Court Opinion

ID: 5094355
Source: CourtListenerOpinion
Date Created: 2021-10-01 16:35:30.29261+00
Date Added: 2024-06-11T08:20:44.417044
License: Public Domain

HEDGES, Justice,
dissenting.
I respectfully dissent. I believe that the majority has used the wrong standard by which to determine the liability of Houston Lighting & Power (“HL & P”). I believe that a showing of ordinary negligence should be insufficient to avoid limitation of liability under a tariff regulating a public utility. I would hold that a higher degree of negligence is necessary to impose liability on a tariff-protected industry.
As a general rule, public utility tariffs carry the dignity of statutory law and are presumed reasonable, but that determination is usually a question for the trier of fact. Southwestern Bell Tel. Co. v. Vollmer, 805 S.W.2d 825, 829 (Tex.App.—Corpus Christi 1991, writ denied). The PUC has provided that a tariff is “subject to review for reasonableness by the courts ...” Application of Central Power & Light Company for Approval of Tariff Amendment, Docket No. 3198, Tex. PUC LEXIS 247 (June 22, 1981) (CP & L Decision). Courts have held that if a customer can show that the application of a tariff’s limitation of liability would be unreasonable, the customer can avoid its consequences and recover damages beyond what the tariff provides. The reasonableness of the application of a tariff’s limitation of liability is assessed based on (1) whether damages caused are large compared to the minute recovery allowed by the tariff; and (2) whether the utility has allowed the problem to persist for a long time even though it could have solved it quickly. See Calarco v. Southwestern Bell Tel. Co., 725 S.W.2d 304, 306-07 (Tex.App.—Houston [1st Dist.] 1986, writ ref d n.r.e.); Southwestern Bell Tel. Co. v. Reeves, 578 S.W.2d 795, 798-99 (Tex.Civ.App.—Houston [1st Dist.] 1979, writ refd n.r.e.). In Reeves and Calarco, the tariffs provide that the customer can recover limited damages even if the utility is not negligent. Calarco, 725 S.W.2d at 306; Reeves, 578 S.W.2d at 799.
Our tariff provides:
Company [HL & P] will make reasonable provisions to supply steady and continuous electric service, but does not guarantee the electric service against fluctuations or interruptions. Company will not be liable for any damages, whether direct or consequential, including, without limitation, loss of profits, loss of revenue, or loss of production capacity, occasioned by fluctuations or interruptions unless it be shown that Company has not made reasonable provisions to supply steady and continuous electric service, consistent with the Customer’s class of service, and in the event of a failure to make such reasonable provisions (whether as a result of negligence or otherwise), Company’s liability shall be limited to the cost of necessary repairs of physical damage proximately caused by the service failure to those electrical facilities of Customer which were then equipped with the protective safeguards recommended or required by the then current edition of the National Electric Code.
While I recognize the Reeves factors as the factors we must look to in order to decide the issue of reasonableness of application, I part company with the majority on the nature of conduct required to impose liability for lack of reasonableness.
It is clear from the language of our tariff that it limits recovery for all claims except those involving conduct more egregious than mere negligence. In contrast to Reeves and Calarco, our tariff permits a customer a limited recovery only if HL & P is negligent.
*204If we say that a customer can challenge the reasonableness of this tariff based on a showing of negligence, the logical conclusion is that we are denying HL & P any relief from liability; only in the absence of negligence would the tariff’s limitation apply. But in the absence of negligence, why would the limitation of liability clause be necessary? To my mind, the majority opinion has decimated the whole purpose of this tariffs limitation provision.
Public policy strongly supports limitation of liability for public utilities. In the CP &L decision, three important justifications for limitation of liability clauses in the tariffs of regulated utilities are set forth: (1) unlimited liability could materially affect CP & L’s financial status; (2) unlimited liability could ultimately affect the perception of the company’s risk by investors; (3) unlimited liability would ultimately result in higher rates within the general rate structure. Id. at *15-17. The hearing examiner reasoned, “the primary justification for this [limitation clause] is the sheer size of the potential liability CP & L could be subjected to if it were liable for property loss in a general outage.... The bulk of such losses would be sustained by a small number of large industrial customers, and the absence of such a clause clearly would adversely affect the rates of all customers, large and small.” Id. at *8.
How do I square my interpretation with the language in Reeves and Coloreo? In order to understand my distinction, it is necessary to differentiate between a challenge to the reasonableness of the application of a tariff and a challenge to the reasonableness of the tariff itself. Although eases speak in terms of the “reasonableness of a tariff,” Reeves, 578 S.W.2d at 799, a careful reading of their facts reveals that the common issue is not the reasonableness of the tariff as it applies to every customer, but the reasonableness of the tariff as applied to the particular plaintiff. In fact, the first prong of the Reeves test, “that damages caused may be large as compared to the minute recovery allowed by the tariff”, 578 S.W.2d at 798, explicitly supports my conclusion. This inquiry clearly relates to the damages caused to the particular plaintiff in the ease.
In no case has a court invalidated a tariff because it was unreasonable on its face;1 rather, the inquiry has been the reasonableness of an individual application under discrete circumstances. When analyzed under this construct, I believe that Reeves and Co-loreo can be reconciled with our case. In each, the investigation must be the reasonableness of the application of the specific tariff under the case’s unique facts.2
In our case, we must decide what the standard of “reasonableness” is under the tariff before we assess the propriety of its application. I believe that the tariff’s limitation of liability provision compels that the customer show conduct beyond mere negligence, specifically gross negligence or intentional wrongful conduct, before raising a fact issue about the reasonableness of application of the limitation provision. In our case, Au-chan neither alleged nor sought to prove gross negligence or intentional wrongful conduct in its response to HL & P’s motion for summary judgment. At the most, Auchan demonstrated negligence on HL & P’s part. Therefore, I would hold that Auchan did not meet its burden in raising a fact issue in the summary judgment proceeding.
I would affirm the trial court’s summary judgment order.

. If the reasonableness of the tariff as applied to all customers were the issue before us, I would find that the tariff was reasonable based on the reasoning set forth in the CP & L decision. Furthermore, the Public Utilities Commission, whose jurisdiction includes approval of specific tariffs, has approved this one.

. Auchan clearly argues that the application of HL & P’s tariff is unreasonable in the context of this dispute in that: there existed a disparate bargaining process between Auchan’s predecessor and HL & P; an unreasonable length of time was required to make the necessary repairs to restore electrical service; and Auchan’s damages are large compared to the recovery which the limited liability provision of the tariff provides.