Time Warner Entm't Advance/Newhouse P'ship v. Town of Landis

• Decision Date: 06 August 2013
• Docket Number: No. COA 13–22.,COA 13–22.
• Parties: TIME WARNER ENTERTAINMENT ADVANCE/NEWHOUSE PARTNERSHIP, Plaintiff, v. TOWN OF LANDIS, North Carolina, Defendant.
• Court: North Carolina Court of Appeals

747 S.E.2d 610

TIME WARNER ENTERTAINMENT ADVANCE/NEWHOUSE PARTNERSHIP, Plaintiff,

v.TOWN OF LANDIS, North Carolina, Defendant.

No. COA 13–22.

Court of Appeals of North Carolina.

Aug. 6, 2013.

Appeal by plaintiff from order entered 2 October 2012 by Judge Calvin E. Murphy in the North Carolina Business Court. Heard in the Court of Appeals 23 April 2013.

Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, by Reid Phillips, and Hogan Lovells U.S. LLP, by Gardner Gillespie and Paul Warner, for plaintiff-appellant.

Poyner Spruill LLP, by Andrew H. Erteschik, for defendant-appellee.

Nelson Mullins Riley & Scarborough, Raleigh, by Joseph W. Eason, Christopher J. Blake, and Phillip A. Harris, Jr., for the North Carolina Association of Electric Cooperatives, amicus curiae.

David M. Barnes, Raleigh, for ElectriCities of North Carolina, Inc., amicus curiae.

HUNTER, JR., ROBERT N., Judge.

Time Warner Entertainment Advance/Newhouse Partnership (“TWEAN”) appeals a trial court order dismissing its case for lack of subject matter jurisdiction. Upon review, we reverse and remand.

I. Facts & Procedural History

In 1979, Vision Cable Communications, Inc. (“Vision”) began providing cable television services in the Town of Landis (“Landis”).On 16 June 1984, Vision and Landis entered into a written pole attachment agreement (the “1984 Agreement”). Under the terms of the 1984 Agreement, Landis granted Vision a license to attach transmission cables to Landis' utility poles for $3 per pole per year.¹ Landis charged an additional $1 per year for each metered power supply attachment. The 1984 Agreement required semi-annual payments and was for a period of “not less than one (1) year.” After one year, either party could terminate the Agreement by giving six months' written notice.

TWEAN subsequently acquired Vision and became successor-in-interest to the 1984 Agreement. TWEAN delivers cable television and broadband services to businesses and residents in Landis. Nothing in the record indicates Vision, TWEAN, or Landis ever terminated the 1984 Agreement.

In 2008, Landis hired McGavran Engineering, led by Larry McGavran, to: (i) conduct an audit of its pole inventory; and (ii) negotiate a new pole attachment agreement with TWEAN. McGavran completed the audit in November 2008. According to McGavran's audit, Landis had 3,000 utility poles. TWEAN had 2,100 attachments on 1,594 of these poles. The audit stated TWEAN's attachments had 946 safety or technical violations.

While completing the audit, McGavran also drafted a new proposed pole attachment agreement (the “Proposed Agreement”) for Landis and TWEAN. On 6 October 2008, McGavran submitted a preliminary draft of the Proposed Agreement to Landis. Between October 2008 and August 2009, McGavran revised the Proposed Agreement. In July 2009, McGavran submitted his revised Proposed Agreement to Landis Town Administrator Reed Linn and Landis Director of Public Works Steve Rowland.

Under the Proposed Agreement, TWEAN would pay $18 per cable for its first rental year (2009), and the rate would increase by $1.40 per year until 2014. TWEAN usually operated two cables per pole. Thus, at the final 2014 rate, TWEAN would pay $50 per pole under the Proposed Agreement.² After the first rental year, either party could terminate the Proposed Agreement by providing written notice 90 days prior to the current term's end. The Proposed Agreement also included a $10 per pole permit fee and a $15 per day penalty for failure to comply with applicable safety requirements.

Meanwhile, McGavran also drafted a proposed amendment to Landis' municipal pole attachment ordinance. The proposed amendment authorized Landis to impose a default pole attachment rate of $50 per year for any “telecommunications and cable television provider” that did not sign a “Town approved contract to maintain attachments to the same poles” by 9 April 2009. On 9 March 2009, Landis adopted this amendment.

On 3 August 2009, McGavran sent the Proposed Agreement to TWEAN. He also included a letter stating that “[the Town] expect[s] [the Proposed Agreement] to be executed within 30 days of receipt of this letter. If this does not occur, we will charge you the default rate as stated in our pole attachment ordinance passed last spring.” The letter also explained that the change from a per-pole rate to a per-cable rate was “in line with standard procedures within the industry for those attaching entities that do not own poles.” Lastly, McGavran promised to send TWEAN the results of an inventory of “poles, attachments, violations and other items” by 17 August 2009. McGavran sent the inventory to TWEAN on 27 August 2009.

On 31 August 2009, TWEAN Senior Director of Construction for the Carolinas Nestor Martin sent a letter to Linn, Landis' Town Administrator, advising Landis to “treat this letter as a request under Section 62–[350](b) to negotiate a new pole agreement, to include a just, reasonable and non-discriminatory rate.” Martin also requested certain cost and valuation data to better evaluate the increased attachment rate. TWEAN then deleted the increased attachment rates from the Proposed Agreement and sent the new version back to Landis.

Over the next few months, TWEAN and Landis negotiated, but failed to reach an agreement. Nothing in the record indicates TWEAN ever paid the increased pole attachment rate in the Proposed Agreement. On 5 January 2010, TWEAN sent Landis a letter requesting mediation. Landis did not respond.

On 19 April 2010, TWEAN filed a complaint in Rowan County Superior Court under N.C. Gen.Stat. § 62–350 for: (i) refusal to negotiate; (ii) violation of the statute's non-discrimination requirement; and (iii) other “issues in dispute.” As to its third claim, TWEAN enumerated three specific issues in dispute: (i) Landis' proposed rental rate of $18 per attachment is unreasonable and unjust; (ii) Landis' proposed charge per cable rather than per pole is unreasonable and unjust; and (iii) Landis' proposed fines for non-conforming attachments are unreasonable and discriminatory.

On 21 April 2010, Chief Justice Parker designated the action a mandatory complex business case. The following day, it was assigned to the North Carolina Business Court. On 4 June 2010, Landis filed an answer.

On 20 December 2010, Landis filed a motion for partial summary judgment as to TWEAN's claims for: (i) refusal to negotiate; and (ii) discrimination. On 9 February 2011, TWEAN filed a reply brief. On 17 February 2011, the Business Court heard Landis' arguments. On 30 June 2011, the Business Court entered an order: (i) granting Landis' motion to dismiss TWEAN's claim for refusal to negotiate; but (ii) denying Landis' motion to dismiss the discrimination claim.

From 18 July to 21 July 2011, the Business Court conducted a bench trial on: (i) the discrimination claim; and (ii) the “issues in dispute.” At the close of TWEAN's evidence, the Business Court denied Landis' motion for directed verdict for the other “issues in dispute,” but reserved its ruling on the discrimination claim.

On 19 June 2012, the Business Court sua sponte raised two concerns about the case: (i) the justiciability of the “issues in dispute;” and (ii) the constitutionality of N.C. Gen.Stat. § 62–350. To this effect, the Business Court requested supplemental briefs discussing: (i) whether TWEAN had standing; (ii) whether there was a “case or controversy;” and (iii) whether N.C. Gen.Stat. § 62–350 violates the separation of powers doctrine and/or is an unlawful delegation of legislative authority. The parties briefed the court on these issues. On 2 October 2012, the Business Court entered an order determining it did not have subject matter jurisdiction because TWEAN did not satisfy the controversy requirement. The Business Court then dismissed the case without prejudice. On 12 October 2012, TWEAN filed timely notice of appeal.

II. Standard of Review

“Whether a trial court has subject-matter jurisdiction is a question of law, reviewed de novo on appeal.” McKoy v. McKoy, 202 N.C.App. 509, 511, 689 S.E.2d 590, 592 (2010). “Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the lower tribunal.” State v. Williams, 362 N.C. 628, 632–33, 669 S.E.2d 290, 294 (2008) (quotation marks and citation omitted).

III. Analysis

On appeal, TWEAN argues the Business Court erred in dismissing its case for lack of subject matter jurisdiction because: (i) N.C. Gen.Stat. § 62–350 authorizes TWEAN to enforce its statutory pole attachment rights; or alternatively, (ii) TWEAN faces imminent harm. Plaintiff then argues the trial court's decision improperly nullified N.C. Gen.Stat. § 62–350. Upon review, we reverse and remand.

“Jurisdiction is ‘[t]he legal power and authority of a court to make a decision that binds the parties to any matter properly brought before it.’ ” In re T.R.P., 360 N.C. 588, 590, 636 S.E.2d 787, 789–90 (2006) (quoting Black's Law Dictionary 856 (7th ed.1999)) (alteration in original). “If a court finds at any stage of the proceedings that it lacks jurisdiction over the subject matter of a case, it must dismiss the case for want of jurisdiction.” Sarda v. City/County of Durham Bd. of Adjustment, 156 N.C.App. 213, 215, 575 S.E.2d 829, 831 (2003) (quotation marks and citation omitted). A party may not waive [subject matter] jurisdiction.” Reece v. Forga, 138 N.C.App. 703, 704, 531 S.E.2d 881, 882 (2000).

To satisfy jurisdictional requirements, courts must have both personal jurisdiction and subject matter jurisdiction. In re T.R.P., 360 N.C. at 590, 636 S.E.2d at 790. First, courts “must have personal jurisdiction over the parties to bring [them] into [the] adjudicative process.” Id. (quotation marks and citation omitted)(first alteration in original). “More importantly for our purposes, the court must also have subject matter jurisdiction, or [j]urisdiction over the nature of the case and the type of relief...