Ctr. Point Energy Res. Corp. v. Ramirez
| Decision Date | 11 February 2022 |
| Docket Number | 20-0354 |
| Parties | Center Point Energy Resources Corp., Petitioner, v. Fernando Ramirez and Minerva Ramirez, Respondents |
| Court | Texas Supreme Court |
Argued September 29, 2021
On Petition for Review from the Court of Appeals for the Fourth District of Texas
Justice Huddle and Justice Young did not participate in the decision.
The issue of first impression in this personal-injury case is whether a limitation of liability provision in a utility tariff approved by state regulators bars the utility's liability for damages suffered by a residential customer's houseguests. We hold that it does. The tariff provides, without exception, that the utility "shall not be liable for any damage or loss" in the limited circumstance where damage or loss is "caused by the escape of gas from Consumer's housepiping or Consumer's appliances."[1] That is precisely how the houseguests were injured, but the lower courts agreed with the houseguests that the liability limitation is applicable only to any damage or loss sustained by the utility's customer. We hold that the liability limitation precludes the houseguests' negligence claims because (1) the tariff's terms expressly apply to "all consumers" and (2) the houseguests meet the tariff's special definition of that term. A tariff approved by a regulatory body is not a "mere contract" and instead carries "the force and effect" of law, at least as to those to whom the tariff applies. The houseguests are bound by the tariff's terms because, as consumers the tariff applies to them and, like any other law, neither assent nor actual knowledge is required to enforce its terms as written. We therefore reverse and render judgment that the tariff forecloses the houseguests' ordinary negligence claims against the utility.
In December 2011, Adrian and Graciela Castillo purchased a new home built by WestWind Homes d/b/a WestWind Development, G.P.-Laredo. The home's gas lines were installed by plumber Armando Aguilar & Sons Contractor. After the City of Laredo issued a certificate of occupancy certifying the home was habitable and built to code, the Castillos moved into the residence. Shortly thereafter, CenterPoint Energy Resources Corp. installed a gas meter outside the home and initiated gas service.
Over the next three years, Graciela's parents, Fernando and Minerva Ramirez, were frequent visitors and guests at the home. During these visits, the Ramirezes used the home's gas services, including for cooking and showering. In February 2015, while Fernando was attempting to repair the Castillos' electric clothes dryer, he inadvertently opened the valve on an unused gas line behind the dryer. Escaping gas accumulated to combustible levels and ignited, resulting in an explosion that damaged the Castillos' home and seriously injured Fernando.
The Ramirezes sued the homebuilder, the plumber, and CenterPoint for personal-injury damages under negligence and gross-negligence theories. The Ramirezes alleged that all three defendants had breached a duty to plug or seal the unused gas line. The Ramirezes did not contend that the defendants' equipment failed but, rather, that the defendants failed to provide essential equipment.
The plumber settled, and the case proceeded to a jury trial against the homebuilder and CenterPoint. After the close of the plaintiffs' case-in-chief, the trial court directed a verdict for the homebuilder and CenterPoint on the Ramirezes' gross-negligence and exemplary-damages claims. In response to three negligence submissions, the jury found that only the defendants were at fault and apportioned responsibility 60% to the homebuilder, 34% to CenterPoint, and 6% to the plumber.[2] The jury awarded the Ramirezes more than $6.9 million in actual damages.
CenterPoint moved for judgment notwithstanding the verdict and, in the alternative, a new trial. The motion asserted a number of grounds, including that the jury's verdict was immaterial because CenterPoint is entitled to judgment as a matter of law based on the terms of its tariff, which was filed with and approved by state regulators. CenterPoint asserted that, under the filed-rate doctrine, the tariff's terms, which generally limit the company's liability for damages resulting from gas usage after delivery to the meter, are (1) binding as law, (2) presumed reasonable, and (3) applicable to the Ramirezes' ordinary negligence claims.
The trial court denied CenterPoint's motion and rendered judgment on the verdict. Based on the jury's proportionate-responsibility findings, the trial court rendered judgment that the homebuilder was jointly and severally liable for all of the Ramirezes' damages and CenterPoint was liable only for its proportionate share of the damages.[3] While the case was on appeal, the homebuilder settled with the Ramirezes.[4]
The court of appeals affirmed the judgment against CenterPoint.[5]With respect to the main issue here, the court held that the provisions in a utility's tariff are enforceable only against the utility's customers and the Ramirezes were not CenterPoint's customers, presumably because they did not contract for the utility's services.[6] The court acknowledged that the tariff's special definition of "Consumer, Customer and Applicant" broadly defines the terms to mean "a person or organization utilizing services or who wants to utilize services to CENTERPOINT[.]"[7] Even so, the court held that the scope of the defined term was narrowed to exclude houseguests like the Ramirezes because (1) the tariff states that the terms "'Consumer, Customer and Applicant' are used interchangeably" and (2) the terms "Consumer" and "Customer" are used in select tariff provisions that would be "absurd" if applied to noncustomers.[8] From the court's perspective, interchangeable use means that "each term can be substituted wherever any of the terms are used," so any narrower use within the tariff necessarily constrains the special definition to a narrower meaning throughout the tariff.[9] The court did not define the term "customer" except to state that the Ramirezes were not CenterPoint's customers.[10]The court also noted that the Ramirezes were not residents or tenants in the Castillos' home but did not explain the significance of those facts to the analysis.[11] The court posited, however, that it could not be the case that anyone using gas services inside the home would be subject to the tariff's liability limitations.[12]
After determining that the Ramirezes were not "consumers" as that term is defined in the tariff because they were not CenterPoint's "customers," the court held that the tariff's liability limitations did not apply to their negligence claims because a tariff can only govern the relationship between a utility and its customers.[13] Applying this categorical rule of nonapplicability, the court rejected CenterPoint's argument that, under the tariff's plain language, the limitations on liability extend to any damage or loss caused by gas after it leaves the meter or escapes from the consumer's housepiping, not just a customer's damage or loss.[14] The court also ruled adversely to CenterPoint on its remaining issues challenging the submission of jury questions on negligent-undertaking and negligence per se theories and the sufficiency of the evidence to support the jury's verdict.[15]
CenterPoint filed a petition for review, which we granted to address the enforceability of the limitation of liability provisions in the natural gas provider's tariff. On that point, we agree with CenterPoint that, under the filed-rate doctrine, the liability limitation in Section 14 of the tariff plainly and expressly precludes the utility's liability for the Ramirezes' damages and applies to them as "consumers" of the utility's gas services. Accordingly, we do not reach the other issues raised in CenterPoint's petition for review.
[16] For that reason, "[p]ublic agencies regulate utility rates, operations, and services as a substitute for competition."[17] Under the Gas Utility Regulatory Act, the Texas Railroad Commission is granted broad regulatory authority "to protect the public interest inherent in the rates and services of gas utilities" and "to establish a comprehensive and adequate regulatory system for gas utilities to assure rates, operations, and services that are just and reasonable to the consumers and to the utilities."[18] To ensure utilities provide "safe, adequate, efficient, and reasonable" services, [19] the Railroad Commission can adopt reasonable rules, regulations, specifications, and standards; examine and test equipment; address complaints; ask the attorney general to apply for a court order to prohibit or enjoin violations or require compliance with the commission's rules or orders; recover civil penalties for violations; and bring an action for contempt of its lawful orders.[20]
Under this statutory scheme and associated regulations, gas utilities like CenterPoint are required to file a proposed tariff with the Railroad Commission for review and approval.[21] "A tariff is a document that lists a public utility's services and the rates for those services."[22]Tariffs may permissibly include provisions limiting a utility's liability for economic and personal-injury damages.[23] We have explained that "a limitation on liability is an inherent part of the rate the utility charges for its services" that allows regulated utilities to reduce costs for lower rates to customers and reflects the...
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