Satellite Cable Services, Inc. v. Northern Electric Co-op., Inc.

• Decision Date: 01 July 1998
• Docket Number: No. 20046,20046
• Citation: 581 N.W.2d 478,1998 SD 67
• Parties: SATELLITE CABLE SERVICES, INC., Plaintiff and Appellee, v. NORTHERN ELECTRIC COOPERATIVE, INC., a South Dakota Corporation, and its Wholly-Owned Subsidiary Northern Rural Cable TV Cooperative, Inc., Defendants and Appellants.
• Court: South Dakota Supreme Court

Page 478

581 N.W.2d 478

1998 SD 67

SATELLITE CABLE SERVICES, INC., Plaintiff and Appellee, v. NORTHERN ELECTRIC COOPERATIVE, INC., a South Dakota Corporation, and its Wholly-Owned Subsidiary Northern Rural Cable TV Cooperative Inc., Defendants and Appellants.

No. 20046.

Supreme Court of South Dakota.

Argued Jan. 13, 1998.

Decided July 1, 1998.

Monte R. Walz of Davenport, Evans, Hurwitz and Smith, Sioux Falls, for plaintiff and appellee.

Harvey A. Oliver, Jr. of Richards & Oliver, Aberdeen, James A. O'Neal of Faegre & Benson LLP, Minneapolis, Minnesota, for defendants and appellants.

KONENKAMP, Justice.

¶1 After the circuit court enjoined an electric cooperative and its subsidiary from offering cable television service in violation of a statute, the Legislature amended the law to remove the prohibition. We therefore set aside the injunction as no longer sustainable under the amended statute, but remand the case for trial on the issue of damages incurred during the time the cooperative violated the former statute by competing in a municipality with an operating cable television service. Affirmed in part and reversed in part.

Facts

¶2 Northern Electric Cooperative, Inc., organized under SDCL ch 47-21, with its principal office in Bath, South Dakota, supplies electricity to rural communities in the northeastern part of the state. Northern Electric belongs to another cooperative it created, Northern Rural Cable TV, Inc., formed to bring television signals to rural areas and small towns. Northern Cable initially furnished wireless subscription service to several Pierpont, South Dakota residents through a multichannel, multipoint distribution system (MMDS). MMDS delivers programming over microwave channels beamed to subscribers who have special antennas on or near their homes. See SDCL 22-44-4.

¶3 In April 1994, Northern Cable began converting to a community antenna television system (CATV), offering cable service to subscribers in Pierpont. ¹ Since 1988, however, Satellite Cable Services, Inc., held an exclusive franchise to provide cable television to Pierpont residents. Satellite brought suit seeking both declaratory and injunctive relief as well as damages for interference with contractual and prospective contractual relations. Shortly afterwards, Northern Cable agreed to withdraw the offending CATV system. Then, in September 1995, after obtaining a franchise from the Pierpont Board of Trustees to offer CATV, Northern Cable began reconnecting its subscribers to the same system.

¶4 The circuit court granted summary judgment to Satellite, holding that Northern Electric violated SDCL 47-21-2, and ordering that it be prohibited "from providing television service to Pierpont." Northern Electric and Northern Cable appeal raising the following questions: (1) Must the injunctive and declaratory relief be reversed because during appeal SDCL 47-21-2 was amended to allow rural electric cooperatives to participate in the subscription television industry? (2) Was Northern Electric authorized by statute to become a member of Northern Cable? (3) Whether Northern Cable, as a distinct corporate entity, could provide CATV and MMDS service to Pierpont? (4) Did the circuit court properly reject Northern Electric's and Northern Cable's constitutional and federal preemption claims?

Standard of Review

¶5 Under our well-versed standard for reviewing a grant or denial of summary judgment, we must decide if the moving party established the absence of any genuine issue of material fact and demonstrated entitlement to judgment on the merits as a matter of law. We view the evidence most favorably to the nonmoving party and resolve reasonable doubts against the moving party. When summary judgment is supported as provided in § 15-6-56, the nonmovant may not rest on allegations or denials in the pleadings, but must respond by affidavit or as otherwise provided in § 15-6-56, and set forth particulars showing genuine fact issues exist for trial. SDCL 15-6-56(e); Baatz v. Arrow Bar, 452 N.W.2d 138, 140 (S.D.1990). If any basis exists to support summary judgment, affirmance is proper. Petersen v. Dacy, 1996 SD 72, p 5, 550 N.W.2d 91, 92 (citing Trippet Special Trust v. Blevins, 1996 SD 29, p 6, 545 N.W.2d 216, 221); Waddell v. Dewey Cty. Bank, 471 N.W.2d 591, 593 (S.D.1991); see also Wilson v. Great N. Ry. Co., 83 S.D. 207, 211, 157 N.W.2d 19, 21 (1968). Statutory interpretation presents a question of law reviewable de novo. Lustig v. Lustig, 1997 SD 24, p 5, 560 N.W.2d 239, 241; Moss v. Guttormson, 1996 SD 76, p 10, 551 N.W.2d 14, 17; Wharf Res., Inc. v. Farrier, 1996 SD 110, p 5, 552 N.W.2d 610, 612.

Analysis and Decision

1. Effect of Statutory Amendment While Appeal Pending

¶6 At the time of the circuit court's decision, SDCL 47-21-2 (1994) provided in part:

Cooperatives may provide television service which includes multi-channel multi-point distribution systems, including those which utilize coaxial cable, and direct broadcast satellite service, and may provide programming to customers via a CATV system, as defined in § 9-35-16, in any municipality which does not have an operating CATV system.

The circuit court held that the activities of Northern Electric and its wholly owned subsidiary, Northern Cable, violated this enactment by providing CATV service to the city of Pierpont. After judgment, the statute was amended to broaden the authorized activities for cooperatives.

Cooperatives may be organized under this chapter for any lawful purpose except banking, securities, and insurance. Cooperatives proposing to provide local exchange telephone service in a rural telephone company's service area may do so only in compliance with the procedures contained in section 251(f) of the Communication Act of 1934, as amended by the Telecommunications Act of 1996.

SDCL 47-21-2 (1997)(emphasis added).

¶7 If, during an appeal, a statutory change is controlling, we see no virtue in remanding to the trial court to examine an enactment we are equally capable of interpreting. Illinois Indep. Tel. Ass'n v. Commerce Comm'n, 183 Ill.App.3d 220, 132 Ill.Dec. 154, 539 N.E.2d 717, 722 (1988)(citing Rios v. Jones, 63 Ill.2d 488, 348 N.E.2d 825, 828 (1976)); Haines Pipeline Const., Inc. v. MPC, 251 Mont. 422, 830 P.2d 1230, 1238 (1991), overruled on other grounds, Porter v. Galarneau, 275 Mont. 174, 911 P.2d 1143 (1996); State v. Board of Cty. Com'rs of Lyon Cty., 234 Kan. 732, 676 P.2d 134, 139 (1984); Day v. Child Support Enforce. Div., 272 Mont. 170, 900 P.2d 296, 300 (1995); Texas Cty. Irr. & Water Res. Ass'n v. Okl. Water Res. Bd., 803 P.2d 1119, 1122 (Okl.1990). This principle applies whether the change was constitutional, judicial, or statutory. Thorpe v. Housing Auth. of the City of Durham, 393 U.S. 268, 282, 89 S.Ct. 518, 526, 21 L.Ed.2d 474, 484 (1969). Because SDCL 47-21-2 was amended to remove restrictions on electric cooperatives competing with CATV providers in municipalities, the circuit court's declaratory and injunctive relief contravenes South Dakota law as amended, and, accordingly, is reversed.

2. Northern Electric's Membership in Northern Cable

¶8 Before its most current amendment, effective July 1, 1994, SDCL 47-21-68 stated:

A cooperative may become a member of other cooperatives, corporations or organizations engaged in the production or distribution of electricity or television business, and to own stock therein.

SDCL 47-21-68 (1989)(retroactive to January 1, 1988--SL 1989, § 3). We are unable to discern from the circuit court's Amended Order which version of the statute it relied on to resolve this issue. Nonetheless, we conclude from the record that Northern Electric became a member of Northern Cable on January 20, 1989, and that the version of SDCL 47-21-68 then in effect, authorized Northern Electric to do so.

¶9 Article VIII of Northern Cable's Articles of Incorporation provides: "The cooperative will not commence business until consideration of the value of at least One Thousand Dollars ($1,000) has been received for the issuance of shares." Northern Electric's board minutes for January 20, 1989 show a resolution to purchase $5,000 worth of Northern Cable's stock and to pay a $100 membership fee. The date of this resolution determines the time Northern Electric officially became a member of Northern Cable. Before this date, Northern Cable was a paper entity, that according to its Articles, was unable to engage in or transact any business.

¶10 Satellite Cable argues that Northern Cable was created on October 16, 1987 as evidenced by the date its Articles of Incorporation were filed with the South Dakota Secretary of State. Satellite further contends that the version of SDCL 47-21-68 in effect at that time did not authorize Northern Electric to become a member of Northern Cable. ² Our review of the record, however, verifies that Satellite failed to present this argument to the circuit court. Ordinarily, to raise an issue on appeal, a party must first present the question to the trial court and obtain a ruling. "This Court will not decide issues the trial court has not had the opportunity to rule upon." Klinker v. Beach, 1996 SD 56, p 17 n. 3, 547 N.W.2d 572, 576 n. 3; Knudson v. Hess, 1996 SD 137, p 8, 556 N.W.2d 73, 75; Hawkins v. Peterson, 474 N.W.2d 90, 95 (S.D.1991). Under our well-established precedent, Satellite has waived this argument.

3. Northern Cable's CATV Service to Pierpont

¶11 A. Northern Electric Acting Through Northern Cable. The circuit court ruled that Northern Electric could not bypass the prohibitions on electric cooperatives imposed in the earlier version of SDCL 47-21-2 by acting through its wholly owned subsidiary, Northern Cable. Northern Electric maintains that SDCL 47-21-68, as it existed before July 1, 1994, allowed an electric cooperative to join another cooperative to provide television services. Insofar as these two statutes may have conflicted, we resolve the conflict by holding...