City of Glendale v. Marcus Cable Assocs., LLC
| Decision Date | 01 December 2014 |
| Docket Number | B246697 |
| Citation | 180 Cal.Rptr.3d 726,231 Cal.App.4th 1359 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CITY OF GLENDALE, Plaintiff, Cross-defendant and Appellant, v. MARCUS CABLE ASSOCIATES, LLC, Defendant, Cross-complainant and Appellant. |
Rutan & Tucker, William M. Marticorena, Jeffrey T. Melching, Michelle D. Molko, Costa Mesa, for Plaintiff, Cross-defendant and Appellant.
Coblentz Patch Duffy & Bass, Richard R. Patch, Ann E. Johnston, San Francisco, Allison L. Ehlert for Defendant, Cross-complainant and Appellant.
Defendant, appellant, and cross-respondent Marcus Cable Associates LLC, doing business as Charter Communications, Inc. (Charter), appeals from orders granting summary adjudication in favor of plaintiff, respondent, and cross-appellant City of Glendale (Glendale), and Glendale appeals from an order granting summary adjudication in favor of Charter and from certain portions of a judgment in favor of Charter entered after trial. The disputes arise out of a cable television services system operated by Charter within Glendale and the free public, educational, and government-affairs (PEG) requirements in connection with such services.
We hold that federal law precluded Charter from obtaining a declaration of a right of offset against future franchise payments to Glendale for past overpayments of PEG fees to Glendale; Glendale did not breach any obligation in connection with its refusal to approve Charter's request to realign channel numbers for PEG programming that was broadcast on Charter's cable television system in Glendale; Charter had no further obligation to provide free video programming and cable modem services to Glendale; the trial court did not err in concluding that Charter had not conveyed to Glendale a permanent right to possess or use the fiber capacity for government intranet communications—an institutional network or (I-Net)1 —and Charter established that Glendale improperly and contrary to law used PEG fees. Thus, we affirm the judgment.
Glendale filed a complaint and request for a temporary restraining order to prevent Charter from realigning Glendale's PEG channel numbers. Charter answered and filed a cross-complaint. In the operative third amended cross-complaint, Charter sought declarations that it had no obligation to provide Glendale with free video programming services and free cable modem services or with free I-Net services; recovery of possession and control of the I-Net and damages for wrongful possession and detention of the I-Net; a declaration that Charter had the right to realign Glendale's PEG channels; a declaration that Glendale was unlawfully using PEG fees; and a declaration that Charter had a right to offset past PEG fee overpayments against future franchise fee payments.
Glendale filed a motion for summary judgment or summary adjudication on its complaint, and the parties filed cross-motions for summary adjudication on Charter's operative cross-complaint. Following briefing and a hearing, the trial court issued a minute order adopting its written tentative ruling on the parties' respective motions as the final ruling of the court, as amended by the text of the minute order. The facts relevant to the trial court's summary adjudication rulings are set forth below.2
In December 2007, Charter was granted a state franchise that became effective in January 2008. Glendale established a franchise fee for Charter of 5 percent of Charter's annual gross revenues and a PEG fee of 2 two percent of Charter's annual gross revenues, for a total annual fee obligation of 7 percent of Charter's annual gross revenues. Charter collected the franchise and PEG fees from its subscribers and included those fees as separate line items on its subscribers' bills.
Charter sought a declaration in its fourth cause of action that Glendale improperly used the fees it collected for PEG operating costs resulting in an overpayment and a declaration in its fifth cause of action that Charter was entitled to deduct its PEG fee overpayments from future franchise fee payments. The trial court denied Charter's motion for summary adjudication as to whether Glendale improperly used the PEG fees, determining that there were triable issues of fact. The trial court also ruled on the cross-motions for summary adjudication that as a result of federal law, Charter was not entitled to a declaration that it could offset past overpayments of PEG fees against future franchise payments to Glendale.
In 2009, Charter notified Glendale of a planned alteration of the location of Glendale's PEG channels as follows: (a) primary government access channel 6 moving to channel 3; (b) educational channel 15 moving to channel 95; (c) secondary government access channel 16 moving to channel 97; and (d) additional government access channel 21 moving to channel 32. Glendale refused to agree to the proposed channel realignment.
Charter claimed in its third cause of action that Glendale had breached an implied covenant of reasonableness by refusing to approve the channel realignment. The trial court granted Glendale's motion for summary adjudication, ruling that state law gave Glendale "absolute discretion" in determining whether or not to agree to an operator's request for a reassignment of PEG channels.
In January 1995, the predecessor of Charter entered into a local franchise agreement with Glendale (Glendale franchise) under which Charter's predecessor was granted authority to construct and operate a cable television system within Glendale. In October 1995, Glendale approved the transfer of the Glendale franchise to Charter. The Glendale franchise was for a 10-year term that expired in 2005.
Paragraph 12 of the Glendale franchise required Charter to provide Glendale with free cable services to public buildings, including cable drops for residential cable to specified buildings and facilities and upstream capacity from the specified buildings and facilities "to allow live broadcasting and rebroadcasting from said sites and facilities." Paragraph 14(c) of the Glendale franchise also required Charter to provide Glendale with an I-Net that would connect certain specified public buildings to "the activated return path of the cable television system" so as to "allow simultaneous insertion of five (5) audio/video/data programming sources into the return path from each designated location, the transmission of said programming to [any of the specified] building facilit[ies] ..., the transmission of said programming to the headend and the simultaneous retransmission of said programming over the Residential Network upon completion of construction."
In or about 1999, a dispute arose between Charter and Glendale concerning a change in the corporate control of Charter's parent entity and certain franchise compliance issues. In September 1999, Charter and Glendale entered into a settlement and transfer agreement (settlement agreement) that resolved the corporate control and franchise compliance disputes and authorized Charter to continue to provide cable services in Glendale following the change in corporate control.
Paragraph 10 of the settlement agreement stated that Charter must provide or cause to be provided "free High-Speed Internet Access Service installation, modem and monthly service ... on a stand-alone or network basis ... to [specified public] buildings...." Paragraph 12 of the settlement agreement provided that Charter was required, inter alia, to "complete and activate Government and Institutional [video] drops" at specified public buildings, and to "complete and activate upstream and downstream institutional network ... connections by way of fiber optic cable" to certain public buildings. Charter provided the upstream and downstream network functions required under paragraph 12 of the settlement agreement by delivering capacity on fiber optic strands that are contained in the fiber bundle that Charter used to provide residential services. Paragraph 11 of the settlement agreement provided, in part, "[Charter's] completion of the cable connections at the [specified] public, governmental and school locations ... shall be deemed compliance ... with the Franchise requirements to connect public, governmental and school buildings as required by Section 12 and Section 14(c) of the Franchise." Paragraph 6 of the settlement agreement provided that if Charter violated the settlement agreement, it "shall be deemed to be a violation" of the Glendale franchise, and Glendale would be authorized to invoke the liquidated damages provision of the franchise agreement for any such violation.
Charter and Glendale had discussions about the terms and conditions under which the Glendale franchise would be renewed at the end of its term, but no agreement was reached by the parties for the renewal of the Glendale franchise. Charter applied for and was granted a state franchise pursuant to the Digital Infrastructure and Video Competition Act of 2006 (the State Cable Act)3 on December 13, 2007, effective January 2, 2008. Charter's service area under the state franchise included Glendale. As of January 2, 2008, the Glendale franchise was replaced by the state franchise. The stated term of the Glendale franchise had expired at the time the state franchise was issued.
In connection with the present dispute, Glendale and Charter disagreed as to whether (i) Charter was obligated to provide Glendale with free use of the I-Net in perpetuity; (ii) Glendale possessed an ownership interest in the I-Net or should return possession and control of the I-Net to Charter; (iii) Glendale was obligated to compensate Charter for past use of the I-Net; and (iv) Charter was obligated under the settlement agreement to provide certain public buildings with cable modem service...
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