PECO Energy Co v. First Montgomery (memorandum)

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J-A12013-16 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 PECO ENERGY COMPANY, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellee v. FIRST MONTGOMERY PROPERTIES, LTD., THE FAIRWAYS APARTMENTS ASSOCIATES, L.P., FAIRWAYS APARTMENTS G.P., INC., FMP/LAKESIDE ASSOCIATES, L.P., AND FMP/LAKESIDE PROPERTIES, INC., Appellants No. 2100 EDA 2015 Appeal from the Judgment Entered August 20, 2015 In the Court of Common Pleas of Chester County Civil Division at No(s): 2010-04274-CA BEFORE: BENDER, P.J.E., PANELLA, J., and STEVENS, P.J.E.* MEMORANDUM BY BENDER, P.J.E.: FILED AUGUST 30, 2016 First Montgomery Properties, Ltd. (FMP), The Fairways Apartments Associates, L.P., Fairways Apartments G.P., Inc., FMP/Lakeside Associates, L.P., and FMP/Lakeside Properties, Inc. (collectively Appellants) appeal from the judgment entered in favor of PECO Energy Company (PECO) in the amounts of $109,612.61 and $27,118.76 against Appellants, jointly and severally, plus interest. We affirm. PECO filed this collection action against Appellants, who are the owners of residential rental properties, to recover payment for utility ____________________________________________ * Former Justice specially assigned to the Superior Court. J-A12013-16 services it supplied to Appellants’ tenants.1 Following a bench trial that resulted in a verdict in favor of PECO, Appellants filed post-trial motions, which were granted to the extent that the verdict was adjusted to include joint and several liability. See Trial Court Order, 6/9/15. Appellant’s other post-trial motions were denied. Appellants appealed to this Court and submitted a concise statement of errors complained of on appeal in response to the court’s order. See Pa.R.A.P. 1925(b). The trial court issued an opinion on September 2, 2015, that addressed the issues raised by Appellants. The court’s opinion relied extensively on a lengthy footnote contained in its previously issued June 9, 2015 order that addressed all of the issues raised by Appellants in this appeal. In addressing Appellants’ issues, we are “limited to determining whether the trial court’s findings are supported by competent evidence, whether errors of law have been committed, or whether the trial court’s determinations demonstrate a manifest abuse of discretion.” McShea v. City of Philadelphia, 995 A.2d 334, 338 (Pa. 2010). Moreover, [w]hen this Court entertains an appeal originating from a nonjury trial, we are bound by the trial court’s findings of fact, unless those findings are not based on competent evidence. The ____________________________________________ 1 In 2003, Appellants had entered into a contract with ConServe to handle billing for PECO’s services. The deficient payments to PECO arose as a result of ConServe’s continuing to bill Appellants’ tenants, while stopping its payments to PECO in 2008. -2- J-A12013-16 trial court’s conclusions of law, however, are not binding on an appellate court because it is the appellate court’s duty to determine if the trial court correctly applied the law to the facts. Id. We have reviewed the extensive certified record, the briefs of the parties, the applicable law, and the thorough and well-crafted opinion authored by the Honorable Edward Griffith of the Court of Common Pleas of Chester County, dated September 2, 2015. We conclude that Judge Griffith’s comprehensive opinion properly disposes of the issues presented by Appellants on appeal and we discern no abuse of discretion or error of law. Accordingly, we adopt Judge Griffith’s opinion as our own and affirm the judgment on that basis. Judgment affirmed. Judgment Entered. Joseph D. Seletyn, Esq. Prothonotary Date: 8/30/2016 -3- Circulated 08/12/2016 08:49 AM IN THE GOURT OF COMMON PLEAS PECO ENERGY COMPANY · Plaintiff . v .. CHESTER COUNTY, PENNSYLVANIA FIRST MONTGOMERY PROPERTIES, · LTD., individually and t/a FIRST MONTGOMERY GROUP, THE FAIRWAYS APARTMENTS·. ASSOCIATES, LP;, individually and t/a FAIRWAYS APARTMENTS, FAIRWAYS APARTMENTS G.P., INC., FMP/LAKESIDE ASSOCIATES, LP. in~i¥1dually and t/a MELROSE STATION APARTMENTS and FMP/LAKES]DE PRO.PERTIES, INC. Defendants NO. 2010-04274 : CIVILACTION-LAW OPINIQN Defendants, First Montgomery Properfles, Ltd., The Fairways Apartments Associates, L.P., Fairways. Apartments ·G.P.,· lnc., FMP/Lakeside Associates, LP., and FMP/Lakesjcte Properties; · Inc. (collectlvely, 'Defendants"), have appealed from ord~rs entered June 9, 201511nd March 1·8, 2014.. Plaintiff, PECO ·Energy Company.' brought this action to recover sums for . . . . . . electrical service .. delivered by PECO to 'resldentlal rental properties owned by Defendants. Following a· bench trial, a declslon was entered on February 4, 2015 In favor of Plaintiff, PECO Energy Company. Thereafter, Defendants filed a posttrial motion. The order entered June 9, 2016 granted Defendants some post-trlal relief, specifically, the award was restated to take into account the Joint and· several liability of the various defense entitles for the debt owed to PECO; however, most of the relief Defendants sought post-trial was denied." The order entered March 18; 2014 had denied Defendants' rnotlon for summary judgment. Because. the foomote to the June 9, · 2015 Order addresses the issues preserved by Defendants in their Statement of Matters Complalned of on Appeal, we reproduce the footnote here2 forthe 'convenlence of the reviewing court: This is a· collection acflon brought by Plaintiff, · PECO Energy Cor;npany 1("PECQ11)1 to recover sums for utility. services, electric· 1 2 Erroneously stated as July 9, 2016 In the Notice of Appeal. Typographical errors have been corrected. . 1157(a) and gas, that PECO delivered to resldential rental properties owned by. Defendants, First Montgomery Properties, Ltd., lndlvldually and tla First Montgomery Group ("First Montgomery"), The Fairways Apartments Associates, LP., Individually and t/a Falrways Apartments, Fairways Apartments G.P.1 Inc., FMP/Lakeslde Associates, L.P. Individually and· t/a Melrose Station Apartments and FMP/Lakeside Properties, Inc. · . · Defendants operate apartment complexes, Including The · Fairways Apartments and Townhomes ("the Fairways Apartments") and · Melrose Station Apartments · ("the Melrose Apartme.nts")(collectlvely, "the Apartment Complexes"). This action concerns the collection of eighteen past due accounts, fourteen at .the Fairways Apartments and four at the Melrose Apartments. On June 24, 2003, First Montgomery entered Into a contract with Conserve Energy ("Conserve") to manage billing for PECO ·s.upplled utlllty services to the Apartment Complexes: Before June 24, 2003, tenants of the Apartment Complexes were billed by and paid PECO for utility servlces. . Subsequent to June 24, 2003, tenants of the Apartment Complexes were billed by and paid Conserve for utility services. To facilitate the transition to Conserve as a billing agent, PECO's metering of Individual tenant's units was ended and PECO Installed master meters at the Apartment Complexes. Electrlclty delivered by PECO to the master meters was routed. through underground transformers Installed by. Conserve and then delivered to individual tenant's units, where Conserve had -Installed their own metering equipment. Conserve was responslole for paying PECO for electricity delivered to the master meters. . Defendants, as owners/operators of the Apartment Complexes, were the rate payers or customers of PECO at all times. First Montgomery directed· PECO to cooperate wlt.h its agent, Conserve, In setting up a master meter/master account system at the Apartment. Complexes. First Montgomery directed PECO to send bills for utility services to Conserve. · In or about February, 2008, whlle still collecting payments from the tenants, Conserve stopped paying PECO and Defendants' accounts with PECO. fell Into arrears. On April 5, 2010, PECO commenced this action for breach of contract and · unjust : enrichment. At trial, PECO established that when suit was commenced the fourteen accounts as the Fairways Apartments had an unpaid balance of $109,612.61 and the· four accounts at the Melrose Apartments had an unpaidbalance of $27,118.76. These balances were cornprlsed of unpaid charges for utilities as well as late payment charges that posted monthly. There had been prior litlgatlor:i between PECO and the Fairways Apartments defendants, specltlcally, First Montgomery Properties, 2 1158(a) · Ltd., The Fairways Apartments Associates, LP., Fairways Apartments· G.P., inc., FMP/Fairways Associates, L.P. and FMP/Falrways, Inc. ("Prior Litigation"). On February 12, 2009, a . settlement agreement resolved the Prior Litigation f'the ..Settlement _ . Agreement"). The Prior Litigation concerned fourteen Fairways Apartments' accounts, each separate and distinct from the eighteen accounts Involved in the current-litigation. · Following a bench trial on January 13, 2015 and entry of our verdict, Defendants filed posHrlal motions, which we now address. Damages ewera: . · We found merit In Defendants' claim that the damages award· was- lnc.orrectly stated. Our order was amended to 'accurately state Defendants' liability. · Exclusion of evidence of the Settlement Agreement: · On PECO's motion In limine, evidence of the Settlement Agreement was precluded from trial. Defendants contend that the Settlement Agreement contains a general release- that bars the claims asserted in this action and should have been admitted at .trial. . In the Prior Litigation, PECO had sought the appointment of a ·receiver to collect $163,758.71 In past· due utility bills at the Fairmont Apartments. The Settlement Agreement recites: WHEREAS, as of January 12, 2009, PECO Energy alleges that First Montgomery owes PECO Energy the amount of $163,758.71 for utility service provided to First Montgomery under the account numbers referenced In Exhibit A (the "Debt''); (Settlement Agreement, p.1) Exhibit A, which defines "the Debt" that Is the subject of the Settlement Agreement, consists solely of this chart: · First Montgomery Group Account Number 11033-0142? 38882-00600 35?88-02226 26.S0?-01100 14128-01908 45068-0080? 4 I 975,00802 45069·00600 48161.00200 · 48161i<ll?08 S 1253-01408 60531-01608 63623-0I 60 I 9?630·00200 Premlse Address 400 MONTGOMERY BLVD. G3BTIIORNDALB PA 193?2 O OVERLEAF DR. 040 TIIORNDALB PA 193?2 38SKYVIBWLN F4DTH0RNDALEPA 193?2 OGREBNDIUARLN. 02DTIIORNDALBPA 193?2 200 MONTGOMERY BLVD. A3F THORNDALE PA 193?2 OTURTLBPOINTLN GSETHORNDALBPA 193?2 . O TURTLBPOINfLN, H40 TIIORNDALE PA 193?2 O BLUFF RD. H4F 11-IORNDALE PA 193?2 O BLUFF RD H48 THORNDALE PA 193?2 O FOOTHILL TRL, ASO THORNDALE PA 193?2 OBIUFFRD HSRTHORNDALBPA 193?2. O HORSESHOE DR. A48 THORNDALE.PA 193?2 O GOLFERS WAY. "B3E TIIORNDALE PA 193?2 2THORNDALEPL B2DTIIORNDALBPA i93?2 Due Date Balance as of Current 1/12/09 ·Bill $19.284.09 $2103.92 02/ffllOO s122ss.n $1 7?4.20 O'lJOOI09 · $J6 393.69 Sl?92.?6 02/02/09 $JS 266.48 SI 466.S8 . ffllffll09 $12,443:SS $1122.44 02/02/09 $1?0?6.80 $1803.58 02/02/09 (f)J02/09 $16 64l.S3 $1.894.24 $S 829,39 sm.2s W02109 02/0'}/00 $8 986.<.iS SI 097.?9 . $?,4?2.20 $9'45.93 wwoo 0?Kl1.,-\)9 390.66 · $841.64 $? 02(02/09 S? sn.n S99S.OS $8 ?S?.60 (f)j(f)J09 S81?.2S $8 38?.SS $8S3.2S 02/02109 Sl63,7S8.?I 3 1159(a) $18,280.88 The release provides: 1. Mutual Release~ A. Upon receipt of the final payment referenced In paragraph 3 herein, PECO Energy releases and forever discharges First Montgomery, Its successors and assigns, officers, directors, agents. employees of and from any and all manner of actions and cause of action in law or equity; known or unknown (including but not limited to the filing of a complalnt before the Pennsylvania Public Utllity Commission or the Pennsylvania State Attorney General). and Including those which were or could have been asserted· or which PECO Energy ever had, now has, or ever will have against First Montgomery arising out of or In connection with the Debt.· (Settlement Agreement, p. 1) . i The entire release is qualified by the final clause, "arising out of .or in connection with the Debt." The "Debt" Is defined as fourteen specific Fairmont Apartment accounts, Tlie "Debt" is separate from · the eighteen accounts sued on In the within action, which Include four Melrose Apartment accounts. The release was specifically limited to the accounts defined by account number and account. balance as the "Debt", Defendants would have us Ignore this qualiflcatlon and read the release as encompassing all claims that · PECO could have brought at the time of the settlement, whether or not such. claims involved Fairmount Apartment accounts or the same parties. The Settlement Agreement is · unambiguous and clearly ldentltles and narrowly defines the "Debt" released. Nothing In the Settlement Agreement suggests that the "Debt" was Intended to be expanded beyond the definition set forth at Exhibit A. "When construing agreements Involving clear and unambiguous terms, this · .court need only examine the writing itself to give effect to the parties['] understanding. The court must construe the contract only · as written and may' not modify the plain meaning of the words. under the guise of Interpretation. When the terms of a written contract are clear, this Court wlll not re-write it to give it a construction in conflict with the accepted and plain meaning of the languaqe used." Acme Markets. lnc. v. Federal Armored· Exp., Inc .• 437 Pa.Super. 41, 648 A.2d 1218, 1220w1221 (Pa.Super.,1994). (citations omitted). Furthermore, the "effect of a release Is .to be determined by the ordinary meaning of its language." Republic Ins. Co. v, Paul Davis Svstems of Plttsbun:1h South. Inc. 543 Pa. 186, 670 A.2d 614, 615 (Pa., 1995). Having determined that the release was limfted on ltsIace to the claims raised in the Prior Litigation. we concluded that the Settlement Agreement was of no probative . value to the claims pending In the within action, which derived from 4 1160(a) separate accounts and balances and did not arise out of or In connection with the "Debt". Defendants also sought to lntroduce evidence of the Settlement Agreement to counter trial ·testimony of PECO!s witness that .PECO had ·tried to "reach out to negotiate payment arrangements" but were "unable to negotiate payment." (N.T. 9:6·10) Defendants expressed .concern that such statements were prejudicial. However, because this was a bench trial, we can assure Defendants that these comments were disregarded and played no part in our decision. · Formation of a confr(tQI: · Defendants claim that PECO failed to establish the essential tenns of a contract, in this case the Tariff. However, a Tariff creates a contract and by accepting utility service delivered through master meters to its properties, Defendants agreed to abide by the Jarlffs rates, rules and regulations. . Tariffs, of course, can include schedules of rates, and all rules, regulations, practices or contracts Involving rates and have the force of law and are binding on both the utility and Its· customer. Behrend v. ·sell Tel§phone Company, 242 Pa.Superlor Gt. 47, 363 A.2d 1152 (1976). And, In E.fil! Telephone Co.. v. Pennsvlvania Public Utilitv Commission, 53 Pa.Commonwealth Ct. 241, 244, 417 A.2d 827, 828~29 . · (1980), this Court construed Section 1303 of the Code and stated that "(t)here can be no lawful rate except the last taritf published as provided. by law.... Further, It is well established that In the absence of an exception by the Commission, a public utility may not charge any rate for services other than that lawfully tariffed.... " (Citations omitted, emphasis In original.) It Is well~settled In Pennsylvania that: Contracts for the service of utilities are presumed to have been made subject to the police power of the state ... , and it Is beyond the power of the contracting .partles . to fix rates or provide for service permanently.... (T)he Public Utility law supplant(s) any agreement tn so far as rates are Involved between the consumer and the utility. (Citations omitted, emphasis added.) Brockwav Glass Co. v. Pennsylvania Public Utility Commission, 63 Pa.Cmwlth. 238, 437 A.2d 1067, 1070 (Pa.Cmwlth.;1981)(citatlons omitted). Tariffs are not mere contracts, but have the force of law and are binding on the consumer and the utlllty. Stiteler y. Bell Tel. · QQ. 32 Pa.Cmwlth. 319, 379 A.2d 339,· 341 (Pa.Cmwlth. 1977). Regardless of the evidence PECO presented to support the terms of the Tariff, the Tariff applies by operation of law and Defendants, ·5 1161(a) by accepting utility service, and are bound to pay PECO In accordance with the terms of the Tariff In effect at the time the charges were Incurred. Defendants contend that PECO failed to establish liability for any defendant other than First Montgomery. That The Fairways Apartments Associates, L.P., lndfvidually . and t/a. Fairways Apartments and Fairways· Apartments G.P., Inc. operate -the Fairways Apartments· was admitted by Defendants in t~e pleadings. (Complaint and Amended Answer. ,-J,-J 4-7, 20, 25) The Utility Services Agreement entered into by The Fairways Apartments Associates, L.P. 'and Conserve describes The fairways Apartments Associates, LP. as the "owner" who "owns and operates" the Fairways Apartments. · (Exh. P-52, p.1) The Utility Services Agreement· also recites that it rs the "owner" who . purchases electric energy from the utility. (Exh. P-52, Exh. 0, p. 1) That FMP/Lakeside Associates, LP.. Individually and t/a · Melrose Station Apartments and FMP/Lakeside Properties,. Inc. operate the Melrose Apartments was admitted by Defendants ·in the · pleadlngs. (Complaint and Answer, 11118-111 27, 32) Lisa Hofland, a PECO business analyst working in collections, testified that all of the Defendants were customers/account holders. (N.t. a:2·-15, 13:8-11.) On cross-examination, Ms. Holland was never questioned. about her identification of the Defendants as the parties responsible for the eighteen accounts at issue. Based upon Defendants' admissions In pleadings and the evidence as stated, we concluded that all of the Defendants had liability for specflc accounts as stated in our decision. ConSe,ve as agent: · . Throughout thls lltigatlon, Defendants have attempted to distance themselves from Conserve. However, it was Defendants who brought Conserve into its relationship with PECO and directed PECO to communicate and cooperate with Conserve as "our agent In our metering and bllllng service program" at the Apartment Complexes. (Exh. P-10) On September 28, 2004, Conserve sent a letter to PECO identifying itself ·as the "accounts management agent for First Montgomery Group" and req(1estlng the creation of a master account for summary billing for the Fairways Apartments. (Exhs. Pa, 0-E) On the same day. ConServe. sent a second letter to PECO .identifying itself as the "accounts management agent for First Montgomery Group" and requesting the creation of a master account for summary billing for the Melrose Apartments. (Exhs. P9, 0-F) In both instances, Conserve directed 'PECO to send its bills to Conserve at a Minnesota address. On October -15, 2004, First Montgomery sent a letter to· PECO · stating: 6 1162(a) ... we have retained Conserve Corporation to be our agent In our metering and billing services program [at the Apartment Complexes.] ... Please be advised that Conserve has . full authorization to work with yoy regarding .billing Issues on the above properties. In addition, we expect that you will honor ConServe's request as ounlnec In the .attached letters from Conserve [Exhs. P-8/D-E and P-9/D. F]. Any communication regarding this program and the implementation process should be directed to Conserve as ~ur agent In this with us copied .. . · · (Exhs. P-10, D-G)(N.T. 89:12-18) PECO complied with First Montgomery's request and began to send bills· for utllHy services at the Apartment Complexes to the Minnesota address. As early as August, 2007, Defendants knew payments for utility accounts at the Apartment. Complexes were In arrears; however, Defendants chose to believe Conserve'e explanations, whic)l placed blame on PECO. (N.T. 91 :5-11, 116:17-117:2, 118:23-119:2; Exhs. P-11, D-H) Defendants continued 'to work with Conserve, even though Conserve was never.able to produce a reconciliation of the accounts. (N.T. 86:2-4, 117:5-8, 91 :23-92:5, 118:1-2) On May 14, 2008, First Montgomery sent a letter to Conserve terminating their contract. (N.T. 93:3-6, 118:16-20, Exh. D-1) At about the same time, First Montgomery directed PECO to send bills for utility services at the Apartment Complexes to Its New Jersey offices. PECO again complied with. First Montgomery's Instructions. Based upon First Montgomery's conduct and representations to. PECO, we concluded that Conserve was First Montgomery's' agent. · · . Defendants also argue that they are not· liable for the debt ConServe's criminal activity created because Conserve acted outside the. scope of Its agency when it stole funds collected from tenants at the Apartment· Complexes. However, · PECO's contractual or Tariff relatlonshlp was With Defendants, not Conserve, and Defendants remain liable for the debt. "[A] principal Is liable to Innocent third parties for the frauds, deceits, concealments, misrepresentations, torts, negligences and other malfeasances or mtsfeasances of his agent committed In the course of his employment, although the principal did not authorize, justify or participate in, or indeed know of, such misconduct, or even· if he forbade the acts or disapproved of them." Aiello Ed Saxe~. Real Estate, Inc., · 508 Pa. 553, 499 A:2d 282, 287 (Pa., 1985). Defendants authorized PECO to interact with Conserve as their agent and PECO complied with PECO'~ Instructions. The· relatlonshlp between Defendants and Conserve does not in any way limit or reduce Defendants liability to PECO. v. 7 1163(a) Admission of PECO's hlJJJng summaries: -- Defendants flied a motion in llmlne to exclude PECO's billing summaries as evidence. at trial on the basis that the billing summaries are not the best evidence of the debt. This motion was denied and at trial PECO introduced Jts. business records of the eighteen contested accounts, which consisted ·of Activity·. Statements, designated as billing summaries by the parties, as well as B!lls from 2008 through 4010. Biiis predating. 2008 were unavailable, having been destroyed by PECO In the usual course of business pursuant to its retention pol!cy. Pa.RE., Rule 1004 allows a party to use Its business records when origlnal Invoices are unavailable and provides: An original is not required and other evidence of the content of a writlng1 recordlnq, orphotopraph is admissible If: (a) all_ the originals are lost or destroyed, and not by the proponent actlnq in bad faith; Pa.RE., Rule 1004; Bills for· each account, dating from October, ;2008 for all but three accounts through October, 201 o, were admitted at trial, Biiis for the remaining three accounts; dating from December, 2008 through October, 2010, were admitted. (Exhs. P-33 - P-50) In addition, Activity Statements for each account were admitted. (Exhs. P-15 - P-32) Each Activity Statement set forthlnvolce dates, addressee, billing address, current charges, late fees, prior balances and payment credits. (N.T. 11:21-12;3) The recordsthat PECO produced contained the same information as the Bills that . had been sent monthly to. First Montgomery, either directly or through Its agerit, Conserve. The Activity Statements are created by PECO routinely and concurrently with their Bflls. · The Biiis are created for the customer and the Activity Statements are created for Internal purposes. (N.T. 11:15-20, 23:4-16) The records that PECO produced are maintained in the regular-course of business to record regular, buslness related activities. (N .T.. 12:4~11, 21 :512) The records PECO produced constitute business records and Defendants were not prejudiced In anyway by the absence of the · original billing records. ' Un/ust enrichment: Defendants maintain that PECO did not establlsh a claim for unjust ..enrichment. Unjust enrichment requires proof of three elements: · (i) [B]enefits conferred on defendant · by· plaintiff[;] (ii) appreciation of such· benefits by ,._.defendant{;] and (iii) acceptance and retention of such beneffts under such circumstances that It would be lneqult~ble for defendant to retain the benefit without payment of value. 8 1164(a) Shafer Elec. & Constr. v. Mantia, 67 A.3d a.12 n. 5 (Pa.Super.,2013)(citatlon omitted). PECO delivered utilities to Defendants' residential rental properties. Defendants are required to provide· their tenants with habitable units, which Include electrical power and heat. (N.T. 95:9-16) Defendant~ were able to maintain tenants In their properties and collect rent by accepting the benefit of the utllltles delivered by PECO. Defendants, or their agent, collected payments from tenants for the utilities, but failed to pay PECO's bill. PECO established Its claim for unjust enrichment. Defendants complain that that under unjust enrichment they can only be liable for electric charges and not late payment charges. However, the Tariff controls the charges for utilities and as such the . late payment charges are mandated and become. part of the debt. PECO does not have discretion to charge a customer other than as provided by the Tariff . • 1 For all of the reasons stated, we entered our Order. BY THE COURT: Dated: September ( , 2015 Edwa,~ 9 1165(a) ,_.., -········

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