Electricity N.H., LLC d/b/a ENH Power v. Old Dutch Mustard Co., Inc. d/b/a Pilgrim Foods

2022 DNH 036

• Court: District Court, D. New Hampshire
• Decided: March 17, 2022
• Docket: 21-cv-33-PB
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Electricity N.H., LLC d/b/a ENH Power

v. Case No. 21-cv-33-PB Opinion No. 2022 DNH 036 Old Dutch Mustard Co., Inc. d/b/a Pilgrim Foods

MEMORANDUM AND ORDER

This case arises from an admitted failure by Old Dutch

Mustard Company to pay in full for electricity produced by

Electricity N.H., LLC (“ENH”) and delivered by Eversource. Old

Dutch Mustard received monthly consolidated bills from

Eversource that covered the charges of both ENH and Eversource.

At some point, Old Dutch Mustard began to make only partial

payments on the consolidated bills. In several instances it

also issued instructions to Eversource to apply its partial

payments to ENH’s portion of the bills. Eversource, relying on

a tariff approved by the New Hampshire Public Utilities

Commission (“PUC”), failed to follow Old Dutch Mustard’s

instructions and instead paid itself first.

ENH later sued Old Dutch Mustard for breach of contract.

Its summary judgment motion asserts that it is owed $306,061 in

unpaid charges. Old Dutch Mustard disputes approximately

$128,000 of the total amount claimed because it argues that Eversource, acting as ENH’s agent, improperly disregarded its

instructions to apply its payments to ENH’s charges. Because I

conclude that Eversource was barred from complying with Old

Dutch Mustard’s demand by the PUC-approved tariff, I reject Old

Dutch Mustard’s argument and grant ENH’s motion in full.

I. BACKGROUND

A. Regulatory Framework

To understand this dispute, it is important to outline some

basics that govern the provision of electricity in the State of

New Hampshire. The State regulates all public utilities,

including electric utilities, through the PUC. See N.H. Rev.

Stat. Ann. §§ 374:3, 362:2. The PUC has statutory authority to

set rates for public utility services and dictate the terms of

service. See id. §§ 374:3, 378:7.

Electric utilities once had a monopoly over the supply and

delivery of electricity within their designated service areas.

In Re Statewide Elec. Util. Restructuring Plan, 82 N.H.P.U.C.

122, 1997 WL 998365, at *18 (Feb. 28, 1997). That changed in

the late 1990s, when, at the direction of the legislature, the

PUC issued a formal order that required utilities to unbundle

their services and allowed competitive energy suppliers to enter

the market. See id. at *1-3. The restructuring of the industry

left the delivery of electricity to the utilities but created

retail choices for energy supply. See id.

2 Today, New Hampshire customers can continue to buy energy

from their electric utility, or they can choose an energy

supplier in the marketplace and pay their utility only for the

delivery of electricity. See id. at *2-3, *19. The supplier is

paid market-based rates for energy supplied each month. See id.

at *19. The utility is paid rates set by the PUC for the

associated delivery services. See id. at *23. The utility’s

rates and terms of service are set out in a publicly available

“tariff” filed with the PUC. See N.H. Code Admin. R. Puc

1603.02. The supplier and the utility may send either separate

bills or a consolidated bill for both sets of services, itemized

to show the unbundled services and the amounts owed for each.

B. Facts

In 2017, Old Dutch Mustard contracted with ENH for the

supply of electricity to its manufacturing facility in

Greenville, New Hampshire. Eversource, the utility that

services Greenville, delivered the electricity. ENH also

engaged Eversource to perform billing, payment, and collection

services on its behalf. The contract between Old Dutch Mustard

and ENH specified that the supplier’s monthly charges would

appear on invoices issued by Eversource and that Old Dutch

Mustard would remit payment for those charges to Eversource.

See Doc. No. 25-1 at 6.

3 Old Dutch Mustard received consolidated monthly bills from

Eversource that itemized the amounts owed both for the delivery

services provided by Eversource and the supply services provided

by ENH. The bills instructed Old Dutch Mustard to remit payment

to Eversource for the total amount due. Eventually, however,

Old Dutch Mustard began making only partial payments and

accumulated a balance owed to both companies that currently

stands at more than $620,000.

At times, Old Dutch Mustard sent payments to Eversource

with instructions to credit those payments only to the amounts

it owed to ENH. Eversource accepted those designated payments,

which totaled approximately $128,000, without protest. But,

apparently, Eversource ignored Old Dutch Mustard’s payment

instructions and instead applied payments based on a payment

hierarchy to which Eversource and ENH agreed in a settlement

agreement approved by the PUC in 2014. See Doc. No. 25-3 at

102-09. Under the agreement, customer payments on consolidated

electricity bills must be applied in the following order:

(1) utility outstanding deposit obligations, (2) any utility current payment arrangement obligation, (3) any utility budget billing arrangement obligations, (4) utility and supplier aged accounts receivables, with a priority for the utility aged receivables, (5) utility and supplier current charges, with a priority for the utility’s current charges. . . .

Doc. No. 25-3 at 104-05. This payment hierarchy is repeated

verbatim in the tariff that has been approved by the PUC. See

4 Doc. No. 28-1 at 44. Thus, when it received payment from Old

Dutch Mustard, Eversource was entitled to pay itself before

paying ENH. This explains why ENH’s records do not reflect

receipt of the $128,000 and instead show an unpaid balance of

$306,061.33.

Seeking to recover that unpaid balance, ENH sued Old Dutch

Mustard for breach of contract. I previously granted summary

judgment to ENH on the issue of liability but left the amount

Old Dutch Mustard owed for later determination because Old Dutch

Mustard admitted liability but disputed the amount it owes under

the contract. ENH now moves for summary judgment on damages and

Old Dutch Mustard objects.

II. STANDARD OF REVIEW

Summary judgment is appropriate when the record reveals “no

genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a); Tang v. Citizens Bank, N.A., 821 F.3d 206, 215 (1st Cir.

2016). In this context, a “material fact” is one that has the

“potential to affect the outcome of the suit.” Cherkaoui v.

City of Quincy, 877 F.3d 14, 23 (1st Cir. 2017) (quoting Sanchez

v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). A “genuine

dispute” exists if a factfinder could resolve the disputed fact

in the nonmovant’s favor. Ellis v. Fid. Mgmt. Tr. Co., 883 F.3d

1, 7 (1st Cir. 2018).

5 The movant bears the initial burden of presenting evidence

that “it believes demonstrates the absence of a genuine issue of

material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323

(1986); accord Irobe v. U.S. Dep’t of Agric., 890 F.3d 371, 377

(1st Cir. 2018). Once the movant has properly presented such

evidence, the burden shifts to the nonmovant to designate

“specific facts showing that there is a genuine issue for

trial,” Celotex, 477 U.S. at 324, and to “demonstrate that a

trier of fact could reasonably resolve that issue in [its]

favor.” Irobe, 890 F.3d at 377 (quoting Borges ex rel. S.M.B.W.

v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir. 2010)). If the

nonmovant fails to adduce such evidence on which a reasonable

factfinder could base a favorable verdict, the motion must be

granted. Celotex, 477 U.S. at 324. In considering the

evidence, the court must draw all reasonable inferences in the

nonmoving party’s favor. Theriault v. Genesis HealthCare LLC,

890 F.3d 342, 348 (1st Cir. 2018).

III. ANALYSIS

ENH argues that it is entitled to summary judgment on

damages because the undisputed record shows that Old Dutch

Mustard owes it $306,061. Old Dutch Mustard disputes the amount

owed because it does not include payments that Old Dutch Mustard

instructed Eversource to remit to ENH. If Eversource ignored

those instructions and instead applied the payments to its own

6 charges, the argument goes, ENH must seek recovery from

Eversource.

Old Dutch Mustard argues that it has a common law right to

direct how its payments are applied. To be sure, the leading

treatise on contract law recognizes that, as a general

principle, a debtor who owes multiple debts has the right to

direct a creditor to allocate payment to a particular debt. See

28 Williston on Contracts, § 72:2 (4th ed.). And, as Old Dutch

Mustard points out, even if the debtor’s choice of allocation

would violate a prior contract between the debtor and the

creditor, the creditor’s acceptance of payment obligates the

creditor to apply the money as directed. See id. § 72:3. But

the treatise also recognizes that a statute that defines how

payments must be applied trumps those default rules. See id.

§ 72:7; see also id. § 72:2 (noting that the general rule

applies “except as may be modified by statute”). Here, there is

a statutorily delegated regulatory structure that overrides the

common law rule that Old Dutch Mustard cites.

By statute, the PUC has the authority to set rates for

Eversource’s services and define the terms of those services.

See N.H. Rev. Stat. Ann. §§ 374:3, 378:7. With limited

exceptions not relevant here, the PUC also has statutory

authority to oversee competitive energy suppliers like ENH. See

id. § 374-F:7. The PUC’s adjudicatory powers allow it to

7 resolve some disagreements between suppliers and utilities by

approving a just and reasonable settlement. See id. § 541-A:31,

V(a); N.H. Code Admin. R. Puc 203.20(b). When a dispute arose

between ENH and Eversource, among others, about the allocation

of payments on consolidated electricity bills, the PUC entered

an order approving a settlement agreement that sets forth the

present payment hierarchy that Eversource must follow. In

short, the agreement directs Eversource to prioritize payment of

its own charges before remitting payment to ENH. See Doc. No.

25-3 at 104-05.

That payment hierarchy is also reflected in the tariff

Eversource filed with the PUC. Tariffs “define the terms of the

contractual relationship between a utility and its customers.”

In re Verizon New Eng., Inc., 158 N.H. 693, 695 (2009) (quoting

Appeal of Pennichuck Water Works, 120 N.H. 562, 566 (1980)).

“They have the force and effect of law and bind both the utility

and its customers.” Pennichuck Water Works, 120 N.H. at 566.

Indeed, given its unique status, “a tariff has the same force

and effect as a statute.” Verizon New Eng., 158 N.H. at 695.

“The rights and liabilities as defined by the tariff cannot be

varied or enlarged by either contract or tort. . . .” Guglielmo

v. WorldCom, Inc., 148 N.H. 309, 313 (2002) (cleaned up).

The tariff and the PUC order approving the settlement

agreement make plain that Old Dutch Mustard had no right to

8 dictate how its payments would be allocated between Eversource

and ENH. Old Dutch Mustard’s ignorance of the payment hierarchy

is no excuse. See id. (“Customers are conclusively presumed to

know the contents of the carrier’s tariff.”). Thus, Old Dutch

Mustard’s argument that its directed payments that never reached

ENH should be set off against the unpaid balance is meritless.

Because Old Dutch Mustard presents no other arguments or

evidence to controvert ENH’s evidence about the sum it is owed,

ENH is entitled to summary judgment on damages.

IV. CONCLUSION

For the foregoing reasons, the plaintiff’s motion for

summary judgment (Doc. No. 25) is granted. The clerk of court

is directed to enter judgment in favor of ENH in the amount of

SO ORDERED.

/s/ Paul J. Barbadoro Paul J. Barbadoro United States District Judge

March 17, 2022

cc: Counsel of record