Discussion

We first address Verizon's motion for summary judgment. Verizon seeks this judgment on two grounds: (1) CHLB is not entitled to penalties pursuant to the policy that underlies Verizon's Tariff Rule 10(e), and (2) judicial admissions in CHLB's pleadings establish that it did not exercise reasonable diligence in discovering its cause of action and the statute of limitations has thus run.

The legal standard for granting a motion for summary judgment is that there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. This is the same standard a court would apply in civil practice. See D.94-04-082, Westcom Long Distance, Inc. v. Pacific Bell, (54 CPUC2d 244, 249). We find that Verizon's motion does not meet our legal standard because the Commission must look beyond the plain language of the tariff to the regulatory history in order to interpret the tariff and we would also need to examine the underlying facts of the first claim in order to determine if CHLB exercised due diligence. Therefore, we deny Verizon's motion for summary judgment.

We next turn to examining the underlying facts in the complaint. In the first claim, Claim number RAL-022207, CHLB asserts that it faxed Verizon a disconnect order for several lines on July 21, 2001. Both parties state that the individuals involved with this account in 2001 are not available to provide testimony. CHLB has a copy of the fax but no confirmation from Verizon. CHLB also states that in July 2001 it was working under a great deal of pressure to reopen the hospital as it had been closed since September 2000. The reopening required closing another facility, the one where the subject phone lines were located. Further, CHLB states that between 2001 and 2007, Verizon merged with another carrier, transferred responsibility of CHLB's account between three different contact centers, and churned over 10 account managers assigned to it. CHLB asserts that Verizon's billing practices are cumbersome and complicated, and require highly specialized firms to analyze the bills for compliance with utility contracts, tariffs, and services actually in use.³

Verizon asserts that the billing detail it provided each month would have allowed a business that was exercising due diligence in reviewing its bills to determine that the specific telephone lines at issue had not been disconnected. Specifically, Verizon provided CHLB a summary bill and subordinate bills for each billing telephone number it had with Verizon. Further, Verizon cites to the fact that CHLB was not a customer that was passively paying its monthly bills in 2001 but rather, due to this portion of the hospital facility being scheduled to close, had assigned two employees dedicated to actively inventorying and reviewing its telecommunications services.⁴

Both parties agree that Public Utilities Code Section 736 (Section 736) is the relevant statute for determining if the statute of limitations prevents CHLB from seeking recovery of overcharges, and any interest and penalties that may be related. Section 736 states in pertinent part:

All complaints for damages resulting from the violation of any of the provisions of Sections 494 or 532 shall either be filed with the commission, or, where concurrent jurisdiction of the cause of action is vested in the courts of this state, in any court of competent jurisdiction within three years from the time the cause of action accrues, and not after. If claim for the asserted damages has been presented in writing to the public utility concerned within the period of three years, the period shall be extended to include six months from the date notice in writing is given by the public utility to the claimant of the disallowance of the claim, or of any part or parts thereof specified in the notice.

CHLB argues that its cause of action did not begin to accrue until February 2007, the date it discovered through an independent audit that the lines had not been disconnected. In establishing 2007 rather than 2001 as the date of the cause of action, CHLB asserts that the "discovery rule" provides that the accrual date of a cause of action is delayed until the injured party actually knows or could have reasonably discovered through investigation of sources open to it.⁵ Verizon argues that the cause of action occurred in 2001, when CHLB would have discovered the billing error if it had exercised due diligence.

The record before us establishes that CHLB faxed its disconnection request in 2001. It is unclear whether Verizon ever received the order or whether Verizon erred in failing to perform the disconnection. While CHLB establishes that its business was in a state of flux in 2001, it nevertheless is a business customer and had employees dedicated to managing this account. Verizon's submission establishes that CHLB received the billing detail necessary to have determined that these lines were not disconnected, although its bills may have been confusing and its customer account personnel difficult to reach. Verizon's settlement of the claim is a reasonable solution for a long-time business customer.

However, the record does not support a finding that the cause of action occurred as late as February 2007, as asserted by CHLB. Therefore, this claim is beyond the three-year statute of limitations established by Section 736 and we cannot consider an award of late payment charges. While CHLB cites to two other cases it considers similar where Verizon did pay late payment charges, these cases do not go back as far as 2001 and the facts specific to the cases are not fully known.⁶

The second claim, Claim number CAL-031307, is for late payment charges of $1,744.64 for a 27 month period beginning in March 2004 when Verizon disconnected a circuit but failed to stop billing for the associated tie lines that rode over the circuit. CHLB states it does not have a copy of the disconnection request for these services. It relies instead on an e-mail from Verizon that states it has corrected the over billing and "shares some of the responsibility."⁷

The record establishes that CHLB, through its agent Ariel Link, contacted Verizon on March 30, 2007 regarding this claim. This date is within the three-year statute of limitations provided under Section 736 as CHLB would have first received billing notice in April 2004. The record also shows that CHLB contacted the Commission within six months of Verizon's resolution letter of October 24, 2007. ⁸ Therefore, the cause of action for claim CAL-031307 is within our statutory requirements.

Pursuant to Verizon's Tariff Rule 10(E), CHLB is requesting $1,744.64 in late payment charges for this claim. In its answer to the complaint, Verizon asserts that Tariff Rule 10(E) is not applicable as the customer waited years to report the billing error and to allow late payment charges to be applied to the entire period would provide a windfall to the customer and be inconsistent with the Commission policy underlying Tariff Rule 10(E) as articulated in D.85-12-017.

In reviewing D.85-12-017, we find that the Commission intended for customers who pay a bill subject to a late payment charge which is in error to receive a comparable 1.5% penalty on the amount in error from the utility. This intention is discussed in the decision and clearly stated in Ordering Paragraph 1 of the decision.⁹ Since CHLB asserts that it first knew of the billing error in February 2007 based on an independent audit by Ariel Link,¹⁰ we find it acted promptly in informing Verizon and should be given the late payment charge from the time the error occurred through the time it became a known billing dispute, as provided by Tariff Rule 10(E).

Based on the discussion above, we do not award any late payment charges for Claim number RAL-022207 but do award $1,744.64 in late payment charges for Claim number CAL-031307.

³ See August 27, 2009 Response to Verizon's Answer to Complaint at 5-6.

⁴ See March 19, 2010 Motion for Summary Judgment with attached Declaration of Cynthia E. Padgett and the September 3, 2009 Reply of Verizon to CHLB's Response to Defendant's Motion to Dismiss at 2.

⁵ See D.94-04-057, Toward Utility Rate Normalization (TURN) v. Pacific Bell (54 CPUC2d 122, 126.)

⁶ See August 27, 2009 Response to Verizon's Answer to Complaint at 3.

⁷ March 11, 2010 Declaration of Robert J. Klingseis, Exhibit C.

⁸ See March 25, 2008 letter from Ariel Link to the Commission's Consumer Affairs Branch, included in formal complaint.

⁹ See 19 CPUC2d 329.

¹⁰ See August 24, 2009 Response to Motion to Dismiss at 5 and March 11, 2010 Declaration of Robert J. Klingsies at 2.