Core Commc'ns, Inc. v. Verizon Maryland, Inc.
| Decision Date | 10 August 2012 |
| Docket Number | Civil No. 1:02-cv-3180-JFM,Civil No. 1:08-cv-503-JFM |
| Parties | CORE COMMUNICATIONS, INC., Plaintiff, v. VERIZON MARYLAND, INC., Defendant. CORE COMMUNICATIONS, INC., Plaintiff, v. VERIZON MARYLAND, INC., Defendant. |
| Court | U.S. District Court — District of Maryland |
These two actions involve a dispute between Core Communications, Inc. and Verizon Maryland, Inc. under an Interconnection Agreement ("ICA") and the federal Telecommunications Act. Civil No. 02-3180 was filed by Core against Verizon. In that action, Core sought to recover monetary damages for Verizon's delay in providing telecommunication interconnection services to Core. Civil No. 02-3180 was administratively closed for many years pending resolution of a proceeding Core instituted against Verizon before the Maryland Public Service Commission ("PSC"). Civil No. 08-503 is a declaratory judgment action filed by Verizon challenging the PSC's ruling in Core's favor. On June 30, 2009, in an opinion issued inCivil No. 08-503, I granted summary judgment in favor of Verizon and vacated the PSC's order.1 The Fourth Circuit reversed my ruling. Upon the remand of Civil No. 08-503, Civil No. 02-3180 was reopened and consolidated with Civil No. 08-503.
Core's claims for fraudulent concealment and unfair competition remain before this court, as does a damages assessment for Core's breach of contract claim.2 The parties have filed cross-motions for summary judgment. I grant Verizon's motion—and deny Core's motion—as to the claims for fraudulent concealment and unfair competition. I deny Verizon's motion as to breach of contract damages and hold that Core's damages are not limited to those provided for in section 26.1 of the ICA.
My prior opinion and the opinion of the Fourth Circuit set forth the factual background of the case. See Verizon Maryland, Inc. v. Core Commc'ns, Inc., 631 F. Supp. 2d 690 (D. Md. 2009); Verizon Maryland, Inc. v. Core Commc'ns, Inc., 405 F. App'x 706, 714 (4th Cir. 2010). I will therefore only briefly summarize the facts pertinent to the pending motions.
Core was beginning to enter the local Baltimore telephone market in 1999. At that time Verizon was the incumbent local exchange carrier ("ILEC") in the market. The Telecommunications Act of 1996 required Verizon to "interconnect"—that is, to make its existing facilities available—to competing local exchange carriers ("CLECs"), such as Core. To that end, Verizon was required under federal law to enter into an interconnection agreement ("ICA") with Core. After the ICA was entered into, Core and Verizon met on August 11, 1999 to begin the interconnection process. Core requested interconnection at its Wire Center on the tenth floor of the Court Square Building in Baltimore, a so-called "carrier hotel" at which many carriers, including Verizon, have facilities.
At the August 11 meeting Core proposed interconnection using an existing OC-12 Loop Ring and an OC-12 multiplexer. Use of this equipment would make it unnecessary for Verizon to build new facilities. Verizon agreed that use of the OC-12 Loop Ring would be technically feasible. Core asked that September 18, 1999 be the interconnection activation date.
On August 15, 1999, Verizon informed Core that the OC-12 multiplexer that Core proposed Verizon use to interconnect was assigned to another Verizon customer. In fact, that other customer was Core. Verizon did not disclose that fact to Core, and Core never mentioned it to Verizon.
Verizon interconnected with Core on December 23, 1999, slightly more than three months after the September 18, 1999 activation date Core originally proposed.
A court may properly award summary judgment when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). A material fact is one that "might affect the outcome of the suit." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine dispute about a material fact exists only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. When reviewing a motion for summary judgment, the court must look at the facts and inferences drawn therefrom in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 373, 378 (2007).
While the burden is on the moving party to demonstrate the absence of any genuine issue of material fact, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970), "[a] mere scintilla of proof . . . will not suffice to prevent summary judgment." Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003). The non-moving party may not merely rest upon allegations or denials in her pleadings but must, by affidavit or other evidentiary showing, set out specific facts showing a genuine issue remains for trial. Fed. R. Civ. P. 56(e)(2). A court should enter summary judgment where a nonparty fails to make a sufficient showing to establish the elements essential to the party's claim and on which the party will bear the burden of proof at trial. See Celotex,477 U.S. at 322. "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
If there is insufficient evidence for a reasonable jury to render a verdict in favor of the non-moving party, there is no genuine issue of material fact, and summary judgment may be granted. See Anderson, 477 U.S. at 248. The District of Maryland has held that "a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences." Shin v. Shalala, 166 F. Supp. 2d 373, 375 (D. Md. 2001). Summary judgment is inappropriate, however, if there clearly exist factual issues "that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 447 U.S. at 250; see also JKC Holding Co., LLC v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
As indicated above, Core asserts claims for fraudulent concealment and unfair competition. Before addressing the merits of those claims, I will first discuss Verizon's two preliminary arguments: (1) that these tort claims are barred by the ICA's exculpatory provision and (2) that this is a pure breach of contract action barring Core from punitive damages.
The ICA includes an exculpatory provision,3 which Verizon argues bars Core from raising a tort claim and recovering punitive damages. I disagree.
The general rule in Maryland is that "[i]n the absence of legislation to the contrary, exculpatory clauses are generally valid, and that the public policy of freedom of contract is best served by enforcing the provisions of the clause." Wolf v. Ford, 644 A.2d 522, 525 (Md. 1994); see Adloo v. H.T. Brown Real Estate, Inc., 686 A.2d 298, 301 (Md. 1996) () Maryland courts have recognized three exceptions, however, where a contract's exculpatory provision is unenforceable: (1) in the event of intentional or grossly negligent conduct; (2) when the contract is the "product of grossly unequal bargaining power"; or (3) in "transactions affecting the public interest." Wolf, 644 A.2d at 526.
The first two exceptions are inapplicable. First, Core has put forth no evidence to show that Verizon intended to breach the ICA or breached the ICA through grossly negligent conduct. Second, Core voluntarily opted-in to an existing, PSC-approved ICA between Verizon and another CLEC and therefore has no basis for a claim of negotiating power imbalance. Rather than negotiate a new agreement with Verizon, Core decided to adopt the terms of Verizon's (then Bell Atlantic's) agreement with American Communication Services of Maryland, Inc. If Coredisapproved of the exculpatory clause in the existing agreement, it could have negotiated its own agreement with Verizon, or at the very least negotiated to remove or alter the clause.
The third exception, a broach public policy exception, applies when there are "exculpatory agreements in transactions affecting the public interest." Id. Although recognizing "general reluctance to invoke the nebulous public interest to disturb private contracts," the Maryland Court of Appeals has stated that a contract for the performance of a public service obligation, such as providing public utilities, is a transaction affecting the public interest. Id. The relationship between Core and Verizon, formed pursuant to the policies and purposes behind the Telecommunications Act, supports application of the public interest exception.
The Telecommunications Act promotes competition to secure lower prices and higher quality services for telecommunication consumers. The Act sought to replace an infrastructure of exclusive franchises with a competitive marketplace for local telephone services. To that end, the Act required ILECs to interconnect with CLECs, to make existing facilities and networks available to CLECs so CLECs' customers could receive calls from, and place calls to, the ILECs' customers. See Verizon Maryland, Inc. v. Pub. Serv. Comm'n of Maryland, 535 U.S. 635, 638 (2002). Core and Verizon entered into an agreement pursuant to the Act. While Core is not itself a "consumer" in the conventional sense, it furthers the interest of private consumers by interconnecting with Verizon and increasing competition in the market. The agreement was therefore patently a "transaction...
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