Berry's Chapel Utility, Inc. v. Tennessee Regulatory Authority

CourtCourt of Appeals of Tennessee
DecidedDecember 21, 2012
DocketM2011-02116-COA-R12-CV
StatusPublished

This text of Berry's Chapel Utility, Inc. v. Tennessee Regulatory Authority (Berry's Chapel Utility, Inc. v. Tennessee Regulatory Authority) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Berry's Chapel Utility, Inc. v. Tennessee Regulatory Authority, (Tenn. Ct. App. 2012).

Opinion

IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE December 13, 2012 Session

BERRY’S CHAPEL UTILITY, INC. v. TENNESSEE REGULATORY AUTHORITY

Appeal from the Tennessee Regulatory Authority No. 1100005 Mary W. Freeman, Chairman

No. M2011-02116-COA-R12-CV - Filed December 21, 2012

This is a direct appeal by newly incorporated Berry’s Chapel Utility, Inc., from a declaratory order by the Tennessee Regulatory Authority. The dispute hinges on whether the TRA had jurisdiction over Berry’s Chapel pursuant to Tennessee Code Annotated § 65-4-101(6)(E) (2010). The TRA held that Berry’s Chapel was a public utility as defined in Tennessee Code Annotated § 65-4-101(6)(E) (2010), thus, it was subject to the jurisdiction of the TRA. Berry’s Chapel asserts it was a non-profit and, thus, it was a non-utility by statutory definition and not subject to the TRA’s jurisdiction. We affirm the decision of the TRA.

Tenn. R. App. P. 12 Direct Review of Administrative Proceedings by the Court of Appeals; Judgment of the Tennessee Regulatory Authority Affirmed

F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which A NDY D. B ENNETT and R ICHARD H. D INKINS, JJ., joined.

Henry M. Walker, Donald Lee Scholes, and Heather Howell Wright, Nashville, Tennessee, for the appellant, Berry’s Chapel Utility, Inc.

Jonathan N. Wike, Richard Collier, and Shiva K. Bozarth, Nashville, Tennessee, for the appellee, Tennessee Regulatory Authority.

Robert E. Cooper, Attorney General and Reporter, William E. Young, Solicitor General, and Vance L. Broemel, Senior Counsel, Nashville, Tennessee, for the appellee, the Consumer Advocate and Protection Division of the Office of the Attorney General of Tennessee. OPINION

For many years, Lynwood Utility Inc., a for-profit corporation that operated subject to the jurisdiction of the Tennessee Regulatory Authority, provided sewer services to approximately 800 customers in the Cottonwood residential community near Franklin, Tennessee. On July 16, 2010, some of the shareholders and officers of Lynwood Utility incorporated a new business entity, Berry’s Chapel Utility, Inc. and filed a Charter with the Secretary of State of Tennessee. The Charter stated that Berry’s Chapel was a non-profit mutual benefit corporation.1

On September 1, 2010, Lynwood Utility Inc., merged into Berry’s Chapel; only Berry’s Chapel survived the merger. Thereafter, Berry’s Chapel sent a letter to the TRA informing it of the merger and that Berry’s Chapel would be providing sewer services to Lynwood’s former customers. The letter to the TRA also stated that Berry’s Chapel was not subject to the jurisdiction of the TRA because Berry’s Chapel qualified as a non-utility under Tennessee Code Annotated § 65-4-101(6)(E) (2010). At the time, Tennessee Code Annotated § 65-4-101(6)(E) contained an exception to the definition of public utilities for “[a]ny cooperative organization, association or corporation not organized or doing business for profit.” 2

Soon thereafter, and without seeking approval from any entity or agency, Berry’s Chapel informed all of its customers that the sewer rates would increase by $20 per month effective November 1, 2010. After learning of the unilateral rate increase by Berry’s Chapel, the Consumer Advocate Division of the Tennessee Attorney General’s Office filed a Petition for Declaratory Order with the TRA seeking a declaratory order that Berry’s Chapel was a public utility because it did not qualify as a “non-utility” under the definition of non-utility

1 The record on appeal indicates that Berry’s Chapel has not yet obtained non-profit status from the Internal Revenue Service. 2 Effective June 6, 2011, the subsection was amended to read:

Any cooperative organization not organized or doing business for profit, cooperative association not organized or doing business for profit, or cooperative corporation not organized or doing business for profit. For purposes of this subdivision (6)(A)(v), “cooperative” shall mean only those nonprofit cooperative entities organized under or otherwise subject to the Rural Electric and Community Services Cooperative Act, compiled in chapter 25, part 2 of this title, or the Telephone Cooperative Act, compiled in chapter 29 of this title;

2011 Tenn. Pub. Acts ch. 430, § 3.

-2- in Tennessee Code Annotated § 65-4-101(6)(E) (2010).3 Berry’s Chapel filed an answer; thereafter, the parties filed briefs in support of their respective positions. Oral arguments were held before a panel on April 4, 2011.

On August 5, 2011, the TRA issued its Order. First, the TRA ruled that “[i]nherent and necessary in the power to adequately regulate public utilities is the long accepted ability of the TRA to interpret the statutory definition of a public utility and that of a non-utility”; therefore, the TRA held it was within its jurisdiction to determine whether Berry’s Chapel was a public utility or a non-utility. The TRA then found that Berry’s Chapel was a public utility subject to TRA regulation. The TRA reasoned that for Berry’s Chapel to qualify as a non-utility it would have to be a not-for-profit “cooperative.” Further, the TRA held that Berry’s Chapel was not a cooperative because no “member structure” had been established and Berry’s Chapel did not have members. Based upon these holdings, the TRA ordered that Berry’s Chapel suspend assessing the $20 rate increase. Berry’s Chapel then filed a direct appeal to this court.

A NALYSIS

This is a direct appeal from a declaratory order issued by the Tennessee Regulatory Authority.4 The dispute hinges on whether Berry’s Chapel is subject to the jurisdiction of the TRA. Berry’s Chapel asserts that it was a non-utility, as that term was defined in the 2010 version of Tennessee Code Annotated § 65-4-101(6) (2010), because the statute then in effect defined non-utilities to include non-profit corporations and Berry’s Chapel was incorporated in July of 2010 as a non-profit corporation.

The operative subsection in effect prior to June 6, 2011, states that a “public utility” shall not include: “Any cooperative organization, association or corporation not organized or doing business for profit.” Tenn. Code Ann. § 65-4-101(6)(E) (2010). The parties read this very short sentence to have differing meanings. Berry’s Chapel insists section (6)(E) exempts corporations not organized or doing business for profit. The Attorney General and the TRA read it to only exempt cooperative corporations not organized or doing business for profit.

3 In the Petition, the Attorney General’s Office also sought an order that Berry’s Chapel refund to its customers the $20 per month rate increase that was implemented on November 1, 2010. The TRA did not rule on the refund request; instead, it opened a new docket to subsequently determine whether the customers of Berry’s Chapel were entitled to a refund of the increased sewer rates paid after November 1, 2010. The refunds are not at issue in this appeal. 4 Unlike most administrative agency appeals, this case did not go before the Chancery Court; the appeal is directly to this court.

-3- The parties differing assertions are due, in part, on the fact the word cooperative only appears before the word organization and not before the words association and corporation. Had the sentence read “[a]ny cooperative organization not organized or doing business for profit, cooperative association not organized or doing business for profit, or cooperative corporation not organized or doing business for profit,” there would be no room for construction of the meaning of the statute, but it did not, at least not before June 6, 2011.

A.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Scott v. Ashland Healthcare Center, Inc.
49 S.W.3d 281 (Tennessee Supreme Court, 2001)
State v. Flemming
19 S.W.3d 195 (Tennessee Supreme Court, 2000)
Gleaves v. Checker Cab Transit Corp., Inc.
15 S.W.3d 799 (Tennessee Supreme Court, 2000)
McGee v. Best
106 S.W.3d 48 (Court of Appeals of Tennessee, 2002)
National Gas Distributors, Inc. v. State
804 S.W.2d 66 (Tennessee Supreme Court, 1991)
In Re Estate of Dobbins
987 S.W.2d 30 (Court of Appeals of Tennessee, 1998)
Wilson v. Johnson County
879 S.W.2d 807 (Tennessee Supreme Court, 1994)
T.R. Mills Contractors, Inc. v. WRH Enterprises, LLC
93 S.W.3d 861 (Court of Appeals of Tennessee, 2002)
State v. Turner
913 S.W.2d 158 (Tennessee Supreme Court, 1995)
Tidwell v. Collins
522 S.W.2d 674 (Tennessee Supreme Court, 1975)

Cite This Page — Counsel Stack

Bluebook (online)
Berry's Chapel Utility, Inc. v. Tennessee Regulatory Authority, Counsel Stack Legal Research, https://law.counselstack.com/opinion/berrys-chapel-utility-inc-v-tennessee-regulatory-a-tennctapp-2012.