Subject-Matter Jurisdiction Fixed at Filing and Express Fee-Shifting Required: Sunnyside Park Utilities, Inc. v. Sorrells (Idaho 2025)

Introduction

In Sunnyside Park Utilities, Inc. v. Sorrells, the Idaho Supreme Court affirms a district court judgment in a dispute between a private water/sewer corporation and a commercial customer over unauthorized connections and excessive discharges into a septic system. The opinion addresses three principal themes:

• Appellate practice: the Court declines to reach the merits of the appellant’s arguments due to a flagrantly noncompliant opening brief under the Idaho Appellate Rules.
• Regulatory jurisdiction: the Court holds that the Idaho Public Utilities Commission’s (IPUC) original jurisdiction over a water corporation is determined as of the filing of the action; later corporate restructuring to avoid regulation cannot retroactively alter that jurisdictional analysis.
• Attorney fees: the Court reiterates the American Rule in Idaho—fee-shifting requires an express contractual provision or statute—and confirms that general “expense, loss, fines, charges or damages” language in utility rules does not authorize recovery of attorney fees.

The parties are Sunnyside Park Utilities, Inc. (SPU), a water corporation serving properties in the Sunnyside Industrial & Professional Park, and property owner Donald Sorrells. SPU obtained partial summary judgment declaring Sorrells a “persistent violator” of SPU’s Rules and Regulations for sewer-related conduct, while the district court dismissed SPU’s water-service claims for lack of subject-matter jurisdiction in favor of the IPUC. Both sides sought attorney fees and costs; none were awarded. On appeal, Sorrells challenged justiciability and the sufficiency of the evidence; SPU cross-appealed on the IPUC jurisdictional ruling and fee denials.

Summary of the Opinion

The Idaho Supreme Court affirmed the district court in all respects:

• No consideration of appellant’s merits. The Court refused to address Sorrells’ claims (on justiciability and “persistent violator” status) because his opening brief failed to comply with Idaho Appellate Rules 35(a)(4) and 36(a)(6), lacking an issues-presented section and citations to the record.
• IPUC jurisdiction is determined at filing. The district court correctly dismissed SPU’s water-service claim (alleged violations of IDAPA 31.21.01.602.01 and interference with SPU’s water meter) because, at the time SPU filed suit, SPU was a “water corporation” subject to the IPUC’s original jurisdiction under Idaho Code § 61-129 and IDAPA 31.21.01.009. Later IPUC proceedings in which SPU altered its bylaws and structure to take itself outside IPUC jurisdiction did not retroactively change the district court’s earlier jurisdictional ruling.
• No attorney fees or costs. The district court did not abuse its discretion in concluding there was no prevailing party overall (each side prevailed in part). Nor did SPU’s Rules and Regulations provide an express contractual basis for attorney fees. The Supreme Court likewise denied fees on appeal under Idaho Code §§ 12-120(3) and 12-121 and under the contract.

Background

SPU issued a “Will Serve” letter agreeing to provide water and sewer service to Sorrells’ property on the representation that only two bathrooms would be installed. Instead, Sorrells installed additional unpermitted water and sewer connections: a washer/dryer connection, RV septic connection, and ten frost-free hydrants. SPU discovered repeated excessive discharges—at one point traceable to a continuously running toilet—and issued multiple notices of violation. After continued problems, SPU shut off water and locked the meter; Sorrells (or his agent) re-opened the meter without authorization and threatened to remove SPU’s personnel “by force if necessary.”

SPU filed for declaratory judgment in November 2021 alleging rule violations and “willful waste” under IDAPA 31.21.01.602.01. The district court granted partial summary judgment to SPU on sewer issues, finding Sorrells a persistent violator under SPU’s Rules, but dismissed SPU’s water-service claims for lack of jurisdiction in favor of the IPUC. On fees, the court found no prevailing party overall and held that SPU’s Rules contained no express fee-shifting provision.

After the district court’s ruling, the IPUC initially asserted jurisdiction over SPU. SPU then undertook to restructure and amend its bylaws to qualify as a nonprofit “service-at-cost” entity exempt from IPUC regulation under Idaho Code § 61-104. The IPUC ultimately accepted that restructuring and concluded it lacked jurisdiction going forward. The Idaho Supreme Court took judicial notice of these IPUC orders to resolve the cross-appeal but held they did not affect the district court’s original ruling because subject-matter jurisdiction is assessed at the time of filing.

Analysis

Precedents and Authorities Cited

• Appellate practice: Idaho Appellate Rules 35(a)(4) (issues on appeal) and 36(a)(6) (argument requirements) framed the Court’s refusal to reach Sorrells’ merits. The Court invoked the “groomed horse” metaphor from South Valley Ground Water Dist. v. IDWR, emphasizing that new or noncompliant arguments are not welcome on appeal.
• Jurisdiction and justiciability: Groveland Water & Sewer Dist. v. City of Blackfoot and Tucker v. State confirm that justiciability implicates jurisdiction, reviewed de novo. The Court also cited out-of-state authorities—Warner v. USAA Ins. Agency, Inc. and Janowski v. Division of State Police—adopting the principle that subject-matter jurisdiction is determined at the time the suit is filed.
• Regulatory framework: Idaho Code § 61-129 deems Idaho “water corporations” to be public utilities subject to IPUC’s jurisdiction. IDAPA 31.21.01.009 reflects the Commission’s retained authority to interpret its rules and resolve formal complaints. Idaho Code § 61-104 exempts certain nonprofit, service-at-cost entities from Commission oversight. Probart v. Idaho Power allowed the Court to take judicial notice of IPUC orders.
• Attorney fees and prevailing party: The Court relied on Treasure Valley Home Solutions v. Chason; Breckenridge Property Fund 2016 v. Wally Enterprises; Lettunich v. Lettunich; and Sommer v. Misty Valley to affirm the district court’s discretion in prevailing party determinations. Tricore Investments v. Estate of Warren and City of Middleton v. Coleman Homes clarify that, under fee-shifting statutes, the prevailing party is assessed for the “action as a whole,” not claim-by-claim. Miller Trust v. Rocking Ranch teaches that a contract may create claim-specific fee rights, but only if it expressly does so.
• Contract interpretation and the American Rule: Jenkins v. Commercial National Bank of St. Anthony (1911) underscores Idaho’s American Rule—no fee-shifting absent statute or express agreement. The Court applied standard contract-interpretation precedents (Potlatch Education Ass’n; Cristo Viene Pentecostal Church; McFarland; Clark; Caldwell Land & Cattle; Bakker; Thurston Enterprises) to hold that SPU’s “expenses, loss, fines, charges or damages” language did not expressly authorize attorney fees.
• Fees on appeal: AgStar Financial Services v. Northwest Sand & Gravel confirms that § 12-120(3) fees go to the prevailing party on appeal; Erickson v. Erickson and Owen v. Smith explain § 12-121’s limited scope. Knudsen v. J.R. Simplot and Tapadeera v. Knowlton caution that an unsuccessful cross-appeal undermines prevailing-party status on appeal.

Legal Reasoning

1) Appellate briefing defects precluded merits review

The Court emphasized strict adherence to Idaho Appellate Rules. Sorrells’ opening brief was effectively a recycled trial-court brief, lacking the required “Issues on Appeal” section and citations to the appellate record. Given the wholesale rule violations and failure to engage the district court’s decision, the Court declined to reach the merits and affirmed without addressing the underlying justiciability and “persistent violator” arguments. The decision underscores that compliance with I.A.R. 35 and 36 is not optional; noncompliance can be fatal.

2) IPUC jurisdiction is fixed at the time of filing

The cross-appeal turned on whether the district court correctly ruled that only the IPUC could adjudicate SPU’s water-service claims. The Court held that, because SPU was a “water corporation” at the time it filed its declaratory-judgment petition, the district court properly concluded the IPUC had original jurisdiction over those water-service issues (Idaho Code § 61-129; IDAPA 31.21.01.009). The later IPUC orders—issued after SPU modified its bylaws and corporate structure to become a nonprofit “service-at-cost” entity under § 61-104—did not retroactively alter the district court’s earlier subject-matter jurisdiction analysis.

To reach that result, the Court adopted the time-of-filing rule for subject-matter jurisdiction: jurisdiction “is generally determined at the time the suit is filed,” and cannot be “fixed” retroactively by subsequent amendments or organizational changes. The Court cited Warner and Janowski to reinforce this foundational jurisdictional principle and applied it to Idaho’s public-utility regulatory scheme.

3) No attorney fees or costs below or on appeal

The district court found that neither party prevailed overall—SPU won a declaration that Sorrells was a persistent violator of SPU’s Rules for sewer-related conduct, while Sorrells succeeded in obtaining dismissal of the water-service claims to the IPUC. Idaho law treats the prevailing-party inquiry under statutes like § 12-120(3) holistically—across the “action as a whole”—and not claim-by-claim. The Supreme Court held that it was no abuse of discretion to find no prevailing party.

SPU also argued that its Rules and Regulations contractually entitled it to attorney fees as “expenses, loss, fines, charges or damages” caused by a violation. The Court rejected that reading under the American Rule, holding that absent express fee-shifting language, courts will not infer attorney fee entitlement from general “expenses” clauses—especially where, as here, the provision reads as a damages/indemnity clause for operational harm rather than a litigation-fee clause. Interpreting the rules’ plain text, the Court found no express agreement to shift fees in litigation to enforce the rules.

On appeal, SPU again sought fees under §§ 12-120(3) and 12-121 and under the contract. The Court denied them for the same reasons: no express contractual fee provision; mixed results (and SPU lost its cross-appeal); and the discretionary bar on § 12-121 fees where the appeal is not frivolous or purely re-argumentative under that statute’s narrow standard.

Impact and Practical Implications

A) Regulatory jurisdiction for private water providers

• Time-of-filing matters. Entities seeking to avoid IPUC oversight by restructuring (e.g., converting to nonprofit/service-at-cost status under § 61-104) must do so before filing disputes that implicate Commission rules. Later corporate changes—even if accepted by the IPUC—will not rewrite jurisdictional history in court.
• Split claims approach is validated. The district court’s bifurcated handling—retaining sewer-rule issues within judicial purview while directing water-service disputes to the IPUC—was effectively endorsed. Practitioners should carefully parse whether alleged conduct is regulated by Commission rules (water service) versus non-Commission matters (e.g., local septic/sewer rule compliance), and file in the right forum accordingly.

B) Contract drafting for utilities, HOAs, and service providers

• Express fee-shifting is essential. Generic “expenses, losses, fines, charges or damages” language will not support attorney-fee recovery in Idaho. If fee-shifting is intended, include a clear, express litigation-fee clause covering trial and appeals, and consider tailoring it to categories of claims.
• Align governing documents with regulatory posture. Whether a utility qualifies as exempt under § 61-104 depends not only on labels, but on being “organized and operated for service at cost.” Bylaws and operations must reflect that reality, and documentary proof should be available before disputes arise.

C) Appellate practice and strategy

• Strict compliance with I.A.R. 35 and 36. Failure to set out issues presented and to cite the record can lead the Court to refuse to consider the merits.
• Cross-appeals carry fee risk. As the Court warns, respondents should think carefully before cross-appealing; losing a cross-appeal can foreclose prevailing-party status and fee recovery on appeal.

Complex Concepts Simplified

• Subject-matter jurisdiction: A court’s power to hear a particular kind of case. It is determined when the case is filed and typically cannot be changed by later events.
• Idaho Public Utilities Commission (IPUC): The state agency that regulates public utilities, including “water corporations,” unless the provider qualifies for an exemption (e.g., a nonprofit organized and operated for service at cost under Idaho Code § 61-104).
• Water corporation/public utility: Under Idaho Code § 61-129, Idaho water corporations are public utilities subject to IPUC jurisdiction and Commission rules.
• IDAPA 31.21.01.602.01: A Commission rule related to water-service usage, often invoked in “waste of water” or similar enforcement scenarios.
• Declaratory judgment: A court ruling that clarifies the parties’ rights or legal relations without awarding damages, used here to determine compliance with private utility rules.
• Persistent violator (contractual): A status under SPU’s Rules and Regulations indicating repeated or continuing rule violations, used to justify enforcement actions (e.g., termination of service).
• American Rule on attorney fees: Each party pays their own attorney unless a statute or an express contract clause provides otherwise. Courts will not infer fee-shifting from general “expense” or “damages” language.
• Prevailing party: The party who wins the “primary issues” in litigation. Under fee statutes like § 12-120(3), Idaho courts decide this based on the action as a whole, not claim-by-claim. A contract can, however, specify claim-specific fee rights if it expressly says so.

Conclusion

Sunnyside Park Utilities, Inc. v. Sorrells makes three contributions to Idaho law and practice. First, it enforces the Idaho Appellate Rules by declining to reach the merits when an appellant’s briefing is noncompliant. Second, it clarifies that IPUC jurisdiction over “water corporations” is determined at the time a case is filed; later nonprofit/service-at-cost restructuring under § 61-104 cannot retroactively undo a district court’s correct jurisdictional ruling. Third, it reaffirms that Idaho’s American Rule requires express fee-shifting language; general “expense” or “damage” provisions in utility regulations do not suffice.

For utilities and commercial customers, the decision highlights careful forum selection and the importance of aligning corporate structure and bylaws with regulatory goals before litigation commences. For drafters of service agreements and utility rules, the case underscores the need for explicit fee clauses if litigation costs are to be recoverable. And for appellate practitioners, it is a stark reminder that rigorous compliance with I.A.R. 35 and 36 is indispensable to preserve issues for appellate review.

Key Takeaways

• Subject-matter jurisdiction is fixed as of filing; later corporate changes cannot cure or negate it.
• IPUC has original jurisdiction over water corporations; sewer/septic disputes may remain in court depending on the issues raised.
• General “expense/damages” clauses do not authorize attorney fees; fee-shifting requires express contractual language.
• Prevailing-party status under fee statutes is assessed holistically; mixed outcomes can result in no fees for anyone.
• Noncompliant appellate briefs risk outright forfeiture of merits review.