Morgan v. AT & T CORP.
Morgan v. AT & T CORP.
Opinion of the Court
Katie Owen Morgan ("plaintiff") appeals from an order of dismissal with prejudice dated 8 August 2003 of her action for damages and a declaratory judgment against AT & T Corporation ("defendant"). As we find the trial court's grant of summary judgment improper as to plaintiff's claim under N.C. Gen.Stat. § 75-1.1 (2003) for fraud and unfair and deceptive practices after the cancellation of the agreement, we reverse in part.
Plaintiff's evidence tends to show that on 27 February 2001, plaintiff was contacted by an agent of defendant via telephone regarding an offer for long-distance service. The agent represented that plaintiff would receive a rate of five cents per minute for long-distance calls for a small monthly fee. Plaintiff accepted the offer and began to use the plan.
Some months later, plaintiff noticed that she had been charged a rate of ten cents per minute for some long-distance calls on her telephone bill. She contacted defendant on 1 June 2001 and was advised the five cent rate applied only to interstate calls on weekends. Plaintiff then asked defendant to cancel her service with them and resumed service with her previous carrier.
Defendant continued to bill plaintiff for services through April 2002. Plaintiff attempted to contact defendant using the printed number on the statements, but was unable to reach a live representative. Plaintiff then wrote a letter to defendant, dated 24 March 2002, advising defendant that she had previously cancelled the service. Plaintiff continued to receive bills from defendant and shortly thereafter was pursued by collection agencies for non-payment of the account. Although she advised the collection agents she had cancelled the account, she continued to receive calls demanding payment.
Plaintiff filed an action on 21 May 2002 for fraud and unfair and deceptive practices *562against defendant. Plaintiff sought injunctive relief to bar the harassing phone calls and correspondence, and monetary damages. Defendant denied the allegations in the complaint and moved for dismissal under Rule 12(b)(6) for lack of jurisdiction by the trial court. Defendant alleged that its rates were regulated by the Federal Communications Commission, which has exclusive jurisdiction over such tariffs, and that any action challenging communication charges was vested exclusively in the federal courts and the Federal Communications Commission.
Following a period of discovery, a delayed hearing on defendant's motion to dismiss pursuant to Rule 12(b)(6) was held on 14 July 2004. Defendant moved to convert the 12(b)(6) motion to a motion for summary judgment, and for dismissal of the action on the grounds the fixed tariff doctrine was an absolute bar to plaintiff's action. The motion was opposed in writing by plaintiff. The trial court converted defendant's original motion to one for summary judgment and granted the motion, dismissing plaintiff's complaint with prejudice on the grounds that plaintiff's exclusive remedy lay in the Federal Communications Act of 1934 ("FCA"). Plaintiff appeals from this order.
We note that plaintiff conceded during oral argument before this Court that she no longer sought injunctive relief against defendant. We therefore make our determination as to whether plaintiff's complaint is preempted solely upon plaintiff's claim for damages for fraud and unfair and deceptive practices.
I.
Plaintiff first contends the trial court erred by converting defendant's Rule 12(b)(6) motion to a motion for summary judgment and dismissing plaintiff's action with prejudice prior to completion of discovery. We disagree.
When matters outside the pleadings are considered in a motion pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(6) (2003), that Rule states that the motion "shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Id. "The standard of review of a trial court's decision to convert a Rule 12(b)(6) motion to a Rule 56 motion is abuse of discretion." Belcher v. Fleetwood Enters., Inc.,
Here, defendant raised the affirmative defense of the federal filed tariff rate doctrine, arguing it preempted state action as a matter of law. See AT&T v. Central Office Telephone,
II.
Plaintiff next contends the trial court erred in ruling that the FCA preempted state consumer protection laws and barred plaintiff's action. We agree in part on this question of first impression for our courts, and reverse the grant of summary judgment as to plaintiff's claim for unfair and deceptive practices for the continued harassment after cancellation of the telecommunications service with defendant.
We first note the standard of review on appeal of a motion for summary judgment is whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law, when the evidence presented by the parties is viewed in the light most favorable to the non-movant. See Bruce-Terminix Co. v. Zurich Ins. Co.,
The United States Supreme Court has held that Congress' intent to supercede state law may be inferred in three ways, absent explicit pre-emptive language: (1) when the scheme of federal regulation is so pervasive that an inference is reasonable that Congress left no room for the States to supplement it, (2) when the legislation concerns a field in which the federal interest is so dominant that the federal system is assumed to preclude enforcement of state laws on the same subject, or (3) when the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose. See Fidelity Federal S. & L. Assn. v. de la Cuesta,
The stated purpose of the FCA is to regulate
interstate and foreign commerce in communication ... so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges[.]
The FCA therefore preempts state actions to enforce even fraudulent agreements of rates which vary from the filed tariff. See AT&T v. Central Office Telephone,
The FCA does not, however, exclusively preempt state action against purveyors of telecommunications. Section 414 of the FCA states that "[n]othing in this chapter contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies."
The FCA not only does not manifest a clear Congressional intent to preempt state law actions prohibiting deceptive business practices, false advertisement, or common law fraud, it evidences Congress's intent to allow such claims to proceed under state law.... Moreover, while the FCA does provide some causes of action for customers, it provides none for deceptive advertisement and billing....
The states may have an equal or greater interest in preventing such conduct as manifested by state consumer protection laws.
Marcus v. AT&T Corp.,
In this case, plaintiff's complaint, in addition to alleging fraud in the misrepresentation of the rate, also raised a claim of fraud and unfair and deceptive practices under N.C. Gen.Stat. § 75-1.1 for defendant's continued charges to plaintiff after cancellation of the service, and continuing harassing phone calls to plaintiff. Our courts have established that an unfair and deceptive practices claim must show "(1) an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) which proximately caused injury." Unifour Constr. Servs., Inc. v. Bellsouth Telecomm., Inc.,
The statement of "an intention to perform an act, when no such intention exists, constitutes misrepresentation of the promisor's state of mind, an existing fact, and as such may furnish the basis for an action for fraud if the other elements of fraud are present[.]" Unifour Constr. Servs.,
Here, plaintiff contacted defendant regarding cancellation of the service, but continued to be billed for several months after the cancellation, even after attempting to contact defendant by telephone and in writing regarding the continued charges. Additionally, defendant placed plaintiff's account with a collection agency who continued to call and harass plaintiff, even after notification by plaintiff that the account had been cancelled. These actions, taken after plaintiff's cancellation of the contract and independent of the agreement governed by the filed tariff, present a claim sufficient, when taken in the light most favorable to the plaintiff, to overcome a motion for summary judgment.
Further, although courts have held that awards of damages which would provide compensation for misrepresented rates would violate the filed tariff doctrine by effectively giving claimants a discounted rate for phone service, see Marcus,
As plaintiff's action for fraud and unfair and deceptive practices for defendant's actions subsequent to plaintiff's cancellation of service is not preempted by the Federal Communications Act, we therefore reverse the trial court's grant of summary judgment as to this issue.
In conclusion, we affirm the trial court's grant of summary judgment as to plaintiff's claim for fraud and unfair and deceptive practices as to defendant's misrepresentation of the filed rate, and reverse the trial court's grant of summary judgment as to plaintiff's claim for fraud and unfair and deceptive practices as to defendant's actions after the cancellation of the agreement between the parties.
Affirmed in part and reversed in part.
Judges CALABRIA and LEVINSON concur.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.