Local Access, LLC v. Peerless Network, Inc.
| Decision Date | 26 September 2016 |
| Docket Number | Case No: 6:14-cv-399-Orl-40TBS |
| Parties | LOCAL ACCESS, LLC and BLITZ TELECOM CONSULTING, LLC, Plaintiffs, v. PEERLESS NETWORK, INC., Defendant/Counter-Plaintiff, v. LOCAL ACCESS, LLC, Counter-Defendant. |
| Court | U.S. District Court — Middle District of Florida |
This cause comes before the Court without oral argument on the following:
Upon consideration and review of the record, including all pleadings, deposition transcripts, affidavits, exhibits, and memoranda of the respective parties, the Court denies both motions.
By way of introduction, the parties in this case all operate within the telecommunications industry. Plaintiff, Blitz Telecom Consulting, LLC ("Blitz"), purchases telephone numbers from various telecommunications carriers (such as local and long distance providers) and subsequently markets and resells those numbers in bulk, along with other associated services, to companies and telecommunications carriers who then offer telephone services to end consumers at a discounted price. Plaintiff, Local Access, LLC ("Local Access"), and Defendant, Peerless Network, Inc. ("Peerless"), are both Competitive Local Exchange Carriers, which are essentially telephone companies that provide local telephone and other telecommunications services directly to end consumers.
This lawsuit represents the second chapter in what has proved to be a challenging business relationship between Blitz and Peerless. The first chapter opened in November 2010, when Blitz and Peerless entered into a contract whereby Blitz agreed to place certain telecommunications traffic on Peerless's networks in exchange for Peerless paying Blitz a commission based on the volume of traffic Blitz placed. See Blitz Telecom Consulting, LLC v. Peerless Network, Inc., 151 F. Supp. 3d 1294, 1299-1300 (M.D. Fla. 2015). Peerless subsequently stopped paying commissions to Blitz, however, and Blitzsued. The chapter ended (at least in this Court) on March 9, 2016, when a jury returned a verdict in Blitz's favor and awarded over $2.3 million in damages.
This second chapter begins in late 2011, when the members of Blitz began exploring the possibility of selling Blitz or a portion of its assets. To that end, Blitz retained a brokerage firm to identify potential buyers and facilitate negotiations. The brokerage firm soon identified West Corporation ("West") as a potential buyer and, after negotiations, West submitted a non-binding letter of interest to Blitz on May 11, 2012 (hereinafter referred to as the "Letter of Interest"). In the Letter of Interest, West offered to purchase "all of [Blitz's] Telecommunications business"1 for $8.5 million. (Doc. 124-3). According to Blitz, West later increased its offer to $9 million.
Blitz and West never consummated a deal, however, although the parties disagree as to why. Peerless contends that Blitz found West's offer far too low. Conversely, Blitz asserts that it would have accepted West's offer, but that it was Peerless which convinced it otherwise. Specifically, Blitz states that Peerless proposed an alternative arrangement where Blitz would create a new entity—Local Access—and that Peerless would assign and refer to Local Access all current and future prepaid calling card clients who wished to purchase certain telephone services. In exchange, Local Access would place all traffic it generated from prepaid calling card clients on Peerless's networks for transit. Blitz alleges that it was this business proposal which caused it to abandon the deal with West.
In any event, Blitz's members rejected West's offer on May 22, 2012 and formed Local Access soon thereafter. On June 1, 2012, Local Access and Peerless executed a Homing Tandem Agreement (hereinafter referred to as the "Contract") which, at least in part, codified the terms Blitz says caused it to reject West's offer. Important to this case is Section 7, titled "Non-Competition," which provides as follows:
(Contract § 7).2
According to Plaintiffs, however, Peerless breached the Contract almost immediately after it was signed by failing to refer or assign to Local Access prepaid calling card clients who wished to purchase the services contemplated by Section 7.1. Plaintiffs now believe that Peerless never actually intended to follow through on its promises, but proposed the alternative arrangement as a ruse to prevent Blitz from completing the dealwith West, which is one of Peerless's competitors. Peerless denies Plaintiffs' accusations.
Plaintiffs filed this lawsuit on March 12, 2014. Blitz sues Peerless for tortiously interfering with its deal with West and for fraudulently inducing it to make a business decision it never would have made but for Peerless's promises. Local Access sues Peerless for breaching the Contract and for fraudulently inducing it to enter into the Contract in the first place.3 Now before the Court are the parties' respective summary judgment motions.
"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). The party moving for summary judgment must "cit[e] to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials" to support its position that it is entitled to summary judgment. Fed. R. Civ. P. 56(c)(1)(A). "The court need consider only the cited materials," but may also consider any other material in the record. Fed. R. Civ. P. 56(c)(3).
A factual dispute is "genuine" only if "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if the fact could affect the outcome of the lawsuit under the governing law. Id. The moving party bears the initial burden of identifying those portions of the recorddemonstrating a lack of a genuine factual dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004). If the movant shows that there is no evidence to support the non-moving party's case, the burden then shifts to the non-moving party to demonstrate that there are, in fact, genuine factual disputes which preclude judgment as a matter of law. Celotex, 477 U.S. at 331; Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006).
To satisfy its burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, the non-movant must go beyond the pleadings and "identify affirmative evidence" which creates a genuine dispute of material fact. Crawford-El v. Britton, 523 U.S. 574, 600 (1998). In determining whether a genuine dispute of material fact exists, the court must read the evidence and draw all factual inferences therefrom in the light most favorable to the non-moving party and must resolve any reasonable doubts in the non-movant's favor. Skop v. City of Atlanta, 485 F.3d 1130, 1136 (11th Cir. 2007). Summary judgment should only be granted "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita, 475 U.S. at 587.
Local Access moves for partial summary judgment on a particular aspect of its breach of contract claim against Peerless and Peerless moves for summary judgment on all of Plaintiffs' claims against it. The Court addresses the issues raised by the parties' respective motions in the most logical order.
In its Motion for Partial Summary Judgment, Local Access asks the Court to determine what Peerless's duty was under the Contract relative to assigning or referring prepaid calling card clients. Due to a choice of law provision in the Contract, the Court applies Illinois law in answering Local Access's question.4 (See Contract § 12).
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