New York Law Review

Tag: Utility Law

  • Con Edison v. Paul Schultz, 48 N.Y.2d 925 (1979): Recovery for Tampered Electric Meter

    Con Edison v. Paul Schultz, 48 N.Y.2d 925 (1979)

    A utility company is entitled to recover for services used when a customer’s electric meter has been tampered with, even if the utility cannot prove who caused the tampering, but the amount of damages must be properly determined.

    Summary

    This case addresses the issue of liability and damages when an electric meter has been tampered with, and the customer is aware of the tampering. The New York Court of Appeals held that Consolidated Edison (Con Edison) was entitled to recover for the electricity used by the customer (Schultz), regardless of who caused the tampering, because the customer was aware of the situation. However, the Court also found that there was a triable issue of fact regarding the calculation of damages, necessitating a new trial on that specific issue.

    Facts

    Paul Schultz’s electric meter was tampered with. Con Edison claimed Schultz was aware of the tampering. Con Edison brought a counterclaim to recover for the electricity Schultz actually used during the period of the tampering. The test period Con Edison used to estimate damages was at the end of the five-year period during which the meter malfunctioned and was atypical. Schultz’s store hours were 50% greater and the area to be lighted increased eightfold from the beginning to the end of the period.

    Procedural History

    Con Edison brought a counterclaim against Schultz. Schultz demanded a jury trial, and Con Edison did not object, thus agreeing to a jury determination of the amount owed. The lower court directed judgment for Con Edison. The Appellate Division affirmed the judgment regarding liability but modified it concerning damages. The Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    Whether Consolidated Edison is entitled to recover for services actually used by plaintiff when the plaintiff’s electric meter was tampered with, regardless of who caused the tampering, if the plaintiff was aware of the tampering. Whether there was a triable issue for the jury concerning the amount of damages owed to Consolidated Edison.

    Holding

    1. Yes, because it was undisputed that the plaintiff’s electric meter was tampered with and that the plaintiff was aware of that fact, Consolidated Edison was entitled to recover for the service actually used by the plaintiff, without regard to who caused the tampering.

    2. Yes, because there was a triable issue for the jury concerning the amount of damages due to the propriety of the test period used which was at the end of the five-year period during which the meter functioned improperly and was atypical.

    Court’s Reasoning

    The Court reasoned that because Schultz knew about the tampering, Con Edison was entitled to compensation for the services used, regardless of who was responsible for the tampering. The Court highlighted paragraph 18 of Con Edison’s counterclaim as sufficient pleading for recovery under this theory. The Court found no triable issue regarding liability because the evidence established Schultz’s awareness.

    However, the Court found a triable issue concerning the amount of damages. Schultz demanded a jury trial on the counterclaim, and Con Edison consented by failing to object. The Court noted the test period used to calculate damages was problematic because it occurred at the end of the five-year period of meter malfunction and was atypical due to increased store hours and expansion of the store’s area. Because of these factors affecting electricity usage during the test period, the Court deemed a jury trial necessary to determine the proper amount of damages. The Court stated, “There clearly was a triable issue for the jury concerning amount of damages: the propriety of the test period used which was at the end of the five-year period during which the meter functioned improperly and was atypical, according to plaintiff’s testimony, both as to time (hours the store was open were 50% greater than the rest of the year) and area to be lighted (from the beginning to the end of the period the area of the store increased eightfold).”

  • Passantino v. Consolidated Edison Co., 54 N.Y.2d 840 (1981): Punitive Damages for Utility’s Knowing Interference with Customer Rights

    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.