Court Opinion

ID: 9593204
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:20:34.9816+00
Date Added: 2024-06-11T18:01:18.851269
License: Public Domain

BAKES, Chief Justice,
dissenting:
I
First, I do not believe that the Court has adequately dealt with the possible res judicata effect of the Public Utilities Commission’s ruling which Idaho Power asserts held that it was authorized to simultaneously invoke the remedies provided in Appendix B-2(A) and Appendix B-2(C). In April of 1985, Afton applied to the PUC for an order to modify the Power Sales Agreement and Idaho Power’s action in this case. The Commission declined to assume jurisdiction over the matter stating that it had no authority to modify the rates, terms and conditions of the agreement. Thereafter, Afton filed a Petition for Writ of Mandate with this Court to compel the Commission to hold a hearing to consider Afton’s application. On May 24, 1985, this Court granted Afton’s petition and issued an alternative writ of mandate to the Commission to “either schedule and hold a hearing ... and thereafter make a determination on said application ...” or show cause why it should refuse to do so. The Commission complied with the alternative writ and held the hearing.
We should not now refuse to address Idaho Power’s res judicata defense, resulting from the Commission’s decision, and the jurisdictional issue on which it hinges, merely because the Court finds that “the PUC did not purport to have jurisdiction to interpret the Agreement.” Certainly if the Commission did “purport” to have jurisdiction, this Court would not have felt bound, but would have decided that question for ourselves. The Commission opted to hear the petition and to make a decision regarding Afton’s application. Idaho Power now asserts that the issues presented to the trial court in this case where those presented to the Commission, and therefore Afton was precluded from litigating those issues under the doctrine of res judicata. Our cases hold that if the Commission had jurisdiction, then their decision would preclude any jurisdiction in the district court. West v. State, 112 Idaho 1038, 739 P.2d 337 (1987); Brannon v. Pike, 112 Idaho 938, 737 P.2d 459 (1987) (if Industrial Commission has subject matter jurisdiction, the district court has no jurisdiction). Since this Court issued our writ, directing the Commission to either act or show cause, we should now determine if in fact the Commission did have jurisdiction and, if so, whether the doctrine of res judicata prevents Afton from asserting their claim for breach of contract.
II
Like Justice Boyle, I concur in Part IV of the Court’s opinion and with that portion of Part III of the opinion concluding that Afton did not invoke the force majeure provision of the agreement, and specifically finding that Afton breached the agreement by only performing 39% of its agreed upon obligation. However, I believe that the majority errs seriously in concluding that the agreement unambiguously precludes Idaho Power from exercising its options under both Appendix B-2(A) and B-2(C). An examination of the Appendix B-2, as set forth in the majority opinion, demonstrates that the only reasonable interpretation is one where Idaho Power is allowed to exercise both options.
*343Afton’s breach gave Idaho Power the option to terminate the contract entirely, or to reduce its obligation to buy energy and capacity which is referred to in the agreement as “Capacity Sale Reduction.” Section B-2 of the Appendix, as set out on page 851 of the majority opinion, reads:
B-2 TERMINATION OR REDUCTION DUE TO rAFTON’Sl FAILURE TO PERFORM
Except in the event of Force Majeure as defined in Article VII of this Agreement, if [Afton] fails to provide the amount of energy and Capacity specified in Article III, such failure shall be grounds for Contract Termination or a Capacity Sale Reduction in accordance with the following:
... (Emphasis added.)
In this case, Idaho Power decided on a “Capacity Sale Reduction” which is defined in the agreement as, “A reduction in the amount of Capacity provided or to be provided and purchased under this Agreement,” rather than contact termination which is defined as, “The early termination of this Agreement.”
Along with those two options, Sections (A)-(E) of Appendix B-2 provide a means of allowing Idaho Power to deal with the effects of Afton’s breach. One effect of Afton’s breach in this case was that Idaho Power overpaid Afton approximately $1.9 million in the first year. According to Appendix B-2, Idaho Power could recoup this overpayment in one of two ways depending on the option Idaho Power chose to take.
If Idaho Power decided on a “Capacity Sale Reduction,” Section B-2(A) allowed Idaho Power to recoup the overpayment by “suspendpng] or reducpng] Capacity payments to [Afton] for a probationary period not to exceed twelve (12) months.” If Afton thereafter met its obligation during the probationary period, the overpayment would be recouped and Afton would then be entitled to a reinstatement of the Capacity payment under the agreement. This is recognized in Section B-2(A)(1). However, if Afton did not meet its obligation during the probationary period, Idaho Power was entitled to recoup the overpayment by permanently derating the Capacity. This is recognized in Section B-2(A)(2).
Section B-2(A)(2) also allowed Idaho Power to “terminate the Capacity purchases if no Capacity is supplied during the probationary period.” Obviously, if no Capacity was being supplied Idaho Power would be unable to recoup any overpayment.
If Idaho Power decided on “Contract Termination,” or if Idaho Power terminated the Capacity purchases because no Capacity was supplied during the probationary period, Idaho Power was then entitled to recover the overpayment under the terms of Section B-2(B). That Section required Afton to “refund an amount equal to seventy-five percent (75%) of the difference between the Capacity payments already paid by Idaho (based on the original term of the Agreement) and the total Capacity payments which would have been paid if the Capacity Price had been based on the period from the Operation Date to the actual date of termination.”
As can be seen from the above analysis, Sections B-2(A) and B-2(B) provide a means for the recovery of any overpayments which were a result of Afton’s failure to provide the agreed-upon Capacity under the contract. However, Afton’s failure to provide the agreed-upon Capacity in year one was also an indication that it might never be able to produce the agreed-upon Capacity, thus resulting in continuing overpayments by Idaho Power. To prevent such continuing overpayments, Section B-2(C) allowed Idaho Power to “reduce the Capacity or terminate Capacity purchases.” That section states:
If at any time, based on appropriate tests, studies or prior performance, Idaho determines that [Afton] will be unable to provide the agreed-upon Capacity, Idaho may immediately reduce the Capacity or terminate Capacity purchases. (Emphasis added.)
The majority states that this section is inconsistent with the probationary period of Section B-2(A) and therefore Idaho Power must choose between the two remedies. However, this interpretation ignores the *344different purposes of the two sections. As shown above, Sections B-2(A) and B-2(B) provide a means of recovering over-payments already made. On the other hand, Section B-2(C) provides the means of preventing future overpayments due to the continued inability of Afton to provide the agreed-upon Capacity.
This distinction was recognized by the trial court which interpreted the contract as permitting:
the use of both the reduction of capacity payments in order to recoup an overpayment and the reduction in capacity payments. Any other interpretation seems unreasonable. The contract clearly contemplates that Idaho Power will have a right to recoup capacity overpayment and it also clearly permits the de-rating of the facility based upon “pri- or performance,” among other grounds. Thus it may recoup an overpayment already made and avoid what would appear, based on past performance of the facility to be the almost certain problem of an overpayment the following year. There is nothing inconsistent about the two remedies. Afton was not able to meet its dispatchable capacity requirements in either contract year one or contract year two. The overpayment for contract year one of 1.9 million dollars was a considerable overpayment, approximately sixty percent of the entire payment for the capacity payments for that year. The Power Sales Agreement permitted Idaho Power based upon Alton’s established inability to perform in the first contract year to de-rate the dis-patchable capacity immediately. The derating of the facility prevented an overpayment in contract year two. It simply does not seem reasonable that Idaho Power is obligated to continuously overpay Afton or completely terminate the agreement. (Emphasis added.)
As noted by the trial court, if Idaho Power was only allowed the remedy provided in Section B-2(A), Idaho Power would be forced to “continuously overpay Afton or completely terminate the contract.” Such an interpretation is unreasonable. On the other hand, if Idaho Power was only allowed to “immediately reduce the Capacity or terminate Capacity purchases” under Section B-2(C), it would be unable to recover any of the overpayments already paid. This interpretation is also unreasonable.
The unreasonableness of these choices is even more pronounced in light of the fact that it is Afton who is in breach of the contract. Because Afton breached the contract, Idaho Power could have terminated the contract entirely and sued Afton for breach of contract under Section B-2(E), thus recovering not only the overpayments made to Afton but any damages resulting from Afton’s failure to provide the agreed-upon Capacity. Given this option available to Idaho Power, it is not unreasonable to allow Idaho Power to recoup the over-payments already made by reducing the Capacity payments as allowed in Section B-2(A), in addition to preventing any further overpayments by reducing its Capacity purchases as allowed in Section B-2(C). In fact, by not allowing Idaho Power to reduce its Capacity purchases under Section B-2(C), the majority is requiring Idaho Power to perform under the original terms of the contract. This is, in effect, allowing Afton to enforce the terms of that contract while at the same time being in substantial breach of the contract. Such a situation should not be allowed. See Ellis v. Butterfield, 98 Idaho 644, 570 P.2d 1334 (1977); Nelson v. Hazel, 89 Idaho 480, 406 P.2d 138 (1965) appeal after remand, 91 Idaho 850, 433 P.2d 120 (1967); Windward Partners v. Lopes, 640 P.2d 872, 874 (Hawaii App. 1982) (“It is basic contract law that one party cannot insist upon the performance of a contract or a provision thereof where he, himself, is guilty of a material or substantial breach of that contract or provision.”); Tel-Radio Transport Corp. v. Cantrell & Cochrane Corp., 43 Ill.App.2d 84, 192 N.E.2d 584, 587 (1963) (“[0]ne of the basic principles of contract law is that a party who himself has breached an agreement cannot recover under the agreement.”).
Accordingly, the only reasonable interpretation of the agreement in this case is that Sections B-2(A) and B-2(B) give Idaho *345Power a means to recover any over-payments made to Afton in the first year. Since Idaho Power chose not to terminate the agreement but rather opted on the “Capacity Sales Reduction,” Idaho Power’s means of recoupment of the overpayment was through Section B-2(A) which was done in this case. It is clear from the record that Idaho Power felt that Afton would be unable to provide the agreed-upon Capacity based on its performance during the first year. As such, Section B-2(C) also allowed Idaho Power to reduce the Capacity as to prevent any future overpayment. The two sections are not inconsistent but rather provide a complete remedy to resolve the effects of Afton’s breach. This was recognized by the trial court and its decision should be affirmed.