Time Warner Entertainment Advance/Newhouse Partnership v. Town of Landis

Decision Date30 June 2011
Docket Number10 CVS 1172
CourtSuperior Court of North Carolina
PartiesTIME WARNER ENTERTAINMENT ADVANCE/NEWHOUSE PARTNERSHIP, Plaintiff, v. TOWN OF LANDIS, NORTH CAROLINA, Defendant.

Brooks, Pierce, McLendon, Humphrey & Leonard, LLP by Reid L. Phillips; Hogan Lovells, LLP by Gardner F. Gillespie and Paul A. Werner, III for Plaintiff.

Poyner & Spruill, LLP by David M. Barnes and Andrew H. Erteschik for Defendant.

Joseph W. Eason for the North Carolina Association of Electric Cooperatives, Amicus Curiae.

ORDER & OPINION

Murphy, Judge.

{1} The Court heard this matter on February 17, 2011, on the Motion of Defendant Town of Landis, North Carolina (the "Town"), for partial summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure.

{2} The Town moved for summary judgment on Plaintiff Time Warner Entertainment Advance/Newhouse Partnership's ("TWEAN") First Claim for Relief for "refusal to negotiate" and Second Claim for Relief for "violation of nondiscrimination requirement."

{3} After considering the Complaint, the briefs and submissions of the parties, and the arguments of counsel at the February 17, 2011 hearing, the Court agrees with Defendant that there is no disputed issue of material fact relating to Plaintiff's First Claim for Relief for "refusal to negotiate" as required under Section 62-350 of the North Carolina General Statutes and Defendant is entitled to summary judgment as a matter of law as to this claim only. Accordingly, Defendant's Motion for Partial Summary Judgment as to Plaintiff's First Claim for Relief is GRANTED. Plaintiff's First Claim for Relief for "refusal to negotiate" is, therefore, DISMISSED.

{4} The Court further concludes that there exists a disputed issue of material fact as to whether Plaintiff violated the nondiscrimination requirement of Section 62-350 of the North Carolina General Statutes. Accordingly, Defendant's Motion for Partial Summary Judgment as to Plaintiff's Second Claim for Relief is DENIED.

I. FACTS

{5} Plaintiff TWEAN is a New York general partnership with its principal place of business in New York, New York. TWEAN is a cable system operator that provides internet, television and telephone services via cables attached to utility poles owned by the Town, a municipal corporation, pursuant to a pole attachment agreement under which the parties operated. Pursuant to this agreement, from 1979 to 2009, the Town permitted TWEAN to attach its cables to the Town's utility poles at the original rate of $3.00 per pole.

{6} Effective July 10, 2009, the North Carolina General Assembly enacted Section 62-350 of the North Carolina General Statutes (the "Act") which provides that "a municipality . . . that owns or controls poles, ducts, and conduits shall allow any communications service provider to utilize its poles, ducts, and conduits at just, reasonable, and nondiscriminatory rates, terms and conditions adopted pursuant to negotiated or adjudicated agreements." N.C. Gen. Stat. § 62-350(a) (2010).

{7} The Act further provides a mechanism for resolving disputes between communication service providers and municipal utilities over the use of poles, ducts and conduits. First, the parties are required to negotiate concerning rates, terms and conditions for the use of or attachment to the poles, ducts, or conduits. N.C. Gen. Stat. § 62-350(b) (2010). If they are unable to reach an agreement within a 90-day period or if either party believes in good faith that an impasse has been reached before the expiration of the 90-day period, either party may bring an action in the Business Court and the Court "shall resolve any dispute identified in the pleadings consistent with the public interest and necessity so as to derive just and reasonable rates, terms, and conditions." N.C. Gen. Stat. § 62-350(c) (2010).

{8} In 2009, the Town proposed a new contract to cover TWEAN's existing and future cable attachments to the Town's poles. The new contract would increase TWEAN's attachment rate from $3.00 per pole, per year, to more than $36.00 per pole, per year with additional increases built in. TWEAN objected to the proposed increase.

{9} After the Town and TWEAN were unable to resolve their differences and reach an agreement regarding reasonable rates, terms and conditions, on April 19, 2010, Plaintiff filed its Notice of Designation and Complaint alleging three separate claims for relief: (1) refusal to negotiate (N.C. Gen. Stat. § 62-350(b)); (2) violation of the non-discrimination requirement (N.C. Gen. Stat. § 62-350(a)); and (3) issues in dispute. Compl. ¶¶ 34-49.

{10} In addition to TWEAN, the Town also allows another local exchange carrier – Windstream Communications ("Windstream") – to attach to the Town's poles pursuant to a joint use agreement. This agreement provides for a reciprocal arrangement wherein the Town attaches to poles owned by Windstream at no charge and Windstream attaches to poles owned by the Town at a rate of $2.00 per pole, per year.

{11} It is uncontroverted that TWEAN does not own any utility poles within the jurisdiction of the Town and does not have a reciprocal arrangement with the Town for the attachment of cables used to deliver electrical or communication services to the public.

{12} The Town now seeks summary judgment on TWEAN's claims for "refusal to negotiate" and "violation of the Act's nondiscrimination requirement." The Town concedes that the third claim "issues in dispute" is ripe for determination by the Court at trial and is not included in its Motion for Partial Summary Judgment.

{13} Included in the Town's Motion for Partial Summary Judgment were allegations supported by attached discovery documents, including deposition testimony, that summarized the contacts, communications and efforts at negotiations between the Town, its representatives, and TWEAN and its representatives. TWEAN presented no documentary or testimonial evidence to contradict the contents of those documents and the Court considers the contents to be uncontroverted. The Court adopts many of those allegations and sets out salient portions below that support the Court's determination of these issues.

{14} On August 3, 2009, the Town's Administrator, Douglas R. Linn ("Linn"), wrote to TWEAN's representative, Nestor M. Martin ("Martin"), regarding a new pole attachment contract for 2010. See Def.'s Mot. Summ. J. Ex. A. The letter enclosed a new proposed contract for TWEAN, and asked that any comments be directed to the Town's consultant, McGavran Engineering, P.C. Id. The letter further advised that McGavran Engineering had completed a pole attachment survey and offered to provide TWEAN with the results of that survey. Id. The letter also referenced new state legislation regulating pole attachments and stated that "we need to discuss this very soon, " and "we look forward to hearing from you on this matter." Id.

{15} On August 24, 2009, Martin wrote back to Linn on behalf of TWEAN. Def.'s Mot. Summ. J. Ex. B. Martin indicated that TWEAN had not yet received the pole attachment survey results from McGavran Engineering, and that it wanted to review those results before responding to the August 3, 2009 letter. Id.

{16} On August 27, 2009, Edward McGavran, III ("McGavran") of McGavran Engineering wrote to TWEAN, providing TWEAN with "the complete inventory/audit results for The Town." Def.'s Mot. Summ. J. Ex. C. The letter explained that TWEAN had more attachments on the Town's poles than was authorized, and that the Town would be charging TWEAN for "back rent" under the then-existing 1979 rental rate. Id. The letter further explained that the Town would take TWEAN's National Electrical Safety Code ("NESC") violations "very seriously as a risk management problem, " but that the Town "will work with [TWEAN] on getting these violations cleaned up, knowing they did not show up there overnight." Id. The letter concluded by stating that TWEAN should let McGavran know if it had any questions, and that he would answer them "as soon and as accurately as [he] can." Id.

{17} On August 31, 2009, TWEAN responded to the Town's August 3, 2009 letter. Def.'s Mot. Summ. J. Ex. D. In the first full paragraph of the letter, Martin made reference to the newly-enacted provisions of Chapter 62 of the North Carolina General Statutes, indicating that either party had the right "to take the matter to the Business Court for resolution" if they were unable to agree on rates, terms and conditions within 90 days. Id. Martin specifically requested that Linn "treat this letter as a request under Section 62-55(b) to negotiate a new pole agreement, to include a just, reasonable and non-discriminatory rate." Id. He also stated that TWEAN expected to have a redlined copy of the Town's proposed pole attachment agreement ready for review shortly and requested the Town to complete an attached questionnaire and provide TWEAN with the Town's most recent annual financial statements related to its electric service. Id. TWEAN further indicated that it would use this information to formulate a proposal regarding a reasonable attachment rate. Id. The letter pointed out that McGavran Engineering's pole attachment audit did not include any specifics as to which of TWEAN's cable attachments on the Town's poles were in violation of their agreement. Id. The letter concluded by reminding the Town that the parties would "have an opportunity to seek the assistance of the North Carolina Business Court if [they were] unable to negotiate a mutually satisfactory agreement." Id.

{18} On September 10, 2009, TWEAN sent the Town a redlined copy of the Town's proposed pole attachment agreement. Def.'s Mot. Summ. J. Ex. E. Despite the Town's instruction that TWEAN deal directly with its consultant, McGavran, TWEAN directed the redlined proposed agreement to Linn, the Town Administrator, and did not copy McGavran. Id.

{19} TWEAN scheduled a face-to-face meeting on September 21, 2009...

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