Opinion ID: 749918
Heading Depth: 3
Heading Rank: 1

Heading: Paragraph 6.1 of the Agreement requires a valuation by the CPUC.

Text: 37 In analyzing whether the Commission approval required by Paragraph 6.1 of the Agreement constituted a valuation under the SGA, the district court adopted a common sense definition of the term valuation. The court noted that, under the ECAC review procedures in effect when the Agreement was signed, the [Commission] had the power to modify the very measure of the Agreement['s] price terms, albeit after-the-fact, by evaluating and then approving or disapproving specific transaction costs which made up the Agreement WACOG. The court found this approval process to be both functionally and logically equivalent to a process of price 'valuation.'  The court also found that Paragraph 6.1 only made sense if it was read to require such a valuation by the Commission. 38 The district court's approach finds support in common law precedents. 1 In Re: Nudgee Bakery Pty. Ltd's Agreement (1971) Q.L.R. 24 (S.C.), for instance, the Supreme Court of Queensland, Australia reviewed a contract that stipulated that certain commodities would be sold at the maximum prices set each year under a legislative act. After the legislature ceased, by proclamation, to set prices for the commodities in question, the purchaser sought to avoid the contract. Interpreting a provision of the Australian Sale of Goods Act that is substantially similar to Section 12(1) of the Alberta SGA, the court determined that the legislature's setting of maximum prices had constituted a valuation. Id. at 28-29; see also Firth v. Midland Railway Co. 20 L.R. Eq. 100 (Ch. 1875) (decision by English court finding approval of plans and estimate for construction of road to constitute valuation). 39 San Diego Gas argues that Nudgee Bakery and Firth are irrelevant to the present dispute because, in each, a third party valuation fixed the contract price in advance of performance. San Diego Gas points out that, in contrast, the Commission's actions could affect the Agreement price only retroactively. For that reason, San Diego Gas maintains that Section 12(1) of the SGA is inapplicable. San Diego Gas does not, however, identify any clause of Section 12(1) requiring that the third party valuation take place before performance. Under the plain terms of Paragraph 6.1 of the Agreement, the final Agreement price can only be ascertained after CPUC approval or disapproval takes place. Thus, no less than in Nudgee Bakery, the Agreement price is fixed by the valuation of a third party. Accordingly, we find section 12(1) of the SGA to be applicable to the Agreement. 40 B. Under PBR review, the Agreement price no longer is fixed through a valuation by the CPUC. 41 The district court found Paragraph 6.1 to require the Commission's approval or disapproval of individual purchase transactions. As discussed at length in Section I, above, that finding was supported by uncontradicted parol evidence and by common sense. Under PBR review, however, the Commission no longer is capable of disapproving any of the individual transactions that comprise the Agreement WACOG because it now reviews the reasonableness of San Diego Gas' expenditures in the aggregate. 42 Thus, we find that current PBR review procedures do not allow the Commission to make the valuation on which the final Agreement price is based and that the Commission's inability to do so violates Section 12(1) of the SGA. 43 C. Alberta law does not permit San Diego Gas to waive the as approved by the Commission clause. 44 San Diego Gas' final argument rests on a line of cases in which Canadian and American courts have permitted parties to waive contractual provisions included solely for their benefit. San Diego Gas argues that Romaniuk v. Nelson [1983] 4 D.L.R. 4th 51, is of particular relevance to this dispute. In Romaniuk, a purchaser of land obtained financing in a manner inconsistent with the land sale contract, and the seller sought to avoid the contract on that basis. Relying on an Ontario Court of Appeals decision, however, the Romaniuk court upheld the contract because the purchaser's actions had not adversely affected the seller. Id. at 54 (citing Beauchamp v. Beauchamp [1973] 32 D.L.R.3d 693). 45 San Diego Gas points out that the Commission approval clause could operate only to benefit San Diego Gas because the Commission would be likely to disapprove only prices it deemed to be too high, thereby reducing the amount owed by San Diego Gas to Canadian Hunter. Citing Romaniuk and Beauchamp, San Diego Gas contends that it consequently is entitled to waive its right to include only Commission-approved transactions in the Agreement WACOG. 46 The district court ignored this argument, and it does not warrant much more attention on appeal. In all of the cases cited by San Diego Gas in support of its waiver argument, including Romaniuk and Beauchamp, one party to a contract sought to avoid the contract based on the failure of a contractual provision, and the other party sought to uphold the contract, arguing that the provision in question was solely for its benefit and could be waived. In the present dispute, however, Canadian Hunter does not argue that it may avoid its obligations based solely on the failure of a contractual provision. Rather, Canadian Hunter contends that it can avoid its obligations on the basis of a statutory provision--Section 12(1) of the SGA. None of the cases cited by San Diego Gas involves a contract under the SGA or a comparable statute. If the Alberta legislature has concluded that a breakdown in the valuation process renders a contract voidable, it is beyond the province of the courts to impose a new rule. 47 Moreover, the SGA makes no provision for waiver in the event that a third party valuation would operate to benefit only one of the parties. The SGA states simply that a contract is avoided when a third party ceases to be able to fix the contract price. SGA § 12(1). As discussed above, that is precisely what occurred in this case. Accordingly, we find that San Diego Gas has no right to waive the as approved by the [Commission] provision.