Massachusetts Municipal Wholesale Electric Co. v. City of Springfield

6 Mass. L. Rptr. 584
CourtMassachusetts Superior Court
DecidedApril 23, 1997
DocketNo. 941532
StatusPublished

This text of 6 Mass. L. Rptr. 584 (Massachusetts Municipal Wholesale Electric Co. v. City of Springfield) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Massachusetts Municipal Wholesale Electric Co. v. City of Springfield, 6 Mass. L. Rptr. 584 (Mass. Ct. App. 1997).

Opinion

Fremont-Smith, J.

The plaintiff, Massachusetts Municipal Wholesale Electric Company (“MMWEC”), brings this action against the defendants, the City of Springfield (the “City”) and its Board of Water Commissioners (the “Board”), seeking damages for past overcharges in contravention of an agreement entered into by the parties for the sale of water and an injunction requiring the defendants to abide by the terms of the agreement. The parties have filed cross-motions for summary judgment.

BACKGROUND

Created by St. 1975, c. 775, MMWEC is a public corporation and political subdivision of the Commonwealth of Massachusetts which plans, finances, and acquires electric power on behalf of its member cities and towns. MMWEC operates an electric generating facility in Ludlow known as the Stony Brook Energy Center (“Stony Brook”) which supplies electricity, under power sales agreements, to Massachusetts cities and towns with municipal light departments. The Board operates a municipal waterworks which supplies water to residential, commercial and industrial users in Springfield and several surrounding towns, including Ludlow.1 Defendants have operated the municipal water supply system in Springfield and Ludlow as a single integrated system for over 100 years, setting rates and operating and maintaining the water distribution system. See St. 1,889, c. 368.

It is further undisputed that MMWEC and the defendants entered into an agreement, effective January 1, 1981, for the sale of water to MMWEC at Stony Brook for a period of twenty years (the “Agreement”). Under the Agreement, MMWEC is to make payments, pursuant to Appendix A of the Agreement (“Appendix A”), for water provided by the City. The Agreement further provides that the rates set forth in Appendix A may be amended by a vote of the Board “(t]o reflect general increases in the City’s cost, but in no event shall such rates in any one year be greater that the rates shown on Appendix A as amended for that year. ” See Agreement Paragraph 3.

For the first eight years that the Agreement was in place, the City charged, and MMWEC paid, for water at the rates set forth in Appendix A. During that time, it is undisputed that MMWEC was billed $0.50 per 100 cubic feet (“CCF”) of water for the first 5,000 CCF, $0.44 per CCF for the next 55,000 CCF, and $0.22 for each additional CCF. Since January 1, 1989, water rates have been amended by vote of the Board on five separate occasions, as follows:

On January 1, 1989, the City increased water rates for the first time in eleven years, billing MMWEC $0.75 for the first 5,000 CCF, $0.66 for the next 55,000 CCF, and $0.33 for each additional CCF over 60,000 CCF. Shortly thereafter, on July 1, 1989, the City began charging MMWEC $1.09 for the first 20,000 CCF and $.33 for each additional CCF. Almost two years later, on April 1, 1991, the Board instituted a $0.36 rate for industrial customers in the City of Springfield, while MMWEC’s industrial customer rate remained unchanged at $1.09 for the first 20,000 CCF, and $0.33 for each additional CCF.2 Later in 1991, the Board again raised rates, charging residential and commercial users in the City of Springfield $1.09 per CCF, industrial users in Springfield $0.36 per CCF, and all users in Ludlow $1.09 per CCF. Finally, on January 1, 1992, the Board decreased the rates charged to residential and commercial users in Springfield and all users in Ludlow, including MMWEC, to $0.99 per CCF. Water rates for industrial users in the City of Springfield remained at $0.36 per CCF.

Thus, the cumulative rate increase charged to MMWEC between 1989 and 1992 was more than 350%, whereas it is undisputed that the City’s actual costs from the water system increased only about 28%, from 1988 to 1992, as follows:

Fiscal Year End City Water Costs

June 30, 1988 $8.7 Million

June 30, 1989 $10.7 Million

June 30, 1990 $9.4 Million

June 30, 1991 $11.8 Million

June 30, 1992 $11.2 Million

DISCUSSION

“The interpretation of a written contract ... is a question of law, not of fact” and is proper for summary judgment. Lumber Mutual Ins. Co. v. Zoltek Corp., 419 [585]*585Mass. 704, 707 (1995); see also Allstate Ins. Co. v. Bearce, 412 Mass. 442, 446-47 (1992). A written contract is to be construed according to the usual and ordinary meaning of its words. Ober v. National Casualty Co., 318 Mass. 27, 30 (1945); Edwin R. Sage Co. v. Foley, 12 Mass.App.Ct. 20, 28 (1981); Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703, 706 (1992). The court should grant summary judgment where there are no genuine issues of material fact and where the summary judgment record entitles the moving parly to judgment as a matter of law. Nashua Corp. v. First State Ins. Co., 420 Mass. 196, 202 (1995); Community Nat'l Bank v. Dawes, 369 Mass. 550, 553 (1976); Mass.R.Civ.P. 56.

While admitting that the rate increases have greatly exceeded the actual increase in their direct and indirect water costs for 1988 — 1992, defendants point to the City of Springfield Financial Management Structure Reorganization, Acts of 1989, Chapter 656, §11 (approved January 8, 1990), which provides, in pertinent part:

Notwithstanding the provisions of any general or special law to the contrary, the water commission shall establish rates for water which shall include, at least, an amount adequate to cover: (i) an appropriate rate for the sale of water as determined by the water commission in its sole discretion; plus: (ii) any current and past operating deficits; (iii) establishment of a sufficient capital and operating reserve fund; and (iv) reimbursement of the city’s general fund for all direct and indirect administrative costs incurred by the city relative to the water department.

The defendants contend that, in addition to the actual increased costs they incurred, they were entitled to raise rates in view of their assumption, in the 1989— 1992 period, of a $4.2 Million liability for the “Water Reserve Loan 1971,” and a $3.95 Million liability for the “Ludlow Filter Plant 1989.” The amount of any increased costs resulting from the assumption of such liabilities, however, is nowhere set forth in the record, and such costs have been, in any event, already accounted for in the costs listed at p. 4 above — see Twining and Lyons affidavits, discussed infra.

And, while it is true that the Agreement and Chapter 656 clearly authorize the City to charge water users for the funding of a “sufficient capital and operating reserve fund” for the water system, there is no evidence that any such reserve fund has actually been established or funded which would justify any of the rate increases.

Indeed, while defendants make general allegations that additional cash reserves are required for various contemplated capital improvement projects and to comply with a Consent Order of the Massachusetts Department of Environmental Protection, the record is devoid of any indication that defendants have yet to actually commence any such projects, that any such projects have ever been funded, or even that any such projects are planned to be commenced at any definite date in the near future.3 To the contrary, both Mr. Twining, Senior Accountant at the Water Department, and Mr. Lyons, Manager of the Water Department, testified in their depositions that the cost comparison figures set forth at p.

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Related

Community National Bank v. Dawes
340 N.E.2d 877 (Massachusetts Supreme Judicial Court, 1976)
Edwin R. Sage Co. v. Foley
421 N.E.2d 460 (Massachusetts Appeals Court, 1981)
Schwanbeck v. Federal-Mogul Corp.
592 N.E.2d 1289 (Massachusetts Supreme Judicial Court, 1992)
Allstate Insurance v. Bearce
589 N.E.2d 1235 (Massachusetts Supreme Judicial Court, 1992)
Weld v. Board of Gas & Electric Light Commissioners
84 N.E. 101 (Massachusetts Supreme Judicial Court, 1908)
Brand v. Water Commissioners
242 Mass. 223 (Massachusetts Supreme Judicial Court, 1922)
Ober v. National Casualty Co.
60 N.E.2d 90 (Massachusetts Supreme Judicial Court, 1945)
Lumber Mutual Insurance v. Zoltek Corp.
647 N.E.2d 395 (Massachusetts Supreme Judicial Court, 1995)
Nashua Corp. v. First State Insurance
648 N.E.2d 1272 (Massachusetts Supreme Judicial Court, 1995)
Flatley v. City of Malden
660 N.E.2d 704 (Massachusetts Appeals Court, 1996)

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Bluebook (online)
6 Mass. L. Rptr. 584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/massachusetts-municipal-wholesale-electric-co-v-city-of-springfield-masssuperct-1997.