Werner Properties, Inc. v. Gasearch, L.L.C. ( 2023 )

[Cite as Werner Properties, Inc. v. Gasearch, L.L.C., 2023-Ohio-1049.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
WERNER PROPERTIES, INC., ET AL., :
Plaintiffs-Appellants, :
No. 111850
v. :
GASEARCH, LLC, ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: March 30, 2023
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-21-955721
Appearances:
Kaufman, Drozdowski & Grendell, LLC, and Evan T.
Byron, for appellants.
Black, McCuskey, Souers & Arbaugh, James M. Wherley,
Jr., and Randolph L. Snow, for appellees Gasearch, LLC
and Susan Faith.
Taft Stettinius & Hollister, LLP, Adrian D. Thompson, and
Julie A. Crocker; McGuireWoods, LLP, Gregory J. Krock,
for appellee The East Ohio Gas Company d.b.a. Dominion
Energy Ohio.
KATHLEEN ANN KEOUGH, J.:
Plaintiff-appellant, Werner Properties, Inc., on behalf of itself and a
putative class of similarly situated persons and entities, appeals from the trial court’s
judgment granting the motion to dismiss of defendant-appellee, East Ohio Gas
Company d.b.a. Dominion Energy Ohio (“DEO”), and sua sponte dismissing
defendants-appellees (“Gasearch”), L.L.C. and Susan Faith (“Faith”) and by
implication the Doe defendants. For the reasons that follow, we affirm.
I. Background
The underlying question in this appeal is whether the common pleas
court had jurisdiction over Werner’s claims regarding services provided by
defendants-appellees as part of DEO’s Energy Choice Program.
With the approval of the Public Utilities Commission of Ohio
(“PUCO”), certain natural gas companies have established energy choice programs
in which customers shop for energy options from a group of competitive suppliers
certified by the PUCO. See R.C. 4929.04. Under DEO’s Energy Choice Program, a
DEO customer may select a supplier other than DEO to supply the customer’s
natural gas. DEO, however, remains responsible for the transportation and delivery
of the gas. The supplier selected by the customer contracts directly with the
customer to supply the gas and DEO, in turn, delivers the gas to the customer. The
consumer pays for the gas provided by its selected supplier and the local utility
company’s distribution costs. In re Complaint of Wingo v. Nationwide Energy
Partners, 163 Ohio St.3d 208, 2020-Ohio-5583, 169 N.E.3d 617, ¶ 13, fn. 3.
To participate in an energy choice program, gas suppliers must first
be certified by the PUCO and then comply with extensive PUCO regulations. See
Ohio Adm.Code 4901:1-27 through 4901:1-34. Suppliers must also agree to comply
with the terms and conditions of the local natural gas company’s PUCO-approved
tariff.1 Id.As alleged in Werner’s second amended complaint (“SAC”), in March
2012, Werner entered into an Energy Choice Natural Gas Sales Agreement (“NGA”)
with Gasearch in which it agreed to purchase its natural gas from Gasearch. SAC at
¶ 41-42; exhibit No. 5. Thereafter, Werner and Gasearch renewed the NGA five
times between 2012 and 2018. Id. at ¶ 43-38; exhibit Nos. 5-10.
In the NGAs, Gasearch agreed to “sell and deliver 100% of [Werner’s]
natural gas requirements to [Werner’s facilities].” Id. at ¶ 47; exhibit Nos. 5-10.
Although DEO was not a party to and did not sign the agreements, the NGAs
provided that DEO would submit bills on a monthly basis to Werner that would
include charges for the natural gas supplied by Gasearch and the transportation
services provided by DEO. Id.; exhibit Nos. 5-10.
Werner and Gasearch executed their most recent NGA in April 2020.
Id. at ¶ 46; exhibit No. 10. The April 2020 NGA required Werner to pay $2.72 per
one thousand cubic feet (“mcf”) that Gasearch supplied. Id. Approximately 18
1 “Public utility tariffs are books or compilations of printed materials filed by public
utilities with, and approved by, [the PUCO] that contain schedules of rates and charges,
rules and regulations, and standards for service.” Jones v. Ohio Edison Co., 2014-Ohio-
5466, 26 N.E.3d 824, ¶ 16 (11th Dist.).
months later, on October 28, 2021, Gasearch sent an email to all its customers
informing them that it was shutting down its business operations and would not
satisfy any of its outstanding contracts. Id. at ¶ 49; exhibit No. 11. Werner thereafter
entered into a contract with another PUCO-approved supplier in the Energy Choice
Program that required it to pay $4.09 per mcf for its gas. Id. at ¶ 52-53.
Upon learning of the email that Gasearch sent to its customers, DEO
filed an application with the PUCO seeking to terminate Gasearch’s participation in
the Energy Choice Program. Id. at ¶ 56; exhibit No. 14. The PUCO approved the
application on November 3, 2021, and ordered DEO to “effectuate an orderly
transition of Gasearch’s customers” but “delay the termination of Gasearch’s
participation in the Energy Choice Program until all existing customers have been
transitioned * * * to another supplier or supply option.” Id.; exhibit No. 18. The
PUCO stated that it would “continue to monitor this situation and take any
additional action deemed necessary.” Id. After receiving approval from the PUCO,
DEO removed Gasearch from the list of suppliers certified to participate in the
Energy Choice Program. Id. at ¶ 59.
In the SAC, Werner asserted claims for breach of contract, fraud, and
deceptive trade practices against Gasearch; fraud and piercing the corporate veil
against Faith, Gasearch’s sole owner; and breach of fiduciary duty, negligent
misrepresentation, negligence, and principal/agency liability against DEO. It also
named as defendants “John/Jane Does 1-10” but did not assert any claims against
them.
In support of its allegations against DEO, Werner alleged in the SAC
that it had obtained a copy of the “actual agreement” between DEO and Gasearch,
entitled “Service Agreement — Energy Choice Pooling Service,” regarding the
financial, operational, and creditworthiness requirements imposed by DEO on
Gasearch. Id. at ¶ 22-23; Exhibit A. Werner alleged that under the agreement, DEO
was contractually required but failed to monitor Gasearch’s financial condition,
creditworthiness, and operations to ensure that Gasearch would be capable of
satisfying its contracts with its customers. Id. at ¶ 21-27, 112-117. Werner contended
that as a result, it and the putative class members were entitled to recover monetary
damages in the amount of the increased prices they were required to pay to purchase
replacement gas from other PUCO-approved suppliers through March 2023, when
the Gasearch agreement was set to expire. Id. at ¶ 62(b) and (c).
DEO filed a motion to dismiss the SAC pursuant to Civ.R. 12(B)(1)
and (6) for lack of jurisdiction and failure to state a claim upon which relief can be
granted. In its motion, DEO asserted that Exhibit A attached to Werner’s SAC was
not a signed contract between DEO and Gasearch but rather, a portion of the DEO
Tariff that provides the general terms and conditions that govern the conduct of both
DEO and all suppliers in the Energy Choice Program.
DEO argued that contrary to Werner’s allegation in the SAC that DEO
was responsible for certifying the suppliers in the Energy Choice Program, the DEO
Tariff expressly states that the PUCO certifies the suppliers who can participate in
the program. See Exhibit A, § 24.1 (“Supplier shall be certified by the PUCO in
accordance with the PUCO’s requirements for Certification of Governmental
Aggregators and Retail Natural Gas Suppliers as set forth in OAC Chapter 4901:1-
27.”) DEO pointed out that the Tariff also contains provisions that govern DEO’s
conduct regarding the certified suppliers. For example, the Tariff (1) requires DEO
to apply and enforce the Tariff in a nondiscriminatory manner; id. at § 24.4(a) and
(b); (2) prohibits DEO from giving any supplier preference over another supplier;
id. at § 24.4(c); (3) requires DEO to process all similar requests for transportation
services in the same manner; id. at § 24.4(d); and (4) prohibits DEO from
communicating “the idea that any advantage might accrue in the use of [DEO’s]
services as a result of dealing with any Supplier.” Id. at § 24.4(j).
Relying on Hull v. Columbia Gas of Ohio, 110 Ohio St.3d 96, 2006-
Ohio-3666, 850 N.E.2d 1190, DEO argued that the trial court lacked jurisdiction
over the matter because the Supreme Court of Ohio decided in Hull that the PUCO
has exclusive jurisdiction over disputes involving the amount a customer must pay
for replacement gas under a natural gas company’s energy choice program if the
supplier fails to satisfy its obligations to that customer. DEO argued further that
Werner could not avoid the PUCO’s exclusive jurisdiction by couching its service
and rate-related claims as tort claims because regardless of the label attached to the
claims, the claims involved the services that DEO was supposed to provide under
the Energy Choice Program, and the PUCO has exclusive jurisdiction to resolve
disputes involving those services. Finally, DEO argued that even if the trial court
had jurisdiction, Werner’s SAC failed to state a claim under which relief can be
granted.
In its brief in opposition to DEO’s motion, Werner acknowledged that
as a public utility, DEO is regulated by Ohio’s Revised Code and Administrative
Code, that DEO’s provision of services under the Energy Choice Program is
governed by the DEO Tariff, and that the PUCO is responsible for regulating issues
regarding that Tariff. (Werner’s brief in opposition, p. 2, 7.) Nevertheless, Werner
argued that the trial court should deny DEO’s motion because this case “is not an
administrative or regulatory matter at all” but instead, “a basic civil action premised
on the common law of Ohio.” (Appellant’s brief in opposition, p. 9.) Werner also
argued that its case was distinguishable from Hull.
The trial court granted DEO’s motion, finding that it lacked
jurisdiction over Werner’s claims because they are within the exclusive jurisdiction
of the PUCO. The trial court found that DEO’s obligations to its customers are
governed by PUCO regulations and that, in fact, the PUCO had already exercised
jurisdiction over Gasearch’s breach of its supply contracts with DEO customers.
The trial court further found that, as in Hull, Werner sought to calculate damages
based on the difference between its increased gas cost after Gasearch’s default less
its expected cost under its contract with Gasearch, and that as determined by the
Ohio Supreme Court in Hull, the PUCO has exclusive jurisdiction to adjudicate
complaints regarding the rates to be charged a public utility’s customers. Finally,
the trial court found that it was undisputed that Gasearch was a PUCO-certified
natural gas supplier and because the PUCO has exclusive jurisdiction to consider
complaints against such suppliers, the trial court was likewise without jurisdiction
to consider Werner’s claims against Gasearch and Faith. Accordingly, the court
dismissed Werner’s claims against DEO, Gasearch, and Faith with prejudice.2 This
appeal followed.
II. Appellate Jurisdiction
In addition to naming Gasearch, Faith, and DEO as defendants in the
SAC, Werner also named as defendants “John/Jane Does 1-10.” The SAC asserted
that the Doe defendants were “either individuals and/or entities wholly or partially
owned by and/or affiliated with Ms. Faith and/or Gasearch that aided, abetted,
conspired, or otherwise participated in the misconduct set forth herein.” SAC at ¶ 9.
Werner alleged that it would amend the SAC upon discovering their identities. Id.Under Civ.R. 15(D), “when the plaintiff does not know the name of a
defendant, that defendant may be designated in a pleading or proceeding by any
name or description.” Then, “when the name is discovered, the pleading or
proceeding must be amended accordingly.” Id. Under Civ.R. 3(A), an action is
commenced by filing a complaint if service is obtained within one year from such
filing “upon a named defendant * * * or upon a defendant identified by a fictitious
name whose name is later corrected pursuant to Civ.R. 15(D).”
2 The trial court did not address DEO’s Civ.R. 12(B)(6) argument that the SAC
should be dismissed because Werner failed to state a claim upon which relief can be
granted.
Applying these rules, this court has recognized that when the one-
year period for naming and serving John Doe defendants has expired, a judgment
rendered as to other defendants may be considered final and appealable because the
action never commenced against the John Doe defendants. Kohout v. Church of St.
Rocco Corp., 8th Dist. Cuyahoga No. 88969, 2008-Ohio-1819, ¶ 7. However, when
the one-year period for obtaining service on the John Doe defendants has not yet
passed and the plaintiff has not expressly abandoned the claims against the John
Doe defendants, a judgment in favor of other defendants that does not include the
“no just reason for delay” language of Civ.R. 54(B) is not final and appealable.3 Id.The trial court’s dismissal entry dismissed the claims against DEO,
Gasearch, and Faith but did not mention the Doe defendants. Furthermore, the one-
year period for serving the Doe defendants had not yet passed when the trial court
entered its order of dismissal. Accordingly, this court, sua sponte, invited the parties
to file supplemental briefs regarding whether the trial court’s judgment is a final
appealable order such that we have jurisdiction over the appeal. We conclude that
the trial court’s order is final and appealable.
First, although Werner identified the Doe defendants in the SAC as
individuals or entities owned or affiliated with Gasearch and Faith who allegedly
“aided, abetted, conspired or otherwise participated in the misconduct” described in
3 Under Civ.R. 54(B), “when multiple parties are involved, the court may enter final
judgment as to * * * fewer than all of the parties only upon an express determination that
there is no just reason for delay.”
the SAC, it did not actually assert any claims against them. The Doe defendants are
not named in the counts for breach of contract, fraud, and deceptive trade practices
against Gasearch and Faith nor, in fact, in any counts in the complaint.
Second, even assuming the SAC asserted claims against the Doe
defendants, the trial court’s order implicitly resolved the claims against them such
that they do not remain pending for adjudication. The Ohio Supreme Court has
recognized that an order that is silent as to a particular claim does not necessarily
leave that claim unresolved because courts sometimes resolve ancillary claims by
implication. Gen. Accident Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17, 21, 540
N.E.2d 266 (1989) (concluding that in rejecting the appellant’s claim that certain
insurance companies owed a duty to defend, the trial court implicitly rejected a
claim that those insurers owed a duty to indemnify); Wise v. Gursky, 66 Ohio St.2d
241, 421 N.E.2d 150 (1981) (jury verdict in favor of defendant implicitly rendered
the claims of defendant’s third-party complaint moot); see also Sec. Natl. Bank &
Trust Co. v. Jones, 2d Dist. Clark No. 2000-CA-59, 2001 Ohio App. LEXIS 3236, 6
(July 6, 2001) (trial court’s grant of summary judgment in favor of the plaintiff
implicitly rejected the defendant’s counterclaim).
In its order, the trial court determined that because Gasearch was a
PUCO-certified supplier under the Energy Choice Program, Werner’s claims against
Gasearch and its owner, Faith, are subject to the PUCO’s exclusive jurisdiction. That
determination necessarily also applies to any claims that Werner might assert
against the Doe defendants because if, as the trial court found, the PUCO has
exclusive jurisdiction over claims involving Gasearch’s and Faith’s alleged
misconduct, it necessarily also has exclusive jurisdiction over claims against the Doe
defendants as entities that allegedly aided and abetted Gasearch and Faith in their
alleged misconduct. Thus, it is apparent that although the trial court’s dismissal
order does not specifically address Werner’s claims against the Doe defendants, the
order implicitly dismissed any claims against them.
Finally, and most importantly, even if the trial court’s order did not
implicitly dismiss the claims against the Doe defendants, it contains the requisite
Civ.R. 54(B) language, expressly stating that there is “no just cause for delay” of an
immediate appeal in a case involving multiple claims and parties. Accordingly, we
find that the trial court’s order is a final appealable order.
III. Law and Analysis
A. Werner’s Claims Against DEO
In its first assignment of error, Werner contends that the trial court
erred in dismissing its claims against DEO based on its determination the PUCO has
exclusive jurisdiction over the claims. Werner contends that its claims against DEO
are not related to DEO’s natural gas service, rates, and payment for same — which
Werner concedes are regulatory matters falling within the PUCO’s exclusive
jurisdiction — but rather are merely common-law tort claims that do not require the
PUCO’s expertise to decide. He also contends that Hull, the case upon which the
trial court relied in concluding it lacked jurisdiction, is distinguishable from this
case.
“Subject matter jurisdiction is the power conferred on a court to
decide a particular matter on its merits and render an enforceable judgment over
the action.” Udelson v. Udelson, 8th Dist. Cuyahoga No. 92717, 2009-Ohio-6462,
¶ 13. In considering its jurisdiction pursuant to a Civ.R. 12(B)(1) motion to dismiss,
the trial court “determines whether the claim raises any action cognizable in that
court.” Moore v. Ohio Dept. of Rehab. & Corr., 10th Dist. Franklin No. 18AP-599,
2019-Ohio-767, ¶ 4. The trial court is not confined to the allegations of the
complaint but may consider material pertinent to its inquiry without converting the
motion into one for summary judgment. Vedder v. Warrensville Hts., 8th Dist.
Cuyahoga No. 81005, 2002-Ohio-5567, ¶ 15. Appellate courts apply a de novo
standard of review to questions of subject matter jurisdiction. Id.“The General Assembly has created a broad and comprehensive
statutory scheme for regulating the business activities of public utilities.” Kazmaier
Supermarket, Inc. v. Toledo Edison Co., 61 Ohio St.3d 147, 150, 573 N.E.2d 665(1991). By enacting statutory provisions requiring public utilities to file and adhere
to rate schedules, forbidding discrimination among their customers, prohibiting
free service, and providing a detailed procedure for service and rate complaints, the
General Assembly has lodged exclusive jurisdiction in such matters in the PUCO,
subject to review by the Supreme Court of Ohio. State ex rel. N. Ohio Tel. Co. v.
Winter, 23 Ohio St.2d 6, 260 N.E.2d 827 (1970), paragraph one of the syllabus.
Thus, in general, the “PUCO has exclusive jurisdiction over most matters concerning
public utilities.” Allstate Ins. Co. v. Cleveland Elec. Illum. Co., 119 Ohio St.3d 301,
2008-Ohio-3917, 893 N.E.2d 824, ¶ 5.
Notwithstanding the PUCO’s exclusive jurisdiction over service-
related matters, courts retain subject-matter jurisdiction over “pure tort and
contract claims” against utilities regulated by the PUCO. Id. at ¶ 6, citing State ex
rel. Ohio Edison Co. v. Shaker, 68 Ohio St.3d 209, 211, 625 N.E.2d 608 (1994). “The
mere fact that a plaintiff casts its allegations to sound in tort, however, is insufficient
to confer jurisdiction upon the common pleas court.” Pro Se Commercial Properties
v. Illum. Co., 8th Dist. Cuyahoga No. 92961, 2010-Ohio-516, ¶ 9, citing State ex rel.
Illum. Co. v. Cuyahoga Cty. Court of Common Pleas, 97 Ohio St.3d 69, 2002-Ohio-
5312, 776 N.E.2d 92, ¶ 21, “Instead, it is the substance of the claims that is
controlling; if the claims are manifestly service-related, they are with the exclusive
jurisdiction of the commission.” Pro Se Commercial Properties at id.In Allstate, the Supreme Court adopted a two-part test to determine
whether a claim is service-related or involves a common-law tort. The first part of
the test asks whether the PUCO’s administrative expertise is required to resolve the
issue in dispute. Allstate at ¶ 12. The second part of the test is whether the act
complained of constitutes a practice normally authorized by the utility. Id. If the
answer to either question is no, the claim is not within the PUCO’s exclusive
jurisdiction. Id.Applying this test to the case before us, it is apparent that the claims
Werner attempts to style as torts relate to service under the DEO Tariff over which
the PUCO has particular expertise and that involve standard industry practices. The
gravamen of the SAC is Werner’s contention that Werner and the purported class
members paid too much for replacement gas after Gasearch failed to satisfy its
contractual obligation as a supplier under DEO’s Energy Choice Program. In
describing DEO’s tortious conduct, Werner asserts that because the DEO Tariff
required DEO to monitor the creditworthiness and financial wherewithal of
suppliers, DEO assumed a duty to customers to ensure that those suppliers could
satisfy their supply contracts. Werner and the putative class members seek to
recover economic losses arising from the increased cost of obtaining natural gas
following Gasearch’s default of its obligations under its supply contracts.
With respect to the first part of the Allstate test, we find that the
PUCO’s expertise is required to assess the monitoring services that Werner contends
DEO should have provided. If DEO should have known that Gasearch might have
difficulty satisfying its contracts, the adjudicating tribunal will have to determine
what actions DEO would have been permitted to take in response. Importantly, the
DEO Tariff governs both the information that Gasearch was required to provide so
that DEO could monitor its creditworthiness and the information about Gasearch
that DEO would be permitted to convey to customers. See Exhibit A to SAC, § 23
and 24.4. The tribunal will have to ensure that the actions that Werner contends
DEO should have taken would not have violated the DEO Tariff by giving one
supplier preference over another supplier. In addition, the tribunal will have to
assess the extent to which DEO would have needed the PUCO’s approval to
undertake the actions that Werner contends DEO should have taken. See Ohio
Adm.Code 4901:1-27-13(F) (requiring the PUCO’s approval to take certain actions
in response to a supplier’s default). These assessments require the PUCO’s unique
administrative expertise.
Moreover, although Werner’s claims are that DEO failed to
adequately monitor Gasearch’s financial wherewithal, Ohio law requires the PUCO
to evaluate the “financial capability” of retail gas suppliers like Gasearch. R.C.
4929.02(A); see also Ohio Adm.Code 4901:1-2705 (requiring suppliers to provide
various forms of financial information as part of their certification applications). In
short, the duties that DEO purportedly violated were either promulgated by order of
the PUCO or otherwise entrusted by law to the PUCO’s jurisdiction. Thus, the
PUCO’s expertise is required to assess purported violations of those duties.
With respect to the second part of the Allstate test, it is apparent that
Werner’s claims involve services and practices normally authorized by public
utilities. DEO’s responsibilities to both its retail natural gas supplier and its
customers if that supplier defaults on its contracts are governed by regulation (see
Ohio Adm.Code 4901:1-13-14) and the DEO Tariff. Similarly, the manner in which
DEO would have been permitted to respond to any customer that might have
contacted DEO about Gasearch’s financial status is governed by the DEO Tariff. The
fact that Ohio statutes and regulations govern the issues involved in a lawsuit
demonstrates that the practice is normally authorized by the public utility. See, e.g.,
Jones, 2014-Ohio-5466, 26 N.E.3d 824 at ¶ 33-34 (11th Dist.) (because repairing
and replacing power lines are governed by the Ohio Administrative Code and a
PUCO-approved tariff, those actions are “practices normally authorized by” the
utility); DiFranco v. FirstEnergy Corp., 134 Ohio St.3d 144, 2012-Ohio-5455, 980
N.E.2d 996, ¶ 36 (“Offering discounted tariff rates to certain customers is a practice
normally engaged in by the utility. In fact, the practice is specifically authorized by
statute.”). Here, the DEO Tariff addresses in detail the relationship between DEO
and suppliers like Gasearch, thereby confirming that DEO’s supposedly actionable
conduct is “normally authorized.”
In light of our analysis under the Allstate test, we find that the trial
court did not err in determining that the PUCO has exclusive jurisdiction over this
matter, despite Werner’s attempts to categorize his claims as common-law tort
claims. Indeed, as the trial court found, the Ohio Supreme Court’s ruling in Hull,
wherein the Supreme Court held that the PUCO has exclusive jurisdiction over
disputes involving the amount a customer must pay for replacement gas under a
natural gas company’s energy choice program if the supplier fails to satisfy its
obligations to that customer, is directly on point.
In Hull, in accordance with a customer choice program implemented
by public-utility company Columbia Gas of Ohio that gave customers a choice to
purchase their natural gas from sources other than Columbia, Hull elected to
purchase his natural gas from one of the suppliers that the PUCO had certified. Hull,
110 Ohio St.3d 96, 2006-Ohio-3666, 850 N.E.2d 1190 at ¶ 6-9. That supplier
breached its contract with the customer. Id. at ¶ 10. Because the cost to procure
replacement gas from Columbia exceeded the price that the defaulting supplier had
agreed to charge, Hull sued Columbia under what he called a “pure contract theory
of recovery” to recover the increased cost he incurred in purchasing replacement gas
at a higher price. Id. at ¶ 28. In dismissing the case for lack of jurisdiction, the
Supreme Court of Ohio emphasized that “a pure contract case is one having nothing
to do with a utility’s services or rates.” Id. at ¶ 34. The Supreme Court further
explained that
[w]hile Hull characterizes his complaint against Columbia as a pure
contract claim, it is not. His complaint against Columbia is that the rate
he was charged exceeded the Energy Max contract rate and, thus, that
he was overcharged. A dispute so founded is squarely within the
exclusive jurisdiction of the PUCO.
Id. at ¶ 40-41.
Werner’s claims are virtually identical to those in Hull. Werner
alleges that it contracted to purchase its gas from Gasearch in accordance with
DEO’s Energy Choice Program, that Gasearch breached the contract, and that
Werner subsequently paid more for replacement gas than it would have paid under
its contract with Gasearch. SAC at ¶ 19-20, 40-54. As in Hull, Werner seeks to
recover damages from DEO in the amount of the increased cost that it and the
putative class members paid to obtain replacement gas from alternative suppliers
when Gasearch defaulted on its contractual obligations. Id. at ¶ 62(b) and (c). In
short, Werner contends that DEO’s allegedly faulty “monitoring services” caused the
purported class members to pay too much for replacement gas when Gasearch failed
to satisfy its contractual obligations as a supplier under the Energy Choice Program
and that DEO should be liable for the increased cost of that replacement gas.
Despite Werner’s efforts to distinguish its claim, it is
indistinguishable from the claim raised in Hull. Werner’s contention that its NGAs
with Gasearch somehow make this case different from Hull because the contract in
Hull was between the customer and Columbia — the public utility — rather than the
alternative supplier, is irrelevant. Just as Columbia was not a party to the contract
with Hull, DEO was not a party to Werner’s contracts with Gasearch. Likewise, the
fact that Werner characterizes its claims as tort claims instead of the contract claim
asserted in Hull is meaningless. The Hull Court held that the PUCO has exclusive
jurisdiction over all claims that involve a utility’s services or rates, regardless of how
the plaintiff characterizes those claims. Hull, 110 Ohio St.3d 96, 2006-3066, 850
N.E.2d 1190 at ¶ 34, 40-41.
Werner’s assertion that this case is different from Hull because the
plaintiff therein sought to compel Columbia to provide natural gas, unlike the
demand in this case, is also without merit. The customer in Hull sought the same
relief that Werner seeks: damages in the amount of the additional money that it and
the putative class members paid an alternative supplier when their initial supplier
defaulted under its supplier contracts. Id. at ¶ 28, 41. Furthermore, despite
Werner’s contention otherwise, the fact that one justice issued a dissent in Hull does
not permit this court to disregard the majority’s ruling.
Finally, Werner’s assertion that the PUCO does not have jurisdiction
because it is not a court and cannot award damages is without merit. If the PUCO
finds a violation, Werner can seek to recover monetary damages in court. See, e.g.,
State ex rel. Ohio Edison Co. v. Trumbull Cty. Ct. of Common Pleas, 11th Dist.
Trumbull No. 2019-T-0062, 2019-Ohio-5313, ¶ 33 (“Even though the trial court
does not have jurisdiction over the issue of whether a violation has occurred, the
court of common pleas does have jurisdiction over the issue of damages if the PUCO
finds a violation.”); Jones, 2014-Ohio-5466, 26 N.E.3d 824 at ¶ 38 (“Thus, if
appellants are able to establish their claims before the PUCO * * * appellants can
then seek an award of treble damages against them in court.”).
Werner’s claim that DEO’s allegedly faulty monitoring services
caused it and the putative class members to pay too much for replacement gas when
Gasearch failed to satisfy its obligations as a supplier under the Energy Choice
Program and that DEO should therefore be liable for the increased cost of the
replacement gas is indistinguishable from the claim in Hull that the court found to
be within the PUCO’s exclusive jurisdiction. Accordingly, the trial court did not err
in finding, in reliance on Hull, that the PUCO has exclusive jurisdiction over this
matter and dismissing Werner’s claims against DEO. In fact, the PUCO has already
exercised jurisdiction over issues surrounding Gasearch’s default of its supply
obligations to its customers and announced its intention to remain involved by
taking “any additional action deemed necessary.” SAC, exhibit No. 18 at ¶ 10. The
first assignment of error is overruled.
B. Werner’s Claims Against Gasearch and Faith
In its second assignment of error, Werner contends that the trial court
erred in sua sponte dismissing its claims against Gasearch and Faith for lack of
subject-matter jurisdiction. We disagree.
First, Werner’s assertion that Interstate Gas Supply, Inc. v. Calex
Corp., 10th Dist. Franklin No. 04AP-980, 2006-Ohio-638, “demonstrates, as a
matter of law, that common pleas courts of Ohio have jurisdiction to hear contract
and tort actions against natural gas suppliers (like Gasearch and Faith)” is wholly
without merit. There is no discussion whatsoever in that case about the PUCO or its
jurisdiction. Furthermore, the case involved claims by Interstate against two
defendants with whom it had contracted to supply gas. When the defendants did not
pay Interstate’s invoices, Interstate sued for breach of contract and amount due on
an account. Thus, the claims asserted by Interstate did not relate to its service or
rates but were “pure contract” claims over which the PUCO does not have
jurisdiction.
As noted by the Ohio Supreme Court in Hull, by enacting R.C.
4929.20 through 4929.30, the General Assembly gave the PUCO authority and
regulatory jurisdiction over governmental aggregators and retail natural gas
suppliers such as Gasearch. Hull, 110 Ohio St.3d 96, 2006-Ohio-3666, 850 N.E.2d
1190 at ¶ 35. See, e.g., R.C. 4929.24(A)(1) (“The public utilities commission has
jurisdiction under section 4905.26 of the Revised Code, upon complaint of any
person * * * regarding the provision by a natural gas supplier subject to certification
* * * of any service for which it is subject to certification.”). It is undisputed that
Gasearch was a PUCO-certified natural gas supplier. SAC at ¶ 6, 29. Furthermore,
despite Werner’s characterization otherwise, its claims against Gasearch and Faith
are neither contract nor tort claims; they are service-related claims that fall squarely
within the PUCO’s exclusive jurisdiction. In fact, as discussed above, the PUCO has
already exercised its jurisdiction over Gasearch’s default of its supply agreements
with DEO’s customers.
The trial court did not err in dismissing Werner’s claims against
Gasearch and Faith for lack of subject-matter jurisdiction. The second assignment
of error is therefore overruled.
Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, JUDGE
ANITA LASTER MAYS, A.J., and
EMANUELLA D. GROVES, J., CONCUR