Prior v. GTE North Inc., 19A01-9611-CV-385

Citation681 N.E.2d 768
Decision Date30 June 1997
Docket NumberNo. 19A01-9611-CV-385,19A01-9611-CV-385
PartiesRobert PRIOR, Appellant-Plaintiff, v. GTE NORTH INCORPORATED, Appellee-Defendant.
CourtCourt of Appeals of Indiana
OPINION

BAKER, Judge.

In this case of first impression, we are asked to decide whether a public utility may limit its liability for omitting a customer's name from a directory and White Pages through a tariff 1 on file with the Indiana Utility Regulatory Commission (IURC). Specifically, appellant-plaintiff Robert Prior challenges the trial court's grant of summary judgment in favor of appellee-defendant, GTE North Incorporated (GTE), after the court upheld GTE's tariff to limit Prior's remedy to the monthly charge for telephone service.

FACTS

The facts relevant to this appeal are not in dispute. Prior is involved in the business of selling truck-mounted cranes and related used equipment in Huntingburg, Indiana. His business covers a wide geographical area and includes several states. In order to increase his business, Prior placed his name and business telephone phone number in several of GTE's publications, including the 1993/1994 and 1994/1995 GTE Directory White Pages, the 1994 Perry/Spencer/Dubois Regional Directory White Pages and the 1992-1994 GTE Directory Information Service. Although Prior timely paid for the inclusion of his name in each publication, he learned in January 1995 that his name had been omitted from each publication. When Prior contacted GTE regarding the omissions, it refunded the monthly charge for his telephone service during the months in which his number had been omitted. However, GTE refused to reimburse Prior for his lost business revenues pursuant to its tariff on file with the IURC which limited its liability for damages arising from "errors in/or omissions of directory listings ... to the monthly rate for each such listing for the charge period during which the error or omission continues." Record at 43.

Thereafter, on November 16, 1995, Prior brought an action against GTE to recover his lost business revenues and punitive damages. In his complaint, Prior alleged that GTE had breached its contract with him and was negligent, grossly negligent and reckless 2 by failing to include his name and telephone number in the business directories and White Pages.

In response, GTE filed a motion for summary judgment claiming that Prior's claims for damages were precluded by the tariff on file with the IURC. Specifically, GTE argued that the tariff limited its liability to the cost of the monthly charge paid by Prior for the inclusion of his name in the GTE publications. According to GTE, because it had already refunded Prior's monthly charge for the months in which his ads were omitted, it had no further liability.

In response to GTE's motion, Prior argued that the tariff's limitation of liability clause was invalid because it abrogated GTE's statutory duty to provide "reasonably adequate service and facilities" under IND. CODE § 8-1-2-4. Prior also contended that public policy prohibited GTE from limiting is liability through the tariff. Thus, Prior asserted that he was entitled to damages beyond the cost of his monthly telephone charges. After a hearing, the trial court granted GTE's motion for summary judgment.

On July 1, 1996, Prior filed a motion to correct error, wherein he argued that he was denied a meaningful remedy under Article I, Section 12 of the Indiana Constitution because of the tariff's limitation of liability clause and that the IURC had no legislative authority to approve a tariff which limited GTE's liability for negligently omitting names from its directory. The trial court denied Prior's motion on August 30, 1996. Prior now appeals the trial court's grant of GTE's motion for summary judgment.

DISCUSSION AND DECISION 3

Prior challenges the grant of GTE's motion for summary judgment on several grounds. In particular, he contends that the tariff's limitation of liability clause is invalid for the following reasons: 1) the tariff abrogates GTE's statutory duty under I.C. § 8-1-2-4 to provide "reasonably adequate service and facilities;" 2) the IURC exceeded its legislative authority by approving a tariff which limits GTE's liability for negligently omitting a customer's name from the White Pages to the cost of his monthly telephone charges; 3) the tariff violates public policy; and 4) the tariff violates Article 1, Section 12, of the Indiana Constitution. On cross-appeal, GTE contends that this court lacks jurisdiction to determine the validity of the tariff because Prior failed to exhaust his administrative remedies.

Initially, we set forth our standard of review. In a motion for summary judgment, the burden is on the moving party to show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C). Once the movant has sustained this burden, the opposing party must respond by setting forth specific facts showing a genuine issue for trial; he may not simply rest on the allegations of his pleadings. Stephenson v. Ledbetter, 596 N.E.2d 1369, 1371 (Ind.1992). At the time of filing the motion or response, a party shall designate to the court all parts of the pleadings, depositions, answers to interrogatories, admissions, matters of judicial notice, and any other matters on which it relies for purposes of the motion. T.R. 56(C). When reviewing a trial court's grant or denial of a motion for summary judgment, this court applies the same standard as the trial court. Jordan v. Deery, 609 N.E.2d 1104, 1107 (Ind.1993).

I. Jurisdiction

First, we address GTE's contention that this court lacks jurisdiction to hear this appeal. Specifically, GTE argues that Prior failed to exhaust his administrative remedies because he failed to bring his challenge to the validity and reasonableness of the tariff before the IURC. In response, Prior contends that he is not required to exhaust his administrative remedies because he is attacking the facial validity of the tariff and the constitutionality of the IURC's action in approving a tariff which limits its liability without express legislative authority.

GTE correctly asserts that generally a party must exhaust his administrative remedies prior to seeking judicial review. City of Lake Station v. State ex rel. Moore Real Estate, Inc., 558 N.E.2d 824, 828 (Ind.1990). However, a recognized exception to this rule applies where an administrative regulation is alleged to be facially invalid. Indiana Dep't of Ins. v. Golden Rule Ins., 639 N.E.2d 339, 342 (Ind.Ct.App.1994). Here, Prior is attacking the validity of the tariff by arguing in part that the IURC acted beyond its statutory authority in approving GTE's tariff. As a result, Prior is not required to exhaust his administrative remedies. See Golden Rule, 639 N.E.2d at 342 (insurance company which challenged Department of Insurance regulations governing qualified long-term care policies on basis that Department had exceeded statutory authority attacked validity of regulations and, therefore, was not required to exhaust administrative remedies prior to seeking judicial review). 4 Thus, this court has jurisdiction over this appeal.

II. Tariff's Validity

Next, we address Prior's challenge to the validity of the tariff. According to Prior, the tariff's limitation of liability clause is invalid for several reasons. First, Prior contends that the clause abrogates GTE's statutory duty under I.C. § 8-1-2-4 to provide "reasonably adequate service." Prior also contends that the IURC lacked express legislative authority to approve a tariff which limits GTE's liability. Finally, Prior argues that the tariff violates public policy and Article 1, Section 12, of the Indiana Constitution. We will address each contention in turn. 5

A. GTE's Duty to Provide Reasonably Adequate Service

First, Prior argues that the tariff is invalid because the liability limitation clause conflicts with GTE's statutory duty to provide "reasonably adequate service and facilities" under I.C. § 8-1-2-4. Specifically, Prior contends that this language creates a duty on the part of a utility to use reasonable care in providing service and that this duty is abolished if GTE is permitted to limit its liability for negligent behavior.

As Prior correctly notes, GTE, as a public utility, has a statutory duty to provide reasonably adequate service. See South Eastern Indiana Natural Gas Co., Inc. v. Ingram, 617 N.E.2d 943, 951 (Ind.Ct.App.1993) (public utility supplying gas to greenhouse had statutory duty to furnish reasonably adequate service and facilities pursuant to I.C. § 8-1-2-4). This service includes the product itself, the use or accommodation afforded the customers and the equipment employed by the utility in performing the service. I.C. § 8-1-2-1. In providing its service, however, GTE must function under the IURC's regulations which are in place to ensure that GTE is providing the proper level of service. As a result of these regulations, the way GTE functions is significantly different than a private business. These considerations must be taken into account in determining whether GTE may limit its liability under the tariff.

Generally, when a private business provides inadequate service, the consumer files a civil suit for damages caused by the business' negligent errors. As a result of the litigation, the business becomes aware of its errors and may take measures, including the implementation of policies and procedures, to ensure that the mistake does not occur again. As a result, the quality of the business' service improves.

These improvements, however, do not occur without substantial costs which include the expenses of defending lawsuits, paying...

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