Court Opinion

ID: 9896107
Source: CourtListenerOpinion
Date Created: 2023-11-09 16:04:50.972083+00
Date Added: 2024-06-11T09:14:02.858668
License: Public Domain

Supreme Court of Florida
                            ____________

                          No. SC2022-0094
                            ____________

           CITIZENS OF THE STATE OF FLORIDA, etc.,
                         Appellant,

                                 vs.

                   GARY F. CLARK, etc., et al.,
                           Appellees.

                         November 9, 2023

GROSSHANS, J.

     We have for review a decision of the Public Service

Commission allocating partial replacement power costs to Duke

Energy Florida, LLC. 1 We affirm, finding that the Office of Public

Counsel (OPC) did not properly preserve its legal challenges and

therefore waived the arguments it now presents in this appeal.

                                  I.

     In December 2020, a coal-fired steam power plant operated by

Duke Energy Florida, LLC (DEF) unexpectedly went offline. Before

     1. We have jurisdiction. See art. V, § 3(b)(2), Fla. Const.
bringing the plant—known as CR4—back online, the operator

needed to synchronize the generator’s electrical parameters to the

power grid. 2

     DEF operators first attempted automatic synchronization, but

the effort failed. Roughly 10 minutes later, operators tried to

perform a system reset by manually forcing a breaker to close.

Under normal circumstances, the manual sync check relay3 would

prevent closure and return the unit to “automatic” mode, permitting

additional automatic synchronization attempts. The manual sync

check relay unexpectedly failed, and the breaker closed out of

phase, harming the generator rotor and forcing an outage.

     After the outage, DEF performed a Root Cause Analysis (RCA)

to evaluate the factors contributing to the event and possible

corrective measures. The RCA identified two primary causes:

     2. Synchronization, which can be done either manually or
automatically, involves (1) matching the generator voltage and
frequency to the system voltage and frequency and (2) monitoring
the phase angle to ensure the breaker close circuit is complete
when the angle aligns.

     3. A manual sync check relay is a device used to verify that
two sides of a breaker match before closing.

                                 -2-
(1) the failure of the manual sync check relay and (2) the operator’s

failure to follow written operational procedures.

      DEF then petitioned the Public Service Commission for

recovery of all its replacement power costs, arguing that DEF’s

actions were “reasonable and prudent” with respect to the factors

leading to the forced outage. OPC and other parties challenged the

petition. 4

      The Commission held an evidentiary hearing to resolve issues

concerning DEF’s prudence. To establish its prudence, DEF called

one witness who testified that the operator’s action plus the failed

check relay led to the plant’s damage.

      After the hearing, the parties submitted additional arguments,

and the Commission held an agenda conference. At this

conference, the commissioners discussed, sua sponte but without

objection, mitigating circumstances and the division of financial

responsibility. Ultimately, the Commission unanimously voted to

grant DEF’s recovery of fifty percent of the replacement power costs

associated with the CR4 outage.

     4. The parties stipulated that DEF incurred $14.4 million in
replacement costs due to the out-of-phase synchronization.

                                 -3-
     The Commission’s six-page final order summarized the

positions of the parties and evidence presented, noted that DEF

bore the burden of proof, and concluded that two causes led to the

outage. Notably, in making that conclusion, the Commission

agreed that the operator’s failure to follow written procedures

directly led to the outage but found two “mitigating factors”: the

reliability of the manual sync check relay, and the operator’s

reliance on past success of the actions taken.

     OPC filed a motion for reconsideration with the Commission.

It asserted that the Commission’s decision to consider mitigating

factors was not authorized by law. OPC also argued that there was

insufficient evidence and factual findings to support the equal

division of financial responsibility. Prior to obtaining a ruling on

the motion, OPC appealed to this Court for judicial review and

subsequently withdrew the motion for reconsideration.

                                  II.

     OPC raises a series of interrelated legal challenges questioning

the authority of the Commission to assign partial costs and

consider mitigating factors when making a prudence

                                 -4-
determination. 5 It also argues that the Commission erroneously

interpreted and applied the burden of proof. In response, DEF

argues that these issues have not been preserved for our review.

We agree with DEF’s preservation arguments and affirm on that

basis.

     It is well established that issues not properly preserved are

waived. Sunset Harbour Condo. Ass’n v. Robbins, 914 So. 2d 925,

928 (Fla. 2005) (holding that it is “not appropriate for a party to

raise an issue for the first time on appeal”); Tillman v. State, 471 So.

2d 32, 35 (Fla. 1985); see also DeLisle v. Crane Co., 258 So. 3d

1219, 1237 (Fla. 2018) (Canady, C.J., dissenting) (“Parties every day

make choices in litigating cases that limit their options for review.

And parties ordinarily must live with the choices they make.”);

Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983) (The premise

of our adversarial system is that appellate courts do not sit as self-

directed boards of legal inquiry and research, but essentially as

     5. To the extent that OPC separately advances a sufficiency of
the evidence argument, that argument also does not support
reversal.

                                 -5-
arbiters of legal questions presented and argued by the parties

before them.”).

     Parties are required to preserve arguments because it allows

the lower tribunal to consider and resolve errors when they arise,

rather than wait for the process of an appeal and expend the

judicial resources that come with that procedure. Harrell v. State,

894 So. 2d 935, 940 (Fla. 2005) (stating that the purpose of the

preservation rule is to notify the trial judge of possible error and

offer a chance to correct it at an early stage); Castor v. State, 365

So. 2d 701, 703 (Fla. 1978). The preservation requirement also

serves the purpose of treating the parties, the court, and the

judicial system fairly. City of Orlando v. Birmingham, 539 So. 2d

1133, 1134 (Fla. 1989); Eaton v. Eaton, 293 So. 3d 567, 568 (Fla.

1st DCA 2020).

     One specific preservation principle comes into play when a

final order addresses substantive issues or reaches legal

conclusions that have not been previously raised or challenged. If

this occurs, a party must file a motion for rehearing to preserve

                                  -6-
those alleged errors for appellate review. 6 Holland v. Cheney Bros.,

Inc., 22 So. 3d 648, 650 (Fla. 1st DCA 2009); Morgan v. Am.

Airlines, 296 So. 3d 565, 566 (Fla. 1st DCA 2020).

     These preservation principles are no less applicable in the

context of formal administrative adjudication. Fla. Dep’t of Bus. &

Pro. Regul., Div. of Pari-Mutuel Wagering v. Inv. Corp. of Palm Beach,

747 So. 2d 374, 385 (Fla. 1999) (applying the preservation

requirement to review of a declaratory statement); see also Stueber

v. Gallagher, 812 So. 2d 454, 456 (Fla. 5th DCA 2002) (“In

administrative appeals a claim of error cannot be raised for the first

time on appeal.”); Richards v. Dep’t of Rev. Child Support Program,

306 So. 3d 220, 221 (Fla. 3d DCA 2020) (discussing preservation

requirement in administrative hearings). 7

     6. Though, generally, a challenge to a final order would be
termed a “Motion for Rehearing,” and a challenge to a nonfinal
order termed a “Motion for Reconsideration,” see Fla. R. Civ. P.
1.530, the Florida Administrative Code uses the word
“reconsideration” when discussing challenges to final orders in the
administrative context, see Fla. Admin. Code R. 25-22.060.

     7. Our preservation requirement does not extend to
determinations of whether there is competent substantial evidence
supporting an order, or allegations of fundamental error. See Fla.
R. Civ. P. 1.530(e); Pumphrey v. Dep’t of Child. & Fams., 292 So. 3d
1264 (Fla. 1st DCA 2020).

                                 -7-
     In this case, the alleged legal errors—burden-shifting,

misplaced reliance on mitigating circumstances, and division of

financial responsibility—first appeared in the Commission’s final

order. Though OPC filed a motion for reconsideration, it withdrew

the motion without giving the Commission a fair opportunity to

correct the alleged errors raised in the motion. Thus, OPC failed to

preserve these arguments. See Pisano v. Mayo Clinic Florida, 333

So.3d 782, 788 (Fla. 1st DCA 2022). This failure constrains our

review—that is, we can only reverse if those errors rise to the level

of fundamental error. Aills v. Boemi, 29 So. 3d 1105, 1109 (Fla.

2010). We have carefully reviewed the record and conclude that,

even assuming error, that error would not be fundamental.

     To reiterate, we do not discount the significance of the issues

raised by OPC. Instead, our refusal to exempt OPC’s arguments

from the preservation requirement stems from our commitment to

the critical interests served by preservation and the structural

limitations on the scope of our appellate review of lower tribunal

decisions.

                                 -8-
                                 III.

     For the reasons stated above, we affirm the Final Order of the

Public Service Commission.

     It is so ordered.

MUÑIZ, C.J., and CANADY, COURIEL, and FRANCIS, JJ., concur.
MUÑIZ, C.J., concurs with an opinion.
LABARGA, J., concurs in result.
SASSO, J., did not participate.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION
AND, IF FILED, DETERMINED.

MUÑIZ, C.J., concurring.

     I concur in the Court’s opinion but write briefly to clarify the

preservation rule that dictates the outcome in this case.

     The Court says that “[i]n this case, the alleged legal errors . . .

first appeared in the Commission’s final order.” Majority op. at 8.

“If this occurs,” the Court says, “a party must file a motion for

rehearing to preserve those alleged errors for appellate review.” Id.

at 6-7. As authority for this proposition, the Court cites two cases

from the First District Court of Appeal: Holland v. Cheney Bros.,

Inc., 22 So. 3d 648, 650 (Fla. 1st DCA 2009), and Morgan v. Am.

Airlines, 296 So. 3d 565, 566 (Fla. 1st DCA 2020).

                                  -9-
     Those First District cases in turn relied on an earlier case that

the Court does not cite, Hamilton v. R.L. Best International, 996 So.

2d 233 (Fla. 1st DCA 2008). Hamilton illuminates—and limits—the

preservation principle in play here. The Hamilton court observed

that “[m]ost issues are raised by an argument that is presented

during the course of the proceeding and resolved in the final order.”

Id. at 234. The court went on: “In some instances, however, the

issue may be one that arises for the first time in the final order

itself.” Id. Hamilton holds that, when an issue first appearing in

the final order gives rise to asserted error, the aggrieved party must

file a motion for rehearing as a predicate to seeking appellate

review. Id.

     The Hamilton principle applies in this case. The parties’ post-

hearing briefs took an all-or-nothing position. Each party assumed

that the Commission faced a binary prudence determination and

that the resulting award had to be zero or $14.4 million (the

undisputed amount of the replacement power costs), depending on

whether the utility met its burden of proof as to prudence. But the

Commission itself, after a post-hearing discussion limited to

Commission members and staff, decided to pursue a third path.

                                - 10 -
One commissioner encapsulated the group’s thinking: “[T]his is one

of those Solomon decisions, can you split the baby.” The ensuing

legal issues had not been litigated by the parties, who could not

have anticipated that the Commission’s final order would announce

such an unorthodox approach.

     Readers of the Court’s opinion must bear this context in mind

when applying today’s precedent to preservation disputes involving

alleged legal errors that “first appear” in a final order. The appellate

issues that the Court today finds unpreserved are ones that the

Commission itself created by resolving this case along lines that

neither party advocated. Our decision today does not address

preservation in the context of issues that are litigated by the parties

and then resolved (correctly or not) in a final order.

An Appeal from the Florida Public Service Commission

Richard Gentry, Public Counsel, Mary A. Wessling, Associate Public
Counsel, and Charles Rehwinkel, Deputy Public Counsel,
Tallahassee, Florida,

     for Appellant Citizens of the State of Florida

Keith C. Hetrick, General Counsel, Samantha M. Cibula, Attorney
Supervisor, Margo A. DuVal, Senior Attorney, and Jonathan H.
Rubottom, Senior Attorney, Florida Public Service Commission,
Tallahassee, Florida,

                                 - 11 -
     for Appellee Florida Public Service Commission

Dianne M. Triplett, Matthew R. Bernier, and Stephanie A. Cuello of
Duke Energy Florida LLC, Tallahassee, Florida; Michael P. Silver
and Alyssa L. Cory of Shutts & Bowen LLP, Tampa, Florida; and
Daniel E. Nordby of Shutts & Bowen LLP, Tallahassee, Florida,

     for Appellee Duke Energy Florida, LLC

                              - 12 -