City of Hernando v. North Miss. Utility Co.
| Docket Number: | 2007-CA-00176-COA Linked Case(s): 2007-CA-00176-COA2007-CT-00176-SCT |
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| Oral Argument: | 04-02-2008 | |
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| Court of Appeals: |
Opinion Link Opinion Date: 09-02-2008 Opinion Author: Barnes, J. Holding: Reversed and Rendered |
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| Additional Case Information: |
Topic: Water service - New evidence on remand - Certificate of public convenience - Validity of agreement - Law of the case doctrine Judge(s) Concurring: King, C.J., Lee and Myers, P.JJ., Irving, Chandler, Griffis, Ishee, Roberts, and Carlton, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 11-15-2006 Appealed from: DeSoto County Chancery Court Judge: Melvin McClure, Jr. Disposition: INJUNCTION ISSUED AGAINST CITY OF HERNANDO Case Number: 01-7-972 |
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| Party Name: | Attorney Name: | |||
| Appellant: | CITY OF HERNANDO, MISSISSIPPI |
KENNETH E. STOCKTON |
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| Appellee: | NORTH MISSISSIPPI UTILITY COMPANY | DENNIS W. MILLER |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Water service - New evidence on remand - Certificate of public convenience - Validity of agreement - Law of the case doctrine |
| Summary of the Facts: | In February 1966, the City of Hernando and Bright’s Water Association, a private water company, entered into an agreement whereby, in exchange for the City agreeing not to object to BWA’s serving water to the area located within one mile of the City’s limits, BWA agreed, in the event the City ever annexed the area, to release the area from its service area and to give the City the option to purchase the pipes, equipment, and other assets. In 1990, the City annexed the area covered by the agreement. Subsequently, BWA sold its certificated area and assets to North Mississippi Utility Company. In 1992, the City purchased all of the water lines and meters located in the annexed area from NMUC for $10,647.60 pursuant to the terms of the 1966 agreement. In 2001, NMUC filed a complaint in chancery court County seeking to enjoin the City from serving water to customers within NMUC’s certificated area. The chancery court granted the injunction on the ground that the 1966 agreement did not comply with the statute of frauds; however, the Court of Appeals reversed the chancery court’s ruling on appeal and remanded the case for further consideration. On remand, the chancery court again enjoined the City from serving water to the annexed area. The City appeals. |
| Summary of Opinion Analysis: | The City argues that the chancery court erred in failing to abide by the Court’s instructions on remand and in allowing NMUC to present evidence regarding the value of a certificate of public convenience at the hearing held on remand. The instructions from the Court in the first appeal were as follows: “On remand, the primary question for the chancellor to decide is whether Hernando’s payment of the BWA and NMUC invoices, during 1991 and 1992, constituted full payment for the rights to serve all of the property annexed in 1990. If Hernando paid fair value for BWA’s pipes and equipment within the area of land annexed in 1990, then the 1966 agreement should be enforced and NMUC’s claims should fail.” NMUC argues that as a result of the remand, the parties were restored to the position on the record occupied at the time of the rendition of the judgment and therefore, it was entitled to produce new and additional competent evidence on remand. However, only when a case has been reversed and remanded without final directions will the parties be restored to the exact position on the record that they severally occupied at the time of the rendition of the judgment in the trial court. Thus, on remand the chancellor was permitted to consider one issue: whether the City paid fair value for BWA’s pipes and equipment within the area of land annexed. Having specifically found that the City did in fact pay fair value, the chancellor was, in accordance with the Court of Appeal’s instructions, constrained to find that the 1996 agreement was enforceable and that NMUC’s claims should fail. When NMUC purchased BWA’s certificate of public convenience and necessity and assets, it became BWA’s successor-in-interest; therefore, it was bound by the 1966 agreement to the same extent BWA was bound. There were two separate and distinct parts to the 1966 agreement: a release of the service area and an option to purchase the pipes and equipment located within the service area. Accordingly, NMUC’s obligation pursuant to the agreement was two-fold: first, NMUC was obligated, upon the City’s request, to release the annexed area from its service area, i.e., the area covered by its certificate of public convenience and necessity; and in a second and separate obligation, NMUC was required to provide the City with the opportunity to purchase the pipes and equipment located within the annexed area. Therefore, by the agreement’s own terms, the certificate of public convenience and necessity was not encompassed by the term “other assets” because in the preceding provision, NMUC agreed to release the annexed area from its service area. By exercising its rights under the 1966 agreement, the City did not invade NMUC’s certificated area; rather, the portion of NMUC’s certificated area represented by the annexed area was released. NMUC argues that the 1966 agreement should fail for lack of consideration, because the City did not give up anything by permitting NMUC to serve customers in the one-mile annexed area. The fact that the City did not have the exclusive right to furnish water to customers within the annexed area does not mean that the City did not give value to BWA in exchange for the release of the service area located in the annexed area. The City had the right to object to BWA’s expansion into the area within one-mile of the City’s limits, and the City provided consideration when it gave up that right. In addition, the Court found that the 1966 agreement was valid and enforceable on the prior appeal of this case. According to the law of the case doctrine, this issue cannot be reconsidered on appeal. Pursuant to the 1966 agreement, NMUC was required to release the portion of its certificated area located within the one-mile annexed area in addition to providing the City with the option to purchase the pipes and equipment located in the area. |
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