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Milcrofton Utility District of Williamson County v. Non Potable Well Water, Inc.

Court of Appeals of Tennessee, Nashville

May 10, 2019

MILCROFTON UTILITY DISTRICT OF WILLIAMSON COUNTY, TENNESSEE
v.
NON POTABLE WELL WATER, INC. ET AL.

          Session March 6, 2019

          Appeal from the Chancery Court for Davidson County No. 18-455-IV Russell T. Perkins, Chancellor

         Appellant, a public utility, appeals the Davidson County Chancery Court's dismissal of its complaint for declaratory judgment and injunctive relief for lack of subject matter jurisdiction. Appellant argues that it has an exclusive right to provide water service under Tennessee Code Annotated section 7-82-301 and that Appellee is usurping its exclusive right by providing water to residents of a subdivision within Appellant's service area. Because the gravamen of Appellant's complaint is to maintain its exclusive franchise by the grant of injunctive relief prohibiting Appellee from providing water service, the case does not fall within the purview of Tennessee Code Annotated section 4-5-225. As such, we affirm the trial court's conclusion that it does not have subject matter jurisdiction over the case.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Michael J. Wall, Benjamin A. Gastel, and Daniel Patrick Hull, Nashville, Tennessee, for the appellant, Milcrofton Utility District of Williamson County, Tennessee.

          Phillip B. Jones, Nashville, Tennessee, for the appellees, Non Potable Well Water, Inc., and John Powell.

          Ryan L. McGehee, and Kelly Cashman Grams, Nashville, Tennessee, for the appellee, Tennessee Public Utility Commission.

          Kenny Armstrong, J., delivered the opinion of the court, in which Arnold B. Goldin, J., joined. J.

          OPINION

          KENNY ARMSTRONG, JUDGE

         I. Background

         Appellant Milcrofton Utility District of Williamson Co. ("Milcrofton") is a water utility district created under the Utility District Law of 1937, Tennessee Code Annotated section 7-82-101, et seq. As such, Milcrofton is a municipality or public corporation. The Tennessee Public Utility Commission (the "TPUC") is the state agency that regulates privately-owned utility providers. As a public utility district, Milcrofton owns and operates a public water system in Williamson County. Milcrofton has the exclusive right to provide water service within its chartered boundaries and can also provide water service outside its boundaries. Tenn. Code Ann. § 7-82-301, infra.

         John Powell is the developer of a residential subdivision called King's Chapel Subdivision ("King's Chapel"). King's Chapel was initially located within Milcrofton's chartered boundaries, but later Mr. Powell expanded the subdivision into the Nolensville/College Grove Utility District of Williamson County. In 2008, the two utility districts entered into a Service Area Agreement, under which Milcrofton obtained the exclusive right to serve all of King's Chapel.

         In 2015, Mr. Powell asked Milcrofton to build water lines from a well in King's Chapel to distribute water to lot owners for irrigation. Milcrofton denied the request, and Mr. Powell proceeded to provide the irrigation to owners by using Non Potable Well Water, Inc. ("Non Potable," and together with Mr. Powell and the TPUC, "Appellees"). Non Potable charges King's Chapel residents a fee to connect to its system.

         Milcrofton initially filed suit with the TPUC. Milcrofton asked the TPUC to declare Non Potable a "public utility" under Tennessee Code Annotated section 65-4-101(6) ("'Public utility' means every individual, copartnership, association, corporation, or joint stock company . . . that own, operate, manage or control, within the state, any . . . water . . . services . . . affected by and dedicated to the public use . . . ."). Such designation would require Non Potable to obtain a certificate of public convenience ("CPC") under Tennessee Code Annotated section 65-4-201(a) ("No public utility shall establish or begin the construction of, or operate any line, plant, or system, or route in or into a municipality or other territory already receiving a like service from another public utility, or establish service therein, without first having obtained from the commission, after written application and hearing, a certificate that the present or future public convenience and necessity require or will require such construction, establishment, and operation."). It is undisputed that Non Potable did not obtain a CPC before commencing its services to King's Chapel residents. Therefore, Milcrofton asked the TPUC to take action to stop Non Potable from providing water to King's Chapel. By order of October 6, 2017, the TPUC dismissed Milcrofton's complaint on the ground that the TPUC lacked the authority to grant CPCs or to eject a competitor from Milcrofton's exclusive service area. Tenn. Code Ann. § 7-82-104(a) ("Neither the Tennessee public utility commission nor any other board or commission of like character . . . shall have jurisdiction over the district in the management and control of any system . . . except to the extent provided by this chapter.").

         Milcrofton did seek judicial review of the TPUC's ruling within 60 days as required under Tennessee Code Annotated section 4-5-322. Instead, seven months later, on April 23, 2018, Milcrofton filed a complaint in the Davidson County Chancery Court alleging that Non Potable was illegally competing with Milcrofton by serving water to customers within Milcrofton exclusive service area. Milcrofton sought, inter alia, a declaratory judgment that Non Potable may not provide water service anywhere in Milcrofton's service area. Milcrofton alleged that Davidson County had subject matter jurisdiction to issue such declaratory judgment under Tennessee Code Annotated section 4-5-225(a), infra.

         On May 24, 2018, the TPUC filed a motion to dismiss asserting that Davidson County lacked subject matter jurisdiction. Rather, the TPUC asserted that Williamson County had exclusive subject matter jurisdiction . Mr.Powell and Non Potable also filed motions to dismiss asserting lack of jurisdiction. By order of July 13, 2018, the Davidson County Chancery Court granted the Appellees' motions to dismiss on its finding that the Davidson County court lacked subject matter jurisdiction.

         II. Issue

         Milcrofton appeals. The sole issue for review is whether the trial court erred in dismissing Appellant's complaint for lack of subject matter jurisdiction.

         III. Standard of Review

         This case was decided on grant of Appellees' motions to dismiss. The resolution of a Tennessee Rule of Civil Procedure 12.02 motion to dismiss is determined by an examination of the pleadings alone. Leggett v. Duke Energy Corp., 308 S.W.3d 843, 851 (Tenn. 2010); Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn. 2002). A defendant who files a motion to dismiss "'admits the truth of all of the relevant and material allegations contained in the complaint, but . . . asserts that the allegations fail to establish a cause of action.'" Brown v. ...


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