Stevenson v. Prairie Power Cooperative

JOHNSON, Justice. These cases involve a rural electric cooperative (Prairie Power) and two of its members (Stevenson and Sun Valley Ranches, Inc.). The trial court granted summary judgments in favor of Prairie Power dismissing the claims of Stevenson and Sun Valley. Stevenson and Sun Valley appealed. We assigned the cases to the Court of Appeals. The Court of Appeals issued an opinion affirming the dismissal of Stevenson’s claim that Prairie Power’s policy was unreasonable, vacating the dismissal of Sun Valley’s claims, affirming the award of attorney fees and nondiscretionary costs, finding error in the award of discretionary costs and remanding the cases for further proceedings. By our direction, the Court of Appeals opinion has not previously been published. On petition of Stevenson and Sun Valley, we granted review. We have reviewed and considered the briefs, the record and the opinion of the Court of Appeals. We have also heard and considered the arguments of counsel. Considering all of these, we concur with the decision of the Court of Appeals as to the vacating of the dismissal of Sun Valley’s claims and as to the award of attorney fees to the individual board members of Prairie Power. We vacate the dismissal of Stevenson’s claim against Prairie Power on the ground that there was a genuine issue of material fact as to the reasonableness of the conditions Prairie Power imposed on Stevenson for the delivery of power. We remand these cases and the question of costs to the trial court for further proceedings consistent with our opinion and with the applicable part of the opinion of the Court of Appeals. [32] Because we have decided to depart from only the portion of the opinion of the Court of Appeals dealing with Stevenson’s claim against Prairie Power, we now authorize the publication of the opinion of the Court of Appeals concurrently with this opinion. Except as we have indicated in this opinion, we accept the opinion of the Court of Appeals for the disposition of these appeals. I. THERE WAS A GENUINE ISSUE OF MATERIAL FACT AS TO THE REASONABLENESS OF THE CONDITIONS PRAIRIE POWER IMPOSED ON STEVENSON FOR THE DELIVERY OF POWER. Stevenson asserts that the trial court should not have granted summary judgment dismissing his claim that the conditions Prairie Power imposed on him for the delivery of power were unreasonable. We agree. Stevenson and Prairie Power both moved for summary judgment. Stevenson contended that Sutton v. Hunziker, 75 Idaho 395, 272 P.2d 1012 (1954), required that the conditions imposed on him by Prairie Power for the delivery of power must be reasonable. Stevenson argued that the conditions imposed by Prairie Power were not reasonable because: (1) they required payment in advance for 100 per cent of the irrigation season, even when an irrigator operated only a portion of the season and (2) they required an irrigator to make advance payment, even though the irrigator could not pay in advance and even though other alternatives to secure payment were available. Prairie Power responded to Stevenson’s reasonableness argument by citing First Federal Savings & Loan Association of Twin Falls v. East End Mutual Electric Co., 112 Idaho 762, 735 P.2d 1073 (Ct.App.1987), for the proposition that the conditions should be upheld if they were not arbitrary and did not infringe upon any fundamental public policy. Prairie Power contended that Stevenson had failed to establish that the conditions violated this standard. The trial court found that the fee collection policy adopted by Prairie Power was reasonable. The Court of Appeals accepted the trial court’s factual determination of reasonableness on the ground that Stevenson and Prairie Power had both moved for summary judgment on the same evidentiary facts and on the same issues and theories and had effectively stipulated that there was no genuine issue of material fact. Sutton requires that Prairie Power’s conditions for supplying power to Stevenson must be reasonable. In Sutton this Court held that a rural electric cooperative’s demand for an easement across the property of one of its members must be “a reasonable request under all the circumstances shown by the evidence.” 75 Idaho at 403, 272 P.2d at 1016. We said that if the request was unreasonable, the member was justified in refusing to comply with the request “and the disconnection of his electric service was wrongful.” Id. Significantly for our purposes here, in Sutton we ruled that whether the request was reasonable was a factual question for the trier of fact — the jury in that case. Here, there was a request for a jury trial. Even though both Stevenson and Prairie Power moved for summary judgment, this does not in itself establish that there was no genuine issue of material fact. Casey v. Highlands Ins. Co., 100 Idaho 505, 507, 600 P.2d 1387, 1389 (1979). Whether the conditions imposed by Prairie Power were reasonable depends on a consideration of the facts presented by Prairie Power and by Stevenson on the motions for summary judgment. If there is any genuine issue of material fact created by these facts, summary judgment should not have been granted. I.R.C.P. 56(c). Prairie Power defended the reasonableness of the conditions on the ground that the conditions were predicated upon a legitimate organizational objective — prevention of the inability to collect on irrigator accounts. Prairie Power contended that this would protect other members from incur [33] ring economic hardship as a result of an irrigator’s default. The only facts presented by Prairie Power as to the reason for the adoption of the policy was a statement in the minutes of the board of directors of Prairie Power and a statement by the chairman of the board of Prairie Power in his deposition. The minutes of the board of Prairie Power for the meeting when the policy was adopted indicate that immediately before the policy was discussed the attorney for Prairie Power reported that he had received a bankruptcy plan for Sun Valley and that Sun Valley owed more than $10,-000.00 to Prairie Power. The board then passed a motion that Sun Valley would have to notify Prairie Power by a date approximately two weeks later how Sun Valley would pay their bills. The motion stated that if Sun Valley did not commit itself for payment, their power would be turned off. The minutes indicate that the board then adopted the policy. In his deposition, the chairman of the board of Prairie Power described the discussion that the board held before adopting the policy: “Counsel advised that we should have a customer irrigation — or irrigation customer policy because of the fact we was having trouble collecting irrigation accounts.” Other than the Sun Valley account, there is no indication of what trouble Prairie Power was having in collecting irrigation accounts. The Court of Appeals alludes to Prairie Power’s financial records revealing that many irrigator members were delinquent in paying their accounts following the 1983 growing season. This is perplexing to us. The only place in the record on appeal where those financial records appear is by attachment to an affidavit of Stevenson’s attorney. The attachments are the 1983 irrigator ledger cards of Prairie Power that were provided to Stevenson’s attorney in response to a discovery request. However, the affidavit was not filed until after the trial court issued its decision granting summary judgment to Prairie Power against Stevenson. Whether these ledgers were considered by the trial court is not established by the record. They are not mentioned in the briefs of the parties on the motions for summary judgments, nor are they mentioned by the trial court in its decision. In any event the ledgers do not indicate that Prairie Power had not been paid the amounts owed by the irrigators at the time the policy was established. Whether the conditions were reasonable should be measured by whether they were “[f]air, proper, just, moderate, suitable under the circumstances” or “[f]it and appropriate to the end in view.” Black’s Law Dictionary, 1138 (5th ed. 1979) (cited in Giacobbi v. Hall, 109 Idaho 293, 297, 707 P.2d 404, 408 (1985)). In his affidavit Stevenson offered several reasons why the conditions were not reasonable. He pointed out that in prior years the payment policy had provided for monthly billing and payment within ten days after the bill was mailed. Prairie Power reserved the right to discontinue service for nonpayment. He stated that he could offer a crop lien and partial payments as a means of securing payment for the power he used. The policy referred to “a letter of credit or some other notification from a lending institution or similar type of organization that the irrigator has financial ability to pay the season’s irrigation bill.” The ámount that was to be referred to in the letter of credit or other notification was “the average of the last three years’ power usage.” Prairie Power acknowledged that cash would satisfy the requirement in lieu of a letter of credit or notification referred to in the policy. In his affidavit Stevenson pointed out that the policy also included the provision: This policy is not designed to pose a hardship upon anybody and the Board feels it is flexible enough to allow different types of arrangements for the different irrigators who may finance differently- Stevenson alleged that he had asked the secretary of Prairie Power what alternatives were available other than a letter of credit or other notification from a lending institution. He said the secretary told him [34] that another irrigator, who was also self-financing, had simply written at the bottom of a copy of the policy that he would guarantee payment himself. Stevenson also alleged the efforts he had made to obtain power from Prairie Power during June 1984. These included a tender of $2,200.00 annual hook-up fee and an additional $1,300.00 for seven days use. Late in June, Stevenson finally convinced Prairie Power to turn on the power in exchange for payment in advance of the average of the last three years billings minus the month of June. Construing the statements made by Stevenson in his affidavit liberally in his favor and giving them every reasonable intendment, as we must when considering the propriety of the summary judgment on this issue, we conclude that there was a genuine issue of fact as to the reasonableness of the conditions that Prairie Power imposed for furnishing power to Stevenson. It was not just the policy on its face that Stevenson challenged, but its application to him. The facts presented by Stevenson can be construed to indicate that Prairie Power did not reasonably consider the proposals he made for insuring his payment. Whether Prairie Power was reasonable under all the circumstances is an issue to be resolved by the trier of fact. Therefore, summary judgment should not have been granted. For the guidance of the trial court we note that we have not engaged in the analysis employed by the Court of Appeals based on its decision in East End Mutual Electric Co. Whether Prairie Power’s conditions for the delivery of power to irrigators was arbitrary or infringed upon a fundamental public policy such as nondiscrimination is not the measure of its reasonableness. East End was a declaratory judgment action. There, after a trial, the trial court declared the bylaws that were at issue to be reasonable. Here, on appeal Stevenson has raised reasonableness as the only issue. In support of its standard in East End that a cooperative’s “restraints are enforceable unless they are arbitrary or contrary to public policy,” the Court of Appeals cited Capital Electric Power Association v. McGuffee, 226 Miss. 227, 83 So.2d 837 (1955), overruled on other grounds, Tideway Oil Programs, Inc. v. Serio, 431 So.2d 454 (Miss.1983). In McGuffee the Mississippi Supreme Court cited Sutton, but distinguished it because of the differences in the law of Mississippi. 83 So.2d at 843. Sutton is the law of Idaho, not McGuffee. Reasonableness is the rule here in cases of this type. II. CONCLUSION. We vacate the dismissal of Stevenson’s claim that the conditions imposed on him by Prairie Power were unreasonable. We vacate the dismissal of Sun Valley’s claims on the basis of the opinion of the Court of Appeals. We remand these cases to the trial court for further proceedings consistent with this opinion and with the applicable part of the opinion of the Court of Appeals. As to the award of costs and attorney fees, the trial court should reconsider its award in light of the opinion of the Court of Appeals and of this Court. We award no" costs or attorney fees on appeal. BAKES, C.J., and BISTLINE, BOYLE and McDEVITT, JJ., concur.