No. 06-30774

* Pursuant to 5 TH C IR . R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR . 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: * Pl aint iff Mabey, as bankruptcy trustee fo r Cajun Electric Power Cooperative (“Cajun”), sued to recover $2,754,760.04 f or 39 m onths of electricity received by defendant Dixie Electric Membership Corporation (“ DEMCO”) but unm etered (and therefore not billed) by Cajun until a calibration error in a transformer at a power substation was discovered. The bankruptcy court granted Cajun’s mo tion fo r sum

mary judgment and denied DEMCO’s motion; the district court affirmed wit hout oral argument. Aft er review of the record and the parties' arguments, we agree. The judgment of th e district court is therefore AFFIRMED. I. Cajun is a nonprofit corporation th at generates and transmits electricity to m embers 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 ClerkNo. 06-30774

non-profit electric distribution cooperatives, who sell and distribut e power to th e end consumer. D EMCO was required by a contract known as the 1976 Who lesale Power Supply A greement (“WPSA”) to purchase from Cajun at wholesale all of it s electric power requirements. The WPSA contains, inter alia , the following provisions: 1. GENERAL. The Seller [Cajun] shall sell and deliver to the Member [DEMCO] and th e Member shall purchase and receive from the Seller all electric power and energy which th e Member shall re qui re for the operation of the Member's system to the extent th at th e Seller shall have su ch power and energy and facilit ies available; provided, however, th at th e Member shall have the right to continue to purchase electric power and energy under any existing contract or contracts wi th a supplier oth er th an th e Seller during the remainder of th e term thereof. If the Member continues to purchase electric power and energy under a contract or contracts wit h a supplier or suppliers oth er th an the Seller, then the power and ene rgy purchased under such contract or contracts shall be paid for by Seller for the account of the Member, and th e Member shall be billed by Seller fo r 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 deliv er power and energy to the Point or Point s of Connection [e.g., a power substation]. The Member shall be responsible fo r providing the facilit ies necessary to take and use th e pow er and energy f rom the Point or Point s of Connection. The parties shall provide and maint ain, or cause to be provided and maint ained, switching and protective equipment which may be reasonably necessary to protect the sy stem of th e oth er. Meters and met ering equipment shall be furnished, maint ained, and read, or caused to be furnished, maintained, and read, by the Seller. 4. RATE.

.... The Member shall p ay t he Seller for all electric power and energy furnished hereunder at th e rates and on the terms and conditions set fo rth in Rate Schedule A....
6. METER TESTING AND BILLING ADJUSTMEN T. The Seller shall t est and calibrate or cau se to b e tested and calibrated meters by comparison with accurate standards at intervals of twelve (12) mo nt hs. The Seller shall also make or cause to be made special met er tests at any time at the Member's request.

. . . The readings of any met er which shall have been disclosed by test to be inaccurate shall be corrected fo r th e ninet y (90) days previous to such test in accordance with the percentage of inaccurac y fo und by such test. If any meter shall fail to register for any period the Member and the Seller shall agree as to the amo unt of energy furnished during such period and the Seller shall render a bill therefor.

In the 1990s, DEMCO built th e Vignes power substation; alt hough constructed by DEMCO alo ne, th e facilit y was jo int ly owned by DEMCO and Cajun. Entergy , per a contractual arrangement wit h Cajun, provided electricity th rough the substation to DEMCO fo r further distribution. The station had two met ers: one, a "high side" met er, belo nged to Cajun and measured electricity com ingNo. 06-30774

int o th e station from Entergy 's lines; t he other, a "low side" meter, belonged to DEMCO and measured the electricity DEMCO received for distribution. The station became operational in Septem ber 1996. At th at time, it is undisputed th at Cajun's met er was inco rrectl

y cal ibrated, such that it regi stered only half of the electricity entering the substation. Cajun's resulting bill to DEMCO therefore covered only half of the electricity provided. D EMCO, h owever, had a properly calibrated meter and was charging its customers for the full

amo unt of electricity provided. The problem continued fo r 39 mo nt hs until, in December 1999, an Entergy employee discovered the problem. The met er it self was corrected the same day. Entergy and Cajun executed a plan under which Cajun reimbursed Entergy fo r Entergy 's share of the unmetered electricity delivered to DEMCO. In January 2000, Cajun made written demand on DEMCO fo r the unmetered electricity received but not billed, a total value of $2,754,760.04. The fo llo wing mo nt h, DEMCO tendered a check for $179,483.82, cit ing to a provision under the WPSA known as the "reach back" provision th at, DEMCO claimed, limit ed it s liabilit y fo r excess electricity to the excess received during the 90 days prior to discovery of th e error. Cajun refused tender; the com pany sub sequently underwent a bankruptcy reorganization. On February 17, 2003, th e bankruptcy trust ee sued DEMCO as a part of an adversary proceeding related to Cajun's declaration of bankruptcy under Chapter 11. The trustee sought to
recover th e entirety of th e $2,754,760.04, asserting th ree different bases fo r recovery : (1) breach of contract; (2) indemnit y ( fo r the payment s Cajun made to Entergy fo r the power sold to DEMCO); and (3) unjust enrichment. The trustee mo ved fo r summary judgment on the issue of liabilit y in January 2005; DEMCO responded wit h a mo tion to dismiss fo r failur e to state a cl aim o r, in t he alt ernative, fo r summary judgment. In Septem ber 2005, the bankruptcy court gran ted summary judgment fo r Cajun. DEMCO appealed both the grant of Cajun's motion and the denial of it s own; at th e same time, it also asserted that an order of the Loui siana Public Service Com missio n barred Cajun from seeking reimbursement for billing errors over six months old. In June 2006, the district court, wit hout oral argum ent, 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 (5th Cir. 2007). Summary judgment is appropri ate where th e record shows “t hat th ere is no genuine issue as to any material fact and th at the mo ving party isNo. 06-30774

entitled to a judgment as a mat ter of law.” FED
. R. C IV
. P. 56(c); Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). Facts and inferences reasonably drawn from th ose facts should be taken in the light

mo st favorable to th e 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 “t he existence of an element essential to th at party 's case, and on which th at party will bear the burden of proof at tri al,” no genuine issue of mat erial fact can exist. Celotex , 477 U.S. at 322-23. “If the mo ving party meets th e init ial burden of showing there is no genuine issue of mat erial fact, the burden shift s to th e non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue fo r tri al.” 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 preliminary mat ter, DEMCO asserts th at Cajun lacks standing to bring suit, arguing th at under th e WPSA, DEMCO is required to com pensate Cajun only fo r the power provided by Cajun. Since th e surplus energy was in fa c t provided by Entergy , DEMCO argues, under the language of Articles 1 and 4 of th e WPSA, Cajun has no contractual right to seek p ayment from DEMCO for electricity provided by Entergy. DEMCO's argument fails. Even assuming, a rguendo , as DEMCO urges th at it s principal obligation is to Entergy as th e actual supplier, Loui siana law unequivocally establishes th at Cajun is legally subrogated to Entergy 's claim because Cajun has already entirely reimbursed Entergy fo r th at
com pany's share of the unmetered electricity. See LA
. C IV
. C ODE ANN . art. 1829(3) (“Subrogation takes place by operation of law:

. . . [i ]n favor of an obligor who pays a debt he owes wit h others or fo r others and who has recourse against those others as a result of the payment[.]”); see also State Farm Mut. Auto. Ins. Co. v. Berth elot , 732 So.2d 1230, 1233 (La. 1999) (“Subrogation is a legal fict io n whereby payment by a thir d person . . . extinguishes an obligation of the original creditor. The thir d person th en steps int o th e shoes of the original creditor, acquiring the right to assert the actions and rights of th e original creditor.”). To the extent DEMCO argues th at the record is devoid of evidence th at Cajun paid Entergy fo r th e electricity sold to DEMCO, the record belies th at assertion: Mr. El mer, Cajun's vice president fo r operations, testified before the bankruptcy court th at Cajun had determ ined that Entergy was owed payment for its share of the delivered electricity and that Cajun accordingly reimbursed Entergy

. DEMCO of fers no evidence to rebut th at testimo ny. We therefore hold that Cajun has standing to bring this suit. B.No. 06-30774

On appeal , DEMCO argues that L A
. C IV
. C ODE art. 2002, which requires an oblig ee to undertake reasonable effo rts to mit igate damage resulting from an obligor's failure to perform, bars Cajun’s recovery because Cajun has not mitigated its damages. We disagree. The Loui siana Supreme Court has held th at “[the] duty to mit igate . . . damages is not applicable where th e party whose duty it is primarily to perform a contract ‘has equal opportunity fo r 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 effo rts or do what is unreasonable or impracticable in his effo rts to minimize damages; reasonable diligence and ordinary care are all th at is required to allo w full recovery of all damages caused by the defendant's wrongful activit y. More com pletely stated, the consequences of an injury are recoverable where th e injured party acts wit h such care and diligence as a man of ordinary prudence would under the circumstances, and his effo rts to m inimize damages are determined by the rules of com mo n 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 indicates th at once Cajun was notified of the problem by Entergy personnel, it took immediat e steps to correct th e issue: the met er was corrected th at same day. In other words, Cajun appears to have taken the proper steps to mit igate as soon as it was aware th at the problem existed. DEMCO, furthermore, admits that it knew th at it was receiving twice the electricity it was paying fo r but argues th at Cajun knew about the problem before Entergy 's report. DEMCO asserts th at it notified Cajun of th e error at the outset, relying on testimo ny fr om Mr. Lindsley, it s Vice P resident of Engineering and Operations. Mr. Lindsley testified that he believed DEMCO, in the person of Mike Landry, DEMCO's Construction Supervisor at Vignes, info rm ed Bob Bayley, Cajun's Manager of Engineering and Maintenance at Vignes, of the error. During his deposition, however, Mr. Landry denied ever having a conversation wit h Mr. Bayley about the met er r eading error. In short, no one could personally testify as to who personally info rm ed Mr. Bayley of the met ering error. On th e oth er hand, Mr. El mer testified th at had Cajun been info rm ed of the error, Mr. El

mer would have taken immediat e action to correct the problem. In fact, th at i s preci sely what occurred when Entergy notified Cajun of th e error. The record does not , therefore, establ ish t hat DEMCO ever notified Cajun of th e error such th at Cajun should have begun mit igating damages at an earlier point in t ime.No. 06-30774

DEMCO also argues, however, th at the error resulted from Cajun's breach of Article 6 of the WPSA, which places responsibility fo r testing and calibratio n of the high-side meters with Cajun. Because Cajun did not set th e proper transformer ratio and because Cajun failed to detect the error during routine testing, DEMCO asserts, Cajun breached it s duties under the WPSA and theref ore DEMCO is not responsible fo r th e unmetered electricity it received. DEMCO cit es no authority fo r th e proposition that Cajun's error in failing t o detect the error at the time t he station became active precludes lat er recovery fo r DEMCO's breach of the WPSA terms requiring it to pay for all energy furnished to it by Cajun. Even assuming, however, th at the duty to mit igate reaches back to the time of th e init ial error, it is not clear th at Cajun's actions were deficient. The record indicates th at the
com pany performed it s standard yearly tests at the station. Mr. El mer testified t hat to detect the calibration error, th e entire substation would have needed to be taken out of service. Mr. El mer also testified th at th e only reason Entergy was able to detect the error wit hout a com plete shut-down was because it s employee was using a recent ly acquired piece of specialized equipment. Given that evidence, it cannot be said th at Cajun failed to perform any of the routine checks required of it under th e WPSA. Furthermore, to th e extent DEMCO is arguing th at such a shut-down should have been performed, Cajun is only requi red to m it igate as a reasonable person would have done in those circumstances. Unverzagt , 215 So.2d at 825. Wit h no notice from DEMCO th at there was an error in th e met er’s calibration, a reasonable person would not have undertaken to shut the entire substation down to test th at calibration. We th erefore find no failure to mit igate on Cajun’s part such as would restrict i ts ability to recover from DEMCO. C. DEMCO next argues th at th e error in the met er is, under the terms of Article 6 of the WPSA, an “inaccuracy” such that DEMCO must only pay Cajun fo r the amo unt of energy furnished during th e 90-day period prior to th e discovery of the problem. Cajun responds by asserting th at the problem is, instead, better described as a “failure to register,” such th at the parties shall agree to the amount of electricity furnished over th at period

- here, 39 mo nt hs

- and the provider shall be reimbursed fo r th at am ount. The bankruptcy court phrased the question as one of determ ining which provision of Article 6 applies to the facts of this case and held, as a mat ter of law, th at the contract could not be read in such a way th at would permit th e 90-day reach back period to apply to the circumstances in this case. In oth er words, th e bankruptcy court held th at as a mat ter of law, this sit u ati on could only be construed as a failure to register becauseNo. 06-30774

[t]he 90 day reachback [sic] provision is coupled wit h the requirement th at Cajun test and calibrate th e met ers at int ervals of 12 mo nt hs. The underlying assumption is th at any inaccuracy would be revealed th rough testing. Also since it would be impo ssible to determ ine when a met er started to read inaccurately, the partie s agreed th at the billing adjust ment would be limit ed to 90 day s, thereby limiting loss by either party.
The premise underlying th e 90 day reachback [sic] provision, however, does not exist in t he present case. Cajun performed the required testing. The incorrect calibration, however, was not susceptible to discovery th rough routine testing. The defect could be discovered only if t he 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, th e entire underl ying premise of the 90-day reachback [sic] period fails. We agree wit h th e 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 th e parties' int ent.” LA
. C IV
. C ODE ANN
. art. 2046. Where a word is susceptible to “different meanings [, it ] m ust be interpreted as having the meaning that best conforms to the object in th e contract.” LA
. C IV
. C O DE A NN . art. 2048. Moreover, “[e]ach provi sio n in a contract must be int erpreted in light of th e oth er provisions so th at each is given the meaning suggested by the contract as a whole.” LA
. C IV
. C ODE ANN . art. 2050. The bankruptcy court properl y determ ined th at the meanings of the two phrases were clear. It held th at as a mat ter of law, th e ty pe of error at issue in this case, where the met er read the info rmation it received accurately but was, in fact, receiving the wrong info rmation because of the wrong current t ransformer ratio, could only be read as a failure to register. We agree that to hold oth erwise would not com

port wit h th e clear int ent of the parties as expressed in the contract, which couples th e 90-day reach back provision with calibration and standard testing requirements. We th erefore affirm the grant of summary judgment on this issue. D. Finally, DEMCO asserts th at certain General Or ders of the Louisiana Public Service Com missio n limit Cajun 's abilit y t o seek unpaid electricity to correct billing errors occurring more th an six mo nt hs before the discovery of the error. We disagree. In 1975, th e Loui siana Public Service Com missio n adopted a General Order th at provides as fo llo ws: This Com

missio n is mindful th at controversies have arisen between utilit ies com panies in attem

pting to levy charges fo r services furnished in the distant past, but which were not billed when furnished. Frequently, the problem has been o ne of aNo. 06-30774

fault y met er or m

eter reading or com

pany billing errors.
The Com missio n feels th at is [sic] should, and by this order, does form ulate a guideline fo r inst it ution of act io ns to collect sums allegedly due by reason of faulty met er or readings thereof, on Company billing errors, excepting fraud. . . . Accordingly, this Com

missio n hereby orders th at no rate on file wit h this Com missio n and billing made pursuant thereto shall be effective against a consumer where the utilit y co mpany has permitted twelve months to elapse between the rendition of the service and accurate billing therefor, incidences of consumer fraud, such as meter tam pering, 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 anyt hing mo re th an six mo nt hs. We disagree, fo r the reasons given by both the bankruptcy court and district court: th e operative language in the order applies to back billing against a consumer - th at is, th e end user, rather th an int ermediate utilit ies like DEMCO. In 2002, the Louisiana Supreme Court defined a "consumer" in th e context of power utilit ies as "the ult imat e user of the electricity[.]" Cleco Evangeline, LLC v. La. Tax Comm'n , 813 So.2d 351, 355 (La. 2002). In doing so, the court specifically excluded from th at definit io n "the wholesaler or toller th at purchases the output from the

. . . plant

. . . because both act as middle persons simply t ransferring the electricit y t o oth ers that ult imat ely consume th e electricity." Id. DEMCO fit s the second definit io n precisely; as such, it cannot receive protection clearly given to "consumers" in the express language of the order. III. The bankruptcy court properl y granted summary judgment in this case: by the terms of the WPSA, DEMCO is bound to reimburse Cajun fo r the electricity received but not metered over the 39-m onth period before th e error was corrected. Cajun has not failed to mit igate it s damages, and the Loui siana Public Service Com missio n’s orders do not apply to limit the period over which damages may be recovered. The judgment is therefore AFFIRMED. AFFIRMED.