Town & Country Management Corp. v. Comcast Cablevision of Md.
| Decision Date | 01 September 1986 |
| Docket Number | No. 731,731 |
| Citation | 70 Md.App. 272,520 A.2d 1129 |
| Parties | TOWN & COUNTRY MANAGEMENT CORPORATION v. COMCAST CABLEVISION OF MARYLAND. , |
| Court | Court of Special Appeals of Maryland |
George A. Nilson (Lee Baylin and Piper & Marbury, on the brief), Baltimore, for appellant.
R. Bruce Beckner (Dow, Lohnes & Albertson, Washington, D.C., Michael A. Pace, Judith A. Mather and Dow, Lohnes & Albertson of Annapolis, on the brief), for appellee.
Argued before GILBERT, C.J., and ALPERT and POLLITT, JJ.
This appeal is concerned with cable television. Specifically, it asks whether the trial court erred in holding that certain television programing supplied by a particular company was not cable television. The principals in this case are Town & Country Management Corporation (Town), which manages a number of large apartment complexes in the metropolitan Baltimore area, and Comcast Cablevision of Maryland (Comcast), which, operating pursuant to a nonexclusive franchise granted by Baltimore County, provides cable television service to subscribers in the county. 1
In August 1980, the parties entered into contracts to provide cable television service to six of Town's complexes, one contract for each complex. By 1982, five additional contracts, similar to the first six, had been signed, extending the service to other complexes managed by Town. The contracts authorized Comcast to install and operate, in each of the apartment complexes, a "cable television antenna system" in order to provide "community television antenna service" to the tenants.
When Comcast first began "wiring" the county in 1980, it solicited apartment owners and managers, such as Town, for permission to supply the service to tenants. Town was agreeable to having the service but wanted some monetary consideration from the provider. As a matter of firm business policy, Comcast refused to pay any monies to Town. After some negotiation, the parties resolved the impasse through what may be regarded as a reciprocal "most favored nation" provision, which they inserted in each of the eleven contracts.
The first part of that provision, p 9(a), states in essence that, if Comcast enters into any cable television service arrangement with any other apartment complex on terms more favorable to that apartment complex than are provided in the contract with Town, the Town contracts would be amended automatically to match the more favorable terms in the other contract. In short, if Comcast agreed to pay any other owner or manager of an apartment complex for the privilege of providing service to his tenants, it would have to pay Town on a similar basis.
The second part of the provision, p 9(b), was intended to cover the converse situation of another cable television service's offering better terms to Town. Paragraph 9(b) provides:
"The Company [i.e., Comcast] further agrees that in the event any other cable television service offered in Baltimore County provides benefits, payments or other features to the parties referred to immediately above, the Company, at its option, shall immediately commence payments, benefits or provide other features to Owner on the same or nearly comparable basis as the cable television service offering the greatest payments, benefits, or other features, or shall terminate this Agreement." (Emphasis added.)
Subject to p 9(b), the contracts afford Comcast the exclusive right to provide the cable television service to the complexes covered by them. Paragraph 10 of each contract states:
(Emphasis added.)
Shortly after the first contracts between the parties were signed in 1980, Town learned that it would be some time before Comcast would be able to supply service to the Cockeysville area of the county, where Town managed a complex that was not covered by any of its contracts with Comcast. In September 1980, Town entered into a contract with Cable Garden, Inc. for the installation of a "Premium TV" service to the tenants of that complex. The "Premium TV" service was defined in that contract as follows
Unlike Comcast, Cable Garden, Inc. agreed to pay a commission to Town based on the rate of tenant subscription to its service. Paragraph 21 of its contract stated:
Cable Garden, Inc. was apparently slow in installing its system and never attracted a large number of subscribers. It made no payments under its contract until 1983, and even then the payments were not very large. Nonetheless, Town regarded the payments made by Cable Garden, Inc. as triggering p 9(b) in its contracts with Comcast and thus demanded that Comcast begin making payments consistent with the Cable Garden, Inc. formula, which it refused to do. Town became even more insistent in 1985, when it received two additional proposals to replace the current Cable Garden, Inc. service--one from Cable Garden, Inc. and one from BBC Satellite.
The new Cable Garden, Inc. proposal was for "SMATV" 2 service in two tiers. The "local tier" would consist of eight Baltimore-Washington commercial channels 3 and one local public television channel. 4 The "premium tier" was to include seven satellite channels, including a news channel (CNN), a sports channel (ESPN), a "music" channel (MTV), a children's channel (Nickelodian), a movie channel (TMC), and two general feature channels (USA and WGN). Under the terms of the proposal, Cable Garden, Inc. was to pay an even higher commission to Town, ranging from $1 per month per subscriber to $2.75 per month when over 55 percent of the tenants subscribed.
The BBC system is also described as a "SMATV" system. It proposed "one premium movie channel, one satellite sports or news network, one satellite superstation and three Baltimore or Washington over-the-air channels." The BBC proposal would have paid a commission to Town of 5 percent of "gross subscriber receipts."
Because of Comcast's continuing intransigence, based on its assertion that the services being rendered by Cable Garden, Inc., as well as those proposed by that company, and by BBC Satellite were not "cable television service" for the purposes of p 9(b), Town filed this action in the Circuit Court for Baltimore County. The suit, seeking both damages and declaratory relief, charged Comcast with breach of contract. Town asked for a declaratory judgment that Cable Garden's and BBC's proposed services did constitute "cable television service" under p 9(b), and that Comcast was required either "to commence payments on the same basis as those offered by Cable Garden (or similar cable television services) or terminate the agreements...." Alternatively, Town asked for a declaratory judgment that the services offered and proposed by Cable Garden, Inc. were not the types of services contemplated under p 10 of the contracts, and that Town was at liberty to install that service in the eleven complexes already covered by the contracts with Comcast.
Throughout the nonjury trial in the circuit court, Comcast maintained that the term "cable television service," as used in p 9(b), meant only a cable television service that was franchised by Baltimore County. The trial judge rejected that interpretation. Comcast has not pursued that matter in this appeal. During the course of the trial, when Town first offered parol evidence as to its intentions with respect to p 9, the court concluded that the term was ambiguous and, therefore, permitted both parties to offer parol evidence on the issue.
The evidence elicited concerned primarily perceptions of how SMATV was regarded in the cable television industry. O.D. Page, testifying for Town, had been working in the cable television industry since 1968. He related to the court:
"In common usage in the industry a cable system is a system that sells a television service to subscribers and generally carries something more than just over the air broadcasting and such satellite channels, and may I go further, almost all satellite channels are classified as cable service by the buyer of those services."
Mr. Page made clear that, while SMATV did not offer the full range of channels carried by franchised cable companies, the two types of companies were, nevertheless, in competition. SMATV operators, he said, attempted to convince prospective subscribers that the extra channels carried by franchised companies were of little benefit.
Archer S. Taylor, a witness on behalf of Comcast, had a different view. He opined:
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