Puget Sound Power & Light Co. v. Strong

798 P.2d 1162, 59 Wash. App. 430, 1990 Wash. App. LEXIS 398

• Court: Court of Appeals of Washington
• Decided: October 17, 1990
• Docket: No. 11668-5-II
• Status: Published

Opinions

Alexander, C.J.

Puget Sound Power and Light Company (Puget) appeals an order of summary judgment in favor of Gerald Strong which limited the damages Puget could recover for a utility pole destroyed by Strong. We affirm.

Strong negligently drove his automobile into one of Puget's utility poles and destroyed it. Puget, thereafter, instituted a suit against Strong seeking damages for the cost of the replacement pole plus the cost of labor and overhead expenses incident to its replacement. Strong answered and admitted liability for the labor and overhead expenses incurred by Puget in replacing the pole but asserted, with respect to the cost of the replacement pole, that Puget was only entitled to recover the depreciated value of the pole which was destroyed.

The issue regarding the appropriate measure of damage was presented to the court by way of cross motions for summary judgment. For purposes of the motion, the parties stipulated to the following facts:

1. Puget Sound Power & Light Company (Puget) is the sole owner of the wood distribution pole involved in this litigation.

2. The wood pole involved in this litigation was installed in 1970.

3. The original cost for both the acquisition and installation of this wood pole is included in Puget's Account No. 364. The depreciation rate for this wood pole since its installation averaged 3.43%.

4. Puget's average service life of a pole, for depreciation purposes, is 31 years.

5. Washington State Utilities and Transportation Commission (WUTC) includes depreciation as an expense when deciding rate schedules for utility users.

6. Puget depreciates Account No. 364, which includes this wood pole, as an expense for tax purposes.

7. Puget's wood poles have no salvage value or retirement costs . . ..

Puget also submitted several affidavits which established, in pertinent part: The pole struck by Strong was in "good" condition; "Under a good maintenance program, a wood pole should be able to last at least 50 years or more if not affected by outside influences such as cars, lightning strikes, or decay," etc. There is no way, however, to predict how long a given pole will last in the field; "poles are also frequently removed because of factors unrelated to the condition of the pole" such as relocation of the system, transformation to an underground system, upgrading to bigger/stronger poles, etc.; "There is no established market in which used utility poles are bought and sold"; "The account under which the wood poles are capitalized and depreciated by Puget includes other related electrical facilities such as brackets, cross-arms, transformer racks and platforms." Accordingly, the depreciation rate of 3.43 percent is with regard to a class of equipment; costs incurred in repairing poles damaged by third party negligence are accumulated and charged to a pole damage claim which is not capitalized or depreciated.

The trial court granted summary judgment to Strong, concluding that Puget was only entitled to receive, as damages for the loss of the pole, the depreciated value of the pole which was destroyed based upon the life of the utility pole as computed by Puget for tax and accounting purposes. Puget argues that the trial court erred in reaching that conclusion, contending that because there is no "market" for used utility poles it is entitled to the cost of replacement. In the alternative, Puget asserts that to the extent it is limited to the actual or depreciated value of the pole, such value should be determined in relation to the characteristics of the individual pole and should not be based upon the depreciation rate applied by it for tax and accounting purposes.

In reviewing a trial court's decision to grant summary judgment, an appellate court engages in the same inquiry as did the trial court. Hontz v. State, 105 Wn.2d 302, 311, 714 P.2d 1176 (1986). A motion for summary judgment should not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). In our judgment, the essential facts are not in dispute. Accordingly, the appropriate measure of damages that is to be applied is a question of law, and the case is ripe for summary judgment.

I

Measure of Damages

The measure of damages in tort actions is that indemnity which will afford an adequate compensation to a person for a loss suffered or the injury sustained by him as the direct, natural, and proximate consequences of the wrongful act or omission. Burr v. Clark, 30 Wn.2d 149, 158, 190 P.2d 769 (1948). The purpose of awarding damages for injury to property in a tort case is to place the injured party in the condition in which he would have been had the wrong not occurred. Wilson v. Brand S Corp., 27 Wn. App. 743, 745, 621 P.2d 748 (1980), review denied, 95 Wn.2d 1010 (1981). A party suffering compensable injury, therefore, although entitled to be made whole, should not be allowed to duplicate his recovery. Leader Nat'l Ins. Co. v. Torres, 113 Wn.2d 366, 369, 779 P.2d 722 (1989).

We recognize that "cost of replacement" is generally stated as the appropriate measure of damages for destruction of both personal and real property where such property does not possess a market value. See Clark, 30 Wn.2d at 158; Mieske v. Bartell Drug Co., 92 Wn.2d 40, 43, 593 P.2d 1308, 6 A.L.R.4th 923 (1979).¹ Under the circumstances of the present case, however, Puget would gain an estimated additional 14 years of service life if it were permitted to recover the cost of a new pole. Such compensation exceeds the loss incurred by Puget and, thus, would result in a windfall to Puget. We believe, therefore, that an award of replacement cost, due to the unique nature of the property at issue, would not be just. Accordingly, we decline to apply that measure of damages.²

In reaching this conclusion, we reject Puget's contention that the replacement of a damaged utility pole with a new pole is no different them the replacement of a damaged taillight or bumper on a used vehicle with a new part. Puget's analogy ignores the fact that the owner of the vehicle does not gain any added benefit from the replacement of one particular part independent of the vehicle as a whole. In contrast, a utility pole has value independent of the system as a whole and, thus, Puget clearly realizes a benefit in excess of the loss incurred by the replacement of a used pole with a new pole. Accordingly, we believe the appropriate measure of damages is the actual loss incurred by Puget based upon the estimated remaining useful life of the pole destroyed of which Puget is deprived.

We recognize that 01» holding is contrary to that of Division Three of this court in Washington Water Power Co. v. Miller, 52 Wn. App. 565, 762 P.2d 16 (1988), wherein an identical claim by another tortfeasor was rejected. In reaching its conclusions, however, the court in Miller concluded that the burden was on the tortfeasor to prove that the pole's estimated life expectancy, as established by the utility for tax and accounting purposes, accurately reflected the life expectancy of the pole. Miller, 52 Wn. App. at 572. Because the defendant was unable to meet that burden, the court disallowed any offset for depreciation, concluding: " [T]he length of time this pole might have remained in the ground is pure speculation, and speculation does not provide a sufficient basis for damages." Miller, 52 Wn. App. at 572.

We decline to follow the holding of Miller. The court in Miller, although disallowing an offset for depreciation on the basis that it was too speculative, implicitly authorized the utility to recover on a theory which was equally speculative, namely, that the pole which was destroyed had some future life expectancy of which the utility was deprived by its premature destruction. A utility can just as easily be overcompensated by the award of a replacement cost measure of damages as it can be undercompensated by the application of a depreciated value measure of loss.

Given the speculative nature of both theories of recovery, we believe the court in Miller incorrectly placed the burden upon the defendant to prove that the new pole would provide a windfall to the utility by exceeding the remaining service life of the old pole. In our opinion, the burden correctly lies with the utility to show that the new pole would merely fulfill the remainder of the old pole's service life.

The rule regarding speculative damages cited by the court in Miller has always been stated in the context of denying damages unless they are established with reasonable certainty. See McKernan v. Aasheim, 102 Wn.2d 411, 419, 687 P.2d 850 (1984). Consequently, the burden of proving and segregating damages is upon the plaintiff. See Scott v. Rainbow Ambulance Serv., Inc., 75 Wn.2d 494, 498, 452 P.2d 220 (1969).

As a practical matter, neither party can meet such a burden given the unpredictable forces which affect the lifespan of a utility pole. In light of this dilemma, we believe the onus properly lies with the plaintiff, not the defendant. Accord, Younger v. Appalachian Power Co., 214 Va. 662, 664-65, 202 S.E.2d 866, 868 (1974); New York State Elec. & Gas Co. v. Fischer, 43 Misc. 2d 178, 250 N.Y.S.2d 567 (1964); Ohio Power Co. v. Zemelka, 19 Ohio App. 2d 213, 251 N.E.2d 2 (1969); Public Serv. Co. v. Jasso, 96 N.M. 800, 635 P.2d 1003 (1981); but see New Jersey Power & Light Co. v. Mabee, 41 N.J. 439, 442, 197 A.2d 194 (1964); Horton v. Georgia Power Co., 149 Ga. App. 328, 254 S.E.2d 479 (1979); Carolina Power & Light Co. v. Paul, 261 N.C. 710, 136 S.E.2d 103 (1964); Mississippi Power & Light Co. v. Tillman, 291 So. 2d 736 (Miss. 1974).

We similarly reject the contention of the City of Seattle and Washington Society of Municipal and PUD Attorneys, as set forth in their brief amicus curiae, that the Legislature, by virtue of the enactment of RCW 80.28.240, has prescribed the application of a "replacement cost" measure of damages. RCW 80.28.240 provides, in pertinent part:

(1) A utility may bring a civil action for damages against any person who commits, ... or attempts to:

(d) Tamper with any property owned or used by the utility to provide utility services;. . .

(2) In any civil action brought under this section, the utility may recover from the defendant as damages three times the amount of actual damages, if any, plus the cost of the suit and reasonable attorney's fees,. . ..

Amici argue that the Legislature's reference to "actual damages" precludes an offset for depreciation. This is so, they assert, because to allow an offset for depreciation would constitute "net" damages as opposed to "actual" damages.

The term "actual damages" is not defined by the statute. Absent a statutory definition, words of a statute must be accorded their ordinary meaning. Davis v. Department of Empl. Sec., 108 Wn.2d 272, 277, 737 P.2d 1262 (1987). Statutes are also presumed to be consistent with the common law in the absence of a contrary indication from the Legislature. State v. Bushnell, 38 Wn. App. 809, 810-11, 690 P.2d 601 (1984).

The term "actual damages" is defined in Black's Law Dictionary 33 (5th ed. 1979), as being synonymous with "compensatory damages," which term is defined as:

such as will compensate the injured party for the injury sustained, and nothing more; such as will simply make good or replace the loss caused by the wrong or injury.

(Citations omitted.) Black's Law Dictionary 352 (5th ed. 1979).

Given the analogy to compensatory damages, and the rule of statutory construction which presumes consistency with the common law, we conclude that the term "actual damages," as it appears in the statute, does not import a rule of damages different from that prescribed by the common law. In our judgment, the appropriate measure of damages remains "... that indemnity which will afford an adequate compensation for the loss suffered . . Clark, 30 Wn.2d at 158.

II

Basis of Computation

Finally, we disagree with Puget's alternative contention that the trial court erred in applying the depreciation rate used by Puget for tax and accounting purposes in order to determine the depreciated value of the pole.

Puget asserts that the depreciation rate used by it for tax and accounting purposes is not reflective of the actual depreciated value of any one pole and, thus, that the trial court erred in applying such rate as the basis for computing the pole's value. In support of this argument, Puget notes that the pole in question was stated to be in "good" condition with a potential service life of an additional 50 years if not affected by outside influences, etc.

Puget concedes, however, that there is no realistic way to predict how long a given pole will last in the field. As stated above, the burden of proving damages is upon the plaintiff. Rainbow Ambulance Serv., Inc., 75 Wn.2d at 498. Given that the depreciation rate can work in favor of Puget as easily as against,³ depending upon the actual remaining service life of a given pole, and that it is impossible to otherwise predict the remaining service life of a utility pole, we conclude that the trial court did not err in applying such rate as the basis for computing the depreciated value of the pole.

Affirmed.

Mitchell, J. Pro Tern., concurs.

1 Market value is defined as "that reasonable sum of money which the property would bring on a fair sale, by a man willing to sell, but not obliged to sell, to a man willing to buy, but not obliged to buy." McCurdy v. Union Pac. R.R., 68 Wn.2d 457, 467, 413 P.2d 617 (1966).

2 See Tilly v. John Doe, 49 Wn. App. 727, 731, 746 P.2d 323 (1987), review denied, 110 Wn.2d 1022 (1988) (holding, in the context of the measure of damages for the loss of a security interest, that the courts will not apply a fair market value of the collateral if the application of that measure of damages would result in a windfall to the plaintiff).

3 To illustrate, we note that if the pole which was destroyed in the present case had in reality only a few short months of remaining service life, Puget would come out ahead in that it would recover damages representing the loss of an additional 17 years of service life, thus accounting for the total 31-year estimated service life. In contrast, had the original pole in fact had an additional 50 years of service life ahead, and were the new pole to last only a year or two, then Puget would go uncompensated for such lost service life.