Coretel Va., LLC v. Verizon Va., LLC

• Decision Date: 13 November 2015
• Docket Number: No. 15–1008.,15–1008.
• Parties: CORETEL VIRGINIA, LLC, Plaintiff–Appellant, v. VERIZON VIRGINIA, LLC; Verizon South, Inc.; MCIMetro Access Transmission Services, LLC; MCI Communications Services, Inc.; Verizon Business Global LLC; Bell Atlantic Communications, Inc., d/b/a Verizon Long Distance, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

808 F.3d 978

CORETEL VIRGINIA, LLC, Plaintiff–Appellant,

v.VERIZON VIRGINIA, LLC; Verizon South, Inc.; MCIMetro Access Transmission Services, LLC; MCI Communications Services, Inc.; Verizon Business Global LLC; Bell Atlantic Communications, Inc., d/b/a Verizon Long Distance, Defendants–Appellees.

No. 15–1008.

United States Court of Appeals, Fourth Circuit.

Argued: Sept. 16, 2015.

Decided: Nov. 13, 2015.

ARGUED:Edward Jay Tolchin, Offit Kurman, P.A., Tysons Corner, Virginia, for Appellant. Scott H. Angstreich, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Appellees. ON BRIEF:Eduardo F. Bruera, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Appellees.

Before WILKINSON, NIEMEYER, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Judge WILKINSON and Judge NIEMEYER joined.

DUNCAN, Circuit Judge:

CoreTel Virginia, LLC ("CoreTel"), a telecommunications company, has entered into interconnection agreements with Verizon Virginia, LLC and Verizon South, Inc. (collectively "Verizon") in accordance with the Telecommunications Act of 1996, Pub. L. No. 104–104, 110 Stat. 56 (codified at 47 U.S.C. § 151 et seq. ). In this second appeal arising out of a disagreement between CoreTel and Verizon over their respective obligations under those interconnection agreements, CoreTel disputes the district court's determination that it owes Verizon $227,974.22 for the use of Verizon's telecommunications facilities and $138,724.47 in late-payment fees. For the reasons that follow, we affirm.

I.

The Telecommunications Act of 1996 (the "Act") provides the context for this dispute between CoreTel and Verizon. As we explained more fully in our first opinion, the Act requires incumbent local exchange carriers such as Verizon to allow competitive local exchange carriers such as CoreTel to connect with end users over the incumbent's network. See CoreTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364, 366–68 (4th Cir.2014) ("CoreTel I "). Using the procedures set out in section 252 of the Act, 47 U.S.C. § 252, carriers negotiate private agreements with each other that establish the rates and terms under which their networks will be interconnected. This case involves two such interconnection agreements: one between CoreTel and Verizon Virginia, and one between CoreTel and Verizon South (the "ICAs").¹

The ICAs govern, among other aspects of interconnection, CoreTel's use of Verizon's physical telecommunications facilities. In CoreTel I, we addressed the parties' dispute over what rates CoreTel must pay to use Verizon's facilities. See 752 F.3d at 370–72. Verizon took the position that it was entitled to charge the rates set out in its tariffs filed with state and federal regulatory agencies, and billed CoreTel accordingly. CoreTel believed that the ICAs entitled it to purchase access to Verizon facilities at a lower "total element long-run incremental cost," or "TELRIC" rate.²

CoreTel declined to pay not only the amounts set out in Verizon's tariff-based bills, but also the TELRIC-based amounts CoreTel contended should have been billed.

Verizon sued for breach of contract, bringing two claims associated with CoreTel's refusal to pay its tariff-based bills. First, Verizon sought a declaratory judgment that, if CoreTel failed to pay, Verizon was entitled to terminate CoreTel's service. Second, Verizon sought damages associated with CoreTel's breach of the ICAs.

In CoreTel I, we held that Verizon should have billed CoreTel for facilities at TELRIC rather than tariff rates, and that therefore "CoreTel was entitled to summary judgment in its favor on ... Verizon's claim for declaratory relief relating to Verizon's facilities charges." 752 F.3d at 372. We did not, however, resolve Verizon's claim for damages associated with CoreTel's breach of the ICAs. Rather, we remanded that claim so that the district court could apply the proper TELRIC rates to calculate what CoreTel owes Verizon for use of Verizon's facilities. Id.

On remand, the district court held a bench trial, during which Verizon presented the tariff-based monthly bills it had issued to CoreTel and the "pricing attachments" to the ICAs. The monthly bills detail (1) what facilities Verizon provided to CoreTel; (2) whether the facility was provided by Verizon Virginia or Verizon South and, if split between those two, the percentage of the facility in each company's service area; and (3) for transport facilities billed by the mile, the number of transport miles provided. The ICAs' pricing attachments set out the TELRIC rates associated with each type of facility. Pricing is the only term on which the Verizon Virginia ICA and the Verizon South ICA differ; the ICAs are otherwise identical in all relevant respects.

From that evidence, Verizon developed a summary spreadsheet containing an entry for every facility it provided to CoreTel with the specific amount owed for each at TELRIC rates. J.A. 865–99. The entries, in total, reflected debts of $162,871.70 for Verizon Virginia facilities and $65,102.52 for Verizon South facilities, for a total of $227,974.22 in damages.

Verizon also contended that it was entitled to late-payment fees of 1.5% per month on the facilities charges under the ICAs. To calculate the amount, Verizon presented another summary spreadsheet detailing the total unpaid facilities charges accrued (i.e., the principal) for each month and the total late fees associated with those unpaid facilities charges. J.A. 900–01. The late fees totaled $131,885.25.

CoreTel raised numerous objections to Verizon's proposed damages calculation, each of which the district court rejected in entering judgment in favor of Verizon for the full amount it sought—$227,974.22 in facilities charges and $138,724.47 in late fees.³ J.A. 451. This appeal followed.

II.

Under Virginia law,⁴ "[t]he elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation." Ramos v. Wells Fargo Bank, NA, 770 S.E.2d 491, 493 (Va.2015) (citation omitted). CoreTel has never disputed that the ICAs are valid contracts that require it to pay for its use of Verizon's facilities, that it has in fact used Verizon facilities without paying for that use, or that its failure to pay has injured Verizon.

The sole question in this appeal is whether the district court properly calculated Verizon's damages for CoreTel's breach as we instructed. CoreTel argues (1) that the district court violated our mandate in CoreTel I by awarding as damages any TELRIC-based facilities charges at all; (2) that even if Verizon can recover such facilities charges, the district court made several errors in calculating the total amount owed; and (3) that the district court further erred in calculating the late fees CoreTel owes under the ICAs. In addressing CoreTel's arguments, we review the district court's factual findings for clear error and its conclusions of law de novo. See Helton v. AT & T Inc., 709 F.3d 343, 350 (4th Cir.2013).

A.

As we clarify during our discussion, several of CoreTel's arguments suffer from the same underlying flaw: a misperception of the mandate rule. The mandate rule "is merely a specific application of the law of the case doctrine." United States v. Pileggi, 703 F.3d 675, 679 (4th Cir.2013) (citation omitted). It "prohibits lower courts, with limited exceptions, from considering questions that the mandate of a higher court has laid to rest." Moore v. Bennette, 517 F.3d 717, 727 (4th Cir.2008) (citation omitted).

CoreTel appears to believe that our opinion in CoreTel I froze not only the law of the case but also all the underlying facts. Our remand order in CoreTel I, however, contemplated that the district court would conduct additional fact-finding to determine what CoreTel owes Verizon for facilities at TELRIC rates. The only matter our mandate in CoreTel I "laid to rest" with regard to Verizon's facilities claims is that TELRIC rates should apply, not tariff rates. The district court faithfully followed that ruling.

B.

We first address CoreTel's argument, under the guise of the mandate rule, that our opinion in CoreTel I precludes Verizon from recovering as damages any facilities charges at all. Essentially, CoreTel interprets that opinion to have mandated complete summary judgment in CoreTel's favor on Verizon's facilities-related claims, leaving Verizon without a live claim on which to seek damages. Thus, CoreTel argues, the district court violated our mandate when it nonetheless awarded damages.

CoreTel misunderstands both CoreTel I and Verizon's claims. As we explain above, Verizon brought two claims related to its provision of facilities to CoreTel: a declaratory-judgment claim and a claim for damages associated with a breach of the ICAs. In CoreTel I, we held that "CoreTel was entitled to summary judgment in its favor on ... Verizon's claim for declaratory relief relating to Verizon's facilities charges," because we agreed with CoreTel that Verizon was limited to charging the TELRIC rates for its facilities. 752 F.3d at 372 (emphasis added). But we expressly did not resolve Verizon's claim for damages associated with CoreTel's breach of the ICAs. Rather, we "remand [ed] to the district court for consideration of ... Verizon's damages claim." Id.⁵ Thus, the district court did not violate our mandate when it considered Verizon's damages claim.⁶

C.

We turn next to CoreTel's challenges to the district court's calculation of the outstanding facilities charges CoreTel owes Verizon. To understand CoreTel's arguments, some background information about the ICAs is helpful. Under the ICAs, the parties are to establish "interconnection points" ("IPs") at particular, agreed-upon locations. See ICA § 4.2.2, J.A. 469. When a CoreTel customer calls a Verizon customer,...