Grafton v. Ohio Edison Co.

• Decision Date: 13 November 1996
• Docket Number: No. 95-572,95-572
• Citation: 77 Ohio St.3d 102,671 N.E.2d 241
• Parties: , Util. L. Rep. P 26,575 VILLAGE OF GRAFTON, Appellee, v. OHIO EDISON COMPANY et al., Appellants.
• Court: Ohio Supreme Court

Page 102

77 Ohio St.3d 102

671 N.E.2d 241, Util. L. Rep. P 26,575

VILLAGE OF GRAFTON, Appellee, v. OHIO EDISON COMPANY et al., Appellants.

No. 95-572.

Supreme Court of Ohio.

Submitted May 1, 1996.

Decided Nov. 13, 1996.

On May 1, 1962, the village of Grafton granted the Ohio Edison Company a twenty-five-year, nonexclusive franchise to provide electric service to two commercial/industrial customers inside Grafton and to transport electrical energy through Grafton for use outside Grafton:

"Section 1. Ohio Edison Company * * * is hereby granted, for a period of twenty-five (25) years from the date of the filing of its acceptance hereof * * * the right and privilege to erect, construct, operate and maintain electric facilities, including without limitation poles * * * and all necessary fixtures and appurtenances, in, along, [and] over * * * the streets, alleys, public ways and grounds of the Village of Grafton.

"Section 2. Ohio Edison Company may exercise the rights granted in Section 1 of this Ordinance only to the extent reasonably necessary for the purpose of transmitting electric energy through the Village from points outside the corporate limits of the Village to other points outside said corporate limits, and for the purpose of supplying electrical energy to Sunshine Biscuits, Inc. Milling Division and W.O. Larson Foundry Co., or their successors and assigns.

" * * *

"Section 6. It is understood and agreed that the rights and privileges granted herein shall not be or be considered an exclusive grant and nothing in this ordinance shall in any way affect, restrict or abridge the rights of the Village of Grafton, at any time, to grant similar rights and privileges to any other person." (Emphasis added.)

In 1947, Grafton had granted Ohio Edison's predecessor in interest a fifteen-year franchise to maintain and operate an existing system for the transmission and distribution of electrical power, and to extend service to three specified customers. ¹ These franchise agreements expired by their own terms in 1962 and 1987. Ohio Edison did not seek to renew its limited franchises.

Grafton provides electric service to its inhabitants through its own electric department. Following expiration of the franchises, Ohio Edison still serves customers that it had served under the franchises, but has also initiated service to two newly developed commercial properties, those of Design Management Company ("Design") in 1992 and Rite Aid of Ohio, Inc. ("Rite Aid") in 1993. Design and Rite Aid were not part of the limited franchises. Ohio Edison ran separate service lines (including step-down transformers and other equipment) to Design and to Rite Aid from an existing Ohio Edison transmission line running within the Design and the Rite Aid properties. The service lines to Design and Rite Aid do not cross Grafton's public lands or rights-of-way. Grafton has electric poles and lines capable of serving Design and Rite Aid on or near both properties.

In 1992, Grafton brought an action for injunctive and declaratory relief and damages in the common pleas court relating to Ohio Edison's construction of the new service lines and provision of electric service to Design and Rite Aid. Ohio Edison filed a counterclaim against Grafton for tortious interference with business relations. Grafton, Ohio Edison, Rite Aid, and Design each moved for summary judgment on the various claims and the counterclaims.

The trial court found that Grafton could compel Ohio Edison to stop serving Design and Rite Aid because Ohio Edison had commenced service to these two customers after the expiration of the franchise agreement. The trial court noted that Grafton would be required to seek permission from the Public Utilities Commission of Ohio to terminate Ohio Edison's service to its pre-1987 customers, but held that Grafton need not make such an application in this case because Grafton was merely exercising its municipal utility authority under Section 4, Article XVIII of the Ohio Constitution.

As to its declaratory judgment, the court determined that there was no just reason for delay. Ohio Edison and Design appealed, arguing that Grafton could not stop Ohio Edison's continued service to any of its customers, irrespective of when they began receiving that service, without first obtaining commission permission under the Miller Act. The court of appeals disagreed, holding that the Miller Act did not apply in this case.

The court of appeals based its decision on Toledo v. Pub. Util. Comm. (1939), 135 Ohio St. 57, 62, 13 O.O. 329, 331, 19 N.E.2d 162, 164, in which this court held that the Miller Act did not create commission jurisdiction over the forced abandonment of a railroad "spur" or "side" track. The track at issue in Toledo served only nine individual customers. In Grafton, the court of appeals reasoned that, since the electric line at issue served only two customers, it was the equivalent of a "spur" or "side" track. Further, the court of appeals held that, since the Miller Act did not apply in the instant case, Grafton need not apply to the commission before compelling Ohio Edison to terminate service to Design and Rite Aid.

The cause is now before this court upon the allowance of a motion to certify the record.

Richard G. Lillie, & Assoc., and Richard G. Lillie, Cleveland, for appellee.

Jones, Day, Reavis & Pogue and David A. Kutik; Cook & Batista Co., L.P.A., and Daniel P. Batista, Lorain, for appellants.

Chester, Willcox, & Saxbe, John W. Bentine and Jeffrey L. Small, Columbus, urging affirmance for amicus curiae American Municipal Power--Ohio.

Robert S. Tongren, Consumers' Counsel, and Barry Cohen, Assistant Consumers' Counsel, Columbus, urging reversal for amicus curiae Office of Consumers' Counsel.

Porter, Wright, Morris & Arthur, Samuel H. Porter, Columbus, Alan D. Wright, Cleveland, Kathleen M. Trafford, Daniel R. Conway and Alaine Y. Miller, Columbus, urging reversal for amicus curiae Ohio Electric Utility Institute.

Betty D. Montgomery, Attorney General, Duane W. Luckey and Ann E. Henkener, Assistant Attorneys General, Columbus, urging reversal for amicus curiae Public Utilities Commission of Ohio.

PER CURIAM.

Appellants pose three propositions of law, arguing that the Miller Act prevents Grafton from terminating Ohio Edison's service to Design and Rite Aid without commission approval. For the reasons that follow, we hold that the Miller Act does not prevent Grafton from forcing Ohio Edison to abandon the Design and Rite Aid electric lines.

In order to obtain summary judgment, the movant must show that (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion when viewing evidence in favor of the nonmoving party, and that conclusion is adverse to the nonmoving party. State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn. (1994), 69 Ohio St.3d 217, 219, 631 N.E.2d 150, 152. This court has complete and independent power of review as to all questions of law. MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527 N.E.2d 777, 780; Indus. Energy Consumers of Ohio Power Co. v. Pub. Util. Comm. (1994), 68 Ohio St.3d 559, 563, 629 N.E.2d 423, 426. There are no questions of fact in the case now before us, as Ohio Edison acknowledges that it erected the service lines to Design and Rite Aid several years after its nonexclusive franchise with Grafton had expired. Thus, the determination of whether the trial court properly granted summary judgment below involves only questions of law and is considered on a de novo basis. Id.

This case involves the interrelationship between the Miller Act, R.C. 4905.20 and 4905.21; the Certified Territory Act, R.C. 4933.81 through 4933.90; and a municipality's power to control utilities within its municipal limits, Section 4, Article XVIII of the Ohio Constitution.

Under Section 4, Article XVIII of the Ohio Constitution, Grafton had constitutional authority to build and operate a municipal utility to serve its inhabitants. Wooster v. Graines (1990), 52 Ohio St.3d 180, 181, 556 N.E.2d 1163, 1164. This right is not generally subject to statutory restriction. Lucas v. Lucas Local School Dist. (1982), 2 Ohio St.3d 13, 2 OBR 501, 442 N.E.2d 449; Columbus v. Pub. Util. Comm. (1979), 58 Ohio St.2d 427, 12 O.O.3d 361, 390 N.E.2d 1201; Columbus v. Ohio Power Siting Comm. (1979), 58 Ohio St.2d 435, 12 O.O.3d 365, 390 N.E.2d 1208.

However, municipal utility operations are subject to statewide police power limitations for health and safety reasons. See Canton v. Whitman (1975), 44 Ohio St.2d 62, 73 O.O.2d 285, 337 N.E.2d 766; Delaware Cty. Bd. of Commrs. v. Columbus (1986), 26 Ohio St.3d 179, 184, 26 OBR 154, 158-159, 497 N.E.2d 1112, 1117; Columbus v. Teater (1978), 53 Ohio St.2d 253, 260-261, 7 O.O.3d 410, 414, 374 N.E.2d 154, 159. Moreover, the Miller Act requires municipalities to obtain commission approval before forcing the abandonment of nonmunicipal utility facilities or the withdrawal of nonmunicipal utility services located inside the municipality. State ex rel. Klapp v. Dayton Power & Light Co. (1967), 10 Ohio St.2d 14, 39 O.O.2d 9, 225 N.E.2d 230; State ex rel. Wear v. Cincinnati & Lake Erie RR. Co. (1934), 128 Ohio St. 95, 190 N.E. 224. Thus, under the Miller Act, a municipality generally must seek commission approval before forcing a utility to stop serving customers or to abandon its electric lines inside the municipal limits. Id.

However, Grafton asserts that the Miller Act does not apply in this case because the Design and Rite Aid service lines are service lines for individual customers and not a "main" electric line and because Ohio Edison improperly initiated service to Design and Rite Aid after expiration of the nonexclusive franchise. Grafton is correct only on the second ground. We discussed Grafton's...