Tri-County Elec. Coop., Inc. v. GTE Sw. Inc.

• Decision Date: 11 February 2016
• Docket Number: NO. 02–14–00199–CV,02–14–00199–CV
• Citation: 490 S.W.3d 530
• Parties: Tri-County Electric Cooperative, Inc., Appellant v. GTE Southwest Incorporated d/b/a Verizon Southwest, Appellee
• Court: Texas Court of Appeals

490 S.W.3d 530

Tri-County Electric Cooperative, Inc., Appellant

v.GTE Southwest Incorporated d/b/a Verizon Southwest, Appellee

NO. 02–14–00199–CV

Court of Appeals of Texas, Fort Worth.

DELIVERED: February 11, 2016

Rehearing and Reconsideration En Banc Overruled June 2, 2016

John Westhoff, Borden & Westhoff, LLP, Weatherford, TX, Thomas B. Magee, Keller & Heckman LLP, Washington, D.C., Steven K. Hayes, Law Office of Steven K. Hayes, Fort Worth, TX, for Appellant.

John H. Cayce, Jr., Kelly Hart & Hallman LLP, Fort Worth, TX, David D. Rapp, Eggleston King LLP, Weatherford, TX, Christopher S. Huther & Claire J. Evans, Wiley Rein LLP, Washington, D.C., for Appellee.

PANEL: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.

OPINION

TERRIE LIVINGSTON ,CHIEF JUSTICE

This is an appeal from a summary judgment in favor of GTE Southwest Incorporated d/b/a Verizon Southwest (Verizon) in a dispute involving the proper construction of provisions in an industry-standard agreement between Verizon and Tri–County Electric Cooperative, Inc. (Tri–County) governing the joint use of each other's utility poles. In three issues, Tri–County, the plaintiff in the underlying suit, challenges the visiting trial judge's summary judgment for Verizon based on Verizon's construction of the terms of the agreement and the award of attorney's fees to Verizon. We reverse and render in part, reverse and remand in part, and affirm in part.

I. Background

Tri–County is an electric cooperative that has provided electricity in Parker County and other Texas counties for over seventy years. In December 1959, Tri–County entered into a “General Agreement Joint Use of Wood Poles” with Southwestern States Telephone Company of Brownwood, Texas for the “joint use of their respective poles, erected or to be erected within the areas in which both parties render service.” The agreement set forth an initial annual rental rate to be paid for the use of the joint poles and also provided for periodic adjustment of the rental rates at five-year intervals upon the request of either party. Tri–County executed four amendments to this agreement; in three of the amendments, the amount of the rentals was increased. The last rental adjustment occurred in 1993. Verizon, which provides telecommunications services in the same geographic area as Tri–County provides electricity, is the successor to Southwestern States through a series of mergers and corporate transactions.

In 1975, Tri–County entered into the same type of agreement with Continental Telephone Company of Texas. That agreement also provided for the periodic adjustment of rentals. In 1981, Tri–County and Continental agreed to an amendment of the contract that increased the pole rental rates; no further rental adjustment or other amendment to that agreement has been made. Verizon is also the successor to Continental. Both agreements, as amended, are collectively referred to herein as the JUA.

In a November 6, 2003 letter to Verizon, Tri–County requested a rental rate adjustment “pursuant to Article XII,” stating that “[t]he new rates will be effective January 1, 2004.” The letter concludes as follows:

Appendix B of the agreements provides a method (Share The Savings Method) to determine rental rates based upon pole costs and operational costs. Please coordinate evaluation of these costs with Ed Sheppard of RASR Associates. RASR Associates has been retained by Tri–County ... to assist in developing joint use rental rates.... We will need Verizon's costs for 30 foot poles and Verizon's annual charge percentage relating to poles to make this calculation.

Verizon did not respond to the request for cost information, but Tri–County continued to bill, and Verizon continued to pay, rental at the 1981 and 1993 amended rates. In January 2005, Tri–County notified Verizon by letter that it was terminating the JUA under article XX effective February 2, 2008. In that letter, Tri–County demanded that Verizon remove its attachments from Tri–County poles by the termination date and also asserted, “Verizon has not cooperated in providing cost information as requested by letter dated November 6, 2003. Based on information filed by Verizon with the FCC and Tri–County Electric costs, the rental rate will be $31.17/pole for the remaining three (3) years of the Agreement.” According to Tri–County, the $31.17 rate was a clerical error, and it told Verizon later that the rate should be $29.21 instead. Beginning in 2009, TriCounty began billing Verizon at the $29.21 per pole rate because Verizon's attachments remained on Tri–County's poles and were being used by Verizon; Verizon has not paid pole rental since the termination date.¹

In late 2009 or early 2010, Tri–County realized that Verizon had not been seeking permits for new attachments to Tri–County's poles for some time; thus, Tri–County engaged a third-party consultant to inventory its poles. According to Tri–County, from 2004 to 2010 its records had shown that Verizon had 5,307 attachments to Tri–County's poles, but the inventory showed that Verizon had approximately 7,523 attachments to Tri–County's poles.

In October 2010, Tri–County sued Verizon (1) for breach of contract for failing to pay rental to Tri–County for its attachments to Tri–County's poles for the years 2008, 2009, and 2010² and (2) breach of contract, trespass, and trespass to try title for failing to remove its attachments from Tri–County's poles after the termination date of the JUA. Tri–County also sought a declaratory judgment that Verizon had breached the JUA, that Tri–County had properly terminated the JUA, that Verizon must remove its attachments from Tri–County's poles, and that Tri–County is entitled to the 2008–2009 rental it was seeking.

Tri–County amended its petition twice; its second amended petition expanded its breach of contract allegations to include Verizon's alleged failure to obtain Tri–County's prior permission when making additional attachments to poles and sought breach of contract damages and declaratory relief for unpaid rentals from 2005 “to the present.”³ Additionally, Tri–County also sought to enjoin Verizon from adding future attachments to its poles.

Verizon filed a motion for summary judgment on all of Tri–County's claims, and Tri–County filed a motion for partial summary judgment. At a hearing on the motions in November 2013, the visiting trial judge verbally granted Verizon's summary judgment motion. When the judge indicated that he would consider granting Verizon attorney's fees, Tri–County's counsel argued that Verizon had not pled for attorney's fees in its answer even though it had requested attorney's fees in its motion for summary judgment. Verizon filed a motion for leave to amend its answer to include a request for attorney's fees and to amend its motion for summary judgment to present evidence of reasonable and necessary attorney's fees. The trial court granted Verizon's motion for leave to amend both pleadings. Additionally, the trial court signed an order denying Tri–County's motion for partial summary judgment, and a final, take-nothing judgment for Verizon, awarding it $1,100,000 in attorney's fees for proceedings in the trial court and $150,000 in attorney's fees in the event of an unsuccessful appeal by Tri–County.

II. Issues on Appeal

In its first issue, with four subissues, Tri–County challenges the trial court's granting the summary judgment for Verizon and denying the partial summary judgment motion filed by Tri–County. In its subissues, Tri–County contends as follows: (1) it validly terminated the JUA, which required Verizon to remove all its attachments to Tri–County's poles as of the termination date, (2) there is at least a fact issue as to whether Verizon is a holdover tenant, (3) Verizon has breached the JUA because it (a) has not paid rental since the termination date although it maintains and continues to use attachments on Tri–County's poles, (b) at least a fact issue exists as to Verizon's failure to report new attachments to Tri–County's poles, (c) Verizon failed to provide cost and charge information in good faith in response to Tri–County's 2003 request, and (4) there is some evidence to support an award of exemplary damages. In its second issue, Tri–County contends that the trial court abused its discretion by granting Verizon leave to amend its pleadings to include a request for an award of attorney's fees and that the trial court abused its discretion by overruling Tri–County's objections to Verizon's summary judgment evidence of fees.⁴ Finally, in its third issue, Tri–County contends that if this court reverses the take-nothing summary judgment, it must also reverse the award of attorney's fees to Verizon and the take-nothing summary judgment on attorney's fees sought by Tri–County.

III. Propriety of Summary Judgment Rulings

A. Standard of Review

We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex.2010)

. We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex.2008). A defendant who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex.2010) ; see Tex.R. Civ. P. 166a(b), (c).

Generally, when both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both parties' summary judgment evidence, determine all questions presented, and render the judgment that the trial court should have rendered. Mann Frankfort, 289 S.W.3d at 848

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