Professional Answering Serv. V. Chesapeake Tel.

• Decision Date: 11 October 1989
• Docket Number: No. 87-1210.,87-1210.
• Parties: PROFESSIONAL ANSWERING SERVICE, INC., Appellant, v. CHESAPEAKE AND POTOMAC TELEPHONE CO., Appellee.
• Court: D.C. Court of Appeals

565 A.2d 55

PROFESSIONAL ANSWERING SERVICE, INC., Appellant, v. CHESAPEAKE AND POTOMAC TELEPHONE CO., Appellee.

No. 87-1210.

District of Columbia Court of Appeals.

Argued November 3, 1988.

Reargued May 1, 1989.

Decided October 11, 1989.

Dale A. Cooter, with whom Nicholas H. Hantzes, Washington, D.C., was on the brief, for appellant.

Frederick B. Abramson, with whom Judy B. Chase, Lee A. Satterfield, Washington, D.C., and F. Joseph Feely, III were on the brief, for appellee.

Howard C. Davenport, Gen. Counsel, with whom Mary J. Sisak and Thomas J. Moorman, Staff Counsel, were on the brief for amicus curiae, The Public Service Com'n of the District of Columbia.

Before ROGERS, Chief Judge, and FERREN and BELSON, Associate Judges.

ROGERS, Chief Judge:

The principal issue in this appeal from the grant of summary judgment is whether, prior to the statutory amendments in 1984, an exculpatory tariff limiting the liability of the Chesapeake & Potomac Telephone Company (C & P) for negligence to the amount of a customer's monthly bills may be approved by the District of Columbia Public Service Commission (PSC) pursuant to the 10 day letter of acceptance procedure of D.C.Code § 43-527 (1981) or must be approved pursuant to the notice and hearing requirements of D.C.Code § 43-601 (1981). We must further decide whether the trial judge erred in finding that the PSC had substantively approved the exculpatory tariff on which C & P relies. Also before us is the issue of whether such a tariff limits C & P's liability for gross negligence. The other issues are related to the trial court rulings on these principal issues.

Appellant, Professional Answering Service, Inc. (PASI), sued appellee, Chesapeake & Potomac Telephone Co., for breach of contract, negligence, gross negligence, and fraudulent misrepresentation. PASI sought to recover damages for installation of a defective telephone system, the provision of inefficient and ineffective telephone service, and failure properly to repair and maintain PASI's telephone system and service. C & P defended on the ground that its liability was limited to the amount of the customer's telephone bill under the terms of an explanatory tariff, Section 1.E.1 of Tariff No. 201, which was included in a 1973 repagination filed and approved pursuant to the 10 day letter of acceptance procedure of D.C.Code § 43-527 (1981).¹ PASI responded that the 1973 repagination did not constitute substantive approval of the exculpatory tariff by the District of Columbia Public Service Commission and that the PSC was required, pursuant to D.C.Code § 43-601(c) & (d) (1981),² to give notice and hold a hearing before approving the exculpatory tariff. The motions judge (Judge Webber) initially disagreed, and granted partial summary judgment for C & P, but upon reconsideration vacated his order, ruling that while the letter of acceptance procedure governed the tariff, there was a factual dispute whether the PSC had approved it. Based on the pretrial discovery, the trial judge (Judge Wolf) granted summary judgment for C & P on the approval issue, and thereafter entered judgment for PASI in the amount stipulated by the parties, $57,163.53.

Following oral argument on appeal, this court requested the PSC to respond to a series of questions regarding its procedure for approval of the exculpatory tariff and the underlying public policy limiting C & P's liability for negligence and gross negligence. PSC filed a brief stating that tariffs are approved in either of two ways, as part of a rate proceeding or outside of the rate proceeding, and that at the time the 1973 repagination was considered, the PSC interpreted the statute to permit PSC approval of non-rate proceeding partial tariff revisions by the filing and letter of acceptance procedure. Because C & P in 1973 only requested a repagination, PSC's approval of it did not involve substantive approval of the tariff, however; the substantive approval of the exculpatory tariff had occurred, according to the PSC, on October 10, 1967.

We hold that the PSC interpretation of the statute regarding approval procedures for tariffs is reasonable. Thus, if the tariff was properly approved, it limits C & P's liability for negligence. However, we hold that it was error to grant summary judgment since the nature of the 1967 tariff changes is unknown and evidence of PSC approval of a 1973 repagination of tariff pages did not constitute proof that the PSC had substantively approved the tariff. We also hold that the tariff shields C & P against damages for gross negligence. Accordingly, we reverse the orders of September 9, 1986, May 4, 1987, and July 17, 1987, granting summary judgment to C & P. Upon remand the trial court shall determine whether the PSC approved the tariff as amended by the changes proposed by C & P in 1967, and whether the nature of those tariff changes precluded approval by letter of acceptance and required prior notice and hearing; if the court finds that the tariff was not lawfully approved, then it shall proceed to trial on PASI's claims for negligence, gross negligence and false misrepresentation.

I.

The facts.³ In connection with preparing for the opening of its business providing answering telephone service through a switchboard for professionals, PASI entered into a contract with C & P on November 4, 1975.⁴ C & P represented that it could provide the telephone equipment necessary for the operation of PASI's business and install it so that PASI would be able to commence business on February 6, 1987.

C & P began its installation process in late November 1975. In early January 1976, it began installation of its Model 557B answering switchboards, the same model PASI had used from 1952 to 1966 in a prior business venture. PASI objected to the installation of this model because the model had previously proved to be obsolete, unreliable, and difficult to service. C & P acknowledged that the model was obsolete but advised PASI that this was the only model available if PASI wanted to commence business on February 6th, and made a take it or leave it offer, representing that C & P would maintain and service the equipment to provide adequate service. PASI accepted Model 557B on this basis.

Unfortunately, PASI's concerns about Model 557B proved to be well founded. Even before PASI took its first call, C & P's performance was inadequate. By February 6th, C & P had installed only two of the four switchboards that C & P was to provide, and the switchboards that were installed had inadequate cords. During transmission, there was static and deficient volume. Service personnel advised they were not trained to service Model 557B and their attempts were to no avail, and PASI lost all sound after four days. Sound was restored but the crackling static and deficient volume remained. In addition, severe echoes known as "repeater howls" would occur during transmission.

After a number of attempts at repair by personnel not trained to service Model 557B, C & P installed amplifiers to cure the deficient volume; however, this resulted in further problems. The sound continued to be either inaudible or overamplified, which made the voices too loud, created a sound of voices being distant and artificial, and picked up and transmitted other noises.

PAST also suffered a lack of service for substantial periods of time. From the beginning individual subscriber lines would suddenly not work and transmit no sound and restoration of service was delayed from several days to several months. PASI also experienced several instances of telephone lines being disconnected. In November 1978, C & P came onto PASI's premises without notice and removed cable which caused PASI to be without service for several days.⁵

C & P further misrepresented to third parties what service PASI offered when it disconnected a subscriber service and told the subscriber that PASI had ordered the discontinuance, and when it told callers that PASI's main number was not working. PAST maintained that the service provided was unprofessional and disrespectful in manner.

After years of unsuccessful efforts to obtain adequate and reliable service, during which time PASI met repeatedly with C & P officials who represented that they would resolve the problems, PASI filed suit against C & P on February 3, 1983.

The proceedings in the trial court. PASI's complaint sought damages from C & P in the amount of $2.2 million dollars for breach of contract, negligence, gross negligence and fraudulent misrepresentation, and injunctive relief and costs. C & P answered and subsequently filed a counterclaim seeking damages in the amount of PASI's outstanding telephone bill.

On November 20, 1984, C & P filed a motion for partial summary judgment on the grounds that PASI's damages were limited by Section 1.E.1 of PSC General Regulations Tariff No. 201 (April 10, 1973) (tariff or exculpatory tariff), which was incorporated by reference in the application for service filed by PASI on February 6, 1975.⁶ PASI filed an opposition and a cross motion for summary judgment challenging the validity of the damages limitation on the ground that the tariff had not been lawfully approved. The motions judge granted C & P's motion for partial summary judgment on February 24, 1986. However, upon reconsideration, pursuant to PASI's motion of April 11, 1986, the motions judge, on September 9, 1986, vacated his order granting C & P partial summary judgment on the grounds that there were facts in dispute as to whether the tariff had been filed and lawfully approved.⁷

Thereafter, on May 4, 1987, following discovery, the trial judge (Judge Wolf) granted C & P's motion for summary judgment on the ground that the tariff had been lawfully approved by the PSC. The trial judge relied on C & P's copy of the approval letter of April 10, 1973, from the executive secretary of the PSC, and deposition testimony, including testimony by a C & P employee that he...