LeBlanc v. City of Plaquemine

Citations: 448 So. 2d 699; 1984 La. App. LEXIS 8261; 1984 WL 921084Docket: 83 CA 0564

Court: Louisiana Court of Appeal; February 27, 1984; Louisiana; State Appellate Court

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In Mr. and Mrs. Mervin LeBLANC, et al. v. CITY OF PLAQUEMINE, the Court of Appeal of Louisiana addressed an appeal concerning a declaratory judgment favoring the plaintiffs, residents of Green Acres subdivision, allowing them to terminate their electric service with the City of Plaquemine in favor of Gulf States Utilities (GSU). Green Acres, developed in two phases by Allied Investments, is located outside the City limits. Initially, Allied sought electric service from the City, although they preferred GSU. An informal agreement was reached, leading the City to install electric infrastructure in the subdivision, but no formal contract was documented.

For Green Acres II, Allied entered a 'utilities service agreement' with the City that allegedly required exclusive electric service from the City, but evidence showed this restriction was not implemented in the subdivision’s covenants. Approximately 50 plaintiffs, all receiving service from the City, sought to switch to GSU, citing lower rates and claiming the City's service lacked a valid agreement as mandated by Louisiana law (La. R.S. 33:1326). The City contested the suit, asserting the existence of valid service agreements and invoking custom and usage in electric service provisions. Additionally, the City made a reconventional demand for compensation for the electric facilities installed for the plaintiffs. The Court ultimately ruled in favor of the plaintiffs, affirming their right to transition to GSU services.

Plaintiffs agreed not to pursue injunctive relief prior to trial. Following the trial, the judge determined that the City lacked service agreements required under La. R.S. 33:1326, allowing plaintiffs to terminate their electric service with the City to obtain it from GSU. The court ruled that the City could not seek compensation for electric facilities or service extensions, as it had not charged plaintiffs for those services initially. The City appealed this decision, citing eight errors, arguing primarily that the trial court erred in concluding there were no valid service agreements. The City contended that the arrangements for providing electric service constituted valid contracts under Louisiana law. Expert testimony indicated that written service agreements are uncommon among municipal utilities. Upon review, the court sided with the City’s interpretation, asserting that the legislature did not impose stricter requirements for service agreements under La. R.S. 33:1326, noting that other provisions in the law explicitly require written agreements for different types of contracts.

The term 'service agreements' under La. R.S. 33:1326 is interpreted to require only the basic elements of a contract as defined by Louisiana law, which includes competent parties, mutual consent, a certain object, and a lawful purpose, all of which are present in the case at hand, establishing a valid contract between the City and its customers. Previous case law supports that the use of utility services, along with billing and payment, constitutes a binding contract. The appellees assert that the service agreements lack a specified duration and could be unilaterally terminated by customers, but the appellant counters that such agreements cannot be unilaterally terminated for the duration of customer requirements or the lifespan of the utility facilities. The trial court did not evaluate the existence of service agreements regarding their termination or duration. In Louisiana, absent an explicit term, courts will infer a reasonable duration based on the contract's nature and circumstances, considering the parties' execution of obligations and customary practices. Testimonies from several plaintiffs indicated varied intentions regarding the duration of service, with some unaware of any intention to switch utilities. Notably, no evidence was presented showing a customer had switched utilities without the City’s consent, implying that the City believed these agreements were not terminable at the customer's discretion, given their significant investment in electric infrastructure.

Provisions of the Louisiana Civil Code relevant to this case include articles that outline the role of custom and usage in contract obligations. Specifically, contracts encompass not only explicit terms but also those implied by law, equity, or customary practices (La. C.C. art. 1903). Ambiguities in contracts are clarified by local usage (La. C.C. art. 1953). Furthermore, the law recognizes that incidents not expressly stated in contracts can be inferred from common practices within the relevant field (La. C.C. art. 1964 and 1966). Testimony revealed a consistent practice in the utility sector where customers are not allowed to unilaterally terminate service to switch providers. Notably, GSU required the plaintiffs to obtain releases from the City before providing service. An exception was highlighted in the case of Plaquemine High School's transfer to Louisiana Power and Light, which occurred under a settlement agreement that included a release from the City. Although the trial court deemed the settlement letter inadmissible as hearsay, it was signed by the mayor and indicated awareness of potential contract issues when customers sought to change utilities. Additionally, the plaintiffs in Green Acres II were notified that the City would be the exclusive utility provider for their subdivision, as documented and filed legally, which implied that termination of service could not occur unilaterally. The court concluded that the service agreements with the City are not terminable at will by the plaintiffs, affirming the existence of valid contracts that cannot be unilaterally terminated for the purpose of switching suppliers. The trial court's judgment was reversed, costs were assigned to the plaintiffs, and there was no need to determine the specific duration of the agreements since that request was not made in the petition. The court chose not to address other claims regarding compensation related to termination. The judgment was reversed and rendered.

La. R.S. 45:123 typically prevents one electric public utility from constructing facilities or providing service within 300 feet of another's line, but exempts municipally-owned utilities in Louisiana. In this case, the court does not need to evaluate whether the service agreement with Green Acres II developers constituted a restrictive covenant for lot purchasers, as residents are currently receiving electricity from the City. One plaintiff's intent regarding the duration of service was not explored during testimony. Determining a 'reasonable term' for service agreements should consider factors such as the City’s investment recovery time, industry practices for similar contracts, and other relevant issues that influence the contract length needed to provide service cost-effectively. Additionally, while the City retains the right to terminate service if a plaintiff no longer requires it, no customer can terminate their service to switch to another supplier.