S T A T E O F M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * *
In the matter of the complaint of )
RESSCO, LLC, d/b/a SG MANAGEMENT, and ) Case No. U-17036 STAFFORD HOLDINGS, INC., against DTE GAS )
COMPANY. )
)
At the September 26, 2014 meeting of the Michigan Public Service Commission in Lansing, Michigan.
PRESENT: Hon. John D. Quackenbush, Chairman Hon. Greg R. White, Commissioner Hon. Sally A. Talberg, Commissioner
ORDER
On February 27, 2013, RESSCO, LLC, d/b/a SG Management (RESSCO), and Stafford Holdings, Inc. (Stafford Holdings), filed a complaint against DTE Gas Company (DTE Gas). Stafford Holdings owns and operates an apartment complex referred to as Chicago Apartments that is located in the City of Detroit. RESSCO is a property management company that manages this particular property for Stafford Holdings, as well as managing other properties not owned by Stafford Holdings. The complaint alleges that DTE Gas improperly transferred outstanding balances from properties managed by RESSCO, but not owned by Stafford Holdings, to the Chicago Apartments account and improperly threatened to shut off service on two occasions to the Chicago Apartments account.
A prehearing conference was held on June 13, 2013, before Administrative Law Judge Richard A. Patterson (ALJ) in order to set a schedule for the rest of the proceedings. DTE Gas, RESSCO, Stafford Holdings, and the Commission Staff (Staff) appeared at the conference.
An evidentiary hearing was held on October 15, 2013. DTE Gas, RESSCO, Stafford Holdings, and the Staff appeared at the hearing.
Complainants presented the testimony of Shawn Stafford, an employee of RESSCO,1 and eight exhibits in support of their position. Mr. Stafford testified that in January 2011 and March 2011, he received the natural gas bill for the Chicago Apartments account and noticed that
outstanding balances from several other properties had been transferred to the Chicago Apartments account. He testified that RESSCO was the property manager for the other properties, but did not have any ownership interest in the properties. Mr. Stafford outlined what duties RESSCO was required to perform as property manager. Mr. Stafford explained that RESSCO established utility accounts for the Chicago Apartments on behalf of Stafford Holdings. He explained further that when the accounts were set up, it was made clear to DTE Gas who the customer was, who the property owner was, and that although RESSCO was not the property owner, the bills should be sent to RESSCO because as the property manager and agent, it would be collecting the funds from tenants and remitting payment for the utility services. Mr. Stafford went on to explain how the bank account used to pay the bills was set up with Stafford Holdings as the owner of the account, and RESSCO being authorized to deposit funds and write checks against the account to pay bills. Mr. Stafford reiterated that RESSCO was the management company, not the property owner for any of the properties in question. He testified that in late 2010 or 2011, a receiver was appointed
1 Throughout the record, the parties describe the property management company as either RESSCO or SG Management. For consistency, the Commission will refer to the property
for the properties whose balances were transferred to the Chicago Apartments account and once the receiver was appointed, the receiver took over management duties for those properties. Mr. Stafford stated that DTE Gas was notified that the receiver was taking over the properties and clarified that at no time was the receiver appointed over RESSCO. Mr. Stafford also testified that he provided the receiver with the shut-off notices from DTE Gas and made sure that the receiver was aware that there was an issue with the properties’ unpaid DTE Gas bills. Regarding the transferred balances, Mr. Stafford testified that RESSCO immediately notified DTE Gas that the transfers were in error because Stafford Holdings had no affiliation with the other properties.
DTE Gas presented the testimony of Inez Chavez, an analyst in DTE Gas’ Consumer Hearings Department, and 45 exhibits in support of its position. Ms. Chavez testified that she was
personally involved in RESSCO’s complaint process and explained the steps DTE Gas took to resolve the complaint. DTE Gas claims that RESSCO was the customer of record for all of the accounts in question and provided bills showing that the bills were addressed to RESSCO, not the various property owners. DTE Gas argues that because RESSCO was the customer of record on all of the accounts, the transfers to the Chicago Apartments account were proper. Ms. Chavez testified that throughout the time period in question, a representative of RESSCO was always the contact person for all the accounts involved. Ms. Chavez further testified that Mr. Stafford contacted DTE Gas when other properties were in danger of having their utility service shut off. She also stated that in November 2010, DTE Gas received correspondence notifying them that neither RESSCO nor Stafford Holdings were responsible for the non-Chicago Apartments accounts, asking that RESSCO be removed from the accounts, and providing the name of the proper responsible party. Ms. Chavez testified that in March 2012, DTE Gas received notice that a receiver was appointed for properties other than the Chicago Apartments, that those properties had
been sold, and that service should be put in the new owners’ names. Ms. Chavez also sponsored several exhibits, including requests made by RESSCO to alter accounts, showing that RESSCO was the customer of record for all of the accounts in question. Ms. Chavez also testified regarding her interactions with RESSCO’s attorney regarding the informal hearing process and her
understanding of the rule regarding transfers of balances in non-residential accounts.
RESSCO, Stafford Holdings, DTE Gas, and the Staff submitted written closing arguments on November 21, 2013.
On January 23, 2014, the ALJ issued a Proposal for Decision (PFD) in which he found that DTE Gas did not produce any evidence to counter the complainants’ testimony and evidence showing that the accounts were set up with RESSCO as the agent of Stafford Holdings and not the owner or ultimate consumer of the utility services. The ALJ found persuasive the fact that the bills were consistently addressed to RESSCO at its corporate address instead of the various service addresses and that all the checks used to pay the bills indicated that RESSCO was an agent of Stafford Holdings. The ALJ also found persuasive the fact that DTE Gas did not produce
documents showing that its normal procedure for setting up accounts, including asking for positive identification of the entity requesting service (such as a tax identification number) and entering that information on the “Responsibility Tab” in its database, was followed. The ALJ found that the balance transfers to the Chicago Apartments account were not appropriate and that
complainants proved by a preponderance of evidence that RESSCO provided DTE Gas with sufficient information to correctly identify the customer of each account. The ALJ recommended that the Commission find that the transfers were not proper. The ALJ provided the parties an opportunity to file exceptions by February 13, 2014, and if necessary, replies to exceptions.
On February 13, 2014, DTE Gas filed exceptions. DTE Gas reiterated its argument that RESSCO was its customer for all the properties in question, not the property owners. DTE Gas argues that per the rules, the term “customer” means the purchaser, not the end user of the service. DTE Gas also points out that some of Mr. Stafford’s testimony regarding when an account was set up was inaccurate and argues his testimony was given too much weight by the ALJ. DTE Gas argues that Mr. Stafford’s testimony was misleading in that not all of the checks remitted to pay utility bills identified RESSCO as an agent of Stafford Holdings and those that do identify
RESSCO as an agent, identify RESSCO as an agent for an entity named Small Properties LLC, an entity unknown to DTE Gas. DTE Gas argues that the documents and testimony presented by complainants do not establish the companies involved were unrelated. Rather, DTE Gas asserts that the documents and testimony presented by DTE Gas establish that the companies involved were related. DTE Gas argues further that one of its representatives instructed RESSCO on how to transfer an account to another entity so that entity would be considered the customer instead of RESSCO. DTE Gas alleges that because RESSCO continued to receive bills in its name for all properties in question and did not provide any documentation or request any different billing treatment, RESSCO should be considered the customer and therefore, the balances transferred to the Chicago Apartments account were proper. DTE Gas argues that the Staff statement that DTE Gas did not properly reply to discovery requests, the Staff’s misstatement of a discovery request, and the Staff’s reliance on that misstatement misled the ALJ. Finally, DTE Gas asserts that the PFD is unlawful, unjust, and contrary to the evidence on the record.
On February 27, 2014, complainants filed replies to DTE Gas’ exceptions. According to RESSCO and Stafford Holdings, the owner of the property, not its management company, should be considered the customer and the ultimate purchaser of the utility service for the purposes of
1999 AC, R 460.1625(4) (Rule 25(4)) of the Commission’s Billing Practices Applicable to Non-Residential Electric and Gas Customers. Following this theory, RESSCO and Stafford Holdings allege that outstanding bills for properties managed by RESSCO but not owned by Stafford Holdings should not have been transferred to the Chicago Apartments account and by transferring the outstanding bills to the Chicago Apartments account, DTE Gas violated Rule 25(4). They argue that the ALJ properly applied the definition of customer and interpreted the evidence presented at the hearing, and therefore, properly determined that each apartment complex, not the property manager, was DTE Gas’ customer. They point out that the ALJ found that RESSCO met its burden of proof in showing which entity should be considered the customer and that DTE Gas’ exceptions are mostly reiterations of arguments already heard and rejected by the ALJ. They reiterate the argument that DTE Gas had several opportunities to collect the outstanding balances from the properties and failed to take advantage of these opportunities. RESSCO and Stafford Holdings argue that DTE Gas has provided no basis to reverse the PFD and the ALJ’s
recommendation should be upheld.
On February 28, 2014, the Staff filed replies to DTE Gas’ exceptions. The Staff points out that DTE Gas did not request that the Commission pierce the corporate veil and hold RESSCO responsible for the outstanding bills until DTE Gas’ written closing argument. The Staff also points out that RESSCO and Stafford Holdings met their burden of proof and DTE Gas did not provide evidence to refute it.
Discussion
After careful consideration of the facts presented at the hearing, the Commission concludes that it should adopt the findings and recommendations of the ALJ. It has long been the law in this state that the findings of an administrative law judge, albeit not controlling on the Commission
under all circumstances, may be afforded due weight when they bear on the credibility of the witnesses. MERC v Detroit Symphony Orchestra, Inc., 393 Mich 116; 223 NW2d 283 (1974). The rationale for giving due weight to an ALJ’s assessment of the witnesses’ testimony is that, unlike the Commission that reviews a cold record, the ALJ actually observes the demeanor of the witnesses during the hearing, and is better positioned to make credibility determinations. The Commission reviewed the record, agrees with the reasoning of the ALJ, and finds that DTE Gas should be ordered to remove the transferred amounts and any corresponding fees from the Chicago Apartments account as requested by the complainants.
THEREFORE, IT IS ORDERED that the relief requested in the complaint of RESSCO, LLC, d/b/a SG Management, and Stafford Holdings, Inc., against DTE Gas Company is granted, and the utility shall promptly remove all amounts transferred to the complainants’ account under 1999 AC, R 460.1625(4) and all corresponding fees from the Chicago Apartments account.
Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order under MCL 462.26.
MICHIGAN PUBLIC SERVICE COMMISSION
________________________________________
John D. Quackenbush, Chairman
________________________________________
Greg R. White, Commissioner
________________________________________
Sally A. Talberg, Commissioner
By its action of September 26, 2014.
________________________________ Mary Jo Kunkle, Executive Secretary
