Bits N Bytes Computer Supplies, Inc. v. Chesapeake & Potomac Telephone Co. of Maryland, 48

• Citation: 97 Md.App. 557,631 A.2d 485
• Decision Date: 01 September 1993
• Docket Number: No. 48,48
• Parties: BITS "N" BYTES COMPUTER SUPPLIES, INC. v. The CHESAPEAKE & POTOMAC TELEPHONE COMPANY OF MARYLAND. ,
• Court: Court of Special Appeals of Maryland

Page 557

97 Md.App. 557

631 A.2d 485

BITS "N" BYTES COMPUTER SUPPLIES, INC. v. The CHESAPEAKE & POTOMAC TELEPHONE COMPANY OF MARYLAND.

No. 48, Sept. Term, 1993.

Court of Special Appeals of Maryland.

Oct. 4, 1993.

As Amended Oct. 27, 1993.

Certiorari Denied Jan. 12, 1994.

John W. Hermina (Hermina & Hermina, on the brief) Laurel, for appellant.

Eric B. Yarvin (Lester B. Seidel and Protas & Spivok, Chartered, on the brief) Bethesda, for appellee.

Argued before BLOOM, FISCHER and MOTZ, JJ.

MOTZ, Judge.

During 1985 and 1986, appellant, Bits "N" Bytes Computer Supplies, Inc. (BNB), entered into a series of directory advertising contracts with appellee, The Chesapeake & Potomac Telephone Company of Maryland (C & P), for advertisements in various yellow page telephone directories owned by C & P. BNB also purchased telephone service from C & P. On January 28, 1988, C & P filed suit against BNB in the District Court of Maryland, asserting that BNB failed to pay "statement[s] of accounts" submitted to it by C & P and so owed C & P $8,918.18. BNB filed a notice of intent to defend and a request for a jury trial. The case was transferred to the Circuit Court for Montgomery County where C & P filed its complaint and a motion for summary judgment, asserting once again that $8,918.18 was due and owing from BNB. This entire amount was owing on unpaid directory advertising bills, rather than on telephone service bills.

In response, BNB filed an extensive answer, an opposition to the motion for summary judgment, and a three-count counterclaim. BNB asserted that C & P, a public utility, was "regulated by the Maryland Public Service Commission" (PSC), and that in violation of a regulation of the PSC, COMAR 20.45.04.07(D), C & P wrongfully interrupted telephone service to BNB when BNB did not pay its outstanding bill for directory advertising. BNB further asserted that C & P falsely advised BNB that C & P had a right to interrupt BNB's telephone service if BNB failed to pay its directory advertising bill, which led BNB to terminate its Baltimore area telephone service. Additionally, BNB asserted that C & P's "illegal threats and false claims" constituted a breach of its directory advertising contracts with BNB and caused BNB to suffer "a substantial loss of profits, as well as other incidental and consequential damages." BNB asked that its directory advertising contract with C & P be rescinded (Count I), or alternatively that BNB be awarded "consequential damages of $20,000" and "incidental damages of $5,000 and costs" sustained because of C & P's breach of the contracts (Count II). Finally, BNB asserted that C & P's "threat to interrupt service and actual interruption" of BNB's service "constituted intentional interference with [BNB's] business relations and prospective advantage" because, as C & P "well knew," BNB's business "was primarily conducted on the telephone"; on this count (Count III) BNB claimed "consequential damages of $20,000, incidental damages of $5,000 and punitive damages of $1,000,000 and costs." C & P's motion for summary judgment was denied on June 21, 1988.

On that same day, C & P moved to dismiss BNB's counterclaim, arguing that BNB's asserted failure to exhaust its administrative remedies before the PSC meant that the circuit court lacked subject matter jurisdiction over the counterclaim. After extensive briefing of these points and oral argument by counsel for both C & P and BNB, on October 19, 1988, the circuit court (Raker, J.) granted C & P's motion to dismiss the counterclaim "pursuant to Maryland Rule 2-322(b)(1) for lack of subject matter jurisdiction because of Bits "N" Bytes Computer Supplies, Inc.'s failure to exhaust administrative remedies." C & P's complaint remained in the circuit court and discovery proceeded on the claim stated in it.

On May 25, 1989, BNB filed a complaint with the PSC, alleging inter alia essentially the same facts as originally alleged in its circuit court counterclaim. BNB asked the PSC to "[f]ind that C & P violated.... COMAR, Section 20.45.04.07(D) in that [C & P] threatened to and did, in fact, interrupt plaintiff's telephone service for failure to pay directory advertising charges," to "[o]rder C & P to comply with the aforesaid section[s] of COMAR" and to "[p]rovide such other and further relief as the nature of the case may require." ¹ On August 3, 1989, the PSC directed C & P to satisfy or answer the complaint. C & P did subsequently answer the complaint.

On December 10 and 11, 1990, the PSC hearing examiner conducted a hearing on these issues. On August 1, 1991, the examiner issued a 36 page proposed order in which he found, inter alia, that C & P did not falsely advise BNB that C & P had the right to terminate BNB's telephone service for failure to pay advertising charges, leading BNB to cancel this service. The examiner did find, however, that C & P's failure to distinguish directory advertising charges "from the other telephone charges at the time of initial interruption of service on August 19, 1986 resulted in BNB's telephone service being interrupted for non-payment of directory charges, which is in violation of the COMAR restrictions."

The examiner also stated that "while this proceeding concerns the various complaints by BNB regarding the alleged improper actions of C & P, there is a judicial proceeding pending between the parties in Montgomery County wherein the question of damages, if any, will be resolved. Thus, the focus of the instant proceeding before the Commission is to determine the propriety of C & P's actions rather than to make findings regarding damages." Similarly, at the conclusion of his proposed order, the examiner explained that he did not address BNB's behavior in failing to pay its bills because, "the jurisdiction of the Commission in this proceeding is limited to the matters of complaint that have been raised" and "the jurisdiction of the Commission is limited to supervisory and regulatory powers over public service companies." As far as PSC sanctions against C & P, the examiner concluded that "on a prospective basis, C & P should first separate [directory advertising] charges prior to any disconnections for nonpayment even before the customer has raised such an issue," and that "no sanctions or other action need be invoked at this time as this matter [violation of the COMAR regulation] has never been specifically addressed prior to this case."

C & P appealed the proposed order to the PSC itself. Although the Commission noted that C & P disagreed with "some aspects" of the proposed order, "the only aspect" it appealed was the hearing examiner's recommendation that C & P separate its bills; C & P asserted that this was impossible. BNB also appealed to the PSC, asserting inter alia that (1) because the facts found by the PSC were to be determinative in its civil suit for damages, it was "critical" that the actual duration of the interruption of service be determined, and (2) the PSC should impose sanctions on C & P for violation of the PSC regulation. On October 10, 1991, the PSC issued an Order modifying the hearing examiner's proposed order by granting C & P some modest relief (less than C & P requested) from the burden of separating bills. In all other respects, the PSC confirmed the proposed order of the hearing examiner. In doing so, the PSC noted:

[W]hile this complaint was filed for the purpose of exhausting administrative remedies, the Commission is not a fact finder for purposes of civil litigation. In a complaint based on a violation of the PSC Law or regulations, the Commission or the Hearing Examiner will determine facts which are necessary to establish a violation [o]f or compliance with COMAR regulations.

A week later, on October 17, BNB moved for reconsideration before the PSC on the imposition of sanctions; that motion was denied on February 27, 1992. Neither party sought judicial review of the PSC order.

On April 20, 1992, BNB moved in the circuit court that Counts II and III of the counterclaim (claiming damages for breach of contract and for tortious interference with business advantage, respectively) be reinstated. BNB never asked that its recision claim (Count I) be reinstated. C & P opposed the motion, asserting that BNB still had failed to exhaust its administrative remedies. The circuit court denied BNB's motion to reinstate two counts of its counterclaim.

Trial on the claim set forth in C & P's original complaint was set for September 14, 1992. On the day of trial, C & P again moved for summary judgment. C & P asserted, inter alia, that (1) because BNB's counterclaim had been dismissed and not reinstated, BNB could not raise "defensively" any of the issues raised in the counterclaim, even though those issues had also been set forth in BNB's answer to the complaint, and (2) all material facts were undisputed and C & P was entitled to judgment, as a matter of law, as to $8,291.08 (C & P decided not to proceed on its claim to one portion of the bill, thus lowering its demand from $8,918.18 to $8,291.08). After hearing argument of counsel for both sides, the circuit court granted summary judgment to C & P in the amount of $8,142.92, thus allowing BNB to set off against the claimed charges $148.16, which represents a pro rata deduction of its bills for directory advertising and telephone service for the three days it was without telephone service.

On appeal BNB raises five questions:

1. Did the court err in dismissing BNB's counterclaim for failure to exhaust administrative remedies?

2. Is the administrative remedy before the PSC exclusive as to the causes of action in the Counterclaim?

3. Did BNB "exhaust" its administrative remedies?

4. Did the court err in dismissing BNB's motion to reinstate its Counterclaim after Public Service Commission proceedings were concluded and a final PSC Order was entered finding that C & P had improperly interrupted BNB's service?

5. Did the court err...