Empire West v. Southern California Gas Co.

• Court: California Court of Appeals
• Writing for the Court: FLEMING; ROTH, P. J., and COMPTON
• Citation: 38 Cal.App.3d 38,112 Cal.Rptr. 925
• Decision Date: 22 March 1974
• Parties: EMPIRE WEST, a Limited Partnership, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA GAS COMPANY, a corporation, Defendant and Respondent. Civ. 42328.

Page 925

112 Cal.Rptr. 925 38 Cal.App.3d 38 EMPIRE WEST, a Limited Partnership, Plaintiff and Appellant,
v.
SOUTHERN CALIFORNIA GAS COMPANY, a corporation, Defendant and Respondent. Civ. 42328. Court of Appeal, Second District, Division 2, California. March 22, 1974.
For Opinion on Hearing see, 117 Cal.Rptr. 423, 528 P.2d 31.

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

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

FLEMING, Associate Justice.

Action for $477,000 damages by plaintiff Empire West, a limited partnership,

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against defendant Southern California Gas Company. Plaintiff appeals a summary judgment in favor of defendant.

The issue is whether the facts presented by plaintiff amount to a cause of action. Plaintiff asserts that in 1963 and 1964 defendant fraudulently misrepresented the prospective cost of operation for a gas heating and cooling system in plaintiff's planned 108-unit apartment house. Thereafter, in reliance on defendant's misrepresentations plaintiff built the apartment house in 1965 equipped with a gas heating and cooling system. According to the complaint, installation of the gas system cost $27,000 more than an electrical system would have cost, and operation of the system costs $8,000 a year more than the amount defendant said it would cost.

Public policy precludes recognition of a cause of action based on these facts. In effect, plaintiff seeks a reduction in charges for the gas it needs to operate its heating and cooling system. Public Utilities Code section 532 forbids defendant from refunding 'directly or indirectly, in any manner or by any device' the scheduled charges for its services. A public utility 'cannot by contract, conduct, estoppel, waiver, directly or indirectly increase or decrease' the rates fixed for its services. (Transmix Corp. v. Southern Pac. Co., 187 Cal.App.2d 257, 264, 9 Cal.Rptr. 714; see Gardner v. Basich Bros. Construction Co., 44 Cal.2d 191, 193-194, 281 P.2d 521; Gardner v. Rich Mfg. Co., 68 Cal.App.2d 725, 730, 158 P.2d 23; Butler v. Bell Oil & Refining Co., 70 Cal.App.2d 728, 730, 161 P.2d 559; Groom v. Holm, 176 Cal.App.2d 310, 315, 1 Cal.Rptr. 410.) It is established doctrine that scheduled rates must be inflexibly enforced in order to maintain equality for all customers and eliminate preferential treatment for some. (R. E. Tharp, Inc. v. Miller Hay Co., 261 Cal.App.2d 81, 86, 67 Cal.Rptr. 854.) Without inflexibility collusive judgments based on allegations of fraud might easily and effectively disguise a public utility's preferential treatment of particular customers. (See People ex rel. Public Util. Com. v. Ryerson, 241 Cal.App.2d 115, 120-121, 50 Cal.Rptr. 246.) The reality of these dangers finds substantial support in past history and experience. Practical necessity, therefore, requires uniform enforcement of the policy...