EC061441

Demurrer

Motion to Strike Demurrer

Case Management Conference

The Complaint alleges that the Plaintiff constructed a solar power system at his house with the intent to sell surplus electricity to the Defendant. A dispute arose whether the Plaintiff could sell surplus electricity to the Defendant. The Plaintiff brought this claim to seek damages because the Defendant had approved his application to construct the solar power system, but has not approved the application to connect the system to the power grid for the purpose of selling excess electricity to the Defendant.

The First Amended Complaint alleges causes of action for:
1) Deceit
2) Damages for Breach of Duty under Tariff Rule 21
3) Damages for Breach of Duty under Tariff Rule 21
4) Damages for Breach of Duty under Tariff Rule 21
5) Damages for Breach of Duty under Tariff Rule 21
6) Damages for Breach of Duty under Tariff Rule 21
7) Damages for Inconsistent Application of Tariff Rule 21
8) Damages for Permitting Unlawful Acts under Tariff Rule 16
9) Damages for Inconsistent Application of Tariff Rule 21

This hearing concerns the Defendant’s demurrer to the entire complaint on the ground that each cause of action fails to state sufficient facts. In addition, the Plaintiff has filed a motion to strike portions of the Defendant’s demurrer. The following considers the Plaintiff’s motion to strike before analyzing the Defendant’s demurrer.

1. Plaintiff’s Motion to Strike

The Plaintiff requests that the Court strike five portions of the Defendant’s demurrer.

Under CCP section 436, the Court may strike out false, irrelevant, or improper matter in a pleading. A motion to strike should be applied cautiously and sparingly because it is used to strike substantive defects. PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683. A party cannot use a motion to strike as a “line item veto.” Id.

A review of the Plaintiff’s motion reveals that he does not request that the Court strike any substantive defects in the demurrer. Instead, the Plaintiff is seeking to use his motion to strike as a “line item veto” to remove various sections, phrases, and words with which he does not agree.

First, the Plaintiff argues that that the Defendant’s statement of the case is irrelevant and false. The Defendant’s statement of the case does not identify any grounds to sustain a demurrer. Instead, it is a narrative offered by the Defendant’s attorney to provide his interpretation of the facts underlying the case. There is no expectation that the narrative be objective because it was crafted by an attorney for the Defendant. Since the statement of the case is included solely for informative purposes, there are no grounds to strike it because it is not a substantive defect in the demurrer. Further, the Court does not rely upon or base any portion of its rulings on the statement of the case that parties and attorneys include in their motions. Instead, the Court analyzed the demurrer with the statutes and principles of law drawn from the cases applicable to the issues in the pleadings.

Second, the Plaintiff argues that the characterization of his motives is irrelevant and inflammatory. Attorneys regularly attempt to characterize the motive of the other side and the Court does not rely upon or base any portion of its rulings on the attempts of parties and attorneys to ascribe motives to their opponents.

In addition, a review of the phrase identified by the Plaintiff reveals that it is not inflammatory or prejudicial. The argument in the demurrer that the Plaintiff filed this Complaint to “circumvent the jurisdiction of the CPUC (California Public Utilities Commission) to see if he can get a more favorable result” is a standard claim that the Plaintiff was engaged in forum-shopping to obtain a more favorable result. It is not a substantive defect in the demurrer.

Third, the Plaintiff argues that certain statements are improper conclusions of law, e.g., statements regarding size limitations for the solar generators. Again, these statements in the demurrer are provided for informative purposes and they do not create any substantive defect in the demurrer.

Therefore, the Court denies the Plaintiff’s motion to strike because the Plaintiff does not seek to strike any substantive defect in the pleading.

2. Defendant’s Demurrer

The Defendant argues that this Court lacks jurisdiction over the matter because the California Public Utilities Commission (“CPUC”) has exclusive jurisdiction to resolve the Plaintiff’s dispute with the Defendant. CPUC is a state agency of constitutional origin with far-reaching duties, functions and powers. San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal. 4th 893, 914-915. California’s Constitution confers broad authority on CPUC to regulate utilities, including the power to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures. Id. CPUC’s powers, however, are not restricted to those expressly mentioned in the Constitution because the Constitution authorizes the Legislature to confer additional authority and jurisdiction upon CPUC. Id. Accordingly, the Legislature enacted the Public Utilities Act, which vests CPUC with broad authority to supervise and regulate every public utility in the State and grants the Commission numerous specific powers for the purpose. Id.

CPUC is specifically empowered to require a public utility to file tariff schedules containing the utility’s rates, charges, classifications and conditions affecting service.
L.A. Cellular Tel. Co. v. Superior Court (1998) 65 Cal. App. 4th 1013, 1017. These tariff rules have the force and effect of a statute. Dyke Water Co. v. Public Utilities Com. (1961) 56 Cal. 2d 105, 123.

Further, Public Utilities Code section 1759 states that no Court, except the Supreme Court and the Court of Appeal, shall have jurisdiction to review any order or decision of the Commission. The Superior Court is precluded from deciding issues which must necessarily be decided by the Commission in its continuing exercise of jurisdiction over rate making, rate regulation, and similar issues. Schell v. S. Cal. Edison Co. (1988) 204 Cal. App. 3d 1039, 1046. Further, a Superior Court does not have jurisdiction over a private action if:

1) CPUC has the authority to regulate the conduct at issue;
2) the CPUC has exercised the authority; and
3) the superior court action would hinder or interfere with CPUC policies or annul a CPUC decision or order.
San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal. 4th 893, 923, 926, 935.

This case involves the Plaintiff’s request to interconnect his solar power system to the Defendant’s power grid. California’s Constitution confers broad authority on CPUC to regulate utilities, including the power to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures. San Diego Gas, 13 Cal. at 915-916. California’s Legislature enacted the Public Utilities Act, which vests CPUC with broad authority to supervise and regulate every public utility in the State and grants the Commission numerous specific powers for the purpose. Id. These authorize CPUC to regulate the Defendant’s power grid and the request for interconnections to the power grid.

The Defendant issued Tariff Rule 21 to govern interconnections to the Defendant’s power grid. CPUC empowered the Defendant to issue the tariff. This indicates that CPUC exercised its authority to regulate interconnections with the power grid.

Finally, this action would hinder or interfere with CPUC policies or annul a decision because, as the following analysis demonstrates, CPUC has the initial jurisdiction to hear the Plaintiff’s claims.

A copy of Tariff Rule 21 is attached as exhibit 5 to the Defendant’s request for judicial notice. Under Evidence Code section 452(c) the Court may take judicial notice of the Tariff Rule because it is an official act of a legislative, executive, and judicial department of the State of California.

Tariff Rule 21 identifies the requirements for third parties to interconnect their generators to the Defendant’s power grid. Rule 21 concerns the submission of interconnection requests (section E), the review process for interconnection requests (section F), and design and operating requirements (section H).

Section K of Tariff Rule 21 identifies the dispute resolution process (see pages 115 to 117, numbered SCE00417 to SCE00419 in exhibit 5). The rule states in section K.1., labeled “Scope”, that the Commission has initial jurisdiction to resolve disputes regarding the distribution provider’s performance of its obligations under Commission-jurisdictional tariffs.

This indicates that CPUC has the initial jurisdiction to resolve this dispute. As noted above, the appellate jurisdiction over the Commission’s acts lies exclusively with California’s Supreme Court. This Court is precluded from deciding issues that must necessarily be decided by the Commission with regards to the application of Tariff Rule 21.

The Plaintiff alleges in paragraph 3 that each of the causes of action in his Complaint arise from his attempt to install solar generators at his home and rental apartments. The Plaintiff’s Complaint includes the following causes of action:

1) Deceit;
2) Damages for Breach of Duty under Tariff Rule 21
3) Damages for Breach of Duty under Tariff Rule 21
4) Damages for Breach of Duty under Tariff Rule 21
5) Damages for Breach of Duty under Tariff Rule 21
6) Damages for Breach of Duty under Tariff Rule 21
7) Damages for Inconsistent Application of Tariff Rule 21
8) Damages for Permitting Unlawful Acts under Tariff Rule 16
9) Damages for Inconsistent Application of Tariff Rule 21

The first cause of action for deceit claims that the Defendant’s employees made false statements regarding the procedure for reviewing the application to interconnect. The second, third, fourth, fifth, sixth, seventh, and ninth causes of action seek damages for alleged violations of duties under Tariff Rule 21. The eighth cause of action claims that the Defendant unlawfully authorized an interconnection with the power facility of one of the Plaintiff’s competitors, Coronus, while refusing an interconnection with the power facility of the Plaintiff.

Each of these claims arises from a dispute regarding the Plaintiff’s request to interconnect his power system to the Defendant’s power grid. Since the Defendant’s Tariff Rule 21, section K, provides that such disputes are resolved by the Commission, this Court is precluded from hearing the Plaintiff’s claims. Accordingly, the Court is without jurisdiction to consider the Plaintiff’s claims and this action would interfere with CPUC’s initial jurisdiction to resolve the dispute.

In his opposition, the Plaintiff argues that he may bring the claim under Public Utilities Code section 2106, which states that a public utility which does, causes to be done, or permits any act, matter, or thing prohibited or declared unlawful, or which omits to do any act, matter, or thing required to be done, either by the Constitution, any law of this State, or any order or decision of the commission, shall be liable to the persons or corporations affected thereby for all loss, damages, or injury caused thereby or resulting therefrom. However, case law holds that section 2106, which authorizes actions for damages, must be construed in harmony with section 1759 to avoid unnecessary conflict. Barnett v. Delta Lines, Inc. (1982) 137 Cal. App. 3d 674, 681.

Section 2106 can only be utilized when it will not interfere with or obstruct the commission in carrying out its own policies. Id. This precludes the recovery of damages resulting from the conduct of a public utility. Id. The CPUC has exclusive jurisdiction over the regulation and control of utilities, and once it has assumed jurisdiction, it cannot be hampered, interfered with, or second-guessed by a concurrent superior court action addressing the same issue. Id. Even if the PUC makes an invalid order, it is binding and conclusive until annulled by the Supreme Court, which is the only court that can review PUC orders. Id.

As discussed above, the Plaintiff’s claims for damages interfere with CPUC in exercising initial jurisdiction to hear disputes arising from the regulation of interconnections under Tariff Rule 21. Accordingly, the Plaintiff cannot interfere with or hinder CPUC’s exercise of jurisdiction through a superior court action.

Further, the Plaintiff cites to Vila v. Tahoe Southside Water Utility (1965) 233 Cal.App. 2d 469 to argue that the Court has jurisdiction to hear his claims. In Vila, the plaintiff brought claims regarding the public utility’s wrongful refusal to connect water service to his property. The Court of Appeal found that Superior Courts could hear the claim regarding the wrongful refusal to connect water service.

However, Vila did not involve a Tariff that stated initial jurisdiction was with CPUC. Further, unlike Vila, the pending case does not involve the refusal to provide a needed utility to the Plaintiff, e.g., a wrongful refusal to provide him with electricity. Instead, this case concerns the manner in which the Plaintiff is authorized to interconnect his solar power system to the power grid for the purpose of selling his excess electricity to the Defendant. As discussed above, Tariff Rule 21, section K, states that initial jurisdiction to resolve the Plaintiff’s disputes lies with CPUC.

Therefore, the Court sustains the Defendant’s demurrer to the entire complaint. It is not reasonable possible for the Plaintiff to correct the defect that the Court lacks jurisdiction to hear his claims by amendment. Accordingly, the Court does not grant the Plaintiff leave to amend. The case will be dismissed.