Upper Peninsula Power Co. v. Vill. of L'Anse

334 Mich.App. 581

965 N.W.2d 658

UPPER PENINSULA POWER COMPANY, Plaintiff/Counterdefendant-Appellant,

v. VILLAGE OF L'ANSE, Defendant/Counterplaintiff-Appellee,andWPPI Energy, Inc. and Utility Systems Engineering, Inc., Defendants-Appellees.

No. 349833

Court of Appeals of Michigan.

Submitted November 4, 2020, at Lansing.

Decided November 12, 2020, at 9:00 a.m.

Dykema Gossett PLLC (by Richard J. Aaron, Jason T. Hanselman, Lansing, Frank A. Dame, Jr., and Jeffrey A. Caviston ) for the Upper Peninsula Power Company.

Straub, Seaman & Allen, PC (by Thomas F. Waggoner, St. Joseph, Brandon G. Warzybok, and Megan M. Cuellar ) for Utility Systems Engineering, Inc.

Dickinson Wright PLLC, Lansing (by Peter H. Ellsworth and Nolan J. Moody ) for the Village of L'Anse.

Kitch Drutchas Wagner Valitutti & Sherbrook (by Beth A. Wittman, M. Sean Fosmire, Marquette, and Michael J. Watza, Detroit) for WPPI Energy.

Cunningham Dalman, PC, Holland (by Andrew J. Mulder and Vincent L. Duckworth ), for the Michigan Municipal League and the Michigan Townships Association, Amici Curiae.

Before: Jansen, P.J., and Fort Hood and Ronayne Krause, JJ.

Jansen, P.J. Plaintiff, Upper Peninsula Power Company (UPPCO), appeals as of right the trial court's opinion and order granting summary disposition to defendants—the Village of L'Anse (the Village), WPPI Energy, Inc. (WPPI), and Utility Systems Engineering, Inc. (USE)—under MCR 2.116(C)(8). We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from the Village's decision to not issue another franchise to UPPCO after the previous, 30-year franchise expired in July 2018. UPPCO is a utility company providing electric power to customers in Michigan's Upper Peninsula. WPPI is a Wisconsin-based regional power company that sells electricity to 51 locally owned electric utilities, including the Village. USE is a company that helps utilities grow service territory and increase the amount of electricity those utilities sell. The Village is located in Baraga County in the Upper Peninsula and is a member of WPPI. UPPCO's claims, according to its second amended complaint, arise from "the Village's attempts to take or convert UPPCO's existing utility customers by unlawful means and without UPPCO's consent and WPPI and USE's facilitation and funding of that takeover."

UPPCO had provided utility service in the Village and to the township of L'Anse since the early 1900s. UPPCO's last franchise issued by the Village in 1988 expired on July 26, 2018.¹ The franchise was nonexclusive, and it also provided that "service under this franchise shall be restricted to the Celotex Corporation and other firms, persons or corporations, who are unable to obtain electric service from the municipally owned utility...." In 1994, the Village annexed from the surrounding township of L'Anse parcels of land that constituted an industrial park known as "Dynamite Hill." UPPCO had served customers within that industrial park.

On December 14, 2015, Village Manager Bob LaFave sent an e-mail to USE President Pat Wheeler, stating that he had "received direction to proceed with trying to get the Dynamite Hill area put onto Village power." LaFave asked Wheeler what the next steps would be. Wheeler indicated that he was going to send some "information with which to make potential customer contacts" and that once those contacts were made, a meeting could be set up with either UPPCO or with the potential customers. LaFave replied that he would prefer to meet with the potential customers first.

On January 7, 2016, the Village sent a letter to all of UPPCO's customers in the Village. The letter stated, in pertinent part:

The Village of L'Anse is studying an offer of Village electric service to electric consumers within the Village limits who are currently served by UPPCO. In order to approach UPPCO regarding a proposed transfer of service, it is important that the Village determine which electric consumers desire this proposed transfer of service.

The letter went on to state that the Village was setting up a meeting on January 19, 2016, which all the customers could attend. Further, the letter stated, "UPPCO will not be contacted prior to this meeting, and it is asked that electric consumers receiving this letter not discuss this matter with UPPCO prior to this meeting, as this is purely exploratory in nature at this time."

The January 19, 2016 meeting went on as planned without UPPCO's knowledge or participation. At the meeting, the customers were presented with a summary of the savings they could expect if UPPCO was no longer the electric service provider. On February 3, 2016, the Village approached UPPCO about the Village providing electric service to the Dynamite Hill customers. On March 22, 2016, UPPCO informed Wheeler that it "[did] not intend to give up the customers in the industrial park." The communication also stated that a meeting on this issue would not be productive.

At some point, the Village presented UPPCO's Dynamite Hill customers with an "Agreement to Transfer," which some customers executed. On July 17, 2017, the Village notified UPPCO that the Village planned to not renew the current franchise, which was due to expire on July 26, 2018. The letter explained that it was "in a position to provide service to all customers located in the Village through its own electric distribution system" and "[f]or that reason, the Village has decided not to renew the franchise agreement with [UPPCO]."

On January 19, 2018, the Village sent another letter to the Dynamite Hill electric customers, stating that UPPCO's franchise to serve electric customers in the Village would be expiring and that customers currently receiving electric service from UPPCO would be transferred to the Village's electric system sometime after that franchise expires on July 26, 2018. The Village and Wheeler continued to actively pursue UPPCO's customers with promises of offering electric service for a lower price.

On February 28, 2018, UPPCO again stated that it would not consent to the Village taking UPPCO's customers. UPPCO also explained that the Village could not take over UPPCO's lines within the Village because doing so would prevent UPPCO from serving customers located outside the Village. A couple of weeks later, Village Manager LaFave sent an e-mail to UPPCO stating that there had apparently been a misunderstanding because the Village had no intention of preventing UPPCO from the public rights-of-way to provide service to its customers outside the Village. UPPCO responded that it was pleased to hear this clarification but reiterated that it considered "any action taken by the Village that unreasonably denies the renewal of UPPCO's franchise, seizes UPPCO's distribution assets, or takes UPPCO's customers to be unlawful."

Despite UPPCO's warning, the Village, USE, and WPPI continued to work toward having the Village provide electrical service to UPPCO's customers, including requesting quotes for constructing a duplicate line to the line UPPCO had already constructed to provide service to the Dynamite Hill area. The quotes were due on May 11, 2018, and the work was to be completed by July 31, 2018.

On May 10, 2018, UPPCO submitted a request for a franchise renewal to the Village. One of the provisions in the requested franchise was that UPPCO would be allowed "to transact local business in the Village for the purposes of producing, storing, transmitting, selling, and distributing electricity into and through the Village and all other matters incidental thereto." On July 24, 2018, the Village sent its proposed revisions to UPPCO, which included the striking of any provisions related to allowing UPPCO to provide service to any customers in the Village, not only those who were unable to obtain electric service from the Village.

Before UPPCO's franchise expired, UPPCO discovered that "certain meter and equipment seals belonging to UPPCO had been removed ... and replaced with WPPI Energy seals." On August 20, 2018, three of UPPCO's customers asked UPPCO to discontinue supplying electric service, but UPPCO refused. UPPCO explained that it had an "ongoing duty and right" to provide electric service to "all ... customers currently being served in the Village." Thereafter, the Village hired Penokie Electric to sever certain electric lines leading into UPPCO's meters. While performing this work at the Village's water tower, which was located in the Dynamite Hill area, Penokie damaged a wire between the meter and the service panel, creating a dangerous condition. UPPCO had to de-energize the service so the repair could be effectuated.

UPPCO filed its initial complaint on August 1, 2018, seeking injunctive relief for the Village having denied a franchise and severed live electrical lines, and also seeking declaratory and injunctive relief under the General Law Village Act, MCL 61.1 et seq . The complaint further alleged counts of trespass, impairment of contract, unlawful forcible entry and detainer, tortious interference with a business relationship, unfair competition, civil conspiracy, and violations of the Michigan Antitrust Reform Act, MCL 445.771 et seq . —one involving unlawful contract, combination, or conspiracy, and one involving unlawful monopoly.²

Defendants moved for summary disposition under MCR 2.116(C)(8) and (C)(4), and the trial court granted defendants’ motions. The court's ruling first addressed UPPCO's contention that the Village could not deny a franchise to UPPCO. The court noted that a franchise is a contract and that once a franchise expires on its own terms, there is no continuing duty for the parties to enter into a new franchise agreement. The trial court also rejected UPPCO's argument that the Village's decision to not renew the franchise was reviewable for "reasonableness." The court further elaborated that not only was the Village's decision not reviewable for reasonableness, it was not reviewable at all.

Regarding the Village's solicitation of...