Cleveland v. Cleveland Elec. Illum. Co., 69584

• Decision Date: 30 September 1996
• Docket Number: No. 69584,69584
• Citation: 684 N.E.2d 343,115 Ohio App.3d 1
• Parties: CITY OF CLEVELAND et al., Appellants, v. CLEVELAND ELECTRIC ILLUMINATING COMPANY, Appellee. * Eighth District, Cuyahoga County
• Court: Ohio Court of Appeals

Page 1

115 Ohio App.3d 1

684 N.E.2d 343

CITY OF CLEVELAND et al., Appellants, v. CLEVELAND ELECTRIC ILLUMINATING COMPANY, Appellee. ^*

No. 69584.

Court of Appeals of Ohio,

Eighth District, Cuyahoga County.

Decided Sept. 30, 1996.

Sharon Sobol Jordan, Director of Law, Cleveland; Climaco, Climaco, Seminatore, Lefkowitz & Garofoli, Co., L.P.A., Richard M. Knoth and Jayne L. Jakubaitis, Cleveland; Chester, Willcox & Saxbe, John W. Bentine and Charles Rockwell Saxbe, Columbus, for appellants.

Sally L. Geib, Gregory A. Cada and Michael C. Regulinski, Independence, for appellee.

KARPINSKI, Judge.

Plaintiffs-appellants, city of Cleveland and American Municipal Power-Ohio ("AMP-Ohio"), appeal from the judgment of the trial court dismissing the case for lack of jurisdiction. Plaintiffs filed their complaint for declaratory and injunctive relief against defendant-appellee, Cleveland Electric Illuminating Company ("CEI"). The dispute arose when CEI refused to commit to transmitting a guaranteed level of power as requested by Cleveland Public Power ("CPP") for the month of June 1995. The reason CEI gave for refusing was that one of its generating facilities was not operational because of repairs. Dismissing the complaint, the lower court apparently reasoned that the dispute was under the exclusive jurisdiction of the Federal Energy Regulatory Commission ("FERC"). For the reasons that follow, the judgment of the lower court is reversed and remanded.

According to plaintiffs' brief, AMP-Ohio is a "not-for-profit Ohio corporation which is comprised of 77 Ohio municipalities that own and operate municipal electric utilities. AMP-Ohio supplies power and energy to some of its members, including CPP, and acts as agent for its members by acquiring power and energy as well as arranging for the transmission of the supplies to its member municipalities. AMP-Ohio serves as both a direct seller of power to its members and as an agent for the municipalities in arranging wholesale purchases of power and the subsequent transmission of power."

CPP, which is a member of AMP-Ohio, is a municipal utility company owned and operated by the city of Cleveland. CEI is a privately owned utility company which generates electrical power. While CPP purchases some power (five percent) from CEI, the bulk of CPP's power (ninety-five percent) is purchased from sources other than CEI and sent to CPP through CEI transmission lines--a process known as "wheeling." Because CPP is surrounded by CEI's system, CPP is dependent upon CEI for transmission of power. For this wheeling service, CPP pays a service fee to CEI, which is the owner of the transmission lines used to wheel the electrical power.

CPP and CEI have experienced a litigious history together. In 1979 the Nuclear Regulatory Commission found that CEI committed antitrust violations. The NRC approved the licenses for the Davis-Besse and Perry nuclear power plants on the condition, inter alia, that CEI wheel power to various municipally owned utilities, including CPP. Toledo Edison Co. (1979), 10 NRC 265, at 398-401 and 406. The current agreement under which CEI provides power to CPP is the "CEI-Cleveland Agreement for Installation and Operation of a 138 kV Synchronous Interconnection" dated October 18, 1985.

The heart of this dispute is CPP's request for a commitment by CEI to transmit, on a firm basis, power generated by other utility companies. ¹ In June 1994, CPP reserved seventy-two megawatts ("MW") of firm transmission service. In May 1995, CPP requested, and CEI agreed to provide, one hundred twenty-five MW of firm transmission service. Later, on May 11, 1995, CPP requested an additional sixty-two MW of firm service. Thus, the total requested firm transmission service was one hundred eighty-seven MW.

CEI informed CPP that it would provide twenty-five MW of the additionally requested sixty-two MW on a firm basis. This would leave thirty-seven MW of the requested one hundred eighty-seven MW on a nonfirm basis. CEI claimed that the denial to provide the last thirty-seven MW on a firm basis was for only five weeks because one of its power-generating facilities, Ashtabula # 5 Unit, was out of service.

CPP argues that the following portion of the October 18, 1985 agreement is central to this dispute. Section 3(a) of this agreement states as follows:

"TECO [Toledo Edison Company] and CEI shall each engage in wheeling under appropriate tariffs and at the request of AMP-O and its members, as long as such requested wheeling is not to a retail customer, and such wheeling shall be provided on a daily, weekly, monthly or annual basis at the request of AMP-O or its members. TECO and CEI further agree that such wheeling service shall be available with respect to any unused capacity on the transmission lines of either, the use of which will not jeopardize the utility's transmission system. In the event that a reduction in wheeling service due to lack of capacity becomes necessary, reductions in service will be made to AMP-O or its members on a non-discriminatory basis subject to constraints imposed by actual operating conditions. It is also understood that TECO's and CEI's obligations to wheel power pursuant to this paragraph of the agreement include the provision for transmission service into, out of, or through their service territories, including between points wholly within the service territory of either of them." (Emphasis added.)

CPP contends that the refusal to provide the entire requested firm service amounted to a reduction on a discriminatory basis prohibited by the agreement. CPP argues that the refusal to provide the requested amount is discriminatory because, in the event the amount of production is lessened, the reduction in service will be borne entirely by CPP and its customers. CEI counters that this dispute is controlled by certain tariffs, as opposed to the agreement. ²

On May 31, 1995, CPP filed a complaint in common pleas court seeking injunctive and declaratory relief to enforce the contract between CPP and CEI. After a hearing, the common pleas court, on June 2, 1995, denied the motion for a temporary restraining order ("TRO"). The trial court did not explain the basis for its decision. On August 23, 1995, the court granted CEI's motion to dismiss, for lack of jurisdiction. The city and AMP-Ohio timely appealed, raising three assignments of error as follows:

"I. The lower court erred in finding that it did not have jurisdiction to grant immediate injunctive relief to enforce a contract between utility companies and municipal electric utilities.

"II. The lower court erred in finding that it did not have jurisdiction to interpret and enforce a contract between utility companies and municipal electric utilities.

"III. The lower court erred in dismissing an action for lack of jurisdiction when the court had concurrent jurisdiction over the subject matter."

These three assignments will be discussed together because each raises the issue of whether the trial court has jurisdiction over this matter. The standard of review when a complaint is dismissed under Civ.R. 12(B)(1) is "whether any cause of action cognizable by the forum has been raised." State ex rel. Bush v. Spurlock (1989), 42 Ohio St.3d 77, 80, 537 N.E.2d 641, 644.

CEI argues that the question in the breach of contract issue is now moot. CEI could continue, however, to refuse to transmit power each time it is requested, and the question of whether CEI breached its contractual obligation could return. Mootness, therefore, is avoided because this is an issue capable of repetition yet evading review. See In re Protest Filed By Citizens for the Merit Selection of Judges, Inc. (1990), 49 Ohio St.3d 102, 551 N.E.2d 150.

Indeed, given the litigation history of these parties, repetition is likely. The NRC has previously described the history of these parties as follows:

"We think that the applicants [including CEI] should not be taken at their word. The record is replete with evidence that, in the past, they have either refused or delayed the provision of wholesale power or of the interconnections necessary for it, to the great detriment of the small electric systems in their area.

" * * *

"A company bears a heavy burden in showing that past conduct will not be repeated. * * * We decline to find that the likelihood of similar conduct in the future is so remote that the present case is moot.

"Applying this test, we have concluded that the extensive past misconduct of the applicants suggests a real possibility that they may again try to force small electric systems in their area out of business once the heat of this litigation has passed. * * * We cannot rely on the good faith of those who have acted in bad faith." (Footnote omitted.) Toledo Edison Co. (1979), 10 NRC 265, at 398-400.

Generally, state courts have concurrent jurisdiction with FERC regarding the interpretation of contracts on file with FERC. Florida Power Corp. (1994), 68 FERC p 61,351. ³ In Portland Gen. Elec. Co. (1995), 72 FERC p 61,009, at 61,021, FERC further explained that its "jurisdiction to settle disputes over the meaning of rate schedules does not as a matter of law preclude state courts from entertaining contract litigation of the type raised by Edison's complaint in Oregon state court." (Footnote omitted.) FERC was especially persuaded of a need not to "close off from state review a wide range of conventional contract interpretation issues, whenever a contract is on file with the Commission, even if the matter at issue had little relation to the Commission's exclusive jurisdiction to determine the reasonableness of rates for wholesale sales of electric power in interstate commerce." Id. at 61,021. See, also, Doswell Limited Partnership (1992), 61 FERC p 61,196; Pennzoil Co. v. Fed. Energy Regulatory Comm. (C.A.5 1981), 645 F.2d 360; Delaware Cty. Elec. Coop., Inc. v. Power Auth. of New York (1983), 96 A.D.2d 154, 468 N.Y.S.2d 233.

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