PRESENT: All the Justices 

PO RIVER WATER AND 

SEWER COMPANY 

v. Record No. 970050 OPINION BY JUSTICE BARBARA MILANO KEENAN 

 January 9, 1998 

INDIAN ACRES CLUB OF 

THORNBURG, INC., ET AL. 

FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY 

J. Peyton Farmer, Judge 

 In this appeal, we consider whether a property owners' 

association must pay a utility for services provided to common 

area facilities owned by the association. 

 Indian Acres Club of Thornburg, Inc. (the Association) is 

the property owners' association for Indian Acres of Thornburg, a 

private recreational campground in Spotsylvania County. The 

campground consists of 6,245 individual lots located on 802 

acres. 

 The campground includes certain facilities for the benefit 

of the individual lot owners, including roads, swimming pools, 

tennis courts, lakes, parks, a club house, a recreation center, a 

golf course, a car wash, showers, toilets, and lavatories. The 

Association owns all the campground's common area facilities. 

Each of the individual lot owners is a member of the 

Association. 

 Po River Water and Sewer Company (Po River) is a Virginia 

public service corporation certified by the State Corporation 

Commission (the Commission) to provide water and sewer services 

to the individual lot owners and to the campground's common area 

facilities. From 1971 through October 1987, Po River sent one 
bill for water and sewer services to the Association, or to its 

predecessor, Indian Acres International. Beginning in November 

1987, Po River billed the individual lot owners directly for the 

cost of providing water and sewer services to the entire 

campground, including the common areas. However, Po River 

experienced difficulties in collecting payment for these services 

from the individual lot owners. 

 In conjunction with Po River's 1992 application for a rate 

increase, the State Corporation Commission entered an order in 

January 1994, requiring Po River to record the amount of water 

consumed by the Association's common area facilities. The 

Commission further ordered Po River to submit in its next rate 

case a rate structure that incorporated the Association as a 

separate customer class and reflected the Association's water 

usage. 

 Po River filed its next rate case in 1995. Based on meter 

readings, the proposed tariffs and regulations requested a rate 

of $85,750 per quarter to be charged to the Association, rather 

than to the individual lot owners, for services provided to the 

common area facilities. In its required notice to the individual 

lot owners and to the Association, Po River stated that the rate 

for the individual lot owners would decrease in proportion to the 

rate paid by the Association, in order to prevent Po River from 

being paid twice for the same service. The State Corporation 

Commission approved the rate requested by Po River on an interim 

basis, subject to a refund, and permanent rates are currently 

under consideration by the Commission. 
 Although Po River sent several bills to the Association 

seeking payment for service to the common areas at the interim 

rate, the Association refused to pay any of these bills. Po 

River then informed the Association that it would terminate water 

and sewer services to the common area facilities unless the 

Association paid the quarterly bill of $85,750 and signed a 

contract for the continuation of utility service to the 

Association's facilities. 

 In response, the Association filed a petition for injunctive 

relief and declaratory judgment asking the trial court to enjoin 

Po River from terminating services to the common areas and to 

hold, among other things, that there is no contract for the 

provision of services between the Association and Po River, that 

the Association is not a customer of Po River, and that the 

Association is not responsible for Po River's customer billing.1

 Po River filed a cross-bill requesting that the trial court 

rule, under the theory of quantum meruit, that Po River is 

entitled to $85,750 for three months of water and sewer services 

provided to the Association's common area facilities. Po River 

also requested the trial court to issue a declaratory judgment 

stating that the Association must pay Po River for its services 

at the rate of $85,750 per quarter, subject to refund and 

modification as may be ordered by the State Corporation 

Commission. 

 

 1 Thirty-seven individual lot owners joined the Association 

as plaintiffs. However, all the plaintiffs except the 

Association and Audrey V. Conti later obtained a nonsuit of their 

claims against Po River. 
 After a bench trial, the court ruled that the Association 

was entitled to the "full relief requested." The court held that 

the individual lot owners are customers of Po River and "are 

obligated to pay for all water and sewerage services provided by 

Po River." The trial court enjoined Po River from terminating 

service to the common area facilities on the basis that the 

Association is a "non-paying customer" of the utility. Po River 

appeals from this decision. 

 Po River first argues that the trial court lacked 

jurisdiction to enjoin it from terminating services to the 

Association, and to rule that the individual lot owners are 

obligated to pay for the water and sewer services provided to the 

common area facilities. Po River asserts that the State 

Corporation Commission has sole jurisdiction over these matters. 

 Po River also argues that the trial court erred in denying the 

relief requested in its cross-bill. 

 In response, the Association contends that Po River failed 

to raise its jurisdictional argument in the trial court and, 

thus, is prevented from raising this objection on appeal. The 

Association also argues that the trial court properly exercised 

its jurisdiction to determine whether an individual or an entity 

is a customer of a public utility for the purposes of bill 

collection, because this determination involves private rights 

and contracts between a public utility and individuals. Lastly, 

the Association denies that Po River is entitled to quantum

meruit relief. 

 We first address the principles of law that apply to the 
jurisdictional issue raised by Po River. A challenge to a 

court's subject matter jurisdiction may be raised at any time, 

even for the first time on appeal. Wackwitz v. Roy, 244 Va. 60, 

63, 418 S.E.2d 861, 863 (1992); Morrison v. Bestler, 239 Va. 166, 

170, 387 S.E.2d 753, 756 (1990). 

 The Commission has a constitutional and statutory duty to 

fix just and reasonable public utility rates. Va. Const. art. 

XI, § 2; Code § 12.1-12; Anheuser-Busch Co. v. Virginia Natural 

Gas, 244 Va. 44, 46, 418 S.E.2d 857, 858 (1992). In setting 

rates for a public utility, the Commission must first determine 

the public utility's revenue requirement, and then decide where, 

how, and from what source or sources the revenue awarded is to be 

obtained. Id. at 47, 418 S.E.2d at 859; Secretary of Defense v. 

Chesapeake and Potomac Tel. Co., 217 Va. 149, 152, 225 S.E.2d 

414, 417 (1976); Apartment House Council v. PEPCO, 215 Va. 291, 

294, 208 S.E.2d 764, 766 (1974); City of Norfolk v. Chesapeake 

and Potomac Tel. Co., 192 Va. 292, 320, 64 S.E.2d 772, 789 

(1951). Thus, in order to allocate a public utility's revenue 

requirement, the Commission is charged with establishing 

appropriate customer classes based on usage characteristics of 

individuals and entities utilizing the utility's services. See

Anheuser-Busch Co., 244 Va. at 46-47, 418 S.E.2d at 858-59; 

Secretary of Defense, 217 Va. at 152-53, 225 S.E.2d at 416-17; 

Commonwealth v. Shenandoah River Light and Power Corp., 135 Va. 

47, 60, 115 S.E. 695, 699 (1923). In this manner, the Commission 

sets a particular rate for each identified customer class. See

Anheuser-Busch Co., 244 Va. at 46-47, 418 S.E.2d at 858-59; 
Secretary of Defense, 217 Va. at 152, 225 S.E.2d at 417; 

Chesapeake and Potomac Tel. Co., 192 Va. at 320, 64 S.E.2d at 

789. 

 These rate-making duties are encompassed within the 

Commission's general duty to supervise, regulate, and control 

public utilities in "all matters relating to the performance of 

their public duties and their charges therefor." Code § 56-36. 

Since the Commission has sole jurisdiction to define a utility's 

customer classes for the purposes of setting the rate at which 

the defined classes must pay for services received, the trial 

court did not have jurisdiction to determine who was a "customer" 

of Po River. Thus, the trial court erred in addressing the issue 

whether the individual lot owners and the Association are 

"customers" of Po River. 

 This conclusion, however, does not end our inquiry because 

the trial court has jurisdiction to adjudicate and determine 

private rights and contracts between public utilities and the 

individual recipients of their services. Appalachian Power Co. 

v. Walker, 214 Va. 524, 533-34, 201 S.E.2d 758, 766 (1974); City 

of Lynchburg v. Commonwealth, 164 Va. 57, 63-64, 178 S.E. 769, 

771 (1935); Norfolk & W. Ry. Co. v. Commonwealth, 143 Va. 106, 

113-14, 129 S.E. 324, 326 (1925). Thus, the trial court has 

jurisdiction to determine which individuals or entities have 

received a public utility's services. Once the trial court makes 

this determination, the court may then compute the recipient's 

liability for payment at the rate set by the Commission for the 

customer class pertaining to that recipient. Within this 
context, the trial court may also consider whether someone other 

than the recipient is obligated by contract to pay for the 

utility services provided to the recipient. See id.

 Applying these principles, we conclude that the trial court 

erred in holding that the individual lot owners are obligated to 

pay Po River directly for water and sewer services provided to 

the Association's common area facilities. The evidence is 

uncontroverted that the Association is the owner of the common 

areas and facilities, and that Po River provided water and sewer 

services to these facilities. Thus, the Association, not the 

individual lot owners, received these services from Po River. 

Further, the record contains no evidence that the individual lot 

owners were required by contract to pay for the utility services 

received by the Association. The documents on which the 

Association relies are unambiguous and do not establish such a 

duty binding the individual lot owners.2

 

 Although neither the individual lot owners nor the 

Association were required by contract to pay for the utility 

services received by the Association, we agree with Po River that 

the trial court erred in failing to grant Po River relief in 

accordance with its cross-bill, which requested equitable and 

declaratory relief under the theory of quantum meruit. To avoid 

unjust enrichment, equity will effect a "contract implied in 

 

 2 These documents include the restrictive covenants 

applicable to the individual lots, Po River's application to the 

Commission in 1971 requesting certificates of public convenience, 

Po River's 1971 rates, rules and regulations, and the lease 

agreement between Po River and Indian Acres Land Company. 
law," requiring one who accepts and receives the services of 

another to make reasonable compensation for those services. See

Marine Dev. Corp. v. Rodak, 225 Va. 137, 142-44, 300 S.E.2d 763, 

765-66 (1983); Ricks v. Sumler, 179 Va. 571, 577, 19 S.E.2d 889, 

891 (1942); Hendrickson v. Meredith, 161 Va. 193, 200, 170 S.E. 

602, 605 (1933). The liability to pay for the services is based 

on an implication of law that arises from the facts and 

circumstances presented, independent of agreement or presumed 

intention. Marine Dev. Corp., 225 Va. at 142, 300 S.E.2d at 766; 

Hendrickson, 161 Va. at 200-01, 170 S.E. at 605. The promise to 

pay is implied from the consideration received. Id. 

 Here, the record is clear that the Association, as the owner 

of the common area facilities, accepted and received water and 

sewer services from Po River. A promise to pay is implied from 

the acceptance and receipt of those services. Thus, we hold that 

the Association is required to pay Po River for those utility 

services. 

 As stated above, the interim rate in effect for the 

Association's water and sewer usage is $85,750 per quarter. The 

quarterly period for which Po River requests monetary relief on a 

quantum meruit basis is December 1, 1995 through February 29, 

1996. Thus, the Association is required to pay $85,750 to Po 

River for the water and sewer services provided to the 

Association's common area facilities for that period. We also 

hold that Po River is entitled to a judgment declaring that the 

Association is required to pay Po River for the water and sewer 

services provided to the Association's common area facilities at 
the rate of $85,750 per quarter, subject to any future refunds 

and future modifications that may be ordered by the Commission. 

 For these reasons, we will reverse the trial court's decree 

and enter final judgment in favor of Po River on the 

Association's petition for injunctive and declaratory relief and 

on Po River's cross-bill. 

Reversed and final judgment.