No. 06-30774

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published

and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-30774

Ralph R. Mabey

Appellee

v.

Dixie Electric Membership Corp.

Appellant

Appeal from the United States for the Middle District of Louisiana, Baton Rouge Division

USDC No. 3:06-CV-11

Before DENNIS, CLEMENT, and PRADO, Circuit Judges.

PER CURIAM:*

Plaintiff Mabey, as bankruptcy trustee for Cajun Electric Power Cooperative (“Cajun”), sued

to recover $2,754,760.04 for 39 months of electricity received by defendant Dixie Electric

Membership Corporation (“DEMCO”) but unmetered (and therefore not billed) by Cajun until a

calibration error in a transformer at a powersubstationwas discovered.The bankruptcycourt granted

Cajun’s motion for summary judgment and denied DEMCO’s motion; the district court affirmed

without oral argument. After review ofthe record and the parties' arguments, we agree. The judgment

of the district court is therefore AFFIRMED.

I.

Cajun is a nonprofit corporation that generates and transmits electricity to members of the

cooperative as well as non-members. The cooperative's members, including DEMCO, are also

United States Court of Appeals

Fifth Circuit

F I L E D

August 7, 2007

Charles R. Fulbruge III

Clerk
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non-profit electric distribution cooperatives, who sell and distribute power to the end consumer.

DEMCO was required by a contract known as the 1976 Wholesale Power Supply Agreement

(“WPSA”) to purchase from Cajun at wholesale all of its electric power requirements. The WPSA

contains, inter alia, the following provisions:

1. GENERAL. The Seller [Cajun]shallsell and deliver to the Member [DEMCO] and

the Member shall purchase and receive from the Seller all electric power and energy

which the Member shall require for the operation of the Member's system to the

extent that the Seller shall have such power and energy and facilities available;

provided, however, that the Member shall have the right to continue to purchase

electric power and energy under any existing contract or contracts with a supplier

other than the Seller during the remainder of the term thereof. If the Member

continues to purchase electric power and energy under a contract or contracts with

a supplier or suppliers other than the Seller, then the power and energy purchased

under such contract or contracts shall be paid for by Seller for the account of the

Member, and the Member shall be billed by Seller for such power and energy in

accordance with the terms and conditions of [Article] 4 hereof.

3. DELIVERY FACILITIES. The Seller shall be responsible for the facilities to

deliver power and energy to the Point or Points of Connection [e.g., a power

substation]. The Member shall be responsible for providing the facilities necessary to

take and use the power and energy from the Point or Points of Connection. The

partiesshall provide and maintain, or cause to be provided and maintained, switching

and protective equipment which may be reasonably necessary to protect the system

ofthe other. Meters and metering equipment shall be furnished, maintained, and read,

or caused to be furnished, maintained, and read, by the Seller.

4. RATE. .... The Member shall pay the Seller for all electric power and energy

furnished hereunder at the rates and on the terms and conditions set forth in Rate

Schedule A....

6. METER TESTING AND BILLING ADJUSTMENT. The Seller shall test and

calibrate or cause to be tested and calibrated meters by comparison with accurate

standards at intervals of twelve (12) months. The Seller shall also make or cause to

be made special meter tests at any time at the Member's request. . . . The readings of

any meter which shall have been disclosed by test to be inaccurate shall be corrected

for the ninety (90) days previous to such test in accordance with the percentage of

inaccuracy found by such test. If any meter shall fail to register for any period the

Member and the Seller shall agree as to the amount of energy furnished during such

period and the Seller shall render a bill therefor.

In the 1990s, DEMCO built the Vignes power substation; although constructed by DEMCO

alone, the facility was jointly owned by DEMCO and Cajun. Entergy, per a contractual arrangement

with Cajun, provided electricity through the substation to DEMCO for further distribution. The

station had two meters: one, a "high side" meter, belonged to Cajun and measured electricity coming
No. 06-30774

into the station from Entergy's lines; the other, a "low side" meter, belonged to DEMCO and

measured the electricity DEMCO received for distribution. 

The station became operational in September 1996. At that time, it is undisputed that Cajun's

meter was incorrectly calibrated, such that it registered only half of the electricity entering the

substation. Cajun's resulting bill to DEMCO therefore covered only half of the electricity provided.

DEMCO, however, had a properly calibrated meter and was charging its customers for the full

amount of electricity provided. The problem continued for 39 months until, in December 1999, an

Entergy employee discovered the problem. 

The meter itself was corrected the same day. Entergy and Cajun executed a plan under which

Cajun reimbursed Entergy for Entergy's share of the unmetered electricity delivered to DEMCO. In

January2000, Cajun made written demand on DEMCO for the unmetered electricityreceived but not

billed, a total value of $2,754,760.04. The following month, DEMCO tendered a check for

$179,483.82, citing to a provision under the WPSA known as the "reach back" provision that,

DEMCO claimed, limited its liability for excess electricity to the excess received during the 90 days

prior to discovery of the error. Cajun refused tender; the company subsequently underwent a

bankruptcy reorganization.

On February 17, 2003, the bankruptcy trustee sued DEMCO as a part of an adversary

proceeding related to Cajun's declaration of bankruptcy under Chapter 11. The trustee sought to

recover the entirety of the $2,754,760.04, asserting three different bases for recovery: (1) breach of

contract; (2) indemnity (for the payments Cajun made to Entergy for the power sold to DEMCO);

and (3) unjust enrichment. The trustee moved for summary judgment on the issue of liability in

January 2005; DEMCO responded with a motion to dismiss for failure to state a claim or, in the

alternative, for summary judgment. In September 2005, the bankruptcy court granted summary

judgment for Cajun. DEMCO appealed both the grant of Cajun's motion and the denial of its own;

at the same time, it also asserted that an order of the Louisiana Public Service Commission barred

Cajun from seeking reimbursement for billing errors over six months old. In June 2006, the district

court, without oral argument, affirmed the judgment of the bankruptcy court. DEMCO timely

appeals.

II.

We review the bankruptcy court's grant of a motion for summary judgment de novo. In re:

Ark-La-Tex Timber Co., 482 F.3d 319, 328 (5thCir. 2007). Summary judgment is appropriate where

the record shows “that there is no genuine issue as to any material fact and that the moving party is
No. 06-30774

entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986). Facts and inferencesreasonably drawn from those factsshould be taken in the light

most favorable to the non-moving party. Ark-La-Tex, 482 F.3d at 329 (citing Duckett v. City of

Cedar Park, 950 F.2d 272, 276 (5th Cir. 1992)). Where the non-moving party fails to establish “the

existence of an element essential to that party's case, and on which that party will bear the burden of

proof at trial,” no genuine issue ofmaterialfact can exist. Celotex, 477 U.S. at 322-23. “Ifthe moving

party meets the initial burden of showing there is no genuine issue of material fact, the burden shifts

to the non-moving party to produce evidence or designate specific facts showing the existence of a

genuine issue for trial.” Ark-La-Tex, 482 F.3d at 329 (citing Allen v. Rapides Parish Sch. Bd., 204

F.3d 619, 621 (5th Cir. 2000)).

A.

As a preliminarymatter, DEMCO assertsthat Cajun lacksstanding to bring suit, arguing that

under the WPSA, DEMCO is required to compensate Cajun only for the power provided by Cajun.

Since the surplus energy was in fact provided by Entergy, DEMCO argues, under the language of

Articles 1 and 4 of the WPSA, Cajun has no contractual right to seek payment from DEMCO for

electricity provided by Entergy.

DEMCO's argument fails. Even assuming, arguendo, as DEMCO urges that its principal

obligation is to Entergy as the actual supplier, Louisiana law unequivocally establishes that Cajun is

legally subrogated to Entergy's claim because Cajun has already entirely reimbursed Entergy for that

company's share of the unmetered electricity. See LA. CIV. CODE ANN. art. 1829(3) (“Subrogation

takes place by operation of law: . . . [i]n favor of an obligor who pays a debt he owes with others or

for others and who has recourse against those others as a result of the payment[.]”); see also State

Farm Mut. Auto. Ins. Co. v. Berthelot, 732 So.2d 1230, 1233 (La. 1999) (“Subrogation is a legal

fiction whereby payment by a third person . . . extinguishes an obligation of the original creditor. The

third person then steps into the shoes of the original creditor, acquiring the right to assert the actions

and rights of the original creditor.”). To the extent DEMCO argues that the record is devoid of

evidence that Cajun paid Entergy for the electricity sold to DEMCO, the record beliesthat assertion:

Mr. Elmer, Cajun's vice president for operations, testified before the bankruptcy court that Cajun had

determined that Entergy was owed payment for its share of the delivered electricity and that Cajun

accordingly reimbursed Entergy. DEMCO offers no evidence to rebut that testimony. We therefore

hold that Cajun has standing to bring this suit.

B.
No. 06-30774

On appeal, DEMCO argues that LA. CIV. CODE art. 2002, which requires an obligee to

undertake reasonable efforts to mitigate damage resulting from an obligor's failure to perform, bars

Cajun’s recovery because Cajun has not mitigated its damages. We disagree.

The Louisiana Supreme Court has held that “[the] duty to mitigate . . . damages is not

applicable where the party whose duty it is primarily to perform a contract ‘has equal opportunity for

performance and equal knowledge of the consequences of nonperformance.’” Unverzagt v. Young

Builders, Inc., 215 So.2d 823, 828 (La. 1968) (quoting Parker v. Harris Pine Mills, Inc., 291 P.2d

709, 717 (Or. 1955). Moreover,

[t]he injured person need not make extraordinary efforts or do what is unreasonable

or impracticable in his effortsto minimize damages;reasonable diligence and ordinary

care are all that is required to allow full recovery of all damages caused by the

defendant's wrongful activity. More completely stated, the consequences of an injury

are recoverable where the injured party acts with such care and diligence as a man of

ordinary prudence would under the circumstances, and his efforts to minimize

damages are determined by the rules of common sense, good faith, and fair dealing.

What constitutes reasonable care depends upon the circumstances of the particular

case, taking into consideration time, knowledge, opportunity, and expense.

Id. at 825-26. The record indicatesthat once Cajun was notified ofthe problembyEntergypersonnel,

it took immediate steps to correct the issue: the meter was corrected that same day. In other words,

Cajun appears to have taken the proper steps to mitigate as soon as it was aware that the problem

existed.

DEMCO, furthermore, admits that it knew that it was receiving twice the electricity it was

paying for but argues that Cajun knew about the problem before Entergy's report. DEMCO asserts

that it notified Cajun of the error at the outset, relying on testimony from Mr. Lindsley, its Vice

President of Engineering and Operations. Mr. Lindsley testified that he believed DEMCO, in the

person ofMike Landry, DEMCO'sConstruction Supervisor at Vignes, informed BobBayley, Cajun's

Manager of Engineering and Maintenance at Vignes, of the error. During his deposition, however,

Mr. Landry denied ever having a conversation with Mr. Bayley about the meter reading error. In

short, no one could personallytestify asto who personally informed Mr. Bayley ofthe metering error.

On the other hand, Mr. Elmer testified that had Cajun been informed of the error, Mr. Elmer would

have taken immediate action to correct the problem. In fact, that is precisely what occurred when

Entergy notified Cajun of the error. The record does not, therefore, establish that DEMCO ever

notified Cajun of the error such that Cajun should have begun mitigating damages at an earlier point

in time.
No. 06-30774

DEMCO also argues, however, that the error resulted from Cajun's breach of Article 6 of the

WPSA, which places responsibility for testing and calibration of the high-side meters with Cajun.

Because Cajun did not set the proper transformer ratio and because Cajun failed to detect the error

during routine testing, DEMCO asserts, Cajun breached its duties under the WPSA and therefore

DEMCO is not responsible for the unmetered electricity it received. DEMCO cites no authority for

the proposition that Cajun's error in failing to detect the error at the time the station became active

precludes later recovery for DEMCO's breach of the WPSA terms requiring it to pay for all energy

furnished to it by Cajun. Even assuming, however, that the duty to mitigate reaches back to the time

of the initial error, it is not clear that Cajun's actions were deficient. The record indicates that the

company performed its standard yearly tests at the station. Mr. Elmer testified that to detect the

calibration error, the entire substation would have needed to be taken out ofservice. Mr. Elmer also

testified that the only reason Entergy was able to detect the error without a complete shut-down was

because its employee was using a recently acquired piece of specialized equipment. Given that

evidence, it cannot be said that Cajun failed to perform any of the routine checks required of it under

the WPSA. Furthermore, to the extent DEMCO is arguing that such a shut-down should have been

performed, Cajun is only required to mitigate as a reasonable person would have done in those

circumstances. Unverzagt, 215 So.2d at 825. With no notice from DEMCO that there was an error

in the meter’s calibration, a reasonable personwould not have undertakento shut the entire substation

down to test that calibration. We therefore find no failure to mitigate on Cajun’s part such as would

restrict its ability to recover from DEMCO.

C.

DEMCO next arguesthat the error in the meter is, under the terms of Article 6 of the WPSA,

an “inaccuracy” such that DEMCO must only pay Cajun for the amount of energy furnished during

the 90-day period prior to the discovery ofthe problem. Cajun responds by asserting that the problem

is, instead, better described as a “failure to register,” such that the parties shall agree to the amount

of electricity furnished over that period - here, 39 months - and the provider shall be reimbursed for

that amount. 

The bankruptcy court phrased the question as one of determining which provision of Article

6 applies to the facts of this case and held, as a matter of law, that the contract could not be read in

such a way that would permit the 90-day reach back period to apply to the circumstancesin this case.

In other words, the bankruptcy court held that as a matter of law, this situation could only be

construed as a failure to register because 
No. 06-30774

[t]he 90 day reachback [sic] provision is coupled with the requirement that Cajun test

and calibrate the meters at intervals of 12 months. The underlying assumption is that

any inaccuracy would be revealed through testing. Also since it would be impossible

to determine when a meter started to read inaccurately, the parties agreed that the

billing adjustment would be limited to 90 days, thereby limiting loss by either party.

The premise underlying the 90 day reachback [sic] provision, however, does not exist

in the present case. Cajun performed the required testing. The incorrect calibration,

however, was not susceptible to discovery through routine testing. The defect could

be discovered only if the substation were shut done [sic] for some major repair or

service. As no major repairs occurred during the time period at issue, the error was

not located. As this type of error could not be located during the testing referred to

in Paragraph 6, the entire underlying premise of the 90-day reachback [sic] period

fails.

We agree with the bankruptcy court’s reasoning. Under Louisiana law, where “the words of

a contract are clear and explicit and lead to no absurd consequences, no further interpretation may

be made in search of the parties' intent.” LA.CIV.CODEANN. art. 2046. Where a word is susceptible

to “different meanings [, it] must be interpreted as having the meaning that best conforms to the

object in the contract.” LA. CIV. CODE ANN. art. 2048. Moreover, “[e]ach provision in a contract

must be interpreted in light ofthe other provisionsso that each is given the meaning suggested by the

contract as a whole.” LA. CIV. CODE ANN. art. 2050. 

The bankruptcy court properly determined that the meanings of the two phrases were clear.

It held that as a matter of law, the type of error at issue in this case, where the meter read the

information it received accurately but was, in fact, receiving the wrong information because of the

wrong current transformer ratio, could only be read as a failure to register. We agree that to hold

otherwise would not comport with the clear intent of the parties as expressed in the contract, which

couples the 90-day reach back provision with calibration and standard testing requirements. We

therefore affirm the grant of summary judgment on this issue.

D.

Finally, DEMCO asserts that certain General Orders of the Louisiana Public Service

Commission limit Cajun's ability to seek unpaid electricity to correct billing errors occurring more

than six months before the discovery of the error. We disagree.

In 1975, the Louisiana Public Service Commission adopted a General Order that provides as

follows:

This Commission is mindful that controversies have arisen between utilities

companies in attempting to levy chargesfor servicesfurnished in the distant past, but

which were not billed when furnished. Frequently, the problem has been one of a
No. 06-30774

faulty meter or meter reading or company billing errors.

The Commission feels that is [sic] should, and by this order, does formulate a

guideline for institution of actions to collect sums allegedly due by reason of faulty

meter or readings thereof, on Company billing errors, excepting fraud. . . .

Accordingly, this Commission hereby ordersthat no rate on file with this Commission

and billing made pursuant thereto shall be effective against a consumer where the

utility company has permitted twelve months to elapse between the rendition of the

service and accurate billing therefor, incidences of consumer fraud, such as meter

tampering, excepted. 

The Order was amended in 1993 to reduce the time to six months.

DEMCO argues that the Order is intended to protect it from having to reimburse Cajun for

anything more than six months. We disagree, for the reasons given by both the bankruptcy court and

district court: the operative language in the order applies to back billing against a consumer - that is,

the end user, rather than intermediate utilities like DEMCO. In 2002, the Louisiana Supreme Court

defined a "consumer" in the context of power utilities as "the ultimate user ofthe electricity[.]" Cleco

Evangeline, LLC v. La. Tax Comm'n, 813 So.2d 351, 355 (La. 2002). In doing so, the court

specifically excluded from that definition "the wholesaler or toller that purchasesthe output from the

. . . plant . . . because both act as middle persons simply transferring the electricity to others that

ultimatelyconsume the electricity." Id. DEMCO fitsthe second definition precisely; assuch, it cannot

receive protection clearly given to "consumers" in the express language of the order.

III.

The bankruptcy court properly granted summary judgment in this case: by the terms of the

WPSA, DEMCO is bound to reimburse Cajun for the electricity received but not metered over the

39-month period before the error was corrected. Cajun has not failed to mitigate its damages, and the

Louisiana Public Service Commission’s orders do not apply to limit the period over which damages

may be recovered. The judgment is therefore AFFIRMED.

AFFIRMED.