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County of Butler v. Centurylink Communications, LLC

Commonwealth Court of Pennsylvania

June 8, 2017

County of Butler, Appellant
v.
Centurylink Communications, LLC, and all subsidiaries and related entities; The United Telephone Company of Pennsylvania LLC, and all subsidiaries and related entities; Consolidated Communications of Pennsylvania, LLC, and all subsidiaries and related entities; Consolidated Communications Enterprise Services, Inc. and all subsidiaries and related entities; Core Communications, Inc., and all subsidiaries and related entities; Intermedia Communications of Florida, Inc., and all subsidiaries and related entities; Verizon Pennsylvania, Inc., and all subsidiaries and related entities; Level 3 Communications, LLC, and all subsidiaries and related entities; Telcove of Eastern Pennsylvania, and all subsidiaries and related entities; AT&T Corp., and all subsidiaries and related entities; Teleport Communications America, LLC, and all subsidiaries and related entities; U.S. LEC of Pennsylvania, Inc., and all subsidiaries and related entities; Bandwidth.com CLEC, LLC, and all subsidiaries and related entities; Comcast Phone of Pennsylvania, LLC, and all subsidiaries and related entities; Peerless Network of Pennsylvania, LLC, and all subsidiaries and related entities; and ABC Companies 1 Through 20

          Argued: April 4, 2017

          BEFORE: HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE MICHAEL H. WOJCIK, Judge

          OPINION

          P. KEVIN BROBSON, Judge

         This is an appeal from a decision of the Court of Common Pleas of Butler County (trial court), sustaining Centurylink Communications, LLC and the remaining captioned appellees' (collectively, Service Providers) preliminary objections to the County of Butler's (County) complaint. The County's complaint alleged that the Service Providers did not fulfill their responsibilities under the statewide 911 emergency communication system. For the reasons set forth below, we reverse.

         As an initial matter, we note that the underlying dispute in this case between the County and the Service Providers, namely whether the Service Providers failed to bill and undercharged subscribers, pertains to what we will refer to as the 911 Act, 35 Pa. C.S. §§ 5301-5312.1, prior to the General Assembly's amendments to the 911 Act that became effective in August 2015. As discussed further below, however, the instant appeal requires this Court to consider the 911 Act both before and after the effective date of the 2015 amendments.

         Pursuant to the 911 Act, the County is responsible for the "implementation, operation and maintenance of a 911 system." Section 5304 of the 911 Act, 35 Pa. C.S. § 5304. Prior to the 2015 amendments, the statutory scheme operated in the following manner. Through the implementation of a "contribution rate" (911 fees), the 911 Act provided funding to counties to address the costs associated with each county's 911 calling and response system. Former Section 5302 of the 911 Act, 35 Pa. C.S. § 5302. The 911 Act, prior to the 2015 amendments, also required telecommunication service providers to bill the 911 fees to subscribers and to remit the amount collected to the counties. See former Section 5307(a) of the 911 Act, 35 Pa. C.S. § 5307(a) (relating to collection and disbursement of 911 fees) and former Section 5311.14 of the 911 Act, 35 Pa. C.S. § 5311.14 (relating to Voice over Internet Protocol (VoIP) service), repealed by the Act of June 29, 2015, P.L. 36.[1] It also required service providers to report information on "each interconnected VoIP service customer" relating to the 911 fee for that customer. Former Section 5311.14(b)(2) of the 911 Act.

         On February 11, 2016, the County filed a complaint in the trial court, alleging that the Service Providers failed to charge customers adequately and to collect, remit, and report certain fees under the services fee scheme of the 911 Act. (Reproduced Record (R.R.) at 47a-79a.) The County sets forth its specific legal claims in four counts. Count I of the complaint alleges that the Service Providers were fiduciaries of the County, because the Service Providers had custody and control over all information related to the 911 fees. Count I also alleges that the Service Providers breached their fiduciary obligations by failing to charge, collect, and remit 911 fees and by submitting false or inaccurate reports to the County pertaining to those fees. (R.R. at 74a.) Count II alleges that the Service Providers committed fraud by intentionally and/or knowingly failing to charge, collect, report, and remit the 911 fees as required by the 911 Act and by materially misrepresenting and/or concealing the facts surrounding the 911 fees. (R.R. at 75a-76a.) Count III alleges that the Service Providers committed negligent misrepresentation in that the Service Providers provided false representations to the County through inaccurate 911 fees and remittance forms, and the County relied on those representations to its detriment. (R.R. at 76a-78a.) Count IV alleges that the County is unable to ascertain the extent of the underpayment of 911 fees and, therefore, requests the trial court to compel an accounting. Count IV additionally asks the trial court to enjoin the Service Providers from continuing to violate the 911 Act and to award monetary damages. (R.R. at 78a-79a.)

         The Service Providers filed joint preliminary objections to the County's complaint. The Service Providers first object on the ground that the 911 Act provides the Pennsylvania Emergency Management Agency (PEMA) exclusive authority to enforce the 911 Act. The Service Providers also object to Count II, which alleges fraud, on the ground that the complaint lacks particularity and specificity. In their third preliminary objection, the Service Providers contend that Count I fails to state a claim for breach of fiduciary duty, because the County fails to allege facts that would establish a fiduciary relationship or confidential relationship between the County and the Service Providers. Fourth, the Service Providers object to Count III under the economic loss doctrine, because the County alleges only money damages as a result of the purported negligent misrepresentation. In their fifth preliminary objection, the Service Providers object to Count IV and contend that the County is not entitled to an accounting, because Count IV does not assert a breach of a promise or contract, which is necessary to support a request for an accounting. Finally, the Service Providers object to the complaint on the ground that it fails to develop any claim against unnamed "Subsidiaries and Related Entities" that are captioned in the complaint.[2]

         On August 11, 2016, the trial court issued an opinion and order, sustaining the Service Providers' first preliminary objection. The trial court highlighted PEMA's authority under now-repealed Section 5311.13 of the 911 Act, [3] which provided:

In addition to any powers expressly enumerated in this chapter, the agency has the power and duty to enforce and execute, by its regulations or otherwise, this chapter. The agency may institute injunction, mandamus[, ] or other appropriate legal proceedings to enforce this chapter and regulations promulgated under this chapter.

Section 5302 of the 911 Act defines "agency" as PEMA. According to the trial court, given PEMA's authority under now-repealed Section 5311.13, the County has no authority to bring its case-either due to Section 1504 of the Statutory Construction Act of 1972 (Statutory Construction Act), 1 Pa. C.S. § 1504, [4] or for lack of standing. Because the trial court sustained the Service Providers' first preliminary objection, it declined to address the remaining preliminary objections.

         Following the trial court's August 11, 2016 opinion, the County filed a motion for reconsideration. The County attached to its motion an Affidavit of Robert Mateff, Deputy Director for PEMA (Mateff Affidavit). The Mateff Affidavit explained that PEMA reviewed the trial court's August 11, 2016 opinion and interpreted the 911 Act differently than the trial court. According to the Affidavit, "PEMA has always interpreted [former] Section 5307(e)(1) [of the 911 Act, 35 Pa. C.S. § 5307(e)(1)] to authorize the counties to police the telephone companies [sic] collection practices." (R.R. at 901a.) The County argued that the trial court should reconsider its decision based on the Mateff Affidavit and afford deference to PEMA's interpretation. (R.R. at 890a-97a.) On September 8, 2016, the trial court denied the County's motion for reconsideration.

         On appeal, [5] the County first argues that former Section 5307(e)(1) of the 911 Act authorized the County to pursue its case against the Service Providers. The County argues, in the alternative, that former Section 5307(e)(1) was at least ambiguous, and, thus, this Court should afford deference to PEMA's interpretation as set forth in the Mateff Affidavit. The County also contends that Section 1504 of the Statutory Construction Act does not preclude the County's claims, because the 911 Act does not provide an adequate statutory remedy. Finally, the County argues that it has a constitutionally-protected interest in the 911 fees and that the trial court's interpretation of the 911 Act violated the County's procedural due process rights by depriving the County of an adequate remedy.[6]

         In response, the Service Providers argue that former

         Section 5307(e)(1) of the 911 Act does not authorize the County's suit, because that section pertains to the collection of 911 fees, as opposed to the allegedly noncompliant billing of 911 fees. The Service Providers then argue that the Mateff Affidavit should not be given deference first, because it cannot trump the plain language of the statute, and second, because it lacks the formality of notice-and-comment or any other procedural check on the agency. The Service Providers argue that the trial court correctly determined that PEMA alone has the authority to enforce the 911 Act against service providers. The Service Providers cite to Petty v. Hospital Service Association of Northeastern Pennsylvania, 23 A.3d 1004 (Pa. 2011), in support of their contention that the County's option to notify PEMA of the alleged violation of the 911 Act constitutes a sufficient remedy for the County. The Service Providers further argue that because the 911 Act provides a sufficient statutory remedy, Section 1504 of the Statutory Construction Act precludes the County from pursuing common law claims. Finally, the Service Providers argue that the trial court's interpretation did not implicate due process concerns, because the County did not have a constitutionally protected property interest in the 911 fees.

         In support of its purported statutory authority to bring this suit, the County points to former Section 5307(e) of the 911 Act. Prior to the 2015 amendments ...


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