Intercom Systems Corp. v. Bell Atlantic of Maryland, Inc.

KRAUSER, Judge. This is an appeal from an order of the Circuit Court for Prince George’s County, dismissing a complaint filed by appellant, Intercom Systems Corporation, against appellee, Bell Atlantic of Maryland, Inc. (“Bell Atlantic”), for tortious inter ⁶²⁷ ference with contract or economic relations, 1 negligence, and breach of contract. That dismissal, the circuit court declared, was compelled by this Court’s holding in Bits “N” Bytes v. C & P Telephone, 97 Md.App. 557 , 631 A.2d 485 (1993), that the Public Service Commission Act (“Act”), now the Public Utility Companies Article (PUC)of the Maryland Code, 2 provides an exclusive remedy for such claims before the Public Service Commission (“Commission” or “PSC”). The circuit court’s reliance on that case was appropriate and the result it reached, under that decision, correct.

Nonetheless, in light of the decision of the Court of Appeals in Zappone v. Liberty Life, 349 Md. 45 , 706 A.2d 1060 (1998), we now conclude that the remedy provided by that Act is primary and not exclusive. Accordingly, we shall reverse the judgement of the circuit court and, to the extent that our decision in Bits “N” Bytes is inconsistent with this opinion, we overrule that decision. Background Appellant, Intercom Systems Corporation, was an internet service provider that conducted business in Clinton, Maryland. As an internet service provider, appellant was entirely dependent on local phone access service to conduct its business.

That service was provided by Bell Atlantic, the local exchange carrier for the Clinton area. Among other things, appellant relied on Bell Atlantic to provide it with regular telephone service, Centrex lines, a 56K data link, and high speed circuits such as frame relay and T-l circuits. ⁶²⁸ Growing increasingly dissatisfied with the quality of the services provided by Bell Atlantic and unhappy with the seeming unwillingness of Bell Atlantic to provide other services requested, appellant began filing complaints with the Public Service Commission. The Commission is “an independent unit in the Executive Branch of State Government.” PUC § 2-101. Its function is to “supervise and regulate the public sendee companies,” PUC § 2-113, such as Bell Atlantic, pursuant to the Public Utility Companies Act.

On February 16, 1995, appellant, then Intercom Micro Systems, lodged seven informal complaints against Bell Atlantic in a letter to Frank Fulton, Director of the Consumer Assistance and Public Affairs Office of the Commission. In that letter, appellant principally claimed that Bell Atlantic: 1) provided telephone lines that repeatedly malfunctioned, thereby interrupting appellant’s service to its customers; 2) rerouted appellant’s telephone voice line to one of its competitors; and 3) refused to provide certain services ordered by appellant, such as “remote access telephone numbers,” 3 despite providing the same services to appellant’s competitors. In response to these complaints, Fulton conducted an informal investigation. At the conclusion of that investigation, in a letter to appellant, dated August 31, 1995, Fulton stated that he had held two conferences with the parties, and that in response Bell Atlantic had agreed to “construct and install the hardware needed to expand [appellant’s] system.” He further stated that the investigation was now complete and that it appeared that “these last efforts [by Bell Atlantic] would resolve the problem.” He then concluded that letter by informing appellant that it could appeal his findings by “filing a Formal Complaint with the Public Service Commission pursuant to Code of Maryland Regulations (COMAR) 20.32.01.04M. and 20.07.03.04.” Instead, appellant sent a letter to Fulton, dated September 28, 1995, stating that “[t]he ⁶²⁹ Public Service Commission has fulfilled every fair aspect of this complaint.” Nonetheless, appellant’s problems with Bell Atlantic persisted.

From January 7, 1997, through February 24, 1997, appellant submitted to the Commission nine “filings” which consisted of sixteen different complaints against Bell Atlantic. In those complaints, appellant alleged, among other things, that Bell Atlantic: 1) had refused to provide new telephone service; 2) had maliciously disrupted appellant’s telephone service; 3) had refused to repair broken facilities for appellant; 4) had over-billed and incorrectly billed appellant for services rendered; 5) had refused to list appellant in both the 411 Information Directory and the Business White Pages directory; and 6) had given preferential treatment to appellant’s competitors. According to appellant, Bell Atlantic’s conduct constituted an “intentional and improper interference with the business expectations of appellant and its customers,” and was part of a deliberate attempt to put appellant, a competitor of a subsidiary of Bell Atlantic’s, out of business. A second informal investigation by Fulton ensued.

It culminated in the issuance of a final letter by Fulton, dated April 11, 1997, reviewing each of appellant’s allegations. Among other things, that letter indicated that on four occasions Bell Atlantic had agreed that it had overbilled or issued incorrect bills to appellant and, as a result, it had applied the following credits to appellant’s accounts: $1,477.33, $1,709.11, $408.00, and $1,754.34. Notwithstanding these discrepancies, Fulton concluded his letter with a statement that he did “NOT believe that [Bell Atlantic had] failed to act in good faith with the customer” and that it “ha[d] NOT violated any of its Commission-approved tariffs” (emphasis in original). He then informed appellant once again that it could appeal his findings by filing a formal complaint with the Commission.

Five days later, on April 16, 1997, appellant filed a lawsuit against Bell Atlantic in the Circuit Court for Prince George’s County, alleging tortious interference with contract relations, ⁶³⁰ negligence, and breach of contract. 4 The dismissal of that complaint lies at the core of this appeal. Nine days after that, on April 25, 1997, appellant filed a formal complaint with the Commission and re-submitted the sixteen complaints it had previously filed. Appellant’s case was assigned to a hearing examiner, pursuant to PUC § 3-104. 5 While the formal investigation was pending, appellant added a seventeenth complaint, alleging that Bell Atlantic’s conduct was designed to benefit “Bell Atlantic Internet Solutions, Inc,” a subsidiary of Bell Atlantic that, like appellant, is in the business of providing internet service to the public. In this latest complaint, appellant requested compensatory and punitive damages for Bell Atlantic’s “deliberate and malicious” conduct.

After discovery was concluded, Bell Atlantic filed a “Motion for Summary Dismissal.” On December 23, 1999, the hearing examiner issued a twenty-four page proposed order, granting Bell Atlantic’s motion. In that order, the examiner summarized Bell Atlantic’s position as follows: Bell Atlantic claims that in all of the complaints, it has undertaken corrective action. Thus, where a complaint was made as to an over-billing, credit has been granted; where a ⁶³¹ complaint was made that services were not provided, those services have now been provided; and when a complaint was made that actions were impacting negatively on a client of [appellant], those actions have ceased. The hearing examiner then concluded, “In reviewing all [of appellant’s] complaints, it is clear that [Bell Atlantic] has responded to each complaint, and any action taken has properly resolved the complaint ... [and] there is no further action that needs to be taken by [Bell Atlantic], consistent with the tariffs, to satisfy any [of appellant’s] complaints.” Before dismissing appellant’s complaints, however, the hearing examiner noted that “[t]he crux of what [appellant] claims should be remedied involves an alleged pattern, ongoing scheme, or willful course of conduct by [Bell Atlantic] designed to destroy the business of [appellant].” It is “entirely understandable,” the examiner surmised, that appellant drew this conclusion based on Bell Atlantic’s conduct.

He observed that Bell Atlantic is a “sophisticated company with technological and management systems in place to provide reliable service to its customers” and that the “cumulative affect [sic] of the actions described in [appellant’s] complaints certainly belie the standard of reliability expected of Bell Atlantic.” He concluded, “[i]t is, indeed, very troublesome that this succession of problems has occurred. Moreover, it is reasonably foreseeable that the repeated problems could and probably did have serious economic consequences [for appellant].” Observing, however, that appellant’s “claim for economic damage seeks to obtain a remedy that is beyond the boundary of the tariffs or the Commission’s statutory authority,” the examiner granted Bell Atlantic’s motion for summary dismissal. That order became final on January 25, 2000. Thereafter, appellant tiled a petition for judicial review in the Circuit Court for Prince George’s County.

That petition is still pending. As noted earlier, the complaint filed by appellant in the circuit court consisted of three counts: tortious interference with economic or contract relations, negligence, and breach of ⁶³² contract. In support of its claim of tortious interference with economic or contract relations, appellant alleged that Bell Atlantic, “either directly or through a subsidiary, is a direct competitor of [appellant] in providing Internet access to the general public.” Because it is a competitor of appellant, it has, according to appellant, intentionally 1) failed to promptly provide new or additional circuits, 2) provided circuits that repeatedly failed, or were of low quality, 3) incorrectly billed or otherwise charged appellant higher prices than appellant’s competitors, 4) failed to provide appellant with circuits, while promptly providing circuits for appellant’s competitors, 5) rerouted or forwarded appellant’s voice lines to competitors, and 6) refused to list appellant in the White Pages or in its 411 Information Directory listings. Furthermore, appellant alleged that Bell Atlantic’s actions were intended to harm appellant and “done with evil motive, ill will.” Consequently, it demanded compensatory and punitive damages.

On May 23, 1997, Bell Atlantic filed a motion to dismiss appellant’s complaint for failure to state a claim upon which relief can be granted. In support of that motion, Bell Atlantic asserted that appellant had filed complaints with the PSC alleging the same conduct complained of in its lawsuit and that, “[t]herefore, under the doctrine of exhaustion of administrative remedies, [appellant] may only seek judicial review, if at all, from a final decision of the agency.” In response, appellant asserted that its claims were “independent of any PSC regulation” and that “the PSC cannot provide, to any substantial degree, a remedy.” For those reasons, appellant maintained that it should be permitted to proceed with its cause of action. On November 14, 1997, at the hearing on Bell Atlantic’s motion to dismiss, appellant argued that Bell Atlantic had intentionally violated administrative rulés and tariffs in an effort to destroy appellant. It conceded, however, that the PSC’s formal investigation should be permitted to proceed to a conclusion.

It therefore requested that the circuit court stay its lawsuit pending the outcome of the on-going administrative proceedings, rather than dismiss it. ⁶³³ After hearing argument, the circuit court stated that it was “constrained by the decision contained in Bits “N” Bytes ... [to find] that the allegations raised in the complaint are within the exclusive jurisdiction of the Public Service Commission” and, on that basis, dismissed the complaint. Appellant now appeals that dismissal. Discussion The issue before us is whether the administrative remedy provided by the PUC Article before the Commission is exclusive, primary, or concurrent. If primary or concurrent, as appellant contends, the circuit court erred in dismissing appellant’s complaint.

Because we find that the remedy in question is primary, appellant’s request that the proceedings before that court be stayed (and not dismissed) pending appellant’s exhaustion of the Commission’s administrative remedy, should have been granted. Before proceeding with an analysis of the issues before us, however, we note that the circuit court and the parties addressed the question of exhaustion of administrative remedies in terms of whether the Commission has exclusive, primary, or concurrent “jurisdiction” over appellant’s claims. The use of the term “jurisdiction” is misleading. We are dealing here not with “a limitation upon the subject matter jurisdiction” but with the nature of the available administrative remedy.

Maryland-Nat’l Cap. P & P Comm’n v. Crawford, 307 Md. 1 , 13 n. 4, 511 A.2d 1079 (1986). As we have previously observed, “[A] court is usually not without subject matter jurisdiction to consider an original civil suit brought by a party who has failed to exhaust his exclusive administrative remedies.” Bits “N” Bytes, 97 Md.App. at 567 , 631 A.2d 485 . Admittedly, however, the exhaustion doctrine “is for some purposes treated like a jurisdictional issue.” Crawford, 307 Md. at 13-14, n. 4 , 511 A.2d 1079 .

Moreover, if properly invoked, it may require the trial court to dismiss or stay the action before it. Nonetheless, it should be reemphasized that the terms “exclusive,” “primary,” and “concurrent” apply only to the administrative remedy- available to the claimant and do ⁶³⁴ not impose any limitation on the subject matter jurisdiction of the courts. I The exhaustion of remedies doctrine requires that “one must exhaust statutorily prescribed administrative remedies before resorting to the courts.” Maryland Comm’n on Human Rel. v. Downey Communications, Inc., 110 Md.App. 493, 526 , 678 A.2d 55 (1996); see also McCullough v. Wittner, 314 Md. 602 , 552 A.2d 881 (1989). In other words, “ordinarily a party must pursue the prescribed administrative procedure to its conclusion and await its final outcome ... [and] a party can resort to a court only when there is a final order in the administrative proceeding.” Maryland Comm’n on Human Rel. v. Baltimore Gas and Electric Co., 296 Md. 46, 51 , 459 A.2d 205 (1983).

The rationale underlying the doctrine is: The decisions of an administrative agency are often of a discretionary nature, and frequently require an expertise which the agency can bring to bear in sifting the information presented to it. The agency should be afforded the initial opportunity to exercise that discretion and to apply that expertise. Furthermore, to permit interruption for purposes of judicial intervention at various stages of the administrative process might well undermine the very efficiency which the Legislature intended to achieve in the first instance. Lastly, the courts might be called upon to decide issues which perhaps would never arise if the prescribed administrative remedies were followed.

Soley v. State Comm’n on Human Rel., 277 Md. 521, 526 , 356 A.2d 254 (1976). II In Maryland, the Legislature has “created [a] comprehensive and detailed administrative machinery for the regulation of public utilities throughout the State.” Spintman v. C & P Telephone, 254 Md. 423, 427 , 255 A.2d 304 (1969). That ⁶³⁵ administrative machinery is set forth in §§ 1-101 to 13-207 of the PUC Article of the Maryland Code. 6 Pursuant to that Act, the Commission is expressly authorized to supervise and regulate all public utility companies in Maryland. PUC § 2-113 7 For that purpose, it is granted “the implied and incidental powers needed or proper to carry out its functions under this article.” PUC § 2-112 8 As to the handling of complaints against public utility companies, the Commission is authorized to receive a complaint from any person, PUC § 3-102(a), or it may proceed on its own motion, PUC § 3-102(e), to conduct an investigation, PUC § 2-115.

In furtherance of that investigation, it may ⁶³⁶ serve process, PUC § 3-103, conduct hearings, PUC § 3-104, and issue subpoenas to compel testimony or the production of documents. PUC § 3-109. After the Commission has issued a decision or order, any party, dissatisfied with the result reached by the Commission, may petition the circuit court for judicial review of that decision or order. The scope of that review is as follows: Every final decision, order, or regulation of the Commission is prima facie correct and shall be affirmed unless clearly shown to be: (1) unconstitutional; (2) outside the statutory authority or jurisdiction of the Commission; (3) made on unlawful procedure; (4) arbitrary or capricious; (5) affected by other error of law, or (6) if the subject of review is an order entered in a contested proceeding after a hearing, the order is unsupported by substantial evidence on the record considered as a whole.

PUC § 3-203. Thus, the Act creates a comprehensive but, as we shall see, not an exclusive system for the resolution of complaints against the public utility companies. Ill The circuit court dismissed appellant’s complaint on the ground that the Commission had exclusive “jurisdiction” over the claims raised in that complaint. In so ruling, the circuit court relied exclusively on our decision in Bits “N” Bytes .

The facts of that case are as follows. Bits “N” Bytes” (“BNB”), a supplier of computers and computer parts, had entered into a series of directory advertising contracts with the Chesapeake & Potomac and Telephone Co. of Maryland (“C & P”). Id. at 561 , 631 A.2d 485 . When BNB failed to pay money owed C & P pursuant to those contracts, C & P cut off ⁶³⁷ its telephone service and filed suit against BNB in the District Court of Maryland to collect that money.

Id. at 562 , 631 A.2d 485 . Upon BNB’s request for a jury trial, the case was removed to the circuit court where BNB filed a counterclaim. Id. at 561-62 , 631 A.2d 485 . In that counterclaim, BNB made the following allegations: BNB ... asserted that C & P falsely advised BNB that C & P had a right to interrupt BNB’s telephone service if BNB failed to pay its directory advertising bill, which led BNB to terminate its Baltimore area telephone service.

Additionally, BNB asserted that C & P’s “illegal threats and false claims” constituted a breach of its directory advertising contracts with BNB and caused BNB to suffer “a substantial loss of profits, as well as other incidental and consequential damages.” BNB asked that its directory advertising contract with C & P be rescinded (Count I), or alternatively that BNB be awarded “consequential damages of $20,000” and “incidental damages of $5,000 and