Szeto v. Ariz. Pub. Serv. Co.
| Decision Date | 30 November 2021 |
| Docket Number | 1 CA-CV 20-0609 |
| Citation | 252 Ariz. 378,503 P.3d 829 |
| Parties | Chao Xie SZETO, et al., Plaintiffs/Appellants, v. ARIZONA PUBLIC SERVICE COMPANY, Defendant/Appellee. |
| Court | Arizona Court of Appeals |
Merlin Law Group, P.A., Phoenix, By Michael Ponzo Counsel for Plaintiffs/Appellants
Gaona Law Firm, Phoenix, By David F. Gaona Counsel for Defendant/Appellee
¶1 Plaintiffs Chao Xie Szeto, Yit Kiu Szeto, and Lydia Briones appeal from the superior court's summary judgment for Defendant Arizona Public Service Company ("APS"). We hold the superior court erred by ruling that APS's tariff bars a claim for property damage caused by a fire allegedly resulting from negligent maintenance of the utility's power lines. We, therefore, reverse the judgment and remand for further proceedings consistent with this opinion.
¶2 In August 2020, a fire destroyed two homes, one owned by the Szetos and occupied by Briones. Briones testified that she saw loose power lines dancing and sparking on the utility pole between her home and the house next door just before the fire. Briones and her son fled to the street in front of their home, where she heard an explosion from the backyard. Besides destroying the home, the fire also damaged Briones’ personal property. A fire investigator found that arcing in the overhead electrical wires on the utility pole between the two homes caused the fire.
¶3 The Szetos and Briones sued APS, alleging that APS negligently maintained the power lines, causing the fire. APS moved for summary judgment, asserting that its public utility tariff exempted it from liability for ordinary negligence. The relevant section of the tariff provides:
¶4 Focusing on the exculpatory clause's reference to a "failure to perform," the superior court found that APS could be liable in connection with providing electric service only if it committed willful misconduct or gross negligence. As a result, the court entered summary judgment against the Szetos and Briones, who had alleged mere negligence on the part of APS. The Szetos and Briones appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(1).
¶5 On appeal from a summary judgment, we view the facts in the light most favorable to the party against whom judgment was granted, Riley, Hoggatt & Suagee, P.C. v. English , 177 Ariz. 10, 12, 864 P.2d 1042, 1044 (1993), and "determine de novo whether there are any genuine issues of material fact and whether the trial court erred in its application of the law," Sign Here Petitions LLC v. Chavez , 243 Ariz. 99, 104, ¶ 13, 402 P.3d 457, 462 (App. 2017) (quoting L. Harvey Concrete, Inc. v. Agro Constr. & Supply Co. , 189 Ariz. 178, 180, 939 P.2d 811, 813 (App. 1997) ).
A. A Tariff Approved by the Corporation Commission is Binding on a Public Service Corporation's Customers and May Limit Certain Liabilities.
¶6 Article 15, Section 3 of the Arizona Constitution authorizes the Corporation Commission to "prescribe just and reasonable ... rates and charges to be made and collected[ ] by public service corporations within the state for services rendered therein." Under this authority, the Commission requires electric public service corporations to file proposed tariffs that "list the services and products offered by the utility and which set forth the terms and conditions and a schedule of the rates and charges, for those services and products." Ariz. Admin. Code ("A.A.C.") §§ R14-2-201.4.42, R14-2-212(F) ; A.R.S. § 40-365. Once approved by the Commission, a tariff governs the relationship between the public service corporation and its customers. US Airways, Inc. v. Qwest Corp. , 238 Ariz. 413, 416, ¶ 11, 361 P.3d 942, 945 (App. 2015), aff'd and ordered depublished in part , 241 Ariz. 182, 385 P.3d 412 (2016). The tariff becomes a binding contract between the utility and its customers. Sommer v. Mountain States Tel. & Tel. Co. , 21 Ariz. App. 385, 387-88, 519 P.2d 874 (1974).
¶7 Our constitution does not expressly authorize the Commission to limit the liability of public service corporations. But the rate-setting process requires the Commission to consider a utility's liabilities, so the Commission necessarily has the authority to limit certain liabilities. See Qwest Corp. v. Kelly , 204 Ariz. 25, 30, ¶ 13, 59 P.3d 789, 794 (App. 2002) () (quoting State ex rel. Corbin v. Ariz. Corp. Comm'n , 174 Ariz. 216, 218, 848 P.2d 301, 303 (App. 1992) ). Thus, the Commission may limit a utility's liability for economic damages resulting from service interruptions, which are appropriately considered in ratemaking decisions because of their contractual nature and potential magnitude, but may not limit liability for personal injury and property damages, which are not. See Pub. Serv. Comm'n v. Mo. Gas Energy , 388 S.W.3d 221, 231–32 (Mo. App. 2012) ().
B. The Tariff Does Not Preclude APS's Liability for Property Damage Resulting from a Breach of its Duty to Exercise the Highest Degree of Skill and Care for the Protection of Life and Property in the Generation and Distribution of Electricity from its Plant to its Patrons.
¶8 In determining APS's liability, the superior court relied on the first clause of § 5.3.1, focusing specifically on the term "failure to perform." The court read this provision as eliminating liability for APS's failure to perform its obligations to transmit and distribute electricity safely. But as noted below, "failure to perform" refers only to a failure to perform by third-party companies called "Load Serving ESPs," not to any failure to perform by APS.
¶9 Tariff interpretation generally presents a question of law which we review de novo . Harby v. Saadeh , 816 F.2d 436, 439 (9th Cir. 1987) (). We use contract principles to construe tariffs and look first to the tariff's plain meaning to determine its intended effect. 73B C.J.S. Public Utilities § 7 (2021). In addition, "[w]ords are to be given the meaning that proper grammar and usage would assign them." Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts , at 140 (2012). Grammar is not "a category of indication separate from textual meaning." Id. at 141. It is one of the ways the sense of a statute is conveyed. Id.; see also Brett M. Kavanaugh, Fixing Statutory Interpretation , 129 Harv. L. Rev. 2118, 2144 (2016) (book review) ("First, courts could determine the best reading of the text of the statute by interpreting the words of the statute, taking account of the context of the whole statute, and applying any other appropriate semantic canons of construction.").
¶10 The first sentence of § 5.3.1 states:
Company shall not be liable to the customer for any damages occasioned by Load Serving ESP's equipment or failure to perform, fluctuations, interruptions or curtailment of electric service, except where due to Company's willful misconduct or gross negligence.
Usually, one applies a prepositive modifier to each element of a list possessing a straightforward parallel construction. Scalia, supra , at 147–51. For example, in the phrase "charitable institutions or societies," "charitable" applies to both "institutions" and "societies." Id. at 147. We refer to this canon of construction as the series-qualifier canon. Id.
¶11 And though the series at issue is less straightforward than the example, we apply the canon to each sublist in the series. Because there is a conjunction rather than a comma between "equipment" and "failure to perform," the two terms make up a single compound item in the series—a sort of list within the list. See Scalia, supra, at 161 (). In the context of the whole series, the punctuation means that "Load Serving ESP's" modifies both "equipment" and "failure to perform," so that the liability limitation applies to a "Load Serving ESP's equipment" and a "Load Serving ESP's failure to perform." And, as APS concedes, there is no question that "Load Serving ESP" does not refer to APS. The tariff always calls APS the "Company," and A.A.C. R14-2-1601 defines "ESPs" as "Electric Service Providers," which are companies that supply the electricity in competition with APS under A.A.C. R14-2-1601 to - 1618. Giving the provision its fair meaning, we conclude the tariff eliminates APS's liability for damages caused by Load Serving ESP's equipment or failure to perform but does not apply to a failure to perform by APS itself.
¶12 Although the superior court relied only on the term "failure to...
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