VT Elec. Coop v. Mass. Municipal Wholesale Elec.

Vermont Electric Cooperative, Inc. v. Massachusetts Municipal Wholesale
Electric Co.   (96-127); 165 Vt 629; 687 A.2d 1256

[Opinion Filed 10-Oct-1996]


                               ENTRY ORDER

                      SUPREME COURT DOCKET NO. 96-127

                            SEPTEMBER TERM, 1996


Vermont Electric Cooperative,        }     APPEALED FROM:
Inc.                                 }
                                     }
     v.                              }     Lamoille Superior Court
                                     }
Massachusetts Municipal Wholesale    }
Electric Company                     }     DOCKET NO. 99-4-95Lecv


       In the above-entitled cause, the Clerk will enter:

       Plaintiff Vermont Electric Cooperative (VEC) seeks restitution of
  $92,508.30 in payments made to defendant Massachusetts Municipal Wholesale
  Electric Company (MMWEC) under a power sales agreement that was
  subsequently declared void ab initio in Vermont Department of Public
  Service v. Massachusetts Municipal Wholesale Electric Co., 151 Vt. 73, 558 A.2d 215 (1988), cert. denied, 493 U.S. 872 (1989) (hereinafter VDPS).  The
  trial court granted defendant's motion for summary judgment, holding that
  the action was barred by the six-year statute of limitations for civil
  actions, 12 V.S.A. § 511.  We affirm.

       In the spring of 1979, MMWEC sent letters to Vermont municipalities
  and electric cooperatives, including VEC, soliciting their interest in the
  purchase of project capability from MMWEC's joint ownership interest in the
  Seabrook Nuclear Generating Station.  On September 27, 1979, VEC signed a
  power sales agreement to purchase 10,000 kilowatts of power capability in
  Seabrook from MMWEC.  Other Vermont municipal and cooperative utilities,
  including the Villages of Stowe, Ludlow, Lyndonville, Morrisville, and
  Northfield and the Washington Electric Cooperative, also signed similar
  power sales agreements with MMWEC.

       In the fall of 1985, MMWEC informed each of the purchasers, including
  VEC, that they were required to begin making monthly interest payments on
  January 1, 1986, under their respective power sales agreements.  VEC paid
  the amount of $92,508.30 to MMWEC on February 12, 1986.

       In October 1985, the Vermont Department of Public Service (DPS) filed
  a complaint against MMWEC and certain Vermont utilities, including VEC,
  seeking a declaration that the power sales agreements were void under
  Vermont law because they impermissibly delegated local authority to MMWEC. 
  Shortly after this suit was filed, VEC sought and was granted status as a
  plaintiff.  In a memorandum in support of summary judgment submitted to the
  court in February 1986, VEC asserted that it lacked authority to enter into
  its power sales agreement and that its contract "should be . . . declared
  invalid and ultra vires."

       In an amended complaint dated April 10, 1986, VEC sought restitution
  from MMWEC of the interest payment made in February.  In August 1986, VEC
  and other plaintiffs stipulated to dismiss without prejudice their claims
  for restitution.  Under the stipulation, MMWEC, VEC and other plaintiffs
  agreed that if any of the claims for restitution were reinstated in another
  lawsuit within one year from the entry of a final judgment of the trial
  court, the claims would be deemed to have been filed on the date they were
  first filed by the DPS.

 

       The Washington Superior Court upheld the power sales agreements in a
  decision issued on November 26, 1986.  This Court reversed, directing entry
  of judgment for plaintiffs, and the United States Supreme Court denied
  MMWEC's petition for a writ of certiorari on October 2, 1989.

       The instant complaint was filed on April 25, 1995.  At issue is the
  date upon which the action for restitution accrued.  Plaintiff argues that
  its claim for restitution did not accrue until October 2, 1989, when the
  United States Supreme Court denied MMWEC's petition for writ of certiorari. 
  Accordingly, plaintiff argues that this suit falls within the six-year
  statute of limitations. Plaintiff contends that in the special case where a
  party seeks restitution of payments made on a void contract, the claim does
  not accrue until judgment declaring the invalidity of the contract is
  final.  In asserting this claim, plaintiff relies on Republic Security
  Corp. v. Puerto Rico Aqueduct & Sewer Authority, 674 F.2d 952 (1st Cir.
  1982), a decision that applies the Puerto Rican Civil Code.

       In Vermont, a civil action for restitution "shall be commenced within
  six years after the cause of action accrues and not thereafter."  12 V.S.A.
  § 511; Stankiewicz v. Estate of LaRose, 151 Vt. 453, 456, 561 A.2d 400, 402
  (1989) (12 V.S.A. § 511 applies to restitution actions). The statute of
  limitations runs from the time when a plaintiff can first sue and recover
  its demand.  Furlon v. Haystack Mountain Ski Area, Inc., 136 Vt. 266, 270,
  388 A.2d 403, 406 (1978); White v. White, 136 Vt. 271, 273, 388 A.2d 386, 388 (1978).  The discovery rule, defining the point at which the cause of
  action accrues as the time of discovery of the injury, applies to actions
  under 12 V.S.A. § 511.  Univ. of Vt. v. W.R. Grace & Co., 152 Vt. 287, 290,
  565 A.2d 1354, 1357 (1989).

       We hold that VEC's action for restitution accrued in February 1986,
  when VEC made payment to the defendant.  Once VEC made payment to MMWEC,
  VEC suffered injury and was entitled to seek restitution.  See Stankiewicz,
  151 Vt. at 456, 561 A.2d  at 403 (action by insurance company to recover
  proceeds paid to insured accrued when plaintiff made payment); Furlon, 136
  Vt. at 270, 388 A.2d  at 406 (cause of action to recover for personal injury
  accrued on date of injury).

       Application of the discovery rule, W.R. Grace & Co., 152 Vt. at 289,
  565 A.2d at ___, does not change this result because plaintiff was aware of
  the infirmities in the power sales agreement when it made payment in
  February 1986.  Where the plaintiff discovers an injury after it occurs,
  the statute of limitations begins to run at the time of discovery of the
  injury.  Id. Plaintiff filed a motion in support of summary judgment
  against MMWEC in the VDPS action in February 1986.  Because plaintiff was
  aware of its claim against MMWEC at the time it made payment, the statute
  of limitations began running immediately.  See Lake v. Piper, Jaffray &
  Hopwood Inc., 365 N.W.2d 838, 839 (Neb. 1985) (per curiam) (action for
  declaratory judgment and recovery for payment made under allegedly void
  contract accrued on date of contract's execution, not date of payment,
  where plaintiff had knowledge of fraud when contract was signed).

       Plaintiff's reliance on Republic Security is misplaced. Although the
  facts of Republic Security are similar to those here, Puerto Rican civil
  law is not.

     [T]he courts of Puerto Rico have consistently observed that civil law
     tradition, and not common law, governs the rules applicable to limitation
     periods and tolling provisions under Puerto Rican law. . . .  Thus, it is
     evident that special care must be taken when dealing with limitation
     problems under Puerto Rican law.

  Rodriguez Narvaez v. Nazario, 895 F.2d 38, 43 (1st Cir. 1990) (citations
  omitted).  In Republic Security, the plaintiff's action was brought under
  Article 1255 of the Puerto Rican Civil Code, which has been interpreted to
  give rise to an action for restitution on a void contract only after a
  final declaration of invalidity.  674 F.2d  at 955.  Thus, under Puerto
  Rican law, the statute of limitations for the restitution action did not
  begin to run until the declaration of invalidity was final.  Id. at 954. 
  Vermont has no such rule.  See Legault v. Legault, 142 Vt. 525, 531, 459 A.2d 980, 984 (1983) (summarizing equitable doctrine of unjust enrichment). 
  Furthermore, we decline to adopt such a rule because it would, in our
  opinion, unnecessarily postpone the resolution of disputes, contrary to the
  preference for finality inherent in 12 V.S.A. § 511.

       Affirmed.




     BY THE COURT:



     _______________________________________
     Frederic W. Allen, Chief Justice

     _______________________________________
     Ernest W. Gibson III, Associate Justice

     _______________________________________
     John A. Dooley, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice