ZumBerge v. Northern States Power Co.

• Decision Date: 18 February 1992
• Docket Number: No. CX-91-907,CX-91-907
• Citation: 481 N.W.2d 103
• Parties: 16 UCC Rep.Serv.2d 962 Dale ZumBERGE, et al., individually & d/b/a ZumBerge Holsteins, Respondents, v. NORTHERN STATES POWER COMPANY, Appellant.
• Court: Minnesota Court of Appeals

Page 103

481 N.W.2d 103

16 UCC Rep.Serv.2d 962

Dale ZumBERGE, et al., individually & d/b/a ZumBerge Holsteins, Respondents, v. NORTHERN STATES POWER COMPANY, Appellant.

No. CX-91-907.

Court of Appeals of Minnesota.

Feb. 18, 1992.

Review Denied April 29, 1992.

Syllabus by the Court

1. The limitation of liability provision in the utility company's rate tariff will not 2. The Minnesota Supreme Court decision in Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn.1990), permits recovery of economic losses that do not arise from a commercial transaction, but instead result from independent acts of negligence.

prevent recovery under the "use of service" provision merely because a consumer receives electricity.

3. Where an expert's qualifications are established, the weight and credibility to be attributed to his testimony are for the jury to decide.

4. A trial court's evidentiary rulings will not be overturned on appeal absent an abuse of discretion and resulting prejudice.

5. Although evidence of prejudgment interest should not be presented to the jury, its erroneous admission is not grounds for reversal absent a showing of prejudice.

6. Motions for judgment notwithstanding the verdict and a new trial are properly denied where competent evidence reasonably supports the jury's verdict.

James H. Kaster, Jeffrey P. Anderson, Nichols, Kaster & Anderson, Minneapolis, for respondents.

Michael T. Nilan, Brian N. Johnson, John M. Baker, Popham, Haik, Schnobrich & Kaufman, Ltd., Minneapolis, for appellant.

Considered and decided by AMUNDSON, P.J., and FORSBERG and KALITOWSKI, JJ.

OPINION

AMUNDSON, Judge.

Respondents brought this action against appellant Northern States Power Company (NSP) for damages resulting from stray voltage which injured their dairy herd. Following a jury trial, NSP was found negligent and respondents were awarded $1,000,000 in damages. NSP's motions for judgment notwithstanding the verdict or a new trial were denied, judgment was entered and this appeal followed. We affirm.

FACTS

Dale, Gloria and Steven ZumBerge operate a family dairy farm near Green Isle, Minnesota. As of 1975, there were over 30,000 dairy farms in the state of Minnesota. The Minnesota Dairy Herd Improvement Association rated the ZumBerges' herd one of the top 100 herds in the state, with average annual milk production above the state and national averages.

In 1977, the ZumBerges noticed behavioral problems with the herd. The cows were reluctant to eat, failed to conceive, exhibited nervousness in the milk barn, developed leg and hoof problems, and showed high levels of mastitis (an udder infection resulting in high bacterial counts which makes milk unacceptable for sale). By 1983, the herd's milk production fell below the Minnesota Dairy Herd Improvement Association statewide average.

In 1984, the ZumBerges learned through a dairy industry magazine that stray voltage may have detrimental effects on dairy cattle. The farm was tested for stray voltage; the results showed 2.5 volts, a fairly high reading, in the dairy barn. NSP was contacted. The NSP crew confirmed stray voltage was present in the barn and determined NSP's neutral line was the source of the stray voltage.

In August 1984, NSP installed a "neutral isolator" to prevent neutral current on NSP's line from being transferred to the farm's neutral line and then onto farm property. The isolator supposedly eliminated the problem. Three months later, however, another NSP crew replaced an allegedly undersized transformer, and in the process, improperly reinstalled the neutral isolator. The isolator remained dysfunctional until February 1990.

The ZumBerges sued NSP in 1986, alleging negligence, breach of warranty and strict liability. After the jury verdict for the ZumBerges, NSP moved for judgment notwithstanding the verdict or a new trial arguing (1) its rate tariff precluded recovery of consequential damages; (2) Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn.1990), prevents the ZumBerges' recovery for economic losses; (3) the trial court erred in its evidentiary rulings; and (4) the trial court erroneously submitted to the jury a calculation which represented preverdict interest. This appeal followed.

ISSUES

1. Did the trial court err in concluding that the rate tariff does not insulate NSP from liability?

2. Did the trial court err in concluding Hapka did not preclude respondents' recovery of economic losses?

3. Did the trial court err in allowing respondents' damage expert to testify?

4. Did the trial court abuse its discretion in any of its challenged evidentiary rulings, and if so, was NSP prejudiced by those rulings?

5. Did the trial court err in permitting the jury to consider evidence of "additional interest" as part of the respondents' damages and, if so, was NSP prejudiced by its admission?

6. Did the trial court err in denying NSP's motion for judgment notwithstanding the verdict or a new trial?

ANALYSIS

I

The limitation of liability provision in NSP's rate tariff states:

1.4 Continuity of Service. The Company will endeavor to provide continuous service but does not guarantee an uninterrupted or undisturbed supply of electric service. The Company will not be responsible for any loss or damage resulting from the interruption or disturbance of service for any cause other than gross negligence of the Company. The Company will not be liable for any loss of profits or other consequential damages resulting from the use of service or any interruption or disturbance of service.

(Emphasis added.) Interpretation of the tariff's language and application to this case is a question of law subject to independent review on appeal. See Meyering v. Wessels, 383 N.W.2d 670, 672 (Minn.1986); Hibbing Educ. Ass'n. v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

NSP argues the stray voltage arose from the ZumBerges' "use" of electrical service, and therefore recovery of consequential damages is improper. The trial court concluded the "mere availability of continuous electric energy" to the ZumBerges did not amount to "use" under the tariff. We agree with the trial court.

This court has recognized the rate tariff as a valid limitation of liability and not contrary to public policy. Computer Tool & Eng'g, Inc. v. Northern States Power Co., 453 N.W.2d 569, 573 (Minn.App.1990), pet. for rev. denied (Minn. May 23, 1990). In Computer Tool, telephone company employees cut through a primary electrical service line. The incident resulted in a power surge which seriously damaged Computer Tool's equipment. This court concluded the tariff immunized NSP from liability because damage caused by an interruption or disturbance of service was expressly limited by the tariff.

By its own terms, the tariff does not purport to relieve NSP from all negligence under all conceivable circumstances. The tariff is narrow and applies to exonerate NSP from liability occasioned by interruptions or disturbances in the electric service. Liability would remain for all injury not caused by an interruption or disturbance in power.

Id. ¹

NSP's interpretation of the tariff language requires a broad reading, namely, the ZumBerges' mere use of electrical service "resulted" in the presence of stray voltage which ultimately caused the damage. Such a broad reading, however, is inconsistent with this court's conclusion that the language should be read narrowly:

The tariff is narrow and applies to exonerate NSP from liability occasioned by interruptions or disturbances in the electric service * * *. Narrowly construed, the limitation applies where an occurrence breaks the uniformity and continuity of electric service, which is exactly what happened here.

Id. Hence, construing the phrase "use of service" as precluding liability in all instances where damage arose from "the mere availability of continuous electrical energy" contravenes public policy. Nonetheless, even if we construe the statute broadly, the evidence supports the conclusion that the ZumBerges' use of service did not cause the stray voltage.

There was evidence at trial that the "cause" of the stray voltage was potentially attributable to several factors, including an inadequately sized transformer, use of split-bolt connectors, and failure to properly install or maintain the neutral isolator on the part of NSP. Thus, while "neutral-to-earth" voltage may be a natural phenomena associated with power distribution systems (and therefore "caused" by the mere use of electricity), "stray voltage" is not the same thing. Rather, neutral-to-earth voltage is only correctly termed "stray voltage" when it appears in an animal environment "at a magnitude that is problematic to the animals."

NSP's assertion that the two are synonymous contradicts the company's concession that stray voltage is a controllable phenomena. Consequently, equating unavoidable, but relatively innocuous, neutral-to-earth voltage with stray voltage in the dairy barn is like equating a tiger loose on the street to one properly caged and controlled. We therefore find that the stray voltage was not caused by the ZumBerges' "use of service" as that phrase is used in the rate tariff, and that the tariff, interpreted narrowly, does not bar recovery in this matter.

II

NSP argues that based on Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn.1990), the ZumBerges are not entitled to recovery on a negligence theory. The trial court determined Hapka did not preclude recovery for two reasons: (1) the ZumBerges' damages arose from a "consumer" transaction since they did not have equal bargaining power with NSP, and (2) the stray voltage was not the product of any transaction between NSP and the ZumBerges. We agree.

The Minnesota Supreme Court held in Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159, 162 (Minn.1981), that economic losses arising out of commercial transactions are not recoverable under negligence and strict products liability theories, unless they involve...