Dansie v. Public Service Commission , 374 P.3d 1057 ( 2016 )

2016 UT App 116THE UTAH COURT OF APPEALS
JESSE H. DANSIE FAMILY TRUST,1
Petitioner,
v.
PUBLIC SERVICE COMMISSION AND HI-COUNTRY ESTATES
HOMEOWNERS ASSOCIATION,
Respondents.
Opinion
No. 20140653-CA
Filed May 26, 2016
Original Proceeding in this Court
John S. Flitton, Attorney for Petitioner
Melanie A. Reif, Attorney for Respondent Public
Service Commission
Sean D. Reyes and Brent A. Burnett, Attorneys for
Respondent Division of Public Utilities
J. Craig Smith, Debra K. Caldwell, and Adam S.
Long, Attorneys for Respondent Hi-Country Estates
Homeowners Association
JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGES STEPHEN L. ROTH and KATE A. TOOMEY concurred.
VOROS, Judge:
¶1 The Jesse H. Dansie Family Trust (the Trust) seeks review
of a final order of the Public Service Commission (the PSC),
1. Jesse Rodney Dansie filed this petition for review when he
was trustee of the Jesse H. Dansie Family Trust. He resigned as
trustee in January 2015, and the Trust was substituted as the real
party in interest in this proceeding.
Dansie v. Public Service Commission
which approved a rate case for the Hi-Country Estates
Homeowners Association (the Association). We decline to
disturb the PSC’s order.
BACKGROUND
¶2 The events leading to this case began in 1977, when Jesse
H. Dansie leased the use of a well on his property to Gerald
Bagley, the original developer of Hi-Country Estates. The Well
Lease allowed Bagley to connect Hi-Country’s water system to
Dansie’s well for ten years. In return, Dansie received an initial
payment and ‚monthly rental‛ fees, plus water and a number of
residential hook-ups free of charge. Eight years later, Dansie and
Bagley amended the Well Lease. Under the amendment, Dansie
received, in addition to his residential hook-ups, ‚the right to
receive up to 12 million . . . gallons of water per year from the
combined water system at no cost for culinary and yard
irrigation on the Dansie property.‛ The amendment also stated
that the Well Lease bound Bagley, Dansie, and their successors
and assigns.
¶3 In 1985, Bagley created Foothills Water Company and, as
Foothills, applied to the PSC to operate the water system as a
public utility. Hi-Country Estates Homeowners Ass’n v. Bagley
& Co. (Hi-Country Estates I), 2008 UT App 105, ¶ 4, 182 P.3d 417.
The PSC granted a certificate of public convenience and
necessity (CPCN) to Foothills and authorized interim rates. Id.Later that year, Bagley transferred all interest and stock in
Foothills to Dansie. Id. That same year, the Association sued,
contesting Foothills’s and Dansie’s interests in the water system
and seeking to quiet title in the Association. This case represents
the most recent episode in the ensuing litigation between the
Association, Foothills, Bagley, Dansie, and the Trust.
¶4 In March 1986, the PSC held general rate-setting hearings
for Foothills and issued an order (the 1986 Order). In the course
of determining ‚just and reasonable rates,‛ the PSC considered
20140653-CA 2 2016 UT App 116Dansie v. Public Service Commission
the Well Lease. The PSC found that the Well Lease was ‚grossly
unreasonable, requiring not only substantial monthly payments,
but also showering virtually limitless benefits on Jesse Dansie
and the members of his immediate family.‛ The PSC further
determined that ‚it would be unjust and unreasonable to expect
Foothills’ . . . active customers to support the entire burden of
the Well Lease Agreement.‛ If Dansie and his family received
water through the water system, the PSC ordered that they
would have to pay ‚the actual pro-rata . . . costs for power,
chlorination and water testing involved in delivering that
water.‛2
¶5 In 1993, the Association assumed control of the water
system and the CPCN and developed a new well, discontinuing
the use of the Dansie well. Id. ¶ 5. A year later, the Association
disconnected the water lines to the Dansie property after the
Dansies allegedly refused to pay the costs required by the 1986
Order. Id. In 1996, the PSC decertified the Association as a public
utility. Id.
¶6 In 2005, a trial court ruled that the Well Lease was an
enforceable contract, neither void as against public policy nor
unconscionable. Id. ¶ 6. We affirmed the trial court’s order in Hi-
Country Estates I, 2008 UT App 105, ¶ 1. We noted that after the
PSC ‚revoked the status of the water system as a public utility
. . . the PSC did not have jurisdiction over the water system‛ and
‚the 1986 PSC order was no longer binding.‛ Id. ¶ 12 n.2. We
therefore ‚interpret*ed+ the Dansies’ rights and obligations
under the Well Lease according to its plain language‛ and
concluded that under the plain language of the Well Lease, the
Dansies were not required to pay the costs listed in the 1986
2. The PSC determined that, under the Well Lease, Foothills was
responsible for the monthly lease payments, but Bagley was
personally responsible for ‚any remaining obligations‛ and that
the Dansies could seek reimbursement from Bagley for the costs
of receiving water through the water system.
20140653-CA 3 2016 UT App 116Dansie v. Public Service Commission
Order. Id.; see also Hi-Country Estates Homeowners Ass’n v. Bagley
& Co. (Hi-Country Estates II), 2011 UT App 252, ¶¶ 10, 13, 262
P.3d 1188.
¶7 After we issued our decision in Hi-Country I, the Dansies
filed a motion in the trial court ‚to modify the Final Judgment to
conform to footnote 2 of our opinion as they understood it.‛ Hi-
Country Estates II, 2011 UT App 252, ¶ 4. The trial court denied
the motion and the Dansies once again appealed to this court. Id.We affirmed the trial court and explained that ‚the effect of the
Final Judgment . . . is that the Dansies are, going forward,
entitled to their contractual rights to free water and free hook-
ups unless the PSC intervenes and determines otherwise.‛ Id. ¶¶ 11,
14 (emphasis added).
¶8 In the wake of Hi-Country Estates II, the Association
presented evidence that it was providing water service to
customers outside its boundaries and requested reinstatement of
the water system’s CPCN. The PSC reinstated the CPCN,
bringing the water system again within the PSC’s jurisdiction.
One year later, the Association filed a general rate case
application with the PSC. The application included a
transportation fee specific to ‚well lease customers‛—in other
words, a fee specific to members of the Trust. The Association
asserted that it was under no obligation to serve the Trust
members, but it included the fee in the proposed rates as a
contingency to cover the costs it would incur should the PSC
determine such an obligation existed. Jesse Rodney Dansie, who
at the time was the trustee, filed a petition to intervene, which
the PSC granted.
¶9 The PSC scheduled a general rate increase hearing for
March 4, 2014, and a public witness hearing one day later.
Dansie filed both direct testimony and surrebuttal testimony,
addressing the Well Lease and whether the Association’s service
area included certain parcels of his property. He asserted that
Hi-Country Estates I and Hi-Country Estates II prevented
abrogation of the Well Lease; that he had a right to 12 million
20140653-CA 4 2016 UT App 116Dansie v. Public Service Commission
gallons of water per year from the Association at no cost,
including transportation fees; and that the proposed ‚well lease
rate‛ of $3.85 per 1,000 gallons was prohibited under the Well
Lease. Dansie also stated that he was a customer of the
Association and that his ‚back 80‛ acres were included in the
original water system service agreement and should continue to
be.
¶10 The day before the scheduled rate hearing, the Trust’s
attorney filed a motion for continuance. The motion stated that
Dansie had suffered a fall, was hospitalized, and thus would be
unable to attend the March 4 hearing. On March 4, instead of
holding the rate hearing, the PSC convened a hearing to discuss
Dansie’s motion. The Trust’s attorney appeared on behalf of
Dansie. After a discussion that included consideration of the
PSC’s statutory deadline of 240 days and the lengthy history of
litigation over the water system, the parties proposed to hold the
rate hearing one week later. The Trust’s attorney suggested the
new date and stated that if Dansie could not attend, his brother
‚would . . . be willing to testify in his place,‛ and that if Dansie’s
brother testified, the Trust would not appeal based on Dansie’s
absence. The Administrative Law Judge stated that she was ‚not
addressing that issue per se,‛ but she ‚recognize*d+‛ what the
Trust’s attorney had said. The PSC rescheduled the hearing.
¶11 On March 11, 2014, the parties met again for the rate
hearing. Dansie was still in the hospital, but the Trust’s attorney
again appeared on his behalf. Dansie’s brother did not attend,
and the Trust’s attorney moved to continue the hearing until
Dansie himself could attend, which the Trust’s attorney
acknowledged could be six weeks or more. After discussing the
motion with the parties, the PSC denied the motion and
proceeded with the hearing, but offered the parties, including
Dansie, the opportunity to file post-hearing briefs and responses
to any new issues raised in the hearing. The Trust’s attorney
agreed to proceed with the option to file a post-hearing brief
and, at the end of the hearing, stated, ‚I think we’ll file a post
20140653-CA 5 2016 UT App 116Dansie v. Public Service Commission
hearing brief probably within the next week or so.‛ However,
the Trust did not file a post-hearing brief.
¶12 Two months later, the PSC issued its order. The PSC
concluded, as it had in the 1986 Order, that the Well Lease was
‚void and unenforceable as against the public interest‛:
There has been no evidence presented that would
persuade us to overturn our prior 1986 order
finding that the Well Lease . . . is unreasonable,
unjust, and not in the public interest. Therefore,
based on the [PSC]’s earlier order, the lack of
contrary evidence, and the Division’s evidence and
recommendation in this docket, we decline to
deviate from our prior precedent. We find the Well
Lease . . . is void and unenforceable as against the
public interest. Thus, the [Association] has no
obligation to provide water to Mr. Dansie, and
therefore, the [Association’s] proposed fee of $3.85
per 1,000 gallons to deliver water to Mr. Dansie is
moot and disallowed from the tariff.
The PSC also concluded that Dansie’s western-most 40-acre
parcel falls within the Association’s service area, but the
remainder of his ‚back 80‛ acres does not.
¶13 Dansie requested rehearing and reconsideration. The PSC
denied these requests. The Trust timely petitioned this court for
judicial review of the PSC’s order.
ISSUES
¶14 The Trust raises three issues for review. First, the Trust
contends that the PSC exceeded its jurisdiction by declaring the
Well Lease void and unenforceable. Second, the Trust contends
that the PSC improperly approved the Association’s rate case
without then-trustee Jesse Rodney Dansie’s presence at the rate
20140653-CA 6 2016 UT App 116Dansie v. Public Service Commission
case hearings. Finally, the Trust contends that the PSC
improperly excluded certain property from the rate case. The
Trust argues that the property was owned by Dansie and had
been covered under the original service area for the water
system.
ANALYSIS
I. The PSC Did Not Exceed Its Jurisdiction
¶15 The Trust contends that the PSC exceeded its jurisdiction
when it concluded that the Well Lease ‚is void and
unenforceable as against the public interest.‛ The Trust argues
that in a prior iteration of this dispute, this court determined that
the Well Lease ‚is valid, binding and enforceable‛ and that the
PSC’s 1986 Order was no longer in force. The Trust also argues
that the PSC’s ‚authority to modify contracts is not boundless‛
and that the Well Lease falls outside of the PSC’s authority. ‚The
question of [PSC] jurisdiction turns on statutory interpretation
and therefore presents a question of law that we review for
correctness.‛ Bear Hollow Restoration, LLC v. Public Serv. Comm’n,
2012 UT 18, ¶ 16, 274 P.3d 956 (citation and internal quotation
marks omitted).
¶16 ‚To [e]nsure efficient use of resources, public utilities . . .
are[] granted exclusive franchises and regulated to prevent
exploitation by the producer while encouraging economies of
scale.‛ Garkane Power Ass’n v. Public Serv. Comm’n, 681 P.2d 1196,
1200 (Utah 1984) (per curiam). ‚[T]he Legislature may in the
exercise of its police power fix or determine rates and charges of
public utilities doing business within the state, or delegate the
power to do so, and within limitations and restrictions regulate
and control their service . . . .‛ Logan City v. Public Utils. Comm’n
of Utah, 271 P. 961, 970 (Utah 1928).
¶17 The legislature delegated to the PSC ‚power and
jurisdiction to supervise and regulate every public utility in this
state, and to supervise all of the business of every such public
20140653-CA 7 2016 UT App 116Dansie v. Public Service Commission
utility in this state, and to do all things . . . necessary or
convenient in the exercise of such power and jurisdiction.‛ Utah
Code Ann. § 54-4-1 (LexisNexis 2010); see also Bear Hollow, 2012
UT 18, ¶ 16. The PSC’s ‚general jurisdiction is ‘broad and
sweeping in scope.’‛ Beaver v. Qwest, Inc., 2001 UT 81, ¶ 10, 31
P.3d 1147 (quoting Utah Power & Light Co. v. Public Serv. Comm’n,
152 P.2d 542, 555 (Utah 1944)). This ‚broad authority over public
utility operations‛ allows the PSC ‚to protect the public
interest.‛ Utah Cable Television Operators Ass’n v. Public Serv.
Comm’n, 656 P.2d 398, 401 (Utah 1982). The PSC protects the
public interest by ensuring the utilities’ ‚continued ability . . . to
serve the customers who rely upon them for essential service
and products‛ and ‚balancing the interest of having financially
sound utilities that provide essential goods and services against
the public interest of having goods and services made available
without discrimination and on the basis of reasonable costs.‛
Garkane Power, 681 P.2d at 1207.
¶18 ‚In addition to broad powers, the legislature specifically
outlined rate making as a delegated function to the [PSC]‛ in
Utah Code section 54-4-4. Beaver, 2001 UT 81, ¶ 11. If, in
performing that function, the PSC ‚finds after a hearing that . . .
contracts affecting the rates . . . are: (A) unjust; (B) unreasonable;
(C) discriminatory; (D) preferential; or (E) otherwise in violation
of any laws,‛ the PSC ‚shall . . . determine the just, reasonable,
or sufficient rates . . . or contracts to be thereafter observed and
in force.‛ Utah Code Ann. § 54-4-4(1)(b)(i). ‚*I+n the fixing of
rates for public utility service . . . the [PSC] is not limited or
controlled by the provisions of antecedent contracts, but is at
liberty to disregard such contracts altogether if they come in
conflict with what the [PSC] finds to be a reasonable rate under
the conditions existing at the time of making the investigation.‛
Utah Hotel Co. v. Public Utils. Comm’n of Utah, 204 P. 511, 515
(Utah 1922). ‚*I+f it is the policy of the state to regulate the rates
for the services rendered by public utilities through the exercise
of the police power, then contracts respecting rates will not
prevent the state from subsequently authorizing a change in the
rates stated in the contract so as to prevent them from being
20140653-CA 8 2016 UT App 116Dansie v. Public Service Commission
unfair or discriminatory on the one hand or from being unjust or
confiscatory upon the other.‛ City of St. George v. Public Utils.
Comm’n, 220 P. 720, 722 (Utah 1923).
¶19 In 1996, the PSC ‚revoked the water system’s status as a
public utility.‛ Hi-Country Estates I, 2008 UT App 105, ¶ 5, 182
P.3d 417. Over the next 16 years, the Association operated the
water system as a private nonprofit corporation. Because it was
no longer a public utility, neither statutes regulating public
utilities nor the PSC’s order applied to the Association. Id. ¶ 12.
But in 2012, the PSC reinstated the Association’s CPCN, making
the water system once again a public utility and placing the
Association under the PSC’s jurisdiction. See Utah Code Ann.
§ 54-4-1. The PSC ordered the Association to file a rate case,
which in turn required the PSC to review the Well Lease. The
PSC cited its 1986 Order,3 ‚the lack of contrary evidence, and the
Division *of Public Utilities’+ evidence and recommendation‛ in
concluding that the Well Lease ‚is void and unenforceable as
against the public interest.‛
¶20 Before the PSC reinstated the CPCN and re-established its
jurisdiction, this court reviewed the validity of the Well Lease.
See Hi-Country Estates II, 2011 UT App 252, 262 P.3d 1188; Hi-
Country Estates I, 2008 UT App 105. Interpreting the Well Lease
3. The Trust argues that the PSC’s decision ‚relies heavily‛ on
the 1986 Order. Although the PSC quoted the 1986 Order, the
record shows that it primarily relied on evidence and testimony
from the Division of Public Utilities. ‚The Division is charged
with, inter alia, representing the public interest before the [PSC],
investigating rate cases, making policy recommendations to the
[PSC], and investigating compliance with [PSC] orders.‛
Mountain Fuel Supply Co. v. Public Serv. Comm’n of Utah, 861 P.2d
414, 418 n.3 (Utah 1993); see also Utah Code Ann. § 54-4a-1
(LexisNexis 2010). The PSC was ‚persuaded by the Division’s
evidence that no costs associated with the Well Lease Agreement
should be recovered through rates.‛
20140653-CA 9 2016 UT App 116Dansie v. Public Service Commission
as an ‚agreement*+ between private parties contracting for water
service,‛ Hi-Country Estates I, 2008 UT App 105, ¶ 12, we
concluded that the Well Lease ‚was not void as against public
policy‛ and that it ‚was not unconscionable,‛ Hi-Country Estates
II, 2011 UT App 252, ¶ 3 (citing Hi-Country Estates I, 2008 UT
App 105, ¶¶ 13, 15). The Trust argues that our holding in those
cases ‚reaffirm*ed+ that the *Association] system is burdened
with the obligation of the *Well Lease+ Agreement.‛ But ‚our
opinion [in Hi-Country Estates I] wisely hazarded no guess as to
whether the PSC could or would exert jurisdiction in the future,
and thus made no effort to adjudicate the rights of the parties or
the enforceability of the Well Lease going forward.‛ Id. ¶ 10.
And we took care to express no opinion as to whether, in the
future, the PSC would re-assert jurisdiction and again prevent
the Dansies from enjoying ‚free hook-ups and free water under
the Well Lease.‛ Id. ¶ 13.
¶21 The PSC has now re-asserted jurisdiction. Accordingly, it
‚is not limited or controlled by the provisions of antecedent
contracts, but is at liberty to disregard such contracts altogether
if they come in conflict with what the [PSC] finds to be a
reasonable rate under the conditions existing at the time of
making the investigation.‛ Utah Hotel Co., 204 P. at 515. Nothing
in Hi-Country Estates II prevents this result; as explained above,
its holding applied only so long as the PSC did not assert
jurisdiction. We therefore conclude that the PSC did not exceed
its jurisdiction, and we decline to disturb the PSC’s decision that
‚the Well Lease Agreement is unreasonable, unjust, and not in
the public interest.‛
II. The PSC Adequately Addressed the Trustee’s Inability to
Attend the Rate Case Hearing
¶22 The Trust contends that ‚because of unforeseeable health
reasons,‛ then-trustee Jesse Rodney Dansie (the Trustee) could
not attend the March 11, 2014 rate case hearing before the PSC.
The Trust argues that without the Trustee’s attendance,
20140653-CA 10 2016 UT App 116Dansie v. Public Service Commission
‚valuable and important rebuttal and cross-examination were
not conducted or factored into the [PSC]’s findings.‛
¶23 We reject this claim as inadequately briefed. The Trust
provides no ‚citations to the authorities‛ as required by rule 24
of the Utah Rules of Appellate Procedure. ‚Briefs must contain
reasoned analysis based upon relevant legal authority. An issue
is inadequately briefed when the overall analysis of the issue is
so lacking as to shift the burden of research and argument to the
reviewing court.‛ State v. Sloan, 2003 UT App 170, ¶ 13, 72 P.3d
138 (citation and internal quotation marks omitted). ‚Utah courts
routinely decline to consider inadequately briefed arguments.‛
State v. Davie, 2011 UT App 380, ¶ 16, 264 P.3d 770 (citation and
internal quotation marks omitted).
¶24 Although we decline to consider this argument on the
merits, we note that the PSC treated the Trustee fairly. It
originally scheduled the hearing for March 4, 2014. When the
Trustee was unable to attend due to his hospitalization, the PSC
continued the hearing one week. It did so with the agreement of
all parties, including the Trust’s attorney, who stated that March
11 was ‚acceptable‛ and that if the Trustee was still not available
on that date, another member of the Trust would be able to
testify. When the Trustee could not attend the March 11 hearing
and no other member of the Trust appeared, the Trust’s attorney
asked the PSC to continue the hearing a second time, but the
attorney did not know when the Trustee would be available. The
Trust’s attorney acknowledged at both hearings that the PSC ‚is
statutorily required to issue a decision within 240 days‛ and was
facing that deadline. See Utah Code Ann. § 54-7-12(3)
(LexisNexis 2010). Additionally, prior to the March 4 hearing,
the Trustee had submitted direct and surrebuttal written
testimony. When he was unable to attend the March 11 hearing,
the PSC gave the Trust the opportunity to file a post-hearing
brief, which it did not do. Finally, the Trustee’s absence did not
disadvantage the Trust alone, but also other parties, because it
gave the Trust the right to submit the Trustee’s testimony in
written form without cross-examination.
20140653-CA 11 2016 UT App 116Dansie v. Public Service Commission
III. The PSC Properly Excluded Dansie Property from the
Service Area
¶25 The Trust next contends that the PSC’s order ‚excludes
portions of the Dansie property from the proposed service area
despite the fact that those lands were included in the [original]
service area and specifically covered under the [Well Lease]
Agreement.‛ This argument is inadequately briefed. An
adequately briefed argument ‚contain*s+ the contentions and
reasons of the appellant with respect to the issues presented . . .
with citations to the authorities, statutes, and parts of the record
relied on.‛ Utah R. App. P. 24(a)(9). Further, ‚a party
challenging a fact finding must first marshal all record evidence
that supports the challenged finding.‛ Id. ‚A reviewing court ‘is
not simply a depository in which the appealing party may dump
the burden of argument and research.’‛ Hampton v. Professional
Title Servs., 2010 UT App 294, ¶ 2, 242 P.3d 796 (quoting State v.
Bishop, 753 P.2d 439, 450 (Utah 1988)).
¶26 The Trust identifies no provision of the Well Lease or any
other evidence that would obligate the Association to provide
water service to the excluded portions of the Dansie property.
The PSC noted that the Trust ‚presented no basis in law or fact
for altering‛ the Association service area and we conclude the
same on appeal.
CONCLUSION
¶27 We decline to disturb the order of the PSC.
20140653-CA 12 2016 UT App 116