Development Recovery Co., LLC v. Public Service Company of Colorado

16CA0940 Development Recovery v Public Svs 06-15-2017 2017COA86
COLORADO COURT OF APPEALS
Court of Appeals No. 16CA0940
City and County of Denver District Court No. 15CV34584
Honorable Catherine A. Lemon, Judge
Development Recovery Company, LLC,
Plaintiff-Appellant,
v.
Public Service Company of Colorado, d/b/a Xcel Energy Company,
Defendant-Appellee.
JUDGMENT AFFIRMED
Division I
Opinion by JUDGE ROMÁN
Taubman and Lichtenstein, JJ., concur
Announced June 15, 2017
MMARTINLAW LLC, E. Gregory Martin, Michael G. Martin, Denver, Colorado,
for Plaintiff-Appellant
Gordon & Rees LLP, John M. Palmeri, Franz Hardy, Lance J. Ream, Gregory S.
Hearing II, Denver, Colorado, for Defendant-Appellee
Cynthia H. Coffman, Attorney General, Jessica L. Lowrey, Assistant Attorney
General, Denver, Colorado, for Amicus Curiae Colorado Public Utilities
Commission
¶1 In this case, we are asked to decide whether the district court
has jurisdiction over a breach of contract case against a public
utility where the essence of the claims involves the enforcement of
tariffs. We conclude that where common-law claims are, in
essence, brought to enforce the rates, charges, or tariffs, they fall
within the broad authority granted to the Colorado Public Utilities
Commission (PUC). Because we conclude that the claims in this
case were brought to enforce the rates, charges, and tariffs of a
public utility, we agree with the district court that it lacked subject
matter jurisdiction over the complaint. Accordingly, we affirm the
district court’s dismissal of the complaint.
I. Background
¶2 Plaintiff, Development Recovery Company, LLC (DRC), appeals
the district court’s dismissal of its complaint against the Public
Service Company of Colorado, d/b/a Xcel Energy Co. (Xcel). Xcel is
a utility company providing electric and gas service that is regulated
by the PUC. DRC is the assignee of claims from real estate
developers who entered into extension agreements with Xcel for the
construction of distribution facilities to provide gas or electric
service for homes in new developments.
1
A. Extension Agreements
¶3 Pursuant to one-page extension agreements, the developers
made construction payments in an amount determined by Xcel, and
Xcel constructed the facilities to deliver electricity or gas to new or
planned developments.1 The agreements referred several times to
Xcel’s extension policies and specifically required that “the
application and interpretation of this Agreement, including the
definitions of terms used herein, shall be in accordance with [Xcel’s
Service Rules and Regulations, including the extension policy] on
file and in effect from time to time with the Public Utilities
Commission of the State of Colorado and that said Rules and
Regulations constitute a part of this Agreement and are binding on
the parties hereto.”
1 Xcel submitted two extension agreements in support of its motion
to dismiss — one for indeterminate electric service and one for
permanent gas service. Because these are the only agreements in
the record and there was no evidence or argument that they are not
representative, we consider these two agreements representative of
all the agreements that are the subject of this case. See Redfern v.
U S W. Commc’ns, Inc., 38 P.3d 566, 568 (Colo. App. 2000).
2
¶4 According to the electric and gas service extension policies on
file with the PUC, referred to as “tariffs,”2 when an applicant
requests electric or gas service at premises not connected to Xcel’s
distribution system, Xcel designates the type of service as
permanent, indeterminate, or temporary, and then “construct[s] the
extension with reasonable promptness in accordance with the terms
of” applicable plans described in the tariffs.3 The tariffs provide
that extension contracts are based on the estimate of the cost to
construct and install the necessary facilities to provide the
requested service. Thus, Xcel is responsible for estimating the cost
of materials, labor, and rights-of-way, as well as related costs such
2 Public utilities are required to maintain open schedules showing
rates and charges, along with factors affecting rates or service. See
§ 40-3-103, C.R.S. 2016. “Tariffs are the means by which utilities
record and publish their rates along with all policies relating to the
rates.” AviComm, Inc. v. Colo. Pub. Utils. Comm’n, 955 P.2d 1023,
1031 (Colo. 1998). In support of its motion to dismiss, Xcel
submitted the schedules relating to the extension of electric and gas
service, which DRC had referenced in its complaint. See Barry v.
Bally Gaming, Inc., 2013 COA 176, ¶ 8 (evidence outside the
pleadings may be considered to resolve a challenge to subject
matter jurisdiction).
3 Although electric and gas service are covered in different tariffs,
the pertinent provisions are similar. Because the parties refer to
the tariffs collectively and do not argue that any differences are
pertinent, we also discuss the tariffs this way.
3
as trenching or tree trimming, “together with all incidental and
overhead expenses.”
¶5 These construction costs in turn are divided into two parts.
First, if applicable, Xcel bears a portion of the cost in an amount
listed in the tariffs — the “construction allowance.”4 Second, the
“construction payment” is the “[a]mount advanced by applicant to
pay all construction costs in excess of [the] [c]onstruction
[a]llowance.”
¶6 The tariffs specifically describe if and when Xcel’s portion —
the construction allowance — will be credited, depending on the
designated type of service. The tariffs also explain when refunds of
the construction payment could become due and how they would be
calculated.
B. DRC’s Allegations in Support of Claims For Relief
¶7 DRC filed the complaint against Xcel alleging breach of
contract, breach of the implied covenant of good faith and fair
dealing, unjust enrichment, and violation of section 40-7-102,
C.R.S. 2016, related to an unspecified number of extension
4The amount of the construction allowance provided in the tariffs
changed during the period covered by the complaint.
4
agreements (the agreements) between developers and Xcel during
the course of eighteen years.
¶8 Specifically, DRC alleged in support of its claims for relief that
 Xcel inflated the costs of construction;
 Xcel failed to properly credit construction allowances;
 Xcel failed to refund construction payments; and
 Xcel violated section 40-7-102 by including provisions in
the agreements not permitted by the applicable tariffs.
¶9 Xcel moved to dismiss the complaint for lack of subject matter
jurisdiction, arguing that this matter was within the exclusive
jurisdiction of the PUC. Alternatively, Xcel argued that if the PUC
did not have exclusive jurisdiction, the court should nonetheless
refer the matter to the PUC under the primary jurisdiction doctrine.
¶ 10 The district court agreed with Xcel on both grounds and
dismissed the case.
¶ 11 DRC appeals the trial court’s dismissal, arguing that the
district court, not the PUC, has exclusive subject matter jurisdiction
over DRC’s common law claims.
II. Legal Standards
5
¶ 12 In considering a district court’s dismissal of a claim under
C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction, we review
factual findings for clear error and legal conclusions de novo.
Auxier v. McDonald, 2015 COA 50, ¶ 9; City of Aspen v. Kinder
Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App. 2006).
¶ 13 If subject matter jurisdiction is challenged, the plaintiff has
the burden of proving it. Associated Gov’ts of Nw. Colo. v. Colo. Pub.
Utils. Comm’n, 2012 CO 28, ¶ 7; City of Aspen, 143 P.3d at 1078.
Evidence outside the pleadings may be considered. City of Aspen,
143 P.3d at 1078. The trial court considers the facts alleged and
the relief requested to determine the substance of the claim and
whether the court has subject matter jurisdiction. Id. at 1078-79
(“We are not bound by the form in which the plaintiff asserts its
claim, but rather it is the facts alleged and the relief requested that
decide the substance of a claim, which in turn is determinative of
the existence of subject matter jurisdiction.” (quoting City of Boulder
v. Pub. Serv. Co., 996 P.2d 198, 203 (Colo. App. 1999))).
III. Public Utilities Commission (PUC)
¶ 14 The General Assembly is empowered by the Colorado
Constitution to designate to an agency “all power to regulate the
6
facilities, service and rates and charges therefor” for an entity
operating as a public utility in Colorado. Colo. Const. art. XXV.
¶ 15 Under section 40-3-102, C.R.S. 2016, the legislature
designated the PUC as the regulatory body. Specifically,
[t]he power and authority is hereby vested in
the public utilities commission of the state of
Colorado and it is hereby made its duty to
adopt all necessary rates, charges, and
regulations to govern and regulate all rates,
charges, and tariffs of every public utility of
this state to correct abuses; to prevent unjust
discriminations and extortions in the rates,
charges, and tariffs of such public utilities of
this state; to generally supervise and regulate
every public utility in this state; and to do all
things, whether specifically designated in
articles 1 to 7 of this title or in addition
thereto, which are necessary or convenient in
the exercise of such power, and to enforce the
same by the penalties provided in said articles
through proper courts having jurisdiction.
§ 40-3-102.
¶ 16 “The Public Utilities Commission is a legally constituted
administrative body with exclusive jurisdiction in its constituted
field.” Intermountain Rural Elec. Ass’n v. Colo. Cent. Power Co., 135
Colo. 42, 48, 307 P.2d 1101, 1104 (1957). The legislature has also
provided that complaints may be made to the PUC, and it has
7
outlined the procedures to be followed to resolve complaints. See
§§ 40-6-108, -109, C.R.S. 2016.
IV. Analysis
¶ 17 The PUC has exclusive jurisdiction over claims for the
enforcement of tariffs. See AviComm, Inc. v. Colo. Pub. Utils.
Comm’n, 955 P.2d 1023, 1031 (Colo. 1998). “[T]he proper
application of rates and tariffs is within the regulatory authority of
the PUC.” Id.; see also Associated Gov’ts, ¶ 7 (the legislature may
limit the constitutional grant of general subject matter jurisdiction
to the district courts); City of Aspen, 143 P.3d at 1081
(“Determining whether defendants comply with the PUC
requirements and fashioning a remedy for any violation is within
the PUC’s authority.”). Thus, although DRC seeks to distinguish
City of Aspen and City of Boulder as cases addressing ratemaking,
the PUC’s jurisdiction is more expansive, including the application
of and compliance with tariffs. See AviComm, 955 P.2d at 1031;
City of Aspen, 143 P.3d at 1081.
¶ 18 DRC asserts that the trial court erred in concluding that the
substance of its claims is merely the enforcement of tariffs. We
disagree.
8
¶ 19 DRC relies primarily on its own characterization of the claims
it pled — breach of contract, breach of the implied covenant of good
faith and fair dealing, unjust enrichment, and violation of section
40-7-102 — arguing that only the district court has jurisdiction
over such claims. However, we are not bound by the labels of the
causes of action pled; rather, we must consider the substance of the
claims asserted. See City of Aspen, 143 P.3d at 1078-79; City of
Boulder, 996 P.2d at 203.
¶ 20 We turn next to DRC’s complaint.
A. Inflating Estimated and Actual Costs of Construction
¶ 21 DRC claims that Xcel breached the agreements and the
implied covenant of good faith and fair dealing by inflating the
estimated and actual costs of construction. Although the
agreements provide the amount of the required construction
payments, the factors used to determine the costs of construction
are addressed by the tariffs. Thus, assessment of whether those
charges are excessive is within the PUC’s jurisdiction. See § 40-3-
102 (empowering PUC to adopt and enforce regulations to govern
and regulate public utilities; “to correct abuses; to prevent unjust
discriminations and extortions . . . ; to generally supervise and
9
regulate every public utility in this state; and to do all things, . . .
which are necessary or convenient in the exercise of such power”);
City of Boulder, 996 P.2d at 205 (district court lacked subject
matter jurisdiction over claim for breach of duty of good faith and
fair dealing for improperly calculating payments due, where the
parties’ agreements incorporated amounts set forth in the
PUC-approved tariff and the utility had to calculate the rate for its
tariff filing in accordance with PUC’s methodology and other
regulations).
B. The Treatment of Construction Allowances
¶ 22 DRC takes issue with Xcel’s treatment of construction
allowances. However, the only mention of construction allowances
in the agreements is that “[n]othing in this Agreement shall be
construed to waive the right,” if any, of a construction allowance or
refund thereof “associated with distribution and/or service lateral
installations pursuant to the Rules and Regulations currently on
file with the Public Utilities Commission.” The agreements merely
recognize that developers might be entitled to a construction
allowance as provided by the tariffs. While DRC’s complaint alleges
that Xcel exercised discretion in classifying the service for each
10
contract (which impacts whether and when a construction
allowance is credited), the tariffs define the classification of service.
DRC’s claim that Xcel failed to properly credit construction
allowances is, therefore, also a claim for enforcement of the tariffs.
See City of Aspen, 143 P.3d at 1079-80 (concluding that, although
the plaintiff attempted to re-characterize claim to avoid PUC
jurisdiction, matters within the PUC’s exclusive jurisdiction were
still “inextricably intertwined” with the claims).
C. Failure to Refund Construction Payments
¶ 23 DRC claims that Xcel failed to refund construction payments.
Here, again, the agreements explicitly invoke the tariffs to describe
Xcel’s obligations: “Any possible refunds [of the Construction
Payment] will be made in accordance with the terms and conditions
of [Xcel’s extension policy]. This policy is on file with the Public
Utilities Commission . . . .” Once again, DRC’s claim is for
enforcement of the tariffs, and is thus within the PUC’s jurisdiction.
See id.
D. Violation of Section 40-7-102
11
¶ 24 Finally, DRC claims that Xcel also violated section 40-7-102
by including provisions in the agreements not permitted by the
applicable tariffs. Section 40-7-102(1) provides as follows:
In case any public utility does, causes to be
done, or permits to be done any act, matter, or
thing prohibited, forbidden, or declared to be
unlawful, or omits to do any act, matter, or
thing required to be done, either by the state
constitution, any law of this state, or any order
or decision of the commission, such public
utility shall be liable to the persons or
corporations affected thereby for all loss,
damage, or injury caused thereby or resulting
therefrom. . . . An action to recover such loss,
damage, or injury may be brought in any court
of competent jurisdiction by any corporation or
person.
¶ 25 Yet, even if DRC has a cause of action under section 40-7-102,
exhaustion of administrative remedies before the PUC is required.
See City of Aspen, 143 P.3d at 1081-82 (“Even if Aspen were correct
[that this section supports an action against a utility for violation of
the Colorado Consumer Protection Act (CCPA)], it has failed to
exhaust remedies before the PUC and therefore cannot at this time
invoke them to support its CCPA claims. . . . [T]he PUC would still
be the proper forum for first determining whether defendants
violated its regulations.”); City of Boulder, 996 P.2d at 206-07
12
(where plaintiffs sought damages under section 40-7-102(1), the
district court properly dismissed because, although the statute
creates a private cause of action for damages resulting from
conduct of a regulated utility which violates state law, subject
matter jurisdiction does not exist in the district court unless and
until administrative remedies have been exhausted as provided in
sections 40-6-108 and 40-6-109). DRC did not allege or establish
that it had exhausted administrative remedies. See § 40-6-115,
C.R.S. 2016 (providing for district court review of a final decision by
the PUC).
E. Alleged Damages
¶ 26 Beyond the particular causes of action alleged, DRC
additionally asserts that the district court must have jurisdiction
because only the district court can award the relief DRC sought.
We disagree.
¶ 27 “Subject matter jurisdiction concerns ‘the court’s authority to
deal with the class of cases in which it renders judgment.’”
Monaghan Farms, Inc. v. City & Cty. of Denver, 807 P.2d 9, 18 (Colo.
1991) (quoting Closed Basin Landowner’s Ass’n v. Rio Grande Water
Conservation Dist., 734 P.2d 627, 636 (Colo. 1987)). “A court has
13
jurisdiction of the subject matter ‘if the case is one of the type of
cases that the court has been empowered to entertain by the
sovereign from which the court derives its authority.’” Closed Basin
Landowner’s Ass’n, 734 P.2d at 636 (quoting Paine, Webber,
Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 513 (Colo. 1986)).
Where, as here, the power to determine claims regarding the
enforcement of tariffs has been vested in the PUC in the first
instance, DRC cannot confer subject matter jurisdiction on the
district court simply by requesting relief in the form of damages.
Subject matter jurisdiction “either exists or it does not. The parties
cannot confer subject matter jurisdiction upon the court, nor may
the court confer it upon itself.” Cornstubble v. Indus. Comm’n, 722
P.2d 448, 450 (Colo. App. 1986) (quoting Sanchez v. Straight Creek
Constructors, 41 Colo. App. 19, 21, 580 P.2d 827, 829 (1978)).
¶ 28 Nonetheless, we note that the PUC has authority to order
reparations where excessive charges have been collected by a public
utility for any product or service:
When complaint has been made to the
commission concerning any rate, . . . and the
commission has found, after investigation, that
the public utility has charged an excessive or
discriminatory amount . . . the commission
14
may order that the public utility make due
reparation to the complainant therefor, with
interest from the date of collection, provided no
discrimination will result from such
reparation.
§ 40-6-119(1), C.R.S. 2016. Distilled to their essence, DRC’s claims
here are that the developers were ultimately required to foot more of
the bill for the utility extensions than was due according to the
terms of the tariffs. As a result, reparations for excessive charges
could be an appropriate remedy in this case. See Peoples Nat. Gas
Div. of N. Nat. Gas Co. v. Pub. Utils. Comm’n, 698 P.2d 255, 262-63
(Colo. 1985) (PUC had statutory authority to award reparations to
utility customers for overbilling); Village of Evergreen Park v.
Commonwealth Edison Co., 695 N.E.2d 1339, 1343 (Ill. App. Ct.
1998) (“The fact that the plaintiff labels its action a breach of
contract action is not dispositive . . . . Irrespective of that label, it is
apparent that the plaintiff is seeking a refund of part of the charges
it paid the defendant and, consequently, plaintiff is alleging a claim
for reparations.”) (citations omitted).5
5 DRC also asserts that the district court must have jurisdiction
because it is the only venue in which DRC can be afforded a jury
trial, as demanded in the complaint. A demand for a jury trial,
15
¶ 29 Considering the allegations in the complaint in conjunction
with the evidence submitted on the issue of subject matter
jurisdiction, we agree with the district court that DRC failed to carry
its burden to establish subject matter jurisdiction in the trial
court.6
V. Conclusion
¶ 30 The judgment is affirmed.
JUDGE TAUBMAN and JUDGE LICHTENSTEIN concur.
however, does not go to the substance of the claim. See City of
Aspen v. Kinder Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App.
2006) (consider the facts alleged and the relief requested to
determine the substance of the claim and whether the court has
subject matter jurisdiction). We will not permit a party to
circumvent the jurisdiction of the PUC simply by including a
demand for jury trial in the complaint.
6 Nor are we persuaded by DRC’s reliance on Great Western Sugar
Co. v. Northern Natural Gas Co., 661 P.2d 684, 690 (Colo. App.
1982). The division in Great Western Sugar considered whether the
trial court erred by declining to exercise its discretion to refer issues
to the Federal Energy Regulatory Commission under the doctrine of
primary jurisdiction. Id. Because we conclude that the district
court lacked subject matter jurisdiction, we do not reach the issue
of discretionary referral under the doctrine of primary jurisdiction,
and Great Western Sugar is inapplicable.
16