Campbell v. Mountain States Tel. & Tel. Co.

• Decision Date: 19 September 1978
• Docket Number: No. 1,CA-CIV,1
• Citation: 120 Ariz. 426,586 P.2d 987
• Parties: Madeline CAMPBELL, Appellant, v. MOUNTAIN STATES TELEPHONE & TELEGRAPH COMPANY and American Telephone& Telegraph Company, Appellees. 3503.
• Court: Arizona Court of Appeals

Page 987

586 P.2d 987

120 Ariz. 426

Madeline CAMPBELL, Appellant, v. MOUNTAIN STATES TELEPHONE & TELEGRAPH COMPANY and American Telephone& Telegraph Company, Appellees.

No. 1 CA-CIV 3503.

Court of Appeals of Arizona, Division 1, Department B.

Sept. 19, 1978.

Rehearing Denied Nov. 1, 1978.

Thur & Preston by Calvin C. Thur, Scottsdale, for appellant

Fennemore, Craig, von Ammon & Udall by Michael Preston Green, George T. Cole, Phoenix, for appellees.

OPINION

EUBANK, Judge.

FACTS AND ISSUES

The primary question raised by this appeal is whether A.R.S. § 40-241 et seq., and § 40-321 et seq., or the doctrine of primary jurisdiction, require the appellant, Madeline Campbell, to assert her tort and breach of contract claims against appellees in a complaint to the Arizona Corporation Commission before suing on those claims in Superior Court. The trial court was of the opinion that such "prior resort" to the Commission was required and granted appellees' Motion to Dismiss, made pursuant to Rule 12, Rules of Civil Procedure, 16 A.R.S. Appellant appeals on the ground that her suit in Superior Court was proper without prior resort to the Commission. We agree and reverse the trial court's judgment of dismissal.

Our summary of the facts is taken from appellant's allegations in her complaint, for all such material allegations must be taken as true by a reviewing court testing the propriety of an order granting a motion to dismiss. Hatch v. Double Circle Ranch, 22 Ariz.App. 124, 125, 524 P.2d 958, 959 (1974).

Madeline Campbell, an invalid, operated several businesses out of one location in Phoenix for a period of several years. During that time, she requested, received, and paid for telephone service from the Mountain States Telephone & Telegraph Company, one of the appellees. Beginning in 1972, appellant learned from her customers, friends and employees that her phones at her place of business were not being answered at times when she was there, indicating that her phones did not ring to indicate incoming calls. Further, some calls to appellant's place of business were "intercepted" by Mountain States operators who falsely told the callers that appellant was out of business. To end these problems, appellant made numerous complaints to the phone company over several months, but both problems continued. In addition, as these problems continued in 1974, appellant, while making a call, heard background noises and asked if someone was on the line. A woman responded that she was an operator "monitoring" the call.

Appellant's complaint was in three counts, two in tort and one in contract. The first count apparently asserts two causes of action in tort. One is the appellees' intentional tort of refusing to give appellant unintercepted and uninterrupted phone service despite her repeated requests for such service, and the second is appellees' intentional infliction of emotional distress upon appellant. This latter cause of action is based on appellant's assertions that appellees were aware of her frail condition and susceptibility to upset and that they nevertheless proceeded to intercept and interrupt her phone service even though they knew or should have known that emotional distress to appellant would result. Appellant sought substantial compensatory damages for appellant's loss of income and business, aggravation, mental and physical suffering, inconvenience, distress, and aggravation of physical condition. Punitive damages were also sought for both alleged torts.

The second count seeks damages for breach of contract. Because appellees failed to deliver uninterrupted telephone service, they allegedly breached their contract with appellant, resulting in a loss of income and business by appellant.

The third count of the complaint asserts a cause of action for alleged tortious invasion of appellant's privacy. By "monitoring" and intercepting her phone calls and conversations, appellees allegedly intruded into her personal life in an outrageous manner. Appellant sought compensatory and punitive damages for the invasion of privacy.

The issue of whether or not appellant's allegations are sufficient to state a claim or claims is not before us. Thus, for purposes of this appeal, we will assume that the complaint does allege facts sufficient to state claims in tort and for breach of contract. ¹

On July 7, 1975, appellees moved to dismiss the complaint "on the ground that plaintiff has failed to exhaust administrative remedies and that this Court lacks jurisdiction." While appellees' motion considered the question one of exhaustion of remedies, it is clear from their discussion that there real argument was that exclusive primary jurisdiction was in the Corporation Commission. The differences between the two doctrines are discussed hereafter. Appellees' key proposition was that appellant's claims, though nominally sounding in contract and tort, really concerned the adequacy of appellees' services as public service corporations. Questions dealing with adequacy of service are, appellees contended, within the exclusive original jurisdiction of the Commission under A.R.S. § 40-321 et seq. Further, appellees asserted that by means of A.R.S. § 40-241 et seq., the legislature set up a detailed investigation and hearing process within the Commission for claims of this sort. Appellees contend that this process was intended to be the exclusive original remedy available to appellant. Appellant opposed the Motion by arguing that the Commission had power to deal with the adequacy of telephone services only to protect the public generally. The Commission allegedly lacked power to award her damages for torts and breach of contract so that she had No administrative remedy to resort to. The trial judge granted the motion to dismiss on January 29, 1976 and a final written judgment was signed and filed on March 5, 1976. Appellant appeals from this judgment.

Two basic issues emerged from the briefs and arguments of this case:

1. Do A.R.S. § 40-241 et seq., and § 40-321 et seq., or the doctrine of primary jurisdiction require appellant to first present her contract and tort claims against appellees, public service corporations, by means of a complaint to the Corporation Commission before suing in the Superior Court?

2. If appellant must first present her claims to the Commission, does this violate her constitutional rights to a jury trial and to recover damages?

Our decision on the first issue is dispositive of the appeal so that we do not

reach the second issue. DISTINGUISHING THE DOCTRINES OF EXHAUSTION OF REMEDIES AND PRIMARY JURISDICTION

As noted below, this case clearly involves an issue concerning the doctrine of primary jurisdiction. However, this doctrine and the doctrine of exhaustion of remedies are so often confused that it is useful to distinguish the two rules.

" The exhaustion doctrine is concerned with the timing of judicial review of administrative action." 3 K. Davis, Administrative Law Treatise § 20.01 at 57 (1958). The doctrine applies only when an administrative agency has original jurisdiction. Once such jurisdiction exists, the exhaustion of remedies doctrine is used to determine whether or not the parties must completely exhaust the available administrative processes before seeking the aid of a court. Our legislature has incorporated the doctrine into A.R.S. § 40-253(A)-(B), which requires parties adverse to orders and decisions of the Arizona Corporation Commission to request a rehearing from the Commission before suing in any court. Our courts have recognized that this provision is an exhaustion of remedies rule. State v. Arizona Corporation Commission, 94 Ariz. 107, 110, 382 P.2d 222, 224 (1963); General Cable Corp. v. Citizens Utilities Co., 27 Ariz.App. 386, 388, 555 P.2d 355, 357 (1976); Kunkle Transfer & Storage Co. v. Superior Court, 22 Ariz.App. 315, 526 P.2d 1270 (1974). Although exhaustion of remedies is a rule of judicial administration, Campbell v. Chatwin, 102 Ariz. 251, 257, 428 P.2d 108, 114 (1976), it is usually applied by virtue of express statutory mandate. See Campbell,supra; State v. Arizona Corporation Commission, supra; Williams v. Bankers National Ins. Co., 80 Ariz. 294, 297 P.2d 344 (1956); General Cable Corp., supra; Kunkle Transfer & Storage Co., supra.

In contrast to the exhaustion of remedies doctrine, which governs When administrative action is subject to judicial review, the doctrine of primary jurisdiction determines whether the court or the agency should make the initial decision in a particular case. Professor Davis states in his treatise:

The precise function of the doctrine of primary jurisdiction is to guide a court in determining whether the court should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.

The principal reason behind the doctrine of primary jurisdiction is not and never has been the idea that "administrative expertise" requires a transfer of power from courts to agencies, although the idea of administrative expertise does to some extent contribute to the doctrine. The principal reason behind the doctrine is recognition of the need for orderly and sensible coordination of the work of agencies and of courts. Whether the agency happens to be expert or not, a court should not act upon subject matter that is peculiarly within the agency's specialized field without taking into account what the agency has to offer, for otherwise parties who are subject to the agency's continuous regulation may become the victims of uncoordinated and conflicting requirements.

3 K. Davis, Administrative Law Treatise § 19.01 at 3-5. (Footnotes omitted).

The doctrine of primary jurisdiction is a discretionary rule created by the courts to effectuate the efficient handling of cases in specialized areas where agency expertise may be useful. Davis, Supra, §...