Summit Properties v. Pnm

• Decision Date: 15 July 2005
• Docket Number: No. 24,231.,24,231.
• Citation: 2005 NMCA 090,118 P.3d 716
• Parties: SUMMIT PROPERTIES, INC., Plaintiff/Appellee/Cross-Appellant, v. PUBLIC SERVICE COMPANY OF NEW MEXICO, formerly doing business as Sangre De Cristo Water Company, and now doing business as PNM Water Services, and City of Santa Fe, a municipality, Defendants/Appellants/Cross-Appellees.
• Court: New Mexico Supreme Court

Page 716

118 P.3d 716

2005 NMCA 090

SUMMIT PROPERTIES, INC., Plaintiff/Appellee/Cross-Appellant, v. PUBLIC SERVICE COMPANY OF NEW MEXICO, formerly doing business as Sangre De Cristo Water Company, and now doing business as PNM Water Services, and City of Santa Fe, a municipality, Defendants/Appellants/Cross-Appellees.

No. 24,231.

Court of Appeals of New Mexico.

May 9, 2005.

Certiorari Denied, No. 29,260, July 15, 2005.

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Mark L. Ish, Carol J. Ritchie, Felker, Ish, Ritchie & Greer, P.A., Karl H. Sommer, Sommer, Udall and Hardwick, Bruce C. Throne, Santa Fe, for Appellee/Cross-Appellant.

Jerry Wertheim, Jones Snead Wertheim & Wentworth, Santa Fe, Thomas C. Bird, David W. Peterson, Anastasia S. Stevens, Keleher & McLeod, P.A., Albuquerque, for Appellants/Cross-Appellees.

OPINION

PICKARD, J.

{1} Summit Properties (Summit), a real estate developer, sued the Public Service Company of New Mexico (PNM) and the City of Santa Fe (City) for, among other things, breach of contract and violation of the Unfair Practices Act (UPA). Summit settled its claims against the City. A trial was held on the claims against PNM, which resulted in the jury's awarding damages to Summit. The trial court also entered an order granting PNM an offset against the judgment based on Summit's settlement with the City. PNM appeals, and Summit cross-appeals. We affirm.

FACTS

{2} PNM owned and operated a water utility in Santa Fe under the name of Sangre de Cristo Water Company (SDCW) (hereinafter we may refer to both entities as PNM). Summit purchased property in the City for development. Before Summit purchased the property, PNM represented to Summit that it planned to expand its water utility system to serve the area where the property was located. After the purchase of the property, PNM withdrew its plan to construct an expansion of its water utility system into the area to be developed. Although Summit was prepared to construct a private water system to serve its 26 lots, the City would approve Summit's development plans only on the condition that PNM's water utility system be expanded to cover Summit's property, as well as other developments in the area. Following discussions between PNM and Summit, PNM agreed to provide water service to the development area based on the terms of a special and unique contract between PNM and Summit under a line extension policy authorized by the New Mexico Public Service Commission (Commission), SDCW "Rule 19." Rule 19 generally sets forth the requirements for line extensions and provides that they are to be paid by the customer to whose property the services are run. Rule 19 also provides that

[w]here unusual circumstances exist, an extension may be made under a special long-term contract providing the contract terms are such that no adverse affects [sic] will be imposed on Company's existing customers; and further providing any such contracts entered into shall be filed with [the] New Mexico Public Service Commission.

{3} This special contract between PNM and Summit was filed with the Public Service Commission on October 16, 1990 (1990 Contract). The essence of the contract was that Summit would construct a water system including a 500,000 gallon water storage tank, transmission lines, and a pump station (Facilities) to serve approximately twenty times the number of customers than it originally contemplated for its own development. This expansion system would be designed by PNM and would be transferred to PNM at no cost under the 1990 Contract. Upon this transfer, PNM would collect hook-up fees from the other customers not in Summit's development, which PNM would then pay over to Summit, allowing Summit to recoup the investment not required by its own development.

{4} The financial arrangements by which Summit would recoup its investment in the water system from PNM under the 1990 Contract were contained in what the contract called a "Rebate Provision." The Rebate Provision provided that the Facilities would provide water service in a designated area to 523 single family residences. Third-party users of the Facilities would be allowed to connect to the Facilities by paying "a proportionate share of the cost of the Facilities as a Connection Fee" determined by a specific formula. Additionally, the Rebate Provision provided a method for determining the cost of the Facilities, which cost would be determined at the time the Facilities were transferred to PNM. The Connection Fee was to be collected by PNM "at the time it would normally collect service line extension charges" and would be paid to Summit within thirty days of its receipt by PNM. The 1990 Contract did not set a specific amount for the Connection Fee.

{5} The dispute in this case centered around the elements that should be included in the Facilities Cost pursuant to which the Connection Fee was calculated. Summit and PNM signed a bill of sale establishing a Facilities Cost, following which PNM wrote to the Commission, stating that the Connection Fee would be that amount divided by 523. Summit, on the other hand, claimed that this figure excluded certain costs and that Summit signed the bill of sale under economic coercion because otherwise PNM would not accept the water system Summit had built, leaving Summit with a development without water service. Summit also had a number of related claims about how PNM was charging third parties.

{6} PNM entered into an agreement to sell SDCW, including the Facilities, to the City on February 28, 1994. On February 24, 1994, Summit had entered into a contract with the City for water and sewer service (Water and Sewer Service Agreement). The Water and Sewer Service Agreement recognized that Summit had built the Facilities at its own expense under the 1990 Contract. On July 3, 1995, PNM sold the Facilities to the City. An Operating Agreement was signed which authorized PNM to continue managing and operating the Facilities. The sale was approved by the Commission.

{7} On appeal, PNM claims that (1) the trial court erred in allowing Summit to bring claims arising before the sale of the Facilities to the City because the Commission had exclusive jurisdiction over those claims; (2) Summit's claims under the UPA were barred as a matter of law; and (3) Summit's claims arising after the sale of the Facilities should have been dismissed because PNM's liability was precluded by the doctrines of abandonment, novation, and impracticability/impossibility. In the cross-appeal, Summit challenges the trial court's grant of an offset of the damages award, claiming that PNM was solely liable on certain breach of contract claims, and Summit and the City had expressly agreed that the settlement was for attorney fees and not for damages. Some arguments made by the parties involve legal questions, and some involve factual questions. The parties are not completely in agreement regarding the standard of review. We review questions of law under a de novo standard of review and questions of fact under a substantial evidence standard of review. See Jicarilla Apache Nation v. Rodarte, 2004-NMSC-035, ¶ 24, 136 N.M. 630, 103 P.3d 554. As discussed in this opinion, we affirm.

DISCUSSION

Jurisdiction

{8} PNM makes two main jurisdictional arguments on appeal. Under the broader argument, PNM claims that, as a matter of New Mexico statutory and common law, the Commission has exclusive jurisdiction over the matters raised in this case, and a breach of contract lawsuit cannot be used to litigate those matters. More narrowly, PNM claims that Summit's attack on the Connection Fees should not have been allowed because those fees amounted to "filed rates," and, under the filed-rate doctrine, a contract or tort lawsuit cannot be used to change a filed rate.

Statutory and Common-Law Jurisdiction Arguments

{9} PNM contends that the Commission has exclusive jurisdiction under our statutes to regulate and supervise rates and service regulations of a public utility. Relying on NMSA 1978, § 62-3-3(H), (J) (2003), PNM argues that the term "rates" is broadly defined to include "every practice, act or requirement `in any way relating' to charges for utility service," and that the term "service regulations" is even more broadly defined to include "every practice, act or requirement relating to the service or facility of a utility." PNM claims that the Connection Fees that were to be charged under the 1990 Contract were "charges to be imposed upon third parties as a condition to obtaining water service," and are therefore "rates." PNM also claims its "acts and practices in implementing" the 1990 Contract related to "service regulations." Therefore, because the Connection Fees are "rates" and because PNM's acts with regard to the 1990 Contract were "service regulations," PNM concludes that the Commission has exclusive jurisdiction over the 1990 Contract and the Connection Fees.

{10} In addition, relying on New Mexico common law, PNM claims that this case involves a matter in controversy that affects the public and does not involve a purely private dispute. See Southwestern Pub. Serv. Co. v. Artesia Alfalfa Growers' Ass'n, 67 N.M. 108, 117-18, 353 P.2d 62, 68-69 (1960) (discussing rule that the power of the Commission is limited to matters and controversies involving the rights of a utility and the public and does not extend to acts by the utility that do not affect its public duties). PNM claims, in this case, that the matter in controversy — the 1990 Contract — is of public concern because it has to do with Connection Fees that were to be charged in conjunction with the development of 523 residences.

{11} PNM's argument is far too broad. PNM's position would create a situation where no public utility could be sued for any matter related to its activities. The general rule, however, is to the contrary—that jurisdiction over contract or tort claims made against a public utility usually rests...