St. John v. Missoula Electric Cooperative, Inc. , 54 St.Rep. 361 ( 1997 )

NO. 96-641
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
LAURICE ST. JOHN,
Plaintiff and Appellant,
v.
MISSOULA ELECTRIC COOPERATIVE, INC.,
Defendant and Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Edward McLean, Judge Presiding.
COUNSEL OF RECORD:
For Appellant:
Timothy D. Geiszler; Geiszler & Newcomer, Missoula, Montana
For Respondent:
Edward A. Murphy; Datsopoulos, MacDonald & Lind, Missoula,
Montana
: FILED APR 2 4 1997
Submitted on Briefs: January 30, 1997
Decided: A p r i l 24, 1997
Filed:
CLERK OF S d P R E f d E COURT
STATE OF MONTANA
@+
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
Laurice St. John (St. John), appeals from the Fourth Judicial District Court's Judgment
awarding Missoula Electric Cooperative, Inc. (MEC), $1,160.30 on its counterclaim. We
reverse and remand.
We address the following dispositive issue on appeal:
Did the District Court err in holding that the Payment Agreement entered into
between St. John and MEC was a settlement of all disputes?
BACKGROUND
In March of 1992, St. John purchased a house fiom Howard Lemm (Lemm) in Lolo,
Montana. St. John did not move into the house for one year after her purchase. During that
period she rented the property back to Lemm. St. John's house is equipped with two
electrical meters, one serving the house (house meter), and the other serving the swimming
pool (pool meter). The pool meter and the house meter were billed separately and given
separate account numbers by MEC. The dispute in this case arises from a bill for electrical
services to the pool meter.
In May of 1993, Lernrn contacted St. John to see if she wanted to use the pool during
the upcoming summer season. In response, St. John contacted a local pool service company
to prepare the pool for use during the summer season. In August of 1993, St. John contacted
MEC to open an account for power to her new house in preparation for her arrival at the
residence later that month. Soon after St. John opened the account, MEC billed her $2,040
for electrical service credited to the pool meter.
In October of 1993, St. John contacted MEC regarding the large bill and contended
that it was a mistake. MEC told St. John that the bill was likely an error and would be
corrected later. However, St. John continued to be billed $2,040 for electrical service
supplied to the pool for the period of July 20, 1993, through August 19, 1993. In addition
to these charges, St. John received a later bill for an additional $2,040 for electrical services
to the pool for the period of October 19, 1993, through November 10, 1993. This made her
total bill $4,080. Although she refused to pay the bill from the pool meter, St. John
continued to promptly pay all bills related to the house meter.
Due to St. John's refusal to pay the bill related to the pool meter, MEC terminated
electrical services to both the house and the pool. Although it would have been possible for
St. John to switch to another supplier for her electrical service, she would first have to obtain
the consent of MEC. St. John had a friend restore power to her home without the permission
or knowledge of MEC. When MEC discovered the unauthorized service, it again terminated
all electrical service to St. John's two accounts.'
MEC agreed to reconnect St. John's service provided she enter into a written
agreement to pay the disputed balance in monthly installments. The agreement provided as
follows:
I . We note that termination of electrical servicecan be a matter of grave concern. The media
reports that Imelda Marcos' unpaid electric bill of $200,000 may cause a power shutoff at her
husband's air-cooled crypt. Winners & Losers, TIME, Feb. 10, 1997, at 19.
I Laurice St. John Agree to pay $882.18 at the time of reconnect. And agree
to make payments of 250.00 a month until my balance is paid in full.
Previous Balance 3908.87
current charges 237.43
tampering feeldisc 75.00
deposit 264.00
reconnect fee 75.00
Total bal 4,560.30
8/29/94 pmt -900.00
Remaining balance 3,660.30 to make monthly payment
of $250.00
I understand that if this agreement is not kept current my account or accounts
will be disconnected.
Members signature
IS/ Laurice A. St. John 8-29-94
Credit & Collections
IS/ Kelly M. Sherick
Under the terms of the above document, the repayment totaled $4,560.30. St. John
agreed to make a $900 down payment and pay $250 per month until the remaining balance
was paid. After St. John signed the agreement, and without St. John's knowledge or consent,
MEC altered the document by adding the words "ACCORD AND SATISFACTION." In
order to continue to receive electrical service, St. John made the down payment and ten
monthly installments before she discontinued payments leaving a balance of $1,160.30
charged to the pool meter.
Unable to resolve her dispute with MEC, St. John filed suit against MEC alleging
negligent billing and negligent infliction of emotional distress. MEC asserted a counterclaim
against St. John, seeking payment of the balance of $1,160. A trial was held before the court
sitting without a jury.
In its Findings of Fact, the District Court found that St. John had agreed to make
payments solely to restore the electrical service to her house. Nonetheless, the court
concluded that St. John had agreed to "settle" the dispute and had only partially complied
with the settlement agreement. Accordingly, the court entered judgment against St. John in
the amount of $1,160. St. John appeals from this judgment.
DISCUSSION
Did the District Court err in holding that the Payment Agreement entered into
between St. John and MEC was a settlement of all disputes?
The standard of review of a district court's findings of fact is whether they are clearly
erroneous. Daines v. Knight (1995), 269 Mont. 320,324,888 P.2d 904,906. This Court has
adopted a three-part test in determining whether the findings are clearly erroneous. Interstate
Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. This test
includes:
First, the Court will review the record to see if the findings are supported by
substantial evidence. Second, if the findings are supported by substantial
evidence we will determine if the trial court has misapprehended the effect of
evidence. [Citations omitted.] Third, if substantial evidence exists and the
effect of the evidence has not been misapprehended the Court may still find
that "[A] finding is 'clearly erroneous' when, although there is evidence to
support it, a review of the record leaves the court with the definite and firm
conviction that a mistake has been committed." . . .
DeSaye, 820 P.2d at 1287 (citing United States v. United States Gypsum Co. (1948), 333
U.S. 364, 68 S. Ct. 525, 92 L. Ed. 746). The standard of review of a district court's
conclusions of law is whether the court's interpretation of the law is correct. Carbon County
v. Union Reserve Coal Co. (1995), 271 Mont. 459,469, 898 P.2d 680,686; see also Kreger
1 v. Francis (1995), 271 Mont. 444, 898 P.2d 672.
~ The court's ruling in favor of MEC is based upon the premise that "[ilf the parties to
a legal dispute enter into an agreement to settle that dispute, the new agreement becomes
enforceable according to its terms." The court concluded that "Laurice St. John and MEC
entered into a new agreement to settle their dispute on August 29, 1994 and she partially
performed her obligations under that agreement, but then breached it by failing to pay the
entire amount owed to MEC." We hold that the court's conclusion that St. John entered into
an agreement to "settle" the dispute is not correct in light of the court's findings of fact.
~ A number of the court's findings of fact relate specifically to the question of whether
~ St. John had a valid dispute with MEC and whether she entered into an agreement to settle
that dispute. The court found specifically that "St. John did not consume 40,000 kwh of
I electricity [$2,040.00] during the period from when her account was opened [August 12,
19931 to the August meter reading [August 19, 19931." The court also found that, although
MEC billed St. John for 40,000 kwh consumption from October 19, 1993 through November
15, 1993, "[tlhe pool had been closed and shut down prior to October 19, 1993." These
findings would certainly indicate that St. John's challenge to the MEC billing was not without
a basis.
Further, with regard to the substance of the "Agreement" that St. John signed in order
to restore power to her residence, the court found that "St. John signed a written promise to
1 pay this disputed balance in monthly installments, without admitting she was responsible for
those disputed charges, and without agreeing that the payment plan constituted a settlement
of the dispute over the pool meter billing." (Emphasis added.) The court also found that St.
John had paid $3,400 to MEC "solely to keep her electrical service to her house." MEC has
not cross-appealed from these findings of fact and thus they constitute established facts.
In light of these established facts, it is clear that St. John had a basis for disputing the
MEC billing and that, in agreeing to make payments on the outstanding balance in order to
restore power to her residence, she did not agree to "settle" the dispute. The court's
~ conclusion that St. John and MEC entered into a new agreement to "settle" their dispute is
contrary to the court's own Findings of Fact and is in error.
We hold that the court's judgment in favor of MEC is based upon an erroneous
I
conclusion that St. John entered into an accord or agreement to settle her dispute with MEC.
As the record and the court's own findings of fact indicate, there was no such settlement
agreement.
Furthermore, once the court found that the dispute had been resolved through a
settlement, it did not address the merits of St. John's claims for negligent billing and
negligent infliction of emotional distress. MEC contends that St. John failed to present a
prima facie case of negligent infliction of emotional distress. However, it is for the trial court
to determine whether the evidence supports a finding of severe emotional distress. Sacco v.
High Country Independent Press (1995), 271 Mont. 209, 239, 896 P.2d 41 1, 429. In the
absence of any findings and conclusions with regard to St. John's claims, we have no basis
for determining whether those claims were of merit. Bauer v. Cook (1972), 182 Mont. 22 1,
228,596 P.2d 200,204. Accordingly, we reverse the judgment for MEC and remand for the
District Court to address the merits of St. John's dispute with MEC's $4,080 bill and the
merits of her claim against MEC for negligent infliction of emotional distress.
We concur:
Justices
Justice Terry N. Trieweiler specially concurring.
I concur with the majority's conclusion that the payment agreement between St. John
and MEC did not settle their dispute regarding the amount owed by St. John for electrical
service. I disagree, however, that that resolves all of the issues which must necessarily be
decided on appeal in order to adequately guide the District Court after this case is remanded.
In addition to its conclusion that St. John had settled her dispute with MEC, the
District Court also concluded that she failed to show that her meter malfunctioned or was
misread. This conclusion was also inconsistent with the District Court's findings and should
be specifically reversed by this Court.
The District Court found that seven days after St. John signed up for electrical service
from MEC, she was billed $2040 for 40,000 kwh of service during that time, but that "St.
John did not consume 40,000 kwh of electricity ($2040.00) during the period from when her
account was opened (August 12, 1993) to the August meter reading (August 19, 1993)."
The District Court went on to find that St. John was later billed $2040 for 40,000 kwh
of consumption from October 19, 1993, through November 15, 1993, but that the pool, for
which the electricity had allegedly been consumed, had been shut down prior to October 19,
1993. Therefore, neither could that charge have been correct. In light of these findings, the
District Court's conclusion that plaintiff failed to show her meter malfunctioned or was
misread is incorrect. That conclusion should be reversed and upon reconsideration of this
case following remand, the District Court should be directed that judgment cannot be based
on that erroneous conclusion.
I would furthermore conclude that the manner in which St. John was treated by MEC
in this case was unconscionable and that as a matter of law electrical providers who
monopolize electrical service cannot extort payment of legitimately disputed sums from their
customers by terminating electrical service until payment is agreed upon. To fully
understand just how egregous MEC's conduct was, it is necessary to look no further than the
court's findings of fact. The following findings have not been appealed by MEC.
When St. John bought her home in Lolo on March 3 1, 1992, electrical service was
provided through and billed from two separate meters. One meter measured consumption
in the household, and the other meter measured consumption by the garage and swimming
pool. MEC treated the charges separately and billed them separately.
Because the person who occupied the house before St. John bought it continued to
live in the house after she bought it, that occupant continued to be responsible for electrical
service for a period of time after St. John's purchase. St. John first signed an agreement with
MEC to pay for electrical service on August 12, 1993. Seven days later, she was billed
$2040 for electrical service provided to the pool area during that seven-day period of time.
The only devices using electricity through the pool meter, however, were the electric light
bulbs in the garage and the electricity for the pool. Even MEC believed at that time that the
meter had to have been misread in order to generate such a substantial and unprecedented
charge.
In November, when St. John was again billed $2040, even after the pool had been
closed and shut down for the winter, she disputed the amount that she was being charged.
She continued to be billed for the full amount through 1993, but was billed separately for her
house and the electrical services provided to the pool. During this time, St. John continued
to promptly pay all bills related to her house. In spite of that fact, on April 5 , 1994, MEC
transferred the $4154 balance attributable to the pool meter to her house meter account, and
then demanded full payment within seven days and threatened to terminate electrical service
if payment was not made. St. John did not make full payment, and the electrical service was
disconnected.
When a h e n d restored unauthorized service to St. John's house in order to avoid the
extreme dificulties caused by the loss of her electricity, MEC discovered the unauthorized
service and sought criminal prosecution of her for unauthorized use of electrical service. It
then again terminated electrical service to her home.
It was under these circumstances that MEC then came to St. John and agreed to
restore the electrical service, which was essential to the habitability of her home, on the
condition that she sign a written agreement to pay the disputed amounts billed from her pool
meter. She signed the promise to make monthly installments, but did not admit she was
responsible for the disputed charges, and did not agree that the payment plan constituted a
settlement of the dispute over the amount due for electricity provided to the pool area.
As if MEC's conduct was not sufficiently reprehensible by this point in time, it then
altered the agreement that St. John had signed, without her knowledge or approval, and
added "ACCORD AND SATISFACTION" to the document. Not being sufficiently
embarrassed by that impropriety, it then raised the document St. John signed as an actual
accord and satisfaction in defense to this action.
The electric cooperative's conduct in this case is nothing short of extortion, combined
with deceit.
The predicament in which St. John found herself due to the bungling, overreaching,
and manipulation by MEC was compounded by the fact that she could not switch to Montana
Power Company for her service without MEC's approval, which apparently was never given.
Under similar circumstances, the Supreme Court of Utah held that a public utility has
a higher obligation to render services to the public than does an ordinary business. While,
concededly, MEC is not a public utility, its status is similar in this case because of the
monopoly it had over electrical service to St. John. In Josephson v. Mountain Bell (Utah
1978), 576 P.2d 850, the public utility which provided telephone service to the plaintiff in
that case terminated service to his home because he was delinquent in payment for his
business phone. The Utah Court held, under the circumstances, that:
But it is our opinion that the defendant should not be permitted to use the
pressure of imposing a penalty upon the home and the family by denying them
a public service they are entitled to and paying for. . . .
In accordance with what has been said above, we cannot see it as other
than a deprivation of the plaintiffs of their rights to cut off their home phone
service because charges on the separate business phone were delinquent. We
therefore agree with plaintiffs' contention that the disconnection of their home
phone was wrongful.
Josephson, 576 P.2d at 852-53 (footnote omitted).
Based on the reasoning in Josephson, I would conclude, likewise, that an electric
cooperative with a monopoly over service to its consumers cannot terminate one form of
service which has been hlly paid for in order to leverage payment for another service which
is legitimately or otherwise disputed. Even though the service disputed in Josephson was to
a business premises and the issue was whether service could be terminated to the plaintiffs
residence, the two services involved in this case had been treated just as separately by MEC
prior to St. John's dispute with the cooperative over service to the pool area.
Finally, I would conclude, as the court did in Trigg v. Middle Tennessee Electric
Membership Corp. (Tenn. Ct. App. 1975), 533 S.W.2d 730, that a company supplying
electricity to the public cannot terminate service to a customer for nonpayment when there
is a bona fide dispute concerning the correctness of the bill. In that case, the Tennessee
Court held that:
A company supplying electricity to the public has the right to cut off
service to a customer for nonpayment of a just service bill and the company
may adopt a rule to that effect. Annot., 112 A.L.R. 237 (1938). An exception
to the general rule exists when the customer has a bona fide dispute concerning
the correctness of the bill. Steele v. Clinton Electric Light & Power Co., 123
Conn. 180, 193 A. 613,615 (1937); Annot. 112 A.L.R. 237,241 (1938); see
also 43 Arn.Jur., Public Utilities and Services, Sec. 65; Annot., 28 A.L.R. 475
(1924). . . .
. . . A public utility should not be able to coerce a customer to pay a
disputed claim.
Trigg, 533 S.W.2d at 733.
While, once again, the rule applied in Trigg is normally applied to public utilities, the
defendant in that case was the Middle Tennessee Electric Membership Corp., subject to the
Electric Cooperative Law of Tennessee, as codified in Tenn. Code Ann. $5 65-25-101
through -229 (1993). Furthermore, because of the monopolistic nature of MEC's relationship
with St. John, the rationale for the rule is the same in this case.
For these reasons, I concur with what has been said in the majority opinion; however,
feel it is insufficient and would expand the opinion to include the conclusions set forth in this
opinion.
Justice William E. Hunt, Sr., joins in the foregoing specially concurring opinion.
Justice