Court Opinion

ID: 5173574
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:14:19.098718+00
Date Added: 2024-06-11T08:26:11.539396
License: Public Domain

BAKES, Justice,
concurring specially:
As the Court’s opinion correctly points out, this case involves “the interpretation of a portion of a Power Sales Agreement (the Agreement) between Afton Energy, Inc., (Afton) and Idaho Power Company (Idaho Power).” Ante at 852, 761 P.2d at 1204. The Power Sales Agreement provides two separate alternative methods of computing the purchase price and method of payment, depending upon the resolution of a certain legal dispute described in Article XIII of the Power Sales Agreement as follows:
“ARTICLE XIII: LEGAL DISPUTE
“It is understood and agreed that a bona fide legal dispute exists between Seller and Idaho [Power] as to the authority of the Idaho Public Utilities Commission to order Idaho to enter into contracts containing rates, terms and conditions with *856which Idaho does not concur. Idaho proposed the following language:
The rates, terms and conditions set forth in this agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms and conditions under this agreement are subject to change and revision by order of the Commission upon a finding, supported by substantial competent evidence, that such rate, term or condition change or revision is just, fair, reasonable, sufficient, non-preferential and nondiseriminatory.
“The Idaho Public Utilities Commission rejected that language. Seller and Idaho [Power] are in agreement that if, as a result of a legal determination as to the Idaho Public Utilities Commission’s authority to dictate rules, terms and conditions or to order that contracts be entered into by Idaho, it is determined that the Idaho Public Utilities Commission has such authority, then the purchase price and terms set out in paragraphs (A) and (B) of Article IV will be in effect for the full term of the Agreement. If the legal determination results in a finding that the Commission does not have that authority, paragraphs (C) and (D) of Article IV of the Agreement will be applicable.”
Afton filed this declaratory judgment action in the district court against Idaho Power shortly after this Court’s decision in Afton IV, Afton Energy Inc. v. Idaho Power Co., 111 Idaho 925, 729 P.2d 400 (1986), in which we affirmed the Idaho Public Utilities Commission’s decision that it had no jurisdiction over the determination of which of the two alternative payment provisions set out in Article IV was applicable, the jurisdiction being in the district court.
Idaho Power answered Afton’s declaratory judgment complaint, and both parties moved for summary judgment based upon the affidavits of officers of their respective companies which set out their version of the legal dispute between the parties and the factual background of the execution of the agreement.
The trial court determined that the evidentiary facts set out in the affidavits were “really undisputed,” and “the focus of this dispute hinges on the interpretation of Article XIII to which the parties have given disputed inferences.” The trial court then stated that, since neither party had requested a jury trial, under this Court’s decision in Riverside Development Co. v. Ritchie, 103 Idaho 515, 650 P.2d 657 (1982), it could resolve the disputed inferences, on summary judgment because had the matter gone to trial the court would presumably have had the same factual evidence before it and would then have been able to resolve those conflicting factual inferences.
Although not expressly stated, it is clear from the trial court’s analysis in its memorandum opinion that it concluded that the payment provisions in Articles IV and XIII of the Agreement were ambiguous. “Determination of whether a document is ambiguous is itself a question of law,” De-Lancey v. DeLancey, 110 Idaho 63, 65, 714 P.2d 32, 34 (1986), but once that initial determination is made, “[interpretation of an ambiguous document presents a question of fact.” Id. See also Clearwater Minerals Corp. v. Presnell, 111 Idaho 945, 949, 729 P.2d 420, 423 (Ct.App.1986) (“Whether a contract is ambiguous is a question of law. (Citing DeLancey) An appellate court exercises free review on such a question.”). Accordingly, the trial court made two determinations regarding the Agreement, first the legal determination that the contract was ambiguous and, secondly, the factual determination of what the parties had intended by the conflicting inferences contained in the agreement.
The correctness of the trial court’s determination regarding ambiguity is crucial because, if correct, it defines and delineates the scope of our review on appeal. If the Power Sales Agreement is ambiguous on the question of which of the two alternative payment methods is applicable, then the trial court’s resolution of those factual inferences is controlling, unless clearly erroneous. I.R.C.P. 52(a). Bergkamp v. Carrico, 101 Idaho 365, 613 P.2d 376 (1980). On the other hand, if the agree*857ment is not ambiguous, then the interpretation of the contract is a question of law for the trial court in the first instance, but this Court can and must exercise its own independent review and interpretation on appeal. DeLancey v. DeLancey, 110 Idaho 63, 714 P.2d 32 (1986); Galaxy Outdoor Advertising, Inc. v. Idaho Transportation Dept., 109 Idaho 692, 710 P.2d 602 (1985); Luzar v. Western Surety Co., 107 Idaho 693, 692 P.2d 337 (1984); Suchan v. Suchan, 106 Idaho 654, 682 P.2d 607 (1984); Bergkamp v. Carrico, supra.
Three separate sentences or phrases from Article XIII are significant in reviewing the correctness of the trial court’s determination. They are as follows:
1. “It is understood and agreed that a bona fide legal dispute exists between Seller and Idaho as to the authority of the Idaho Public Utilities Commission to order Idaho to enter into contracts containing rates, terms and conditions with which Idaho does not concur. ____”
2. “Idaho proposed the following language:
“ ‘The rates, terms and conditions set forth in this agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms and conditions under this agreement are subject to change and revision by order of the Commission upon a finding, supported by substantial competent evidence, that such rate, term or condition change or revision is just, fair, reasonable, sufficient, non-preferential and non-discriminatory.’ “The Idaho Public Utilities Commission rejected that language.”
3. “Seller and Idaho [Power] are in agreement that if, as a result of a legal determination as to the Idaho Public Utilities Commission’s authority to dictate rules, terms and conditions or to order that contracts be entered into by Idaho, it is determined that the Idaho Public Utilities Commission has such authority, then the purchase price and terms set out in paragraphs (A) and (B) of Article IV will be in effect for the full term of the Agreement. If the legal determination results in a finding that the Commission does not have that authority, paragraphs (C) and (D) of Article IV of the Agreement will be applicable.” (Emphasis added.)
The trial court summarized the arguments of both parties. Idaho Power claimed that the legal dispute “has always been the continuing jurisdiction of the IPUC to review and adjust public utility cogenerator contract rates.” The trial court specifically acknowledged this by referring to the proposed language which Idaho Power would have placed in the contract, but which the Idaho Public Utilities Commission expressly rejected, ordering that the language be excluded. That language states,
“The rates, terms and conditions set forth in this Agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms and conditions under this Agreement are subject to change and revision by order of the Commission upon a finding, supported by substantial competent evidence, that such rate, term or condition change or revision is just, fair, reasonable, sufficient, nonpreferential and non-discriminatory.”
Idaho Power argued to the district court that since our decisions in Afton I/III held, as the majority opinion herein points out, ante at 855, 761 P.2d at 1207, that “[t]he rates contained in paragraphs (A) and (B) may be adjusted by the Commission at any time, if the Commission determines that such an adjustment is ‘fair, just and reasonable’ and ‘not inconsistent with federal law to the extent that it may be applicable.’ Afton I/III, 107 Idaho at 793, 693 P.2d at 439,” that Idaho Power had prevailed.
The district court then summarized Afton’s claim as follows:
“Afton believes that the critical language in article XIII is that which states: ‘as a result of a legal determination as to the Idaho Public Utility Commission’s authority to dictate rules, terms and conditions or to order that contracts be en*858tered into by Idaho____’ (emphasis on the disjunctive ‘or’ added).”
Afton argued that Afton 7/7/7 had upheld the authority of the commission “to order that contracts be entered into by Idaho ...,” and therefore it had prevailed.
The apparent ambiguity in the agreement arises from the use of the terms “such authority” and “that authority” in the following portion of Article XIII:
“[I]f ... it is determined that the Idaho Public Utilities Commission has such authority, then the purchase price and terms set out in paragraphs (A) and (B) of Article IV will be in effect for the full term of the Agreement. If the legal determination results in a finding that the Commission does not have that authority, paragraphs (C) and (D) of Article IV of the Agreement will be applicable.” (Emphasis on “such” and “that” added.)
Do the terms “such authority” and “that authority” mean, as Idaho Power argues, authority in the Idaho Public Utilities Commission to order Idaho Power to enter into contracts which are not subject to the continuing jurisdiction of the IPUC to change or revise those rates based upon the fair, just and equitable standard, or, by way of distinction, do the terms “such authority” and “that authority” merely refer to the authority of the IPUC to order Idaho Power to enter into contracts, whether or not the rates set in those contracts are subject to the continuing jurisdiction of the commission to revise, based upon the fair, just and reasonable standard?
The trial court resolved the ambiguity and conflicting inferences in favor of Afton’s interpretation by noting that Idaho Power had actually taken two stances or positions in its defense of Afton’s attempts to compel Idaho Power to enter into a contract. The district court noted that, both before the IPUC and before this Court, Idaho Power had denied the IPUC’s authority to compel Idaho Power to enter into any power purchase agreement which Idaho Power had not freely negotiated. The district court quoted and emphasized the following language from Chief Justice Donaldson’s opinion in Afton IV: “Idaho Power, by answer, denied that the Commission had jurisdiction to order it to enter into the contract attached to Afton’s complaint because it was not freely negotiated____ Idaho Power still disputed the legal authority of the Commission to make such an order.” Ill Idaho at 927, 729 P.2d at 402. The district court also quoted the following from the Afton IV opinion: “Another clause, art. XIII, was entitled Legal Disputes. It provided that, if as a result of a legal determination, the Commission has authority to; (1) dictate rules, terms and conditions, or (2) order Idaho Power to enter into contracts, then the first payment option is in effect.” Id. (Emphasis supplied by district court.)
After reviewing this Court’s prior opinions, and the summary judgment record before it, the district court resolved the conflicting inferences in favor of Afton, concluding that the issue to be resolved in the legal dispute was not whether the commission had authority to order Idaho Power to enter into contracts at avoided cost rates which were not subject to the commission’s continuing jurisdiction to modify under the fair, just and reasonable standard, but, rather, the issue was merely whether the IPUC had authority to order Idaho Power to enter into any cogeneration contracts, whether modifiable or not. The district court concluded that “Afton has prevailed in the dispute, and thus is entitled to have the rates reflected in paragraphs (A) and (B) of Article IV of the contract adopted.”
Exercising free review on the preliminary question of law, DeLancey v. DeLancey, supra, I agree with the district court that the payment provisions of the Power Sales Agreement can reasonably be interpreted in more than one way. Accordingly, the agreement is ambiguous and the interpretation of the payment provision was a question of fact for the trial court. Id. Under this Court’s “clearly erroneous” deferential review of trial court findings under I.R.C.P. 52(a), the district court’s interpretation of the contract is not unreasonable, based on the summary judgment record before the Court, and the various conflicting inferences which can be drawn from Article XIII. While we, as appellate *859judges, might have individually concluded otherwise had we been the trial judge in this matter, that does not diminish our obligation to defer to the trial court’s finding unless that finding is “clearly erroneous.” I.R.C.P. 52(a).
Idaho Power makes an appealing argument that, as a matter of law, it prevailed because, as the majority opinion acknowledges, ante at 855, 761 P.2d at 1207, “[t]he rates contained in paragraphs (A) and (B) may be adjusted by the Commission at any time, if the Commission determines that such an adjustment is ‘fair, just and reasonable’ and ‘not inconsistent with federal law to the extent that it may be applicable.’ ” 1 However, having concluded that Article XIII of the agreement is ambiguous on the payment issue, we are not here interpreting the agreement as a matter of law, but reviewing a trial court’s finding of fact regarding the intention of the parties and the meaning of the agreement. Bergkamp v. Carrico, 101 Idaho 365, 613 P.2d 376 (1980). On this record the trial court’s determination is not “clearly erroneous” and accordingly the trial court’s decision should be affirmed.

. Throughout these proceedings, Afton has argued that under the Federal Energy Regulatory-Act, and the regulations of the Federal Energy Regulatory Commission, federal law requires that public utilities enter into cogeneration contracts with cogenerators for both long terms and for fixed rates, which rates cannot be modified during the course of the term of the agreement. However, as our opinions in Afton III and IV pointed out, and as the majority opinion today acknowledges, under the law of the State of Idaho, "the rates contained [in such contracts] may be adjusted by the Commission at any time, if the Commission determines that such an adjustment is 'fair, just and reasonable’____" Ante at 855, 761 P.2d at 1207. However, both our decisions in Afton III and IV, and our decision today, recognize that in the event the authority granted to the IPUC under Idaho law to adjust the rates of cogeneration contracts is "inconsistent with federal law,” i.e., is prohibited and thus preempted by federal law, then, of course, federal law would be controlling. Preemption of state law by federal law, while not common, is a matter which this Court has addressed before. See Rawson v. United Steelworkers of America, 111 Idaho 630, 726 P.2d 742 (1986) (judgment vacated by mandate of the United States Supreme Court entered July 7, 1987, — U.S.-, 107 S.Ct. 2475, 96 L.Ed.2d 368 (1987)); Dunbar v. United Steelworkers of America, 100 Idaho 523, 602 P.2d 21 (1979); Idaho Power Co. v. Idaho Public Util Comm'n, 102 Idaho 744, 639 P.2d 442 (1981); State ex rel Andrus v. Click, 97 Idaho 791, 554 P.2d 969 (1976). On at least one occasion this Court has-concluded that state law was preempted by federal law. Downing v. Travelers Ins. Co., 107 Idaho 511, 691 P.2d 375 (1984). See abo United States v. Antelope, 430 U.S. 641, 97 S.Ct. 1395, 51 L.Ed.2d 701 (1977); Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985); IBEW, AFL-CIO v. Hechler, 481 U.S. 851, 107 S.Ct. 2161, 95 L.Ed.2d 791 (1987).
While any determination of whether state law is preempted by federal law under the supremacy clause “start[s] with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress,” Ray v. Atlantic Richfield Co., 435 U.S. 151, 157, 98 S.Ct. 988, 994, 55 L.Ed.2d 179 (1978), nevertheless this Court in Afton III and IV recognized the potential for preemption resulting from the Federal Energy Regulatory Act, and the regulations promulgated thereunder. We stated that modification of cogeneration contracts was permissible under state law based on the fair, just and reasonable standard, unless such modification would be "inconsistent with federal law to the extent that it may be applicable." 107 Idaho at 793, 693 P.2d at 439. The potential for federal preemption in these cogeneration contracts would exist regardless of whether that caveat had been inserted in our Afton III and IV opinions.
Preemption of state law by federal law under the supremacy clause of the United States Constitution is a question of federal law. While state courts are often initially required to pass on the question, the ultimate decision rests with the federal courts. Rawson v. United Steelworkers of America, supra; IBEW AFL-CIO v. Hechler, supra.