16CA0940 Development Recovery v Public Svs 06-15-2017            2017COA86

COLORADO COURT OF APPEALS


Court of Appeals No. 16CA0940
City and County of Denver District Court No. 15CV34584
Honorable Catherine A. Lemon, Judge


Development Recovery Company, LLC,

Plaintiff-Appellant,

v.

Public Service Company of Colorado, d/b/a Xcel Energy Company,

Defendant-Appellee.


                              JUDGMENT AFFIRMED

                                   Division I
                           Opinion by JUDGE ROMÁN
                       Taubman and Lichtenstein, JJ., concur

                             Announced June 15, 2017


MMARTINLAW LLC, E. Gregory Martin, Michael G. Martin, Denver, Colorado,
for Plaintiff-Appellant

Gordon & Rees LLP, John M. Palmeri, Franz Hardy, Lance J. Ream, Gregory S.
Hearing II, Denver, Colorado, for Defendant-Appellee

Cynthia H. Coffman, Attorney General, Jessica L. Lowrey, Assistant Attorney
General, Denver, Colorado, for Amicus Curiae Colorado Public Utilities
Commission
¶1    In this case, we are asked to decide whether the district court

 has jurisdiction over a breach of contract case against a public

 utility where the essence of the claims involves the enforcement of

 tariffs. We conclude that where common-law claims are, in

 essence, brought to enforce the rates, charges, or tariffs, they fall

 within the broad authority granted to the Colorado Public Utilities

 Commission (PUC). Because we conclude that the claims in this

 case were brought to enforce the rates, charges, and tariffs of a

 public utility, we agree with the district court that it lacked subject

 matter jurisdiction over the complaint. Accordingly, we affirm the

 district court’s dismissal of the complaint.

                             I. Background

¶2    Plaintiff, Development Recovery Company, LLC (DRC), appeals

 the district court’s dismissal of its complaint against the Public

 Service Company of Colorado, d/b/a Xcel Energy Co. (Xcel). Xcel is

 a utility company providing electric and gas service that is regulated

 by the PUC. DRC is the assignee of claims from real estate

 developers who entered into extension agreements with Xcel for the

 construction of distribution facilities to provide gas or electric

 service for homes in new developments.


                                     1
                        A. Extension Agreements

¶3    Pursuant to one-page extension agreements, the developers

 made construction payments in an amount determined by Xcel, and

 Xcel constructed the facilities to deliver electricity or gas to new or

 planned developments.1 The agreements referred several times to

 Xcel’s extension policies and specifically required that “the

 application and interpretation of this Agreement, including the

 definitions of terms used herein, shall be in accordance with [Xcel’s

 Service Rules and Regulations, including the extension policy] on

 file and in effect from time to time with the Public Utilities

 Commission of the State of Colorado and that said Rules and

 Regulations constitute a part of this Agreement and are binding on

 the parties hereto.”




 1 Xcel submitted two extension agreements in support of its motion
 to dismiss — one for indeterminate electric service and one for
 permanent gas service. Because these are the only agreements in
 the record and there was no evidence or argument that they are not
 representative, we consider these two agreements representative of
 all the agreements that are the subject of this case. See Redfern v.
 U S W. Commc’ns, Inc., 38 P.3d 566, 568 (Colo. App. 2000).

                                     2
¶4    According to the electric and gas service extension policies on

 file with the PUC, referred to as “tariffs,”2 when an applicant

 requests electric or gas service at premises not connected to Xcel’s

 distribution system, Xcel designates the type of service as

 permanent, indeterminate, or temporary, and then “construct[s] the

 extension with reasonable promptness in accordance with the terms

 of” applicable plans described in the tariffs.3 The tariffs provide

 that extension contracts are based on the estimate of the cost to

 construct and install the necessary facilities to provide the

 requested service. Thus, Xcel is responsible for estimating the cost

 of materials, labor, and rights-of-way, as well as related costs such



 2 Public utilities are required to maintain open schedules showing
 rates and charges, along with factors affecting rates or service. See
 § 40-3-103, C.R.S. 2016. “Tariffs are the means by which utilities
 record and publish their rates along with all policies relating to the
 rates.” AviComm, Inc. v. Colo. Pub. Utils. Comm’n, 955 P.2d 1023,
 1031 (Colo. 1998). In support of its motion to dismiss, Xcel
 submitted the schedules relating to the extension of electric and gas
 service, which DRC had referenced in its complaint. See Barry v.
 Bally Gaming, Inc., 2013 COA 176, ¶ 8 (evidence outside the
 pleadings may be considered to resolve a challenge to subject
 matter jurisdiction).
 3 Although electric and gas service are covered in different tariffs,

 the pertinent provisions are similar. Because the parties refer to
 the tariffs collectively and do not argue that any differences are
 pertinent, we also discuss the tariffs this way.

                                    3
 as trenching or tree trimming, “together with all incidental and

 overhead expenses.”

¶5    These construction costs in turn are divided into two parts.

 First, if applicable, Xcel bears a portion of the cost in an amount

 listed in the tariffs — the “construction allowance.”4 Second, the

 “construction payment” is the “[a]mount advanced by applicant to

 pay all construction costs in excess of [the] [c]onstruction

 [a]llowance.”

¶6    The tariffs specifically describe if and when Xcel’s portion —

 the construction allowance — will be credited, depending on the

 designated type of service. The tariffs also explain when refunds of

 the construction payment could become due and how they would be

 calculated.

         B. DRC’s Allegations in Support of Claims For Relief

¶7    DRC filed the complaint against Xcel alleging breach of

 contract, breach of the implied covenant of good faith and fair

 dealing, unjust enrichment, and violation of section 40-7-102,

 C.R.S. 2016, related to an unspecified number of extension


 4The amount of the construction allowance provided in the tariffs
 changed during the period covered by the complaint.

                                    4
  agreements (the agreements) between developers and Xcel during

  the course of eighteen years.

¶8     Specifically, DRC alleged in support of its claims for relief that

        Xcel inflated the costs of construction;

        Xcel failed to properly credit construction allowances;

        Xcel failed to refund construction payments; and

        Xcel violated section 40-7-102 by including provisions in

          the agreements not permitted by the applicable tariffs.

¶9     Xcel moved to dismiss the complaint for lack of subject matter

  jurisdiction, arguing that this matter was within the exclusive

  jurisdiction of the PUC. Alternatively, Xcel argued that if the PUC

  did not have exclusive jurisdiction, the court should nonetheless

  refer the matter to the PUC under the primary jurisdiction doctrine.

¶ 10   The district court agreed with Xcel on both grounds and

  dismissed the case.

¶ 11   DRC appeals the trial court’s dismissal, arguing that the

  district court, not the PUC, has exclusive subject matter jurisdiction

  over DRC’s common law claims.

                           II. Legal Standards




                                     5
¶ 12   In considering a district court’s dismissal of a claim under

  C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction, we review

  factual findings for clear error and legal conclusions de novo.

  Auxier v. McDonald, 2015 COA 50, ¶ 9; City of Aspen v. Kinder

  Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App. 2006).

¶ 13   If subject matter jurisdiction is challenged, the plaintiff has

  the burden of proving it. Associated Gov’ts of Nw. Colo. v. Colo. Pub.

  Utils. Comm’n, 2012 CO 28, ¶ 7; City of Aspen, 143 P.3d at 1078.

  Evidence outside the pleadings may be considered. City of Aspen,

  143 P.3d at 1078. The trial court considers the facts alleged and

  the relief requested to determine the substance of the claim and

  whether the court has subject matter jurisdiction. Id. at 1078-79

  (“We are not bound by the form in which the plaintiff asserts its

  claim, but rather it is the facts alleged and the relief requested that

  decide the substance of a claim, which in turn is determinative of

  the existence of subject matter jurisdiction.” (quoting City of Boulder

  v. Pub. Serv. Co., 996 P.2d 198, 203 (Colo. App. 1999))).

                  III. Public Utilities Commission (PUC)

¶ 14   The General Assembly is empowered by the Colorado

  Constitution to designate to an agency “all power to regulate the


                                     6
  facilities, service and rates and charges therefor” for an entity

  operating as a public utility in Colorado. Colo. Const. art. XXV.

¶ 15   Under section 40-3-102, C.R.S. 2016, the legislature

  designated the PUC as the regulatory body. Specifically,

             [t]he power and authority is hereby vested in
             the public utilities commission of the state of
             Colorado and it is hereby made its duty to
             adopt all necessary rates, charges, and
             regulations to govern and regulate all rates,
             charges, and tariffs of every public utility of
             this state to correct abuses; to prevent unjust
             discriminations and extortions in the rates,
             charges, and tariffs of such public utilities of
             this state; to generally supervise and regulate
             every public utility in this state; and to do all
             things, whether specifically designated in
             articles 1 to 7 of this title or in addition
             thereto, which are necessary or convenient in
             the exercise of such power, and to enforce the
             same by the penalties provided in said articles
             through proper courts having jurisdiction.

  § 40-3-102.

¶ 16   “The Public Utilities Commission is a legally constituted

  administrative body with exclusive jurisdiction in its constituted

  field.” Intermountain Rural Elec. Ass’n v. Colo. Cent. Power Co., 135

  Colo. 42, 48, 307 P.2d 1101, 1104 (1957). The legislature has also

  provided that complaints may be made to the PUC, and it has




                                     7
  outlined the procedures to be followed to resolve complaints. See

  §§ 40-6-108, -109, C.R.S. 2016.

                               IV. Analysis

¶ 17   The PUC has exclusive jurisdiction over claims for the

  enforcement of tariffs. See AviComm, Inc. v. Colo. Pub. Utils.

  Comm’n, 955 P.2d 1023, 1031 (Colo. 1998). “[T]he proper

  application of rates and tariffs is within the regulatory authority of

  the PUC.” Id.; see also Associated Gov’ts, ¶ 7 (the legislature may

  limit the constitutional grant of general subject matter jurisdiction

  to the district courts); City of Aspen, 143 P.3d at 1081

  (“Determining whether defendants comply with the PUC

  requirements and fashioning a remedy for any violation is within

  the PUC’s authority.”). Thus, although DRC seeks to distinguish

  City of Aspen and City of Boulder as cases addressing ratemaking,

  the PUC’s jurisdiction is more expansive, including the application

  of and compliance with tariffs. See AviComm, 955 P.2d at 1031;

  City of Aspen, 143 P.3d at 1081.

¶ 18   DRC asserts that the trial court erred in concluding that the

  substance of its claims is merely the enforcement of tariffs. We

  disagree.


                                     8
¶ 19   DRC relies primarily on its own characterization of the claims

  it pled — breach of contract, breach of the implied covenant of good

  faith and fair dealing, unjust enrichment, and violation of section

  40-7-102 — arguing that only the district court has jurisdiction

  over such claims. However, we are not bound by the labels of the

  causes of action pled; rather, we must consider the substance of the

  claims asserted. See City of Aspen, 143 P.3d at 1078-79; City of

  Boulder, 996 P.2d at 203.

¶ 20   We turn next to DRC’s complaint.

        A. Inflating Estimated and Actual Costs of Construction

¶ 21   DRC claims that Xcel breached the agreements and the

  implied covenant of good faith and fair dealing by inflating the

  estimated and actual costs of construction. Although the

  agreements provide the amount of the required construction

  payments, the factors used to determine the costs of construction

  are addressed by the tariffs. Thus, assessment of whether those

  charges are excessive is within the PUC’s jurisdiction. See § 40-3-

  102 (empowering PUC to adopt and enforce regulations to govern

  and regulate public utilities; “to correct abuses; to prevent unjust

  discriminations and extortions . . . ; to generally supervise and


                                    9
  regulate every public utility in this state; and to do all things, . . .

  which are necessary or convenient in the exercise of such power”);

  City of Boulder, 996 P.2d at 205 (district court lacked subject

  matter jurisdiction over claim for breach of duty of good faith and

  fair dealing for improperly calculating payments due, where the

  parties’ agreements incorporated amounts set forth in the

  PUC-approved tariff and the utility had to calculate the rate for its

  tariff filing in accordance with PUC’s methodology and other

  regulations).

              B. The Treatment of Construction Allowances

¶ 22   DRC takes issue with Xcel’s treatment of construction

  allowances. However, the only mention of construction allowances

  in the agreements is that “[n]othing in this Agreement shall be

  construed to waive the right,” if any, of a construction allowance or

  refund thereof “associated with distribution and/or service lateral

  installations pursuant to the Rules and Regulations currently on

  file with the Public Utilities Commission.” The agreements merely

  recognize that developers might be entitled to a construction

  allowance as provided by the tariffs. While DRC’s complaint alleges

  that Xcel exercised discretion in classifying the service for each


                                      10
  contract (which impacts whether and when a construction

  allowance is credited), the tariffs define the classification of service.

  DRC’s claim that Xcel failed to properly credit construction

  allowances is, therefore, also a claim for enforcement of the tariffs.

  See City of Aspen, 143 P.3d at 1079-80 (concluding that, although

  the plaintiff attempted to re-characterize claim to avoid PUC

  jurisdiction, matters within the PUC’s exclusive jurisdiction were

  still “inextricably intertwined” with the claims).

              C. Failure to Refund Construction Payments

¶ 23   DRC claims that Xcel failed to refund construction payments.

  Here, again, the agreements explicitly invoke the tariffs to describe

  Xcel’s obligations: “Any possible refunds [of the Construction

  Payment] will be made in accordance with the terms and conditions

  of [Xcel’s extension policy]. This policy is on file with the Public

  Utilities Commission . . . .” Once again, DRC’s claim is for

  enforcement of the tariffs, and is thus within the PUC’s jurisdiction.

  See id.

                     D. Violation of Section 40-7-102




                                     11
¶ 24   Finally, DRC claims that Xcel also violated section 40-7-102

  by including provisions in the agreements not permitted by the

  applicable tariffs. Section 40-7-102(1) provides as follows:

             In case any public utility does, causes to be
             done, or permits to be done any act, matter, or
             thing prohibited, forbidden, or declared to be
             unlawful, or omits to do any act, matter, or
             thing required to be done, either by the state
             constitution, any law of this state, or any order
             or decision of the commission, such public
             utility shall be liable to the persons or
             corporations affected thereby for all loss,
             damage, or injury caused thereby or resulting
             therefrom. . . . An action to recover such loss,
             damage, or injury may be brought in any court
             of competent jurisdiction by any corporation or
             person.

¶ 25   Yet, even if DRC has a cause of action under section 40-7-102,

  exhaustion of administrative remedies before the PUC is required.

  See City of Aspen, 143 P.3d at 1081-82 (“Even if Aspen were correct

  [that this section supports an action against a utility for violation of

  the Colorado Consumer Protection Act (CCPA)], it has failed to

  exhaust remedies before the PUC and therefore cannot at this time

  invoke them to support its CCPA claims. . . . [T]he PUC would still

  be the proper forum for first determining whether defendants

  violated its regulations.”); City of Boulder, 996 P.2d at 206-07



                                     12
  (where plaintiffs sought damages under section 40-7-102(1), the

  district court properly dismissed because, although the statute

  creates a private cause of action for damages resulting from

  conduct of a regulated utility which violates state law, subject

  matter jurisdiction does not exist in the district court unless and

  until administrative remedies have been exhausted as provided in

  sections 40-6-108 and 40-6-109). DRC did not allege or establish

  that it had exhausted administrative remedies. See § 40-6-115,

  C.R.S. 2016 (providing for district court review of a final decision by

  the PUC).

                           E. Alleged Damages

¶ 26   Beyond the particular causes of action alleged, DRC

  additionally asserts that the district court must have jurisdiction

  because only the district court can award the relief DRC sought.

  We disagree.

¶ 27   “Subject matter jurisdiction concerns ‘the court’s authority to

  deal with the class of cases in which it renders judgment.’”

  Monaghan Farms, Inc. v. City & Cty. of Denver, 807 P.2d 9, 18 (Colo.

  1991) (quoting Closed Basin Landowner’s Ass’n v. Rio Grande Water

  Conservation Dist., 734 P.2d 627, 636 (Colo. 1987)). “A court has


                                    13
  jurisdiction of the subject matter ‘if the case is one of the type of

  cases that the court has been empowered to entertain by the

  sovereign from which the court derives its authority.’” Closed Basin

  Landowner’s Ass’n, 734 P.2d at 636 (quoting Paine, Webber,

  Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 513 (Colo. 1986)).

  Where, as here, the power to determine claims regarding the

  enforcement of tariffs has been vested in the PUC in the first

  instance, DRC cannot confer subject matter jurisdiction on the

  district court simply by requesting relief in the form of damages.

  Subject matter jurisdiction “either exists or it does not. The parties

  cannot confer subject matter jurisdiction upon the court, nor may

  the court confer it upon itself.” Cornstubble v. Indus. Comm’n, 722

  P.2d 448, 450 (Colo. App. 1986) (quoting Sanchez v. Straight Creek

  Constructors, 41 Colo. App. 19, 21, 580 P.2d 827, 829 (1978)).

¶ 28   Nonetheless, we note that the PUC has authority to order

  reparations where excessive charges have been collected by a public

  utility for any product or service:

             When complaint has been made to the
             commission concerning any rate, . . . and the
             commission has found, after investigation, that
             the public utility has charged an excessive or
             discriminatory amount . . . the commission


                                        14
           may order that the public utility make due
           reparation to the complainant therefor, with
           interest from the date of collection, provided no
           discrimination will result from such
           reparation.

§ 40-6-119(1), C.R.S. 2016. Distilled to their essence, DRC’s claims

here are that the developers were ultimately required to foot more of

the bill for the utility extensions than was due according to the

terms of the tariffs. As a result, reparations for excessive charges

could be an appropriate remedy in this case. See Peoples Nat. Gas

Div. of N. Nat. Gas Co. v. Pub. Utils. Comm’n, 698 P.2d 255, 262-63

(Colo. 1985) (PUC had statutory authority to award reparations to

utility customers for overbilling); Village of Evergreen Park v.

Commonwealth Edison Co., 695 N.E.2d 1339, 1343 (Ill. App. Ct.

1998) (“The fact that the plaintiff labels its action a breach of

contract action is not dispositive . . . . Irrespective of that label, it is

apparent that the plaintiff is seeking a refund of part of the charges

it paid the defendant and, consequently, plaintiff is alleging a claim

for reparations.”) (citations omitted).5




5 DRC also asserts that the district court must have jurisdiction
because it is the only venue in which DRC can be afforded a jury
trial, as demanded in the complaint. A demand for a jury trial,

                                    15
¶ 29   Considering the allegations in the complaint in conjunction

  with the evidence submitted on the issue of subject matter

  jurisdiction, we agree with the district court that DRC failed to carry

  its burden to establish subject matter jurisdiction in the trial

  court.6

                              V. Conclusion

¶ 30   The judgment is affirmed.

       JUDGE TAUBMAN and JUDGE LICHTENSTEIN concur.




  however, does not go to the substance of the claim. See City of
  Aspen v. Kinder Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App.
  2006) (consider the facts alleged and the relief requested to
  determine the substance of the claim and whether the court has
  subject matter jurisdiction). We will not permit a party to
  circumvent the jurisdiction of the PUC simply by including a
  demand for jury trial in the complaint.
  6 Nor are we persuaded by DRC’s reliance on Great Western Sugar

  Co. v. Northern Natural Gas Co., 661 P.2d 684, 690 (Colo. App.
  1982). The division in Great Western Sugar considered whether the
  trial court erred by declining to exercise its discretion to refer issues
  to the Federal Energy Regulatory Commission under the doctrine of
  primary jurisdiction. Id. Because we conclude that the district
  court lacked subject matter jurisdiction, we do not reach the issue
  of discretionary referral under the doctrine of primary jurisdiction,
  and Great Western Sugar is inapplicable.

                                     16
