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Oncor Electric Delivery Co. LLC v. Chaparral Energy, LLC

Supreme Court of Texas

April 27, 2018

Oncor Electric Delivery Company LLC, Petitioner,
Chaparral Energy, LLC, Respondent

          Argued Date: February 7, 2018

          On Petition for Review from the Court of Appeals for the Eighth District of Texas


          Jeffrey S. Boyd, Justice

         The question in this case is whether the Texas Public Utility Regulatory Act grants the Texas Public Utility Commission (the PUC) exclusive jurisdiction to resolve issues underlying a customer's claim that a PUC-regulated utility breached a contract by failing to timely provide electricity services. We hold that it does, so we reverse the court of appeals' judgment and render judgment dismissing this case without prejudice.

         I. Background

         In 2007, Chaparral Energy, LLC, requested that Oncor Electric Delivery Co. provide electricity to two wells Chaparral had recently drilled in Loving County. Oncor agreed, although it would have to construct new facilities to deliver electricity from its existing facilities to a "tie-in" point from which Chaparral could construct facilities to transmit the electricity to the wells. Oncor allegedly represented that it could complete its work within about ninety days, possibly even sooner. In late September 2007, Oncor delivered a proposed written agreement (the Service Agreement) to Chaparral. The Service Agreement required Chaparral to pay $22, 327 as its share of Oncor's costs to construct the new facilities. The agreement provided that "the start date of this project will be no earlier than two weeks preceding the execution of this agreement" and that Oncor would provide a "more definitive installation schedule" upon Chaparral's delivery of the executed agreement and required payment. Chaparral delivered the signed Service Agreement and the $22, 327 payment to Oncor by the end of November.

         Oncor never provided Chaparral a "more definitive installation schedule." Several weeks later, when Chaparral inquired about the project's status, Oncor explained that it was having difficulty obtaining easements it needed to construct the new facilities across privately owned land. Chaparral alleges that these representations were false and that Oncor did not even attempt to obtain all of the necessary easements until several months later. In any event, Oncor did not obtain the easements until December 2008. According to Chaparral, Oncor then finished constructing the new facilities in two days. Meanwhile, Chaparral allegedly spent over $300, 000 to rent generators and purchase diesel fuel to provide the necessary power to the wells.

         Chaparral sued Oncor in district court for breach of contract, seeking actual damages, additional damages, interest, attorney's fees, expenses, taxable costs, "and any further legal or equitable relief to which Chaparral may be entitled." Chaparral alleged that "Oncor did not cooperate in good faith to fulfill its duties and obligations" under the Service Agreement, that "Oncor did not use reasonable diligence, nor did Oncor act in a manner consistent with good business practices, reliability, safety, and expedition, " and that Oncor "engaged in intentional misconduct" and was grossly negligent.[1] It also specifically pleaded that all "conditions precedent to the causes of action asserted and the relief requested by Chaparral herein have occurred, have been performed or have been waived."

         A jury found that Oncor failed to comply with the Service Agreement. Based on the jury's findings, the trial court awarded Chaparral $186, 000 in actual damages, nearly $30, 000 in prejudgment interest, $200, 000 for attorney's fees, and taxable court costs. Oncor appealed. While the appeal was pending, the Fort Worth Court of Appeals issued its decision in Oncor Electric Delivery Company, LLC v. Giovanni Homes Corporation, 438 S.W.3d 644 (Tex. App.-Fort Worth 2014, pet. denied). There, the Fort Worth court decided sua sponte that the PUC had exclusive jurisdiction over Giovanni Homes's breach-of-contract claim against Oncor. Id. at 657. Oncor then moved to dismiss Chaparral's claim for want of jurisdiction, arguing for the first time that the PUC has exclusive jurisdiction to resolve Chaparral's allegations. The court of appeals denied Oncor's "jurisdictional challenge" and affirmed the trial court's judgment. 511 S.W.3d 750, 752 (Tex. App.-El Paso 2016). We granted Oncor's petition for review.

         II. Jurisdiction

         Oncor argues that the court of appeals erred by denying Oncor's dismissal motion because the PUC has exclusive jurisdiction over Chaparral's claims. Chaparral disagrees, of course, and also argues that even if the PUC might otherwise have exclusive jurisdiction, Chaparral did not have to exhaust administrative remedies because (1) the PUC has no authority to resolve a breach-of-contract claim or award damages as a remedy for a breach, and (2) forcing Chaparral to pursue its claim before the PUC would deny Chaparral its constitutional rights to open courts and to a jury trial. We address each issue in turn.

         A. Exclusive jurisdiction

         A state agency "has exclusive jurisdiction when the Legislature has granted that agency the sole authority to make an initial determination in a dispute." In re Entergy Corp., 142 S.W.3d 316, 321 (Tex. 2004). When an agency has exclusive jurisdiction, courts lack jurisdiction until the party has exhausted all administrative remedies before the agency. Id. at 321-22. Because a challenge to the court's subject-matter jurisdiction cannot be waived, a party may raise exclusive jurisdiction for the first time on appeal. Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex. 2012).

         We begin with the presumption that district courts are constitutionally authorized to resolve legal disputes. Entergy, 142 S.W.3d at 322; see Tex. Const. art. V, § 8. To overcome that presumption, the Constitution or another law must grant exclusive jurisdiction to another court or an administrative agency. In re Sw. Bell Tel. Co., 235 S.W.3d 619, 624-25 (Tex. 2007); Entergy, 142 S.W.3d at 322. Unlike courts, an administrative agency is "a legislative creation with only those powers expressly conferred and necessary to accomplish its duties." Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 216 (Tex. 2002). Whether an agency has exclusive jurisdiction presents a question of statutory interpretation we review de novo. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 222 (Tex. 2002).

          A statute grants an agency exclusive jurisdiction when its "language clearly expresses the Legislature's intent for the [agency] to have exclusive jurisdiction over matters the [statute] governs." David McDavid Nissan, 84 S.W.3d at 223. Absent such an explicit grant, an agency may also have exclusive jurisdiction "when a pervasive regulatory scheme indicates that the Legislature intended for the regulatory process to be the exclusive means of remedying the problem to which the regulation is addressed." In re Sw. Bell Tel., 235 S.W.3d at 624-25 (citing David McDavid Nissan, 84 S.W.3d at 221). In deciding whether a "pervasive regulatory scheme" exists, the statutory language is determinative. Entergy, 142 S.W.3d at 322-23.

         Oncor is a public transmission-and-distribution utility regulated by the PUC. See Oncor Elec. Delivery Co. LLC v. Pub. Util. Comm'n, 507 S.W.3d 706, 709-10 (Tex. 2017). The Texas Public Utility Regulatory Act (PURA) grants the PUC broad powers to "regulate and supervise the business of each public utility within its jurisdiction and to do anything specifically designated or implied by [PURA] that is necessary and convenient to the exercise of that power and jurisdiction." Tex. Util. Code § 14.001. PURA's express purpose "is to establish a comprehensive and adequate regulatory system for public utilities to assure rates, operations, and services that are just and reasonable to the consumers and to the utilities" and "to grant the [PUC] authority to make and enforce rules necessary to protect customers of . . . electric services consistent with the public interest." Id. ยง 11.002(a), (c). It reiterates this purpose in Subtitle B, which ...

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