B737 Captain reported the left wing shutoff valve failed during fueling resulting in a spill incident. Maintenance troubleshot the issue and aircraft was ultimately refused due to the Fuel Quantity Indicating System giving bad data readings.

Narrative

During pre-flight fueling operations; the left wing fuel shutoff valve failed; resulting in a fuel spill. Maintenance responded; and during subsequent fault isolation procedures; the FQIS (Fuel Quantity Indicating System) BITE test revealed a 'Tank 1 DEGRAD ACC - Compensator Data Bad' fault.The aircraft fuel quantity for Tank 1 was cross-verified by manually sticking the tank; and the readings were consistent with the fuel indication at that time. However; upon reset of the error; a sudden 450-lb drop in indicated fuel was observed; despite no engines or APU operating; and no evidence of fuel loss or leakage -- indicating a possible integrity issue with the FQIS compensator data.Maintenance spent approximately one hour troubleshooting the discrepancy but was unable to resolve the issue. Given the unresolved fault; the abnormal fuel indication; and the criticality of fuel system accuracy for safe flight operations; I determined the prudent course of action was to decline the aircraft.I coordinated with Maintenance Control via dispatch; declared the aircraft unable to operate; and the aircraft was subsequently removed from service.