Marriott Corp. v. Chesapeake & Potomac Telephone Co.

RALPH M. BURNETT, Judge, Specially Assigned. This appeal involves a multi-million dollar law suit based on four hours of lost long distance telephone service. The appellant is the Marriott Corporation (“Marriott”). The appellee is the Chesapeake and Potomac Telephone Company of Maryland 1 (“C & P”) which, along with various co-defendants 2 , was sued by Marriott for negligence and gross negligence in connection with the lost service.

Marriott is a well known owner and operator of hotels throughout the world. Reservations for its hotels are pro ⁴⁶⁷ cessed at the Frederick Computer Data Center located in Frederick, Maryland. This center provides information as to the status of reservations and room availability at the Marriott hotels to travel agents and customers seeking reservations at Marriott hotels. All long distance communications with the Frederick Center via telephone and data communication services are provided by the American Telephone and Telegraph Company (“AT & T”) under written contract between AT & T and Marriott.

AT & T bills Marriott and Marriott pays AT & T for these services. The services are provided to Marriott via a fiber optic cable installed and maintained by C & P. Marriott is not a party to any agreement regarding this cable. On Friday, April 7, 1989, the fiber optic cable was severed by a Brandenberg Electric, Inc. crew that had been hired by the State Highway Administration (“SHA”) to drill holes for the placement of new road signs along State Highway 874. The result was a four-hour interruption of long distance telephone service throughout western Maryland.

SHA had given notice of the sign location operation to Miss Utility 3 , which in turn had given notice to C & P. Thereafter, C & P employee Robert Carwithen had marked the supposed location of the underground cable with a painted, dashed line. Through its own investigation, C & P determined that the “C & P locator did not mark the cables correctly,” concluding that its own locator, Carwithen, was at fault. Marriott filed a complaint in the Circuit Court for Montgomery County against C & P alleging negligence and gross negligence. 4 Marriott claimed damages stemming from the loss of service occasioned by the severance of the fiber optic cable. C & P moved lor summary judgment, arguing that its liability for negligence and gross negligence, if any, was limited by General Regulation Tariff P.S.C. [Public Service ⁴⁶⁸ Commission] Md. No. 201 (“the Tariff’ or “Tariff No. 201”), on file with the Maryland Public Service Commission.

Under certain circumstances, the Tariff limits C & P’s liability to “an amount equivalent to the proportionate charge to the customer for the service or facilities affected.” C & P also argued that it was entitled to summary judgment as to gross negligence because, as a matter of law, Marriott was unable to allege facts sufficient to constitute gross negligence. Marriott responded by arguing that the Tariff was not applicable to C & P’s liability to Marriott for interruption of the long distance service because Marriott was AT & T’s customer and not C & P’s. Marriott added that summary judgment should not be granted as to gross negligence because (i) a party cannot exculpate itself from gross negligence, and (ii) the claim was supported by sufficient facts. After oral argument, the trial court granted partial summary judgment in C & P’s favor, finding that Marriott was C & P’s customer in regard to the affected service “by virtue .of the use of C & P’s lines in delivering AT & T’s calls.” The court concluded that any liability on C & P’s part on the negligence claim was limited by the Tariff.

The court also ruled that Marriott had failed to set forth “facts to support a claim of gross negligence.” Marriott moved under Md. Rule 2-602(b) to have the ruling on the motion for summary judgment certified as a final judgment. It argued that, under the ruling, it could not recover any damages from C & P. The trial court agreed and granted the motion over C & P’s objection. In apparent contradiction to its earlier ruling on the motion for summary judgment to the effect that Marriott was C & P’s customer in regard to the affected service, the court explained that “[t]he only service provided to Marriott by C & P was local telephone service,” and “[t]he service allegedly interrupted for four hours was AT & T’s long distance service .... ” Marriott then noted an appeal, but this Court granted C & P’s motion to dismiss in light of the many remaining claims and cross-claims involving Brandenberg Electric, Inc. and the State. Thereafter, Marriott moved to dismiss Brandenberg Electric, Inc. and the State from the case and to re-enter the ⁴⁶⁹ summary judgment as final.

The trial court granted the motion and Marriott filed the instant appeal. 5 C & P noted a cross-appeal. ISSUES Marriott presents several questions on appeal, which we consolidate and rephrase as follows: — Was Marriott a C & P customer, such that C & P’s liability for negligence was limited under General Regulation Tariff No. 201? — Did the trial court err in holding that there were no facts to support the claim for gross negligence? C & P adds the following question in its cross-appeal: — Did the trial court err in granting Marriott’s motion for entry of final judgment? We shall first address the issue raised by C & P in its cross-appeal.

DISCUSSION I Finality of Judgment C & P argues that the trial court erred by purporting to enter a final judgment without first having made a determination as to whether C & P was negligent and, if so, what limited damages could be assessed against it under the Tariff. The applicable portion of the Tariff reads: E. LIABILITY OF THE TELEPHONE COMPANY In view of the fact that the customer has exclusive control over the use of service and facilities furnished by the Telephone Company, and because of unavoidableness of errors incident to the services and to the use of such ⁴⁷⁰ facilities of the Telephone Company, services and facilities are furnished by the Telephone Company subject to the terms, conditions and limitations herein specified: 1. Service Irregularities The liability of the Telephone Company for damages arising out of mistakes, omissions, interruptions, delays, errors or defects in transmission, or failures or defects in facilities furnished by the Telephone Company, occurring in the course of furnishing service or other facilities and not caused by the negligence of the customer, shall in no event exceed an amount equivalent to the proportionate charge to the customer for the service or facilities affected during the period such mistake, omission, interruption, delay, error or defect in transmission, or failure or defect in facilities continues after notice and demand to the Telephone Company. General Regulations Tariff P.S.C. Md. No. 201, Section 1, Subsection E at 4th Revised Page 7 (effective January 1, 1984).

C & P argues that the mere dismissal of all defendants other than C & P, making the case a two-party lawsuit, does not bring the matter to final judgment. Instead, C & P claims that the issue of C & P’s liability remains unadjudicated, the lower court having merely limited C & P’s liability and thereby the amount of damages Marriott may be able to recover. To the contrary, the lower court concluded that no damages could be assessed against C & P and therefore Marriott could not go forward. At the hearing on Marriott’s first motion for entry of final judgment, the court reflected on the effect of Marriott’s position that no damages would be determined: [I]f in fact there are no damages that can be recovered by the plaintiff against C & P, then in the Court’s opinion ... the plaintiff would have no case against C & P because of the three elements of duty, breach, and a necessary ability to prove damages.

If because of the application of the tariff the plaintiff can recover no damages, it is the court’s inclination to certify ⁴⁷¹ this case, but it seems to me that I am not really at that position. If counsel wants to file an affidavit to the [e]ffect that the[re] are no damages in this case, if C & P wants to file a counter affidavit, then I think perhaps the Court could rule then on the question of the entire claim of Marriott against C & P on the question of damages one way or another. If there is a possibility of [Marriott] getting damages even though they might be minimal under the tariff, then I don’t think I can certify the case. On the other hand I think if there is no possibility that Marriott could get damages on its claim against C & P because of the tariff situation, then I will certify it.

In response, Marriott provided the court with two affidavits — one signed by its attorney and one signed by a high-level employee. Both affiants stated that Marriott did not obtain long distance service from C & P and that only long distance service was interrupted. C & P’s attorney filed his own affidavit, to which he attached the deposition testimony of a C & P employee. During the deposition, the employee had acknowledged that C & P did not provide Marriott’s long distance service and did not bill Marriott for such services.

The employee had vaguely suggested that C & P nevertheless billed Marriott in connection its use of the fiber optic cable. The trial court thus issued an order in which it concluded that the undisputed evidence established: The only service provided to Marriott by C & P was local . telephone service. The service allegedly interrupted was four hours of AT & T’s long distance service to Marriott. Since Marriott’s local telephone service was not interrupted, the application of C & P’s tariff precludes Marriott from obtaining any damages against C & P. In fact, Marriott has filed an affidavit that if, as this Court has ruled, the tariff applies to this case, it cannot recover any damages against C & P. Since Marriott cannot recover damages against C & P, it has no cause of action. ⁴⁷² In the same order, the court entered final judgment in favor of C & P. The court reiterated the reasons for entering final judgment when it issued its second order in response to Marriott’s second motion for entry of final judgment.

The Court of Appeals “has repeatedly held that an order ‘having the effect of terminating the case in the circuit court[ ] is a final judgment.’ ” Ferrell v. Benson, 352 Md. 2, 5 , 720 A.2d 583 (1998) (citation omitted). “[A] trial court’s order sometimes may constitute a final appealable judgment even though the order fails to settle the underlying dispute between the parties. Where a trial court’s order has ‘the effect of putting the parties out of court, [it] is a final appealable order.’ ” Horsey v. Horsey, 329 Md. 392, 401 , 620 A.2d 305 (1993) (citation omitted). As the Court of Appeals has explained: The determination of whether a court has rendered judgment turns on whether the court indicated clearly that it had fully adjudicated the issue submitted and had reached a final decision on the matter at that time. In other words, the trial court’s ruling must be “an unqualified, final disposition of the matter in controversy.” ...

There are, however, no formal requirements regarding the rendition of a judgment. ... As one court has observed, “[t]here are no hard and fast rules for determining what is a judgment.” ... Rather, whether a judgment has been rendered in a particular case is an inquiry that must be made on a case-by-case basis which focuses upon the actions and statements of the court. Davis v. Davis, 335 Md. 699, 710-11 , 646 A.2d 365 (1994) (citations omitted).

The trial court made it abundantly clear that its ruling on C & P’s motion for summary judgment was a final judgment. The court specified that the undisputed evidence established that Marriott was not C & P’s customer for long distance service, and that the only damages claimed by Marriott arose from the loss of long distance service. In light of the court’s finding that the Tariff applied, and because the Tariff express ⁴⁷³ ly limited recovery to “an amount equivalent to the proportionate charge to the customer for the service or facilities affected,” the court correctly concluded that Marriott could not recover. We are thus satisfied that the court’s ruling on the motion for summary judgment put Marriott out of court and was indeed a final judgment.

II Marriott as C & P’s Customer By its express language, Tariff No. 201 applies to Marriott only if Marriott was a customer of C & P with respect to the “service or facilities affected.” General Regulations Tariff P.S.C. Md. No. 201, Section 1, Subsection E.l at 4th Revised Page 7 (effective January 1, 1984). The trial court determined, on summary judgment, that Marriott was a C & P customer “by virtue of the use of C & P’s lines in delivering AT & T’s calls.” It concluded that Marriott’s negligence claim was therefore subject to the limitation on damages set forth in the Tariff. Marriott now contends that the trial court erred in determining that it was a C & P customer. A trial court “shall enter summary judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” Md. Rule 2-501(e).

In considering a motion for summary judgment, “a trial court determines issues of law; it makes rulings as a matter of law, resolving no disputed issues of fact.” Beatty v. Trailmaster, 880 Md. 726 , 737, 625 A.2d 1005 (1993). “In reviewing a disposition by summary judgment, an appellate court resolves all inferences against the party making the motion.... Because a trial court decides issues of law when granting a summary judgment, the standard of appellate review is whether the trial court was legally correct....” Southland Corp. v. Griffith, 332 Md. 704, 712 , 633 A.2d 84 (1993) (citations omitted). See also Dobbins v. Washington Suburban Sani ⁴⁷⁴ tary Comm’n , 388 Md. 341, 344-45 , 658 A.2d 675 (1995); Berkey v. Delia, 287 Md. 302, 304-05 , 413 A.2d 170 (1980). There is no definition of “customer” in the Public Service Commission Law.

See generally Md. Ann.Code art. 78 (1995 Repl.Vol., 1997 Cum.Supp.). Nor is there a definition in Tariff No. 201 itself. Subsection C of Section 1 of the Tariff, which concerns “Applications for Service,” indicates, however, that “[u]pon the acceptance of an application for service, all the applicable provisions in the Telephone Company’s tariffs lawfully on file become the contract between the customer and Telephone Company.” General Regulations Tariff P.S.C. Md. No. 201, Section 1, Subsection C.l at Original Page lb (effective January 1, 1984). This suggests that an applicant for service becomes a customer when its application is accepted.

There is no indication that Marriott submitted an application to C & P in connection with the fiber optic cable or that any application was accepted. An affidavit appended to Marriott’s opposition to C & P’s motion for summary judgment indicates that the telecommunications for Marriott’s reservation center were provided by AT & T, billed to Marriott, and paid by Marriott to AT & T. Mason Clinton, Senior Director of Telecommunications for Marriott, stated in his affidavit that Marriott’s contract for the interrupted service was with AT & T and that Marriott had no agreement with C & P regarding the service and received no bills from C & P. Thus, competent evidence before the trial court when it ruled on the motion for summary judgment suggested that Marriott was no more than a third party or “down-the-line” user of services and facilities provided to AT & T by C & P. 6 ⁴⁷⁵ “A company’s filed tariff has the force of law, and is binding between a company and its customers ... and is part of the contract between the company and its customers.” 86 C.J.S.