Southwestern Bell Telephone Company v. Fitch
Filing
69
MEMORANDUM AND ORDER granting in part and denying in part 42 AT&T Texas's Motion for Summary Judgment; denying 43 Affordable's Motion for Partial Summary Judgment; granting in part and denying in part 49 Affordable's Motion to Exclude; and granting 64 AT&T Texas's Motion to Supplement. Parties shall appear for a conference on 7/28/11 at 10:15 a.m. in Courtroom 9F.(Signed by Judge Nancy F. Atlas) Parties notified.(TDR)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SOUTHWESTERN BELL
TELEPHONE COMPANY D/B/A
AT&T TEXAS,
Plaintiff,
v.
F. CARY FITCH D/B/A
AFFORDABLE TELECOM,
Defendant.
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CIVIL ACTION NO. 4:09-CV-1548
MEMORANDUM AND ORDER
Plaintiff is Southwestern Bell Telephone Company d/b/a AT&T Texas (“AT&T
Texas”) and Defendant is F. Cary Fitch d/b/a Affordable Telecom (“Affordable”).
Each party alleges that the other has failed to pay money required under their June
2007 Two-Way CMRS Interconnection Agreement (“2007 Agreement”). Pending
before the Court is AT&T Texas’s Motion for Summary Judgment [Doc. # 42]
(“AT&T Texas’s Motion”) to which Affordable has responded [Doc. # 45], and
AT&T Texas has replied [Doc. # 46].1 Also pending before the Court is Affordable’s
1
Affordable has also filed a “Motion to Strike New Evidence and Arguments Raised
in Plaintiff’s Reply, or Alternatively, Motion for Leave to File Sur-Reply” [Doc.
# 49]. AT&T Texas responded [Doc. # 50] that it was not opposed to Affordable’s
(continued...)
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Motion for Partial Summary Judgment [Doc. # 43] (“Affordable’s Motion”), to which
AT&T Texas has responded [Doc. # 44], and Affordable has replied [Doc. # 47]. The
Court heard oral argument on these summary judgment motions on May 18, 2011
[Doc. # 59]. The motions are now ripe for decision. Having considered the parties’
briefing, the applicable legal authorities, and all matters of record, the Court concludes
that AT&T Texas’s Motion should be granted in part and denied in part and
Affordable’s Motion should be denied.
I.
BACKGROUND
A.
Regulatory Background
The Telecommunications Act of 1996, 47 U.S.C. § 151 et. seq. (the “1996
Telecom Act”) requires incumbent local exchange carriers (“ILECs”), such as AT&T
Texas, to provide “interconnection with the [ILEC’s] network” for “the facilities and
equipment of any requesting telecommunications carrier.” 47 U.S.C. § 251(c)(2).
This interconnection is accomplished through “interconnection agreements” with the
competitive local exchange carriers (“CLECs”) even though they compete with the
ILEC providing the interconnection.
1
CLECs and ILECs all provide landline
(...continued)
filing its sur-reply and addressed the merits of the sur-reply. Accordingly, the Court
denies Affordable’s Motion to Strike and grants Affordable’s Motion to File SurReply. The Court will consider the arguments and exhibits contained in these
documents.
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2
telecommunications services.
The Federal Communications Commission (“FCC”) has extended the right to
establish interconnection agreements under 47 U.S.C. §§ 251 and 252 to Commercial
Mobile Radio Service (“CMRS”)2 carriers3 that provide wireless services, such as
paging or cellular telephone services.
ILECs and CMRS carriers physically
interconnect their networks pursuant to the terms of their interconnection agreements.
These interconnections allow CMRS carriers and ILECs to exchange traffic over their
networks for delivery to their end users (i.e., the caller and the called/receiving party).
The CLECs and ILECs are permitted to and do charge each other fees for the
services they render to each other pursuant to the interconnection agreements. The
prices to be paid for the routing of the calls are established in the interconnection
agreements.
B.
Prior Dealings Between the Parties
In 2001, Fitch obtained a one-way CMRS license that allowed him to provide
2
CMRS is “[a]n FCC designation for any carrier or licensee whose wireless network
is connected to the public switched telephone network and/or is operated for profit.”
NEWTON’S TELECOM DICTIONARY 298 (25th ed. 2009). The public switched
telephone network (“PSTN”) “usually refers to the worldwide voice telephone
network accessible to all those with telephones and access privileges.” Id. at 902.
3
First Report and Order, In the Matter of Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, No. 96-98, 1996 WL 452885, 11
F.C.C.R. 15,499, ¶ 1023 (Aug. 8, 1996), reversed on other grounds, AT&T Corp. v.
Iowa Utils. Bd., 525 U.S. 366 (1999); see also 47 C.F.R. § 20.11(e).
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paging services. AT&T Texas then began delivering traffic to Affordable (Fitch’s
sole proprietorship) under an interim agreement.4 Affordable then sought a formal
interconnection agreement from the Public Utility Commission of Texas (“PUCT”).5
On July 15, 2005, the PUCT issued an arbitration award, which as modified, dictated
the terms of that interconnection agreement.6
Affordable had sought from the PUCT authority to provide not only paging
services through his interconnection agreement with AT&T Texas but also to use
those interconnection trunks and facilities to allow customers to call a dial-up Internet
access service that Affordable offered under the name “USA Wide.net.”7 In this
PUCT proceeding, Affordable thus sought to serve as an “Internet Service Provider”
(“ISP”) and sought to use its interconnection with AT&T Texas to carry Internet
access traffic.8
The FCC has recognized that ISPs “are end users of
4
Deposition of F. Cary Fitch, Exh. G to AT&T Texas’s Motion [Doc. # 42] (“Fitch
Depo.”), at 110.
5
See Excerpts from PUCT Arbitration Award and Order Approving Same with
Modifications, Exh. C to AT&T Texas’s Motion [Doc. # 42] (“Arbitration Award”),
at 1. The 1996 Telecom Act authorizes the PUCT and other state commissions to
arbitrate open issues between an ILEC and a requesting telecommunications carrier.
See id.; 47 U.S.C. § 252(b).
6
See generally Arbitration Award.
7
Arbitration Award, at 6-10.
8
An “Internet Service Provider” or ISP is “[a] vendor who provides access for
customers (companies and private individuals) to the Internet and the World Wide
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telecommunications services that are required to purchase LEC business lines” from
local exchange carriers like AT&T Texas in order to receive calls to their dial-up
Internet service.9 Affordable sought to avoid this requirement through the PUCT
proceeding.
Relying on 47 C.F.R. § 51.100(b),10 the PUCT rejected Affordable’s claims that
8
(...continued)
Web. The ISP also typically provides a core group of Internet utilities and services
like E-mail, News Group Readers and sometimes weather reports and local restaurant
reviews. The user typically reaches his ISP by either dialing-up with their own
computer, modem and phone line, or over a dedicated line installed by a telephone
company.” NEWTON’S TELECOM DICTIONARY 610 (25th ed. 2009).
9
See Fitch v. Pub. Util. Comm’n of Texas, 261 F. App’x 788, 793 (5th Cir. 2008)
(citing In the Matter of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, 14 F.C.C.R. 3689, 3690, ¶ 4, 1999 WL 98037 (Rel.
Feb. 26, 1999), vacated on other grounds, Bell Atl. Tel. Co. v. FCC, 206 F.3d 1 (D.C.
Cir. 2000)).
10
47 C.F.R. § 51.100(b) states:
A telecommunications carrier that has interconnected or gained access
under Sections 251(a)(1), 251(c)(2), 251(c)(3) of the Act, may offer
information services through the same arrangement, so long as it is
offering telecommunications services through the same arrangement as
well.
“Telecommunications service” means “the offering of telecommunications for a fee
directly to the public, or to such classes of users as to be effectively available directly
to the public, regardless of the facilities used.” 47 U.S.C. § 153(46).
“Telecommunications” is defined as “the transmission, between or among points
specified by the user, of information of the user’s choosing, without change in the
form or content of the information as sent and received.” 47 U.S.C. § 153(43).
In contrast, an “information service” offers the capability for “generating, acquiring,
storing, transforming, processing, retrieving, utilizing, or making available
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it could use its paging interconnection with AT&T Texas to carry Internet access
traffic because Affordable did not offer telecommunications service “through”
interconnection facilities; rather, it merely transmitted radio signals to activate its
pagers.11 The PUCT arbitrators explained that “47 C.F.R. § 51.100(b) allows the
offering of information service through an interconnection facility, but only as an
incident to the telecommunications service for which the carrier obtained the
interconnection facility.”12 The PUCT arbitrators concluded that Affordable was only
authorized to provide paging services, and “consequently [it] may not receive any
traffic other than paging traffic through the interconnection facility.”13 Affordable
appealed the PUCT’s decision to the federal district court, which affirmed the PUCT.14
The Fifth Circuit also affirmed.15 Affordable nevertheless continued to operate as an
10
(...continued)
information via telecommunications,” but does
telecommunications itself. 47 U.S.C. § 153(20).
not
include
providing
11
See Arbitration Award, at 22-31.
12
Id. at 29.
13
Id. at 31.
14
See Fitch v. Pub. Util. Comm’n of Texas, No. A-06-CA-120-SS (W.D. Tex. Dec. 12,
2006), attached as Exh. D to AT&T’s Motion [Doc. # 42].
15
See Fitch v. Pub. Util. Comm’n of Texas, 261 F. App’x 788 (5th Cir. 2008).
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ISP for approximately one year after the PUCT’s decision.16
C.
Formation of the 2007 Agreement
At some point, Affordable obtained a two-way CMRS license from the FCC,
which allows the company to both send and receive wireless radio communications
within a limited bandwidth.17 Affordable then sought to adopt the interconnection
agreement between Cingular and AT&T Texas.18 AT&T Texas was required by law
to let any “requesting telecommunications carrier” opt into this agreement. See 47
U.S.C. § 252(i); 47 C.F.R. § 51.809. AT&T Texas initially resisted Affordable’s
request to adopt that agreement, expressing concern that Affordable would use this
new agreement to improperly provide information services, just as Affordable had
done under the one-way paging agreement.19 Affordable’s counsel represented that
Affordable acquired his two-way CMRS license to comply with the PUCT’s
decision.20 On June 22, 2007, AT&T Texas and Affordable formally entered into an
16
Fitch Depo., at 127-28. Affordable later separately incorporated the ISP business as
Affordable USAWide, which entity is now a customer of Affordable. Id.; see also
Information Regarding Specific Customers, Exh. H to AT&T Texas’s Motion [Doc.
# 42] (“Customer List”), at 2.
17
See id. at 39-40; see also Exh. R to AT&T’s Motion [Doc. # 42].
18
See Exh. I to AT&T’s Motion [Doc. # 42].
19
See id.
20
See id. at 2.
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interconnection agreement (“2007 Agreement”), which the PUCT approved.21 The
2007 Agreement called for the parties to “connect their facilities and interchange
traffic . . . as telecommunications carriers for the purpose of offering wireless to
wireline or wireline to wireless communications service to their respective end users
. . . .”22
D.
The Instant Lawsuit
Several billing and other disputes have arisen between the parties. AT&T
Texas claims that Affordable has failed to pay for services under the 2007 Agreement.
AT&T Texas states that it provided facilities and services pursuant to the 2007
Agreement and submitted charges to Affordable but that, despite repeated demands
for payment, Affordable has refused to remit the sums due. AT&T Texas therefore
brings claims for breach of contract.23
Affordable disputes many of AT&T Texas’s billings and further alleges that
AT&T Texas has refused to pay certain compensation that Affordable claims is due.
21
See generally Agreement for Interconnection and Reciprocal Compensation by and
between F. Cary Fitch, d/b/a Affordable Telecom and Southwestern Bell Telephone,
L.P. d/b/a AT&T Texas, Exh. A to AT&T Texas’s Motion [Doc. # 42] (“2007
Agreement”).
22
2007 Agreement, at 1 (Agreement’s recitals).
23
AT&T Texas also sued for quantum meruit and anticipatory breach, but has
withdrawn those claims. See AT&T Texas’s Reply [Doc. # 46], at 29. The Court
deems those claims abandoned and dismisses them with prejudice.
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8
Affordable brings counterclaims against AT&T Texas for breach of contract,
declaratory judgment, and violations of the Telecom Act.24
AT&T Texas alleges that in the months preceding the 2007 Agreement,
Affordable represented to the FCC that it would be providing not only “information
services” but also “telecommunications services,”25 such that it was entitled to
“interconnection” under FCC rules. AT&T Texas states that these representations by
Affordable were key to AT&T Texas’s willingness to enter the 2007 Agreement, and
to the PUCT’s approval of the 2007 Agreement, but these representations were
materially false.
Affordable concedes that more than ninety percent of its business comes from
its ISP customers or “Internet service provider aggregator customers”26 (collectively
referred to herein as “ISPs,” “ISP customers,” or “dial-up ISP customers”).
24
Affordable also counterclaims for “Misrepresentations Regarding Intent to Correct
Admitted Billing Errors.” Affordable alleges that AT&T Texas represented that it
would stop assessing charges related to facilities and trunks in the San Antonio area
and that AT&T Texas would issue credits to this account. At oral argument,
Affordable indicated it would withdraw this claim if the billing errors were corrected.
The Court accordingly declines to decide this issue at this time. Finally, Affordable
also counterclaims for fraud related to AT&T Texas’s setting up the network
architecture in the Houston area. This claim is discussed infra at Section III.C.
25
See note 10 supra (defining “telecommunications services” and “information
services”).
26
Fitch Depo., at 97.
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Affordable defines these customers as “receiv[ing] telecommunication service via
delivery of calls from the PSTN to equipment owned by [the ISP, Affordable’s
customer]. [Affordable] transports and terminates calls that originate on the PSTN to
the [ISP] customer-designated demarcation.”27 The PSTN, i.e., the public switched
telephone network, is “the worldwide voice telephone network accessible to all those
with telephones and access privileges.”28 Affordable concedes its ISP customers
provide “dial-up Internet service”29 and that Affordable provides only “PRI circuits”30
to the ISPs. Affordable concedes this service is essentially providing its dial-up ISP
customers with business lines that they would otherwise have to purchase from
27
See id., at 43; Customer List, at 2-3.
28
NEWTON'S TELECOM DICTIONARY 902 (25th ed. 2009).
29
See Fitch Depo, at 44. “Dial-up Internet service” or dial up Internet access is where
a wireline (i.e., landline) telephone customer dials a local ISP via a local wireline
telephone number and uses a modem and standard telephone to connect to the
Internet. See NEWTON'S TELECOM DICTIONARY 363 (25th ed. 2009) (defining “dial
up” and “dial up account”).
30
See id. at 47, 49. “Primary Rate Interface,” or PRI, is “[a] digital access technology
that allows for simultaneous, integrated voice and data capabilities over standard
existing phone lines.” See Joint Glossary of All Technical Terminology [Doc. # 58]
(“Joint Glossary”), at 17 (AT&T Texas’s definition citing XO Commc’ns Servs., Inc.
v. S. Telecom, Inc., No. 05-3018, 2006 WL 1155946, at *1 (W.D. Ark. May 1, 2006)).
PRI circuits provide Affordable’s customers with access to the Integrated Services
Digital Network (ISDN), “a highly sophisticated enhancement of the traditional
circuit-switched PSTN” that “supports access to any type of service (e.g. voice, data,
and video)” for the simultaneous digital transmission of voice, video, data, and other
network services. See NEWTON'S TELECOM DICTIONARY 275, 624-25, 887 (25th ed.
2009) (defining “circuit,” “ISDN,” and “PRI”).
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LECs.31 Affordable’s two-way wireless services under the June 2007 Agreement32 are
unrelated to the services it provides to the ISPs, and its dial-up ISP customers do not
use the wireless spectrum.33
AT&T Texas alleges that this use of Affordable’s
interconnection is a breach of the 2007 Agreement.
Affordable disputes this
characterization and seeks a declaration that Affordable is allowed to provide these
services through his interconnection with AT&T Texas. AT&T Texas also alleges
that Affordable Telecom’s representations to Plaintiff and the FCC, namely, its
representations that it would provide telecommunications services in addition to
information services, were false. Based upon these allegations, AT&T Texas asserts
a claim for fraud.34
31
See Fitch Depo., at 43-44, 47, 49 (describing Affordable’s customers). According to
the FCC, “ISPs purchase analog and digital lines from local exchange carriers [LECs]
to connect to their dial-in subscribers. . . . The ISP typically purchases business lines
from a LEC, for which is pays a flat monthly fee.” In the Matter of Implementation
of the Local Competition Provisions in the Telecommunications Act of 1996, 14
F.C.C.R. 3689, 3690, ¶ 4, 1999 WL 98037 (Rel. Feb. 26, 1999), vacated on other
grounds, Bell Atl. Tel. Co. v. FCC, 206 F.3d 1 (D.C. Cir.2000)
32
Affordable has some customers that “receive telecommunications services
via . . . CMRS facilities. [These customers] have voicemail capability, and
communicate via either half-duplex (‘walkie-talkie’) means or bidirectional (‘duplex’)
audio . . . . Some customers also have a more traditional ‘paging’ arrangement as
defined in FCC rules, e.g., a separate device that received coded messages only.”
Customer List, at 2.
33
See id., at 2.
34
AT&T Texas originally also sued for declaratory judgment and violation of the
(continued...)
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The parties have filed cross-motions for summary judgment, which have been
fully briefed and are ripe for decision.
II.
STANDARD FOR SUMMARY JUDGMENT
Rule 56 of the Federal Rules of Civil Procedure “mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a
party who fails to make a sufficient showing of the existence of an element essential
to the party’s case, and on which that party will bear the burden at trial.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069,
1075 (5th Cir. 1994) (en banc); see also Baton Rouge Oil & Chem. Workers Union v.
ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir. 2002). “The Court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV.
P. 56(a); see Celotex Corp., 477 U.S. at 322–23; Weaver v. CCA Indus., Inc., 529 F.3d
335, 339 (5th Cir. 2008).
For summary judgment, the initial burden falls on the movant to identify areas
essential to the non-movant’s claim in which there is an “absence of a genuine issue
of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir. 2005).
34
(...continued)
Telecom Act, but has withdrawn those claims. See AT&T Texas’s Reply [Doc. # 46],
at 29. The Court deems those claims abandoned and dismisses them with prejudice.
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The moving party may meet its burden by pointing out “‘the absence of evidence
supporting the nonmoving party’s case.’” Duffy v. Leading Edge Prods., Inc., 44 F.3d
308, 312 (5th Cir. 1995) (quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 913
(5th Cir. 1992)).
If the moving party meets its initial burden, the non-movant must go beyond the
pleadings and designate specific facts showing that there is a genuine issue of material
fact for trial. Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001)
(internal citation omitted). “An issue is material if its resolution could affect the
outcome of the action. A dispute as to a material fact is genuine if the evidence is
such that a reasonable jury could return a verdict for the nonmoving party.” DIRECT
TV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2006) (internal citations omitted).
In deciding whether a genuine and material fact issue has been created, the facts
and inferences to be drawn from them must be reviewed in the light most favorable
to the nonmoving party. Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336
F.3d 410, 412 (5th Cir. 2003) (internal citation omitted). The Court may make no
credibility determinations or weigh any evidence, and must disregard all evidence
favorable to the moving party that the jury is not required to believe. See Chaney v.
Dreyfus Serv. Corp., 595 F.3d 219, 229 (5th Cir. 2010) (citing Reaves Brokerage Co.,
336 F.3d at 412-413). However, factual controversies are resolved in favor of the
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non-movant “only ‘when both parties have submitted evidence of contradictory
facts.’”
Alexander v. Eeds, 392 F.3d 138, 142 (5th Cir. 2004) (quoting
Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir. 1999)).
The non-movant’s burden is not met by mere reliance on the allegations or
denials in the non-movant’s pleadings. See King v. Dogan, 31 F.3d 344, 346 (5th Cir.
1994); Johnston v. City of Houston, 14 F.3d 1056, 1060 (5th Cir. 1994). Likewise,
“conclusory statements, speculation, and unsubstantiated assertions cannot defeat a
motion for summary judgment.” RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 857 (5th
Cir. 2010); see also Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530
F.3d 395, 399 (5th Cir. 2008). “A party cannot defeat summary judgment with ‘only
a scintilla of evidence.’” Delta & Pine Land Co., 530 F.3d at 399 (quoting Little, 37
F.3d at 1075).
Rather, a party must support any assertion that a fact cannot be or is genuinely
disputed by “(a) citing to particular parts of materials in the record . . . ; or
(b) showing that the materials cited do not establish the absence or present of a
genuine dispute, or that an adverse party cannot produce admissible evidence to
support that fact.” FED. R. CIV. P. 56(c)(1). Affidavits cannot defeat summary
judgment unless they contain competent and otherwise admissible evidence. FED. R.
CIV. P. 56(c)(4). A party’s self-serving and unsupported statement in an affidavit will
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not defeat summary judgment where the evidence in the record is to the contrary. See
In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000).
Further, “the court need consider only the cited materials, but it may consider
other materials in the record.” FED. R. CIV. P. 56(c)(3). “Rule 56 does not impose
upon the district court a duty to sift through the record in search of evidence to support
a party’s opposition to summary judgment.” Malacara v. Garber, 353 F.3d 393, 405
(5th Cir. 2003). “When evidence exists in the summary judgment record but the
nonmovant fails even to refer to it in the response to the motion for summary
judgment, that evidence is not properly before the district court.” Id.
In the absence of any proof, the court will not assume that the non-movant
could or would prove the necessary facts. Little, 37 F.3d at 1075 (citing Lujan v. Nat’l
Wildlife Fed’n, 497 U.S. 871, 888 (1990)). Rather, “if a party fails to properly support
an assertion of fact or fails to properly address another party’s assertion of fact as
required by Rule 56(c),” the court may, inter alia, “(2) consider the fact undisputed
for purposes of the motion; [or] (3) grant summary judgment if the motion and
supporting materials – including the facts considered undisputed – show that the
movant is entitled to it . . . .” FED. R. CIV. P. 56(e).
Finally, when evaluating cross-motions for summary judgment, the
“[c]ross-motions must be considered separately, as each movant bears the burden of
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15
establishing that no genuine issue of material fact exists and that it is entitled to
judgment as a matter of law.” Shaw Constructors v. ICF Kaiser Eng’rs, Inc., 395 F.3d
533, 538-39 (5th Cir. 2004) (citing 10A CHARLES ALAN WRIGHT, ARTHUR R. MILLER
& MARY KAY KANE, FEDERAL PRACTICE
AND
PROCEDURE § 2720 (3d ed. 1998)
(“WRIGHT”)). “But if there is no genuine issue and one or the other party is entitled
to prevail as a matter of law, the court will render judgment.” WRIGHT, § 2720.
III.
AT&T TEXAS’S MOTION
AT&T Texas moves for summary judgment that (i) AT&T Texas has properly
billed Affordable according to the terms and conditions of the 2007 Agreement,
(ii) AT&T Texas is entitled to recover approximately $1.8 million billed, (iii) AT&T
Texas is not liable for usage charges that Affordable has billed to AT&T Texas,
(iv) Affordable has breached the contract by misusing the interconnection when the
connection is used for land-to-land calls to Affordable’s dial-up ISP customers,
(v) Affordable’s fraud claim is barred as a matter of law, and (vi) that AT&T Texas
is not liable for any of Affordable’s counterclaims.35
A.
AT&T Texas’s Contract Claims
The elements of a claim for breach of contract are: (1) a valid contract; (2) the
plaintiff performed or tendered performance; (3) the defendant breached the contract;
35
See AT&T Texas’s Motion [Doc. # 42], at 1-2, 25.
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and (4) the plaintiff was damaged as a result of the breach. Pegram v. Honeywell,
Inc., 361 F.3d 272, 288 (5th Cir. 2004); SLT Dealer Group, Ltd. v. AmeriCredit Fin.
Servs., 336 S.W.3d 822, 828 (Tex. App.-Houston [1st Dist.] 2011, no pet. h.); Taub
v. Houston Pipeline Co., 75 S.W.3d 606, 615 (Tex.App.-Texarkana 2002, pet. denied);
Guzman v. Ugly Duckling Car Sales of Texas, L.L.P., 63 S.W.3d 522, 528
(Tex.App.-San Antonio 2001, pet. denied); Frost Nat’l Bank v. Burge, 29 S.W.3d 580,
593 (Tex.App.-Houston [14th Dist.] 2000, no pet.). A breach occurs when a party
fails or refuses to do something he has promised to do. Townewest Homeowners
Ass’n, Inc. v. Warner Commc’n Inc., 826 S.W.2d 638, 640 (Tex.App.-Houston [14th
Dist.] 1992, no writ); Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845
(Tex.App.-Houston [1st Dist.] 1984, writ ref’d n.r.e.). “Reliance is not required to
prove a breach of contract.” Nat’l W. Life Ins. Co. v. Rowe, 86 S.W.3d 285, 297
(Tex.App.-Austin 2002) rev’d on other grounds, 2005 WL 1186226 (Tex. 2005) (not
released for publication).
A court must determine whether a contract is ambiguous as a matter of law.
Instone Travel Tech Marine & Offshore v. Int’l Shipping Partners, 334 F.3d 423, 428
(5th Cir. 2003); H.E. Butt Grocery Co. v. Nat’l Union Fire Ins. Co., 150 F.3d 526, 529
(5th Cir. 1998); Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520
(Tex. 1995). Determining whether ambiguity exists, the court must look at the
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contract as a whole in light of the circumstances existing at the time of execution.
Instone Travel, 334 F.3d at 431 (citing In re El Paso Refinery, LP, 302 F.3d 343, 353
(5th Cir. 2002)); Exxon Corp. v. West Tex. Gathering Co., 868 S.W.2d 299, 302 (Tex.
1993). “These circumstances include the commonly understood meaning in the
industry of a specialized term, which may be proven by extrinsic evidence such as
expert testimony or reference material. XCO Prod. Co. v. Jamison, 194 S.W.3d 622,
627-628 (Tex.App.–Houston [14 Dist.], 2006, pet. denied). The terms of a contract
are ambiguous if they are subject to two or more reasonable interpretations.
Balandran v. Safeco Ins. Co., 972 S.W.2d 738, 741 (Tex. 1998); see also Cicciarella
v. Amica Mut. Ins. Co., 66 F.3d 764, 768 (5th Cir. 1995) (“A contract is ambiguous
only ‘when its meaning is uncertain and doubtful or it is reasonably susceptible of
more than one meaning.’” (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex.
1983))). On the other hand, if the terms of the contract can be given a definite or
certain legal meaning, then the contract is not ambiguous. H.E. Butt, 150 F.3d at 529;
CBI Indus., 907 S.W.2d at 520.
The Court is to interpret the terms of an unambiguous contract as a matter of
law. Gonzales v. Denning, 394 F.3d 388, 392 (5th Cir. 2004); MCI Telecomms. Corp.
v. Texas Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). “In construing a written
contract, the primary concern of the court is to ascertain the true intentions of the
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parties as expressed in the instrument.” Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 662 (Tex. 2005) (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223,
229 (Tex. 2003), Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000),
and Coker, 650 S.W.2d at 393 (Tex. 1983)). “To achieve this objective, courts should
examine and consider the entire writing in an effort to harmonize and give effect to
all the provisions of the contract so that none will be rendered meaningless.” Id.
(citing J.M. Davidson, Inc., 128 S.W.3d at 229, and Coker, 650 S.W.2d at 393).
“Contract terms are given their plain, ordinary, and generally accepted meanings
unless the contract itself shows them to be used in a technical or different sense.” Id.
(citing Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996), W.
Reserve Life Ins. Co. v. Meadows, 152 Tex. 559, 261 S.W.2d 554, 557 (1953), and
Provident Life & Accident Ins. v. Knott, 128 S.W.3d 211, 219 (Tex. 2003)).
“Language should be given its plain grammatical meaning unless it definitely appears
that the intention of the parties would thereby be defeated.” Reilly v. Rangers Mgmt.,
Inc., 727 S.W.2d 527, 529 (Tex. 1987) (citing Fox v. Thoreson, 398 S.W.2d 88, 92
(Tex. 1966)).
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1.
AT&T Texas’s Charges Billed to Affordable
AT&T Texas seeks to recover charges billed for facilities that AT&T Texas
provided to Affordable under the 2007 Agreement to route Affordable’s traffic. These
facilities include one-way trunks that route traffic from AT&T Texas to Affordable
(“Land-to-Mobile traffic”), one way trunks that route traffic from Affordable to
AT&T Texas (“Mobile-to-Land traffic”), and two-way trunks that route traffic in both
directions. AT&T Texas seeks to charge Affordable $1,536,678.0036 for one-way
trunks routing Land-to-Mobile traffic, $41,950.00 for one-way trunks routing Mobileto-Land traffic, and $73,029.60 for two-way trunks that route traffic in both directions.
36
In its Motion for Summary Judgment, AT&T Texas states that Affordable owes
$1,243,990.00 for Land-to-Mobile facilities in the Houston LATA and $370,271.60
for Land-to-Mobile facilities in the Austin LATA, for a total of $1,614,261.60. See
AT&T Texas’s Motion [Doc. # 42], at 8 (citing Declaration of Heather D. Lenhart,
Exh. F to AT&T Texas’s Motion [Doc. # 42] (“Lenhart Decl.”)). The figures noted
in AT&T Texas’s Motion are not an accurate reflection of the summaries of AT&T
Texas’s charges to Affordable as of February, 2011, that are attached to Lenhart’s
Declaration.
The Land-to-Mobile facilities charges for the Houston LATA should be
$1,239,436.00, which is $4,554.00 less than the $1,243,990.00 total included in
AT&T Texas’s Motion. See Lenhart Decl., at 6. AT&T Texas mistakenly added
$4,554.00 to its Land-to-Mobile. The $4554.00 is the charge noted in Lenhart’s
summary for Mobile-to-Land facilities in the Houston LATA.
The Land-to-Mobile facilities charges for the Austin LATA should be $297,242,
which is $73,029.60 less than the $370,271.60 total included in AT&T Texas’s
Motion. See Lenhart Decl., at 9. AT&T Texas mistakenly added $73,029.60 to its
Land-to-Mobile calculation. The $73,029.60 is the charge noted in Lenhart’s
summary for Two-Way facilities in the Austin LATA.
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The key disputed contract provisions are in Section 3.1 of the 2007 Agreement, which
addresses the parties’ respective responsibilities for Land-to-Mobile traffic and
Mobile-to-Land traffic.
AT&T Texas also seeks to recover usage charges for transiting37 and
terminating traffic38 to Affordable.39 AT&T Texas seeks to charge Affordable
$32,949.93 in usage charges for transiting and terminating traffic that the parties
37
“Transiting charges” are “charges for one carrier transporting across its network to a
third-party carrier the telecommunications traffic (calls) of another carrier.” See Joint
Glossary, at 23. Transiting charges therefore apply when Affordable’s customers use
AT&T Texas’s facilities to reach non-AT&T Texas customers. See AT&T’s Motion
[Doc. # 42], at 8.
38
“Termination charges” are “charges for delivery of one carrier’s traffic (calls) to the
customers of another carrier. The latter carrier is the one assessing the charge.” See
Joint Glossary, at 22. Affordable owes AT&T Texas termination charges for Mobileto-Land calls from Affordable’s customers that Affordable delivers to AT&T Texas
and AT&T Texas “terminates” to its customers. AT&T Texas would owe Affordable
termination charges for any Land-to-Mobile calls from AT&T Texas’s customers that
AT&T Texas delivers to Affordable and Affordable “terminates” to his customers.
AT&T Texas disputes Affordable’s usage charges for reasons which are discussed
below. See Section III.A.2, infra.
39
AT&T Texas also seeks to recover prorated charges/credits in the amount of
$98,405.22, see AT&T Texas’s Motion [Doc. # 42], at 8, charges that Affordable does
not address. Affordable has waived any opposition to these charges.
Additionally, AT&T Texas seeks to recover $2,807.49 for providing 911 facilities.
AT&T Texas presents evidence that the 911 facilities charges are undisputed. See
Exh. N to AT&T’s Motion [Doc. # 42], at 1 (“We accept the charges for the “911"
trunks on [BAN 710 083 0196 806] and either have or will soon pay them.”).
Affordable has waived any opposition to these charges.
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exchange.40
Land-to-Mobile Facilities Charges.– Section 3.1.2 of the 2007 Agreement
addresses the parties’ responsibilities for Land-to-Mobile traffic. That Section
provides:
3.1.2 Land to Mobile Traffic
3.1.2.1
AT&T TEXAS shall be responsible for the delivery
of traffic from its network to the appropriate point of
interconnection (within the serving wire center
boundary of the end office in which the tandem,
providing the Type 2A interconnection[,] is located
. . . ) on its network for the transport and termination
of such traffic by [Affordable] to a[n Affordable] end
user.
3.1.2.2
Unless AT&T TEXAS elects to have [Affordable] or
a third party provision facilities, AT&T TEXAS
shall provide the physical plant facilities that
interconnect AT&T TEXAS’ point of
interconnection with [Affordable]’s point of
interconnection. AT&T TEXAS shall be responsible
for the physical plant facilities to the appropriate
point of interconnection (within the serving wire
center boundary of the end office in which the
tandem, providing the Type 2A interconnection[,] is
located . . . ) on its network.41
40
Affordable does not dispute AT&T’s usage charges anywhere in his briefing.
Accordingly, Affordable has waived any opposition to these charges.
41
2007 Agreement, §§ 3.1.2.1, 3.1.2.2. The omitted portions of these clauses refer to
Type 1 interconnection, which Affordable does not use and which is not in issue in
this case.
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Pursuant to Section 2.4.1 of the 2007 Agreement, the rates Affordable must pay for
facilities purchased from AT&T Texas “are specified in Section 7 of the inter or
intrastate special access tariffs.”
AT&T Texas argues that pursuant to Section 3.1.2.1, AT&T Texas is
responsible for the costs of facilities used to route Land-to-Mobile traffic to
Affordable, but only for the costs of delivering traffic within the serving wire center
boundary of the end office in which the tandem providing the Type 2A
interconnection is located.42 Affordable does not dispute that the word “responsible”
as used in Section 3 of the 2007 Agreement means obligated to pay costs.43 The thrust
of this aspect of the parties’ billing dispute (i.e., Land-to-Mobile traffic) is that AT&T
Texas contends that Affordable must pay for facilities beyond the serving wire center
boundary of the Type 2A tandem.
The 2007 Agreement defines “tandem” as “a switching system that provides a
concentration and distribution function for originating or terminating traffic between
end offices, other tandems, and Third Party Providers.”44 The 2007 Agreement
42
See AT&T Texas’s Motion [Doc. # 42], at 19.
43
See generally Affordable’s Response [Doc. # 45]. Indeed, Affordable seems to adopt
that meaning in his briefing. See id. at 27 (“Affordable is not responsible for 70% of
two-way facilities or trunks . . . .”).
44
2007 Agreement, § 1, at p. 4.
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defines an “end office” as “a local AT&T TEXAS switching point at which AT&T
TEXAS end user station loops are originated and terminated for purposes of
interconnection to each other and to the network.”45 In other words, the end office is
the connection between AT&T Texas and its customers, and the end offices are served
by the tandem. A “serving wire center” is the “wire center from which service is
provided to the customer.”46 Wire center boundaries define the geographic area in
which all customers served by a given wire center are located.47 The unambiguous
meaning of these terms is that traffic (a call) is “within” the “serving wire center
boundary” only when the traffic originates within one of the end offices served by the
tandem serving the end office where the call terminates, or more simply, when the call
originates and terminates within the same wire center boundary. Accordingly, AT&T
Texas is only responsible for paying the costs of facilities used to transport traffic that
originates within the wire center boundary of Affordable’s Mobile Switching Centers
(“MSCs”). In contrast, Affordable is responsible for paying the costs of facilities used
to transport traffic that originates outside the wire center boundary of Affordable’s
45
Id. § 1, at p. 2.
46
NEWTON’S TELECOM DICTIONARY 832 (24th ed. 2008); see also 47 C.F.R. § 69.2(rr)
(defining “serving wire center” as “[t]he telephone company central office designated
by the telephone company to serve the geographic area in which the interexchange
carrier or other person’s point of demarcation is located.”).
47
Joint Glossary, at 26 (citing 47 C.F.R. § 51.5).
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MSC.48
The parties dispute AT&T Texas’s invoice charges to Affordable for Land-toMobile facilities that Affordable ordered outside the serving wire center where AT&T
Texas delivers the traffic. AT&T Texas billed Affordable for the facility costs
associated with Land-to-Mobile traffic outside the serving wire center in both the
Houston and Austin Local Access and Transport Areas (“LATAs”).49 For example,
in the Houston LATA, AT&T Texas billed Affordable for facilities used to transport
traffic from tandem offices in Nacogdoches, Huntsville and outlying areas of Houston
to tandems in downtown Houston connected to Affordable’s MSC.50 These disputed
48
Pursuant to Section 2.4.1 of the 2007 Agreement, the rates Affordable must pay for
facilities purchased from AT&T Texas “are specified in Section 7 of the inter or
intrastate special access tariffs.”
49
“LATAs” are geographic boundaries beyond which AT&T Texas is not permitted to
pass traffic. Within a given LATA, AT&T Texas can provide both local and long
distance services. AT&T Texas may not, however, deliver traffic outside that LATA
but must, instead, hand the traffic off to an interexchange (long-distance) carrier for
delivery to other LATAs. See AT&T Texas’s Motion [Doc. # 42], at 16-17; Joint
Glossary, at 12. There are 17 LATAs within the state of Texas. Affordable ordered
facilities in four of those LATAs: Houston, Austin, San Antonio, and Corpus Christi.
See AT&T Texas’s Motion [Doc. # 42], at 8.
50
See Attachment 1 to Lenhart Decl., at 1. Affordable argues that he never ordered any
“facilities” and that all of the disputed billings pertain to “trunks” and a simple “cross
connect” between Affordable and AT&T Texas. See Affordable’s Response [Doc.
# 45], at 15 n.11. Affordable does not provide probative evidence supporting this
argument.
AT&T Texas’s invoices reflect that Affordable was being charged for “trunk groups”
(continued...)
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billings are inter alia for Affordable’s dial-up ISP customers’ receipt of land-line calls
from dial-up Internet users in Nacogdoches and Huntsville, which calls had to be
routed over AT&T Texas’s trunks to Affordable’s MSC that Affordable chose to place
50
(...continued)
used to transport traffic that was outside the serving wire boundary of Affordable’s
MSC. Attachment 1 to Lenhart Decl., at 1. The 2007 Agreement defines “connecting
facilities” as “dedicated facilities either provided under this Agreement or separate
contract used to connect [Affordable]’s network and AT&T TEXAS’ network for the
purpose of interchanging traffic.” 2007 Agreement, § 1, at p. 2.
In their Joint Glossary [Doc. # 58], the parties dispute the definition of “facilities.”
Affordable defines facilities as “[a] telephone industry term for a phone or data line.
Sometimes (but rarely) used to describe equipment.” See Joint Glossary, at 9 (citing
NEWTON’S TELECOM DICTIONARY 266 (17th ed. 2001)). AT&T Texas defines
“facilities” as “equipment that transmit[s] information by electromagnetic means or
which directly support such transmission.” AT&T also notes that “[t]he terms
‘facilities’ and ‘trunks’ are sometimes used interchangeably.” Joint Glossary, at 10
(citing United States v. American Telephone & Telegraph Co., 552 F.Supp.131,
229-30 (D.D.C. 1982), and Qwest Corp. v. Minnesota Public Utils. Comm’n, No.
04-1164, 2005 WL 1431652, at *1 (D. Minn. Mar. 31, 2005)).
The parties’ Joint Glossary defines “trunk group” as “a set of trunks of common
routing, origin and destination and which serve a like purpose or function.” Id. at 24.
“Trunks” are “circuit[s] between switchboards or other switching equipment, as
distinguished from circuits which extend between central office switching equipment
and information origination/termination equipment.” Id.
The Court concludes that any distinction between “trunks” and “facilities” as used in
the 2007 Agreement and AT&T Texas’s bills is not material. AT&T Texas is billing
for the trunks that were used to transport traffic to and from Affordable. Affordable
does not make the argument that trunks were not intended to be included as
“facilities” in Section 3 of the 2007 Agreement. Indeed, later in its Response,
Affordable itself appears to use the terms facilities and trunks interchangeably,
referencing “facilities/trunks.” See Affordable’s Response [Doc. # 45], at 22, 24 n.19.
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in downtown Houston.51
Affordable advances two principal arguments as to why he should not have to
pay these costs. First, Affordable relies on Southwestern Bell Telephone Co. v. PUC,
348 F.3d 482 (5th Cir. 2003), and the FCC’s reciprocal compensation regulations, 47
C.F.R §§ 51.703(b), 51.709(b).52
The Southwestern Bell case involved an
interconnection agreement that was the product of compulsory arbitration under 47
U.S.C. § 252(b). The Fifth Circuit affirmed the district court’s ruling that the FCC’s
reciprocal compensation rules, 47 U.S.C. § 251(b) and 47 C.F.R. § 51.703, governed
the agreement and did not allow the ILEC, Southwestern Bell, to charge the CLEC,
AT&T, for traffic originating on Southwestern Bell’s network. Affordable thus
argues that federal law prohibits AT&T Texas from charging for trunks that carry
AT&T Texas-originated traffic. Affordable’s reliance is misplaced. Section 3 of the
2007 Agreement, including sections 3.1.2.1 and 3.1.2.2 that require Affordable to pay
51
Transcript [Doc. # 62], at 25, 32, 39-40, 54, 118, 155.
52
47 C.F.R. § 51.703(b) states: “A LEC may not assess charges on any other
telecommunications carrier for telecommunications traffic that originates on the
LEC’s network.” 47 C.F.R. § 51.709(b) provides that:
The rate of a carrier providing transmission facilities dedicated to the
transmission of traffic between two carriers’ networks shall recover
only the costs of the proportion of that trunk capacity used by an
interconnecting carrier to send traffic that will terminate on the
providing carrier’s network. Such proportions may be measured during
peak periods.
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for the facilities needed to route AT&T Texas-originated traffic outside of the serving
wire boundary, was the result of voluntary negotiations under 47 U.S.C. § 252(a), as
explained below and thus the authorities on which Affordable bases its argument are
inapplicable.
The Federal Telecommunications Act provides two mechanisms for creating
interconnection agreements under 47 U.S.C. §§ 251 and 252. Agreements may be
reached by voluntary negotiations or mediation under § 252(a), or may be established
by “compulsory arbitration” under § 252(b). Section 252(a)(1) expressly allows
parties to negotiate an agreement “without regard to the standards set forth in
subsections (b) and (c) of section 251.” 47 U.S.C. § 252(a)(1); see also Coserv Ltd.
Liab. Corp. v. Sw. Bell Tel. Co., 350 F.3d 482, 485 (5th Cir. 2003) (“Under the
provision for voluntary negotiations, the parties are free to reach any agreement,
without regard to the duties set forth in § 251.” (citing 47 U.S.C. § 252(a)(1))). When
all or part of an agreement is voluntary, 47 U.S.C. § 252(e)(2)(A) authorizes a state
commission to reject the agreement (or any voluntary part of it) only if: (i) the
agreement (or portion thereof) discriminates against a telecommunications carrier not
a party to the agreement; or (ii) the implementation of such agreement or portion is
not consistent with the public interest, convenience, and necessity. See also 47 C.F.R.
§ 51.3 (“To the extent provided in [47 U.S.C. § 252(e)(2)(A)], a state commission
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shall have authority to approve an interconnection agreement adopted by negotiation
even if the terms of the agreement do not comply with the requirements of this part.”).
The regulations on which Affordable relies, 47 C.F.R. §§ 51.703(b), 51.709(b), were
promulgated to implement the reciprocal compensation provisions of 47 U.S.C.
§ 251(b),53 and do not apply to voluntarily negotiated agreements. 47 U.S.C.
§ 252(a)(1); Coserv Ltd. Liability Corp., 350 F.3d at 485; Globaleyes Telecomms.,
Inc. v. Verizon N., Inc., 425 B.R. 481, 493-94 (S.D. Ill. 2010) (rejecting, on appeal
from bankruptcy court’s grant of summary judgment, argument that 47 C.F.R.
§ 51.709 governed or superseded contract terms that were voluntarily negotiated under
47 U.S.C. § 252(a)(1), and noting that the “contention that every interconnection
agreement must comply with 47 C.F.R. § 51.709 is inaccurate.”).
Section 25.1 of the 2007 Agreement states that the Agreement was “entered into
as a result of both private negotiation between the Parties and arbitration by the
Commission.”54 AT&T Texas has provided uncontradicted evidence that Section 3
of the 2007 Agreement was the result of voluntary negotiations under 47 U.S.C.
§ 252(a). The 2007 Agreement Affordable entered into was the same agreement
53
In the Matter of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, No. 96-98, 1996 WL 452885, 11 F.C.C.R. 15,499
at *16228-*16229, or at *453-*455 (Rel. Aug. 8, 1996), reversed on other grounds,
AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999).
54
2007 Agreement, § 25.1.
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AT&T Texas first established with its affiliate Cingular Wireless in 1998.55 When the
parties submitted that agreement to the PUCT, AT&T Texas and its affiliate
represented to the PUCT that “[t]his Agreement constitutes the negotiated contract
between SWBT and a CMRS provider” and is a “bilateral agreement, reached as a
result of negotiations and compromise.”56 The parties sought approval of the
agreement under the standards for state commission review of voluntary agreements.57
The PUCT approved the 1998 agreement under the § 252(e)(2)(A) standards for
negotiated agreements.58 In approving the 1998 agreement, the PUCT stated:
“Approval of the Agreement does not constitute Commission determination on
whether or not the terms and conditions of this agreement comply with the
requirements of Section 251 of the FTA [or] the regulations prescribed by the [FCC]
55
See Exh. I to AT&T Texas’s Motion [Doc. # 42], at 1 (Affordable’s counsel
requesting to opt-in to Cingular/AT&T Texas interconnection agreement). Compare
2007 Agreement with Agreement for Interconnection and Reciprocal Compensation
by and between Southwestern Bell Wireless Inc. and Southwestern Bell Telephone
Company, Attachment 1 to Joint Application of Southwestern Bell Telephone
Company and Southwestern Bell Wireless, Inc. for Approval of Interconnection
Agreement, Exh. Y to AT&T Texas’s Reply [Doc. # 46], at 9-70.
56
See Joint Application of Southwestern Bell Telephone Company and Southwestern
Bell Wireless, Inc. for Approval of Interconnection Agreement, Exh. Y to AT&T
Texas’s Reply [Doc. # 46], at 3-4.
57
Id. at 4.
58
PUCT Order dated February 5, 1998, Docket No. 18364, Exh. Z to AT&T Texas’s
Reply [Doc. # 46], at 4 (approving Cingular/AT&T Texas interconnection agreement
under 47 U.S.C. § 252(e)(2)(A), the standard for voluntary agreements).
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pursuant to Section 251 of the FTA . . . .”59 The 2007 Agreement remained voluntary
even when Affordable entered into it; the parties’ joint submission requested and
obtained PUCT approval under the nondiscriminatory/public interest standards of 47
U.S.C. § 252(e)(2)(A).60 Affordable has not provided contradictory evidence and has
failed to raise a genuine issue of material fact that the 2007 Agreement was not
voluntarily negotiated under § 252(a).61 Because the evidence establishes that the
Section 3 compensation obligations of the 2007 Agreement were negotiated in 1997
after the pertinent FCC rules implementing § 251(b) were adopted, those terms were
voluntary and did not have to comply with 47 U.S.C. § 251(b) and (c). For these
reasons, 47 C.F.R. §§ 51.703(b), 51.709(b), and Southwestern Bell v. PUC, 348 F.3d
59
Id. at 5.
60
See Exhs. EE, FF to AT&T Texas’s Reply [Doc. # 46]
61
Affordable also relies on Sections 25.1, 25.2, and 26.1 of the 2007 Agreement to
argue that federal law does indeed govern the 2007 Agreement. This reliance is
unavailing. Section 25.1 is discussed in the text above. Section 25.2 describes a
process to amend the contract should a court or regulatory agency determine that
modification is necessary to bring the contract into compliance with the Telecom Act.
Section 26.1 is a choice of law provision, which provides that Texas law governs
except insofar as federal law may control. These provisions simply do not suggest
that Section 3 was not voluntarily negotiated pursuant to 47 U.S.C. § 252(a).
Further, to the extent Affordable contends AT&T Texas urges that federal law is
inapplicable, Affordable misperceives AT&T Texas’s position. AT&T Texas
nowhere contends that federal law does not govern the 2007 Agreement. AT&T
Texas’s argument is that federal law, specifically 47 U.S.C. § 252(a)(1), expressly
allows parties to negotiate an agreement “without regard to the standards set forth in
subsections (b) and (c) of section 251.”
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482 (5th Cir. 2003), which involved an arbitrated agreement under 47 U.S.C.
§ 252(b), do not apply to the 2007 Agreement provisions at issue here.
Second, Affordable argues that there is a single point of interconnection
(“POI”)62 in each LATA and that Affordable is not liable for trunks on AT&T Texas’s
side of the POI. It is undisputed that Affordable only has a single POI in each
LATA.63 Rather, the parties dispute whether Affordable has a contractual right to a
single POI without incurring the costs of delivering traffic over AT&T Texas lines to
that POI whenever Affordable requires delivery of calls originating outside the
serving wire center of the tandem serving Affordable’s MSC.
To the extent
Affordable argues that it is entitled to a single, cost-free POI pursuant to 47 U.S.C. §
251(b), the reciprocal compensation regulations (47 C.F.R. §§ 51.703(b), 51.709(b)),
and Southwestern Bell v. PUC, 348 F.3d 482 (5th Cir. 2003), Affordable’s reliance on
these authorities is misplaced, as explained above, because these authorities are
inapplicable.
Affordable also relies on Section 2.2.1.1, Section 2.5.1, and Appendix DCO of
the 2007 Agreement to support its argument that it is not liable for transmission over
62
A “POI” is defined as “a physical location where AT&T Texas and Carrier
interconnect which establishes the technical interface and point(s) for operational
division of responsibility.” Joint Glossary, at 16.
63
See AT&T Texas’s Reply [Doc. # 46], at 14 (“AT&T Texas is not arguing that
Affordable actually has multiple POIs in the LATA.”).
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the trunks on AT&T Texas’s side of the POI. Section 2.2.1.1 provides that Affordable
may interconnect with AT&T TEXAS’ network at any technically
feasible point. The parties acknowledge for purposes of this requirement
that the locations listed in Appendix DCO constitute technically feasible
points of interconnection for Carrier to pass traffic to AT&T TEXAS for
transport and termination by AT&T TEXAS on its network or for
transport to a Third Party Provider.64
Section 2.5.1 similarly provides that “Carrier locations listed in Appendix DCO
constitute technically feasible points of interconnection [that] Carrier shall provide for
AT&T TEXAS to pass traffic for transport and termination on Carrier’s network.”65
Appendix DCO lists twenty-nine AT&T Texas tandems in various LATAs throughout
Texas.66 Appendix DCO also lists Affordable’s five MSCs and provides that “[t]he
F. Cary Fitch d/b/a Affordable Telecom points of interconnection include the
following MSCs and their subtending cell sites.”67 None of these contract provisions
address cost responsibility. Rather, these 2007 Agreement provisions unambiguously
authorize locations for Affordable to “interconnect with AT&T TEXAS’ network,”
namely, “at any technically feasible point” the parties designate. Appendix DCO lists
all “technically feasible” points that Affordable may select to locate one or more
64
2007 Agreement, § 2.2.1.1
65
Id., § 2.5.1.
66
See Appendix DCO to 2007 Agreement, at 1.
67
Id., at 6.
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MSCs or POls. The portion of Appendix DCO setting out where Affordable has
elected to have MSCs, lists five of those locations and makes plain that Affordable is
allowed have more. Appendix DCO thus authorizes Affordable to select additional
POIs within any of the serving wire centers from which traffic might originate. Other
sections of the 2007 Agreement, specifically, Sections 3.1.2.1 and 3.1.2.2, as
explained above, allocate financial responsibility and impose the financial
consequences of Affordable’s decision not to select additional POIs within certain
LATAs.
Affordable also argues that the facilities it ordered from AT&T Texas to handle
traffic from outside the serving wire center to his MSC (e.g., from Nacogdoches or
Huntsville to Houston) do not constitute “interconnection” and Affordable should not
have to pay for these facilities. This argument ignores the unambiguous language of
the 2007 Agreement, which defines “interconnection” to include “the connection of
separate pieces of equipment, facilities, or platforms between or within networks for
the purpose of transmission and routing of Telephone Exchange Service traffic and
Exchange Access traffic.”68 Any trunks and facilities Affordable ordered from AT&T
Texas to provide service to his customers constitute interconnection because they are
“equipment, facilities or platforms between or within network for the purpose of
68
2007 Agreement, § 1, at p. 3.
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transmission and routing of Telephone Exchange Service traffic and Exchange Access
traffic.”69 That Affordable does not have a POI where AT&T Texas has provided
dedicated facilities to serve Affordable does not mean that Affordable is not utilizing
AT&T Texas’s interconnection service.
Based on the foregoing, the Court concludes that the 2007 Agreement requires
Affordable to pay AT&T Texas for trunks and facilities that deliver to Affordable’s
MSC all Land-to-Mobile traffic that originates outside the servicing wire center
boundary of the tandem serving Affordable’s MSCs. AT&T Texas provides evidence
that the unpaid fees for these services through February 2011, total $1,536,678.00.70
These fees, and others, are likely still accruing. For this reason, the Court declines to
decide the precise amount owed by Affordable for these or any other charges. The
parties are ordered to determine the precise amounts owed in light of the foregoing
ruling interpreting the 2007 Agreement. The parties must appear for a conference on
July 28, 2011, at 10:15 a.m., to discuss this and other matters related to entry of a
complete or partial final judgment.
Mobile-to-Land Facilities Charges.– Section 3.1.1 of the 2007 Agreement
69
Id.
70
See supra note 36 (explaining how the Court arrived at the $1,536,678.00 using
AT&T Texas-provided evidence). In its Response, Affordable states that the amount
due is $131,467.00 higher, for a total of $1,668,145.00, but provides no source for
that figure. See Affordable’s Response [Doc. # 45], at 16.
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addresses the parties’ responsibilities for Mobile-to-Land traffic, that is, traffic that
originates on Affordable’s network and terminates on AT&T Texas’s network.
Section 3.1.1 provides:
3.1.1 Mobile to Land Traffic
3.1.1.1
[Affordable] shall be responsible for the delivery of
traffic from its network to AT&T TEXAS’ network
for the transport and termination of such traffic by
AT&T TEXAS to a[n] AT&T TEXAS end user or
for delivery by AT&T TEXAS to a Third Party
Provider.
3.1.1.2.
Unless [Affordable] elects to provision its own
facilities, AT&T TEXAS shall provide the physical
plant facilities that interconnect [Affordable]’s
network with AT&T TEXAS’ network. AT&T
TEXAS shall provision mobile to land connecting
facilities for [Affordable] under the terms and
conditions specified in Section 7 of the applicable
inter- or intrastate access tariff.
As discussed above in conjunction with Sections 3.1.2.1 and 3.1.2.2, “responsible”
means responsible for paying costs of the facilities. Sections 3.1.1.1 and 3.1.1.2
unambiguously state that if AT&T Texas provides Mobile-to-Land facilities,
Affordable must pay for them under the terms and conditions specified in Section 7
of the applicable inter- or intrastate access tariff.
Affordable disputes AT&T Texas’s charges for Mobile-to-Land facilities,
arguing that these trunks are on AT&T Texas’s side of the point of interconnection
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(the POI) and, under the FCC’s reciprocal compensation rules, AT&T Texas’s usage
charges already encompass those costs.71 Affordable argues these costs cannot be
“double recovered through ‘facility/trunk’ assessments.”72 Affordable provides no
evidence or legal authority for its argument.73 Furthermore, as discussed above, the
FCC’s reciprocal compensation rules found in 47 C.F.R. §§ 51.703(b), 51.709(b) do
not apply to Section 3 of the 2007 Agreement because it was voluntarily negotiated
pursuant to 47 U.S.C. § 252(a). Affordable’s argument is rejected.
Affordable also relies on Fitch’s Declaration to argue that there are factual
disputes regarding the POI location for Mobile-to-Land trunks in every LATA except
Corpus Christi.74 Even if there are factual disputes, they are not material here. The
location of an Affordable POI is immaterial to Affordable’s responsibility to pay the
tariffs charged by AT&T Texas for the AT&T Texas facilities that Affordable ordered
for Mobile-to-Land traffic. The plain language of Sections 3.1.1.1 and 3.1.1.2 of the
2007 Agreement says nothing about the location of Affordable’s POIs. These contract
71
See Affordable’s Response [Doc. # 45], at 26.
72
See id.
73
In fact, this argument has been squarely rejected by another district court. See
Verizon N., Inc. v. Telnet Worldwide, Inc., 440 F. Supp. 2d 700, 710 (W.D. Mich.
2006).
74
See Affordable’s Response [Doc. # 45], at 26-27 (citing Fitch Second Decl., ¶¶ 2025).
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terms make Affordable responsible for any and all AT&T Texas facilities Affordable
ordered to accomplish delivery of Mobile-to-Land traffic originating on Affordable’s
network.
AT&T states that Affordable owes $41,950 for these charges. Affordable has
not disputed that figure and has waived any challenge this regard.
Two-Way Facilities Charges.–
Section 2.4.4 addresses the parties’
responsibility for two-way facilities, which transport both Land-to-Mobile and
Mobile-to-Land traffic. That section provides that “[Affordable] and AT&T TEXAS
may share AT&T TEXAS interconnection facilities at the rates specified in Section
7 of the applicable inter- or intrastate special access tariff. Charges will be shared by
the Parties based on a proportional (percentage) basis as specified in Appendix
PRICING.”75 Section 6.0 of the “Appendix Pricing,” which was agreed to prior to
commencement of performance under the 2007 Agreement, establishes a sharing ratio
of “70% mobile to land and 30% land to mobile,” thereby assessing 70% of the cost
of a two-way facility to Affordable.76 Affordable disputes these charges, arguing
simply that, under the Agreement and FCC rules, AT&T Texas can assess charges
75
2007 Agreement, § 2.4.4 (referring to “Appendix Pricing,” an appendix to the 2007
Agreement [Doc. # 42-3], at 15-18).
76
See Appendix Pricing to 2007 Agreement, § 6.0.
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only for facilities/trunks on Affordable’s side of the POI.77 Affordable does not
identify any section of the Agreement that establishes this division of responsibility.
Nothing in the 2007 Agreement makes such an allocation (i.e., restricting AT&T
Texas’s charges for two-way trunks to Affordable’s side of the POI). Nor does
Affordable identify the “FCC rules” on which it relies here. To the extent Affordable
again relies on the FCC’s reciprocal compensation rules, those provisions are
inapplicable to Section 2.4.4 of the 2007 Agreement, which was voluntarily
negotiated.78 Affordable’s contention flies in the face of the parties’ plain language
in their 2007 Agreement, which assigns 70% cost-responsibility for two-way facilities
to Affordable, regardless of a POI’s location. Accordingly, the express language of
the 2007 Agreement establishes that Affordable is liable for 70% of the cost of twoway trunks between the parties. Affordable’s contentions regarding two-way trunks
are rejected.
AT&T Texas calculates that Affordable owes $73,029.60 for the two-way trunk
77
Affordable argues that he only has to pay the costs of AT&T Texas-provided facilities
on his side of the POI and that the costs should be adjusted downward to reflect the
assumed percentage of AT&T-originated traffic that flows over those trunks.
Affordable argues it is not responsible for any cost associated with facilities on AT&T
Texas’s side of the POI because AT&T Texas instead should only receive reciprocal
compensation to the extent those facilities are being used to terminate mobile-to-land
traffic. See Affordable’s Response [Doc. # 45], at 22-23.
78
See Exh. Y to AT&T’s Reply [Doc. # 46] (showing Section 2.4.4 was part of 1998
Cingular agreement that was voluntarily negotiated).
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charges.79
Affordable has not lodged any dispute regarding that calculation.
Affordable thus has waived any such challenge.
2.
Affordable’s Usage Charges to AT&T Texas
Affordable seeks to charge AT&T Texas $246,000 in “Usage Charges” for
terminating AT&T Texas-originated traffic.80 AT&T Texas argues that virtually all
of this AT&T Texas-originated traffic is wireline calls from AT&T Texas’s wireline
customers to Affordable’s dial-up ISP customers. Affordable does not dispute that
these calls are totally wireline calls, i.e., land-to-land traffic.81 AT&T Texas argues
that the 2007 Agreement only authorizes Affordable to provide CMRS traffic, which
involves some aspect of wireless service. As such, AT&T Texas argues that it should
not have to pay Affordable for terminating traffic to Affordable’s dial-up ISP
customers because that land-to-land traffic is not authorized under, and thus is a
breach of, the 2007 Agreement. “A fundamental principle of contract law is that when
79
See AT&T Texas’s Motion [Doc. # 42], at 8, and Exh. F thereto.
80
As described above, termination charges are “charges for delivery of one carrier’s
traffic (calls) to the customers of another carrier. The latter carrier is the one
assessing the charge.” See Joint Glossary, at 22. AT&T Texas would owe Affordable
termination charges for any Land-to-Mobile calls from AT&T Texas’s customers that
AT&T Texas delivers to Affordable and Affordable “terminates” to his customers.
81
See Customer List, at 2-3; Fitch Depo. at 72-73; Affordable’s Response [Doc. # 45]
at 14 (arguing that Affordable “is most certainly ‘authorized’ to provide service to
ESPs even if no ‘radio’ is involved.”); id. at 6-14 (never disputing AT&T Texas’s
assertion and evidence that this traffic is wireline or land-to-land traffic).
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one party to a contract commits a material breach of that contract, the other party is
discharged or excused from any obligation to perform.” Hernandez v. Gulf Group
Lloyds, 875 S.W.2d 691, 692 (Tex. 1994); accord Long Trusts v. Griffin, 222 S.W.3d
412, 415 (Tex. 2006). The Court thus must determine whether the 2007 Agreement
authorizes Affordable to transport and terminate wireline calls to its dial-up ISP
customers.82
Several provisions of the 2007 Agreement make clear that Affordable is
permitted under that Agreement to transmit over AT&T Texas’s lines only
communications that involve a wireless customer. First, Affordable entered into the
2007 Agreement based on its representations that it was “a duly authorized common
carrier engaged in providing Commercial Mobile Radio Services (‘CMRS’) in the
State of Texas.”83
The FCC defines CMRS as “[a] mobile service that is:
(a)(1) provided for profit, i.e., with the intent of receiving compensation or monetary
82
Affordable argues that this contention–that the 2007 Agreement does not authorize
Affordable to transport traffic to ISPs–was not raised in AT&T Texas’s Complaint
and therefore may not be considered here. The Court disagrees. AT&T Texas is
seeking summary judgment denying Affordable’s counterclaim that it is owed
reciprocal compensation for terminating traffic to its dial-up ISP customers. In AT&T
Texas’s Answer to Affordable’s counterclaims [Doc. # 22], AT&T Texas “denies that
[Affordable] is entitled to reciprocal compensation under the interconnection
agreement for internet traffic.” See Counter-Defendant’s Original Answer [Doc.
# 22], ¶ 144. Accordingly, Affordable was put on notice, as required by Federal Rule
of Civil Procedure 8, that AT&T Texas disputed Affordable’s charges for terminating
traffic to its dial-up ISP customers.
83
2007 Agreement, at 1 (Agreement’s Recitals).
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gain; (2) [a]n interconnected service; and (3) [a]vailable to the public, or to such
classes of eligible users as to be effectively available to a substantial portion of the
public; or (b) The functional equivalent of such a mobile service described in
paragraph (a) of this section.” 47 C.F.R. § 20.3 (emphasis added). The FCC defines
a “mobile service” as “[a] radio communication service carried on between mobile
stations or receivers and land stations, and by mobile stations communicating among
themselves . . .” Id. It is undisputed that Affordable does not provide CMRS or
wireless service to its dial-up ISP customers.
Second, the parties “agreed to connect their facilities and interchange traffic .
. . for the purpose of offering wireless to wireline or wireline to wireless
communications service to their respective end users.”84 Affordable does not dispute
that the calls it terminates to its dial-up ISP customers are wireline to wireline traffic.85
Third, Section 3, which sets the terms and conditions for exchange of traffic,
references only “Mobile to Land” and “Land to Mobile” traffic. It is undisputed that
the AT&T Texas-originated calls that Affordable terminates to its dial-up ISP
84
Id. (emphasis added)).
85
Affordable’s Response [Doc. # 45], at 6-14
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customers are Land-to-Land calls.86
Affordable argues that the references to
“Land-to-Mobile” and “Mobile-to-Land” in Section 3 merely denote which network
is originating and which network is receiving the call. While the Court is not
persuaded that the provisions in Section 3 are so limited, the fact that Affordable’s
network is referred to in the 2007 Agreement as “Mobile” supports AT&T Texas’s
position that the 2007 Agreement only authorizes Affordable to transport mobile, or
wireless, traffic.
Finally, it is undisputed that Affordable only has Type 2A interconnection with
AT&T Texas,87 and a Type 2A interconnection is defined in the 2007 Agreement as
“[f]acilities which provide a trunk side connection between [Affordable]’s MSC and
a AT&T Texas Wireless Tandem.”88 The 2007 Agreement defines “Mobile Switching
Center” as “[Affordable]’s facilities and related equipment used to route, transport,
and switch Wireless Calls to a from the public switched telephone network.”89 The
2007 Agreement defines “Wireless Tandem” as “a switching system that provides a
concentration and distribution function for originating or terminating traffic between
86
Id. at 6-9.
87
See AT&T Texas’s Motion [Doc. # 42], at 12; Affordable’s Response [Doc. # 45], at
20.
88
2007 Agreement, § 2.1.2.
89
Id., § 1, at p.3.
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wireless MSCs and the landline network and has the software necessary to provide
wireless interconnection services.”90 The 2007 Agreement thus clearly contemplates
that Affordable’s Type 2A interconnection with AT&T Texas would be used to
transport wireless traffic.
The Court concludes that these provisions, taken as a whole, unambiguously
authorize Affordable to provide only wireless communications through his
interconnection agreement with AT&T Texas.
Despite these provisions, Affordable argues that wireline calls to its dial-up ISP
customers are “Wireless Calls” as that term is defined in the 2007 Agreement. The
2007 Agreement defines “Wireless Calls” as “all calls originating from or terminating
to the [Affordable] network.”91 Affordable argues that, because the ISPs are on
Affordable’s network, wireline calls to the ISPs are “Wireless Calls” under the 2007
Agreement. Affordable’s interpretation would render meaningless many other
provisions of the 2007 Agreement establishing that Affordable is only authorized to
transport wireless, that is, CMRS, traffic. The Court construes this provision in
context, as a matter of law, to encompass only those calls that terminate to a wireless
or CMRS end-user. See Valence Operating Co., 164 S.W.3d at 662 (“[C]ourts should
90
Id., § 1, at p. 4.
91
2007 Agreement, § 1, at p. 5.
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examine and consider the entire writing in an effort to harmonize and give effect to
all the provisions of the contract so that none will be rendered meaningless.”).
Affordable argues that “The Reciprocal Compensation for ISP Bound Traffic
and Federal Telecommunications Act Section 251(b)(5) Traffic Amendment” to the
2007 Agreement (“Reciprocal Compensation Amendment”) allows Affordable to
transport traffic to all ISPs and requires AT&T Texas to compensate Affordable for
doing so. The Reciprocal Compensation Amendment states: “The Parties agree to
compensate each other for the transport and termination of ISP-bound Traffic and
Section 251(b)(5) Traffic on a minute of use basis, at $.0007 per minute of use.”92
The Reciprocal Compensation Agreement also provides that:
This Amendment is intended to supercede any and all contract sections,
appendices, attachments, rate schedules, or other portions of the
underlying Interconnection Agreement that set forth rates, terms and
conditions for the terminating compensation for ISP-bound Traffic and
Section 251(b)(5) Traffic exchanged between ILEC and CARRIER. Any
inconsistencies between the provisions of this Amendment and
provisions of the underlying Interconnection Agreement shall be
governed by the provisions of this Amendment.93
Affordable’s argument thus is that it is not limited to providing wireless traffic to
CMRS end users and that it is allowed to provide wireline traffic to its dial-up ISP
customers because otherwise the Reciprocal Compensation Amendment would be
92
Reciprocal Compensation Amendment, § 2.2.2.
93
Id., § 1.5
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read out of the contract.94
The Court is unpersuaded. The Reciprocal Compensation Amendment sets an
FCC-approved rate the parties may charge each other for ISP traffic covered by the
2007 Agreement. The issue dividing the parties is the scope of ISP traffic authorized
under the 2007 Agreement in light of the Reciprocal Compensation Amendment. The
Amendment defines “ISP-bound Traffic” as “ISP-bound traffic lawfully compensable
under the FCC ISP Compensation Order.”95 The FCC ISP Compensation Order held
that ISP-bound traffic was “information access” under 47 U.S.C. § 251(b)(5) and was
excepted from the scope of “telecommunications” subject to reciprocal compensation
under section 251(b)(5).96 The only reference to CMRS carriers in the FCC ISP
Compensation Order was that its holding “does not affect either the application of
[section 251(b)(5)] to LEC-CMRS interconnection or our jurisdiction over LECCMRS interconnection under section 332.”97 The FCC ISP Compensation Order thus
94
See Affordable’s Response [Doc. # 45], at 8.
95
Reciprocal Compensation Amendment, § 1.4. The “FCC ISP Compensation Order”
refers to FCC’s Order on Remand and Report and Order, In the Matter of
Implementation of the Local Competition Provisions in the Telecommunications Act
of 1996, Intercarrier Compensation for ISP-Bound Traffic, FCC 01-131, CC Docket
Nos. 96-98, 99-68 (rel. April 27 , 2001) (“FCC ISP Compensation Order”), remanded
but not vacated in WorldCom, Inc. v. FCC, No. 01.1218 (D.C. Cir. 2002).
96
FCC ISP Compensation Order, ¶ 44.
97
Id., ¶ 47.
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did not address the question of whether a CMRS carrier could transmit wireline calls
to dial-up ISPs. As such, the definition of ISP-bound traffic in the Reciprocal
Compensation Amendment is not persuasive, let alone dispositive, authority
supporting Affordable’s position.
Affordable also argues the Reciprocal Compensation Amendment allows it to
receive AT&T Texas originated calls bound for its dial-up ISP customers, even though
they are not CMRS or wireless customers. AT&T Texas’s position is that “the only
ISP-bound traffic for which [Affordable] can impose reciprocal compensation charges
is ISP-bound traffic that is also CMRS traffic, i.e., traffic routed through his radio
towers.”98 The Court concludes that AT&T Texas’s position best accords with the
parties’ expressed intentions in the 2007 Agreement. The 2007 Agreement, read in
its entirety, only authorizes Affordable to transport wireless CMRS traffic over AT&T
Texas’s facilities. Because the traffic Affordable transports to its dial-up ISP
customers is purely wireline traffic, it is not authorized under the 2007 Agreement.99
Accordingly, Affordable may not charge AT&T Texas for terminating wireline calls
98
AT&T Texas’s Reply [Doc. # 46], at 20.
99
The parties each make various arguments concerning whether under federal
telecommunications law having a two-way CMRS license allows Affordable to route
wireline traffic to its dial-up ISP customers. Because the Court finds that the 2007
Agreement between the parties does not allow Affordable to do so, the Court declines
to reach this broader federal telecommunications law question.
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to Affordable’s ISP customers.
AT&T Texas contends that it is not liable for the $246,000 in termination
charges that Affordable claims.100 As earlier noted, “[a] fundamental principle of
contract law is that when one party to a contract commits a material breach of that
contract, the other party is discharged or excused from any obligation to perform.”
Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994); accord Long
Trusts v. Griffin, 222 S.W.3d 412, 415 (Tex. 2006). AT&T Texas admits, however,
that “[t]erminating charges are owed by AT&T to [Affordable] for Land-to-Mobile
calls that AT&T Texas delivers to [Affordable] and [Affordable] ‘terminates’ to [its]
CMRS customers.”101 Affordable argues that AT&T Texas admitted that 10% of
Affordable’s traffic was CMRS traffic, and therefore AT&T Texas cannot dispute
10% of Affordable’s billings. AT&T Texas disagrees. The Court declines to decide
the amount, if any, owed by AT&T Texas for CMRS traffic.102
3.
AT&T Texas’s Breach of Contract Claim
100
See AT&T Texas’s Motion [Doc. # 42], at 21.
101
Id. at 8.
102
It is noted that AT&T Texas has presented uncontradicted evidence that it has already
paid Affordable $75,157.06 in termination charges, which is well in excess of 10%
of the charges Affordable claims for termination services. Exh. GG to AT&T Texas’s
Reply [Doc. # 46]. Affordable does not dispute receipt of these payments. It is
unclear why AT&T Texas may not apply some of these funds to the termination
charges due. Thus, Affordable has shown no damages in regard to CMRS termination
charges.
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In its Complaint [Doc. # 1], AT&T Texas alleges that Affordable breached the
2007 Agreement by failing to pay amounts due for facilities and services provided
under the 2007 Agreement as discussed above. The elements of a claim for breach of
contract are: (1) a valid contract; (2) the plaintiff performed or tendered performance;
(3) the defendant breached the contract; and (4) the plaintiff was damaged as a result
of the breach. Pegram v. Honeywell, Inc., 361 F.3d 272, 288 (5th Cir. 2004); Taub
v. Houston Pipeline Co., 75 S.W.3d 606, 615 (Tex.App.-Texarkana 2002, pet. denied);
Guzman v. Ugly Duckling Car Sales of Texas, L.L.P., 63 S.W.3d 522, 528
(Tex.App.-San Antonio 2001, pet. denied); Frost Nat’l Bank v. Burge, 29 S.W.3d 580,
593 (Tex.App.-Houston [14th Dist.] 2000, no pet.). It is undisputed that the 2007
Agreement is a valid contract and that AT&T Texas performed by interconnecting
with Affordable. Affordable’s failure to pay for those facilities and services as
required by the Court’s interpretation of the 2007 Agreement constitutes a breach of
the 2007 Agreement. AT&T Texas has claimed damages as set forth in its invoices,
summarized in Lenhart’s Declaration, which Affordable has failed to pay to date.
AT&T Texas is entitled to summary judgment on its breach of contract claim for
unpaid invoices.103
In its Motion for Summary Judgment [Doc. # 42], AT&T Texas also contends
103
The parties will have to determine the precise amounts due on this claim and others
noted elsewhere in the Memorandum and Order.
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that it is “entitled to a summary judgment holding that [Affordable] breached the 2007
Agreement by misusing the interconnection for calls to ISPs.”104 In requesting relief,
AT&T Texas asks the Court to “grant summary judgment that . . . (4) [Affordable] has
breached the contract by misusing the interconnection for land-to-land calls to ISPs
and should be ordered to stop using the interconnection for these calls.”105 Affordable
objects that this claim was never raised in AT&T Texas’s pleadings and that AT&T
Texas therefore cannot seek summary judgment on this claim. Affordable argues that
its breach of the 2007 Agreement by misusing its interconnection with AT&T Texas
to service its dial-up ISP customers is wholly unrelated to AT&T Texas’s breach of
contract claim, which Affordable argues is limited to the claim for unpaid invoices.
Affordable is mistaken. All of AT&T Texas’s factual allegations in the Complaint,
which included allegations that Affordable was misusing its interconnection to
transport wireline traffic to its dial-up ISP customers, are incorporated into AT&T
Texas’s breach of contract cause of action by reference.106 The parties have engaged
in full discovery on the factual matters pertaining to the ISP-misuse theory in
connection with AT&T Texas’s breach of contract claim. AT&T Texas’s breach
104
See AT&T Texas’s Motion [Doc. # 42], at 24.
105
Id. at 25.
106
See Complaint [Doc. # 1], ¶ 4.18 (“AT&T Texas hereby incorporates by reference the
above facts and allegations as if set forth fully herein.”).
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claim therefore is deemed to encompass its theory that Affordable breached the 2007
Agreement by misusing its interconnection to transmit wireline traffic to its dial-up
ISP customers.
The Court’s ruling rejecting Affordable’s counterclaim for reciprocal
compensation under the 2007 Agreement with respect to Affordable’s transport of
wireline traffic to its dial up ISP customers disposes of this claim as well. The 2007
Agreement does not permit Affordable to use its interconnection with AT&T Texas
to transport wireline traffic to its dial up ISP customers. That use constitutes a breach
of the 2007 Agreement.107 AT&T Texas is entitled to summary judgment on this
107
Subsequent to the briefing and argument on the pending motions, AT&T Texas filed
a Motion for Leave to File Supplemental Pleading Under Rule 15(d) [Doc. # 64]
(“Motion to Supplement”). Affordable responded in opposition [Doc. # 67] and
AT&T Texas replied [Doc. # 68]. The Court concludes that AT&T Texas’s Motion
to Supplement should be granted.
AT&T Texas seeks to supplement its Complaint to allege facts that occurred in June
2011 when Affordable allegedly expanded its ISP business by acquiring telephone
numbers previously assigned to Awesome Paging, Inc., a paging carrier AT&T Texas
alleges was also misusing its interconnection with AT&T Texas to serve its dial-up
ISP customers.
Federal Rule of Civil Procedure 15(d) provides:
On motion and reasonable notice, the court may, on just terms, permit
a party to serve a supplemental pleading setting out any transaction,
occurrence, or event that happened after the date of the pleading to be
supplemented. The court may permit supplementation even though the
original pleading is defective in stating a claim or defense. The court
may order that the opposing party plead to the supplemental pleading
(continued...)
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breach of contract claim.
AT&T Texas’s Motion for Summary Judgment further includes a request for
injunctive relief.108
“To obtain permanent injunctive relief, a plaintiff must
demonstrate: ‘(1) that it has suffered an irreparable injury; (2) that remedies available
at law, such as monetary damages, are inadequate to compensate for that injury;
107
(...continued)
within a specified time.
FED. R. CIV. P. 15(d). The Fifth Circuit has indicated that the same factors that shape
a Rule 15(a) inquiry apply to Rule 15(d). See Chemetron Corp. v. Bus. Funds, Inc.,
682 F.2d 1149, 1194 (5th Cir. 1982) (citation omitted), vacated on unrelated grounds
by 460 U.S. 1007 (1983); cf. United States v. Hicks, 283 F.3d 380, 385 (D.C. Cir.
2002) (“[C]ourts often simply apply the principles of Rule 15(c) to supplemental
pleadings”) (citing decisions from Fourth and Seventh Circuits)). These factors
include undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments granted earlier, undue prejudice to the
opposing party, and futility. Chemetron, 682 F.2d at 1194 (citations omitted). Leave
to supplement should not be granted where a plaintiff attempts to present “new and
different cause[s] of action.” Griffin v. Cnty. Sch. Bd. of Prince Edward Cnty., 377
U.S. 218, 226 (1964). However, if he does not, and if no other “substantial reason”
mandates denying leave, the motion should be granted. Chemetron, 682 F.2d at 1194
(citation omitted).
There has been no undue delay, bad faith, dilatory motive, or repeated failure to cure
deficiencies by AT&T Texas. Affordable’s alleged wrongful conduct occurred in
June 2011 and AT&T Texas filed its Motion to Supplement on June 23, 2011. The
proposed Supplemental Complaint alleges no new causes of action but, instead,
merely alleges new facts based on Affordable’s recent conduct in support of AT&T
Texas’s breach of contract action. AT&T Texas’s Motion to Supplement its
Complaint is granted.
108
See AT&T Texas’s Motion [Doc. # 42], at 25 (requesting that the Court order
Affordable to stop using its interconnection with AT&T Texas to route wireline calls
to its dial-up ISP customers).
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(3) that, considering the balance of hardships between the plaintiff and defendant, a
remedy in equity is warranted; and (4) that the public interest would not be disserved
by a permanent injunction.’” ITT Educ. Servs., Inc. v. Arce, 533 F.3d 342, 347 (5th
Cir. 2008) (quoting eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)).
“A plaintiff must allege ‘specific facts’ to support a finding of irreparable injury.” Id.
The Fifth Circuit has also explained that “[p]ermanent injunctions are never lightly
given. They are hedged about with circumspection: to win one, a petitioner must show
a clear threat of continuing illegality portending immediate harmful consequences
irreparable in any other manner.” Posada v. Lamb County, 716 F.2d 1066, 1070 (5th
Cir. 1983) (citing United States v. W.T. Grant Co., 345 U.S. 629 (1953), and Baldwin
Metals Co., Inc. v. Donovan, 642 F.2d 768, 775 & n.17 (5th Cir. 1981)); accord
Ballenger v. Mobil Oil Corp., 138 F. App’x 615, 622 (5th Cir. 2005).
T h e
Court concludes that AT&T Texas is not entitled to a permanent injunction because
AT&T Texas has not demonstrated why monetary damages cannot provide adequate
compensation for the injury caused by Affordable’s wrongdoing. AT&T Texas argues
it has no adequate remedy at law to address Affordable’s continuing breach of the
2007 Agreement because the 2007 Agreement does not directly impose monetary
costs on Affordable for misusing the interconnection to route wireline traffic to its
dial-up ISP customers. AT&T Texas also argues that “[p]roving future lost profits
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from the business lines that [Affordable’s] ISP customers should be purchasing from
AT&T Texas or another local exchange carrier ‘would be considerably more difficult’
and, therefore, injunctive relief is warranted.”109 The Court is unpersuaded. AT&T
Texas has cited the Court to FCC authority suggesting that an “ISP typically
purchases business lines from a LEC, for which [the ISP] pays a flat monthly fee that
allows unlimited incoming calls.”110 AT&T Texas has not shown that, should
Affordable continue to breach the 2007 Agreement by transporting wireline traffic to
its dial-up ISP customers, it would be sufficiently difficult to prove future lost profits.
The Court declines to issue a permanent injunction at this time.
B.
AT&T Texas’s Fraud Claim
In its Reply [Doc. # 46], AT&T Texas indicates that its fraud claim against
Affordable is “unnecessary if AT&T Texas obtains summary judgment on its contract
claim and establishes non-liability for Affordable’s billings” because “the damages
109
See AT&T Texas’s Motion to Supplement [Doc. # 64], ¶ 7 (quoting ICEE
Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 597 (5th Cir. 2003)
(upholding district court’s grant of permanent injunction and noting that “[a]lthough
Distributors could potentially prove past lost profits enabling it to recover some
measure of damages, it would be considerably more difficult for it to prove the
amount of damages owed from J&J and Wal-Mart’s future sale of the tubes.”)).
110
See In the Matter of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, 14 F.C.C.R. 3689, 3690, ¶ 4, 1999 WL 98037 (Rel.
Feb. 26, 1999), vacated on other grounds, Bell Atl. Tel. Co. v. FCC, 206 F.3d 1
(D.C.Cir.2000).
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from the fraud are essentially the same as the contract damages and liability.”111 The
Court has granted summary judgment in favor of AT&T Texas on its contract claims
and has granted summary judgment establishing that AT&T is not liable for the
disputed portion of Affordable’s billings. Accordingly, the Court deems AT&T
Texas’s fraud claim abandoned with prejudice.
C.
AT&T Texas’s Request for Summary Judgment on Affordable’s
Other Counterclaims
AT&T Texas also seeks summary judgment establishing “AT&T’s non-liability
for [Affordable’s] counterclaims.”112 Affordable asserts myriad counterclaims.113
Specifically, Affordable has pleaded counterclaims for (1) Declaratory Judgment,
essentially seeking declarations duplicating the other substantive causes of action;
(2) violations of §§ 201, 202, 251(b)(5), 251(e) and 332(c)(1)(B) of the Telecom Act
and the associated FCC implementing rules; (3) breach of contract; (4) fraud; and
(5) tortious interference.
Declaratory Judgment Counterclaims.–
At oral argument, Affordable
111
See AT&T Texas’s Reply [Doc. # 46], at 22.
112
See AT&T’s Motion [Doc. # 42], at 1.
113
See Affordable’s Response [Doc. # 45], at 3 (“[Affordable] brought a number of
counterclaims. There were five general categories, and four of them had sub-parts.”).
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narrowed its claims. Affordable withdrew its tortious interference claims,114 and
abandoned all its declaratory judgment claims except “the one relating to Affordable
Telecom’s ability to provide service to ESPs.”115 The remaining declaratory judgment
claim thus appears to be Affordable’s request that the Court permit Affordable to
service its dial-up ISP customers under the 2007 Agreement. The Court has already
concluded that the 2007 Agreement does not permit Affordable to provide wireline
service to its dial-up ISP customers. As explained above, Affordable’s request for a
declaration that the 2007 Agreement allows Affordable to provide wireline service,
as opposed to wireless service, to its dial-up ISP customers is denied.
Telecom Act Counterclaims.– Affordable also asserts that AT&T Texas
violated various provisions of the Telecom Act by (1) attempting to charge for AT&Toriginated traffic, i.e., Land-to-Mobile calls; (2) by refusing to set-up a single wireless
tandem to serve the entire Houston LATA; (3) by refusing to pay Affordable
reciprocal compensation for terminating traffic; and (4) by refusing to perform switch
translations/code opening if a carrier that AT&T Texas determines is not a “paging
114
Transcript [Doc. # 62], at 128.
115
Id. at 84. Throughout his briefing and at oral argument, Affordable uses the term
Enhanced Service Providers (“ESPs”), which include Affordable’s dial-up ISP
customers. The Court can discern no material difference between ESPs and ISPs for
purposes of these Motions.
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company” has numbers with a “paging distinction.”116 At oral argument, Affordable’s
counsel recognized that “if the Court were to interpret the Contract to be one by the
parties to intentionally diverge from the standards and the Act, it would be difficult
if not impossible for us to prevail at the FCC and therefore, many of those causes of
action would fall away.”117 This eventuality has now occurred. The Court has already
interpreted the 2007 Agreement to be a voluntarily negotiated contract under 47
U.S.C. § 252(a)(1) that permissibly diverged from the standards in the Telecom Act.118
The Court further has determined that the 2007 Agreement permitted AT&T Texas
to charge for certain AT&T-originated Land-to-Mobile traffic;119 that the 2007
Agreement did not entitle Affordable to rely cost-free on a single wireless tandem that
would serve the entire Houston LATA;120 and that the 2007 Agreement did not require
AT&T Texas to pay Affordable reciprocal compensation for terminating wireline
traffic to Affordable’s dial-up ISP customers.121 Affordable’s counterclaims alleging
violations of the Telecom Act based on these contract provisions therefore are without
116
See Answer [Doc. # 19], ¶¶ 12.3-12.68.
117
Transcript [Doc. # 62], at 87.
118
See Section III.A.1, supra.
119
See id.
120
See id.
121
See Section III.A.2, supra.
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merit; “[u]nder the provision for voluntary negotiations, the parties are free to reach
any agreement, without regard to the duties set forth in § 251.” Coserv Ltd. Liability
Corp. v. Southwestern Bell Tel. Co., 350 F.3d 482, 485 (5th Cir. 2003). AT&T Texas
is entitled to summary judgment, dismissing these counterclaims.
The Court concludes, however, that AT&T Texas is not entitled to summary
judgment on Affordable’s counterclaim that AT&T Texas violated the Telecom Act
by refusing to perform switch translations/code opening if a carrier that AT&T Texas
determines is not a “paging company” has numbers with a “paging distinction.”122
The Court notes that neither party briefed the merits of whether, by requiring
Affordable to change the paging designations on its telephone numbers, AT&T Texas
122
Affordable’s counsel explained this counterclaim at oral argument, stating:
[T]he way things work is a carrier that is a service provider under the
FCC Rules, either a Local Exchange Carrier or a CMRS Provider, is
entitled to get numbers from the national numbering, get telephone
numbers
* * * *
They have specific designations that are used to input into the industry
database. They are classified in certain ways. Some of the Affordable
Telecom numbers had multiple designations, one of which was paging.
What AT&T required Affordable Telecom to do was remove the
paging designation from those numbers even though under Affordable
Telecom’s Licenses, the Radio Licenses, it is authorized expressly to
do paging.
* * * *
So we would contend that’s a violation of 251(e).
Transcript [Doc. # 62], at 87.
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violated the Telecom Act. AT&T Texas merely sought summary judgment on this
counterclaim on the ground that Affordable had not presented any evidence of
damages flowing from this conduct.123 AT&T Texas has presented no legal authority
that evidence of damages is a required element of a claim for violation of the Telecom
Act. In any event, Affordable has provided some evidence that it incurred at least
$15,000 in costs from an outside consultant to meet AT&T Texas’s request to change
the designations.124 AT&T Texas has not met its burden to show there is no genuine
dispute as to any material fact on this counterclaim, and summary judgment in AT&T
Texas’s favor is denied.
Breach of Contract Counterclaims.–
Affordable also asserts three
counterclaims alleging that AT&T Texas breached the 2007 Agreement. First,
Affordable alleges that AT&T Texas breached the 2007 Agreement by sending
Affordable bills for facilities and trunks. As discussed above, the Court holds that
123
See AT&T Texas’s Reply [Doc. # 46], at 22 (“[Affordable] also asserts that AT&T
Texas has not sought summary judgment on all of [Affordable]’s counterclaims . . .
[Affordable], however, has provided no evidence to support any damages associated
with these claims other than his $246,666 invoices. . . . Therefore, [Affordable]’s
other claims have no evidence to support them. AT&T Texas raised this in its Motion
as the basis for establishing non-liability on all of [Affordable]’s counterclaim.”
(citations omitted)).
124
See GVNW Consulting Invoices [Doc. # 45-5], at 3-4 (Exhs. 25 & 26 to Deposition
of Courtney Spears [Doc. # 45-2]).
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AT&T Texas’s billings were proper under the 2007 Agreement.125 Accordingly,
AT&T Texas is entitled to summary judgment dismissing this counterclaim.
Second, Affordable alleges that AT&T Texas has breached the 2007 Agreement
by refusing to pay Affordable reciprocal compensation for AT&T-originated traffic
that Affordable terminated. As discussed above, the Court holds that under the 2007
Agreement, Affordable is only entitled to compensation for terminating AT&T Texas
originated calls to his CMRS, i.e., wireless, customers.126 AT&T Texas has paid more
than Affordable concedes is due under the Court’s interpretation of the 2007
Agreement, and thus Affordable has not shown any damages on this breach of
contract claim127 and it is dismissed.
Affordable finally alleges that AT&T Texas breached the 2007 Agreement by
refusing to perform Switch Translations/Code Opening unless Affordable changed the
designation of its type of numbers from “paging” to a designation that AT&T Texas
prefers. Neither party briefed the merits of the issue of whether AT&T Texas violated
the 2007 Agreement by requiring Affordable to change the paging designations on his
telephone numbers.
Rather, AT&T Texas sought summary judgment on this
125
See Section III.A.1, supra.
126
See Section III.A.2, supra.
127
See note 102, supra.
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counterclaim solely because Affordable had not presented any evidence of damages
associated with this conduct.128 As noted above, Affordable has presented evidence
of expenditures associated with making these requested changes,129 and summary
judgment on the ground asserted by AT&T Texas is denied.130
More fundamentally, however, neither party has pointed the Court to a contract
provision directly addressing this issue.131 The Court therefore questions whether this
counterclaim is viable, but does not reach that issue.
Fraud Counterclaims.– Finally, Affordable asserts two counterclaims for
fraud. First, Affordable alleges that AT&T Texas made misrepresentations regarding
its intent to correct certain billing errors, namely, that AT&T Texas represented that
it would stop assessing charges related to facilities and trunks in the San Antonio
LATA and that AT&T Texas would issue credits to that account. At oral argument,
counsel for Affordable indicated that AT&T Texas had represented that these billing
errors had been fixed, that Affordable was trying to verify the status of these billings.
128
See AT&T Texas’s Reply [Doc. # 46], at 22.
129
See note 124, supra.
130
To expedite final resolution of this case, AT&T Texas may choose to withdraw its
opposition to this claim and other unresolved counterclaims Affordable asserts.
131
See Transcript [Doc. # 62], at 88 (Affordable’s counsel noting “[a]nd then there is the
switch translations issue. We put it as part of the breach of Contract, but frankly,
we’ve had a really hard time finding any place in the Contract that [it’s] addressed”).
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Affordable’s counsel stated that if AT&T Texas had fixed the problem, then this fraud
claim would be dropped.132 The Court declines to rule on this counterclaim, as it
appears moot.
Second, Affordable alleges that AT&T Texas representatives committed fraud
in 2004, when Affordable initially sought to interconnect with AT&T Texas under its
one-way CMRS license.133
Specifically, Affordable alleges that AT&T Texas
representatives Jack Cutting and Veronica Wyant represented to Affordable in March
2004 that unless trunks were established to two wireless tandems in the Houston
LATA and to wireless tandems in Huntsville and Nacogdoches, calls from end-users
in Huntsville and Nacogdoches addressed to Affordable’s customers would “not
complete.” Affordable alleges that these representations were materially false.
Affordable alleges that it relied on this representation and therefore established trunks
to multiple wireless tandems in the Houston LATA.134 At oral argument, Affordable
indicated that this fraud claim was “largely defensive in nature” in that “under
[Affordable’s] interpretation of the Contract, Affordable Telecom does not owe for
the billings . . . [but] even if we do, we built [the network] this way because [AT&T
132
Id. at 129.
133
See Section I.B, supra (explaining prior dealings between the parties).
134
See Affordable’s Answer [Doc. # 19], ¶¶ 11.42-11.45.
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Texas] told us we had to.”135
“A plaintiff seeking to prevail on a fraud claim must prove that (1) the
defendant made a material misrepresentation; (2) the defendant knew the
representation was false or made the representation recklessly without any knowledge
of its truth; (3) the defendant made the representation with the intent that the other
party would act on that representation or intended to induce the party’s reliance on the
representation; and (4) the plaintiff suffered an injury by actively and justifiably
relying on that representation.” Exxon Corp. v. Emerald Oil & Gas Co., L.C., __
S.W.3d __, 2011 WL 1226100, at *18 (Tex. Apr. 1, 2011) (citing DeSantis v.
Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990), and Trenholm v. Ratcliff, 646
S.W.2d 927, 930 (Tex. 1983)). “[J]ustifiable reliance comprises two elements: (1) the
plaintiff must in fact rely on the information; and (2) the reliance must be reasonable.”
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 501-02 (5th Cir. 2000) (citing
Scottish Heritable Trust PLC v. Peat Marwick Main & Co., 81 F.3d 606, 615 (5th Cir.
1996)). “[A] fraud claim can be negated where a merger clause evinces a party’s clear
and unequivocal expression of intent to disclaim reliance on specific representations.”
Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 571 (5th Cir. 2003) (citing
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179 (Tex. 1997)); see also
135
See Transcript [Doc. # 62], at 131.
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U.S. Quest Ltd. v. Kimmons, 228 F.3d 399, 403 (5th Cir. 2000) (“When experienced
executives represented by counsel voluntarily sign a contract whose terms they know,
they should not be allowed to claim fraud in any earlier oral statement inconsistent
with a specific contract provision.” (citation omitted)).
The 2007 Agreement contains a merger clause which states:
This Agreement together with its appendices and exhibits constitutes the
entire agreement between the Parties and supersedes all prior
discussions, representations or oral understandings reached between the
Parties. Appendices and exhibits referred to herein are deemed attached
hereto and incorporated by reference. Neither Party shall be bound by
any amendment, modification or additional terms unless it is reduced to
writing signed by an authorized representative of the Party sought to be
bound.136
The merger clause makes clear that the terms of the 2007 Agreement supersede “all
prior discussions, representations or oral understandings reached between the Parties.”
Moreover, the terms of the 2007 Agreement make clear that “[Affordable] may
interconnect with AT&T Texas’s network at any technically feasible point,”137 that
“the locations listed in Appendix DCO constitute technically feasible points of
interconnection for [Affordable] to pass traffic to AT&T Texas,”138 and that
136
2007 Agreement, § 35.
137
Id., § 2.2.1.1.
138
Id. Appendix DCO lists nine AT&T Texas tandems in the Houston LATA, which
tandems, according to the 2007 Agreement, constitute the “technically feasible
(continued...)
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“[Affordable] agrees to interconnect to at least one AT&T Texas facility in each
LATA in which it desires to pass traffic to AT&T Texas.”139 These terms explain how
Affordable could have chosen to set up its interconnection in the Houston LATA and
supersede any 2004 statements by AT&T representatives. Affordable’s fraud claim
based on the 2004 statements is defeated by the 2007 Agreement’s merger clause.
AT&T Texas is entitled to summary judgment on Affordable’s fraud counterclaim
IV.
AFFORDABLE’S MOTION
Affordable seeks summary judgment (1) denying AT&T Texas’s requests for
Declaratory Judgment in ¶ 4.5 of the Complaint; (2) denying AT&T Texas’s fraud
claim in ¶ 4.15 of the Complaint; (3) denying AT&T Texas’s claim in ¶ 4.11 of the
Complaint that Affordable violated the Telecom Act ; (4) denying AT&T Texas’s
quantum meruit claim in ¶ 4.23 of the Complaint; (5) and granting Affordable’s
Counterclaims for Declaratory Judgment found in ¶¶ 12.2 B-12.2.E of the Answer.140
AT&T Texas has withdrawn its claims for declaratory judgment, violations of the
138
(...continued)
points” where Affordable could have chosen to interconnect. See Appendix DCO to
2007 Agreement.
139
Id., § 2.2.2.
140
Affordable’s Motion for Partial Summary Judgment [Doc. # 43], at 3-5.
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Telecom Act, and quantum meruit.141 Additionally, as stated above, the Court has
deemed AT&T Texas’s fraud claim as abandoned with prejudice.142 The Court
declines to address whether Affordable is entitled to summary judgment on claims that
have been withdrawn or abandoned by AT&T Texas.
Affordable seeks declarations that:
B. [S]ince Affordable Telecom does provide CMRS service that
includes telephone exchange and/or exchange access service, Affordable
Telecom is also allowed to provide telecommunications service to other
customers, Internet Access providers and other information/enhanced
service providers, and is allowed to do so “through” the interconnection
arrangement with AT&T Texas.
C. [S]ince Affordable Telecom does provide CMRS service that
includes telephone exchange and/or exchange access service, Affordable
Telecom is also allowed to directly provide information/enhanced
services, and is allowed to do so “through” the interconnection
arrangement with AT&T Texas.
D. [S]ince Affordable Telecom does provide CMRS service that
includes telephone exchange and/or exchange access service, Affordable
Telecom could – if it chose to do so – provide Internet Access service to
customers “through” the interconnection arrangement with AT&T Texas.
E. Based on the contract terms, AT&T Texas owes intercarrier
compensation at the FCC-prescribed rate of $0.0007 per minute of use
to Affordable Telecom for all § 251(b)(5) traffic that originates on
141
See AT&T Texas’s Response to Affordable’s Motion for Partial Summary Judgment
[Doc. # 44], at 2 (withdrawing claims for quantum meruit and violations of the
Telecom Act); AT&T Texas’s Reply [Doc. # 46], at 22 (withdrawing inter alia claims
for declaratory judgment, violations of the Telecom Act and quantum meruit).
142
See Section III.B, supra.
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AT&T Texas’ network and is delivered to Affordable Telecom for
termination to the called party serviced by a telephone number assigned
to Affordable Telecom from the National Numbering Administrator, or
ported to Affordable Telecom under the national porting rules.
Specifically, but without limitation, AT&T Texas owes Affordable
Telecom intercarrier compensation for the “ISP-bound” traffic that
Affordable Telecom terminates to an ISP.143
At oral argument, Affordable abandoned all of its declaratory judgment claims except
“the one relating to Affordable Telecom’s ability to provide service to ESPs.”144 It is
not clear exactly which of these counterclaims Affordable intended to abandon at oral
argument since the declarations requested paragraphs 12.2B-12.2.E all relate to
Affordable’s ability to provide service to ESPs or ISPs. Affordable, however, is not
entitled to summary judgment on any of the requested declarations.
The Court has already concluded that the 2007 Agreement does not permit
Affordable to provide wireline service to its dial-up ISP or ESP customers.
Accordingly, the Court has concluded that the 2007 Agreement does not require
AT&T Texas to pay reciprocal compensation to Affordable for terminating wireline
traffic to its dial-up ISP customers. For the reasons stated above, any request for a
declaration that the 2007 Agreement allows Affordable to provide wireline service,
143
Affordable’s Motion for Partial Summary Judgment [Doc. # 43], at 4-5 (citing
Answer [Doc. # 19], ¶¶ 12.2.B-12.2.E).
144
Transcript [Doc. # 62], at 84. At oral argument, Affordable’s counsel explained that
ISPs are a subclass of ESPs.
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as opposed to wireless service, to its dial-up ISP customers is denied. Summary
judgment on Affordable’s declaratory judgment counterclaims is denied.
V.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that AT&T Texas’s Motion for Summary Judgment [Doc. # 42]
is granted in substantial part and denied in part. It is further
ORDERED that Affordable’s Motion for Partial Summary Judgment [Doc.
# 43] is denied. It is further
ORDERED that Affordable’s Motion to Strike New Evidence and Arguments
Raised in Plaintiff’s Reply, or Alternatively Motion for Leave to File Sur-reply [Doc.
# 49] is granted in part and denied in part. It is further
ORDERED that AT&T Texas’s Motion to Supplement [Doc. # 64] is granted.
It is further
ORDERED that the parties must make every good faith effort to immediately
negotiate and resolve the open claims and outstanding monetary issues (including
providing updated figures) in this case so final judgment may be entered promptly.
The parties must appear for a conference on July 28, 2011, at 10:15 a.m. in
Courtroom 9F of the United States Courthouse at 515 Rusk, Houston, Texas., to
discuss entry of a complete or partial final judgment.
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SIGNED at Houston, Texas, this 22nd day of July, 2011.
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