State v Cowee Mountain Imp. Assoc., (04-996) 09/06/2005

Appeal by Cowee Mountain Improvement Association, Inc. from an order entered 17 February 2004 by the North Carolina Utilities Commission. Heard in the Court of Appeals 13 April 2005.

    Public Staff Chief Counsel Antoinette R. Wike, for intervenor- appellee North Carolina Utilities Commission.

    Crisp, Page & Currin, L.L.P., by Robert F. Page, for complainant-appellee Edwin C. Carlson and intervenor-appellee Conservancy Community, Inc.

    Anne McDonough, pro-se, respondent-appellee.

    Coward, Hicks & Siler, P.A., by William H. Coward, for intervenor-appellant Cowee Mountain Improvement Association, Inc.

    BRYANT, Judge.

    In 1975, Mountain Acreage, Ltd., a limited partnership in which respondent, Mrs. Anne McDonough, was a primary partner, began development of a thirty-four lot subdivision named Cowee Mountainin Macon County, North Carolina. Although the recorded restrictive covenants for the subdivision prohibited further subdivision without the consent of the developers, the developers themselves, through Mountain Acreage, Ltd., subdivided a lot in 1984, creating a total of thirty-five separate lots. The Public Water Supply Section (PWSS) of the North Carolina Department of Environment & Natural Resources approved the water system originally installed by the developer, with only one well, to serve thirty-five lots. At the time of the hearing in this matter, all of the lots had been sold and there were a total of twenty-two property owners in the Cowee Mountain Subdivision. However, only seventeen of the lots were connected to the water system.
    Dr. Edwin C. Carlson purchased Lot 5 of Cowee Mountain Subdivision in 1993. At that time, the restrictive covenants prohibiting lot owners from subdividing their individual lots were still in force. The restrictive covenants were allowed to expire in 2000 and the property owners have been unable to reach agreement on new restrictive covenants. After the restrictive covenants had expired, Dr. Carlson lawfully subdivided his existing Lot 5 to create Lot 5A. Dr. Carlson's request for water utility service to be extended to Lot 5A was denied and, due to the denial, Dr. Carlson filed his Complaint with the Commission.
    Although Mrs. McDonough continues to own the water system, it is, in effect, operated by the Cowee Mountain Improvement Association, Inc. (CMIA). CMIA contracts with a local person in the Highlands area to provide routine maintenance and repairservices. CMIA collects all of the annual “homeowner” assessments from the lot owners and, from the proceeds of such assessments, pays the operating expenses of the water system. The electric account is in CMIA's name.
    According to PWSS, there are now two wells located at the Cowee Mountain water system which, together, produce a total of forty-three gallons per minute. Service is currently being provided to the seventeen connected lots by the first well. The second well is not on-line and is kept in reserve. Since 1975, when the subdivision came into being, only two lots have been subdivided - the one which was subdivided by the original developers in 1984 and the subdivision by Dr. Carlson of Lot 5 into Lots 5 and 5A following the expiration of the restrictive covenants in 2000.

    On 5 August 2002, Dr. Carlson filed a letter of complaint with the North Carolina Utilities Commission (Commission) regarding the water system being operated in Cowee Mountain Subdivision, Macon County, North Carolina. Dr. Carlson requested that the owner/operator of the water system, Mrs. Anne McDonough, be declared to be a public utility, and as such, be compelled to provide water utility service to Dr. Carlson's subdivided Lot 5A in the Cowee Mountain Subdivision. The Commission requested the Public Staff investigate the matter and, on 16 October 2002, the Public Staff submitted a written report of its findings. Dr. Carlson responded to the Public Staff's report by letter to theCommission. The Commission received additional letters from other property owners in the Cowee Mountain Subdivision.
    Based upon this correspondence and the Public Staff's report, the Commission issued an Order on 27 March 2003 requiring Mrs. McDonough to appear and show cause why her water system should not be declared a public utility. By further Order issued 1 April 2003, the Commission requested participation by the Public Staff at the hearing. The matter came before a Commission Hearing Examiner on 28 May 2003. At the hearing, CMIA and Cowee Ridge Consensus and Conservancy Community, Inc. intervened as parties of record. The intervention of the Public Staff was recognized pursuant to Commission Rule. The matter was heard by Hearing Examiner Larry Height, who subsequently resigned from employment at the Commission. By Order entered 31 July 2003, the Commission assigned Staff Attorney ToNola D. Brown-Bland to review the record and issue a Recommended Order as the Hearing Examiner.
    On 14 November 2003, Hearing Examiner Brown-Bland entered a Recommended Order entitled “Recommended Order Requiring Application for Franchise or Transfer of System.” On 1 December 2003, Dr. Carlson filed exceptions to the Recommended Order and requested that the Commission schedule an oral argument to consider his exceptions. By Order issued 10 December 2003, the Commission found good cause to schedule the matter for oral argument on Dr. Carlson's exceptions and oral arguments took place before the Full Commission on 20 January 2004. On 17 February 2004, the Commission issued its “Final Order Requiring Application For Franchise OrTransfer Of System And Service To Lot 5A” (Final Order) which is the subject of the present appeal. CMIA filed its Notice of Appeal on 19 April 2004.

    The dispositive issue on appeal is whether CMIA has standing to bring this appeal. “Standing refers to whether a party has a sufficient stake in an otherwise justiciable controversy such that he or she may properly seek adjudication of the matter.” American Woodland Indus., Inc. v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d 55, 57 (2002). A party seeking standing has the burden of proving three necessary elements:
        (1) “injury in fact” -- an invasion of a legally protected interest that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the [appellee]; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 114, 574 S.E.2d 48, 52 (2002) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 119 L. Ed. 2d 351, 364 (1992)), review denied, 356 N.C. 675, 577 S.E.2d 628 (2003).
    Furthermore, this Court has previously addressed the standing requirements necessary to appeal a decision by a North Carolina administrative agency:
        In order to have standing to appeal, a party must not only file notice of appeal within 30 days, but must also be aggrieved. Although the phrase 'aggrieved party' has no technical meaning and depends on the circumstances involved, the Administrative Procedure Actprovides guidance as to the intent of the General Assembly in its definition of 'person aggrieved' as any person or group of persons of common interest directly or indirectly affected substantially in his or its person, property, or employment by an administrative decision. In addition, . . . the North Carolina Supreme Court defined an aggrieved person as one adversely affected in respect of legal rights, or suffering from an infringement or denial of legal rights.

State ex rel. Utils. Comm'n v. Buck Island, Inc., 162 N.C. App. 568, 573-74, 592 S.E.2d 244, 248 (2004) (internal citations and quotations omitted). “A 'party aggrieved' is one whose rights have been directly and injuriously affected by the judgment entered . . . . Where a party is not aggrieved, his appeal will be dismissed.” Hoisington v. ZT-Winston-Salem Assocs., 133 N.C. App. 485, 496, 516 S.E.2d 176, 184 (1999) (citations omitted).
    CMIA asserts the following in an attempt to show it has standing as an aggrieved party:
            Appellant is Cowee Mountain Improvement Association, Inc., (CMIA) which is a voluntary . . . homeowners' association initially formed to manage the subject water system (even though it continues to be owned by Respondent, Anne McDonough) and to manage other common elements such as the roads. By and with the consent of the members of the Association, it has also come to be the voice of the individual owners in this litigation. . . .

            . . .

            The long-range impact of the decision is that it will open a wide door that will encourage other owners to re-subdivide their lots, creating the potential for some 140 lots in a subdivision that consisted of only 35 lots until the creation of Lot 5A. In essence, the Commission has said that unlimited re-subdivision will be subsidized byan ever-expanding water system, indefinitely until the aquifer is exhausted. . . .

            . . .

            . . . Suffice it to say that the legal rights of CMIA, as representative of all of the property owners save Dr. Carlson, and the properties of these owners, have been adversely affected by the Order and therefore Appellant is an aggrieved party.

            . . .

            . . . We must assume for our purposes here that the rules now being applied to benefit Appellee Dr. Carlson will be applied the same way for all future applicants.

    In the present case, CMIA has no legally protected interest, or “injury in fact,” and therefore lacks standing to bring this action. While CMIA claims to be representing “all of the property owners save Dr. Carlson” the record contains two letters from property owners (Charles T. Wolf, a member of the Board of Directors of CMIA, and Mark S. Murrah, an independent owner not represented by any homeowners' association) supporting Dr. Carlson. Specifically, the only interest asserted by CMIA was its desire to purchase the Cowee Mountain water system and operate it as a non- regulated community water association. There was an “executory” agreement between Mrs. McDonough and CMIA to sell the system but, as of the time of the Commission's Order, that agreement was on hold. The record does not reflect CMIA has yet purchased the water system. In the Commission's Final Order, there were no orders as to CMIA or any of its members. All of the mandates required that certain actions be taken by Mrs. McDonough or Dr. Carlson, but not by CMIA. If CMIA does ultimately purchase the system from Mrs.McDonough, it is still free to petition the Commission for an exemption from regulation as a public utility.
    Dismissed.