### NO. 96-641 

### IN THE SUPREME COURT OF THE STATE OF MONTANA 1997 LAURICE ST. JOHN, Plaintiff and Appellant,

v. 

### MISSOULA ELECTRIC COOPERATIVE,INC., Defendant and Respondent.

APPEAL FROM: District Court of the Fourth Judicial District, 

### In and for the County of Missoula, The Honorable Edward McLean, Judge Presiding.

COUNSEL OF RECORD: For Appellant: Timothy D. 

### Geiszler; Geiszler & 

### Newcomer, Missoula, Montana For Respondent: Edward A. Murphy; Datsopoulos,MacDonald & 

### Lind, Missoula, Montana

:

# FILED APR 

### 2 4 1997 Filed: CLERK OF SdPREfdE COURT STATE OF MONTANA 

### Submitted on Briefs: January 30, 

### 1997 

# @+ Decided: April 24, 1997



### ClerkJustice W. William Leaphart delivered the Opinion of the Court.
Laurice St. John (St. John), appeals fromthe Fourth Judicial District Court's Judgment awarding Missoula Electric Cooperative, Inc. (MEC), $1,160.30 on its counterclaim. We

reverse and remand. We address the following dispositive issue on appeal: Did the District Court err in holding that the Payment Agreement entered into between St. John and MEC was a settlement of all disputes?


### BACKGROUND In March of 1992, St. John purchased a house fiom Howard Lemm (Lemm) in Lolo, Montana. St.John did not move into the house for one year after her purchase. During that period she rented the property back to Lemm. St. John's house is equipped with two electrical meters, one serving the house (house meter), and the other serving the swimming pool (pool meter). The pool meter and the house meter were billed separately and given separate accountnumbers by MEC. The dispute in this case arises from a bill for electrical services to the pool meter. In May of 1993,Lernrn contacted St. John to see if she wanted to use the pool during the upcoming summer season. In response, St.John contacted a local pool service company to prepare thepool foruse during the summer season. In August of 1993, St. John contacted MEC to open an account for power to her new house in preparation for her arrival at the residencelaterthat month. Soon after St. John opened the account, MEC billed her $2,040for electrical service credited to the pool meter. In October of 1993, St. John contacted MEC regarding the large bill and contended that it was a mistake. MEC told St. John that the bill was likely an error and would be corrected later. However, St. John continued to be billed $2,040 for electrical service supplied to the pool for the period of July 20, 1993, through August 19, 1993. In addition to these charges, St.John received a laterbill for an additional $2,040 for electrical services to the pool forthe period of October 19, 1993,through November 10, 1993. This made her total bill $4,080. Although she refused to pay the bill from the pool meter, St. John continued to promptly pay all bills related to the house meter. Due to St. John's refusal to pay the bill related to the pool meter, MEC terminated electrical services to both the house and the pool. Although it would have been possible for St. John to switch to another supplier for her electrical service, she would first have to obtain the consentofMEC. St.John had a friend restore powerto herhome without the permission

or knowledge ofMEC. When MEC discovered the unauthorized service,it again terminated all electrical service to St. John's two accounts.' MEC agreed to reconnect St. John's service provided she enter into a written agreement to pay the disputed balance in monthly installments.The agreementprovided as follows:

I.We note that termination of electrical service canbe a matter of grave concern. The media reports that ImeldaMarcos' unpaid electricbill of $200,000 may cause apower shutoffat her husband's air-cooledcrypt. Winners & Losers, TIME, Feb. 10, 1997,at 19.I Laurice St. John Agree to pay $882.18 at the time ofreconnect. And agree to make payments of 250.00 a month until my balance is paid in full. Previous Balance 3908.87 current charges 237.43 tampering feeldisc 75.00 deposit 264.00 reconnect fee 75.00 Total bal 4,560.30 8/29/94pmt -900.00 Remainingbalance 3,660.30 to make monthly payment of $250.00 I understand that ifthis agreementis not kept current my account or accounts will be disconnected. Members signature IS/Laurice A. St. John 8-29-94 Credit & Collections IS/Kelly M. Sherick Under the terms of the above document, the repayment totaled $4,560.30. St. John agreed to make a $900 downpayment and pay $250per month until the remaining balance

was paid. After St. John signed the agreement, and without St. John's knowledge or consent, MEC altered the documentby adding the words "ACCORD AND SATISFACTION." In order to continue to receive electrical service, St. John made the down payment and ten monthly installments before she discontinued payments leaving a balance of $1,160.30 charged to the pool meter. Unable to resolve her dispute with MEC, St. John filed suit against MEC allegingnegligent billing and negligent infliction of emotional distress. MEC asserted a counterclaim against St. John, seekingpayment ofthebalance of $1,160. A trial was held before the court sitting without a jury. In its Findings of Fact, the District Court found that St. John had agreed to make payments solely to restore the electrical service to her house. Nonetheless, the court concluded that St. John had agreed to "settle" the dispute and had only partially complied with the settlementagreement. Accordingly, the court entered judgment against St. John in the amount of $1,160. St. John appeals from this judgment.



### DISCUSSION Did the District Court err in holding that the Payment Agreement entered into between St. John and MEC was a settlement of all disputes? The standard of review of a district court's findings offact is whether they are clearly

erroneous. Dainesv. Knight (1995),269 Mont. 320,324,888 P.2d 904,906. This Courthas adopted a three-part test in determining whether the findings are clearly erroneous. Interstate Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. This test includes: First, the Court will review the record to see ifthe findings are supported by substantial evidence. Second, if the findings are supported by substantial evidencewe will determine ifthe trial courthas misapprehended the effect of evidence. [Citations omitted.] Third, if substantial evidence exists and the effect of the evidence has not been misapprehended the Court may still find that "[A] finding is 'clearly erroneous' when, although there is evidence to support it, a review of the record leaves the court with the definite and firmconvictionthat a mistake has been committed."


### . . 

## . DeSaye, 820 P.2d at 1287 (citing United States v. United States Gypsum Co. (1948), 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746). The standard of review of a district court's conclusionsoflaw is whether the court's interpretation ofthe law is correct. Carbon County



### v. Union Reserve Coal Co. (1995),271 Mont. 459,469, 898 P.2d 680,686; see also Kreger 

# 1 v. Francis (1995), 271 Mont. 444, 898 P.2d 672. 

# ~ The court's ruling in favor ofMEC is based upon the premise that "[ilf the parties to

a legal dispute enter into an agreement to settle that dispute, the new agreement becomes enforceable according to its terms." The court concluded that "Laurice St. John and MEC entered into a new agreement to settle their dispute on August 29, 1994 and she partially performed her obligations under that agreement,but then breached it by failing to pay the entire amount owed to MEC." We hold that the court's conclusion that St. John entered into

an agreement to "settle" the dispute is not correct in light of the court's findings of fact. 

# ~ A number ofthe court's findings of fact relate specificallyto the question ofwhether 

# ~ St. John had a valid dispute with MEC and whether she entered into an agreement to settle that dispute. The court found specifically that "St. John did not consume 40,000 kwh of

I electricity [$2,040.00]during the period from when her account was opened [August 12, 19931to the August meter reading [August 19, 19931." The court also found that, although MEC billed St. John for 40,000kwh consumption from October 19, 1993through November 15, 1993, "[tlhe pool had been closed and shut down prior to October 19, 1993

## ." Thesefindings would certainly indicatethat St.John's challengeto the MEC billing was notwithout a basis. Further, with regard to the substance ofthe "Agreement"that St. John signed in order to restore power to her residence, the court found that "St. John signed a written promise to 

# 1 pay this disputedbalance in monthly installments, without admitting she was responsible for those disputed charges, and without agreeing that the paymentplan constituted a settlement 

### ofthe dispute over thepool meter billing." (Emphasis added.) The court also found that St. John had paid $3,400to MEC "solely to keep her electrical serviceto her house." MEC has not cross-appealed from these findings of fact and thus they constitute established facts. In light ofthese established facts,it is clear that St. John had a basis for disputing the MEC billing and that, in agreeingto make payments on the outstandingbalance in order to restore power to her residence, she did not agree to "settle" the dispute. The court's 

# ~ conclusion that St. John and MEC entered into a new agreement to "settle" their dispute is contrary to the court's own Findings ofFact and is in error. We hold that the court's judgment in favor of MEC is based upon an erroneous conclusion that St. John entered into an accord or agreementto settleher dispute with MEC. I As the record and the court's own findings of fact indicate, there was no such settlement agreement. Furthermore, once the court found that the dispute had been resolved through a settlement, it did not address the merits of St. John's claims for negligent billing and

### negligent infliction of emotional distress. MEC contends that St. John failed to present a prima facie case ofnegligent inflictionof emotional distress. However, it is forthetrial court to determine whetherthe evidence supports a finding of severe emotional distress. Sacco v. High Country Independent Press (1995), 271 Mont. 209, 239, 896 P.2d 41 1,429. In the absence of any findings and conclusions with regard to St. John's claims, we have no basis for determiningwhether those claims were of merit. Bauer v. Cook (1972), 182Mont. 22 1, 228,596 P.2d 200,204. Accordingly, we reverse thejudgment forMEC and remand forthe District Court to address the merits of St. John's dispute with MEC's $4,080 bill and the merits ofher claim against MEC for negligent infliction of emotional distress.

We concur:

JusticesJustice Terry N. Trieweiler specially concurring. 

### I concur with the majority's conclusionthat the payment agreementbetween St. John and MEC did not settle their dispute regarding the amount owed by St. John for electrical service. 

### I disagree, however, that that resolves all of the issues which must necessarily be decided on appealin orderto adequately guide the District Court afterthis case is remanded. In addition to its conclusion that St. John had settled her dispute with MEC, the District Court also concluded that she failed to show that her meter malfunctioned or was misread. This conclusion was also inconsistentwith the District Court's findings and should be specifically reversed by this Court. The District Court foundthat seven days after St.John signed up for electrical service from MEC, she was billed $2040 for 40,000 kwh of service during that time, but that "St. John did not consume 40,000 kwh ofelectricity ($2040.00) during the period from when her account was opened (August 12, 1993)to the August meter reading (August 19, 1993)." The District Court went on to find that St. John was laterbilled $2040 for 40,000 kwh of consumption from October 19, 1993, through November 15, 1993,but that the pool, for which the electricityhad allegedlybeen consumed,had been shut down prior to October 19, 1993. Therefore,neither could that charge have been correct. In light of these findings, the District Court's conclusion that plaintiff failed to show her meter malfunctioned or was misread is incorrect. That conclusion shouldbe reversed and upon reconsideration of thiscase followingremand, the District Court shouldbe directed that judgment cannot be based

on that erroneous conclusion. I would furthermore conclude that the manner in which St.John was treatedby MEC in this case was unconscionable and that as a matter of law electrical providers who monopolize electrical service cannot extortpayment oflegitimately disputed sums from their customers by terminating electrical service until payment is agreed upon. To fully understandjust how egregous MEC's conduct was, it is necessary to look no further than the court's findings of fact. The following findings have not been appealed by MEC. When St. John bought her home in Lolo on March 3 1, 1992, electrical service was provided through and billed from two separate meters. One meter measured consumption in the household, and the other meter measured consumption by the garage and swimming pool. MEC treated the charges separately and billed them separately. Because the person who occupied the house before St. John bought it continued to live in the house after shebought it, that occupant continued to be responsible for electrical service for a period oftime after St.John's purchase. St. John first signed an agreement with MEC to pay for electrical service on August 12, 1993. Seven days later, she was billed $2040 for electrical service provided to the pool area during that seven-day period of time. The only devices using electricity through the pool meter, however, were the electric light bulbs in the garage andthe electricity forthe pool. Even MEC believed at that time that themeter had to have been misread in order to generate such a substantial and unprecedented charge. In November, when St. John was again billed $2040, even after the pool had been closed and shut down for the winter, she disputed the amount that she was being charged. She continued to be billed for the full amount through 1993,but was billed separatelyforher house and the electrical services provided to the pool. During this time, St. John continued to promptly pay all bills related to her house. In spite of that fact, on April 

### 5, 1994,MEC transferred the $4154balance attributable to the pool meter to her house meter account, and then demanded full payment within seven days and threatened to terminate electrical service ifpayment was not made. St. John did not make full payment, and the electrical service was disconnected. When a hendrestored unauthorized service to St. John's house in order to avoid the extreme dificulties caused by the loss ofher electricity, 

### MEC discovered the unauthorized service and sought criminal prosecution ofher for unauthorized use of electrical service. It then again terminated electrical service to her home. It was under these circumstances that MEC then came to St. John and agreed to restore the electrical service, which was essential to the habitability of her home, on the condition that she sign a written agreementto pay the disputed amountsbilled from her pool meter. She signed the promise to make monthly installments, but did not admit she wasresponsible for the disputed charges, and did not agree that the payment plan constituted a settlement of the dispute over the amount due for electricity provided to the pool area. As ifMEC's conduct was not sufficiently reprehensible by this point in time, it then altered the agreement that St. John had signed, without her knowledge or approval, and added "ACCORD AND SATISFACTION" to the document. Not being sufficiently embarrassedby that impropriety, it then raised the document St. John signed as an actual accord and satisfaction in defense to this action. The electriccooperative's conduct in this case isnothing short of extortion, combined with deceit. The predicament in which St. John found herself due to the bungling, overreaching, andmanipulationby MEC was compoundedby the fact that she couldnot switchto Montana Power Company forher servicewithoutMEC's approval, which apparently was never given. Under similarcircumstances, the Supreme Court ofUtah held that a public utility has

a higher obligation to render services to the public than does an ordinary business. While, concededly, MEC is not a public utility, its status is similar in this case because of the monopoly it had over electrical service to St. John. In Josephson v. Mountain Bell (Utah 1978), 576 P.2d 850, the public utility which provided telephone service to the plaintiff in that case terminated service to his home because he was delinquent in payment for his business phone. The Utah Court held, under the circumstances, that:But it is our opinion that the defendant should not be permitted to use the pressure of imposing apenalty upon the home and the family by denyingthem a public servicethey are entitled to and paying for.


### . . . In accordance with what has been said above, we cannot see it as other than a deprivation of the plaintiffs oftheir rights to cut offtheir home phone service because charges on the separatebusiness phone were delinquent. We therefore agree with plaintiffs' contention that the disconnection oftheir home phone was wrongful. Josephson, 576 P.2d at 852-53 (footnote omitted). Based on the reasoning in Josephson, I would conclude, likewise, that an electric cooperative with a monopoly over service to its consumers cannot terminate one form of servicewhich has been hlly paid for in order to leverage payment for another service which is legitimately or otherwise disputed. Even though the service disputed in Josephson was to
a business premises and the issue was whether service could be terminated to the plaintiffs residence, the two services involved in this case had been treatedjust as separatelyby MEC prior to St. John's dispute with the cooperative over service to the pool area. Finally, I would conclude, as the court did in Trigg v. Middle Tennessee Electric Membership Corp. (Tenn. Ct. App. 1975), 533 S.W.2d 730, that a company supplying electricity to the public cannot terminate service to a customer for nonpayment when there is a bona fide dispute concerning the correctness of the bill. In that case, the Tennessee Court held that: A company supplying electricity to the public has the right to cut off service to a customer for nonpayment of a just service bill and the company may adopt a rule to that effect. Annot., 112A.L.R. 237 (1938). An exception to the general rule exists when the customer has abona fide dispute concerningthe correctnessofthe bill. Steele 

### v. Clinton Electric Light & Power Co., 123 Conn. 180, 193A. 613,615 (1937); Annot. 112 A.L.R. 237,241 (1938); see also 43 Arn.Jur., Public Utilities and Services, Sec. 65; Annot., 28 A.L.R. 475 (1924). 

## . . .

. . . A public utility should not be able to coerce a customer to pay a disputed claim. Trigg, 533 S.W.2d at 733. While, once again, the rule applied in Trigg is normally applied to public utilities, the defendant in that case was the Middle Tennessee Electric Membership Corp., subject to the Electric Cooperative Law of Tennessee, as codified in Tenn. Code Ann. 

## $5 65-25-101 through -229 (1993). Furthermore, because ofthe monopolistic nature ofMEC's relationship with St. John, the rationale for the rule is the same in this case. For these reasons, I concur with what has been said in the majority opinion; however, feel it is insufficientand would expand the opinionto include the conclusions set forth in this opinion.

Justice William E. Hunt, Sr., joins in the foregoing specially concurring opinion.

Justice