Southworth & McGill, P.A. v. Southern Bell Tel. and Tel. Co.

Decision Date01 March 1991
Docket NumberNo. 87-1198,87-1198
Parties16 Fla. L. Weekly 614 SOUTHWORTH & McGILL, P.A., Appellant, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY and Bellsouth Advertising and Publishing Corporation, Appellees.
CourtFlorida District Court of Appeals

J. Dixon Bridgers, III and Carol Ann Ruebsamen of Carlton, Fields, Ward, Emmanuel, Smith, Cutler & Kent, P.A., Pensacola, for appellant.

Robert L. Crongeyer and Larry A. Matthews of Beggs & Lane, Pensacola, for appellees.

SMITH, Judge.

This cause is before us on appeal from a final judgment granting appellees/defendants' motion for judgment on the pleadings and limiting damages in accord with an exculpatory provision in the contract between the parties. On appeal, the issue is whether the trial court erred in ruling that the exculpatory provision was valid and controlling as a matter of law. We affirm in part and reverse in part.

The facts based on the record before us are that appellant law firm filled out appellees' form contract to purchase advertising space in the 1984/85 directory and paid the required fee. The agreement consisted of several pages entitled "Directory Advertising Order," a printed form which, on the reverse side, bears a list of "Terms and Conditions" including the following provision:

[BELLSOUTH ADVERTISING & PUBLISHING CORPORATION'S] LIABILITY AND THE TELEPHONE COMPANY'S LIABILITY (IF ANY) ON ACCOUNT OF OMISSION OR ERRORS IN SUCH ADVERTISING SHALL IN NO

EVENT EXCEED THE AMOUNT OF CHARGES FOR THE ADVERTISING WHICH WAS OMITTED OR IN WHICH THE ERROR OCCURRED IN THE THEN CURRENT DIRECTORY ISSUE AND SUCH LIABILITY SHALL BE DISCHARGED BY ABATEMENT OF THE CHARGES FOR THE PARTICULAR LISTING OR ADVERTISING IN WHICH THE OMISSION OR ERROR OCCURRED.

The agreement sets out the name of the firm to be listed in the directory as "Southworth and McGill, P.A." Formerly, the firm was "Kirtz, Southworth, and McGill." However, the Florida Bar suspended the first-named partner from practice. As a result of that suspension, the first-named partner ceased to be a member of the firm. The complaint alleges that the remaining partners had taken great pains to disassociate themselves from the suspended former partner. 1

Appellant submitted the correct information to appellees, but appellees published incorrect information. The yellow pages showed the suspended former member as still being the lead partner in the firm and showed the firm as offering the legal services that the former member had performed but which were no longer offered by the firm. 2

Immediately following the publication of the 1984/85 directory, Mr. Southworth of appellant firm wrote to appellees, strongly protesting the inaccuracies and pointing out the seriousness of the errors due to the circumstances involved. A copy of that letter is attached to the complaint. Despite the letter, appellees repeated the same errors in the next year's (1985/86) directory. Appellant alleges various business damage, including expenses incurred in an effort to rectify the situation caused by the erroneous ads.

Appellant filed a complaint alleging negligence, gross negligence, and breach of contract. 3 A copy of the listing agreement was attached to the complaint. Appellees answered with a general denial of breach or liability. Subsequently, appellees filed a motion for judgment on the pleadings contending, among other things, that appellant's recovery, if any, was limited by the terms of the exculpatory clause to a refund of charges for the listing or advertising. Appellant's legal memorandum in response raises "unconscionability" as an absolute defense to enforcement of the exculpatory clause.

The trial court viewed the exculpatory provision as determinative of the case and entered judgment on the pleadings for appellees. Damages for breach of contract were limited to the amount paid for the listings ($645.60) in accordance with the exculpatory clause.

In reviewing the judgment on the pleadings, this court is limited to the pleadings before the court below. Factual matters which are addressed in the brief but are not part of those pleadings are not before us. We observe, initially, that many of the factual matters argued by appellant in its brief are unsupported by allegations contained in the pleadings.

"Unconscionability" as a defense to enforcement of the exculpatory clause, insofar as a ruling on that issue depends upon development of a factual basis for its application, has not been properly raised in this case. There is authority in Florida, and from other jurisdictions, that in actions based on contract "unconscionability" must be pleaded and proved by the party asserting it. 4 Kohl v. Bay Colony Club Condominium, 398 So.2d 865 (Fla. 4th DCA 1981); Rozeboom v. Northwest Bell Tel., 358 N.W.2d 241 (S.D.1984). Here, the listing contract attached to the amended complaint contains a clause limiting liability for "omission or errors in such advertising." The attached contract becomes a part of the complaint to the same extent as if contained in the body of the complaint itself. Further, if an attached document negates the pleader's cause of action, the plain language of the document will control and may be the basis for a motion to dismiss. See, Health Application Systems v. Hartford Life, 381 So.2d 294, 297 (Fla. 1st DCA 1980), and authorities therein cited. If appellants wished to avoid the plain provisions of the clause limiting liability, it was incumbent upon them to plead "unconscionability," and at least an outline of the basic facts upon which they intended to base such claim, which they failed to do. The issue was, however, presented by argument in the court below, as here, and as a practical matter discussion of the legal aspects of this defense is unavoidable at this stage.

Appellant's argument seeks to have this court align itself with the minority view condemning such exculpatory clauses in yellow page contracts. After much consideration of the conflicting decisions on this issue, we adhere to the majority view which holds that exculpatory clauses limiting liability for ordinary negligence in the publication of yellow page advertising are enforceable as a matter of private contract, and do not violate public policy. See, Annotation, 47 A.L.R.4th 882 (1986), "Liability of Telephone Company for Mistakes in or Omissions from its Directory." Under the majority view, the claim for economic damages for the 1984/85 directory, which is based solely on negligent breach of contract, is barred by the exculpatory clause. However, as to the 1985/86 directory, the breach of contract count specifically alleges that the repetition of the prior year's errors after these errors were brought to the defendant's attention constituted "gross negligence," in that the defendants "willfully and maliciously failed to change the advertisement." Under the majority view cases cited in the following discussion, the exculpatory clause does not protect against willful, malicious, or grossly negligent actions.

As noted in Allen v. General Tel. Co. of Northwest, Inc., 20 Wash.App. 144, 578 P.2d 1333 (1978), the courts have varied in their approach to the issue, some construing statutes regulating public utilities as providing a complete system of regulation, including yellow page services, so that limitations of liability are binding and enforceable just as other rules or regulations involving rates or matters affecting rates; other jurisdictions view their statutes as governing the white page services but not the yellow page service, the latter being considered as a matter of private contract; 5 and still other courts do not refer to their public utility statutes, but base their decisions on the private contractual relationship between the parties. Id. 578 P.2d at 1335.

As stated by the Washington court: "Virtually all jurisdictions have enforced such limitations and disclaimers of liability, whether contained in a filed tariff or a private contract, unless the company's negligence is willful or gross." Allen v. General Tel. Co., supra, 578 P.2d at 1335. See also, State ex rel Mountain States Tel. & Tel. Co. v. District Court, 160 Mont. 443, 503 P.2d 526 (1972); Robinson Insurance & Real Estate, Inc. v. Southwestern Bell Telephone Co., 366 F.Supp. 307 (W.D.Ark.1973); Gas House, Inc. v. Southern Bell Tel. & Tel. Co., 289 N.C. 175, 221 S.E.2d 499 (1976); Louisville Bear Safety v. South Central Bell Tel., 571 S.W.2d 438 (Ky.App.1978); Willhite v. South Central Bell Telephone Co., 693 F.2d 340 (5th Cir.1982).

Decisions on both sides of the unconscionability issue have been accompanied by carefully reasoned opinions, including those expressing the minority view, such as Allen v. Michigan Bell Telephone Company, 18 Mich.App. 632, 171 N.W.2d 689 (1969). 6 See also, Morgan v. South Central Bell Telephone Co., 466 So.2d 107 (Ala.1985), in which the court found that omission of the plaintiff's listing four times in succession (the evidence was also found sufficient to establish fraud as to certain years) subjected the telephone company to tort liability, and that a clause in the 1980 advertising order limiting liability was invalid, under criteria stated, because contrary to public policy. 7 Although the Morgan court employed rhetoric on the unconscionability issue similar to that found in Allen (Mich.App.), supra, and other minority view cases, its refusal to allow the telephone company to escape liability in the face of its own egregious and even fraudulent conduct places the result reached fairly in line with the view espoused by the majority courts--that an "errors and omissions" exculpatory clause protects a company only to the extent that its actions amounted to ordinary negligence. State ex rel Mountain States T. & T. Co. v. District Court, supra; Robinson Insurance & Real Estate, Inc. v. Southwestern Bell Telephone Co., supra; Allen v. General Telephone Co. of Northwest, Inc., supra; ...

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