Title: Springfield Hydroelectric Co. v. Copp

State: vermont

Issuer: Vermont Supreme Court

Document:

Springfield Hydroelectric Co. v. Copp (2000-044); 172 Vt. 311; 779 A.2d 67

[Filed 06-Jul-2001]   

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 2000-044

Springfield Hydroelectric Company, et. al.	Supreme Court

                                                On Appeal from
     v.	                                        Chittenden Superior Court

Lawrence D. Copp and Jonathan Downer	        March Term, 2001

Matthew I. Katz, J.

       Mary P. Kehoe of Saxer Anderson Wolinsky & Sunshine PC, Burlington,
  for Plaintiffs-Appellants.

       Thomas F. Heilmann and D. James Mackall of Heilmann, Ekman &
  Associates, Inc., Burlington for Defendants-Appellees.

PRESENT:  Amestoy, C.J., Dooley, Morse and Skoglund, JJ., and
          Allen, C.J. (Ret.), Specially  Assigned

       AMESTOY, C.J.   Appellants Springfield Hydroelectric Company, et. al.,
  appeal the  superior court's summary judgment ruling on behalf of appellees
  Lawrence Copp and Jonathan  Downer, former employees of Vermont Power
  Exchange (VPX).  Appellants, all owners of  commercial hydroelectric
  facilities, allege that appellees in their individual capacities
  negligently  administered a power purchase agreement which resulted in
  shared economic damages.  The trial  court granted appellees' motion for
  summary judgment, ruling that appellants' claims fall within the  scope of
  the economic loss rule, prohibiting tort recovery for purely economic
  losses. We affirm.

 

       Between 1984 and 1996, VPX (FN1) served as the designated purchasing
  agent for  Vermont's Public Service Board (PSB), administering the sale of
  hydroelectric power from small  power producers to retail utility companies
  in Vermont.  To perform this function, VPX entered into  power purchase
  agreements with each of the appellants, owners of small commercial
  hydroelectric  generating facilities, and was paid a fee by them.

       Managing the construction and financial security concerns of new power
  producers to ensure  that they could meet the terms of the power sales
  agreements was among VPX's responsibilities. As  part of the scheme set up
  under the federal Public Utility Regulatory Policy Act of 1978 § 210, 16 
  U.S.C.A. § 824a-3 (2000), power producers qualify for "levelized rates,"
  which sometimes provide  them with compensation greater than the cost of
  production during the early years of a 30-year power  sales contract, and
  less compensation over later years.  In effect, the levelized rates operate
  as a loan  to producers.  

       In order to safeguard ratepayers against producers going out of
  business before the end of  their agreement, a pooled trust fund was set up
  to which all producers contributed a percentage of  their receipts.  The
  fund functioned to secure the power producers' performance of their
  agreements  with VPX, and to provide protection to Vermont ratepayers in
  the event that any of the producers  became insolvent during the 30-year
  levelized rate period.  Otherwise, the fund would be returned to  the
  producers.  One of VPX's duties was to administer the pooled trust fund. 
  The PSB, however,  maintained sole authority and control over disbursement
  of the fund, the authority to order payment 

 

  of proceeds into the fund, and the power to liquidate the fund in the event
  of a default by one of the  power producers.

       The appellants represent all of the participants in the pooled trust
  fund, with the exception of  Williams River, which, although not a party,
  is the subject of this action.  Williams River constructed  a hydroelectric
  facility, Brockways Mill, which produced power from March 1988 to November 
  1989.  Williams River subsequently defaulted, and shut down the Brockways
  Mill facility.  As a  result, the PSB ordered the monies from the pooled
  trust fund be disbursed.

       At the trial court, appellants alleged that appellees Copp and Downer,
  in their capacities as  officers or employees of VPX, acted as their agents
  in the administration of the power purchase  agreement with Williams River. 
  As such, appellants contended that defendants negligently rendered 
  professional services in permitting the facility to go "on-line," which,
  due to its subsequent  insolvency, resulted in the diminution of the trust
  fund by $161,144.

       Appellants sought damages for their reliance upon appellees'
  "negligently rendered  professional services," and asserted that appellees
  were negligent in their duty to exercise due care  under agency theory. 
  Appellees moved to dismiss the action, asserting that economic damages 
  cannot be recovered in tort actions. The trial court granted summary
  judgment to appellees, finding  the case to fall squarely within the
  economic loss doctrine.

       On appeal, appellants claim that: 1) the economic loss doctrine does
  not bar them from  recovery because they are not asserting economic loss;
  2) alternatively, in the event that the damages  requested are economic
  losses, the professional services exception to the economic loss rule
  permits  recovery; and 3) appellants and VPX entered into a principal/agent
  relationship in which VPX, as  agent, violated its duty of care.

 

       In reviewing a summary judgment ruling, we use "the same standard as
  the trial court," and  affirm the granting of a motion for summary judgment
  "if there are no genuine issues of material fact  and the moving party is
  entitled to judgment as a matter of law."  Granger v. Town of Woodford,  
  167 Vt. 610, 611,