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Posted by: Tanja Trezise on Apr 13, 2012

Court: TN Court of Appeals

Attorneys 1:

L. Marshall Albritton and Jessica Van Dyke, Nashville, Tennessee, for the appellant, Outdoor Resorts at Gatlinburg, Inc.

Attorneys 2:

Robert E. Cooper, Jr., Attorney General and Reporter; William E. Young, Solicitor General; Ann Louise Vix, Senior Counsel; and Joe Shirley, Senior Counsel, Nashville, Tennessee, for the appellee, Utility Management Review Board.

James L. Gass and Matthew L. Fink, Sevierville, Tennessee, for the appellee, Webb Creek Utility District.

Judge(s): SUSANO

Webb Creek Utility District (“WCUD”) is a public utility district that, for the most part, furnishes potable water to its customers and processes their sewage. One of its customers is the plaintiff, Outdoor Resorts at Gatlinburg, Inc., the operator of a large campground for campers and recreational vehicles (“RVs”). Outdoor is somewhat unique in that it has its own water supply. It is a “sewer only” customer. From 1985 until 2008, the rate WCUD charged Outdoor was set by contract, which either party could terminate with sufficient notice. In 2008, WCUD terminated the contract and notified Outdoor that it would be charged based upon the number of campsites multiplied by a standard minimum rate per campsite. Outdoor objected to the rate. WCUD held a hearing and adopted the proposed rate over Outdoor’s objection. Outdoor asked for a hearing before the Utility Management Review Board (“the UMRB”). While the matter was pending before the UMRB, WCUD conducted a rate study, following which it proposed still another rate for Outdoor that was less than the objected-to rate, but more than the rate Outdoor had been paying under the terminated contract. The UMRB approved the new rate. Outdoor demanded a refund of overpayments made by it under the higher rate; the UMRB denied Outdoor’s request, stating that it lacked authority to order a refund. Outdoor also asked the UMRB to compel the individual who prepared the rate study to appear for a deposition. The UMRB denied the discovery request upon concluding that it did not have the authority to order such a deposition. Outdoor sought review in the trial court by way of a common law writ of certiorari on several grounds, including lack of material evidence to support the new rate, denial of due process in not compelling a deposition, and its characterization of UMRB’s action as illegal and arbitrary. The trial court allowed Outdoor to take the deposition of the author of the rate study; the court later admitted the deposition testimony into evidence. Nevertheless, the court concluded that the UMRB’s decision was supported by material evidence and dismissed Outdoor’s complaint. Outdoor appeals. We hold that Outdoor was not denied due process, but we vacate the trial court’s judgment because we hold that neither the first post-contract rate established by WCUD nor the newly adopted rate approved by the UMRB is supported by material evidence. Further, we conclude that the UMRB had authority to order a refund of the overpayments.