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City of Holland v. Consumers Energy Co.

Court of Appeals of Michigan

January 6, 2015

CITY OF HOLLAND, Plaintiff-Appellee,
v.
CONSUMERS ENERGY COMPANY, Defendant-Appellant. CITY OF COLDWATER, Plaintiff-Appellee,
v.
CONSUMERS ENERGY COMPANY, Defendant-Appellant

Ottawa Circuit Court. LC No. 12-002758-CZ. Branch Circuit Court. LC No. 13-040185-CZ.

For CITY OF HOLLAND, Plaintiff-Appellee: ANDREW J MULDER, HOLLAND, MI; PETER H ELLSWORTH, LANSING, MI.

For CONSUMERS ENERGY COMPANY, Defendant-Appellant: MICHAEL G WILSON, JACKSON, MI.

For MICHIGAN ELECTRIC & GAS ASSOCIATION, Amicus Curiae: JAMES A AULT, LANSING, MI.

For MICHIGAN ELECTRIC COOPERATIVE ASSOCIATION, Amicus Curiae: SHAUN MATTHEW JOHNSON, LANSING, MI.

For DTE ELECTRIC COMPANY, Amicus Curiae: BRUCE R MATERS, DETROIT, MI.

For ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY, Amicus Curiae: RODERICK S COY, LANSING, MI.

Before: BORRELLO, P.J., and SERVITTO and SHAPIRO, JJ. SHAPIRO, J. (concurring).

OPINION

Page 872

[308 Mich.App. 678] Per Curiam.

In Docket No. 315541, Consumers Energy Company appeals as of right the trial court's grant of summary disposition in favor of the city of Holland in a declaratory judgment action concerning Holland's right to provide electric service to a customer. In Docket No. 320181, Consumers Energy Company appeals as of right the trial court's grant of summary disposition in [308 Mich.App. 679] favor of the city of Coldwater in a declaratory judgment action concerning Coldwater's right to provide electric service to property that Coldwater recently purchased. We affirm in both cases.

DOCKET NO. 315541

Holland filed this declaratory action contending that under the Michigan Constitution and by statute, a municipal utility such as itself can supply light and power within and outside its corporate boundaries to any customer not already receiving the service from another utility. According to Holland, it obtained irrevocable franchises for the delivery of electric power to townships adjoining it, including Park Township. A nonprofit corporation, Benjamin's Hope, owned vacant property in Park Township. The property did not have electric service. Benjamin's Hope sought to build a nonprofit, tax-exempt structure on its property and sought to have Holland provide the electric power service for the building. According to Holland, defendant Consumers Energy Company has asserted that that it has the exclusive right to serve the property, having served the property some years prior, and that Benjamin's Hope must receive electric power from Consumers pursuant to relevant statutory law. Holland, therefore, sought a declaration that it was authorized to provide electric service to Benjamin's Hope under the Michigan Constitution, its franchise agreement, statute, and the Holland city charter.

In lieu of an answer, Consumers filed a motion for summary disposition premised on MCR 2.116(C)(8) and (10). Consumers claimed that it had previously provided electric service to the customer at issue and was currently doing so and provided an affidavit and copies [308 Mich.App. 680] of electric bills to support its position. Consumers further asserted that the case of Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 489 Mich. 27; 799 N.W.2d 155 (2011) already addressed, in Consumers' favor, most of the issues raised in this case. Finally, Consumers asserted that

Page 873

the Michigan Public Service Commission (PSC) had primary jurisdiction of the claims in this case and that MPSC Rule 411 [1] required holding in Consumers' favor.

Holland responded that the only service Consumers provided was temporary and requested by a contractor hired by Benjamin's Hope. Consumers provided the electric service to a construction trailer temporarily located on the property. When the contractor removed its trailer from the property, it also requested that Consumers remove its facilities from the property, which Consumers did. Benjamin's Hope thereafter requested quotes from both Consumers and Holland for the provision of permanent electric services, which both provided. Benjamin's Hope chose Holland, as it was allowed to do, given that Consumers was not providing service to the property at that time. Holland further asserted that the PSC does not have jurisdiction over this matter and MPSC Rule 411 does not apply to municipal utilities. Holland requested summary disposition in its own favor under MCR 2.116(I)(2).

The trial court granted Holland's motion for summary disposition and denied Consumers' motion. The trial court opined that Holland is not subject to regulation by the PSC and that the customer that Holland began providing power to in April 2012 was not, and had not been, a Consumers' customer, it having never before received power from another utility.

[308 Mich.App. 681] On appeal, Consumers first argues that Holland's provision of electric service to Benjamin's Hope clearly violated MCL 124.3 because Consumers had been providing service to the property at issue when Holland entered into a contract with Benjamin's Hope to provide service to the property. Consumers contends that the trial court's erroneous conclusion otherwise was based on the adoption of an illogical and incorrect definition of the word " customer" for purposes of MCL 124.3. We disagree.

" Issues of statutory interpretation are questions of law that this Court reviews de novo." Spectrum Health Hosps v Farm Bureau Mut Ins Co of Mich, 492 Mich. 503, 515; 821 N.W.2d 117 (2012). We also review de novo a trial court's decision on a motion for summary disposition. See Dressel v Ameribank, 468 Mich. 557, 561; 664 N.W.2d 151 (2003). A motion under MCR 2.116(C)(8) tests the legal sufficiency of the plaintiff's complaint by examining the pleadings alone. Patterson v Kleiman, 447 Mich. 429, 432; 526 N.W.2d 879 (1994). All well-pleaded factual allegations are taken as true, as well as any reasonable inferences or conclusions that can be drawn from the allegations. Peters v Dep't of Corrections, 215 Mich.App. 485, 486; 546 N.W.2d 668 (1996). The motion should be granted only if the claims are so clearly unenforceable as a matter of law that no factual development could justify recovery. Id. at 487.

Summary disposition may be granted under MCR 2.116(C)(10) if the documentary evidence submitted by the parties, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. Veenstra v Washtenaw Country Club, 466 Mich. 155, 164; 645 N.W.2d 643 (2002). Summary disposition may be granted [308 Mich.App. 682] in favor of an opposing party under MCR 2.116(I)(2) if there is no genuine issue of material fact and the opposing party is entitled to judgment as a matter of law. 1300 LaFayette East Coop, Inc v Savoy, 284 Mich.App. 522, 525; 773 N.W.2d 57 (2009).

Page 874

Benjamin's Hope acquired the property at issue in 2011. Neither party disputes that at the time of acquisition, there were no buildings on the property. Apparently, the prior owner demolished all buildings that had been on the property sometime in 2007. Accordingly, no electric power was being supplied to the parcel at the time of purchase, and for some time prior. Benjamin's Hope retained a contractor, CL Construction, to begin building what was to become a campus for autistic children. According to both parties, around August 2011, CL Construction requested that Consumers provide single-phase electric service to a construction trailer that CL Construction had temporarily placed on the property. CL Construction requested that Consumers send the electric bills to Benjamin's Hope. The first bill, sent to Benjamin's Hope, reflects that the service was for " Electric Temporary Service Overhead." Consumers provided electric service to the construction trailer from September 2011, until April 13, 2012, when CL Construction removed its trailer from the property and requested that Consumers remove its facilities from the property. There is no dispute that Consumers mailed the monthly bills to Benjamin's Hope or that the bills were paid, although there is no indication in the record as to who paid the bills.

In January 2012, Benjamin's Hope requested quotes from both Consumers and Holland for permanent electric service. On the basis of the prices quoted, Benjamin's Hope signed a contract with Holland on January 25, 2012, for electric service. Consumers asserts [308 Mich.App. 683] that this was a violation of MCL 124.3(2) as it was providing electric service to the premises at the time Holland entered into a contract with Benjamin's Hope.

MCL 124.3 provides:

(1) A municipal corporation may contract for adequate consideration with a person or another municipal corporation to furnish to property outside the municipal corporate limits any lawful municipal service that it is furnishing to property within the municipal corporate limits. A municipal corporation may sell and deliver heat, power, and light in amounts as determined by the governing body of the utility, except for both of the following:
(a) Electric delivery service is limited to the area of any city, village, or township that was contiguous to the municipal corporation as of June 20, 1974, and to the area of any other city, village, or township being served by the municipal utility as of June 20, 1974.
(b) Retail sales of electric generation service are limited to the area of any city, village, or township that was contiguous to the municipal corporation as of June 20, 1974, and to the area of any other city, village, or township being served by the municipal utility as of June 20, 1974, unless the municipal corporation is in compliance with section 10y(4) of 1939 PA 3, MCL 460.10y.
(2) A municipal corporation shall not render electric delivery service for heat, power, or light to customers outside its corporate limits already receiving the service from another utility unless the serving utility consents in writing.
(3) As used in this section:
(a) " Electric delivery service" has the same meaning as " delivery service" under section 10y of 1939 PA 3, MCL 460.10y.
(b) " Electric generation service" means the sale of electric power and related ancillary services.
(c) " Person" means an individual, partnership, association, governmental entity, or other ...

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