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

Supreme Court of Mississippi, En Banc

January 31, 2019

THE DOOR SHOP, INC.
v.
ALCORN COUNTY ELECTRIC POWER ASSOCIATION

          DATE OF JUDGMENT: 06/08/2017

          ALCORN COUNTY CIRCUIT COURT HON. JAMES LAMAR ROBERTS, JR. TRIAL JUDGE.

          TRIAL COURT ATTORNEYS: DAVID L. SANDERS NICHOLAS RYAN BAIN WILLIAM HULL DAVIS, JR.

          ATTORNEY FOR APPELLANT: NICHOLAS RYAN BAIN

          ATTORNEY FOR APPELLEE: WILLIAM HULL DAVIS, JR.

          ISHEE, JUSTICE.

         ¶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 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 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 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 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, 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 ...

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