee.

No. 03-96-00717-CV.

Court of Appeals of Texas,

Austin.

Sept. 11, 1997.

Opinion OverrulingRehearing Dec. 18, 1997.

Myra A. McDaniel, Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, L.L.P., Austin, for The City of McKinney, Texas.

Dan Morales, Attorney General, Amanda Atkinson Cagle, Assistant Attorney General, Natural Resources Division, Austin, for Public Utility Commission of Texas.

Michael Diehl, Graves, Dougherty, Hearon & Moody, Austin, for Southwestern Bell Telephone Co.

Before POWERS, JONES and KIDD JJ.

POWERS, Justice.

In an action brought by Southwestern Bell Telephone Company, the district court (1) reversed a final order issued by the Public Utility Commission in a contested case and (2) dismissed the cause for want of subject-matter jurisdiction. The Commission and the City of McKinney (intervenor in the suit below) appeal. We will reverse the district-court judgment and remand the cause to that court.

THE CONTROVERSY

The Commission's general counsel initiated a contested-case proceeding under Commission Docket 8585 to investigate SWBT's rates and services and to establish new rates if necessary. ¹ See Public Utility Regulatory Act (PURA), Tex.Rev.Civ. Stat. Ann. art.

                1446c,  § 42 (West 1980). 2  The City of McKinney and several other municipalities intervened.  In a preliminary hearing, the parties agreed as follows:  (1) SWBT would not seek to include in its operating expenses, for ratemaking purposes, the sums it paid the cities as reimbursement for their attorneys' fees;  (2) the cities would submit to SWBT sworn statements setting forth the amount of their attorneys' fees;  (3) SWBT would pay the submitted amounts but if a problem arose in that regard SWBT would attempt to "work it out" with the city;  and (4) if the problem could not be "worked out," SWBT would ask the hearing examiner "for whatever ruling might be appropriate." 3  The examiner asked whether the agreement would result in payment of the cities' expenses before rendition of a final order in Docket 8585.  SWBT's counsel replied that he assumed the cities would want their expenses determined as soon as possible, but the determination "could happen, I suppose, at any time."   The examiner implicitly approved the agreement by excluding the reimbursement issue from adjudication in Docket 8585
                

At the conclusion of Docket 8585, the City of McKinney submitted to SWBT its claim for reimbursement of attorneys' fees incurred in that Commission proceeding. SWBT paid the claim without objection. The City sued in district court for judicial review of the Commission's final order in Docket 8585. The course of that litigation is set out in Cities of Abilene v. Public Util. Comm'n, 854 S.W.2d 932 (Tex.App.--Austin), aff'd in part, rev'd in part, 909 S.W.2d 493 (Tex.1995). The City of McKinney submitted to SWBT a claim for reimbursement for attorneys' fees resulting from the lawsuit. SWBT refused to pay the claim based on its understanding that the parties' agreement in Docket 8585 extended only to attorneys' fees incurred in the agency proceeding--expenses that SWBT had previously reimbursed the City--and not to attorney's fees incurred in a suit for judicial review of the agency order in Docket 8585.

Having a contrary understanding of the parties' agreement, the City complained to the Commission. In a contested case conducted in Docket 11027, the Commission issued a final order in which it found as a fact that the parties had made the agreement on the terms set out above. In related conclusions of law, the Commission determined as follows: (1) a proceeding initiated by the Commission's general counsel under PURA section 42 is a "ratemaking proceeding" within the meaning of PURA section 24, entitling municipalities to attorneys' fees under that section; (2) the City of McKinney's complaint in docket 11027, seeking reimbursement of attorneys' fees based on the parties' agreement in Docket 8585, is a dispute so closely related to a "ratemaking proceeding" that the City is also entitled to recover under PURA section 24 the City's attorneys' fees incurred in Docket 11027; (3) $125,686.14 and $57,860.36 were reasonable amounts for SWBT sued in the present case for judicial review of the Commission's final order in Docket 11027, contending among other things that the order was void because the Commission lacked jurisdiction to hear and decide the City of McKinney's complaint. The district court reversed the Commission order in Docket 11027, based on the agency's want of subject-matter jurisdiction, and ordered the cause dismissed.

attorneys' fees in Docket 8585 and Docket 11027, respectively; and (4) SWBT is ordered to reimburse the City of McKinney, within thirty days, the aggregate amount of $183,546.50. ⁴

In two points of error, the Commission contends the judgment is erroneous because, as a matter of law, the Commission possessed subject-matter jurisdiction to adjudicate the City of McKinney's complaint in Docket 11027. The City of McKinney makes the same contention in four of its five points of error. Because we conclude the Commission possessed such jurisdiction, we will sustain the points of error and need not discuss the City's fifth point of error.

DISCUSSION AND HOLDINGS

The legislature delegated to the Commission a general regulatory power over public utilities expressed in the broadest possible terms. The delegation includes the power "to do all things, whether specifically designated in [PURA] or implied herein, necessary and convenient to the exercise of [the Commission's] power and jurisdiction." PURA § 16. The delegated power also includes an express power to conduct adjudicative proceedings "with respect to administering the provisions of [PURA] or the rules, orders, or other actions of the commission." Id. (emphasis added). A delegation of power to an administrative agency, in such broad and general terms, implies a legislative judgment that the agency should have the widest discretion in conducting its adjudicative proceedings, including a discretion to make ad hoc rulings in specific instances, within the bounds of relevant statutes and the fundamentals of fair play. See FCC v. Schreiber, 381 U.S. 279, 289-91, 85 S.Ct. 1459, 1467-68, 14 L.Ed.2d 383 (1965); FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 137-40, 60 S.Ct. 437, 438-40, 84 L.Ed. 656 (1940). Within those limits and without express statutory authority, it has been held that an agency's power to conduct adjudicative proceedings necessarily includes an attendant power to consolidate proceedings, allow intervention by strangers to the litigation, and grant continuances. See, e.g., Alamo Express v. Union City Transfer, 158 Tex. 234, 309 S.W.2d 815, 821 (1958); State v. Gutschke, 149 Tex. 292, 233 S.W.2d 446, 447-48 (1950); Gibraltar Sav. Ass'n v. Franklin Sav. Assn., 617 S.W.2d 322, 326 (Tex.Civ.App.--Austin 1981, writ ref'd n.r.e.); see generally, 3 Sutherland Statutory Construction § 65.04 (5th ed. 1992) ("The procedural methods that are implied for administrative action that is judicial in nature tend to follow the model of court procedures."). An agency must have the flexibility necessary to adjust to the variety of incidents encountered in particular contested cases.

We hold the power to conduct adjudicative proceedings, expressly delegated to the Commission in PURA section 16, necessarily includes the following incidental powers: (1) a power to accept and act upon an agreement between the parties that removes from dispute and litigation a subsidiary issue of fact or law, ⁵ such as the parties' agreement pertaining to attorneys' fees in this instance; (2) a power to interpret the agreement when a dispute arises subsequently in that regard; and (3) a power to formulate SWBT reasons the Commission was powerless to award attorneys' fees in Docket 11027 because: (1) PURA section 24 authorizes recovery of attorneys' fees only in a "ratemaking proceeding," in this instance Docket 8585; (2) the City of McKinney was therefore required to plead, prove, and recover the entirety of its attorneys' fee expenses in Docket 8585; (3) the Commission lost jurisdiction to award attorneys fees in Docket 8585 when its order in that contested case became final; and (4) no statute empowers the Commission to re-open and decide anew matters adjudicated in a previous contested case. In support of this reasoning, SWBT cites several judicial decisions to the effect that one entitled to statutory attorneys' fees must recover accrued and expected attorneys' fees in the same proceeding, our decision in Sexton v. Mount Olivet Cemetery Assn., 720 S.W.2d 129 (Tex.App.--Austin 1986, writ ref'd n.r.e.) (administrative agencies are powerless to re-open adjudicative proceedings absent statutory authority), and the supreme court decision in Coalition of Cities for Affordable Util. Rates v. Public Util. Comm'n, 798 S.W.2d 560, 565 (Tex.1990), cert. denied, 499 U.S. 983, 111 S.Ct. 1641, 113 L.Ed.2d 736 (1991) (common law doctrines of res judicata and collateral estoppel bar relitigating before Public Utility Commission prudence of utility's expenditures for nuclear power plant and resulting rate base). Our holdings do no violence to those decisions.

and award a reasonable remedy necessary to effectuate the agreement. See Corzelius v. Railroad Commission, 182 S.W.2d 412, 417 (Tex.Civ.App.--Austin 1944, no writ) (conservation statutes administered by agency implicitly authorize agency to fashion and apply "practical and reasonable" remedies, in addition to statutory remedies, where necessary to effectuate conservation statutes).

The question of the City of McKinney's entitlement to attorneys' fees was never adjudicated in Docket 8585. Instead, that question was by agreement removed from the course of litigation in that...