State Farm Fire & Casualty Co. v. PECO
54 A.3d 921
| Pa. Super. Ct. | 2012Background
- Surge of electricity around August 10, 2008 damaged subrogors’ homes; PECO contends surge from lightning affected area.
- State Farm, subrogee to insureds Bennett, Winn, Stotz, Pet-tigrow, Witek, sued PECO for damages.
- Complaint alleged negligence, strict liability, breach of contract, and warranty; PECO answered asserting Rule 12.1 limitation on liability.
- Rule 12.1: tariff limits liability for service interruptions/variations to $500 or two times the service charge, and excludes certain causes beyond PECO’s control.
- Trial court granted PECO partial summary judgment, denied State Farm partial summary judgment; court held Rule 12.1 not exculpatory and limited damages.
- Appeal certified for immediate review; issues focus on exculpatory nature of Rule 12.1 and applicability to strict liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Rule 12.1 exculpatory and void against public policy? | State Farm argues Rule 12.1 shields PECO from all liability. | PECO contends tariff is a valid limitation, not fully exculpatory. | Rule 12.1 not exculpatory; enforceable to a degree. |
| Does Rule 12.1 apply to strict liability claims? | Schriner allows strict liability against utilities; tariff should disclaim it if intended. | Tariff does not expressly disclaim strict liability; may limit but not eliminate. | Rule 12.1 does not preclude strict liability claims; affirmed in part and vacated in part. |
| Whether framework Behrend/DeFrancesco governs tariff interpretation? | Behrend/DeFrancesco should guide whether tariff is exculpatory and reasonable. | Tariff interpretation should follow contract principles under Restatement §195. | Two-step framework adopted: exculpatory vs. non-exculpatory; then interpret liability limits. |
| Does Rule 12.1 exculpate beyond negligence (e.g., foreseeability and willful misconduct)? | Foreseeability and within-control damages may still be recoverable; second paragraph limits only. | Exculpation extends to all non-listed harms beyond PECO’s control. | Second paragraph limits damages; first paragraph exculpates beyond control; not wholly exculpatory. |
| Result of tariff on State Farm’s statutory damages claims and remand scope? | State Farm seeks reversal and restoration of claims not barred by tariff. | Tariff controls damages, with limited recovery absent willful misconduct. | Orders affirmed in part, vacated in part; remanded for strict liability handling. |
Key Cases Cited
- Behrend v. Bell Tel. Co., 242 Pa. Super. 47, 363 A.2d 1152 (Pa. Super. 1976) (tariff limitations reviewed for reasonableness; PUC expertise pending)
- DeFrancesco v. Western Pa. Water Co., 329 Pa. Super. 508, 478 A.2d 1295 (Pa. Super. 1984) (exculpatory clause invalid where it exonerates from all liability)
- Schriner v. Pa. Power & Light Co., 348 Pa. Superior Ct. 177, 501 A.2d 1128 (Pa. Super. Ct. 1985) (strict liability against electric utilities can apply; needs consideration)
- Warren City Lines, Inc. v. United Refining Co., 220 Pa. Super. 308, 287 A.2d 149 (Pa. Super. 1971) (public policy limits on contract liability transfer; risk allocation concerns)
- Behrend v. Bell Tel. Co. (Behrend I), 242 Pa. Super. 47, 363 A.2d 1152 (Pa. Super. 1976) (tariffs with liability limitations must be reasonable; PUC role)
- Slater v. Penn. Power Co., 383 Pa. Super. 509, 557 A.2d 368 (Pa. Super. 1989) (electricity deemed inherently dangerous; high standard of care)