Onvoy, Inc. v. Allete, Inc.

• Decision Date: 02 August 2007
• Docket Number: No. A05-1497.,A05-1497.
• Citation: 736 N.W.2d 611
• Court: Minnesota Supreme Court
• Parties: ONVOY, INC., Respondent, v. ALLETE, INC., f/k/a Minnesota Power, Inc., d/b/a Minnesota Power & Light Company, et al., Appellants.

736 N.W.2d 611

ONVOY, INC., Respondent, v. ALLETE, INC., f/k/a Minnesota Power, Inc., d/b/a Minnesota Power & Light Company, et al., Appellants.

No. A05-1497.

Supreme Court of Minnesota.

August 2, 2007.

James A. Wade, Roy J. Christensen, Johnson, Killen & Seiler, PA, Duluth, MN, for Appellant.

Eric J. Nystrom, Christopher H. Yetka, Mark H. Zitzewitz, Lindquist & Vennum, PLLP, Minneapolis, MN, for Respondent.

Heard, considered, and decided by the court en banc.

OPINION

MEYER, Justice.

We are asked to resolve a dispute over whether a building lease between the parties authorizes respondent Onvoy, Inc. to run a telecommunications cable from its leased space inside appellant ALLETE, Inc.'s building to an exterior wall. We must determine if the district court erred in granting a claim for declaratory relief in favor of Onvoy, Inc. in light of a jury verdict finding that there was no breach of the terms of the lease by ALLETE. The court of appeals concluded that the district court did not err in granting declaratory relief to Onvoy. We reverse and remand.

ALLETE (formerly known as Minnesota Power and Minnesota Power & Light Company), and Onvoy (formerly known as Minnesota Equal Access Network Services (MEANS)¹) are both involved in the telecommunications business. ALLETE and Onvoy's business relationship started over 10 years ago in February 1996 when the parties entered into a fiber optic agreement (the Fiber Lease). The Fiber Lease gave Onvoy the right to use twelve of ALLETE's fiber optic strands, which Onvoy intended to use to provide telecommunication services to third parties. Onvoy and ALLETE's fiber optic systems connected at ALLETE's General Office Building (GOB) in Duluth. In exchange for use of the fiber optic strands, Onvoy agreed to pay ALLETE for half the cost of constructing the fiber optic route and to make annual installment payments to ALLETE for 20 years.

The Fiber Lease permits Onvoy to use ALLETE's substations and offices subject to certain fees, which must be established in a separate agreement. On April 10, 1996, a month and a half after entering into the Fiber Lease, Onvoy and ALLETE entered into two separate lease agreements. The first is the Arrowhead Lease, which is not at issue in this case. The second, which is in dispute, is the General Office Building Lease (the GOB Lease), a 20-year lease that provides Onvoy with 430 square feet of office space in the basement of the GOB in Duluth "for use and occupancy as a telecommunication equipment room." The GOB Lease provides that Onvoy

shall have the right, upon written notice to and consent of [ALLETE], which consent will not be unreasonably withheld, to allow collocation[²] of telecommunications equipment of local exchange carriers (LECs), competitive access providers (CAPs) or interexchange carriers (IXCs), in Tenant's leased space provided such collocation of telecommunications equipment is for the purpose of interconnecting Tenant's network with the network(s) of the collocated party(ies).

After entering into the GOB Lease with ALLETE, Onvoy requested permission to run cable conduit from within its leased space through the common area of the GOB to the GOB's exterior wall in order to connect Onvoy's telecommunications equipment with the telecommunications equipment of third-party telecommunications providers outside the GOB. ALLETE refused, contending that Onvoy must negotiate another agreement (and pay an additional fee) in order to run the cable from Onvoy's leased space to the exterior of the GOB.

Onvoy filed suit in June 2003, claiming breach of contract, unjust enrichment, and intentional interference with contractual relations, and seeking declaratory judgment and reformation.³ The complaint alleges that the GOB Lease permits Onvoy to establish and operate a "point of presence" for its telecommunication equipment in Duluth and maintains that Onvoy's "point of presence" can become operational only if Onvoy is able to connect its equipment housed within the GOB to equipment of other providers outside the GOB. The complaint further alleges that ALLETE was trying to force Onvoy to pay it an "exorbitant" monthly fee for the right to connect with other providers even though the cost of installing cables for the purposes of interconnection was minimal and the expense would be borne entirely by Onvoy without any recurring expense for ALLETE or Enventis, ALLETE's subsidiary.

ALLETE brought a motion for summary judgment on Onvoy's claims, but the district court denied the motion because there were "legitimate factual disputes over intent and meaning." The case went to trial, and the claims at law and claims for equitable relief were tried together. At the conclusion of the trial, the jury answered a special verdict form that included questions on both the claims at law and Onvoy's equitable claims of reformation and unjust enrichment. On the claims at law, the jury found that ALLETE did not breach the GOB Lease with Onvoy and that Enventis intentionally interfered with the GOB Lease, but that Onvoy was not entitled to any damages because of Enventis's interference.

With regard to the claims for equitable relief, the jury made an advisory finding that before entering into the GOB Lease, Onvoy and ALLETE had "a valid agreement that Plaintiff Onvoy, Inc. would use the General Office Building space for the collocation of equipment in order to interconnect Plaintiff Onvoy, Inc.'s network with other telecommunications carriers' networks by running cable through the General Office Building and outside of Plaintiff Onvoy, Inc.'s leased space."⁴ The jury then found that the GOB Lease failed to express the earlier agreement because of a unilateral mistake by Onvoy. The jury further found that the unilateral mistake by Onvoy was not accompanied by inequitable conduct by ALLETE.⁵

After receiving the jury verdict, the district court entered judgment for ALLETE based on the jury's answers on the claims at law (breach of contract by ALLETE and intentional interference with contractual relations against Enventis), and made its own factual findings on the claim for declaratory relief.⁶ The court found that Onvoy entered into the GOB Lease for the purpose of establishing a "point of presence" that would allow it to interconnect with other telecommunications networks. The court further found that Onvoy and ALLETE understood and agreed that Onvoy would use its space within the GOB to interconnect its network to third parties and that interconnection would require a physical connection that involved running cables into and out of Onvoy's leased space. The district court determined that Onvoy had made repeated requests to interconnect with third parties, which ALLETE had refused to grant, and that ALLETE had demanded that Onvoy or the third party enter into separate lease agreements and pay additional fees to ALLETE and Enventis. The court found that ALLETE's refusal to allow third-party collocation in Onvoy's leased space prevented Onvoy from utilizing eight of the fiber strands it had leased under the fiber lease. The court then concluded that the GOB Lease provided Onvoy with a right to run cables into its leased space from outside the GOB in order to connect Onvoy's equipment with third-party networks and that Onvoy was entitled to a right of access to facilities or conduit space sufficient to allow interconnection of telecommunications equipment without being required to enter into a separate lease agreement with ALLETE or make additional payments to ALLETE or Enventis.

After the district court entered judgment, ALLETE brought a motion for amended findings and conclusions of law, and Onvoy brought a motion for judgment notwithstanding the verdict or, in the alternative, a new trial. The court denied all of the motions. ALLETE appealed. The court of appeals affirmed the district court, and ALLETE appealed to this court. We granted review solely on the issue of "whether the district court is bound on declaratory judgment by jury findings."

We begin our analysis by considering (1) whether the jury's factual findings that are common to claims at law and claims for equitable relief are binding upon the district court when deciding claims for equitable relief, and (2) if the district court is bound by the jury's factual findings, what factual findings made by the jury are common to Onvoy's claims for both legal and equitable relief. When reviewing a declaratory judgment action, we apply the clearly erroneous standard to factual findings, Toombs v. Daniels, 361 N.W.2d 801, 805 (Minn.1985), and review the district court's determinations of law de novo, see Frost-Benco Elec. Ass'n v. Minn. Pub. Utilities Comm'n, 358 N.W.2d 639, 642 (Minn.1984).

I.

Article I, section 4 of the Minnesota Constitution guarantees that "[t]he right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy." This right to a civil jury trial applies only to claims at law. Morton Brick & Tile Co. v. Sodergren, 130 Minn. 252, 254, 153 N.W. 527, 528 (1915). No right to a jury trial attaches to claims for equitable relief, but the Minnesota Rules of Civil Procedure permit district courts to try claims at law and claims for equitable relief in the same action. Minn. R. Civ. P. 18.01. To do so, a district court may empanel an advisory jury on claims for equitable relief, but findings of the advisory jury as to solely equitable claims are not binding upon the court's adjudication of those equitable claims. Minn. R. Civ. P. 39.02, 52.01; see In re Estate of Murphy, 269 Minn. 393, 404, 131 N.W.2d 220, 227 (1964) (noting that an advisory jury's role is "only to advise the court and its findings are merely to reinforce the court's own decision on the disputed fact—not to supplant it").

We have not previously addressed how jury findings that are common to claims at law and claims for equitable relief impact the...