Sebastian Lake Pub. Util. Co., Inc. v. Sebastian Lake Realty

SEBASTIAN LAKE PUBLIC UTILITY COMPANY, Inc.
v. SEBASTIAN LAKE REALTY, et al.

96-167                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 17, 1996


1.   Appeal & error -- appellant was aggrieved party and had
     standing to raise issue on appeal. -- The supreme court held
     that appellant public utility, which had been allowed to
     intervene below and whose economic interests had been impaired
     by the trial court's decision, was an aggrieved party and, as
     such, had standing to raise an issue on appeal.

2.   Judgment -- summary judgment -- standard of review. -- The
     standard for appellate review of a summary judgment is whether
     the evidentiary items presented by the moving party in support
     of the motion left a question of material fact unanswered and,
     if not, whether the moving party was entitled to judgment as
     a matter of law; the appellate court views all proof in the
     light most favorable to the party opposing the motion,
     resolving all doubts and inferences against the moving party;
     when, however, the movant makes a prima facie showing of
     entitlement to summary judgment, the respondent must meet that
     proof with proof showing a genuine issue as to a material
     fact.

3.   Judgment -- summary judgment -- trial court correctly
     determined that appellant's certificate of public convenience
     and necessity had been nullified. -- Although appellant public
     utility was required to obtain from the Public Service
     Commission a certificate of public convenience and necessity
     in order to operate as a public utility, it was no longer a
     public utility; because it was no longer regulated, the
     Commission's rules and regulations were no longer applicable;
     consequently, the supreme court held that the trial court
     correctly determined that the certificate has been nullified;
     it was therefore unnecessary for the court to consider whether
     the certificate granted appellant an exclusive franchise to
     provide water service in the affected area.

4.   Appeal & error -- argument raised for first time on appeal not
     addressed -- even constitutional arguments waived. -- An
     argument that is raised for the first time on appeal is not
     properly preserved for appellate review and will not be
     addressed; even constitutional arguments are waived on appeal
     if they are not raised at trial.


     Appeal from Sebastian Chancery Court, Greenwood District; Jim
Spears, Chancellor; affirmed.
     John W. Settle Law Firm, by: John W. Settle, for appellant.
     Skinner Law Firm, P.A., by: Jack Skinner, for appellees. 

     Andree Layton Roaf, Justice.June 17, 1996.   *ADVREP*SC5*








SEBASTIAN LAKE PUBLIC UTILITY
COMPANY, INC.,
                    APPELLANT,

V.

SEBASTIAN LAKE REALTY, ET AL.,
                    APPELLEES.



96-167


APPEAL FROM THE SEBASTIAN
COUNTY CHANCERY COURT,
GREENWOOD DISTRICT,
NO. E94-338-G,
HON. JIM SPEARS, CHANCELLOR,




AFFIRMED.


                  Andree Layton Roaf, Justice.


     Sebastian Lake Public Utility Company, Inc., appeals from an
order granting summary judgment in favor of the appellees,
Sebastian Lake Realty and John's Jiffy Stop, Inc.  In granting the
summary judgment, the chancellor ordered the South Sebastian County
Water Users Association, Inc., to provide water service to the
appellees.  The trial court further concluded that, as a matter of
law, the appellant, which had been providing water to the
appellees, did not have an exclusive franchise for the delivery of
water service to any area in Sebastian County, Arkansas.  We
affirm.
     On October 4, 1994, John's Jiffy Stop and Sebastian Lake
Realty, operators of a convenience store and apartment complex,
filed a complaint against South Sebastian County Water Users
Association (Association) alleging that they operated businesses in
Sebastian County and that the Association was a public utility that
provided water service to Sebastian County.  The complaint further
alleged that the Association had refused to provide water service
to the appellees despite the fact that its water line was within a
hundred feet of the appellees' businesses.  The appellees asserted
that the actions of the Association were arbitrary and capricious,
in violation of Ark. Code Ann.  23-3-114 which prohibits a utility
from subjecting any corporation to any unreasonable prejudice or
disadvantage, in violation of the statutes of the United States,
and in violation of the rules and regulations of the United States
Farmers Home Administration.  The appellees alleged that they had
no adequate remedy at law, and they sought a mandatory injunction
requiring the Association to furnish them water service.
     In its answer, the Association alleged that the appellees did
not need water because they were being supplied water from the
appellant, Sebastian Lake Public Utility Company, Inc. (Public
Utility).  The answer provided that the Public Utility purchased
its water from the Association pursuant to a water purchase
contract dating from November 18, 1968.  The Association admitted
that it sells surplus water to the Public Utility which then sells
water to individual consumers in the Sebastian Lake community.
     On May 26, 1995, the Public Utility filed a motion to
intervene, alleging that it had a franchise recognized by the
Public Service Commission (PSC) to supply water in the area where
the appellees' convenience store and apartment complex were
located, and that its contract with the Association would be
contravened if the Association was ordered to supply water directly
to the appellees.  The trial court granted the Public Utility's
motion to intervene.
     On July 6, 1995, the appellees moved for summary judgment. 
They asserted that it was undisputed that the Association refused
to supply water to them and that the Association's water lines were
within close proximity to their businesses.  The appellees further
contended that the Public Utility was no longer regulated by the
PSC, that the Public Utility had not been awarded an exclusive
franchise, and that they were entitled to judgment as a matter of
law.
     Subsequently, the Public Utility also moved for summary
judgment, asserting that it was undisputed that the PSC granted it
a certificate of convenience and necessity to provide water to the
area known as Sebastian Lakes in which the appellees' property was
located.  The Public Utility contended that it was granted an
exclusive right to construct, operate, and maintain a waterworks
system in the area pursuant to the certificate.  The Public Utility
further asserted that even though its rates were no longer subject
to approval by the PSC, the certificate of convenience and
necessity remained in effect because it had never been revoked by
the PSC.
     In granting summary judgment, the chancellor concluded that
the Public Utility did not have an exclusive franchise to provide
water service within the geographic area of Sebastian Lake Estates. 
The trial court further concluded that it was undisputed that the
Public Utility was a Class C public utility which was no longer
regulated by the PSC by virtue of Act 37 of the First Extraordinary
Session of 1987.  The trial court stated that if it held that the
Public Utility had an exclusive and unregulated franchise, the
appellees would be left in the untenable position of having neither
bureaucratic redress for their complaints nor the ability to seek
better service in the market place.  The trial court also found
that when the General Assembly deregulated Class C water utilities
in 1987, it nullified by implication any exclusive franchise which
may have otherwise been in existence for such a utility pursuant to
a certificate of public convenience and necessity.

                           1. Standing
     We first consider whether the Public Utility has standing to
bring this appeal.  The appellees contend that because the
chancellor did not order the Public Utility to do anything, or
prohibit it from doing anything, it consequently does not have
standing to appeal the decision of the trial court.  We hold,
however, that the Public Utility is an aggrieved party, and as
such, has standing to raise an issue on appeal.  See McDonald's
Corp. v. Hawkins, 315 Ark. 487, 868 S.W.2d 78 (1994).  In reaching
its decision, the trial court interpreted the Public Utility's
certificate of public convenience and necessity and held that it
did not have an exclusive franchise.  Although the Public Utility
was not "ordered" to do anything, the trial court's decision
impaired its economic interests.  Further, the Public Utility was
allowed to intervene, and the appellees have not appealed that
decision.

                       2. Summary Judgment
     The standard for appellate review of a summary judgment is
whether the evidentiary items presented by the moving party in
support of the motion left a question of material fact unanswered
and, if not, whether the moving party is entitled to judgment as a
matter of law.  Baker v. Milam, 321 Ark. 234, 900 S.W.2d 209
(1995).  We view all proof in the light most favorable to the party
opposing the motion, resolving all doubts and inferences against
the moving party.  Id.  However, when the movant makes a prima
facie showing of entitlement to summary judgment, the respondent
must meet that proof with proof showing a genuine issue as to a
material fact. Id.
     In determining that the appellees were entitled to summary
judgment as a matter of law, the trial court considered certain
provisions of Title 23 of the Arkansas Code, which addresses Public
Utilities and Regulated Industries.  Chapter 3 of Title 23 is
entitled "Regulation of Utilities and Carriers Generally." 
Arkansas Code Annotated  23-3-201(a) (1987) provides:
     No new construction or operation of any equipment or
     facilities for supplying a public service, or extension
     thereof, shall be undertaken without first obtaining from
     the commission a certificate that public convenience and
     necessity require, or will require, such construction or
     operation.
Commission is defined as "the Arkansas Public Service Commission or
the Arkansas Transportation Commission with respect to the
particular public utilities and matters over which each commission
has jurisdiction."  Ark. Code Ann.  23-1-101(6) (Supp. 1995).
     On October 9, 1964, the PSC entered an order regarding an
application for a certificate of convenience and necessity filed by
the Public Utility.  The order provided that the Public Utility
sought the certificate to:
     construct, maintain and operate a waterworks system in order
     that it may offer water for sale to the public in an area
     within the boundaries of a project known as Sebastian Lake
     Estates, which is being developed by Sebastian Lake
     Developments, Inc. . . .
(Emphasis added.)  Ultimately, the commission ordered that:
     Sebastian Lake Public Utility Company, Inc. be, and it is
     hereby, granted a certificate of public convenience and
     necessity to construct, operate and maintain a waterworks
     system in the area described hereinabove, and it is
     hereby charged with the responsibility of rendering
     adequate water service to the public in the area at rates
     for such service as may be hereafter approved by this
     Commission.
(Emphasis added.)
     On appeal, the Public Utility contends that this certificate
of public convenience and necessity grants it an exclusive
franchise to provide water service in the specified geographic
area.  The Public Utility further contends that the certificate has
never been revoked by the PSC and, therefore, remains in effect.
     The trial court found that when the General Assembly
deregulated Class C water utilities in 1987, it also nullified by
implication any exclusive franchise which may have otherwise been
in existence for such a utility pursuant to a certificate of
convenience and necessity.  Arkansas Code Annotated  23-1-101
(Supp. 1995), Definitions, provides in part:
     (4)(A) "Public utility" includes persons and corporations, or
     their lessees, trustees, and receivers, owning or operating in
     this state equipment or facilities for:

          (i) Producing, generating, transmitting, delivering, or
     furnishing gas, electricity, steam, or another agent for the
     production of light, heat, or power to, or for, the public for
     compensation;

          (ii) Diverting, developing, pumping, impounding,
     distributing, or furnishing water to or for the public for
     compensation.  However, nothing in this subdivision shall be
     construed to include water facilities and equipment of cities
     and towns in the definition of public utility.  Further, the
     term "public utility" shall not include any entity described
     by this subdivision which meets any of the following criteria:

          (a) All property owners' associations whose
          facilities are enjoyed only by members of that
          association or residents of the community governed
          by that association; or

          (b) All entities whose annual operating revenues
          would cause them to be classified as Class C or
          lower water companies pursuant to the uniform
          system of accounts adopted by the Arkansas Public
          Service Commission.  However, the term "public
          utility" shall include any water company which
          petitions, or a majority of whose metered customers
          petition, the Arkansas Public Service Commission to
          come under the commission's jurisdiction, provided
          that the water company must have had combined
          annual operating revenues in excess of four hundred
          thousand dollars ($400,000) for the three (3)
          fiscal years immediately preceding the date of
          filing the petition; or

          (c) All improvements districts.
(Emphasis added.)  Act 37 of the First Extraordinary Session of
1987 amended the definition of public utility to provide that the
definition did not include an entity whose annual operating
revenues would cause them to be classified as a Class C or lower
water company.  The Emergency Clause of Act 37 provided in part:
     It is hereby found and determined by the General Assembly
     that regulation of small water and sewer utilities as
     "public utilities" under the jurisdiction of the Public
     Service Commission generally imposes heavy regulatory
     costs upon the consumers . . .
Act 21 of the Fourth Extraordinary Session of 1988 further amended
the definition to provide that a water company or its customers
could petition the PSC in order to come under its jurisdiction if
the company had sufficient revenues.  In the instant case, it is
uncontested that the Public Utility is a Class C utility which is
not regulated by the PSC.
     It is significant that a certificate of public convenience and
necessity is issued by the PSC as part of its regulatory power. 
See Ark. Code Ann.  23-3-201(a) (1987).  Section 23-3-201(a)
provides that "[n]o new construction or operation of any equipment
or facilities for supplying a public service, or extension thereof,
shall be undertaken without first obtaining from the commission a
certificate. . ."  It is also significant that the order of the PSC
granting the Public Utility's certificate of public convenience and
necessity provided that the Public Utility was charged with the
responsibility of "rendering adequate water service to the public
in the area at rates for such service as may be hereafter approved
by this Commission."  However, because the Public Utility is no
longer subject to regulation, the provisions of the certificate
have no force.
     In short, the Public Utility was required to obtain a
certificate in order to operate as a public utility; however, it is
no longer a public utility.  Because it is no longer regulated, the
Commission's rules and regulations are no longer applicable. 
Consequently, we hold that the trial court correctly determined
that the certificate has been nullified.  We therefore need not
consider whether the certificate granted the Public Utility an
exclusive franchise to provide water service in the area of
Sebastian Lakes Estates.

                         3. Due Process
     The Public Utility also contends that if its certificate has
been revoked by legislation or by the trial court's interpretation
of this legislation, it has been deprived of its property without
due process of law in violation of the United States and Arkansas
Constitutions.  The Public Utility submits that the statute is
unconstitutional because it makes no provision for any proceeding
by which it could protect its interest.
     This argument, however, was never presented to the trial
court.  We have repeatedly stated that an argument which is raised
for the first time on appeal is not properly preserved for
appellate review and will not be addressed.  Marsh & McLennan of
Arkansas v. Herget, 321 Ark. 180, 900 S.W.2d 195 (1995); see also
Smith v. Quality Ford, 324 Ark. 272, ___ S.W.2d ___ (1996);
Technical Services of Arkansas v. Pledger, 320 Ark. 333, 896 S.W.2d 433 (1995).  Even constitutional arguments are waived on appeal if
they are not raised at trial.  Hodges v. Gray, 321 Ark. 7, 901 S.W.2d 1 (1995).
     Affirmed.
     Dudley, J., not participating.