Valentine v. Michigan Bell Tel. Co.

• Decision Date: 26 July 1972
• Docket Number: No. 6,6
• Citation: 388 Mich. 19,199 N.W.2d 182
• Parties: , 67 A.L.R.3d 67 Stephen K. VALENTINE, Jr., and Frances M. Valentine, Plaintiffs-Appellants, v. MICHIGAN BELL TELEPHONE COMPANY, a Michigan corporation, Defendant-Appellee.
• Court: Michigan Supreme Court

Page 182

199 N.W.2d 182

388 Mich. 19, 67 A.L.R.3d 67

Stephen K. VALENTINE, Jr., and Frances M. Valentine Plaintiffs-Appellants, v. MICHIGAN BELL TELEPHONE COMPANY, a Michigan corporation Defendant-Appellee.

No. 6.

Supreme Court of Michigan.

July 26, 1972.

Stephen K. Valentine, Jr., P.C., Orchard Lake, for plaintiffs-appellants.

Mary M. Conrad, Detroit, and Hartman, Beier, Howlett, McConnell & Googasian, Bloomfield Hills, for defendant-appellee.

Before the Entire Bench.

ADAMS, Justice.

I

Plaintiff Valentine, on his own behalf and for his wife, filed suit in Oakland County Circuit Court. He asked that Michigan Bell be ordered to provide adequate telephone service, damages for losses incurred as a result of inadequate service, punitive and exemplary damages in the amount of $790,000, and a finding that the Public Service Commission's regulations concerning limitations of liability be declared null and void as against public policy. The claim, as amended, charged breach of contract, gross negligence, fraud and misrepresentation, malicious and fraudulent failure to provide reasonably adequate equipment and facilities and service, and willful and wanton negligence.

Michigan Bell moved for accelerated and summary judgment based on three grounds: 1) by the doctrine of primary jurisdiction, the Public Service Commission had to hear the case first; 2) there was a similar action by Valentine pending before the Public Service Commission; and 3) there was a failure to state a claim upon which relief could be granted.

The trial court granted summary judgment. The Court of Appeals affirmed. (31 Mich.App. 18, 187 N.W.2d 249). In an opinion written by Judge Quinn, that Court found that, regardless of the variety of names Valentine gave to his claim, he was basically complaining of inadequate service and equipment over which the Public Service Commission had primary jurisdiction. Dismissal was therefore proper. Any appeal from the order of the Commission would be to the Ingham County Circuit Court in accordance with M.C.L.A. § 484.114; M.S.A. § 22.1454. The Court of Appeals declined to follow Grevers v. Michigan Bell Telephone Co., 18 Mich.App. 422, 171 N.W.2d 476 (1969), noting that the issue of lack of jurisdiction of the Wayne County Circuit Court was not raised in Grevers.

II. Jurisdiction

The first question in this case is the extent of the jurisdiction of the Oakland County Circuit Court in a suit by a customer against a utility based upon claimed inadequate or improper service or, stated the other way around, the extent of the jurisdiction of the Public Service Commission with regard to such a claim. Plaintiffs maintain that any claim for damages suffered by them is within the jurisdiction of the Oakland County Circuit Court. Defendant, on the other hand, agrees with the holding of the Court of Appeals that the Public Service Commission has primary jurisdiction as to all matters covered by the code and tariff. If plaintiffs have suffered damages due to inadequate service, defendant maintains their remedy is through the Commission and from it to the Ingham County Circuit Court.

This Court has recognized that certain claims against a telephone company may be brought in courts of general jurisdiction of this State. In Harbaugh v. Citizens' Telephone Co., 190 Mich. 421, 157 N.W. 32 (1916), a declaration in trespass on the case against a telephone company for wrongful refusal to connect plaintiff's telephone with a city exchange, charging a loss of business, was held to state a cause of action for which damages could be recovered. While defendant would distinguish that case from this one because no tariff was involved in Harbaugh and because the declaration sounded in tort, the case does recognize that in some situations a court of general jurisdiction is the proper forum in which to sue.

A telephone customer's right of action for damages suffered due to the negligence of a telephone company in assigning a number was analyzed by this Court in Muskegon Agency, Inc. v. General Telephone Co. of Michigan, 340 Mich. 472, 65 N.W.2d 748 (1954). This Court quoted with approval the following from the opinion of the trial court (pp. 478--479, 65 N.W.2d p. 751):

"In this case, we have an agreement based upon a valid consideration of mutual promises. The plaintiff relied upon his mutual agreement, to its detriment. There was a breach of the agreement and of duty by the defendant.

"On the allegations of the declaration and the facts admitted by the pleadings, the plaintiff is not confined to a recovery for breach of contract: it is also entitled to sue in tort and, in case of recovery, have its damages measured as in that character of action. The defendant is a public service corporation operating under a public franchise. The law necessarily imposes an obligation of diligence upon such favored corporations. If the proofs sustain the allegation, the plaintiff should be entitled to a fair compensation for the loss it has sustained, The inconvenience and annoyance of being wrongfully deprived of the service for which it had stipulated. * * *.' (Emphasis added.)

In Muskegon Agency, Inc. v. General Telephone Co. of Michigan, 350 Mich. 41, 85 N.W.2d 170 (1957), the above holding was reaffirmed. Defendant would distinguish the Muskegon case because the deficiency in service was not dealt with in the telephone company's tariff. Defendant concedes, however, that some claims against it can be adjudicated by a court of general jurisdiction and, in its brief, gives, as an example, a claim for personal injuries arising out of the negligent operation of one of defendant's trucks. Defendant maintains: 'If the activity is regulated, if it is controlled by statute and regulations of the Commission, the Commission has exclusive jurisdiction and the Oakland County Circuit Court has none.'

The Public Service Commission is primarily a regulatory and administrative body. 'It is * * * vested with power and jurisdiction to regulate all rates, fares, fees, charges, services, rules, conditions of service and all other matters pertaining to the formation, operation or direction of such public utilities.' M.C.L.A. § 460.6; M.S.A. § 22.13(6).

The theory behind the powers of a regulatory body, such as the Public Service Commission, to fix rates, charges and conditions of service is that, in dealing with monopolistic corporations that serve great numbers of customers, some public agency must have the power to fix the rates, charges, etc., fairly to both the utility and the customers. The validity and effect of tariffs and regulations so promulgated has been recognized and upheld. ¹ The power of the Public Service Commission over rates, etc., is not retroactive. Michigan Bell Telephone Co. v. Michigan Public Service Commission, 315 Mich. 533 24 N.W.2d 200 (1946); Muskegon Agency, Inc. v. General Telephone Co. of Michigan cases, Supra. Its tariffs and regulation become effective when adopted by it. Fletcher Paper Co. v. Detroit & M.R. Co., 198 Mich. 469, 164 N.W. 528 (1917).

There are some situations involving rates in which a customer may sue a utility in a court of general jurisdiction. In the Fletcher case, it was held that the Circuit Court of Bay County was the proper forum for the recovery of rates wrongfully charged by a railroad company in contravention of the rates which had been set by the Michigan Railroad Commission. In that case, an action in assumpsit was based on the validity of rates set by the Commission and the invalidity of the overcharge. Plaintiff did not seek to upset the rates established by the Commission but rather to recover from the railroad for charges wrongfully imposed by it in violation of Commission-set rates.

If a plaintiff's cause of action is based upon a claim that the utility has violated Public Service Commission promulgated tariffs or codes, or if the claim covers some action by the utility outside of the regulations of the Public Service Commission, a court of general jurisdiction is the proper forum. On the other hand, the code or tariff is part of the contract between the parties and limits of liability therein contained are presumptively valid. Any claim based upon the contractual obligation of the parties is limited to validly promulgated provisions of the tariff or code within the authority of the Public Service Commission. Ordinarily, a party aggrieved by the provisions of a tariff or code should seek relief by an attack upon those provisions before the Public Service Commission and from it to the Ingham County Circuit Court. While the contractual obligations of the parties may be determined by the rules, tariffs and regulations of the Public Service Commission, such is not the case with regard to tortious conduct. Harbaugh, supra, and Muskegon Agency cases, Supra, have clearly established that the proper forum for a claim sounding in tort is a court of general jurisdiction of this State.

III. Plaintiffs' Claims

Count I of plaintiffs' first complaint is based on the claim that 'service has not been efficiently and consistently provided.' It further claims that because the service has been out of order, Stephen K. Valentine 'has lost clients and aggravated other clients and potential clients by reason of the clients inability to communicate with the plaintiff, * * *,' and Frances M. Valentine 'has been called on numerous occasions to be given teaching assignments, but because of the malfunctioning telephone equipment * * * has lost teaching assignments * * *.'

Count II claims that the failure to provide 'efficient and consistent telephone service' constituted gross negligence and that the actions of defendant have damaged the reputation of Stephen K. Valentine as an attorney and that of Frances M. Valentine as a teacher.

By a first amended complaint, a third count was added which stated 'the defendant * * * has adopted an operating policy * * * which is misleading and fraudulent and...