Sunnyland Farms, Inc. v. Central New Mexico Electric Cooperative, Inc.

301 P.3d 387 (2013)

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Nature of the Case

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Facts

P purchased its electricity from D. On September 8, 2003, D shut off electrical service to P. Prior to disconnecting D ordinarily gives its customers notice that they have fifteen days to pay their overdue bills before service is suspended. It did not give P this fifteen-day notice. Before electrical service was restored, P employees engaged in arc welding near flammable materials, including cardboard boxes. They started a fire that ultimately destroyed P's pack house and operations building. Without electricity, P had no running water, and the fire grew. P concedes that its employees were negligent both in starting the fire and by failing to use a fire extinguisher. Fire trucks arrived, but they were unable to access well water because there was no electricity to power the pumps. Firefighters attempted to contact D to restore electricity to the water sources, but D employees expressed reservations to the emergency dispatcher, and the firefighters interpreted their statements as a threat that the fire department would have to assume liability. P sued D in contract and tort. The trial court found D liable both in contract and tort. Total consequential damages of over $21 million, of which $13.7 million was the net value of lost crops that the facility would have been able to grow in the absence of the fire. The trial court reduced the tort damages by 80% to account for P's comparative fault. The trial court awarded the entire amount for contracts damages which was almost $21.4 million. P was allowed to elect a remedy in contract or tort after the resolution of their appeals. The court awarded $100,000 in punitive damages based on D's failure to restore energy when requested to do so by firefighters. The trial court granted D an offset of approximately $3.2 million for subrogation rights that it had obtained in a settlement with P's insurer. It awarded post-judgment interest on the contract damages at a rate of 8.75%, awarded post-judgment interest on damages awarded under tort at 15%, and declined to award any prejudgment interest. The court of appeals affirmed on all issues raised by P and reversed on several issues raised by D. It held that awards of consequential damages in contract are governed by a 'tacit agreement' test, which the trial court had failed to apply. It reversed the award of damages in contract. It vacated the trial court's calculation of future lost profits, finding that the trial court's calculations of crop yields lacked sufficient evidence and did not rise to the level of 'reasonable certainty.' It vacated the award of punitive damages due to the trial court's failure to find the facts necessary to establish corporate liability. It affirmed rulings on pre- and post-judgment interest and D's offset of the damages. P appealed.