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Torts: Tariff Does Not Protect Utility From Liability for Property Damage Caused by Fire

Posted by Matt Schmidt | Dec 01, 2021 | 0 Comments

Szeto v. Arizona Pub. Serv. Co., No. 1 CA-CV 20-0609 (App. Div. I, November 30, 2021) (J. Mc Murdie)

WHILE UTILITIES MAY ESCAPE LIABILITY FOR ECONOMIC DAMAGES CAUSED BY A NEGLIGENT INTERRUPTION OF SERVICE THROUGH A TARIFF THEY MAY NOT ESCAPE LIABILITY FOR FAILING TO EXERCISE THE HIGHEST DEGREE OF SKILL AND CARE RESULTING IN PERSONAL INJURY OR PROPERTY DAMAGE.

A fire caused by arcing Arizona Public Service [APS] power lines destroyed two of plaintiffs' homes. Plaintiffs sued APS for the loss of the homes and personal property on a negligent maintenance theory. The trial court granted defendant's motion for summary judgment ruling APS's tariff barred claims for property damage caused by fire. The Arizona Court of Appeals reversed and remanded.

APS's tariff provides:

5.3 Service Interruptions: Limitations on Liability of Company.
5.3.1 Company  shall  not  be  liable  to  the  customer for  any  damages  occasioned  by  Load Serving ESP's1 equipment or failure to perform, fluctuations,  interruptions  or  curtailment  of electric service, except where due to Company's  willful  misconduct  or  gross negligence. Company may, without incurring any liability therefore, suspend the customer's electric service for periods reasonably required  to  permit  Company  to  accomplish repairs  to  or  changes  in  any  of  Company's facilities. The  customer  needs  to  protect  their own  sensitive  equipment  from  harm  caused by variations or interruptions in power supply.

While this tariff is permitted under Arizona's Constitution to the extent it affects the Corporation Commission's rate making function, the tariff only applies to interruption of service. “Thus, the Commission may limit a utility's liability for economic damages resulting from service interruptions, which are appropriately considered in ratemaking decisions because of their contractual nature and potential magnitude, but may not limit liability for personal injury and property damages, which are not.”  In fact, APS has a duty to exercise “the highest degree of skill and care to protect life and property in the generation and distribution of electricity from its plant to patrons.”

CLICK HERE to read the full case.

About the Author

Matt Schmidt

Matt graduated from the James E Rogers College of Law at the University of Arizona in passing the Arizona bar exam in 2010. Matt's primary interest in law focuses on general personal injury and insurance bad faith.

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