Supreme Court Seal
South Carolina
JUDICIAL DEPARTMENT
Site Map | Feedback
2008-UP-200 - City of Newberry v. Newberry Electric Cooperative, Inc.

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals


City of Newberry, Appellant,

v.

Newberry Electric Cooperative, Inc., and Wal-Mart Stores East, LP and Wal-Mart Real Estate Business Trust, Respondents.


Appeal From Newberry County
 James E. Lockemy, Circuit Court Judge


Unpublished Opinion No. 2008-UP-200
Heard February 5, 2008 – Filed March 24, 2008


AFFIRMED


Eugene C. Griffith, of Newberry and Robert T. Bockman, of Columbia, for Appellant.

Frank Ellerbe, III and Bonnie D. Shealy, both of Columbia and Thomas H. Pope III, and Kyle B. Parker, both of Newberry, for Respondents.

PER CURIAM: In this declaratory action, the City of Newberry (City) appeals the circuit court’s finding Newberry Electric Cooperative, Inc. (the Cooperative) could lawfully provide electric service to a store located in an area annexed by the City.  We affirm.

FACTS

This case involves the City’s annexation of 25.7 acres of land within the service territory of the Cooperative, as assigned by the Public Service Commission (the Commission).  In early 1999, the City and the Cooperative learned Wal-Mart Stores East, LP and Wal-Mart Real Estate Business Trust (collectively Wal-Mart) intended to construct and operate a new store on the 25.7 acres.  At the time, Interlink Development, Ltd. (Interlink) owned the property.  Both the City and the Cooperative desired to provide electric service for the store.  Wal-Mart, believing either could serve the tract, solicited proposals from both parties.    

Subsequently, the Cooperative filed a complaint with the Commission seeking an order prohibiting the City from annexing or serving electricity to Wal-Mart.  The Cooperative also filed a Rule to Show Cause, asking the City to establish why it should not be permanently restrained from interfering with the Cooperative’s electric service to Wal-Mart.  Along with the original complaint, the Cooperative filed a motion for an immediate temporary restraining order.  Subsequently, the Cooperative filed a supplemental complaint with the Commission seeking an order prohibiting the City from attempting to construct or provide service to Wal-Mart.  

On June 11, 1999, the Commission ordered the City to cease and desist its attempts to provide electric service to Wal-Mart in the Cooperative’s assigned territory.  The order also required the City to appear and show cause why it should not be permanently restrained from interfering with the Cooperative’s electric service to Wal-Mart, and a hearing was scheduled in the matter.  The order did not prohibit the City from annexing the property because the Commission lacked the necessary jurisdiction to do so.  

A few days after the Commission issued the cease and desist order, the Cooperative filed a complaint with the circuit court.  In the complaint, the Cooperative sought an order: (1) prohibiting the City from annexing the property; (2) prohibiting the City from attempting to provide electrical services to Wal-Mart; and (3) prohibiting the City from requiring Wal-Mart to purchase electrical service as a condition for receiving other services.  The Cooperative also filed a motion in the circuit court seeking a temporary restraining order.  

In considering whether to choose the City or the Cooperative as its service provider, Wal-Mart initially concluded it should accept the City’s proposal.  Wal-Mart believed it would not be able to receive the other services offered by the City if it accepted the Cooperative’s proposal.  In an affidavit, the City’s Utility Director stated the City’s proposal “did not require Wal-Mart to accept electric service as a condition to the receipt of other services.”  With the Commission’s cease and desist order in place, Wal-Mart accepted the Cooperative’s proposal for electric service, preferring the Cooperative’s “cheaper rates.” 

On June 21, 1999, the Cooperative and Wal-Mart entered into two contracts: a distribution agreement and an agreement for electric power service.  One week later, the parties agreed to dismiss the Cooperative’s action in the circuit court.  Additionally, by letter, the Cooperative informed the Commission the parties had agreed to dismiss the action before it.  The letter included a proposed order of dismissal signed by the attorneys for both parties.  The proposed order stated the issue had “been resolved” and the matter was “moot” because Wal-Mart signed an agreement to purchase electricity from the Cooperative.  Ultimately, the Commission issued an order dismissing the action using the language from the proposed order. 

The City annexed the property by ordinance on July 27, 1999.  Before the date of annexation, the Cooperative had already commenced the work necessary to provide electricity to Wal-Mart.  This included clearing the land and relocating electric poles and power lines.  By January of 2000, the Cooperative was providing power to a contractor for the construction of the store; however, the Cooperative was not providing electricity to any building, structure, or facility.  On June 12, 2000, the Cooperative began to supply service to the completed Wal-Mart store.

On June 2, 2003, the City brought this action against the Cooperative.  In its complaint, the City sought:  (1) a declaratory judgment that the Cooperative did not have the authority to serve the Wal-Mart store; (2) an injunction prohibiting the Cooperative from further providing electric service to the store; and (3) damages. 

The Cooperative answered, asserting inter alia, (1) the City’s claim was barred by the statute of limitations and the doctrines of waiver, laches, and estoppel, and (2) it was entitled to a declaratory judgment that it had the authority to serve electricity to Wal-Mart.  In addition, the Cooperative asserted any interpretation of the applicable statutes which would impair its obligations under the service contracts would be unconstitutional.  Subsequently, Wal-Mart submitted a motion to intervene as defendants in the action pursuant to Rule 24, SCRCP, and the City and Cooperative consented to intervention.

After a hearing, the circuit court found the City was barred form bringing its claims by (1) the statute of limitations; (2) the doctrine of waiver; and (3) the related doctrines of laches, estoppel, and judicial estoppel.  The circuit court also held the Cooperative was entitled to prevail on the merits of its counterclaim for declaratory judgment.  This appeal followed. 

STANDARD OF REVIEW

“A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue.”  Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991).  “An issue, essentially one at law, will not be transformed into one in equity simply because declaratory relief is sought.”  Id.  “[T]he character, as legal or equitable, of an action is determined by the complaint in its main purpose, the nature of the issues as raised by the pleadings or the pleadings and proof, and the character of the relief sought under them.”  Clark v. Hargrave, 323 S.C. 84, 86, 473 S.E.2d 474, 476 (Ct. App. 1996) (citing Ins. Fin. Serv., Inc. v. S. C. Ins. Co., 271 S.C. 289, 247 S.E.2d 315 (1978)).  “An issue regarding statutory interpretation is a question of law.”  Univ. of S. Cal. v. Moran, 365 S.C. 270, 274, 617 S.E.2d 135, 137 (Ct. App. 2005).  “When reviewing an action at law, on appeal of a case tried without a jury, the appellate court’s jurisdiction is limited to correction of errors at law.”  Epworth Children’s Home v. Beasley, 365 S.C. 157, 164, 616 S.E.2d 710, 714 (2005).  “The appellate court will not disturb the circuit court’s findings of fact as long as they are reasonably supported by the evidence.”  Id.

LAW/ANALYSIS

The City argues the Cooperative is not authorized to serve Wal-Mart under the Rural Electric Cooperative Act (RECA).  We disagree.

The Legislature enacted the RECA to promote and extend electric energy in rural areas.  City of Newberry v. Newberry Elec. Co-op., 352 S.C. 570, 573, 575 S.E.2d 83, 85 (Ct. App. 2003) (citing S.C. Code Ann. § 33-49-210 (1990)). “Rural electric cooperatives are creatures of statute and only have such authority as the [L]egislature has given them.”  Duke Power Co. v. Laurens Elec. Co-op, 344 S.C. 101, 104, 543 S.E.2d 560, 562 (Ct. App. 2000).  As a general rule, a cooperative is prohibited from serving in nonrural areas because “[t]he RECA grants cooperatives the authority to supply electric energy only in rural areas, i.e., areas with populations less than 2,500 persons.”  City of Newberry, 352 S.C. at 573, 575 S.E.2d at 85 (citing S.C. Code Ann. § 33-49-250(1) (1990)).  To “prevent the ouster of co-ops from areas they have historically served due to population growth or annexation,” the legislature provided exceptions to the general prohibition on cooperative service in nonrural areas.  Duke Power, 344 S.C. at 105, 543 S.E.2d at 562.   At issue in this case is the “annexation exception,” which states in pertinent part:

the act of incorporating or annexing into a city or town an area in which the cooperative is serving constitutes the consent of the governing body of such city or town for the cooperative to continue serving all premises then being served by the cooperative and such cooperative is empowered to so serve.

S.C. Code Ann. 33-49-250(1) (2006).[1]

The plain language of section 33-49-250(1) provides the annexation exception applies upon a city’s “act of incorporating or annexing into a city or town an area in which the cooperative is serving.”  Our prior interpretations of the exception indicate a cooperative must be serving within the area at the time of annexation for the exception to apply.  See City of Newberry, 352 S.C. at 576, 575 S.E.2d at 86; Duke Power, 344 S.C. at 106, 543 S.E.2d at 563.

If a cooperative is serving an area at the time of annexation, the annexation implies the consent of a municipality for the cooperative to “continue serving all premises then being served.”  S.C. Code Ann. 33-49-250(1).  To this end, we have held “if a cooperative is serving existing customers, it has a statutory right to continue serving them” after annexation. City of Newberry, 352 S.C. at 576, 575 S.E.2d at 86 (emphasis in original).  Further, “the annexation exception also implies consent for cooperatives to serve ‘additional premises,’ i.e., new customers, within an annexed area.” Id. (quoting S.C. Code Ann. § 33-49-250(1)).  However, “the statute expressly limits a cooperative’s authority to provide new or increased service by allowing it only ‘until such time as the governing body of the city or town shall direct otherwise. . . .’” Id.

In the present case, the parties dispute whether the Cooperative was serving the area prior to annexation.  The City argues the annexation exception does not apply because the Cooperative was not providing electricity to a premises on the date of annexation, July 27, 1999.  The circuit court held the Cooperative was serving the premises because of the contract in place between the two parties.  In reaching this conclusion, the circuit court applied the definition of “premises” from the Territorial Assignment Act found in section 58-27-610 of the South Carolina Code (1977).  The pertinent part of the section defines “premises” as a “building, structure or facility to which electricity is being or is to be furnished.”  S.C. Code Ann. § 58-27-610 (2) (emphasis added).  The circuit court found the definition’s inclusion of buildings, structures, or facilities “to be furnished” supported its conclusion the statutory scheme contemplated a situation where a cooperative has a contract, but the customer has not yet erected a structure to which service can be provided.

We are inclined to point out that while section 58-27-610(2) includes premises “to be served,” the language of section 33-49-250(1) only refers to premises “then being served.”  A plain and ordinary interpretation of such language mandates that a cooperative must be serving a premises at the time of annexation.  Therefore, the circuit court’s reliance on the words “to be furnished,” is misplaced. 

Subsequent to the circuit court’s order, the supreme court addressed the issue of what constitutes a “premises then being served” under section 33-49-250(1).  In City of Camden v. Fairfield Elec. Co-op., Inc., 372 S.C. 543, 643 S.E.2d 687 (2007), the supreme court affirmed the application of the definition of “premises” from section 58-27-610(2) to the annexation exception. Id. at 547, 643 S.E.2d at 689.  However, the Camden court affirmed a finding that a rural cooperative did not have authority to serve an annexed property, even though the customer had selected the cooperative as their future service provider prior to annexation.  Id.  In its analysis, the court did not address the effect of the customer’s selection, and instead upheld the decision of the trial court because a security light placed on an unimproved lot “did not constitute a ‘building, structure, or facility’ to which electricity was being furnished, such that it was not a ‘premises then being served’” under section 33-49-250(1).  Id. at 547-48, 643 S.E.2d at 689.  Furthermore, the supreme court noted “the statute merely requires the coop[erative] to be serving a building, structure or facility at the time of annexation.”  Id. at 549, 643 S.E.2d at 690.

Camden is not controlling in this case for two reasons.  First, the property in Camden was located in an unassigned area, while the property in question in this case was specifically assigned to the Cooperative prior to annexation.  Second, instead of a mere customer selection of its future service provider, the Cooperative and Wal-Mart entered into valid and binding service contracts.   

In Camden, the only possible action which could be considered service to the premises prior to annexation was the construction of the security light on its existing lines. While the customer “selected” the cooperative as its power provider, the parties were not bound by the selection because there was no contract between them.  The customer was free to change its mind and select a different power provider because the area had not been assigned. 

We need not reach the issue of whether the cooperative was providing service to a premises at the time of the annexation since we conclude section 58-27-670(1) precludes the City from interfering with an existing contract for services.  As indicated, the parties in the present action had entered into a valid and binding contract prior to annexation.  This contract established the rights and responsibilities of the parties, which the parties could not disrupt without breaching the contract.  Furthermore, prior to annexation, the Cooperative acted pursuant to these established rights and responsibilities by commencing the work necessary to provide electricity to a building, structure, or facility in the future.  Lastly, because the present case involves annexation of an area which had been assigned to the Cooperative under the Territorial Assignments Act, section 58-27-670(1) of the South Carolina Code applies.  While section 58-27-670(1) expressly states it is subject to the provisions of 33-49-250, it also provides:

Annexation may not be construed to increase, decrease, or affect any other right or responsibility a municipality, electric cooperative, or electrical utility may have with regard to supplying electric service in areas assigned by the Public Service Commission in accordance with Chapter 27 of Title 58.

S.C. Code Ann. § 58-27-670(1) (supp. 2007).

In light of the language of section 58-27-670, we affirm the circuit court’s finding that the Cooperative may continue to serve the Wal-Mart premises because (1) the Cooperative had contractual rights and responsibilities to serve the building, structure, or facility, and (2) the Cooperative was performing pursuant to those rights and responsibilities.[2]

The circuit court also addressed the Cooperative’s defenses which additionally support the decision of the trial court.  The City of Newberry first argues the circuit court erred in applying the three year statute of limitations provision of section 15-3-530 of the South Carolina Code (2005).  We disagree.

As a threshold argument, the City contends the language of section 15-3-530 does not apply to its cause of action; instead, the City contends the circuit court should have relied upon the ten-year statute of limitations provision found in section 15-3-600 (2005).[3]  Specifically, the City argues the language of section 15-3-530 is general and does not specifically address the nature of its action or the underlying basis of its claims.  We disagree. 

Section 15-3-530 applies to “an action upon a liability created by statute other than a penalty or forfeiture.”  S.C. Code Ann. § 15-3-530(2) (2005).  The language of section 15-3-530 simply means an action is based upon a liability created by statute if the asserted right is one which would not exist but for the existence of a statute. See 51 Am. Jur. 2d Limitations of Actions § 127 (2007).  “In other words, an action is not based upon a liability created by statute if the right is one that would exist at common law in the absence of statute.”  Id. 

The City’s claims focus upon whether the Cooperative has the authority to serve Wal-Mart under the statutory scheme.  The current action would not exist without the statutes; accordingly, the litigation is an action upon a liability created by statute.  Therefore, we affirm the circuit court’s application of section 15-3-530 to the City’s actions. 

In addition to its assertion that section 15-3-530 does not apply, the City argues the circuit court erred in holding the statutory period under section 15-3-530 commenced in 1999, when the City annexed the property.  The City contends the statute of limitations began to run in 2000, when the Cooperative first furnished electricity to Wal-Mart.  We disagree.   

The discovery rule applies to causes of action arising under section 15-3-530.  Rumpf v. Mass. Mut. Life Ins. Co., 357 S.C. 386, 394, 593 S.E.2d 183, 187 (Ct. App. 2004).  “Under the discovery rule, the statute of limitations begins to run from the date the injured party either knows or should know, by the exercise of reasonable diligence, that a cause of action exists for the wrongful conduct.”  Epstein v. Brown, 363 S.C. 372, 376, 610 S.E.2d 816, 818 (2005).  The injured party must commence the action within three years of the time “facts and circumstances of the injury would put a person of common knowledge and experience on notice that some right of his had been invaded or that some claim against another party might exist.”  Johnston v. Bowen, 313 S.C. 61, 64, 437 S.E.2d 45, 47 (1993). 

The City argues the statutory period did not commence until June 12, 2000, when the Cooperative first began furnishing power to Wal-Mart.  The City bases this argument on its position the Cooperative’s service was illegal, and this service did not occur until it physically supplied electricity.  Even if we agreed with the City’s position, we note the City could have brought its claims immediately following annexation in 1999, because this is the date by which the City contends it obtained the right to serve Wal-Mart.  When the City annexed the property, the City was aware of the service contracts between the Cooperative and Wal-Mart, and also was aware that the parties fully intended to follow through with those contracts.  The City was part of litigation between all parties regarding the issue of service which further evidences notice to the City.  Therefore, we find evidence in the record supports the circuit court’s conclusion the City knew or should have known it could pursue a cause of action when it annexed the property in 1999, and that the action was barred by the applicable statute of limitations.

In deciding this case, the circuit court also addressed the defenses of waiver, laches, and estoppel.  While the court’s analysis on these other defenses is thorough and well-reasoned, in light of our disposition herein, we need not address these issues on appeal.  Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (appellate court need not address remaining issue when determination of prior issue is dispositive).

CONCLUSION

For the foregoing reasons, the order of the circuit court is

AFFIRMED.

HEARN, C.J., PIEPER, J., and GOOLSBY, A.J., concur.


[1] This statute was amended in 2004.  The language at issue herein was not changed.

[2] We note that the General Assembly subsequently amended section 58-27-670 by adding subsection two applicable to areas annexed after the effective date of the amendment; however, that amendment is not applicable to the action herein.

[3] Section 15-3-600 states that “[a]n action for relief not provided for in this chapter must be commenced within ten years after the cause of action shall have accrued.” S.C. Code Ann. § 15-3-600 (2005).