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City of Los Angeles v. Tesoro Refining and Marketing Co.

September 22, 2010

CITY OF LOS ANGELES, PLAINTIFF, CROSS-DEFENDANT AND RESPONDENT,
v.
TESORO REFINING AND MARKETING COMPANY, DEFENDANT, CROSS-COMPLAINANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Los Angeles County. Richard L. Fruin, Jr., Judge. Reversed and remanded with directions. (Los Angeles County Super. Ct. No. BC382649).

The opinion of the court was delivered by: Ashmann-gerst, J.

CERTIFIED FOR PUBLICATION

By way of this appeal, Tesoro Refining and Marketing Company (Tesoro) challenges: (1) the grant of summary judgment in favor of the City of Los Angeles (Los Angeles) on its complaint requesting a declaration that it has the exclusive right to sell power for use within its borders; and (2) the denial of Tesoro's motion for summary judgment on its cross-complaint seeking a declaration that it may purchase power for use in Los Angeles from Southern California Edison (Edison). We reverse the summary judgment entered in favor of Los Angeles and order the trial court to grant the motion for summary judgment filed by Tesoro.

FACTS

Tesoro owns a refinery (refinery) that straddles the border between Los Angeles and the City of Carson (Carson). Most of the refinery is powered with electricity that Tesoro purchases from the Los Angeles Department of Water and Power (LADWP). A small fraction of the refinery outside Los Angeles is powered with electricity purchased from Edison, a private utility company located in and servicing Carson. Tesoro desires to modify its electrical system infrastructure and power the entire facility with electricity purchased solely from Edison.

Los Angeles sued for declaratory relief establishing that as a charter city, the California Constitution gives it the exclusive right to provide electric service to its inhabitants. Subsequently, the Public Utilities Commission (PUC) issued Decision No. 08-06-030 on June 27, 2008 (PUC decision) and ordered Edison to provide the refinery with its full requirement for electricity if requested by Tesoro. Tesoro filed a cross-complaint for declaratory relief establishing that, consistent with the PUC decision, Tesoro may purchase electricity from Edison and use it in the portion of the refinery located in Los Angeles. The parties filed cross-motions for summary judgment.

The trial court ruled against Tesoro and entered judgment containing the following declaration: "[Los Angeles] has the exclusive right to furnish electricity within [Los Angeles]..., and... no utility other than [Los Angeles] may furnish electricity for use or consumption within that portion of the Tesoro refinery situated within [Los Angeles] without consent of [Los Angeles]."

This timely appeal followed.

The PUC requested the opportunity to file an amicus brief on Tesoro's behalf. We granted that request and permitted Los Angeles to respond.

DISCUSSION

Summary judgment is reviewed de novo. (Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1001.) Thus, we take a fresh look at the issues presented to the trial court.

As a preliminary matter, we must examine the judgment in order to help frame the issue. On its face, the judgment purports to prohibit any utility other than Los Angeles from furnishing power for use within its borders. But Edison was not a party to the action, so the judgment is not binding on Edison and does not bar it from complying with the PUC decision.*fn1 Furthermore, the judgment does not expressly prohibit Tesoro from purchasing power from Edison at a delivery point in Carson for use in the portion of the refinery located within the borders of Los Angeles. At best, that prohibition is implied. In its briefs, however, Tesoro accepts the implied prohibition as though it were express. Further, Tesoro tacitly accepts that the judgment prevents Edison from complying with the PUC decision. For purposes of this appeal, we will not second guess Tesoro's assumptions. Thus, the issue is: Does the California Constitution*fn2 or Los Angeles Charter (charter) prevent Tesoro from purchasing and Edison from selling power for use in Los Angeles?

I. The Constitution

Los Angeles is a municipal corporation with the constitutional authority to "establish, purchase, and operate public works to furnish its inhabitants with light, water, power, heat, transportation, or means of communication." (Cal. Const., art. XI, § 9(a).) A private utility company may "establish and operate works for supplying those services upon conditions and under regulations that the city may prescribe under its organic law." (Cal. Const., art. XI, § 9(b).) The charter does not permit a private utility company such as Edison to establish and operate works in Los Angeles for supplying power to its inhabitants absent a franchise. (Charter, §§ 101, 390, 672; Southern Pacific Pipe ...


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