Stanley v. Ozarks Electric Cooperative Corporation

          Rehearing Denied January 15, 2020

         APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT [NO. 72CV-17-916], HONORABLE DOUG MARTIN, JUDGE

         The Evans Law Firm, P.A., Fayetteville, by: Marshall Dale Evans; and Hirsch Law Firm, P.A., Springdale, by: E. Kent Hirsch, for appellants.

         Friday, Eldredge & Clark LLP, Rogers, by: Marshall S. Ney and Katherine C. Campbell; and Eldridge Law Firm, Fayetteville, by: John R. Eldridge III, for appellees.

         OPINION

         BART F. VIRDEN, Judge

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          Appellants William B. Stanley, Niolene E. Stanley, Stephen C. Parker, Kathryn A. Parker, Matthew Britt, and Michael C. Willis appeal from the Washington County Circuit Court’s order dismissing their complaint against appellees Ozarks Electric Cooperative Corporation and OzarksGo, LLC (Ozarks Electric). The circuit court found that the Arkansas Public Service Commission (PSC) has primary jurisdiction of the case. Because this is an inverse-condemnation proceeding and otherwise involves private-property rights, appellants’ complaint was properly filed in the circuit court, which has jurisdiction over this matter. Accordingly, we reverse and remand for further proceedings.

          I. Standard of Review

          When reviewing a circuit court’s order granting a motion to dismiss, we treat the facts alleged in the complaint as true and view them in the light most favorable to the plaintiff. Sanford v. Walther, 2015 Ark. 285, 467 S.W.3d 139. Our standard of review is whether the circuit court abused its discretion. Id. As to issues of law presented, our review is de novo. Id.

          II. Allegations in the Complaint

          The plaintiffs/appellants are property owners in Washington County. The Stanleys and the Parkers own property subject to general-utility easements. Ozarks Electric has installed and is operating a commercial fiber-optic communications network independent of the transmission or distribution of electricity. The Stanleys and the Parkers allege that Ozarks Electric entered land adjacent to the existing utility easements to install its fiber-optic communications network. They allege that during construction of the network, they suffered damages, e.g., loss of use and loss of privacy, to the land adjacent to the easements for which no compensation was offered. They also allege that they suffered damages to the land within the existing easements due to the increased interference with their use of the land.

          Britt owns property through which Ozarks Electric has a right-of-way easement for the transmission or distribution of electricity. Britt executed this easement for Ozarks Electric’s distribution line, but the recorded easement’s use is limited on its face to an "electric line or system." He alleges that Ozarks Electric plans to install and operate a newly constructed 100 percent fiber-optic communications network independent of the existing system for the transmission or distribution of electricity. Britt seeks damages for inverse condemnation or, alternatively, increased interference.

          Willis owns property through which Ozarks Electric installed and maintains a transmission or distribution line for electricity. While there are no existing easements on record with respect to Willis’s property, Ozarks Electric plans to install and operate a newly constructed 100 percent fiber-optic communications network on his property. Willis seeks damages for inverse condemnation or, alternatively, increased interference.

          Appellants allege that Ozarks Electric plans to install and operate a commercial fiber-optic communications network that is independent of the existing wires and cables for the transmission or distribution of electricity. Ozarks Electric’s plans for such a network is a separate business distinct from the generation, transmission, or distribution of electricity. Neither the written, recorded electric power-line easement to Ozarks (on Britt’s property) nor the unrecorded

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electric power-line easement benefiting Ozarks (on Willis’s property) authorizes the installation of fiber-optic cables for communication, internet, or television purposes. Appellants allege that the Broadband Over Power Utility Lines Enabling Act provides for an award of damages to property owners for increased interference when a utility company installs broadband over power lines without just compensation. Appellants allege that BPL (broadband over power lines) is technology that sends two signals down one line: one signal is electricity, and the other is a broadband internet signal. According to appellants, the new fiber-optic system is not broadband over power lines; rather, it is broadband over newly installed fiber-optic cables. They contend that none of Ozarks Electric’s existing power lines are being used for the transmission of the internet signal.

          III. Eminent Domain

         "Whenever any corporation authorized by law to appropriate private property for its use shall have entered upon and appropriated any real or personal property, the owner of the property shall have the right to bring an action against the corporation in the circuit court of the county in which the property is situated for damages for the appropriation[.]" Ark. Code Ann. § 18-15-102(a) (Repl. 2015) (emphasis added). A property owner is entitled to receive just compensation when private property is taken for a public use. Ark. Code Ann. § 18-15-103(b)(1). Arkansas Code Annotated section 18-15-504 deals with petitions for the assessment of damages. "If an electric utility ... fails to obtain, by agreement with the owner of the property through which the line may be located, the right-of-way over the property, it may apply by petition to the circuit court of the county in which the property is situated to have the damages for the right-of-way assessed[.]" Ark. Code Ann. § 18-15-504(a). "An electric utility shall not be required to petition a court in order to provide broadband services over its own lines of wire, cables, poles, or other structures that are in service at the time that the electric utility provides broadband services over the lines of wire, cables, poles, or other structures." Ark. Code Ann. § 18-15-504(e)(1) (emphasis added). "An owner of property upon which an electric utility’s lines of wire, cables, poles, or other structures are located may petition the circuit court of the county in which the property is situated for any compensation to which it might be entitled under this subchapter." Ark. Code Ann. § 18-15-504(e)(2) (emphasis added). Section 18-15-507 provides,

If an owner of property petitions a court under section 18-15-504(e), the amount of damages, if any, payable to the owner for the use of preexisting lines of wire, cables, poles, or other structures by an electric utility to provide broadband services shall be limited to an amount sufficient to compensate the property owner for the increased interference, if any, with the owner’s use of the property caused by any new or additional physical attachments to the preexisting facility for the purpose of providing broadband services.

Ark. Code Ann. § 18-15-507(a)(2) (emphasis added).

          IV. The Broadband Over Power Lines Enabling Act

         An electric utility, along with affiliates and unaffiliated entities, may own or operate a broadband system on the electric utility’s electric-delivery system. Ark. Code Ann. § 23-18-804(a)(1), (2) & (3) (Repl. 2015). Arkansas Code Annotated section 23-18-805(a) provides that "[e]xcept as provided in this subchapter, neither the state nor any agency, instrumentality, or

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political subdivision of the state has jurisdiction over (1) an electric utility’s ownership or operation of a broadband system; or (2) the provision of broadband services by the electric utility, a broadband affiliate, or a broadband operator." "Nothing in this subchapter shall interfere with the Arkansas Public Service Commission’s authority to regulate public utilities pursuant to section 23-2-301 et seq." Ark. Code Ann. § 23-18-805(b).

         Section 23-3-119 provides that any person unlawfully treated by a public utility may complain to the PSC in writing, and the PSC has the authority to investigate and hold public hearings. The PSC shall also have the authority "to mandate monetary refunds and billing credits, or to order appropriate prospective relief as authorized or required by law, rule, regulation, or order." Ark. Code Ann. § 23-3-119(d). Moreover,

The jurisdiction of the commission in such disputes is primary and shall be exhausted before a court of law or equity may assume jurisdiction. However, the commission shall not have the authority to order payment of damages or to adjudicate disputes in which the right asserted is a private right found in the common law of contracts, torts, or property.

Id. (emphasis added).

         The statute specifically grants the PSC "the authority to adjudicate individual disputes between consumers and the public utilities which serve them when those disputes involve public rights. " Ark. Code Ann. § 23-3-119(f)(1) (emphasis added). Furthermore,

Public rights which the commission may adjudicate are those arising from the public utility statutes enacted by the General Assembly and the lawful rules, regulations, and orders entered by the commission in the execution of the statutes. The commission’s jurisdiction to adjudicate public rights does not and cannot, however, extend to disputes in which the right asserted is a private right found in the common law of contracts, torts, or property.

Ark. Code Ann. § 23-3-119(f)(2).

          V. Discussion

          Here, the circuit court granted Ozarks Electric’s motion to dismiss because it found that the PSC had primary jurisdiction over the matter. Subject-matter jurisdiction is the power of the court to hear and determine the subject matter in controversy between the parties. Perroni v. Sachar, 2017 Ark. 59, 513 S.W.3d 239. An Arkansas court lacks subject-matter jurisdiction if it cannot hear a matter "under any circumstances" and is "wholly incompetent to grant the relief sought." Edwards v. Edwards, 2009 Ark. 580, at 4, 357 S.W.3d 445, 448 (quoting J.W. Reynolds Lumber Co. v. Smackover State Bank, 310 Ark. 342, 352-53, 836 S.W.2d 853, 858 (1992)). Circuit courts have original jurisdiction of "all justiciable matters not otherwise assigned pursuant to" the constitution. Ark. Const. amend. 80, § ...