Grindsted Products, Inc. v. Kansas City Power & Light Co., 72456

• Decision Date: 04 August 1995
• Docket Number: No. 72456,72456
• Citation: 901 P.2d 20,21 Kan.App.2d 435
• Parties: GRINDSTED PRODUCTS, INC., Appellant, v. KANSAS CITY POWER & LIGHT CO., Defendant/Appellee, and The State Corporation Commission of the State of Kansas, Intervenor/Appellee.
• Court: Kansas Court of Appeals

Page 20

901 P.2d 20

21 Kan.App.2d 435

GRINDSTED PRODUCTS, INC., Appellant, v. KANSAS CITY POWER & LIGHT CO., Defendant/Appellee and The State Corporation Commission of the State of Kansas Intervenor/Appellee.

No. 72456.

Court of Appeals of Kansas.

Aug. 4, 1995.

Syllabus by the Court

1. The Kansas Corporation Commission has jurisdiction over issues of tariff interpretation and excessive charge claims against public utilities.

2. An action for treble damages and attorney fees under K.S.A. 66-176 can only be brought in district court after the Kansas Corporation Commission has determined whether the public utility has violated the laws regulating it.

C. Edward Peterson and Jeremiah D. Finnegan, of Finnegan, Conrad & Peterson, Kansas City, MO, for appellant.

William G. Riggins and Derek E. Wood, of Kansas City, MO, for defendant/appellee.

Dan Riley, Brian J. Moline, and Susan B. Cunningham, Topeka, for intervenor/appellee.

Before BRAZIL, C.J., LEWIS, J., and JACK L. BURR, District Judge assigned.

BRAZIL, Chief Judge:

Grindsted Products, Inc., (Grindsted) appeals the district court's dismissal of its claim for lack of subject matter jurisdiction. Grindsted argues that a claim for damages under K.S.A. 66-176 need not be first determined by the Kansas Corporation Commission (KCC). We affirm the district court's order dismissing Grindsted's action.

The facts are largely undisputed on appeal. Grindsted manufactures bulk food products. Kansas City Power & Light Company (KCP & L) provides electricity to Grindsted's manufacturing plant in Johnson County, Kansas. KCP & L charges Grindsted for service pursuant to the general service-large (GL) tariff. The GL tariff has been approved by the KCC and is on file with the commission.

Effective July 1988, KCP & L created an Economic Development Rider (EDR) to provide incentive rates for eligible customers. The KCC approved the EDR. The stated purpose of the EDR was to encourage "industrial and commercial business development in Kansas. These activities will attract capital expenditures to the State, diversify the Company's customer base, create jobs and serve to improve the utilization efficiency of existing [KCP & L] facilities."

The EDR's discounted rates are only available in conjunction with government economic development programs where incentives have been offered to locate or expand facilities in the KCP & L service area. The EDR rates apply only to new customers or to existing customers who install separately metered facilities. The rates apply only to those facilities not selling or providing goods and/or services to the general public.

Grindsted began planning an expansion of its existing manufacturing site. Grindsted, through its agents, spoke with KCP & L about the electric service and rates to be charged at the expansion facility. Grindsted completed the separately metered expansion facility in May 1990. Electrical service to the expansion facility was billed at the GL rate with no EDR discount.

Grindsted became aware of the EDR discount in 1993. Grindsted asked KCP & L to bill the facility at the discounted rate because it was eligible under the terms of the EDR. KCP & L stated that the incentives were designed to encourage businesses to build or expand in the KCP & L service area "where the customer decision to build, relocate or expand has not been made." KCP & L noted that Grindsted had decided to expand its facility prior to learning about the EDR incentives; thus, the provisions of the EDR did not apply.

Grindsted filed suit in district court, alleging that KCP & L misconstrued the language of the EDR to Grindsted's detriment. Grindsted alleged that the EDR applied to it and KCP & L currently charged rates for service in excess of those authorized by law. Grindsted sought refund of the excess charges. Further, Grindsted sought treble damages, attorney fees, and costs pursuant to K.S.A. 66-176.

Grindsted simultaneously filed a complaint with the KCC alleging that KCP & L had discriminated against it in failing to inform Grindsted of the provisions of the EDR, KCP & L had incorrectly interpreted the EDR, and KCP & L had as a result overcharged Grindsted for service. Grindsted asked the KCC to enter an order determining that KCP & L improperly failed to apply the EDR tariff and requiring KCP & L to serve Grindsted under the EDR tariff.

KCP & L filed a motion to dismiss for lack of subject matter jurisdiction in the district court. The district court granted KCC's motion to intervene for the limited purpose of addressing the jurisdiction issue. The KCC also filed a motion to dismiss for lack of subject matter jurisdiction. The district court granted the motions after oral argument.

In its brief, the KCC states that the commission reviewed the issues and claims set forth by Grindsted and dismissed the claim on its merits. Grindsted filed a petition for reconsideration, which was denied. Following oral argument, KCP & L provided this court with a certified copy of a petition for judicial review and a copy of the KCC's order.

Grindsted argues that the district court erred in dismissing its claim for lack of jurisdiction. Whether the district court has jurisdiction is a question of law over which this court has unlimited review. Zion Lutheran Church v. Kansas Comm'n on Civil Rights, 16 Kan.App.2d 237, 239, 821 P.2d 334 (1991), affirmed 251 Kan. 206, 830 P.2d 536 (1992).

The district court set out its decision as follows:

"1. Plaintiff's Petition requests the Court to construe Defendant's EDR tariff and determine that Plaintiff has been charged excessive rates for electric service by Defendant;

"2. The controlling cases are Southwestern Bell Telephone Co. v. Kansas Corporation Commission, 233 Kan. 375, (1983), which recognizes the jurisdiction of the Kansas Corporation Commission (KCC) to interpret and construe rate tariffs; and Denison Mutual Telephone v. Kendall, 195 Kan. 227, 403 P.2d 1011 (1965), which holds that parties who complain that a public utility has charged excessive rates should first invoke the relief provided by the Public Utilities Act before resorting to the courts;

"3. In addition, the factors set forth in Hamilton v. United Telephone Co. of Kansas, 6 Kan.App.2d 885, (1981) underscore the need for the KCC's expertise in determining the issues raised by Plaintiff in the first instance, and;

"4. Plaintiff's claim, as stated in its Petition, is premature, and Plaintiff's Petition has not stated a cause of action, and therefore the Motions to Dismiss for Lack of Subject Matter Jurisdiction should be granted and this case dismissed."

Grindsted first argues that its claim for damages based on excessive charges may be brought directly to the district court without KCC review. Grindsted cites K.S.A. 66-176, which states:

"Any public utility or common carrier which shall violate any of the provisions of law for the regulation of such public utilities or common carriers shall forfeit, for every offense, to the person, company or corporation aggrieved thereby, three times the actual damages sustained by the party aggrieved, together with the costs of suit, and a reasonable attorney fee, to be fixed by the court; and if an appeal be taken from the judgment or any part thereof, it shall be the duty of the appellate court to include in the judgment an additional reasonable attorney's fee for services in the appellate court or courts."

Grindsted argues that the statute establishes a cause of action for damages separate from administrative relief through the KCC. K.S.A. 66-176 was enacted in 1883 and, prior to 1995, had not been amended since 1923. Kearney v. Kansas Public Service Co., 233 Kan. 492, 505, 665 P.2d 757 (1983). The Kansas Supreme Court has stated that "K.S.A. 66-176 is penal in nature and is to be strictly construed and should not be expanded by implication." 233 Kan. at 506, 665 P.2d 757.

Grindsted points to several cases which it contends support the theory that K.S.A. 66-176 creates a separate cause of action to be taken directly to the district court. The first is Beadle v. K.C. Ft. S. & M. Rld. Co., 51 Kan. 248, 32 P. 910 (1893). Beadle had filed an action for damages incurred when the railroad overcharged him for shipment of coal. Beadle v. K.C. Ft. S. & M. Rld. Co., 48 Kan. 379, 380, 29 P. 696 (1892). Beadle's original petition sought treble damages under the predecessor to K.S.A. 66-176. The trial court dismissed the petition because it was filed outside the one-year statute of limitations. Beadle amended the petition to seek only actual damages under the common law in an attempt to avoid the statutory bar. The Kansas Supreme Court affirmed the trial court's dismissal of the amended petition. 48 Kan. at 380-82, 29 P. 696.

Upon rehearing, the court considered the issue of whether the somewhat newly enacted predecessorto K.S.A. 66-176 and accompanying statutes abrogated the shipper's common-law remedy. The statutes in question applied only to railroads and other common carriers. 51 Kan. at 249, 32 P. 910.

The Kansas Supreme Court concluded that the statutes, when read together, created a "full and complete remedy to the shipper who has been overcharged." 51 Kan. at 251, 32 P. 910. The court noted that the statutory remedy, which provided for treble damages, was better than that afforded by the common law, which only provided for actual damages. Beadle was thus confined to statutory relief because it abrogated the common-law remedy. 51 Kan. at 251, 32 P. 910.

Grindsted states that "[t]he question was raised in Beadle whether the plaintiff was entitled to pursue an action under the statute or whether resort to the Railroad Commission was required in the first instance." No such question was raised in Beadle. In the last full paragraph of its decision, the court noted the argument that the language of another portion of the railroad statute continued the common law in force in addition to the...