### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON Se pte m be r 21, 200 4 S es sio n PIC KWICK ELEC TRIC CO OPE RA TIVE v. A LCO RN CO UN TY

ELEC TRIC PO WER AS SICA TION
A Dire ct A ppeal f

romthe Chancer y Court for Mc Nairy County No. 7939 The Honorabl e De wey C. Whitenton, Chan cellor

No. W2003-02699-C OA-R3-C V - F iled Novem ber 15, 2004

Th is i s a n a

pp e a l f ro m th e tr ia l c ou rt ’s g rant of a n inj un c tio n a g a ins t Ap pe llant to r e mov e its elec trical lines and fac iliti es from McNa iry County

. The trial court found that Appellant wa s a “noncons u m er owned e lectric sy stem” and, a s such, subject to injunction under T.C.A. §65- 34-103. Finding that Appellant is, in fac t, an “e l ec t ri c and communit y service corpor ation,” we hold that Appellant is not subject to injunction under T.C.A. §65-34- 103. We reve rse a nd rema nd.
Te nn. R . A pp. P . 3 ; A ppe al a s o f Rig ht ; J udgm e nt of t he Cha nc e r y C our t R e ve r se d and Rem anded

W. F RAN K C RAW FORD , P.J ., W.S ., delivere d the opinion of the court, in which A L AN E. H I G H ERS , J . and D AVI D R. F ARMER , J ., joined.
Jame s E. P ri ce, J r. of

Corinth; T e rry

L . Wo odof

Corinth f

or Ap pe llant, Al c orn Co un ty El e c tr ic Power Assoc iation Terry Abernathy

of Selmer f

or Appe llee Pickwick Ele ctric Cooper ative J . Richard L odg e, Jr., and Russell S

. Ba l d wi n o f Nashville for Tenne ssee Ele ctric Cooper ative Association as Amicus Curiae
OP IN ION
Al c orn Co un ty

El e c tr ic Pow e r A sso c ia tio n ( “ AC E, ” “ De fe nd a nt, ” or “ Ap pe llant” ) i s a member- owned non- profit elec tric service cooperative org anized and doing bus iness under the laws of the State of Mississippi for the purpose of provi d i n g elec tric ser vices to its members in Alcorn County , Mississ ippi, pursuant to a ce rtificate of authority from the Mississippi P ublic Service Commi ssion. Pi ckwick E lectr i c C o o p er at i v e ( “P E C , ” “ P l ai n t i ff, ” o r “ Ap p el l ee ”) is a me mber-ow ned non-prof it electric cooper ative org anized and doing business under the la ws of the Stat eo f T e n n e s s ee f o r t h e p u rp o s e o f p r o v i d i n g e l e c tr i c s e r v i c e t o i t s m e m b e r s w i t h i n i t s e x c l u s i v e g e o g r ap h i c t e rr i t o r y, which in c lu d e s M c N a iry

Co u n ty , T e n n e s s e e
. I n th e f a ll o f 2 0 0 2 , A CEc o n s tr

u c te d a th ree -phase ,-2-

12,000 volt electric line and related electric distributi on fac iliti es (including li g hting and seconda ry f a c i l i t i e s f o r s e r v i n g u l t i m a t e c o n s u m e r s ) w i t h i n P E C ’ s t e rr i t o r y i n M c N a i r y C o u n t y.
On Ap ri l 22 , 2 00 3, PEC fi le d a Complaint in the Chanc e ry Cou rt of Mc Nairy Cou nty a g a ins t ACE seeking a mandatory injunction to compel ACE to remove its power lines and distribution fac iliti es fr om McNairy

County . The sole g round re lied upon by PEC in t he complaint was that the ere ction and maintena nce of these lines and f

acilities violated T.C.A. §65-34- 103 beca use ACE wa s alleg edly a “non- consumer ow ned ele ctric sy stem” wit hin the m eaning of t hat s tatute. On M ay 5, 200 3 , AC E fi led its Answer de ny ing that it was a “non- consumer ow ned ele ctric sy stem.” I ncorpor ated into ACE’s Answe r wa s a Motion to Dismi ss on the g rounds that the re strictive provisions of T.C. A. § 6 5 -3 4 -1 0 3 wer e not applica ble to ACE beca

use ACE wa s an “e lectric and c ommun ity

se rv ic e c or

po ratio n, ” a s th a t te rm

is u se d inthe Te nn e sse e statut e s.
The matter was he ard by

the court sitt ing w ithout a jury on Aug ust 25, 2003. On October 24, 2003, the trial court enter ed it s “F inal Dec ree and Judgment” ( the “Judgment” ), which inc orporates the “Trial Opinion” by

ref ere nce. Spec ifically , the trial court held that: ( 1) ACE is a “non-c onsumer owned e lectric sy stem” under Tenne ssee law and, ther efor e, that ACE has violated T.C.A. §65-34- 10 3 by con str

uc tin g a ndma int a ini ng its e le c tr ic a l di stribu tio n f a c ili tie s o uts ide its g e og ra ph ic territory ; (2) that ACE’s faciliti es direc tly encr oach upon PEC’s exclusive territorial rig hts as pr ov ide d by Te nn e sse e la w; (3 ) that AC E’ s fa c ili tie s lim it or pr e c lud e PEC ’s abil ity to e xpa ndor

to sa fe ly ma int a in i ts sy ste m; (4 ) that ACE’ s equ ipm e nt is pla c e d invio la tio n o f the Natio na l E le c tr ic Safety Code (“N ESC”). ACE appea ls and raise s one issue for revie w as stated in its brief: W hetherACE is a “nonconsumer ow ned ele ctric sy stem” within the meaning of Section 65-34- 103, Tenne ssee Code Annotated. I f ACE is not a “non- consumer ow ned ele ctric sy s t em ” as t hat term is def ined by Tenne ssee law , then Section 65-34-103, T ennesse e Code Annotated, is not a pplicable to it; and the tr ia l c ou rt e rr e d inov e rr

uli ng its mot ionto d ism iss

. The trial c ourt’s interpr etation of the statutory scheme at is s u e in this case is a question of la w. As su c h, ou r r e vie w of the tr ia l c ou rt ’s or de r i s de novo upon the re cord w ith no presumption o f c o rr e c tn e s s a c c o mp a n y in g th e tria l c o u r t’ s c o n c lu s io n s o f la w
. See T enn. R . App. P. 13(d); Waldron v. Delffs , 98 8 S.W. 2d 18 2, 18 4 ( Te nn . Ct . A pp . 1 99 8) ; Sims v . St e war t , 973 S.W .2d 597, 599-600 (Te nn. Ct. App. 1998). T.C.A. §65-34- 1 0 3 (1993), unde r which the trial court g rante d PEC’s request for an inj un c tio n, re a ds , inpe rt ine nt p art , a s f oll ow s: 65-34-103. Non-c onsu m er owned elect ric s y stem– Expan sion lim its. – No no n- c on su me r ow ne d e le c tr ic sy ste m ma yconstr uc t, acquir e, or ma intain fac iliti es, lines , poles, or other equipment used or usef ul for the di s t ribution or sale of e lectric ity outside its current g e og ra ph ic te rrito ry , nor

ma y a ny no n- c on su me r o wn e d e le c tr ic-3- sy stem provide, by sale or otherwise, elec tricity to any parc el of land l o c a t e d o u t s i d e i t s c u rr e n tg e o g r ap h i c t e rr i t o r y.
A “ no n- c on su me r o wn e d e le c tr ic sy ste m” is d e fi ne d at T .C. A. §6 5- 34 -1 02 (4 ) ( 19 93 ) a s f oll ow s:

“ No n- c on su me r o wn e d e le c tric sy ste m” me a ns a ny pu bli c e le c tr ic sy s t em other than e lectric and community service cooper atives and municipal elec tric sy stems.... ACE arg ues that it is an “elect ri c and community servicecooper ative” and, there fore , not a “nonconsum er o wn ed ele ctric sy stem,” which is subjec t to the restrictions of T.C.A. §65-34- 103. An “ele ctric and community

service cooper ative” is de fined at T.C.A. §65-25-202(4) (Supp. 2003) as fo llo ws :

“ Coo pe rativ e ” or “ c oo pe rativ e s” me a ns on e (1 ) o r m or e no np ro fi t cooper at ive member ship corporations heretofor e or he rea fter organiz ed under

or otherw ise subject to this part, including corpor at i o n s transac ting business in Tenne ssee pur suant to §65-25- 221 under this part or under its prede cessor , the Elec tric Cooperative L aw, he reina fter c alled “f oreig n corpor ations.”
T. C.A . § 65 -2 5- 22 1( a ) ( 19 93 ) d e fi ne s a “ fo re ig n c or

po ratio n” a s f

oll ow s: Any corpor ation org anized on a nonprofit or a cooper ative basis for the primary

purpose a nd/or for one (1) or more s ec ondary

purposes a ndop e ratin g in a st ate a dja c e nt t o th is s ta te sh a ll b e pe rm itt e d to transac t business in this state without comply ing w ith any statute of this state perta ining to the qualification of fore ign c orporations for the transac tion of business in this state.
Under the statutory

scheme outlined above, if A CE qualifies as a n “ele ctric and community service c oo pe rativ e ” un de r T .C. A. §6 5- 25 -2 02 (4 ), the n it is n ot a “ no n- c on su mer ownede le c tr ic sy ste m” subject to injunction under T.C.A. §65-34-103. Ac cording to the stipulated fac ts, ACE is a member ow ne d n on pr of

it c or po ratio n o rg a nize d f

or the prima

ry pu rp os e of

pr ov idi ng ele ctr icity

to i ts me mbe rs in M iss iss ipp i, a state a dja c e nt t o Te nn e sse e
. We fi nd , th e re fo re , th a t A CE i s a n “ e le c tr ic a ndc ommun ity

se rv ic e c oo pe rativ e ” un de r T .C. A. §6 5- 25 -2 02 (4 ), a nd c ou ld al so be de fi ne d a s a fore ign c orporation under T.C.A. § 68-25- 221(a) . Be ca u s e AC E is not a “non-c onsumer owne d elec tric sy stem,” we find that the trial court erre d in enjoining ACE to re move its lines and fac iliti es under T.C.A. §65- 34-103.
Al tho ug h PE C do e s n ot a lle g e a ny g ro un ds oth e r tha n tho se fo un d a t T. C.A

. §6 5- 34 -1 03 in its Com plaint, at the he ar i n g o n t his matter, PEC proffe red the testimonyof its employ ee Ca rl Dudley . Mr. Dudley

testified that the plac ement of A CE’s lines and fac iliti es is in violation of the-4-

NE SC, andthat A CE’ s e qu ipm e nt i nte rf e re s w ithPEC ’s abil ity

to s e rv ic e a nd

/or e xpa ndthe ir equipment locate d in the are a. Despite the fac t that PEC’s C omplaint was not amende d to include alleg ations that ACE’s equipment wa s place d in violation of the NESC or that it hindered PEC’s ability to se rvice its own sy stem, no objection was made reg arding this e vidence

. Rule 15.02 of the Te nn . R. Civ . P. re a ds , inre le va nt p art , a s f oll ow s: When issues not raised by the pleading s are tried b y ex p re ss or implied consent of the pa rties, they shall be treated in all respe cts as if they had bee n raised in the pleading s. Such amendment of the pleading s as may

be nec essary

to cause them to conform to the evidenc e and to raise these issues may be made upon motion of any pa rty a t a ny tim e , e ve n a ft e r j ud g me nt; but failur e so to amend doe s not affect the result of the trial of these issues

. (Emphasis adde d). Consequently , the fa ct that PEC’s Compl aint does not include a n alleg ation that the place ment of ACE’s equipment is a safe ty hazard or a hindera nce to PEC’s own maintenanc e and/or expansion efforts doe s not invalidate the trial court’s finding on the matter. Mr. Dudley ’s testimony

is larg ely

undispute d ; h o we ver, the re w as not a c omprehe nsive inq uiry be low a s to ACE’ s all e g e d viol a tio ns of sa fe ty stand ard s, or a s to the e xten t, i f any , o f the ir interfe renc e with PEC’s equipment.
For the fore g oing r easons, we reverse the trial court’ s J udg ment. We remand the case for such further proc eeding s as may be nec essary

to determine w hether

and to what e x tent ACE’s lines and fa cilities are pla ced in violation of the N ESC, whether a nd to what extent ACE’s equipment hinders PEC’s ability

to expand and/or maintain its own equipment and, if any violations ex ist, then to determine the means by which those violations may be re medied. Costs of this appeal a re assessed one -half to Appe llant, Alcorn County Electric Power Association, and it s surety , and onehalf to the Appe llee, Pickwick Ele ctric Cooper ative.

__________________________________________ W. F RA NK C RAW FOR D, P RE S I DI NG JUDG E, W.S.