H. Miller & Sons, Inc. v. Hawkins

• Decision Date: 27 July 1979
• Docket Number: No. 52058,52058
• Court: Florida Supreme Court
• Parties: H. MILLER & SONS, INC., Petitioner, v. Paula F. HAWKINS et al., Respondents.

Page 913

373 So.2d 913

H. MILLER & SONS, INC., Petitioner, v. Paula F. HAWKINS et al., Respondents.

No. 52058.

Supreme Court of Florida.

July 27, 1979.

John W. Costigan, of Madigan, Parker, Gatlin, Truett, Swedmark & Skelding, Tallahassee, for petitioner.

Leon F. Olmstead and Raymond E. Vesterby, Florida Public Service Commission, Tallahassee, and Stanley M. Danek, of Myers, Kaplan, Levinson, Kenin & Richards, Tallahassee, for Cooper City Utilities, Inc., respondents.

ADKINS, Justice.

This cause is before us on petition for writ of certiorari to the Public Service Commission. Art. V, § 3(b)(3), Fla.Const. At issue is whether the Commission can modify a private contract between a developer and a utility by increasing service availability charges after the developer has completed payment of the contractual amount for the increase in plant capacity necessitated by the proposed development. U.S.Const. Art. I, § 10, Cl. 1; Art. I, § 10, Fla.Const.

Petitioner, H. Miller & Sons, Inc., is a developer operating, as is herein pertinent, in Broward County, Florida. Respondent, Cooper City Utilities, Inc., (Utility) is a private water and sewer utility located in Broward County, Florida.

In October 1972 as a response to Miller's request for utility service to its proposed 500-unit Timberlake subdivision, the Utility prepared a letter of agreement which Miller accepted. The Utility's obligation to Miller was specifically limited by the agreement to provide sufficient water and sewer plant capacity for the projected development. The Utility explicitly stated it was not responsible for water and sewer lines necessary to make the plant capacity available. In return for the plant capacity expansion, Miller agreed to pay $125,000 in service availability fees (also called plant capacity fees and connection fees) over a two-year period. The due dates for the incremental payments were predicated upon either the passage of time from execution of the agreement (one year, eighteen months, and two years) or the completion of a certain number of homes (100, 200, or 300), whichever occurred sooner. Miller completed payment in accordance with the time schedule in January 1975, by which time homes had been connected to the system.

At the time of the parties' agreement in 1972 the Utility was authorized by the Commission to charge $110 per residential unit as a combined water and sewer service availability fee. Apparently the Utility added $140 in off-site main charges to the authorized amount for the total contract price, reflecting a per-unit charge of $250 ($125, 000/500). In October 1975 the Commission authorized $275 as combined water and sewer service availability charges. The Utility billed Miller at the increased rate for all subsequently connected homes. Miller paid the increase under protest and filed a complaint with the Commission which alleged that: 1) the increases were not applicable to Miller inasmuch as its contractual obligations for service availability charges were fully paid prior to the authorization of the increases; and 2) the 1972 contract price of $250 per unit was unlawful in that it exceeded the Commission-approved tariff and thus entitled Miller to a $70,000 refund.

The Commission ruled in orders 7650 and 7851 that Miller was responsible for the increased charges and that the $250 per unit contract price complied with the 1972 tariff because $140 per unit was attributable to off-site water fees; but an October 1975 increase in those off-site water fees were found to be unlawful, a refund ordered, and the Utility required to charge only the $140 per unit contract off-site water fee in the future.

The Commission's decision was based upon the well-settled principle that contracts with public utilities are made subject to the reserved authority of the state, under the police power of express statutory or constitutional authority, to modify the contract in the interest of the public welfare without unconstitutional impairment of contracts. Midland Realty Co. v. Kansas City Power & Light Co., 300 U.S. 109, 57 S.Ct. 345, 81 L.Ed. 540 (1937); City of Plantation v. Utilities Operating Co., 156 So.2d 842 (Fla.1963); Miami Bridge Co. v. Railroad Commission, 155 Fla. 366, 20 So.2d 356 (1944). (See also 14 A.L.R. 249; 11 A.L.R. 454; 9 A.L.R. 1420; 64 Am.Jur. Public Utilities §§ 81, 83). The Commission felt, and the Utility naturally agreed, that excluding Miller from the authorized increase would be unjustly discriminatory. Furthermore, the effect of ruling in favor of Miller would have been to allow a private party to circumvent by contract the police power of the state, which is impermissible. Union Dry Goods Co. v. Georgia Public Service Commission, 248 U.S. 372, 39 S.Ct. 117, 63 L.Ed. 309, 9 A.L.R. 1420 (1919); Hudson County Water Co. v. McCarter, 209 U.S. 349, 28 S.Ct. 529, 52 L.Ed. 828 (1908).

Miller does not dispute the validity of the general rule but argues it is inapplicable where there has been no express finding that the contract is unreasonable and adversely affects the public interest. Central Kansas Power Co. v. State Corporation Commission, 181 Kan. 817, 316 P.2d 277, 286 (1957) ("contracts cannot be waived aside by mere lip service invocation of the police power"). While it is undoubtedly true that contractual agreements under constitutional protection may not be easily disregarded, such was not the case in the instant Orders. The test for specificity in Commission orders is that they contain "a succinct and sufficient statement of the ultimate facts upon which the Commission relied . . . ." Occidental Chemical Co. v. Mayo, 351 So.2d 336, 341 (Fla.1977); Deel Motors, Inc. v. Dept. of Commerce, 252 So.2d 389 (Fla. 1st DCA 1971). The Commission directly...