Paul Moore v. RealPage Utility Management, Inc.
Misc. No. 1
IN THE COURT OF APPEALS OF MARYLAND
November 30, 2021
September Term, 2021
Opinion by Getty, C.J.
PUBLIC UTILITIES — ENERGY ALLOCATION FOR APARTMENTS — PUBLIC SERVICE COMMISSION APPROVAL
The Court of Appeals held that
United States District Court For the District of Maryland Case No. 8:20-cv-00927 PWG
Argued: September 9, 2021
Getty, C.J. McDonald, Watts, Hotten, Booth, Biran, Battaglia, (Senior Judge, Specially Assigned) JJ.
Filed: November 30, 2021
When the Maryland General Assembly required the installation of individual meters in new construction as of July 1, 1978, it did not retroactively apply this requirement to existing apartment buildings. Apartment buildings constructed prior to 1978 that only have a master meter allocated energy costs to tenants by two methods: (1) square footage computation and pro rata assessments; or (2) added rental components.1 While the PSC has regulatory responsibility over some types of metering, such as individual meters and submetering, from the PSC‘s perspective, the above-referenced methods of allocating a tenant‘s energy costs for apartment buildings
Commission Chairman, to the Honorable Wayne A. Cawley, Jr., Department of Agriculture Secretary in legislative bill file for Senate Bill 899 (1987).
A new system of calculating a tenant‘s monthly gas and electric bill was introduced in the mid-1980s for apartments having a master meter instead of individual meters or submeters. This system did not calculate the actual use of a tenant‘s gas and electricity consumption, nor did it allocate energy charges solely on the basis of square footage computations and pro rata assessments. Instead, the system relied upon various components of measurement, such as the number of seconds a valve was open on a furnace (“furnace runtime“) to compute a tenant‘s utility charges. Therefore, this system was not within the PSC‘s definition of a submeter and resulted in a wholly unregulated method of allocating rental utility charges. Tenants of landlords that utilized these new energy allocation systems expressed concern over a system that had no regulatory oversight. Accordingly, the General Assembly attempted to remedy these concerns by considering legislation in the 1987 and 1988 Legislative Sessions.
As such, today, if a property owner or residential utility billing service company uses an energy allocation system to calculate the amount of gas or electricity consumed by an individual apartment unit,
Before this Court is a certified question of law from the United States District Court for the District of Maryland (“federal district court“) that arises in the context of a putative class action lawsuit brought by Appellant Paul Moore, on behalf of residential apartment tenants, against Appellee RealPage Utility Management, Inc., a residential utility billing services company working on behalf of landlords in Maryland. The federal district court asked this Court to determine whether, for apartment houses built prior to 1978, methods of energy allocation that determine the billable amount of gas or electricity by means other than by the actual measurement of consumption of the individual unit are subject to the PSC‘s approval as set forth in
Based upon a plain language analysis of
Therefore, the allocation of energy costs solely computed on the basis of square footage computations and pro rata assessments, as well as added rental components, are exempt from the approval requirements set forth in
BACKGROUND
The Maryland Uniform Certification of Questions of Law Act,2
The following information is presented from the federal district court‘s Certification Order.3 Appellant Paul Moore (“Mr. Moore“) is a residential apartment tenant of the
Seneca Bay Apartment Homes complex (“Seneca Bay“), built in 1968, and located in Middle River, Maryland. Appellee RealPage Utility Management, Inc. (“RealPage“) manages Seneca Bay‘s allocated utility charges. RealPage allocates the energy charges using equipment and procedures that measure the total energy consumption by a multiple residential unit building, measure the square footage of each individual residential unit, and then assess the charges based upon the square footage computation and pro rata assessment per each individual residential unit. RealPage billed Mr. Moore for “allocated water service,” “allocated sewer service,” and “gas hot water service.”
Mr. Moore filed a putative class action lawsuit against RealPage in the Circuit Court for Montgomery County on February 26, 2020, seeking damages, declaratory and injunctive relief for violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act, as well as various common law claims. In his complaint, Mr. Moore alleges that
[ ] RealPage billed . . . for unlawful allocated energy charges. These energy charges were allocated by RealPage for the landlords . . . using procedures and equipment which measured and read the total energy costs consumed by multiple residential units, measured the square footage of each of the residential units, and then assessed charges for energy to the tenants residing in each of the residential units based upon the square footage of the residential units.4
[ ] However, the Maryland Public Service Commission has not approved the energy allocation procedures and equipment utilized to allocate the energy charges[.]
[ ] The energy allocation procedures are, therefore, unlawful. See
Md. Code Ann., Pub. Util § 7-304 . . . .
RealPage removed the case to the federal district court on April 8, 2020. The federal district court subsequently certified the following question of law to this Court to determine the appropriate interpretation of
Does
Md. Code Ann., Public Util. (“PU“) § 7-304 prohibit the use of energy allocation equipment and procedures, which have not been approved by the Public Service Commission, to bill energy charges to tenants of properties built prior to 1978?
For the reasons that follow, we answer the federal district court‘s certified question of law in the affirmative.
DISCUSSION
A. The Parties’ Contentions.
Mr. Moore contends that
RealPage counters that
In RealPage‘s view, this statutory scheme demonstrates that
B. Plain Language Analysis.
We begin our analysis with the plain language of
this Court provides judicial deference to the policy decisions enacted into law by the General Assembly. We assume that the legislature‘s intent is expressed in the statutory language and thus our statutory interpretation focuses primarily on the language of the statute to determine the purpose and intent of the General Assembly. We begin our analysis by first looking to the normal, plain meaning of the language of the statute, reading the statute as a whole to ensure that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.
Id. (citing Brown v. State, 454 Md. 546, 550–51 (2017)).
We “will give effect to the statute as it is written” so long as “the words of the statute, construed according to their common and everyday meaning, are clear and unambiguous and express a plain meaning[.]” United Bank v. Buckingham, 472 Md. 407, 423 (2021) (quoting Fangman v. Genuine Title, LLC, 447 Md. 681, 691 (2016)). Further,
“statutory construction is approached from a ‘commonsensical’ perspective. Thus, we seek to avoid constructions that are illogical, unreasonable, or inconsistent with common sense.” Id. at 423–24 (quoting Della Ratta v. Dyas, 414 Md. 556, 567 (2010)).
Applying these principles, we turn to the relevant statutory language, which states:
(1) Approval from the [PSC] is required before energy allocation equipment and procedures may be used by the owner, operator, or manager of an apartment house to determine the amount of gas or electricity used by an individual dwelling unit, if the amount of gas or electricity is determined by means other than by actual measurement of fuel or electric power consumed by the unit.
(2) An energy allocation system may not be used for direct billing of energy costs to the tenant of an individual dwelling unit unless the [PSC] approves the system in accordance with this subsection.
Simply, under
We also note that “the plain language of the statute must be viewed within the context of the statutory scheme to which it belongs, considering the purpose, aim or policy of the Legislature in enacting the statute.” State v. Johnson, 415 Md. 413, 421 (2010). The Court presumes “that the Legislature intends its enactments to operate together as a consistent and harmonious body of law,” and, therefore, attempts “to reconcile and harmonize the parts of a statute, to the extent possible consistent with the statute‘s object
and scope.” Id. at 421–22. As such, “it may be beneficial to analyze the statute‘s relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.” Berry, 469 Md. at 687 (quoting Blackstone v. Sharma, 461 Md. 87, 114 (2018)).
In addition to examining the plain language of
The PSC also established regulations regarding substitute billing. See
Reviewing these definitions, it is evident that an energy allocation system and energy allocation equipment revolve around the use of a device that either measures furnace operating or running time or baseboard pipe temperature or other characteristics,
to measure the approximate energy use. Further, the PSC makes a distinction between the use of energy allocation systems and calculating a substitute bill on a square footage allocation. However, it is still unclear whether the allocation of energy costs solely computed on the basis of square footage computations and pro rata assessments, as well as added rental components, was intended to be captured within the term “energy allocation system.” While the plain language of
C. Legislative History.
It is “the modern tendency of this Court to continue the analysis of the statute beyond the plain meaning” of the statutory language. In re: S.K., 466 Md. 31, 50 (2019). An examination of the legislative history helps confirm that our plain language interpretation of the statute is consistent with the legislature‘s intent. Id. In doing so, the Court may examine “the context of a statute, the overall statutory scheme, and archival legislative history of relevant enactments.” Id. (quoting Brown, 454 Md. at 551).
The introduction of the novel technology of energy allocation systems in the mid-1980s created a classic confrontation with disgruntled constituents who urged legislative action. Senator Barbara A. Hoffman and Senator Paula Colodny Hollinger sponsored legislation to address the issues presented by these unregulated energy allocation systems in both the 1987 and 1988 Legislative Sessions. Our review of the legislative history will encompass the 1977 legislation requiring individual meters for newly
constructed residential multiple occupancy buildings, as well as the first attempt to regulate energy allocation systems with proposed legislation under the Real Property Article in the 1987 Legislative Session, and the successful attempt at regulation in the 1988 Legislative Session following the completion of a summer study.
1. Requiring Individual Meters for Newly Constructed Apartment Buildings: House Bill 1493, 1977 Legislative Session.
During the 1977 Legislative Session, Delegate Steven Sklar sponsored House Bill 1493 (“HB 1493“), which proposed an individual meter requirement for newly constructed residential apartment buildings. Proponents of the legislation identified that individual meters provide benefits of energy conservation and energy efficiency during a time when the nation was experiencing an energy crisis.5 See Letter of John P. Hewitt, Director of the Energy Policy Office, to John S. Arnick, Chairman of the House Environmental Matters Committee in legislative bill file for House Bill 1493 (1977).
In light of the energy conservation goals, the General Assembly enacted Article 78, § 51(b)
[for] the purpose of prohibiting the Public Service Commission from authorizing a gas company, an electric company, or a gas and electric company to service any new residential multiple occupancy building on which construction begins after a certain date unless that building has an individual meter for each occupancy unit that is individually leased or owned[.]
The Public Service Commission may not authorize a gas company; an electric company, or a gas and electric company to service any new residential multiple occupancy building on which construction begins after July 1, 1978 unless that building has an individual meter for each occupancy unit that is individually leased or owned.
Thus, Article 78, § 51(b) specified a clear demarcation line that any residential multiple occupancy building constructed after July 1, 1978, must have an individual meter for each occupancy unit to determine a tenant‘s utility charges. Accordingly, this statute required the installation of individual meters for buildings constructed after July 1, 1978. Residential multiple occupancy buildings constructed before July 1, 1978 were not affected by this legislation.
The Court of Special Appeals further clarified this demarcation line when it interpreted Article 78, § 51(b) in a dispute between a landlord and a tenant regarding the installation of separate meters for individual apartments. Legg, 100 Md. App. at 773–75. Deborah Legg resided as a tenant on the ground floor of a two-story house owned by Sadie and Peter Castruccio (“Castruccios“). Id. at 754. Ms. Legg moved into the house while the second floor remained unoccupied and reached an agreement with the Castruccios that the utility account for the house—which had only one meter—would be in Ms. Legg‘s
name. Id. Eventually tenants moved into the second story of the house and reached a verbal agreement with Ms. Legg that the upstairs tenants would pay one-half of the utility bill. Id.
The upstairs tenants subsequently ceased paying their agreed share of the bill and Ms. Legg requested that the Castruccios install separate meters for the two apartments. Id. at 755–56. The Castruccios did not install a second meter for the upstairs apartment, and the upstairs tenants eventually moved out without paying their share of the outstanding utility bills. Id. at 756. The Castruccios also refused to pay any portion of the utility bills and sought to repossess the property from Ms. Legg. Id.
Ms. Legg filed a counterclaim alleging that the Castruccios “engaged in unfair or deceptive trade practices in the rental and offer of rental of consumer realty[.]” Id. at 752. In support of this claim, Ms. Legg argued that “the Castruccios violated a Maryland Public Policy ‘that all residents should have access to utility services and that the only condition that can be imposed upon the service is that a person must pay her [or his] own bill.‘” Id. at 773.
While Ms. Legg did not rely upon Article 78, § 51(b) in her contention, the intermediate appellate court raised the statute in its analysis as “an important Code section” that addresses “the regulation of gas and electric service companies by the [PSC].” Id. at 773–74. In emphasizing that Article 78, § 51 “is not limited to an ‘apartment house‘” the Court of Special Appeals expressed that “Section 51(b) . . . does not, however, apply to buildings constructed before 1978, presumably because the General Assembly did not want to place the burden of retroactive application on landlords and owners.” Id. at 775.
The intermediate appellate court‘s analysis emphasizes that the General Assembly was cautious in not encumbering landlords and property owners with the task of retrofitting all residential multiple occupancy buildings with individual meters. Instead, the legislature provided a clear delineation for residential multiple occupancy
Following Maryland‘s code revision,6
(1) This subsection applies to:
(i) a new residential multiple occupancy building;
(ii) a new shopping center; or
(iii) a new housing unit that is constructed, managed, operated, developed, or subsidized by a local housing authority established under Division II of the Housing and Community Development Article.
(2) The service restrictions imposed under this subsection do not apply to central hot water.
(3) The [PSC] may not authorize a gas company or electric company to service an occupancy unit or shopping center unit subject to this subsection unless the building or shopping center has individual metered service or submetering as provided under § 7-303 or § 7-304 of this subtitle for each individually leased or owned occupancy unit or shopping center unit.
(4) In accordance with its regulations, the [PSC] may authorize a gas company or electric company to provide service for central heating or cooling systems, or a combination of those systems, to an occupancy unit or shopping center unit subject to this subsection if the [PSC] is satisfied that the service will result in a substantial net saving of energy over the energy saving that would result from individual metering or submetering as provided under § 7-303 or § 7-304 of this subtitle.
references to construction ‘after July 1, 1978’ and ‘after July 1, 1985’ are deleted as obsolete.” Therefore, this recodification does not alter the original legislative intent of the predecessor statute enacted in 1977. While
2. Novel Technology for Computing Energy Allocation Charges in Mid-1980s and the Public Service Commission‘s Response to the New Energy Allocation Technology.
New systems of calculating a charge to tenants for monthly gas and electricity bills were introduced during the mid-1980s throughout the state. Constituent complaints were made to Senator Hoffman and Senator Hollinger about the Compugas System (“Compugas“) that was installed in seven apartment complexes throughout Baltimore City and Baltimore County, impacting approximately 2,500 tenants. In addition to Compugas, similar systems were implemented in apartment buildings in other counties across the state,
such as FareShare9 and AccuMeter.10 Senator Hoffman contacted state agencies regarding this novel technology in response to the constituent complaints that she began to receive in 1985. See
Many of the concerns received were from elderly tenants living on a fixed income and accustomed to their rental charge for the month including the cost of their utilities, both gas and electric, as an added rental component. Id. The constituents’ complaints expressed concerns regarding the accuracy of their gas and electricity bills because there was no meter that could be checked, and questioned whether a system like Compugas constituted a fair and accurate measurement of their actual energy use. Id. As a result of Senator Hoffman‘s contacts, a dispute
In response to a letter from the Department of Agriculture, the PSC argued that it only had jurisdiction over systems and equipment measuring the actual consumption of gas and electricity.11 In a December 30, 1986 letter (“1986 PSC Letter“) Frank Heintz, Chairman of the PSC, to the Honorable Wayne A. Cawley, Jr., Secretary of the Department of Agriculture, explained why the PSC believed it did not have regulatory responsibility over Compugas and systems like it. See Letter from Frank Heintz, Public Service Commission Chairman, to the Honorable Wayne A. Cawley, Jr., Department of Agriculture Secretary in legislative bill file for
Compugas is a self-contained microcomputer designed expressly for natural gas allocation in master-metered apartment buildings. It is intended for use in new or existing properties where the installation of individual gas meters is either economically or physically impractical.
In order to collect usage data, Compugas is wired to each furnace in an apartment complex and keeps track, on a month-to-month basis, of how many minutes each apartment furnace runs. At the end of each month, this “runtime” information is transferred, via solid-state recording “module“, to a central computer facility.
Based on the size of the furnace and the runtime, each apartment‘s “heat bill” is computed. Then all the “heat bills” for a building are totaled, and the sum is subtracted from the amount of the total utility company bill for that building. This difference is the “common usage.” The “common usage” is then divided on a percentage basis among the apartments. If all the apartments are the same size, each apartment is charged exactly the same percent of the “common usage” total. Otherwise, the “common usage” charge is factored by the proportional relationship of the apartment sizes. Then each apartment‘s allocation of the common usage is added to its measured heat usage and the bill is prepared.
Id.
As indicated in its description, Compugas did not calculate the actual use of a tenant‘s gas and electricity consumption. Rather, the system relied on a different component of measurement—i.e., the size of the furnace and the furnace runtime—to compute a tenant‘s energy usage. Compugas utilized the square footage of a tenant‘s apartment in determining what percentage of the “common usage” measurement should be allocated to a tenant‘s utility bill. As such, a tenant‘s primary utility bill was calculated based on the size of the furnace and the furnace runtime. The size of a tenant‘s apartment was only utilized in computing their allocated
i. Metered Service.
The 1986 PSC Letter stated that “metered service refers to a utility‘s measurement of electric or gas service.” Id. Additionally, the letter added that a “utility‘s meters are used to measure the consumption of electricity or gas” and these “measurements determine the amount of charges which the utility will impose upon the customer.” Id. The 1986 PSC Letter indicated that “metered service” identifies a system that measures the actual use of electricity or gas.
ii. Submetering.
Submetering, according to the 1986 PSC Letter, “refers to equipment which measures the actual use of gas or electricity for the purpose of allocating the cost of each rental unit‘s gas or electrical consumption at an apartment house, office building or shopping center.” Id. The letter distinguished that “[t]his equipment is not installed or owned by a utility, but is installed and operated under the direction of the landlord.” Id. Further, the PSC “has jurisdiction to establish regulations governing the installation and accuracy of submetering equipment[,]” but the PSC does not have jurisdiction over “complaints by an occupant of a rental unit about submetering.” Id. These matters are “subject to the jurisdiction of a landlord-tenant commission, a consumer protection agency, or other agency designated for tenants’ complaints.” Id.
The definition of submetering in the 1986 PSC Letter is consistent with the current definition of “submetering” found in
iii. Other Measuring Systems.
The 1986 PSC Letter outlined the third category of “other measuring devices,” broadly including “any and all varieties of methods for allocating gas or electric costs which do not fall within the specific definitions of ‘metered service’ or ‘submetering.‘” See 1986 PSC Letter.
The issue raised by Compugas, as characterized in the 1986 PSC Letter, was whether that system constituted submetering within the PSC‘s definition or whether that system fell within the broad category of an “other measuring device.” Id. The 1986 PSC Letter emphasized that “measuring devices or allocation systems which measure the operation or output of gas or electric appliances as a surrogate for measuring the actual cubic feet of gas or actual kilowattage of electricity are not subject to the jurisdiction of the [PSC].” Id. The 1986 PSC Letter reiterated that the PSC “has jurisdiction only over devices actually measuring the cubic feet of gas or kilowatt[-]hours of electricity, and not systems which attempt to indirectly approximate the consumption of gas or electricity.” Thus, the letter stated that the Compugas system was not within the
In addition to explaining why Compugas was not within the PSC‘s jurisdiction, the 1986 PSC Letter also explained that the allocation of utility charges solely computed on the basis of square footage computations and pro rata assessments, as well as added rental components, “are established in the lease agreements between the landlord and the tenant.” Id. Accordingly, “the [PSC] has never had jurisdiction over such landlord/tenant contract provisions[.]” Id. In making this distinction, the PSC defined energy allocation systems as systems that do not measure the actual use of a tenant‘s gas or electric consumption, while excluding the allocation of utility charges solely computed on the basis of square footage computations and pro rata assessments and added rental components from this description.
The PSC‘s viewpoint set forth in the 1986 PSC Letter—that the allocation of utility charges solely computed on the basis of square footage computations and pro rata assessments are governed by lease agreements between the landlord and the tenant—is reflected in statutory provisions contained in the Real Property Article. Specifically,
(a) After January 1, 1975, any landlord who offers more than 4 dwelling units for rent on one parcel of property or at one location and who rents by means of written leases, shall:
***
(2) Embody in the form of lease and in any executed lease the following:
***
(ii) The landlord‘s and the tenant‘s specific obligations as to heat, gas, electricity, water, and repair of the premises.
In 1998, Governor Parris Glendening established by Executive Order the Commission to Review Landlord-Tenant Laws (“Commission“) to improve the equity, efficiency, and effectiveness of landlord-tenant laws. See Bill Analysis from House Committee on Economic Matters in legislative bill file for
3. First Attempt to Regulate Novel Technology Through the Real Property Article: Senate Bill 899, 1987 Legislative Session.
During the 1987 Legislative Session, Senator Hoffman voiced the concerns of her constituents regarding the implementation of Compugas in their various apartment complexes and the issue of who had regulatory responsibility over these types of systems. See
Senator Hoffman explained in her testimony that she disagreed with the PSC‘s perspective, and “felt that [the regulatory
The bill analysis of
that the rental lease agreement must contain a complete description of the energy allocation system used if recoverable utility costs for tenants are not:
- submetered,
- individually metered,
- determined by square foot calculations, or
- added rental compon[e]nts.
This provision applies only to residences with 10 or more residential units. The bill requires the landlord to keep and make available to tenants adequate records of all energy allocation systems and procedures used.
See Bill Analysis from House Committee on Economic Matters in legislative bill file for
As amended,
When Senator Hoffman concluded her testimony before the House Committee on Economic Matters, she stated that she “still believe[d] that the public would be best served if the Public Service Commission had the authority to regulate such systems[.]” See
4. Summer Study Results in Regulation of Novel Technology by the Public Service Commission: Senate Bill 378, 1988 Legislative Session.
The defeat of
(b)(1) Energy allocation equipment and procedures that determine an individual apartment unit‘s gas or electricity use by means other than by actual measurement of fuel or electric power consumed by those units shall be subject to approval by the Public Service Commission.
(2) The Public Service Commission shall adopt regulations specifying the conditions under which the energy allocation equipment and procedures approved by the [PSC] under Paragraph (1) of this subsection may be implemented, including requirements for informing consumers about estimated energy costs.
(3) The Public Service Commission shall send any complaints about an individual apartment unit‘s gas or electric power consumption determined by use of the energy allocation equipment and procedures approved by the Commission under paragraph (1) of this subsection to the Consumer Protection Division in the Office of the Attorney General.
(4) Unless approved by the [PSC] under this subsection, an energy allocation system may not be used for the purpose of directly billing energy costs to individual apartment unit tenants.
By enacting
As previously discussed, the PSC adopted regulations pursuant to its statutory authority following the enactment of
In 1998, as part of Maryland‘s code revision, the General Assembly repealed Article 78 in its entirety and replaced it with the Public Utility Companies Article.14
The plain language of
CONCLUSION
For the foregoing reasons, we answer the question certified to us by the federal district court in the affirmative and hold that the approval requirements stated in
CERTIFIED QUESTION OF LAW ANSWERED AS SET FORTH ABOVE. COSTS TO BE DIVIDED EQUALLY.
Notes
We understand that code revision takes place “for the purpose of clarity only and not substantive change, unless the language of the recodified statute unmistakably indicates the intention of the Legislature to modify the law.” DeBusk v. Johns Hopkins Hosp., 342 Md. 432, 444 (1996). The Revisor‘s Note to
Further,