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Development Recovery Co., LLC v. Public Service Co. of Colorado

Court of Appeals of Colorado, First Division

June 15, 2017

Development Recovery Company, LLC, Plaintiff-Appellant,
v.
Public Service Company of Colorado, d/b/a Xcel Energy Company, Defendant-Appellee.

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

          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

          OPINION

          ROMÁN JUDGE

         ¶ 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.

         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."

         ¶ 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 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 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 ...

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