Szeto v. Aps

CourtCourt of Appeals of Arizona
DecidedNovember 30, 2021
Docket1 CA-CV 20-0609
StatusPublished

This text of Szeto v. Aps (Szeto v. Aps) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Szeto v. Aps, (Ark. Ct. App. 2021).

Opinion

IN THE ARIZONA COURT OF APPEALS DIVISION ONE

CHAO XIE SZETO, et al., Plaintiffs/Appellants,

v.

ARIZONA PUBLIC SERVICE COMPANY, Defendant/Appellee.

No. 1 CA-CV 20-0609 FILED 11-30-2021

Appeal from the Superior Court in Maricopa County No. CV2017-011033 CV2017-056792 CV2018-004433 The Honorable Christopher A. Coury, Judge

REVERSED AND REMANDED

COUNSEL

Merlin Law Group, P.A., Phoenix By Michael Ponzo Counsel for Plaintiffs/Appellants

Gaona Law Firm, Phoenix By David F. Gaona Counsel for Defendant/Appellee SZETO, et al. v. APS Opinion of the Court

OPINION

Judge Paul J. McMurdie delivered the Court’s opinion, in which Presiding Judge Peter B. Swann and Judge David D. Weinzweig joined.

M c M U R D I E, Judge:

¶1 Plaintiffs Chao Xie Szeto, Yit Kiu Szeto, and Lydia Briones appeal from the superior court’s summary judgment for Defendant Arizona Public Service Company (“APS”). We hold the superior court erred by ruling that APS’s tariff bars a claim for property damage caused by a fire allegedly resulting from negligent maintenance of the utility’s power lines. We, therefore, reverse the judgment and remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL BACKGROUND

¶2 In August 2020, a fire destroyed two homes, one owned by the Szetos and occupied by Briones. Briones testified that she saw loose power lines dancing and sparking on the utility pole between her home and the house next door just before the fire. Briones and her son fled to the street in front of their home, where she heard an explosion from the backyard. Besides destroying the home, the fire also damaged Briones’ personal property. A fire investigator found that arcing in the overhead electrical wires on the utility pole between the two homes caused the fire.

¶3 The Szetos and Briones sued APS, alleging that APS negligently maintained the power lines, causing the fire. APS moved for summary judgment, asserting that its public utility tariff exempted it from liability for ordinary negligence. The relevant section of the tariff provides:

5.3 Service Interruptions: Limitations on Liability of Company

5.3.1 Company shall not be liable to the customer for any damages occasioned by Load Serving

2 SZETO, et al. v. APS Opinion of the Court

ESP’s1 equipment or failure to perform, fluctuations, interruptions or curtailment of electric service, except where due to Company’s willful misconduct or gross negligence. Company may, without incurring any liability therefore, suspend the customer’s electric service for periods reasonably required to permit Company to accomplish repairs to or changes in any of Company’s facilities. The customer needs to protect their own sensitive equipment from harm caused by variations or interruptions in power supply.

¶4 Focusing on the exculpatory clause’s reference to a “failure to perform,” the superior court found that APS could be liable in connection with providing electric service only if it committed willful misconduct or gross negligence. As a result, the court entered summary judgment against the Szetos and Briones, who had alleged mere negligence on the part of APS. The Szetos and Briones appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶5 On appeal from a summary judgment, we view the facts in the light most favorable to the party against whom judgment was granted, Riley, Hoggatt & Suagee, P.C. v. English, 177 Ariz. 10, 12 (1993), and “determine de novo whether there are any genuine issues of material fact and whether the trial court erred in its application of the law,” Sign Here Petitions LLC v. Chavez, 243 Ariz. 99, 104, ¶ 13 (App. 2017) (quoting L. Harvey Concrete, Inc. v. Agro Constr. & Supply Co., 189 Ariz. 178, 180 (App. 1997)).

A. A Tariff Approved by the Corporation Commission is Binding on a Public Service Corporation’s Customers and May Limit Certain Liabilities.

¶6 Article 15, Section 3 of the Arizona Constitution authorizes the Corporation Commission to “prescribe just and reasonable . . . rates

1 APS acknowledged during argument in the superior court, “Load-Serving ESP” does not refer to APS. ESPs are companies that supply electricity in competition with APS under Ariz. Admin. Code R14-2-1601 to -1618. See ¶ 11 infra.

3 SZETO, et al. v. APS Opinion of the Court

and charges to be made and collected[] by public service corporations within the state for services rendered therein.” Under this authority, the Commission requires electric public service corporations to file proposed tariffs that “list the services and products offered by the utility and which set forth the terms and conditions and a schedule of the rates and charges, for those services and products.” Ariz. Admin. Code (“A.A.C.”) §§ R14-2-201.4.42, R14-2-212(F); A.R.S. § 40-365. Once approved by the Commission, a tariff governs the relationship between the public service corporation and its customers. US Airways, Inc. v. Qwest Corp., 238 Ariz. 413, 416, ¶ 11 (App. 2015), aff’d and ordered depublished in part, 241 Ariz. 182 (2016). The tariff becomes a binding contract between the utility and its customers. Sommer v. Mountain States Tel. & Tel. Co., 21 Ariz. App. 385, 387-88 (1974).

¶7 Our constitution does not expressly authorize the Commission to limit the liability of public service corporations. But the rate-setting process requires the Commission to consider a utility’s liabilities, so the Commission necessarily has the authority to limit certain liabilities. See Qwest Corp. v. Kelly, 204 Ariz. 25, 30, ¶ 13 (App. 2002) (“[T]he [C]ommission’s power goes beyond strictly setting rates and extends to enactment of the rules and regulations that are reasonably necessary steps in ratemaking.”) (quoting State ex rel. Corbin v. Ariz. Corp. Comm’n, 174 Ariz. 216, 218 (App. 1992)). Thus, the Commission may limit a utility’s liability for economic damages resulting from service interruptions, which are appropriately considered in ratemaking decisions because of their contractual nature and potential magnitude, but may not limit liability for personal injury and property damages, which are not. See Pub. Serv. Comm’n v. Mo. Gas Energy, 388 S.W.3d 221, 231–32 (Mo. App. 2012) (Missouri Public Service Commission acted beyond its authority by limiting a public utility’s liability for personal injury and property damages because “limitations of liability involving economic damages are the types of limitations that would be involved in establishing a utility company’s rates[, but the] same cannot be said of limitations of liabilities in a negligence action involving personal injury or property damage.”).

B. The Tariff Does Not Preclude APS’s Liability for Property Damage Resulting from a Breach of its Duty to Exercise the Highest Degree of Skill and Care for the Protection of Life and Property in the Generation and Distribution of Electricity from its Plant to its Patrons.

¶8 In determining APS’s liability, the superior court relied on the first clause of § 5.3.1, focusing specifically on the term “failure to perform.” The court read this provision as eliminating liability for APS’s failure to

4 SZETO, et al. v. APS Opinion of the Court

perform its obligations to transmit and distribute electricity safely. But as noted below, “failure to perform” refers only to a failure to perform by third-party companies called “Load Serving ESPs,” not to any failure to perform by APS.

¶9 Tariff interpretation generally presents a question of law which we review de novo. Harby v.

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Szeto v. Aps, Counsel Stack Legal Research, https://law.counselstack.com/opinion/szeto-v-aps-arizctapp-2021.