54 N.Y.2d 840 (1981)

A utility company may be liable for punitive damages if it knowingly interferes with a customer’s right to advance notice before discontinuing service for nonpayment, even if the initial service interruption was justified due to meter tampering.

Summary

In this case, the New York Court of Appeals addressed whether a utility company, Consolidated Edison, could be liable for punitive damages for continuing to withhold electrical service after initially cutting it off due to meter tampering. The court held that because Con Edison employees indicated service would only be restored upon payment for past electricity usage *after* the tampering issue was resolved, the jury could find that Con Edison knowingly violated the customer’s right to five days’ notice before discontinuing service for nonpayment, thus potentially warranting punitive damages. The case was remitted to the Appellate Division for factual findings.

Facts

Consolidated Edison (Con Ed) discovered a tampered meter (a “jumper”) at P & F Machine Corp.’s premises, which predated P & F’s ownership. Con Ed employees cut off electrical service to remove the jumper, initially stating the outage would last 15-20 minutes. After fixing the meter, Con Ed informed the plaintiff, Passantino, that power would only be restored upon payment for the electricity previously received. A supervisor reiterated that power would be restored upon payment of the outstanding balance. The next day, Passantino signed an agreement promising to pay $6,400 and paid half immediately, after which electrical service was restored, approximately 20 hours after the initial shutoff.

Procedural History

The trial court charged the jury that punitive damages could be awarded if Con Ed’s conduct was wanton, reckless, or malicious. The jury found in favor of the plaintiff. The Appellate Division reversed on the law. The Court of Appeals reversed the Appellate Division’s order and remitted the case to that court for determination of factual questions.

Issue(s)

Whether a utility company can be held liable for punitive damages for knowingly interfering with a customer’s right to advance notice before discontinuing service for nonpayment, even if the initial interruption was due to meter tampering.

Holding

Yes, because the jury could have found that the utility company, knowing of the customer’s right to five days’ notice before discontinuance for nonpayment, deliberately interfered with those rights by withholding service until the customer paid for past usage after the meter tampering issue had been addressed.

Court’s Reasoning

The Court of Appeals focused on the jury instructions, to which the defendant had not objected, which became the “law of the case.” The trial court instructed the jury that Con Ed had the right to discontinue service without notice for meter tampering but was required to provide five days’ notice before discontinuing service for nonpayment under Section 15 of the Transportation Corporation Law and pertinent tariff rules. The court emphasized Con Ed’s statements that service would be restored upon payment *after* the tampering issue was resolved. The court reasoned that this evidence allowed the jury to conclude that while the initial shutoff was justified, the *continued* withholding of service was for nonpayment and without the required notice. Because Con Ed knew of the plaintiff’s rights but deliberately interfered with them, the corporate plaintiff was entitled to an award of punitive damages. The court stated that the jury could have found the utility company “knew that plaintiffs had the right to five days’ advance notice prior to any discontinuance of service for nonpayment, that while the initial interruption of service without notice for tampering may have been warranted, the continued withholding of service after the jumper had been removed was for nonpayment and without notice, and accordingly that defendant, knowing of plaintiffs’ rights, had deliberately interfered with them.” The court also noted that the jury could have interpreted the charge to mean that Con Ed only had the right to discontinue service for tampering if the *current* customer was the one who tampered with the meter, which was not the case here. Therefore, the initial shutoff might also have been wrongful. The reversal at the Appellate Division was on the law, requiring the Court of Appeals to remit the case for factual determinations.