PECO Energy Co v. First Montgomery ( 2016 )

J-A12013-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PECO ENERGY COMPANY, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
FIRST MONTGOMERY PROPERTIES, LTD.,
THE FAIRWAYS APARTMENTS
ASSOCIATES, L.P., FAIRWAYS
APARTMENTS G.P., INC., FMP/LAKESIDE
ASSOCIATES, L.P., AND FMP/LAKESIDE
PROPERTIES, INC.,
Appellants No. 2100 EDA 2015
Appeal from the Judgment Entered August 20, 2015
In the Court of Common Pleas of Chester County
Civil Division at No(s): 2010-04274-CA
BEFORE: BENDER, P.J.E., PANELLA, J., and STEVENS, P.J.E.*
MEMORANDUM BY BENDER, P.J.E.: FILED AUGUST 30, 2016
First Montgomery Properties, Ltd. (FMP), The Fairways Apartments
Associates, L.P., Fairways Apartments G.P., Inc., FMP/Lakeside Associates,
L.P., and FMP/Lakeside Properties, Inc. (collectively Appellants) appeal from
the judgment entered in favor of PECO Energy Company (PECO) in the
amounts of $109,612.61 and $27,118.76 against Appellants, jointly and
severally, plus interest. We affirm.
PECO filed this collection action against Appellants, who are the
owners of residential rental properties, to recover payment for utility
____________________________________________
*
Former Justice specially assigned to the Superior Court.
J-A12013-16
services it supplied to Appellants’ tenants.1 Following a bench trial that
resulted in a verdict in favor of PECO, Appellants filed post-trial motions,
which were granted to the extent that the verdict was adjusted to include
joint and several liability. See Trial Court Order, 6/9/15. Appellant’s other
post-trial motions were denied.
Appellants appealed to this Court and submitted a concise statement
of errors complained of on appeal in response to the court’s order. See
Pa.R.A.P. 1925(b). The trial court issued an opinion on September 2, 2015,
that addressed the issues raised by Appellants. The court’s opinion relied
extensively on a lengthy footnote contained in its previously issued June 9,
2015 order that addressed all of the issues raised by Appellants in this
appeal.
In addressing Appellants’ issues, we are “limited to determining
whether the trial court’s findings are supported by competent evidence,
whether errors of law have been committed, or whether the trial court’s
determinations demonstrate a manifest abuse of discretion.” McShea v.
City of Philadelphia, 995 A.2d 334, 338 (Pa. 2010). Moreover,
[w]hen this Court entertains an appeal originating from a non-
jury trial, we are bound by the trial court’s findings of fact,
unless those findings are not based on competent evidence. The
____________________________________________
1
In 2003, Appellants had entered into a contract with ConServe to handle
billing for PECO’s services. The deficient payments to PECO arose as a result
of ConServe’s continuing to bill Appellants’ tenants, while stopping its
payments to PECO in 2008.
-2-
J-A12013-16
trial court’s conclusions of law, however, are not binding on an
appellate court because it is the appellate court’s duty to
determine if the trial court correctly applied the law to the facts.
Id.
We have reviewed the extensive certified record, the briefs of the
parties, the applicable law, and the thorough and well-crafted opinion
authored by the Honorable Edward Griffith of the Court of Common Pleas of
Chester County, dated September 2, 2015. We conclude that Judge
Griffith’s comprehensive opinion properly disposes of the issues presented
by Appellants on appeal and we discern no abuse of discretion or error of
law. Accordingly, we adopt Judge Griffith’s opinion as our own and affirm
the judgment on that basis.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/30/2016
-3-
Circulated 08/12/2016 08:49 AM
PECO ENERGY COMPANY IN THE GOURT OF COMMON PLEAS
· Plaintiff
. v .. CHESTER COUNTY, PENNSYLVANIA
FIRST MONTGOMERY PROPERTIES, NO. 2010-04274
· LTD., individually and t/a FIRST
MONTGOMERY GROUP, THE : CIVILACTION-LAW
FAIRWAYS APARTMENTS·.
ASSOCIATES, LP;, individually and t/a
FAIRWAYS APARTMENTS, FAIRWAYS
APARTMENTS G.P., INC.,
FMP/LAKESIDE ASSOCIATES, LP.
in~i¥1dually and t/a MELROSE STATION
APARTMENTS and FMP/LAKES]DE
PRO.PERTIES, INC.
Defendants
OPINIQN
Defendants, First Montgomery Properfles, Ltd., The Fairways Apartments
Associates, L.P., Fairways. Apartments ·G.P.,· lnc., FMP/Lakeside Associates,
LP., and FMP/Lakesjcte Properties; · Inc. (collectlvely, 'Defendants"), have
appealed from ord~rs entered June 9, 201511nd March 1·8, 2014..
Plaintiff, PECO ·Energy Company.' brought this action to recover sums for
. . . . . .
electrical service .. delivered by PECO to 'resldentlal rental properties owned by
Defendants. Following a· bench trial, a declslon was entered on February 4, 2015
In favor of Plaintiff, PECO Energy Company. Thereafter, Defendants filed a post-
trial motion. The order entered June 9, 2016 granted Defendants some post-trlal
relief, specifically, the award was restated to take into account the Joint and·
several liability of the various defense entitles for the debt owed to PECO;
however, most of the relief Defendants sought post-trial was denied." The order
entered March 18; 2014 had denied Defendants' rnotlon for summary judgment.
Because. the foomote to the June 9, · 2015 Order addresses the issues
preserved by Defendants in their Statement of Matters Complalned of on Appeal,
we reproduce the footnote here2 forthe 'convenlence of the reviewing court:
This is a· collection acflon brought by Plaintiff, · PECO Energy
Cor;npany 1("PECQ11)1 to recover sums for utility. services, electric·
1 Erroneously stated as July 9, 2016 In the Notice of Appeal.
2
Typographical errors have been corrected. .
1157(a)
and gas, that PECO delivered to resldential rental properties owned
by. Defendants, First Montgomery Properties, Ltd., lndlvldually and
tla First Montgomery Group ("First Montgomery"), The Fairways
Apartments Associates, LP., Individually and t/a Falrways
Apartments, Fairways Apartments G.P.1 Inc., FMP/Lakeslde
Associates, L.P. Individually and· t/a Melrose Station Apartments
and FMP/Lakeside Properties, Inc. · . ·
Defendants operate apartment complexes, Including The ·
Fairways Apartments and Townhomes ("the Fairways Apartments")
and · Melrose Station Apartments· ("the Melrose
Apartme.nts")(collectlvely, "the Apartment Complexes"). This action
concerns the collection of eighteen past due accounts, fourteen at
.the Fairways Apartments and four at the Melrose Apartments.
On June 24, 2003, First Montgomery entered Into a contract
with Conserve Energy ("Conserve") to manage billing for PECO
·s.upplled utlllty services to the Apartment Complexes:
Before June 24, 2003, tenants of the Apartment Complexes
were billed by and paid PECO for utility servlces. .
Subsequent to June 24, 2003, tenants of the Apartment
Complexes were billed by and paid Conserve for utility services.
To facilitate the transition to Conserve as a billing agent, PECO's
metering of Individual tenant's units was ended and PECO Installed
master meters at the Apartment Complexes. Electrlclty delivered by
PECO to the master meters was routed. through underground
transformers Installed by. Conserve and then delivered to individual
tenant's units, where Conserve had -Installed their own metering
equipment. Conserve was responslole for paying PECO for
electricity delivered to the master meters. .
Defendants, as owners/operators of the Apartment Complexes,
were the rate payers or customers of PECO at all times. First
Montgomery directed· PECO to cooperate wlt.h its agent, Conserve,
In setting up a master meter/master account system at the
Apartment. Complexes. First Montgomery directed PECO to send
bills for utility services to Conserve. ·
In or about February, 2008, whlle still collecting payments from
the tenants, Conserve stopped paying PECO and Defendants'
accounts with PECO. fell Into arrears. On April 5, 2010, PECO
commenced this action for breach of contract and · unjust
: enrichment. At trial, PECO established that when suit was
commenced the fourteen accounts as the Fairways Apartments had
an unpaid balance of $109,612.61 and the· four accounts at the
Melrose Apartments had an unpaidbalance of $27,118.76. These
balances were cornprlsed of unpaid charges for utilities as well as
late payment charges that posted monthly.
There had been prior litlgatlor:i between PECO and the Fairways
Apartments defendants, specltlcally, First Montgomery Properties,
2
1158(a)
· Ltd., The Fairways Apartments Associates, LP., Fairways
Apartments· G.P., inc., FMP/Fairways Associates, L.P. and
FMP/Falrways, Inc. ("Prior Litigation"). On February 12, 2009, a
. settlement agreement resolved the Prior Litigation f'the ..Settlement _ .
Agreement"). The Prior Litigation concerned fourteen Fairways
Apartments' accounts, each separate and distinct from the eighteen
accounts Involved in the current-litigation. ·
Following a bench trial on January 13, 2015 and entry of our
verdict, Defendants filed posHrlal motions, which we now address.
Damages ewera: . ·
We found merit In Defendants' claim that the damages award·
was- lnc.orrectly stated. Our order was amended to 'accurately state
Defendants' liability. ·
Exclusion of evidence of the Settlement Agreement:
· On PECO's motion In limine, evidence of the Settlement
Agreement was precluded from trial. Defendants contend that the
Settlement Agreement contains a general release- that bars the
claims asserted in this action and should have been admitted at
.trial. .
In the Prior Litigation, PECO had sought the appointment of a
·receiver to collect $163,758.71 In past· due utility bills at the
Fairmont Apartments. The Settlement Agreement recites:
WHEREAS, as of January 12, 2009, PECO Energy alleges
that First Montgomery owes PECO Energy the amount of
$163,758.71 for utility service provided to First Montgomery
under the account numbers referenced In Exhibit A (the
"Debt'');
(Settlement Agreement, p.1) Exhibit A, which defines "the Debt"
that Is the subject of the Settlement Agreement, consists solely of
this chart: ·
First Montgomery Group
Account Premlse Address Balance as of Current Due Date
Number 1/12/09 ·Bill
11033-0142? 400 MONTGOMERY BLVD. G3BTIIORNDALB PA 193?2 $19.284.09 $2103.92 02/ffllOO
38882-00600 O OVERLEAF DR. 040 TIIORNDALB PA 193?2 s122ss.n $1 7?4.20 O'lJOOI09
35?88-02226 38SKYVIBWLN F4DTH0RNDALEPA 193?2 · $J6 393.69 Sl?92.?6 02/02/09
26.S0?-01100 OGREBNDIUARLN. 02DTIIORNDALBPA 193?2 $JS 266.48 SI 466.S8 . ffllffll09
14128-01908 200 MONTGOMERY BLVD. A3F THORNDALE PA 193?2 $12,443:SS $1122.44 02/02/09
45068-0080? OTURTLBPOINTLN GSETHORNDALBPA 193?2 . $1?0?6.80 $1803.58 02/02/09
4 I 975,00802 O TURTLBPOINfLN, H40 TIIORNDALE PA 193?2 $16 64l.S3 $1.894.24 (f)J02/09
45069·00600 O BLUFF RD. H4F 11-IORNDALE PA 193?2 $S 829,39 sm.2s W02109
48161.00200 · O BLUFF RD H48 THORNDALE PA 193?2 $8 986.<.iS SI 097.?9 02/0'}/00
48161i648 A.2d 1218, 1220w1221 (Pa.Super.,1994).
(citations omitted). Furthermore, the "effect of a release Is .to be
determined by the ordinary meaning of its language." Republic Ins.
Co. v, Paul Davis Svstems of Plttsbun:1h South. Inc. 543 Pa. 186,
670 A.2d 614, 615 (Pa., 1995). Having determined that the release
was limfted on ltsIace to the claims raised in the Prior Litigation. we
concluded that the Settlement Agreement was of no probative
. value to the claims pending In the within action, which derived from
4
1160(a)
separate accounts and balances and did not arise out of or In
connection with the "Debt".
Defendants also sought to lntroduce evidence of the Settlement
Agreement to counter trial ·testimony of PECO!s witness that .PECO
had ·tried to "reach out to negotiate payment arrangements" but
were "unable to negotiate payment." (N.T. 9:6·10) Defendants
expressed .concern that such statements were prejudicial.
However, because this was a bench trial, we can assure
Defendants that these comments were disregarded and played no
part in our decision. ·
Formation of a confr(tQI: ·
Defendants claim that PECO failed to establish the essential
tenns of a contract, in this case the Tariff. However, a Tariff
creates a contract and by accepting utility service delivered through
master meters to its properties, Defendants agreed to abide by the
Jarlffs rates, rules and regulations. .
Tariffs, of course, can include schedules of rates, and all
rules, regulations, practices or contracts Involving rates and
have the force of law and are binding on both the utility and
Its· customer. Behrend v. ·sell Tel§phone Company, 242
Pa.Superlor Gt. 47, 363 A.2d 1152 (1976). And, In E.fil!
Telephone Co.. v. Pennsvlvania Public Utilitv Commission,
53 Pa.Commonwealth Ct. 241, 244, 417 A.2d 827, 828~29
. · (1980), this Court construed Section 1303 of the Code and
stated that "(t)here can be no lawful rate except the last taritf
published as provided. by law.... Further, It is well established
that In the absence of an exception by the Commission, a
public utility may not charge any rate for services other than
that lawfully tariffed .... " (Citations omitted, emphasis In
original.) It Is well~settled In Pennsylvania that:
Contracts for the service of utilities are presumed to
have been made subject to the police power of the
state ... , and it Is beyond the power of the contracting
.partles . to fix rates or provide for service
permanently.... (T)he Public Utility law supplant(s)
any agreement tn so far as rates are Involved
between the consumer and the utility. (Citations
omitted, emphasis added.)
Brockwav Glass Co. v. Pennsylvania Public Utility Commission, 63
Pa.Cmwlth. 238, 437 A.2d 1067, 1070 (Pa.Cmwlth.;1981)(citatlons
omitted). Tariffs are not mere contracts, but have the force of law
and are binding on the consumer and the utlllty. Stiteler y. Bell Tel.
· QQ. 32 Pa.Cmwlth. 319, 379 A.2d 339,· 341 (Pa.Cmwlth. 1977).
Regardless of the evidence PECO presented to support the terms
of the Tariff, the Tariff applies by operation of law and Defendants,
·5
1161(a)
by accepting utility service, and are bound to pay PECO In
accordance with the terms of the Tariff In effect at the time the
charges were Incurred.
Defendants contend that PECO failed to establish liability for
any defendant other than First Montgomery.
That The Fairways Apartments Associates, L.P., lndfvidually .
and t/a. Fairways Apartments and Fairways· Apartments G.P., Inc.
operate -the Fairways Apartments· was admitted by Defendants in
t~e pleadings. (Complaint and Amended Answer. ,-J,-J 4-7, 20, 25)
The Utility Services Agreement entered into by The Fairways
Apartments Associates, L.P. 'and Conserve describes The
fairways Apartments Associates, LP. as the "owner" who "owns
and operates" the Fairways Apartments. · (Exh. P-52, p.1) The
Utility Services Agreement· also recites that it rs the "owner" who .
purchases electric energy from the utility. (Exh. P-52, Exh. 0, p. 1)
That FMP/Lakeside Associates, LP.. Individually and t/a
· Melrose Station Apartments and FMP/Lakeside Properties,. Inc.
operate the Melrose Apartments was admitted by Defendants ·in the ·
pleadlngs. (Complaint and Answer, 11118-111 27, 32)
Lisa Hofland, a PECO business analyst working in collections,
testified that all of the Defendants were customers/account holders.
(N.t. a:2·-15, 13:8-11.) On cross-examination, Ms. Holland was
never questioned. about her identification of the Defendants as the
parties responsible for the eighteen accounts at issue. Based upon
Defendants' admissions In pleadings and the evidence as stated,
we concluded that all of the Defendants had liability for specflc
accounts as stated in our decision.
ConSe,ve as agent: ·
. Throughout thls lltigatlon, Defendants have attempted to
distance themselves from Conserve. However, it was Defendants
who brought Conserve into its relationship with PECO and directed
PECO to communicate and cooperate with Conserve as "our agent
In our metering and bllllng service program" at the Apartment
Complexes. (Exh. P-10)
On September 28, 2004, Conserve sent a letter to PECO
identifying itself ·as the "accounts management agent for First
Montgomery Group" and req(1estlng the creation of a master
account for summary billing for the Fairways Apartments. (Exhs. P-
a, 0-E) On the same day. ConServe. sent a second letter to PECO
.identifying itself as the "accounts management agent for First
Montgomery Group" and requesting the creation of a master
account for summary billing for the Melrose Apartments. (Exhs. P-
9, 0-F) In both instances, Conserve directed 'PECO to send its
bills to Conserve at a Minnesota address.
On October -15, 2004, First Montgomery sent a letter to· PECO
· stating:
6
1162(a)
... we have retained Conserve Corporation to be our agent
In our metering and billing services program [at the
Apartment Complexes.] ... Please be advised that Conserve
has . full authorization to work with yoy regarding .billing
Issues on the above properties. In addition, we expect that
you will honor ConServe's request as ounlnec In the
.attached letters from Conserve [Exhs. P-8/D-E and P-9/D-
. F]. Any communication regarding this program and the
implementation process should be directed to Conserve as
~ur agent In this with us copied .. . · ·
(Exhs. P-10, D-G)(N.T. 89:12-18)
PECO complied with First Montgomery's request and began to
send bills· for utllHy services at the Apartment Complexes to the
Minnesota address. As early as August, 2007, Defendants knew
payments for utility accounts at the Apartment. Complexes were In
arrears; however, Defendants chose to believe Conserve'e
explanations, whic)l placed blame on PECO. (N.T. 91 :5-11,
116:17-117:2, 118:23-119:2; Exhs. P-11, D-H) Defendants
continued 'to work with Conserve, even though Conserve was
never.able to produce a reconciliation of the accounts. (N.T. 86:2-4,
117:5-8, 91 :23-92:5, 118:1-2) On May 14, 2008, First Montgomery
sent a letter to Conserve terminating their contract. (N.T. 93:3-6,
118:16-20, Exh. D-1) At about the same time, First Montgomery
directed PECO to send bills for utility services at the Apartment
Complexes to Its New Jersey offices. PECO again complied with.
First Montgomery's Instructions.
Based upon First Montgomery's conduct and representations to.
PECO, we concluded that Conserve was First Montgomery's'
agent. · ·
. Defendants also argue that they are not· liable for the debt
ConServe's criminal activity created because Conserve acted
outside the. scope of Its agency when it stole funds collected from
tenants at the Apartment· Complexes. However, · PECO's
contractual or Tariff relatlonshlp was With Defendants, not
Conserve, and Defendants remain liable for the debt. "[A] principal
Is liable to Innocent third parties for the frauds, deceits,
concealments, misrepresentations, torts, negligences and other
malfeasances or mtsfeasances of his agent committed In the
course of his employment, although the principal did not authorize,
justify or participate in, or indeed know of, such misconduct, or
even· if he forbade the acts or disapproved of them." Aiello v. Ed
Saxe~. Real Estate, Inc., · 508 Pa. 553, 499 A:2d 282,
287 (Pa., 1985). Defendants authorized PECO to interact with
Conserve as their agent and PECO complied with PECO'~
Instructions. The· relatlonshlp between Defendants and Conserve
does not in any way limit or reduce Defendants liability to PECO.
7
1163(a)
Admission of PECO's hlJJJng summaries:
-- Defendants flied a motion in llmlne to exclude PECO's billing
summaries as evidence. at trial on the basis that the billing
summaries are not the best evidence of the debt. This motion was
denied and at trial PECO introduced Jts. business records of the
eighteen contested accounts, which consisted ·of Activity·.
Statements, designated as billing summaries by the parties, as well
as B!lls from 2008 through 4010. Biiis predating. 2008 were
unavailable, having been destroyed by PECO In the usual course of
business pursuant to its retention pol!cy.
Pa.RE., Rule 1004 allows a party to use Its business records
when origlnal Invoices are unavailable and provides:
An original is not required and other evidence of the content
of a writlng1 recordlnq, orphotopraph is admissible If:
(a) all_ the originals are lost or destroyed, and not by the
proponent actlnq in bad faith;
Pa.RE., Rule 1004;
Bills for· each account, dating from October, ;2008 for all but
three accounts through October, 201 o, were admitted at trial, Biiis
for the remaining three accounts; dating from December, 2008
through October, 2010, were admitted. (Exhs. P-33 - P-50) In
addition, Activity Statements for each account were admitted.
(Exhs. P-15 - P-32) Each Activity Statement set forthlnvolce dates,
addressee, billing address, current charges, late fees, prior
balances and payment credits. (N.T. 11:21-12;3) The recordsthat
PECO produced contained the same information as the Bills that .
had been sent monthly to. First Montgomery, either directly or
through Its agerit, Conserve. The Activity Statements are created
by PECO routinely and concurrently with their Bflls. · The Biiis are
created for the customer and the Activity Statements are created
for Internal purposes. (N.T. 11:15-20, 23:4-16) The records that
PECO produced are maintained in the regular-course of business
to record regular, buslness related activities. (N .T.. 12:4~11, 21 :5-
12) The records PECO produced constitute business records and
Defendants were not prejudiced In anyway by the absence of the
· original billing records. '
Un/ust enrichment:
Defendants maintain that PECO did not establlsh a claim for
unjust ..enrichment. Unjust enrichment requires proof of three
elements: ·
(i) [B]enefits conferred on defendant · by· plaintiff[;] (ii)
appreciation of such· benefits by ,._.defendant{;] and (iii)
acceptance and retention of such beneffts under such
circumstances that It would be lneqult~ble for defendant to
retain the benefit without payment of value.
8
1164(a)
Shafer Elec. & Constr. v. Mantia, 67 A.3d a.12 n. 5
(Pa.Super.,2013)(citatlon omitted). PECO delivered utilities to
Defendants' residential rental properties. Defendants are required
to provide· their tenants with habitable units, which Include electrical
power and heat. (N.T. 95:9-16) Defendant~ were able to maintain
tenants In their properties and collect rent by accepting the benefit
of the utllltles delivered by PECO. Defendants, or their agent,
collected payments from tenants for the utilities, but failed to pay
PECO's bill. PECO established Its claim for unjust enrichment.
Defendants complain that that under unjust enrichment they can
only be liable for electric charges and not late payment charges.
However, the Tariff controls the charges for utilities and as such the .
late payment charges are mandated and become. part of the debt.
PECO does not have discretion to charge a customer other than as
provided by the Tariff .
•
1
For all of the reasons stated, we entered our Order.
BY THE COURT: ,_.., -········
Dated: September ( , 2015
Edwa,~
9
1165(a)