Public Service Indiana, Inc. v. Nichols

• Court: Indiana Appellate Court
• Writing for the Court: YOUNG
• Citation: Public Service Indiana, Inc. v. Nichols, 494 N.E.2d 349 (Ind. App. 1986)
• Decision Date: 26 June 1986
• Docket Number: No. 1-1283A409,1-1283A409
• Parties: Prod.Liab.Rep. (CCH) P 11,044 PUBLIC SERVICE INDIANA, INC., Appellant (Defendant Below), v. Melvin NICHOLS and Alice Nichols, Appellees (Plaintiffs Below).

Page 349

494 N.E.2d 349

Prod.Liab.Rep. (CCH) P 11,044

PUBLIC SERVICE INDIANA, INC., Appellant (Defendant Below), v. Melvin NICHOLS and Alice Nichols, Appellees (Plaintiffs Below).

No. 1-1283A409.

Court of Appeals of Indiana Fourth District.

June 26, 1986.

Kenneth A. Layton, David W. Paugh, Montgomery, Elsner & Pardieck, Seymour, for appellant.

Richard D. Schreiber, George Clyde Gray, Gray, Robinson, Eckert, Ryan & Schreiber, Indianapolis, for appellees.

YOUNG, Presiding Judge.

Public Service Indiana, Inc. appeals a jury verdict in favor of Melvin and Alice Nichols. On appeal, PSI contends that:

1) the Jackson Circuit Court improperly determined that it and not the Public Service Commission had subject matter jurisdiction over the action;

2) the doctrine of strict liability may not be applied against a utility company for injuries resulting from the sale of electricity;

3) the trial court erred in refusing to give a jury instruction based on Indiana statutes;

4) the trial court erred in giving an instruction concerning the adequacy of PSI's services;

5) the trial court erred in allowing an expert witness to express opinions based on information collected and provided by an employee;

6) the trial court erred in allowing an expert witness to express an opinion as to the reasonableness of PSI's services.

We affirm.

In 1979, the Nichols decided to go into the dairy business and borrowed money to begin the operation. They built a barn and bought and installed the necessary equipment.

During this time period, PSI was engaged in the production, sale and distribution of electrical current. It owned the electrical lines running across the Nichols property and sold the electricity utilized by the Nichols in their dairy barn. PSI was aware that the Nichols intended to use the electricity in a dairy operation and had visited the Nichols farm to discuss their electrical needs while the dairy barn was still under construction.

The Nichols finished their barn and began milking in the fall of 1979. The Nichols soon noticed that the herd was not producing milk as it should. The dairy herd developed a high level of mastitis and showed signs of nervousness. By the fall of 1980, milk production had dropped severely. The Nichols investigated various potential causes for the problem throughout this time period. In January 1981, the Nichols' feed salesman suggested they check the farm for stray voltage since the problem was continuing, and the feed analysis had indicated that the herd was receiving the proper nutrients. The Nichols had their barn tested and discovered that stray voltage was coming from PSI's neutral line. The Nichols immediately contacted PSI.

PSI verified that stray voltage was present and attempted to solve the problem by separating the primary and secondary neutral lines. PSI neglected to tell the Nichols that this procedure created significant hazards such as the potential for electrocution or fire. Upon learning of these dangers through another source, the Nichols requested that the neutrals be reconnected and the problem solved in another fashion. Despite the knowledge that the stray voltage was coming from its neutral line and that the stray voltage was damaging the Nichols dairy herd, PSI never installed the equipment that would alleviate the problem, but rather took the position that it was not obligated or permitted to do so.

By October 1981, the Nichols dairy herd was ruined and the Nichols were forced to sell the entire herd. As a result of these events, the Nichols filed bankruptcy in order to avoid a Sheriff's foreclosure sale. The Nichols brought this action against PSI seeking damages for the loss of the dairy herd and their business. The case was tried to a jury on theories of negligence and strict liability. Punitive damages were sought but not awarded. The jury returned a general verdict for the Nichols in the amount of $343,000.00. Judgment was entered and PSI appeals on the previously listed grounds.

PSI argues that the trial court improperly determined that it had subject matter jurisdiction over this action and that the Nichols were obligated to pursue their claim through the Public Service Commission prior to seeking judicial resolution of the dispute. We disagree.

A trial court does not automatically acquire subject matter jurisdiction because it can provide a remedy that is not available through an administrative body. Indiana Forge and Machine Co., Inc. v. Northern Indiana Public Service Co. (1979), Ind.App., 396 N.E.2d 910, 912. The nature of the claim asserted determines the jurisdictional issue. If the legislature has provided that the administrative remedy is exclusive, the courts cannot exercise jurisdiction until the administrative remedies are exhausted. Id. at 912. However, this rule is not applied in a mechanical fashion. Exceptions to the rule have been created and include instances where pursuit of the administrative remedy would be futile, United States Auto Club, Inc. v. Woodward (1984), Ind.App., 460 N.E.2d 1255, 1258; Northside Sanitary Landfill, Inc. v. Indiana Environmental Management Board (1984), Ind.App., 458 N.E.2d 277, 280; Bowen v. Sonnenburg (1980), Ind.App., 411 N.E.2d 390, 403, where strict compliance would result in irreparable harm, South Bend Federation of Teachers v. National Education Association--South Bend (1979), 180 Ind.App. 299, 309, 389 N.E.2d 23, 30, or when no administrative remedy is provided. Indiana State Highway Commission v. Zehner (1977), 174 Ind.App. 176, 366 N.E.2d 697, 702.

In determining whether administrative remedies are available and should be exhausted, trial courts are to consider:

The character of the question presented and the competency of the administrative agency to answer that question; the avoidance of premature interruption of the administrative process in recognition of the interest of the agency in developing a factual record upon which to exercise its discretion and apply its expertise without the threat of litigious interference; the interest in permitting an agency to correct its own errors, a process by which unnecessary judicial proceedings are obviated; and the avoidance of deliberate or frequent flouting of established administrative processes.

Northside Sanitary Landfill, supra at 281 (quoting Indiana State Department of Welfare Medicaid Division v. Stagner (1980), Ind.App., 410 N.E.2d 1348, 1351).

The Public Service Commission was established "to insure that public utilities provide constant, reliable and efficient service to its customers, the citizens of this state." Office of Utility Consumer Counselor v. Public Service of Indiana, Inc. (1984), Ind.App., 463 N.E.2d 499, 503. The Commission derives its power and authority solely from statute and unless the power to act is conferred by the statute, it must be concluded that the power does not exist. Citizens Action Coalition of Indiana, Inc. v. Northern Indiana Public Service Co. (1985), Ind., 485 N.E.2d 610, 612. The Commission can exercise only administrative or legislative powers. Citizens Action Coalition of Indiana, Inc. v. Public Service Commission of Indiana (1981), Ind.App., 425 N.E.2d 178. It has no judicial powers and cannot award money judgments. Indiana Telephone Corp. v. Indiana Bell Telephone Co., Inc. (1976), 171 Ind.App. 616, 358 N.E.2d 218, 224 modified by 360 N.E.2d 610; State ex rel Indianapolis Water Co. v. Niblack (1959), 240 Ind. 32, 161 N.E.2d 377, 378. Any order the Commission makes with regard to services or rates must be prospective in nature and cannot grant compensation for events that occurred in the past. Id. A reading of the applicable code sections supports this interpretation.

The mechanism by which citizens may seek correction of insufficient service or unreasonable rates is provided by IND.CODE 8-1-2-54 which states:

Upon a complaint made against any public utility by any mercantile, agricultural or manufacturing society or by any body politic or municipal organization or by ten (10) persons, firms, corporations or associations, or ten (10) complainants of all or any of the aforementioned classes, or by any public utility, that any of the rates, tolls, charges or schedules or any joint rate or rates in which such petitioner is directly interested are in any respect unreasonable or unjustly discriminatory, or that any regulation, measurement, practice or act whatsoever affecting or relating to the service of any public utility, or any service in connection therewith, is in any respect unreasonable, unsafe, insufficient or unjustly discriminatory, or that any service is inadequate or can not be obtained, the commission shall proceed, with or without notice, to make such investigation as it may deem necessary or convenient. But no order affecting said rates, tolls, charges, schedules, regulations, measurements, practice or act, complained of, shall be entered by the commission without a formal public hearing.

This statute makes no provision for an award of damages for harm caused by inadequate service. Similarly, IND. CODE 8-1-2-69 provides the Commission a mechanism to assure that future services are provided but provides no remedy for past harm.

In the present case, the Nichols brought their action against PSI alleging that PSI had breached its duty to provide reasonable and adequate services by permitting stray voltage to flow from PSI lines to the ground and onto the Nichols' dairy farm. The Nichols claimed that as a result of this breach, their dairy herd became seriously ill and diseased, causing severe and permanent damage to the Nichols' dairy business. PSI filed a motion to dismiss based on lack of subject matter jurisdiction, asserting that the Nichols' claims were based on contentions that PSI's services were unsafe and therefore the claims were within the jurisdiction of the Commission and not the courts. PSI also argued that the equipment necessary to solve the stray voltage problem was...