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Dist. of Columbia v. Dist. of Columbia Public Service Commission

January 15, 2009


On Petition for Review of a Decision of the District of Columbia Public Service Commission, (PSC Orders Nos. 13790 & 13837). Appeal from the Superior Court of the District of Columbia, (CA-420-05) (Hon. Natalia M. Combs Greene, Trial Judge).

The opinion of the court was delivered by: Ruiz, Associate Judge

Argued November 17, 2006*fn1

Before RUIZ and FISHER, Associate Judges, and FARRELL, Associate Judge, Retired.*fn2

This case arises from a dispute concerning the amount the District of Columbia must pay to Verizon Washington, DC Inc. ("Verizon") for emergency telephone services ("E911 services") under the terms of an interim agreement the parties entered into pending final resolution of the applicable rate by the District of Columbia Public Service Commission ("PSC" or "Commission"). The District petitions for review of the PSC's refusal to interpret the parties' obligations under the agreement. It also seeks review of the Superior Court's grant of summary judgment to Verizon requiring the District to pay additional amounts for E911 service under the agreement, even though the PSC rate proceeding has not yet come to a final conclusion. The District argues that the Superior Court erred in deciding the case because primary jurisdiction resided with the PSC as it involved the interpretation of PSC orders, and the exercise of jurisdiction by the court could affect or interrupt proceedings pending before the PSC. In the alternative, the District argues that even if the Superior Court properly exercised jurisdiction, the trial court erred in granting summary judgment because it erroneously interpreted the terms of the agreement at the heart of the contract dispute between the parties, and failed to consider evidence of disputed material fact on the issue of damages.

We conclude that the PSC did not err in denying the District's request to clarify its understanding of the parties' contractual obligations, and that, as a result, the Superior Court properly exercised jurisdiction in this case. We affirm the grant of summary judgment on the issue of liability--albeit based on an interpretation of the contract that is different from that of the trial judge--and reverse summary judgment on the issue of damages. Therefore, we affirm the PSC's order, but we vacate and remand the case to the Superior Court for further proceedings.

I. Facts

The issues on appeal stem from a longstanding dispute concerning the tariff to be paid by the District for Verizon's provision of E911 telephone service. The rate at which Verizon may charge the District for its E911 service is determined by a Price Cap Plan approved by the Commission. On August 16, 2001, Verizon and the Office of the People's Counsel for the District of Columbia submitted a settlement agreement regarding the 2002 Price Cap Plan which, inter alia, reclassified Verizon's E911 service as "competitive" from its prior classification as "basic." Operating under the new plan, Verizon filed its E911 service tariff with competitive rates on May 16, 2002.

The District did not challenge the change in classification for Verizon's E911 service until after the PSC had approved the settlement agreement. Ultimately, the District's initial challenge was rejected. However, on September 11, 2002, the District exercised its right, pursuant to the 2002 Price Cap Plan itself, to seek a reclassification of Verizon's E911 service to the basic classification. This became Formal Case No. 1005.

During a hearing held to address the District's reclassification request, Verizon represented that the District had not paid for E911 service since the Price Cap Plan 2002 had become effective in May of 2002. The District acknowledged it had not made any payments and offered to enter into an agreement to make payments for E911 service on an interim basis, subject to a true-up payment at a later date for any additional amount it may owe as a result of a potentially higher rate set by the PSC, or a true-up payment from Verizon for any excess amount the District paid above a lower rate set by the PSC. The District requested that the Commission become a signatory to the agreement, or enter the parties' agreement into the record of the case, so as to provide legal authority to make timely payments to Verizon.*fn3 After some initial reluctance, the Commission agreed, stating that "[o]nce the parties agree, you can file a stipulation with us and we'll do whatever's appropriate to make sure that everyone's accommodated."

Verizon drafted a letter agreement addressed to the District (the "Letter Agreement"), which they jointly submitted to the Commission on May 14, 2003. The Letter Agreement states that it is not "a compromise or settlement... but rather... an accommodation to provide for the continued provision of E911 Service by Verizon and the payment of the agreed upon amounts to Verizon by the District for such E911 Service until the Commission renders its decision in Formal Case No. 1005." Under the terms of the Letter Agreement, the District would make "an interim monthly payment of Sixty Thousand Dollars ($60,000) for Verizon's provision of E911 Service to the District commencing May 30, 2002 until the Commission renders a decision in Formal Case No. 1005 (the Interim Period)."*fn4 Once the Commission issues the "final decision," the District shall pay the "then-applicable rate" for E911 Service." With respect to the payments made during the Interim Period, the parties agreed that

upon the Commission's issuance of a final decision in Formal Case No. 1005 or a related proceeding that resolves the rate that Verizon lawfully may charge the District for E911 Service provided during the Interim Period, the District promptly shall pay... without interest, or Verizon promptly shall issue credits... without interest... to conform the amounts billed... during the Interim Period to the Commission's decision.

The Commission issued Order No. 12741 stating that it "finds this Agreement is in the public interest and commends the parties for their efforts to finalize the Agreement and directs that it be filed as part of the record in Formal Case No. 1005." The Order also provides that "Verizon and the District Government are directed to comply with the terms and conditions of the Agreement until the Commission issues a final order in this matter."

On April 1, 2004, by Order No. 13149, the Commission granted the District's request to reclassify the E911 service as a "basic" service, with tariffs subject to prior Commission approval, and suspended Verizon's E911 "competitive" tariff rate from the Price Cap Plan 2002. The Commission further determined that the District was required to pay the competitive E911 rate up until April 1, 2004, the date of the order reclassifying the service and suspending Verizon's tariff, because of the "well-settled prohibition against retroactive rate making," and that, therefore, "[r]elief is prospective, only." PSC Order No 13149, ¶¶ 25, 27, at 10-1 (citing Verizon Tel. Cos. v. FCC, 348 U.S. App. D.C. 98, 106-07, 269 F.3d 1098, 1106-07 (2001), subsequent appeal at Commc'ns Vending Corp. of Ariz., Inc. v. FCC, 361 U.S. App. D.C. 139, 365 F.3d 1064 (2004). Although the Order suspended the competitive tariff, it did not set a new tariff rate for the period going forward from April 1, 2004. Instead, it informed the parties that until the new rate was set, the Letter Agreement would govern the amount and timing of payments owed by the District to Verizon:

There is no Commission determination of a final rate in this matter until such time as a new E911 tariff is filed and approved. Thus, Verizon and the District Government continue to be bound by the terms of the May 14, 2003 Letter Agreement and Order No. 12741.

On May 3, 2004, the District filed an application for reconsideration of Order. No. 13149, asserting that the Commission erred in determining that it was required to pay Verizon's E911 competitive tariff rate for the period between May 31, 2002, and April 1, 2004. This request was denied by the Commission in Order No. 13258, issued on July 30, 2004, again relying on the rule against retroactive rate making. The District petitioned for judicial review to this court, and the Commission's decision was affirmed. See District of Columbia v. D.C. Pub. Serv. Comm'n, 905 A.2d 249, 250 (D.C. 2006).

On December 13, 2004, the Commission issued Order No. 13451, in which it solicited the parties' views on the appropriate procedure for establishing a new rate for E911 service. In a footnote, the Order repeated that the parties remained bound by the Letter Agreement and Order No. 12741. By Order No. 13602, dated June 3, 2005, the Commission announced that it would proceed to determine the E911 service rate through a "rate proceeding rather than through the tariff process under Price Cap Plan 200[2]," and opened a new case on its docket (Formal Case No. 1040), transferring to it all issues related to Verizon's E911 tariff rate.

The District's interim payments under the Letter Agreement for the period up to April 1, 2004, when the Commission suspended the competitive tariff with prospective effect, totaled $1.42 million. On January 21, 2005, Verizon filed a complaint in Superior Court, seeking to compel the District to pay the difference between that amount and what it owed under the original (and since suspended) competitive tariff, which, according to Verizon's calculations, came to $1,449,059.61. Verizon claimed that this payment was required by Commission Order No. 13149, which determined that the suspension of the competitive tariff had no retroactive effect. Relying on the Commission's determination, Verizon argued that the District was required by the Letter Agreement to make a true-up payment to reflect Verizon's competitive rate for E911 service in force between May 31, 2002, to April 1, 2004, when the order suspending the rate was issued. The District responded with a motion to dismiss based on jurisdictional grounds, arguing that Verizon's request for relief involved interpretation and/or consideration of the Commission's orders and would only be properly resolved by the Commission or this court. According to the District, To entertain the merits of Verizon's claim in this civil action would require the Court not only to interpret the [Letter] Agreement between the parties but also to construe the orders of the PSC referring to and incorporating that Agreement. That is, Verizon asks this court to impermissibly inject itself into the PSC proceedings and to usurp the PSC's subject matter jurisdiction.

The District also argued that Verizon's claim for relief was premature because, under the terms of the Letter Agreement, any true-up payment was not due until the Commission issued a "final decision" for the entire rate making proceeding, including the rate Verizon could charge for the E911 service, as reclassified as a "basic" service--a determination that the Commission had not yet reached.

The Superior Court ruled that it had jurisdiction to decide the claim, which the trial judge characterized as "no more to this Court than an enforcement action," noting that "I don't think that I'm being asked to interpret the [P]ublic [S]ervice [C]ommission's order and I am not doing that." Based on the trial court's view that it was not being asked to interpret PSC orders, the District filed a motion with the Commission on August 22, 2005, requesting a "clarification of [the District's] obligations under the Letter Agreement and under the Commission's subsequent orders... directing the parties to continue to adhere to the Letter Agreement." In Order No. 13790, issued October 18, 2005, the Commission "grant[ed] the District Government's request to clarify [its] intent[,] but, because of [its] limited role regarding the [L]etter [A]greement,... decline[d] to express any views on its interpretation."

The District requested reconsideration on November 16, 2005, which the Commission denied by Order No. 13837 on December 15, 2005, primarily because the District government's motion was based "on the same factual predicate" as it proffered in its initial filing. It added, however, that even if it were disposed to interpret the Letter Agreement, the Superior Court had by then already done so "as a matter of law." On February 13, 2006, the ...

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