The Door Shop, Inc. v. Alcorn County Electric Power Association

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2017-CA-00956-SCT
THE DOOR SHOP, INC.
v.
ALCORN COUNTY ELECTRIC POWER
ASSOCIATION
DATE OF JUDGMENT: 06/08/2017
TRIAL JUDGE: HON. JAMES LAMAR ROBERTS, JR.
TRIAL COURT ATTORNEYS: DAVID L. SANDERS
NICHOLAS RYAN BAIN
WILLIAM HULL DAVIS, JR.
COURT FROM WHICH APPEALED: ALCORN COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: NICHOLAS RYAN BAIN
ATTORNEY FOR APPELLEE: WILLIAM HULL DAVIS, JR.
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED - 11/08/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
ISHEE, JUSTICE, FOR THE COURT:
¶1. From November 2004 to January 2011, The Door Shop, Inc., utilized $36,081.86 of
electricity from Alcorn County Electric Power Association (ACE). But because of a billing
error, it was charged only $10,396.28. Upon discovering the error, ACE sought to recover
the $25,658.58 difference via supplemental billing. The Door Shop refused to pay, which
prompted ACE to file suit in the Alcorn County Circuit Court. ACE maintained that The
Door Shop was liable for the underbilled amount and moved for summary judgment, which
the circuit court granted. This appeal followed. We affirm.
FACTS AND PROCEDURAL HISTORY
¶2. ACE is the state-authorized entity charged with providing electric-power services to
Alcorn County, Mississippi. It receives and distributes its electric power via a wholesale
contract with the Tennessee Valley Authority (TVA). The Door Shop, an Alcorn County
business, applied for new services from ACE in October 2004. By executing ACE’s
“Application for Service,” The Door Shop bound itself to ACE’s bylaws.
¶3. ACE’s Engineering and Operations Manager, Jason Grisham, explained ACE’s
procedures for establishing new accounts. First, ACE installs an electric meter, which must
be linked to a current transformer. The transformer decreases the amount of current
registered by the meter, as the actual current transferred through the electric cable is greater
than the current rating of the meter. The result is that the meter measures only a fraction of
the actual electricity used. Here, The Door Shop’s meter operated on a 40:1 ratio—that is,
for every 40 kilowatt hours of electricity used, The Door Shop’s meter would register only
1 kilowatt hour of use. Therefore, The Door Shop’s meter should have been corrected with
a “multiplier” of 40.1
¶4. Once the meter is installed and the multiplier is determined, ACE’s billing department
is made aware of the multiplier so that it may be applied to the customer’s account. But The
1
ACE provided this helpful example: “[I]f the Door Shop’s meter reading one month
was 10 kilowatt hours, the actual usage was in fact 400 kilowatt hours (10 kWh x 40
multiplier = 400 kWh). Therefore, the bill sent to the Door Shop for that month should be
400 kilowatt hours.”
2
Door Shop’s multiplier—though reported to ACE’s billing department—was not applied,
leaving in place the default multiplier of 1. ACE’s mistake resulted in The Door Shop’s
being charged for only 1/40 of the electricity actually used. The error persisted from
November 2004 until late January 2011. After discovering the error, ACE corrected the
multiplier, adjusted its billing to reflect The Door Shop’s actual amount of electricity used,
and calculated the difference. ACE ultimately determined that The Door Shop had been
underbilled by $25,685.58.
¶5. ACE then sent The Door Shop a supplemental bill for the underbilled amount. ACE
did so under Article II, Section 12, of its bylaws, which outlines ACE’s rights and procedures
for collecting undercharged amounts due to billing errors. With The Door Shop unwilling
to pay, ACE filed suit to collect the amount due.
¶6. The Door Shop filed a motion to stay the proceedings, arguing that the dispute
pertained to ACE’s quality of service. And as a service issue, The Door Shop asserted that
the Mississippi Public Service Commission (MPSC), by statute,2 possessed exclusive
jurisdiction over the matter. But the circuit court rejected The Door Shop’s characterization,
instead finding that the claims regarded “rates,” which encompassed amounts charged and
efforts at collection. Holding further that the MPSC lacks jurisdiction over matters involving
rates, the circuit court denied The Door Shop’s petition to stay the proceedings. Because no
dispute existed as to ACE’s adjusted accounting or the actual amount of electricity used by
2
See Miss. Code Ann. § 77-3-5 (Rev. 2018).
3
The Door Shop, ACE then moved for, and was granted, summary judgment. The Door Shop
timely appealed.
STANDARD OF REVIEW
¶7. Decisions granting or denying motions to stay proceedings are reviewed for abuse of
discretion. Prescott v. Leaf River Forest Prods. Inc., 740 So. 2d 301, 307 (Miss. 1999).
Jurisdiction, on the other hand, is a question of law, which we review de novo. Pekin Ins.
Co. v. Hinton, 192 So. 3d 966, 970 (Miss. 2016). This Court likewise reviews a circuit
court’s grant of summary judgment de novo. Daniels v. Crocker, 235 So. 3d 1, 6 (Miss.
2017).
DISCUSSION
¶8. The pertinent issues on appeal are, first, whether the circuit court erred in denying The
Door Shop’s motion to stay the proceedings by holding that the MPSC lacked jurisdiction,
and, second, whether the circuit court erred in granting ACE summary judgment. The
classification of ACE’s claim and its jurisdictional effect, however, are the principal issues
to be resolved, as the former directly affects the latter. We hold that the circuit court
correctly classified the dispute as one involving “rates,” the ultimate jurisdictional issue. We
likewise conclude that the circuit court correctly granted ACE summary judgment.
I. Whether the circuit court erred in denying The Door Shop’s
motion to stay the proceedings by holding that the MPSC lacked
jurisdiction.
¶9. “Subject matter jurisdiction is a threshold inquiry which must be determined before
4
a court may proceed to the merits.” Schmidt v. Catholic Diocese of Biloxi, 18 So. 3d 814,
821 (Miss. 2009). Much of The Door Shop’s argument hinges on its belief that the
MPSC—not the circuit court—possessed exclusive jurisdiction over the matter. To resolve
this jurisdictional issue, we simply look to Mississippi Code Section 77-3-5—the statute
outlining the MPSC’s jurisdictional parameters. See Miss. Code Ann. § 77-3-5 (Rev. 2018).
¶10. On one hand, Section 77-3-5 vests the MPSC with “exclusive original jurisdiction
over the intrastate business and property of public utilities.” Id. On the other hand, however,
Section 77-3-5 divests the MPSC of jurisdiction in certain realms, providing,
[T]he [MPSC] shall not have jurisdiction over the governance, management
or other internal affairs of entities as described by paragraphs (b) and (c)
below. Moreover, [MPSC] shall not have jurisdiction to regulate the rates for
the sales and/or distribution:
....
(b) Of gas or electricity by cooperative gas or electric power
associations to the members thereof as consumers, except as
provided by Section 77-3-17, where service is rendered in a
municipality[.]
Id. (emphasis added).3 Thus, the MPSC lacks jurisdiction in all matters relating to the
3
We note that Section 77-3-5 was amended effective July 1, 2018. See 2018 Miss.
Laws ch. 402, §24. The amended language provides,
[T]he [MPSC] shall have exclusive original jurisdiction over the intrastate
business and property of public utilities and, for purposes of clarification of
the existing scope of said exclusive original jurisdiction, such exclusive
original jurisdiction extends, but is not limited to: the establishment of retail
rates; challenges, including customer complaints, to the amount of a retail
rate or customer bill or whether such rate is just and reasonable; and
5
governance, management, or internal affairs of entities like ACE, as well as to the “rates” for
sale and distribution of electricity by the same. See id. And so, by concluding this case
pertained to “rates,” the circuit court held that Section 77-3-5 divested the MPSC of
exclusive jurisdiction. For that reason, we must determine whether ACE’s claims fall within
the definition of the term “rate” as referenced in Section 77-3-5.
¶11. On this question, The Door Shop insists that the issues presented involve “quality of
service” rather than “rates.” ACE is responsible, The Door Shop argues, for installing a
customer’s electrical meter. And, after installation, ACE is responsible for applying a
multiplier. Thus, failure to apply a correct multiplier results in improper installation. And
because ACE failed to apply the multiplier here, it provided The Door Shop with defective
service; and defective service pertains to quality of service—not rates. Like the circuit court,
however, we find this argument lacks merit.
¶12. We begin with service quality. The Door Shop points to our Public Utilities Act,
challenges to the validity or accuracy of rates charged by a public utility, or
to the accuracy or reliability of information submitted to the [MPSC] by a
public utility or other person in support of or in opposition to a proposed or
approved rate, regardless of the legal theory upon which any such challenge
is made.
Id.
First, the amended language clarifies (rather than expands) the scope of the MPSC’s
exclusive jurisdiction; second, the amendment does not alter Section 77-3-5(b), which
pertains to entities like ACE; and lastly, the amendment does not operate
retroactively—therefore, its prospective effects have no bearing upon this case. See id.
6
where “service” is defined as “the sale or other disposition of energy at the lowest cost
consistent with sound economy, public advantage[,] and the prudent conduct of the business
of the authority.” Miss. Code Ann. § 77-5-3(l) (Rev. 2018) (emphasis added). To The Door
Shop, ACE’s failure to apply the correct multiplier means that ACE failed to act in a
“prudent” manner. This all but concludes The Door Shop’s argument as to service quality
and prudence. So, keeping in mind that ACE instituted this suit to collect an underbilled
amount, let us now turn to “rates.”
¶13. Mississippi Code Section 77-3-3(e) defines what constitutes a “rate,” providing:
The term “rate” means and includes every compensation, charge, fare, toll,
customer deposit, rental and classification, or the formula or method by which
such may be determined, or any of them, demanded, observed, charged or
collected by any public utility for any service, product or commodity described
in this section, offered by it to the public, and any rules, regulations, practices
or contracts relating to any such compensation, charge, fare, toll, rental or
classification[.]
Miss. Code Ann. § 77-3-3(e) (Rev. 2018) (emphasis added).4
4
ACE further points out that Mississippi Code Section 77-5-203(n) defines “rate”
even more broadly:
“Rate” means and includes every compensation, charge, deposit, contribution,
fee, fare, toll, rental, cost and classification, or the formula or method by
which such may be determined, or any of them, demanded, observed, charged,
collected, avoided, or owed by a corporation for or relating to electric energy
offered or provided by the corporation to the public or received by the
corporation, and any rules, regulations, practices or contracts relating to any
such compensation, charge, deposit, contribution, fee, fare, toll, rental, cost,
or classification, including, but not limited to, any rules, regulations, practices
or contracts relating to the disconnection of service to members or
nonmember customers who have failed to pay for electric energy provided by
7
¶14. Reviewing how broadly the term “rate” is defined, we conclude that this case falls
within the purview of “rates.” To that end, this Court has held that, when taken together,
Sections 77-3-3(e) and 77-3-5 bar “the [M]PSC from regulating not only the amounts
charged by nonprofit public utilities for their services, but also the formula used to calculate
that amount and any rules or regulations related to this process.” Miss. Rural Water Ass’n.
Inc. v. Miss. Pub. Serv. Comm’n, 222 So. 3d 288, 293 (Miss. 2017).
¶15. Applied here, ACE argues, and we agree, that the substance of its claims invokes
many of the terms listed in Section 77-3-3(e). For example, ACE sought “compensation” for
a “charge” related to a “service, product, or commodity” it supplied The Door Shop. Going
further, the error prompting this suit derived from ACE’s failure to apply the correct
multiplier to The Door Shop’s account—and the multiplier pertains to “the formula or
method by which [ACE’s charges] may be determined.” Lastly, ACE relied upon its “rules,
regulations, practices, [and] contracts relating” to the sought-after “compensation” or
“charge.” Put simply, this case involves “rates,” as defined under Section 77-3-3(e).
¶16. As a result, the circuit court properly characterized ACE’s claims. And, by extension,
the circuit court correctly concluded that Section 77-3-5 deprived the MPSC of jurisdiction.
Therefore, the circuit court did not err in denying The Door Shop’s motion to stay the
proceedings. Prescott, 740 So. 2d at 307. We find this issue without merit.
the corporation.
Miss. Code Ann. § 77-5-203(n) (Rev. 2018).
8
II. Whether the circuit court erred in granting ACE summary
judgment.
¶17. As to summary judgment, our standard is well established. “The judgment sought
shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to judgment as a matter of law.”
M.R.C.P. 56(c). The evidence must be viewed in the light most favorable to the nonmoving
party, which here is The Door Shop. Mitchell v. Ridgewood E. Apartments LLC, 205 So.
3d 1069, 1073 (Miss. 2016). Nonetheless, The Door Shop “must set forth specific facts
showing that there are genuine issues for trial.” Id. (citations omitted).
¶18. Because it found no genuine disputes as to any material facts, the circuit court granted
ACE summary judgment. In so ruling, the circuit court held that ACE’s bylaws contractually
bound The Door Shop. Specifically, the circuit court found that Article II, Section 12, of
ACE’s bylaws required The Door Shop to remit payment. Disagreeing, The Door Shop
argues that genuine questions remain as to whether ACE’s bylaws actually entitle it to
recover the underbilled amount. Ultimately, we find that the bylaws do entitle The Door
Shop to such relief.
¶19. To begin, we recount the material facts not in dispute (i.e., facts The Door Shop
admittedly has no evidence to contest): (1) that the electrical meter installed at The Door
Shop in November 2004 was accurate; (2) that the correct multiplier that should have been
applied was 40 rather than 1; (3) that 346,680 kilowatt hours were actually used between
9
November 2004 and January 2011; and (4) that ACE’s adjusted accounting and supplemental
bill of $25,685.58 was accurate. There being no dispute as to amounts consumed and owed,
the central issue is whether ACE’s bylaws entitle it to recovery.
¶20. The answer to this question begins with reviewing ACE’s application-for-service
form. When The Door Shop applied for service, it specifically and contractually agreed to
the following:
I hereby apply for membership in the Alcorn County Electric Power
Association, and agree, if accepted as a member thereof, to conform to the
charter by-laws of [ACE], copies of which have been made available to me at
the office of [ACE] . . . . The applicant agrees that this application is subject
to [ACE]’s rules and regulations, . . . and that these rules and regulations are
a part of this agreement.
(Emphasis added.) Charles Bain (a former co-owner of The Door Shop) admitted through
deposition testimony that he both executed the application for service on The Door Shop’s
behalf and that he “agreed to abide by [ACE’s by-laws.]” And Bryan Bain (The Door Shop’s
president) likewise admitted through deposition testimony that The Door Shop had agreed
to ACE’s bylaws. Therefore, there is no genuine dispute that The Door Shop is obligated to
comply with ACE’s bylaws.
¶21. The specific bylaw at issue, Article II, Section 12, provides,
Section 12. Under Billing. In the event that a billing or other error by [ACE]
results in a member being undercharged for the actual amount of electricity
provided to the member by [ACE], then upon discovery of the error, and
regardless of the cause or duration of the error, [ACE] will issue a
supplemental billing reflecti[ng] the corrected amount owed by the member;
and the member shall remit payment to [ACE] for such supplemental billing.
[ACE] may make arrangements for the payment of such supplemental billing
10
on an installment basis, subject to such terms and conditions as may be
approved by [ACE]’s Board of Directors.
(Emphasis added.) A simple reading of this bylaw reveals that ACE’s members “shall remit
payment,” “regardless of the cause or duration of [an] error” “upon discovery of the error[.]”
Applied here, The Door Shop is obligated to remit payment—the error, however long in
duration, was discovered by ACE and, pursuant to the bylaw, The Door Shop received a
supplemental bill reflecting the corrected amount owed (which, again, is not in dispute).
That, however, is not the end of it.
¶22. Indeed, The Door Shop makes much ado over the fact that the bylaw above was not
in force when it applied for service in 2004—rather, ACE adopted it in 2009. So it reasons
that ACE did not authorize itself to collect undercharged amounts before 2009. But Article
VII, Section 12, of ACE’s 1997 bylaws, which were in effect when The Door Shop applied
for service in 2004, provided,
Section 12. Purchase of Electric Energy. Each member shall, as soon as
electric energy is available, purchase from [ACE] all electric energy used on
the premises described in the application for membership, and shall pay
promptly therefore monthly at such rates as may be fixed by the Board of
Directors from time to time.
(Emphasis added.) The crux of the 1997 provision is this: ACE’s members must pay for (i.e.,
purchase) all electric energy used on the premises. Recalling that there is no dispute about
the amount of electricity The Door Shop consumed, its contractual obligation to purchase
from ACE “all” the electricity it admittedly “used” has existed since The Door Shop became
a member.
11
¶23. Moreover, the circuit court correctly noted that Mississippi Code Section 77-5-223
empowers ACE’s Board of Directors “[t]o adopt and amend by-laws for the management and
regulation of the affairs of [ACE].” Miss. Code Ann. § 77-5-223(a) (Rev. 2018).5 Outlining
this right in its 1997 bylaws, Article X, Section 4, provided that ACE’s Board of Directors
was at liberty to alter, amend, repeal, or adopt new bylaws so long as certain voting standards
were satisfied. That is precisely what ACE’s Board did when it adopted the 2009
underbilling amendment specifically outlining its underbilling procedures. Thus, ACE’s
Board acted pursuant to lawful authority, and The Door Shop had notice of the Board’s
power to do so.6 Any argument otherwise is without merit.
¶24. Even so, in a last-ditch effort to circumvent its contractual obligations, The Door Shop
5
See also Miss Code. Ann. § 77-5-231(h), (k) (Rev. 2018) (describing ACE’s
specific powers as to the making and entering contracts, the terms and conditions related
thereto, and the right to collect fees and other charges for services rendered).
6
As to the retroactivity of an amended bylaw, our law lacks authority on point;
therefore, we seek guidance from our sister states. To that end, we find helpful Kelley v.
Tracy Fire Department Relief Association, 390 N.W.2d 394, 398 (Minn. Ct. App. 1986).
In Kelley, the Minnesota Court of Appeals reiterated the rule that bylaws do not have
exclusively prospective effect unless expressly limited to such—rather, an amended bylaw
may apply retroactively “so long as it does not materially impair existing contractual
rights.” Id. at 398 (emphasis added).
Here, we have held that The Door Shop had a contractual obligation to pay for all the
electricity it used since becoming a member of ACE in 2004. Moreover, ACE’s bylaws
must apply to all its members, regardless of a member’s tenure. See Miss. Code Ann. § 77-
5-225. We find Kelley’s rule persuasive, because ACE’s 2009 bylaw amendment did not
“materially impair” any existing contractual rights; instead, the amendment was procedural
in nature, not substantive. Therefore, we find no genuine dispute as to this issue and reject
The Door Shop’s argument.
12
presents a two-pronged argument: first, that to hold it liable for the undercharged amount
equates to “rate discrimination”; and second, that any underbilling should be capped at six
years. We find no merit in either argument, as addressed below.
A. Rate Discrimination
¶25. “Rate discrimination,” which state and federal law prohibits, occurs when consumers
of the same class (i.e., residential or commercial) are charged different rates or are provided
with rebates or other concessions, directly or indirectly. See generally Miss. Code Ann. §
77-5-225 (Rev. 2018); 16 U.S.C. § 831k (2012). Our law, Mississippi Code Section 77-5-
225, states,
[T]he corporate purpose of a corporation shall be to render service to its
members only. Any person may become and remain a member if such person
shall use energy supplied by such corporation and shall comply with the terms
and conditions in respect to membership contained in the bylaws of such
corporation, which terms and conditions shall be nondiscriminatory.
Miss. Code Ann. § 77-5-225 (emphasis added). And the relevant federal statute, which
governs contracts entered into with the Tennessee Valley Authority and which likewise
governs ACE, provides,
That all contracts entered into between [TVA] and any municipality or other
political subdivision or cooperative organization shall provide that the electric
power shall be sold and distributed to the ultimate consumer without
discrimination as between consumers of the same class, and such contract shall
be voidable at the election of the [TVA] if a discriminatory rate, rebate, or
other special concession is made or given to any consumer or user by the
municipality or other political subdivision or cooperative organization[.]
16 U.S.C. § 831k (emphasis added).
13
¶26. Thus, ACE cannot discriminate among its members by charging more or less of
members in the same class. For that reason, ACE must attempt to collect from The Door
Shop the undercharged amounts—to do otherwise would permit prohibited discrimination,
state and federal, among ratepayers in the same class. And while The Door Shop maintains
that remitting payment to ACE results in discrimination, the opposite rings true. For ACE
not to pursue payment from The Door Shop discriminates against other members in the same
class as The Door Shop who have purchased from ACE all electricity consumed. Such a
windfall in favor of The Door Shop cannot be tolerated.
B. Six-Year Overbilling or Underbilling Limit
¶27. As to The Door Shop’s argument that any repayment should be capped at six years,
we disagree. The Door Shop’s argument is premised upon recently enacted law, in which
our Legislature provided,
In any action or regulatory proceeding arising from any overbilling or
underbilling by a corporation, no collection, reimbursement, or other relief
may be awarded for underbillings or overbillings occurring more than six (6)
years prior to the commencement of the action or regulatory proceeding.
Miss. Code Ann. § 77-5-259 (Rev. 2018). But, as The Door Shop concedes, Section 77-5-
259 was enacted after the filing of ACE’s January 2014 complaint. And, as this Court has
held, “[i]f the statutory language mandates that the statute is to apply from and after passage,
it is not to be applied retroactively to causes of action which accrued prior to passage of the
statute.” Jones v. Baptist Mem’l Hosp.-Golden Triangle, Inc., 735 So. 2d 993, 998 (Miss.
1999). Here, the statute makes clear it does not apply retroactively; therefore, it cannot be
14
applied to this action, which accrued prior to the statute’s passage. See Miss. Code Ann. §
77-5-259. As a result, we hold that ACE was entitled to judgment as a matter of law, and
that the circuit court did not err in granting summary judgment.7
CONCLUSION
¶28. At bottom, The Door Shop purchased but a fraction of the electricity it admittedly
used. As a result, ACE sought payment for the undercharged amount. The circuit court held
that, as a matter of law, The Door Shop must pay. We agree and affirm the circuit court’s
judgment.
¶29. AFFIRMED.
WALLER, C.J., RANDOLPH, P.J., COLEMAN, BEAM AND CHAMBERLIN,
JJ., CONCUR. KING, J., CONCURS IN PART AND DISSENTS IN PART WITH
SEPARATE WRITTEN OPINION JOINED BY KITCHENS, P.J. MAXWELL, J.,
NOT PARTICIPATING.
KING, JUSTICE, CONCURRING IN PART AND DISSENTING IN PART:
¶30. Although I agree with the majority’s conclusion that the Mississippi Public Service
Commission (MPSC) lacked jurisdiction in this case, I respectfully disagree with the
7
Although the issue has not been raised by The Door Shop in its briefs on appeal, we
note that Mississippi Code Section 15-1-5 (Rev. 2012) provides that our general three-year
statute of limitations “shall not be changed in any way whatsoever by contract between
parties.” As such, it would appear that Section 15-1-5 calls into question ACE’s
underbilling bylaw, which does not limit its right to assert a claim for relief. But a statute
of limitations is an affirmative defense that must be pleaded and, if not raised, is waived.
See M.R.C.P. 8(c); see also Kimball Glassco Residential Ctr., Inc. v. Shanks, 64 So. 3d
941, 945 (Miss. 2011). Unfortunately, The Door Shop totally failed to raise Section 15-1-5
as an affirmative defense; therefore, it was waived. We decline to address it here, as the
issue is not properly before us. See id.
15
majority’s statement in footnote 7 that The Door Shop failed to raise Mississippi Code
Section 15-1-5 as an affirmative defense. The Alcorn County Electric Power Association
(ACE) filed its complaint on January 17, 2014. The Door Shop filed its answer on May 28,
2014, in which it stated, “Defendant pleads all applicable Statute of Limitations.”
Subsequently, the Mississippi Legislature enacted Mississippi Code Section 77-5-259, which
provides,
In any action or regulatory proceeding arising from any overbilling or
underbilling by a corporation, no collection, reimbursement, or other relief
may be awarded for underbillings or overbillings occurring more than six (6)
years prior to the commencement of the action or regulatory proceeding.
Miss. Code Ann. § 77-5-259 (Rev. 2018). The Door Shop, in its response to ACE’s motion
for summary judgment, argued that Section 77-5-259 barred recovery for any underbilling
that occurred more than six years from the date this suit was filed, January 17, 2014.
Although I agree with the majority’s finding that Section 77-5-259 does not apply
retroactively, I would find that The Door Shop sufficiently raised a statute-of-limitations
defense.
¶31. The Door Shop pleaded all applicable statute of limitations in its answer to ACE’s
complaint. In its response to ACE’s motion for summary judgment, The Door Shop again
argued that this case was barred by the statute of limitations. Mississippi Code Section 15-1-
49 provides a general three-year statute of limitations to “all actions for which no other
period of limitation is prescribed.” Miss. Code Ann. § 15-1-49 (Rev. 2012). Additionally,
Mississippi Code Section 15-1-5 states,
16
The limitations prescribed in this chapter shall not be changed in any way
whatsoever by contract between parties, and any change in such limitations
made by any contracts stipulation whatsoever shall be absolutely null and void,
the object of this section being to make the period of limitations for the various
causes of action the same for all litigants.
Miss. Code. Ann. § 15-1-5 (Rev. 2012). Pursuant to this State’s notice-pleading standard,
The Door Shop’s answer was sufficient to preserve the statute of limitations as a defense. See
M.R.C.P. 8(c), (e); Scafidi v. Hille, 180 So. 3d 634 650 (Miss. 2015) (“Mississippi is a
‘notice pleadings’ state. . . . ‘Each averment of a pleading shall be simple, concise, and direct.
No technical forms of pleadings or motions are required.’”). “Just as Rule 8(a) requires only
that the plaintiff give the defendant notice of the claims, Rule 8(c) requires only that the
defendant give the plaintiff notice of the defense.” M.R.C.P. 8 Advisory Comm. Notes. I
would find that, although The Door’s Shop referenced the incorrect statute in its motion for
summary judgment, it sufficiently raised as an affirmative defense that the general statute of
limitations barred recovery of underbilled amounts.
¶32. Further, I respectfully dissent from the majority’s holding that ACE’s amended bylaw
applied retroactively. I would find that a genuine issue of material fact exists regarding
whether ACE empowered itself to recover undercharged amounts prior to 2009.
¶33. The Door Shop applied for new services from ACE in October 2004 and, in doing so,
bound itself to ACE’s bylaws. The Door Shop submitted full payment for the amount ACE
billed each month. However, due to a clerical error, ACE had undercharged The Door Shop
from 2004 to 2011. Pursuant to Article II, Section 12, of ACE’s bylaws, upon discovering
17
the error in 2011, ACE corrected its mistake and billed The Door Shop for the undercharged
amount, totaling $25,685.58. Article II, Section 12, of ACE’s bylaws provides,
Section 12. Under Billing. In the event that a billing or other error by [ACE]
results in a member being undercharged for the actual amount of electricity
provided to the member by [ACE], then upon discovery of the error, and
regardless of the cause or duration of the error, [ACE] will issue a
supplemental billing reflecti[ng] the corrected amount owed by the member;
and the member shall remit payment to [ACE] for such supplemental billing.
...
However, Article II, Section 12, was adopted in 2009. Prior to 2009, and when The Door
Shop applied for new services, ACE’s bylaws contained no provision authorizing itself to
collect undercharged amounts. The Door Shop argues that, because that provision of the
bylaws was not adopted until five years after it applied for service, it should only be
responsible for payment from the date that the bylaw was adopted.
¶34. The majority finds that, regardless of when Article II, Section 12, was adopted, Article
VII, Section 12, of ACE’s 1997 bylaws authorized ACE to collect undercharged amounts.
I disagree. Article VII, Section 12, states,
Section 12. Purchase of Electric Energy. Each member shall, as soon as
electric energy is available, purchase from [ACE] all electric energy used on
the premises described in the application for membership, and shall pay
promptly therefore monthly at such rates as may be fixed by the Board of
Directors from time to time.
The majority reasons that the above provision, which had been adopted in 1997, required
members to pay for all electricity used on the premises. Although Article VII, Section 12,
states that the member should pay for “all electric energy used on the premises,” the
18
provision contained no procedure to collect the undercharged amount until the adoption of
the new bylaw in 2009. See Nibco Inc. v. City of Lebanon, 680 F. App’x. 428, 430 (6th Cir.
2017). In Nibco, a misapplied multiplier caused a municipality to underbill a customer for
electricity over a period of sixty-five months, resulting in an undercharge of $1.27 million.
Id. The Sixth Circuit held that, because the City of Lebanon’s ordinance was silent about any
procedure or protocol for addressing or correction billing mistakes, it had no authority to
justify backbilling. Id. at 435.
¶35. Similarly, in this case, prior to 2009, ACE’s bylaws contained no provision
authorizing recoupment for undercharges. Evidence of this is shown by ACE’s amendment
of its bylaws in 2009, which stated that upon discovery of the error, ACE would issue a
supplemental billing reflecting the correct amount owed by the member. Thus, the 2009
amendment provided ACE’s procedure to recover for undercharged amounts. The bylaw
adopted by the Board in 2009, if applied retroactively, would enable the Board to recover for
billing errors dating back to ACE’s inception in 1934. That interpretation would be neither
reasonable nor fair. In a similar case, the Supreme Court of Georgia reasoned,
It is simply unjust to require an innocent consumer to bear the entire cost of a
supplier’s mistake where, as here, there is no time limit on back billings.
Armed with absolute immunity for an indefinite time, the supplier has little
incentive to establish reasonable procedures to guarantee that its meters are
properly calibrated or that its bills are computed accurately.
Brown v. Walton Elec. Membership Corp., 531 S.E.2d 712, 713 (Ga. 2000). Here, The Door
Shop agreed to abide by ACE’s bylaws when it applied for service in 2004. However, not
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until 2009 did ACE authorize itself to recover for underbilled amounts. The Door Shop
promptly paid in full for the amount of electric energy for which it was billed each month
and, through no fault of its own, was undercharged for the amount of electricity it had used.
It would be unjust to require The Door Shop to bear the cost of ACE’s mistake for an
indefinite time. Because prior to 2009 ACE’s bylaws had no provision authorizing it to
collect on underbilled accounts, I would find that a material issue of fact exists about whether
ACE is able to collect any underbilled amount prior to that point. Therefore, I would reverse
the trial court’s grant of summary judgment and would remand this case for a trial on the
merits.
KITCHENS, P.J., JOINS THIS OPINION.
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