Hearing Demurrer

Cal. Super. - 6th Dist.July 24, 2017

SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER ~ LINE 5 Hearing Start Time: 9:00 AM Shri Ram vs Pacific Gas and Electric Company 17CV313399 Hearing Type: Hearing: Demurrer Date of Hearing: 10/19/2017 Comments: Heard By: Stoelker, James L Location: Department 13 Courtroom Reporter: - No Record Transcribed Courtroom Clerk: Ann Vizconde Court Interpreter: Court Investigator: Parties Present: Future Hearings: Exhibits: - to the Complaint by Def PG & E (Shari Hollis-Ross) No one called to contest the Tentative Ruling. TENTATIVE RULING IS ADOPTED; see below: Currently before the Court is the demurrer by defendant Pacific Gas and Electric Company ( PG&E) to the complaint of plaintiffShri Ram ( Plaintiff). Factual and Procedural Background This limited civil case arises out of a billing dispute regarding gas and electric charges. Plaintiff resides at 1425 Proud Drive, San Jose, California (Proud Drive Address). (Complaint, 1.) Since 1973, PG&E provided gas and electric service to the Proud Drive Address under account number 9129714196-3 (Proud Drive Account). (lbid.) Plaintiff has a second home at 1949 Hackett Drive, Woodland, California ( Hackett Drive Address). (lbid.) Since 2013, PG&E provided gas and electric service to the Hackett Drive Address under account number 3306196552-2 ( Hackett Drive Account). (lbid.) PG&E always sent both the utility bills separately to Plaintiffs [Proud Drive Address]. (lbid.) In May 2016, PG&E mailed Plaintiff a statement for the Hackett Drive Account, which showed that Plaintiff owed gas and electric charges totaling $184.44 for the period of April 13, 2016 to May 12, 2016. (Complaint, 6, Ex. A.) Plaintiff paid the total amount due and owing by check on June 21, 2016. (lbid.) The following month, PG&E mailed Plaintiff a statement for the Hackett Drive Account, which showed that Printed: 10/19/2017 10/19/2017 Hearing: Demurrer - 17CV313399 Page 1 of 8 ~ SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Plaintiff owed gas and electric charges totaling $169.77 for the period of May 13, 2016 to June 13, 2016. (Complaint, 7, Ex. B.) The statement also indicated that there was a California Public Utilities Commission ( CPUC ) mandated gas credit of $8.95 and an [u]npaid balance of $184.44 such that the total account balance was $345.26. (lbid.) In addition, the statement contained a 15-day notice that the bill included a past due balance of $175.49 and, to avoid disconnection of the utility service, the past due amount needed to be paid before July 11, 2016. (lbid.) In July 2016, PG&E mailed Plaintiff a statement for the Hackett Drive Account, which showed that Plaintiff owed only gas charges totaling $3.97 for the period ofJune 14, 2016 to July 13, 2016. (Complaint, 8, Ex. C.) The statement also indicated that there was a previous unpaid balance in the amount of $160.82 such that the total account balance was $164.79. (lbid.) Plaintiff paid the total amount due and owing by check on July 27, 2016. (lbid.) The next month, PG&E mailed Plaintiff a statement for the Hackett Drive Account, which showed that Plaintiff owed only gas charges totaling $3.74 for the period of July 14, 2016 to August 12, 2016. (Complaint, 9, Ex. D.) The statement also indicated that the previous unpaid balance of $164.79 had been paid in full such that the total account balance was $3.74. (lbid.) Plaintiff paid the total amount due and owing by check on July 27, 2016. (lbid.) PG&E mailed Plaintiff a second statement for the Hackett Drive Account in August 2016, which showed that Plaintiff owed the following electric charges: $223.08 for April 13, 2016 to May 12, 2016; $177.11 for May 13, 2016 to June 13, 2016; $160.42 for June 14, 2016 to July 13, 2016; $160.88 for July 14, 2016 to August 12, 2016. (Complaint, 10, Ex. E.) The statement also indicated that there was a previous unpaid balance of $3.74 and Plaintiff was credited $341.40 for electric corrections such that the total account balance was $383.83. Thereafter, Plaintiff wrote a letter to PG&E, asserting that the total account balance of $383.83 reflected in the second August bill statement was incorrect. (Complaint, 11, Ex. F.) Plaintiff also sent a copy of his letter to the CPUC. (lbid.) In September 2016, PG&E mailed Plaintiff a statement for the Hackett Drive Account, which showed that Plaintiff owed gas and electric charges totaling $192.06 for the period of August 13, 2016 to September 13, 2016. (Complaint, 12, Ex. G.) The statement also indicated there was a previous unpaid balance in the amount of $383.83 and a payment had been received in the amount of $164.62 such that the total account balance was $411.27. (lbid.) Plaintiff paid $192.06 by check on October 14, 2016. (lbid.) Subsequently, Plaintiff sent additional letters to PG&E and the CPUC, asserting that the amounts sought by PG&E were incorrect, but PG&E did not correct the electric usage overcharges. (Complaint, 13-14 and 21.) Plaintiff alleges that PG&E intentionally and deliberately engaged in a fraudulent scheme to deceive and defraud [him] and overcharge him on his electric bill for the Hackett Drive Account. (Complaint, 16.) Specifically, PG&E made false representations in the second account statement of August 2016, regarding the amounts owed for electric usage charges from April 13, 2016 to June 13, 2016. (Id. at 17.) PG&E knew that its representations were false at the time they were made because it had previously billed Plaintiff different amounts for the subject time period. (Id. at 18, 20, 26.) PG&E also excluded electric charges Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 2 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER from two billing statements, when there was no malfunction of the electric meter or replacement of the electric meter and no notification of any plausible reason for such action, to cause [him] to lose track and avoid detection of their wrongful overcharges . (Id. at 19 and 25.) As a result of the fraudulent billing statement, Plaintiff allegedly suffered damages in the amount of $58.79. (Id. at 20 and 27.) Plaintiff states that he does not know the names and title of the personnel or individuals who committed these wrongful acts, but the wrongful and fraudulent acts were done with the knowledge, approval and ratification of [PG&E], the managers, directors, and/or agents of [PG&E] . (Id. at 22.) Based on the foregoing, Plaintiff filed a complaint against PG&E, alleging causes of action for: (1) fraud; (2) violation of Business and Professions Code section 17200; and (3) breach of implied covenant of good faith and fair dealing. On August 24, 2017, PG&E filed the instant demurrer to the complaint. Plaintiff filed papers in opposition to the demurrer on September 13, 2017. On October 12, 2017, PG&E filed a reply. Discussion PG&E demurs to (1) the complaint, in its entirety, on the ground of lack of subject matter jurisdiction and (2) the first through third causes of action on the ground of failure to allege facts sufficient to constitute a cause of action. (Demurrer, pp. 1-2.) I. Requests for Judicial Notice A. PG&E s Request PG&E asks the Court to take judicial notice of Public Utility Code sections 701 and 1759, subdivision (a) and Electric Rule Nos. 1, 10, and 17.1. The Public Utility Code sections are proper subjects ofjudicial notice under Evidence Code sections 451, subdivision (a) and 452, subdivision (a). (See Evid. Code, 451, subd. (a) [courts must take judicial notice of the decisional, constitutional, and public statutory law of California and the United States] and 452, subd. (a) [courts may take judicial notice of the decisional, constitutional, and statutory law of any state of the United States and the resolutions and private acts of the Congress of the United States and of the Legislature of this state].) Additionally, PG&E s Electric Rules filed with the CPUC are proper subjects ofjudicial notice. (See Pacific Bell v. Public Utilities Com'n (2000) 79 Cal.App.4th 269, 273 74 [a tariff is a schedule filed with the CPUC showing all rates, tolls, rentals, charges, and classifications together with all rules, contracts, privileges, and facilities which in any manner affect or relate to rates, tolls, rentals, classifications, or service. ], italics added; see also Dollar-A-Day Rent-A-Car Systems, Inc. v. Pacific Telephone and Telegraph Co. (1972) 26 Cal.App.3d 454, 457 [A public utility s tariffs filed with the PUC have the force and effect of law. [Citations.] A court may take judicial notice of the provisions of a tariff. ]; Duggal v. G.E. Capital Communications Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 3 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Services, Inc. (2000) 81 Cal.App.4th 81, 95 [since the tariff has the force of law [citation] we are obliged to take judicial notice of it. ].) Accordingly, PG&E s request forjudicial notice is GRANTED. B. Plaintiff s Request Pursuant to Evidence Code section 452, Plaintiff asks the Court to take judicial notice of a letter he received from the CPUC dated February 2, 2017. However, the subject letter does not fall under any of the categories ofjudicially noticeable documents set forth in Evidence Code section 452. (See Evid. Code, 452.) Consequently, the letter is not a proper subject ofjudicial notice. Accordingly, Plaintiffs request forjudicial notice is DENIED. ll. Meet and Confer As Plaintiff persuasively argues, PG&E failed to file a meet and confer declaration with its moving papers as required by Code of Civil Procedure section 430.41. Code of Civil Procedure section 430.41 requires a demurring party to meet and confer with the party who filed the challenged pleading to seek informal resolution of the demurring party s objections. (Code Civ. Proc., 430.41, subd. (a) [Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. ].) The meet and confer must be conducted in person or by telephone, and must address each cause of action or defense to be included in the demurrer. (lbid.) If these efforts fail, the demurring party must file and serve a declaration regarding the meet and confer process with the demurrer. (Code Civ. Proc., 430.41, subd. (a)(3).) PG&E attempts to remedy this defect in its reply papers by submitting declarations from Mark Torres ( Torres) and Brian Alexander (Alexander), employees in its Customer Relations department. Torres declares that he spoke with Plaintiff by telephone on August 18, 2017, about the fact that [Plaintiff s] lawsuit was not properly filed in state court and that the California Public Utilities Commission has jurisdiction over billing disputes. (Torres, 3.) Torres meet and confer efforts were insufficient as he only addressed the ground of lack of subject matter jurisdiction during his conversation with Plaintiff. Torres does not declare that he discussed PG&E s objection to the complaint on the ground of failure to allege sufficient facts to state a claim with Plaintiff. Next, Alexander declares that he called Plaintiff on August 22 and 24, 2017, to discuss the lawsuit and how PG&E s bills were calculated. It does not appear that Alexander discussed any of the objections raised in PG&E s demurrer with Plaintiff. Thus, PG&E failed to adequately meet and confer. While a court may not overrule a demurrer for insufficient meet and confer efforts (see Code Civ. Proc., 430.41, subd. (a)(4)), it may continue the hearing and order the parties to meet and confer as required (see Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 4 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Assem. Com. on Judiciary, Rep. on Sen. Bill No. 383 (2015-2016 Reg. Sess.), p. 2). Here, in furtherance of judicial economy, the Court will overlook PG&E s failure to comply with Code of Civil Procedure section 430.41 in this instance only. PG&E is admonished that all future filings should comply with the Code of Civil Procedure. Ill. Legal Standard The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., 430.30, subd. (a).) It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.) IV. Lack of Subject Matter Jurisdiction PG&E argues that the CPUC has exclusive jurisdiction over the billing dispute raised in the complaint under Public Utilities Code section 1759. PG&E points out that Plaintiff s claims are based on the alleged overcharge for electricity in the amount of $58.67. PG&E contends that Public Utilities Code section 1759 divests this Court of anyjurisdiction to interfere with the CPUC s exercise of its power in determining rate disputes. PG&E asserts that the CPUC acted to limit its liability by enacting tariffs or rules governing billing disputes such as the one raised in the complaint. PG&E points out that Electric Rule Nos. 10 and 17.1 provide a procedural framework for the submission of billing disputes regarding overcharges to it and, if the dispute is unresolved, the CPUC. PG&E further asserts that tariffs enacted by the CPUC, specifically the tariff provision set forth in Electric Rule No. 17.1, limits its liability in billing dispute cases to the amount overcharged in a three year period without interest. (Mem. Ps. & As., p. 2:1-2.) PG&E points out that Plaintiff seeks relief beyond the amount allegedly overcharged as Plaintiff requests punitive damages and injunctive relief. PG&E argues that any action by the Court would alter the CPUC s liability paradigm set forth in the tariffs and would frustrate the CPUC s ability to regulate billing disputes. In opposition, Plaintiff asserts that his case does not does not fall within the exclusive jurisdiction of the CPUC because it does not involve rate-making or regulation of PG&E. As the Supreme Court explained in San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893 (Covalt ), [t]he commission is a state agency of constitutional origin with far-reaching duties, functions and powers. [Citation.] The Constitution confers broad authority on the commission to regulate utilities, including the power to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures. [Citation.] [Citation.] The Constitution also gives the Legislature plenary power to confer additional authority and jurisdiction upon the commission, which the Legislature did by enacting the Public Utilities Act ( 201 et seq.). [Citation.] The Public Utilities Act vests the commission Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 5 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER with broad authority to supervise and regulate every public utility in the State ( 701) and grants the commission numerous specific powers for the purpose, as well as the authority to do all things, whether specifically designated in [the Public Utilities Act] or in addition thereto, which are necessary and convenient in the exercise of its jurisdiction over public utilities. [Citation.] [Citation.] The Legislature also has the power to establish the manner and scope of review of commission action in a court of record. [Citation.] Pursuant to this authority, the Legislature enacted article 3 of chapter 9 of the Public Utilities Act, entitled Judicial Review. [Citation.] [Citation.] That article sets forth a method of judicial review that is narrow in both manner and scope. [Citation.] Under the provisions of section 1759, the Legislature restricted review of a commission decision to an action filed directly in the Supreme Court or Court of Appeal by means of a petition for writ of review. [Citations.] Additionally, the Legislature then made it clear in section 1759 of the Public Utilities Act that no other court has jurisdiction either to review or suspend the commission s decisions or to enjoin or otherwise interfere with the commission s performance of its duties [Citation.] (Lefebvre v. Southern California Edison (2016) 244 Cal.App.4th 143, 152 53 (Lefebvre).) As the above discussion makes clear, Public Utilities Code section 1759 was designed to protect the CPUC s constitutional and statutory authority to regulate public utilities. (Wilson v. Southern California Edison Company (2015) 234 Cal.App.4th 123, 142.) Section 1759, subdivision (a), provides: No court of this state, except the Supreme Court and the court of appeal, to the extent specified in this article, shall have jurisdiction to review, reverse, correct, or annul any order or decision of the [CPUC] or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the commission in the performance of its official duties, as provided by law and the rules of court. The statute explicitly limits the subject matterjurisdiction of trial courts as, by its terms, it divests trial courts ofjurisdiction to entertain lawsuits that would interfere with the CPUC s regulation of utilities. (Lefebvre, supra, 244 Cal.App.4th at p. 153.) These jurisdictional limitations place section 1759 in tension with Public Utilities Code section 2106, which authorizes the traditional private remedy of an action for damages and provides that such actions may be brought in any court of competentjurisdiction by any corporation or person. (Id. at p. 154.) To reconcile the conflict between these two provisions, the California Supreme Court declared the primacy of section 1759 and the correspondingly limited role of section 2106. (Covalt, supra, 13 Cal.4th at p. 917.) In Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, 4, the court held that in order to resolve the potential conflict between sections 1759 and 2106, the latter section must be construed as limited to those situations in which an award of damages would not hinder or frustrate the commission s declared supervisory and regulatory policies. The court in Covalt further clarified that actions for damages under section 2106 are barred by section 1759 not only when an award of damages would directly contravene a specific order or decision of the commission, i.e., when it would reverse, correct, or annul that order or decision, but also when an award of damages would simply have the effect of undermining a general supervisory or regulatory policy of the commission, i.e., when it would hinder or frustrate or interfere with or obstruct that policy. (Covalt, supra, 13 Cal.4th at p. 918.) On the other hand, superior courts are not precluded from acting in aid of, rather than in derogation of, the [CPUC s] jurisdiction. (Hartwell Corp. v. Super. Ct. (2002) 27 Cal.4th 256, 275.) Synthesizing and applying these principles, courts generally have held that damages actions challenging a ruling of the commission on a single matter such as its approval of a tariff or a merger would not hinder a policy of the commission and may proceed. [Citation.] But when the relief sought would have interfered with a broad and continuing supervisory or regulatory program of the commission, the courts have found such a hindrance and barred the action under section Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 6 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER 1759. [Citation.] (Lefebvre, supra, 244 Cal.App.4th at p. 154.) In Covalt, the Supreme Court developed a three-part test for courts to employ when determining whether an action brought pursuant to section 2106 is precluded by section 1759. [Citation.] The test consists of three questions: (1) whether the [CPUC] has the authority to adopt a policy on the issue in question; (2) whether the [CPUC] has exercised its regulatory authority governing the issue in question; and (3) whether the superior court action would hinder or interfere with that exercise of regulatory authority. [Citations.] If all three questions are answered in the affirmative, section 1759 divests the superior court ofjurisdiction over the action. [Citation.] (Lefebvre, supra, 244 Cal.App.4th at pp. 154 55.) Here, the foregoing authorities and the judicially noticeable materials establish that the CPUC possessed the authority to regulate matters relating to overcharges and billing disputes between PG&E and Plaintiff. (See Lefebvre, supra, 244 Cal.App.4th at p. 152 [the Constitution confers broad authority on the CPUC to regulate utilities, including the power to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures].) Next, the CPUC exercised its authority to adopt policies on the issue of overcharges and billing disputes as reflected in Electric Rule Nos. 10 and 17.1. (See PG&E RJN, Exs. D and E.) Electric Rule No. 10 expressly covers disputed bills and sets forth a detailed bill review procedure. Under the bill review procedure, a customer first files a complaint with PG&E; PG&E then conducts an investigation and review; if PG&E determines that the bill is correct, in lieu of paying the disputed bill, the customer may deposit the disputed amount with the CPUC and file a complaint with the CPUC; the CPUC then reviews the basis of the billed amount, issues findings, and disburses any deposit in accordance with its findings. Electric Rule No. 10 also provides that failure of the customer to submit a dispute to the CPUC warrants discontinuance of service. Electric Rule No. 17.1 defines billing and provides how adjustments should be made for overcharges. Specifically, Electrical Rule No. 17.1 states that where PG&E overcharges a customer as a result of a billing error, PG&E must issue a refund or credit to the customer for the amount of any overcharge, without interest, for the period of the billing error so long as that period does not exceed three years. These rules demonstrate that the CPUC exercised its authority to establish a broad and continuing supervisory and/or regulatory program regarding the resolution of billing disputes between PG&E and its customers. Finally, Plaintiff s limited civil action would interfere with and hinder the ongoing regulatory efforts of the CPUC. This action undermines and disrupts the CPUC s procedural framework for billing disputes as set forth in the tariff. Furthermore, this action frustrates the CPUC s ability to regulate billing disputes. As PG&E points out, the CPUC has limited customers recovery for overcharges to a refund or credit of the amount of the overcharge, not including interest. In his complaint, Plaintiff seeks to recover not only the amount of the alleged overcharge, but also interest, punitive damages, and injunctive relief. Thus, an award of damages as requested in this limited civil case would have the effect of undermining the general supervisory and/or regulatory policy of the CPUC as articulated in Electric Rule No. 17.1. For these reasons, the demurrer to the complaint in its entirety on the ground of lack of subject matter jurisdiction is SUSTAINED, without leave to amend. (See Melton v. Boustred (2010) 183 Cal.App.4th 521, 544 [the plaintiff must demonstrate a reasonable possibility that the complaint s defects can be cured by amendment]; see also Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [leave to amend granted unless no reasonable possibility of amendment].) Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 7 of 8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER~ - ooOoo - The Court signs the Order as presented by Mr. Crane. Printed: 10/19/2017 10/19/2017 Hearing: Demuner - 17CV313399 Page 8 of 8