Empire West v. Southern California Gas Co.

• Citation: 12 Cal.3d 805,528 P.2d 31,117 Cal.Rptr. 423
• Court: United States State Supreme Court (California)
• Decision Date: 18 November 1974
• Parties: , 528 P.2d 31 EMPIRE WEST, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA GAS COMPANY, Defendant and Respondent. L.A. 30329. In Bank

Page 423

117 Cal.Rptr. 423

12 Cal.3d 805, 528 P.2d 31

EMPIRE WEST, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA GAS COMPANY, Defendant and Respondent.

L.A. 30329.

Supreme Court of California,

In Bank.

Nov. 18, 1974.

Morton M. Gerson, Los Angeles, for plaintiff and appellant.

Overton, Lyman & Prince and John D. McCurdy, Los Angeles, for defendant and respondent.

BURKE, Justice.

Plaintiff appeals from a summary judgment entered in favor of defendant, Southern California Gas Company. (Code Civ.Proc. § 437c.) The only issue is whether plaintiff's asserted cause of action for fraudulent misrepresentation constitutes an attempt to secure preferential rate treatment in violation of Public Utilities Code section 532. ¹ We have concluded that section 532 is inapplicable here and that defendant's motion for summary judgment should have been denied.

We have summarized the well-established rules governing summary judgment procedure as follows: 'The matter to be determined by the trial court in considering such a motion is whether the defendant (or the plaintiff) has presented any facts which give rise to a triable issue. The court may not pass upon the issue itself. Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor and his opponent does not by affidavit show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue. The aim of the procedure is to discover, through the media of affidavits, whether the parties possess evidence requiring the weighing procedures of a trial. In examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. Such summary procedure is drastic and should be used with caution so that it does not become a substitute for the open trial method of determining facts.' (Corwin v. Los Angeles Newspaper Service Bureau, Inc., 4 Cal.3d 842, 851--852, 94 Cal.Rptr. 785, 790, 484 P.2d 953, 958.)

With these rules in mind, we turn to the facts of the case as set forth in the pleadings and affidavits. Plaintiff advised defendant utility company that it planned to build a 108-unit apartment complex, and defendant volunteered to assist plaintiff during the planning and construction of the project regarding any problems which might arise involving the use of gas. Defendant also told plaintiff that it would have its engineers prepare a cost analysis of the operating cost of a central gas heating and cooling system which could be used by plaintiff in planning the project. Defendant presented its cost analysis to plaintiff, representing that the cost of operating a central gas heating and cooling system plus gas water heating would be approximately $12,000 per year. In reliance upon these representations, plaintiff equipped its newly-constructed complex with a gas system. Subsequently, plaintiff found that the actual operating cost of the system was $8,000 more per year than represented.

According to plaintiff, the gas company knew it did not have accurate data upon which to base its analysis and, therefore, knew that it could not represent truthfully the amount of gas which would be consumed. However, despite this knowledge, the gas company held out its estimates as true and accurate, in order to induce plaintiff to buy and install the gas system. Plaintiff allegedly had no experience in the area of gas consumption and its cost; it relied totally on defendant's expertise, and the information it supplied, in planning the project. There are no filed and published gas consumption figures to which plaintiff could have looked for an accurate cost analysis. Had it known the gas company's figures were wrong, plaintiff would not have planned, developed and constructed the building as it did. Instead plaintiff would have installed an electric powered heating and cooling unit. The cost of installing such a unit would have been $27,000 less than that expended for the gas system.

As previously stated, the sole issue before this court is whether plaintiff's cause of action constitutes, in effect, an attempt to secure preferential rate treatment in contravention of section 532. The trial court held that it did and therefore granted defendant's motion for summary judgment. We hold that plaintiff's cause of action does not assert a claim for preferential rate treatment and, accordingly, that summary judgment was improperly granted.

Section 532 forbids any utility from refunding 'directly or indirectly, in any manner or by any device' the scheduled charges for its services. In addition, a public utility 'cannot by contract, conduct, estoppel, waiver, directly or indirectly increase or decrease the rate as published in the tariff . . ..' (Transmix Corp. v. Southern Pac. Co., 187 Cal.App.2d 257, 264, 9 Cal.Rptr. 714, 719; accord South Tahoe Gas Co. v. Hofmann Land Improvement Co., 25 Cal.App.3d 750, 760, 102 Cal.Rptr. 286.) Scheduled rates must be inflexibly enforced in order to maintain equality for all customers and to prevent collusion which otherwise might be easily and effectively disguised. (R. E. Tharp, Inc. v. Miller Hay Co., 261 Cal.App.2d 81, 67 Cal.Rptr. 854; People ex rel. Public Util. Comm. v. Ryerson, 241 Cal.App.2d 115, 120--121, 50 Cal.Rptr. 246.) Therefore, as a general rule, utility customers cannot recover damages which are tantamount to a preferential rate reduction even though the utility may have Intentionally misquoted the applicable rate. (See Transmix Corp. v. Southern Pac. Co., Supra, 187 Cal.App.2d p. 265, 9 Cal.Rptr. 714; Annot. 88 A.L.R.2d 1375, 1387; 13 Am.Jur.2d, Carriers, § 108, p. 650; United States v. Associated Air Transport, Inc., 5 Cir., 275 F.2d 827, 833.)

These principles are most commonly applied in cases which involve mistaken rate quotations whereby the customer is quoted a lower rate than set forth in the published tariff. Upon discovery of the error, the utility may initiate an action against the customer to recover the full legal charges for the service, as filed and published in rate schedules. (See, e.g., Gardner v. Basich Bros. Construction Co., 44 Cal.2d 191, 281 P.2d 521; R. E. Tharp, Inc. v. Miller Hay Co., Supra, 261 Cal.App.2d 81, 67 Cal.Rptr. 854.) In granting recovery to the utility, the courts usually rely on the fact that the rates have been filed and published and have thereby become part of the contract between the utility and the customer. (Gardner v. Basich Bros. Construction Co., Supra, 44 Cal.2d p. 193, 281 P.2d 521; Transmix Corp. v. Southern Pac. Co., Supra, 187 Cal.App.2d 257, 265, 9 Cal.Rptr. 714.) Under these circumstances the customer is charged with knowledge of the contents of the published rate schedules and, therefore, may not justifiably rely on misrepresentations regarding rates for utility service. (See Transmix Corp. v. Southern Pac. Co., Supra, p. 265, 9 Cal.Rptr. 714; 13 Am.Jur.2d, Supra, § 108, p. 649; Annot. 88 A.L.R.2d, Supra, 1375.)

By contrast, the instant case does not involve a dispute over the Rate which plaintiff must pay defendant for gas service. Plaintiff has not asserted that defendant misrepresented the legal rate set forth in a published tariff, nor does plaintiff seek a reduced rate, rebate or refund. Instead, plaintiff contends that defendant misrepresented the Quantity of gas with the proposed building project would consume, resulting in a substantial understatement of plaintiff's total cost for gas service. Plaintiff seeks to recover the actual damages incurred by reason of defendant's fraud. Unlike the rate cases discussed above, the alleged misrepresentation in the instant case did not concern a published rate of which plaintiff was deemed to have knowledge. According to plaintiff, only defendant had the knowledge and expertise necessary to calculate the probable quantity of gas which would be consumed by the project, and the cost to plaintiff for consuming that amount of gas.

Although there is some contrary authority (see 13 Am.Jur.2d, Supra, § 108, p. 649; United...