Computer Tool & Engineering, Inc. v. Northern States Power Co.

• Decision Date: 03 April 1990
• Docket Number: C1-89-1654,Nos. C6-89-1472,s. C6-89-1472
• Citation: 453 N.W.2d 569
• Parties: COMPUTER TOOL & ENGINEERING, INC., Respondent (C6-89-1472), Appellant (C1-89-1654), v. NORTHERN STATES POWER COMPANY, Respondent, United Telephone Company of Minnesota, Appellant (C6-89-1472), Respondent (C1-89-1654).
• Court: Minnesota Court of Appeals

Page 569

453 N.W.2d 569

COMPUTER TOOL & ENGINEERING, INC., Respondent (C6-89-1472) Appellant (C1-89-1654), v. NORTHERN STATES POWER COMPANY, Respondent United Telephone Company of Minnesota, Appellant (C6-89-1472), Respondent (C1-89-1654).

Nos. C6-89-1472, C1-89-1654.

Court of Appeals of Minnesota.

April 3, 1990.

Review Denied May 23, 1990.

Syllabus by the Court

The limitation of liability provision in NSP's rate tariff is valid, enforceable and applicable to the facts of this case. Where evidence of fault existed, the trial court did not err in submitting the issue of a party's negligence. Without common liability, a derivative cross-claim for contribution fails as a matter of law.

Joseph F. Lulic, E. Curtis Roeder, Hanson, Noel & Lulic, Minneapolis, for Computer Tool & Engineering, Inc.

Samuel L. Hanson, Michael C. Krikava, Briggs & Morgan, Minneapolis, for Northern States Power Co.

Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, Minneapolis, for United Telephone Co. of Minnesota.

Considered and decided by GARDEBRING, P.J., and SHORT and KLAPHAKE, JJ.

OPINION

SHORT, Judge.

United Telephone Company of Minnesota (United Telephone) and Computer Tool & Engineering, Inc. (Computer Tool) appeal from the trial court's denial of their motions seeking post-trial relief in a case involving the interruption of electrical service. We affirm.

FACTS

In September of 1986 United Telephone was engaged in the placement of underground telephone cables in a mobile home development in Dakota County. As part of its installation, United Telephone contacted Northern States Power Company (NSP), requesting NSP to locate those power lines lying beneath the work site. NSP sent a locater to the site on September 29, 1986 in response to United Telephone's request. After marking only two of the six lines, the locater told a United Telephone contractor that someone would return later in the week to finish locating the lines.

On September 30, 1986, United Telephone began installing its underground telephone lines, and, in the course of that installation, severed a primary feeder cable and a secondary cable of NSP. This caused a power surge to travel through the cable, damaging computer equipment owned by Computer Tool.

Computer Tool brought suit against both United Telephone and NSP to recover for the damaged computer equipment. United Telephone and NSP asserted cross-claims against one another.

At trial, Computer Tool presented evidence showing the computer's market value before the power surge. Computer Tool's owner and operator testified the market value of the computer before the power surge was between $40,000 to $42,000. He then testified the computer was sold after the power surge to Dimension Industries Machine Shop for $10,000. Computer Tool also presented testimony regarding the reasonable cost of repairing the computer. That witness testified regarding two separate repair estimates; one for $6,664.68 and another for $31,116.38. United Telephone presented testimony from the purchaser of the computer, who testified the cost of repairing the computer totaled roughly $5,415.51. Testimony also showed Computer Tool had experienced power surge problems in the past. Computer Tool did not use surge protection equipment although it knew equipment existed to guard against such an occurrence.

After the presentation of evidence to the jury, the trial court granted NSP's motion for a directed verdict on liability and dismissed United Telephone's cross-claim for contribution. The directed verdict was based on NSP's rate tariff, which states:

1.4. Continuity of Service. The Company will endeavor to provide continuous service but does not guarantee an uninterrupted or undisturbed supply of electric service. The Company will not be responsible for any loss or damage resulting from the interruption or disturbance of service for any cause other than gross negligence of the Company. The Company will not be liable for any loss of profits or other consequential damages resulting from the use of service or any interruption or disturbance of service.

The case was submitted to the jury on Computer Tool's claim against United Telephone. The jury apportioned 85 percent of the fault to United Telephone and 15 percent of the fault to Computer Tool. The jury assessed damages at $31,000.00, which resulted in an award to Computer Tool of $26,350.00. The trial court denied United Telephone's motions for judgment notwithstanding the verdict and for a new trial.

ISSUES

I. Did the trial court err in applying the rate tariff?

II. Did the trial court err in submitting the issue of comparative negligence to the jury?

III. Did the trial court err in granting a directed verdict for NSP?

IV. Did the trial court err in refusing to reduce the award of damages?

ANALYSIS

I.

Appellants claim the rate tariff is contrary to statutory authority, contravenes public policy, and is inapplicable to the facts of the present case. We disagree.

The courts have long recognized a relationship exists between limiting the liability of public utilities and serving the public interest with low utility rates. See Western Union Telegraph Co. v. Esteve Brothers & Co., 256 U.S. 566, 569, 41 S.Ct. 584, 585, 65 L.Ed. 1094 (1921). Liability limitations contained in the rate tariff of a public utility are binding on rate payers regardless of knowledge or assent because the rate, which includes the limitation of liability, is the only lawfully established rate. Komatz Construction, Inc. v. Western Union Telegraph Co., 290 Minn. 129, 137, 186 N.W.2d 691, 696 (1971), cert. denied, 404 U.S. 856, 92 S.Ct. 102, 30 L.Ed.2d 98 (1971). A limitation of liability is an essential and valid part of the rate charged for a public utility's service. Landrum v. Florida Power & Light Co., 505 So.2d 552, 554 (Fla.Dist.Ct.App.1987), rev. denied 513 So.2d 1061 (Fla.1987); Lee v. Consolidated Edison Co., 98 Misc.2d 304, 305, 413 N.Y.S.2d 826, 838 (N.Y.Sup.Ct.1978).

The legislature has delegated authority to regulate public utilities and to determine the reasonableness of the rates they charge to the Minnesota Public Utilities Commission. See Minn.Stat. ch. 216B (1988 & Supp.1989). This grant of authority provides the commission with broad regulatory power, the extent of which is measured by the enabling statute. Frost-Benco Electric Association v. Minnesota Public Utilities Commission, 358 N.W.2d 639, 642 (Minn.1984). We must construe this legislative grant of exclusive control over rates in light of the purpose for which the grant was made. State ex rel. Waste Management Board v. Bruesehoff, 343 N.W.2d 292, 295 (Minn.Ct.App.1984).

Rate-making is a quasi-legislative function, Peoples Natural Gas Co. v. Minnesota Public Utilities Commission, 369 N.W.2d 530, 533 (Minn.1985), and decisions of the commission "command the same regard and are subject to the same tests as enactments of the legislature." Minneapolis Street Railway Co. v. City of Minneapolis, 251 Minn. 43, 71, 86 N.W.2d 657, 676 (1957). The term "rate" is defined by statute to include all tariffs, rules, practices and contracts affecting the rate charged. Minn.Stat. Sec. 216B.02, subd. 5. Rates fixed by the commission are presumed to be reasonable and just until the contrary is shown by clear and convincing evidence. Northwestern Bell Telephone Co. v. State, 299 Minn. 1, 28, 216 N.W.2d 841, 857 (1974).

The tariff at issue here was originally filed with the commission in 1974. It has remained a part of NSP's General Rules and Regulations since that time despite several contested rate changes. It has therefore been recognized as a reasonable limitation of liability by the agency exclusively empowered by the legislature to make this determination. While the statute contains no express provision allowing the commission to limit the liability of a public utility, the commission does have the responsibility of establishing reasonable rates to be charged by public utilities. Approving a liability limitation falls within the ambit of the commission's broad regulatory power. Minn.Stat. Sec. 216B.16. The commission is directed to balance the public need for adequate, efficient and reasonable service, on the one hand, against the need of the public utility for sufficient revenue to meet the cost of furnishing service and earn a reasonable profit. Minn.Stat. Sec. 216B.16, subd. 6. Making these determinations and weighing the needs of the public against those of the public utility is a task suited for the commission because of its expertise in this specialized area. The commission could find the tariff reasonable where, absent the limitation, the broad liability exposure would invariably raise the costs and rates for electric service. Lee, 98 Misc.2d at 305, 413 N.Y.S.2d at 828.

Moreover, we do not find the limitation of liability violates public policy. By its own terms, the tariff does not purport to relieve NSP from all negligence under all conceivable circumstances. The tariff is narrow and applies to exonerate NSP from liability occasioned by interruptions or disturbances in the electric service. Liability would remain for all injury not caused by an interruption or disturbance in power. See Zoller v. Niagara Mohawk Power Corp., 137 A.D.2d 947, 950, 525 N.Y.S.2d 364, 367 (N.Y.App.Div.1988). Furthermore, liability remains for gross negligence as well as willful or wanton acts of NSP. This is quite a different case from Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920 (Minn.1982), where the exculpatory clause called for complete exoneration from liability. While Schlobohm involved what was clearly an exculpatory clause, this case involves what is just as clearly a limitation of liability.

The tariff, embodying the limitation of liability, is an inherent part of the lawful rate charged to consumers, from which neither the utility nor the consumer may depart. Minn.Stat. Sec. 216B.07. Narrowly construed, the limitation applies where an...