Baltimore Gas & Electric Co. v. Everett

WILNER, Judge. There are two basic questions presented to us in this appeal: When a public utility expresses an intention to terminate service to a customer and the customer complains to the Public Service Commission, in a proceeding before the Commission emanating from the complaint, (1) does the utility have the burden of showing that the proposed termination is justified or does the customer have the burden of showing that it is unjustified, and’ (2) where the proposed termination is purportedly based on COMAR 20.31.02.04 (Fraudulent Use), what standard of proof is required? We need answer only the first question. The instant dispute is between the Baltimore Gas and Electric Company (BG & E) and Janice Everett.

At some point, BG & E notified Everett that it intended to terminate her service at 1600 Chilton Street. Upon Ms. Everett’s inquiry as to the basis of the proposed termination, BG & E, on May 7, 1981, wrote to her as follows: ²⁹¹ “In reference to your inquiry, the following information is submitted. We have evidence which we feel holds you responsible for $4242.60 in unpaid bills. Listed below are the addresses, amounts and time periods of those bills.

If you dispute these billings, you do have the right to request a formal hearing by the Public Service Commission of the State of Maryland." On June 4, 1981, Ms. Everett filed a complaint with the Public Service Commission. Attaching a copy of BG & E’s letter, she averred that she had never resided or had service in her name at any of the addresses listed in the letter. She asked that BG & E be “stayed” from terminating her service, that it be prohibited from collecting the amounts “allegedly owed” by her, and that a hearing be held in the matter. The Commission docketed the complaint as Case No. 7593, and, after informal attempts to resolve it proved fruitless, the Commission referred the case to a hearing examiner.

See Md.Code Ann. art. 78, § 20(b) and (c). At some point, BG & E decided not to press the first three claims made in its letter, either because it had already written them off as bad debts or because the bill had been paid, but it continued to consider Ms. Everett responsible for $3,188 for service rendered to 508 E. 43rd Street between May, 1977, and May, 1980. In a formal answer to the complaint, filed in September, 1981, BG & E averred that “[B]etween May 1977 and May 1980, Complainant resided at 508 E. 43rd Street and fraudulently used gas and electric service supplied from BG & E by (1) failing to contract for service in May 1977, (2) making application in a ficti[t]ious name or in the name of another family ²⁹² member or occupant in August 1978, (3) failing to contract for service in May 1979 and (4) making application in a ficti[t]ious name or name of another family member or occupant in September 1979. BG & E further avers that Complainant is liable for such fraudulent use in the amount of $3,188.87 and that BG & E is entitled to terminate service for non-payment of said outstanding amount.” (Emphasis added.) The matter came on for hearing on October 28, 1981, before the hearing examiner.

At the outset, counsel for Ms. Everett, relying on the allegation of “fraud” in BG & E’s answer, moved that the burden be placed on the company “to go forward and present proof to that effect rather than my client having to disprove an allegation for which no basis has yet been presented.” The motion, in other words, was “to have the company go forward with their [sic] evidence and have us rebut.” BG & E opposed the motion, contending that the allegations of fraudulent use merely “tracked” the Commission’s regulation (COMAR 20.31.02.-04), that Ms. Everett was the complainant, and that the “burden of proof is on the complaining party to prove facts to establish her basis for relief in the complaint.” The hearing examiner agreed with Ms. Everett and thus granted her motion, whereupon BG & E proceeded to present its evidence. That evidence, which we need not recount, tended to show that Ms. Everett did indeed reside at 508 E. 43rd Street, as alleged in BG & E’s letter, and that she did, in fact, obtain service at that address by various means, including the knowing use of other people’s names and actually “jumping” the meter. In rebuttal, Ms. Everett produced evidence indicating that she never lived at the 43rd Street address. She claimed that, from 1975 to October, 1980, she lived with her mother and brothers at 3300 Round Road, and that, during that period, the home on 43rd Street was occupied at various times by her daughters Debra and Janet, her grandchildren, and one William Morgan.

She admitted that she “used to babysit” and had ²⁹³ “spent the night there,” but firmly maintained that “I didn’t live there. It was my daughter’s house.” On May 17, 1982, the hearing examiner issued his proposed order. In it, he reaffirmed his conclusion that BG & E had the burden of proof in the matter. Relying on Loyola Federal Savings & Loan v. Trenchcraft, 17 Md. App. 646 , 303 A.2d 432 (1973), he further concluded that, because the proposed termination was based on “fraudulent use,” BG & E had to satisfy the burden by clear and convincing evidence, and not merely by a preponderance of evidence.

Finally, he stated that he was “unable to find sufficiently reliable evidence that the Complainant was living at the premises in question.” In view of the “persistent and unequivocal denials” by Ms. Everett, he declined to accept “the merely permissible inference” or circumstantial evidence to the contrary. Accordingly, he held that BG & E had failed to meet its burden by clear and convincing evidence and thus proposed that the company be prohibited from terminating service to Ms. Everett “on the basis of its claim of fraudulent use at 508 East 43rd Street.” BG & E appealed to the Commission. See art. 78, § 20(c). Each party thereafter filed a memorandum, but neither requested that any additional evidence be considered by the Commission. 1 On November 5, 1982, the Commission issued its order.

It agreed with the hearing examiner that “where a utility seeks to terminate service for fraudulent use, the burden of proof shall be upon the utility to show the customer has engaged in such fraudulent use.” It disagreed, however, that the standard of proof was “clear and convincing evidence,” but determined the appropriate standard to be “preponderance of the evidence.” Finally, reviewing the evidence on the record before the examiner, the Commission found that the company had met its bur ²⁹⁴ den — that “the weight of the evidence establishes Janice Everett’s responsibility for unpaid utility bills at 503 [sic, 508] East 43rd Street during the period between May 1977 and May 1980____” It therefore dismissed her complaint. Everett appealed to the Circuit Court for Baltimore City which, in a memorandum opinion filed February 24, 1984, agreed with the conclusions of the hearing examiner that (1) BG & E had the burden of proof, and (2) the standard of proof was “clear and convincing evidence,” not merely a preponderance of evidence. The court reversed the Commission’s order dismissing the complaint and remanded the case to the Commission for further proceedings. From that judgment, BG & E and the Commission have appealed.

BG & E complains that the court erred in both of its conclusions; the burden, it says, is on Ms. Everett, as the complainant, to show the absence of fraudulent use by a preponderance of the evidence. The Commission finds fault only with the standard of proof adopted by the court. Ms. Everett, supported by the Maryland Office of People’s Counsel, as amicus curiae, urges that the circuit court was correct in both conclusions. Ms. Everett seeks to raise, as well, the question of whether there was sufficient evidence in the record to support the Commission’s decision to permit termination of her service.

Each of the parties has filed an extensive brief, citing many authorities and prophesying, a la Cassandra, the most awful results if its (or her) position does not prevail. The issues are not really so complex; nor will the efficient provision of utility service be impeded by the conclusions we reach, which are basically those reached by the Commission. We shall explain our reasons as simply and concisely as possible, without pausing to discuss or rebut each sub-argument or authority cited in support of a contrary assertion. To put the matter in its proper context, it is important, at the outset, to keep in mind the nature of this proceeding.

In the first place, unlike the situations in Carter v. Suburban Water Co., 131 Md. 91 , 101 A. 771 (1917), Annapolis ²⁹⁵ Public Ut. Co. v. Martin, 131 Md. 393 , 102 A. 465 (1917), and Surratt v. Ches. & Pot. Tel. Co., 156 Md. 510 , 144 A. 495 (1928), this is not an action at law or in equity, but a proceeding before the administrative agency charged with regulating public utilities..

BG & E has not charged Ms. Everett with civil or criminal fraud; it is not seeking, in this proceeding, any judgment against her, either for tort damages or for the bill it claims she owes. Nor is Ms. Everett seeking against BG & E either judicial injunctive relief or damages for wrongful termination of service. Equally significant, notwithstanding all of the discussion about fraud in general and “fraudulent use” under COMAR 20.31.02.04 in particular, this is not really a fraud case. BG & E was not attempting to terminate Ms. Everett’s service because of any existing, ongoing “fraudulent use.” See COMAR 20.31.02.03, permitting a utility to terminate service without notice because of the customer’s tampering with utility equipment or “unauthorized use of service by any method, including diversion of gas or electricity around a meter,” and COMAR 20.31.02.04, permitting termination “if it is determined by the utility that the service at the premises is used in a fraudulent manner.” (Emphasis added.) From the record before us, it seems clear that BG & E moved against Ms. Everett for no other reason than that she refused to pay charges of $4,242 (later reduced to $3,188) that the company claimed she owed for past service rendered to addresses other than her current one.

That is made clear in the company’s answer to Ms. Everett’s complaint. See ante. There is nothing in this record to suggest that had Mrs. Everett tendered the amount claimed, BG & E would have sought to terminate her current service. Thus, the dispute, as it ultimately was presented to the Public Service Commission, was simply whether Ms. Everett was responsible for the gas and electric service furnished to 508 E. 43rd Street from April, 1975 to May, 1980.

The issue of “fraudulent use,” throughout, had but tangential relevance. It may well be that the methods allegedly ²⁹⁶ used by Ms. Everett to obtain and retain service at the 43rd Street address amounted to a “fraudulent use” as defined in COMAR 20.31.02.04, but whether they did or did not was of no real importance. At issue was not the characterization of her actions as fraudulent, but only whether they, or her alleged residence at that address, sufficed to make her liable for the charges. The distinction may be subtle, but it is important.

CO-MAR 20.31.02.04 provides, in relevant part: “A. Electric service or gas service, or both, may be terminated in accordance with this regulation if it is determined by the utility that the service at the premises is used in a fraudulent manner. B. ‘Fraudulent use’ includes, but is not limited to, the following activities: (1) Using service without having contracted with the utility to do so and refusing to sign an application for service; (2) Making an application in a fictitious