SARA LIOI, UNITED STATES DISTRICT JUDGE.
Before the Court are the following fully-briefed motions: (1) the motion for summary judgment filed by defendants New Cingular Wireless PCS, LLC ("NCW") and NCWPCS MPL 30-Year Tower Holdings, LLC ("Tower Holdings") (collectively, "defendants") (Doc. No. 93 ("MSJ")
On May 6, 2016, the District filed a complaint in the Court of Common Pleas of Stark County, Ohio against AT&T, Inc. ("AT&T"), NCW, and Tower Holdings, which defendants removed to this Court on June 10, 2016, alleging diversity jurisdiction. (Doc. No. 1.) The complaint was amended on April 3, 2017. (Doc. No. 27 (First Amended Complaint ["FAC"]).)
The three defendants moved to dismiss the FAC for failure to state a claim. On October 5, 2017, this Court granted the motion to dismiss, in part, resulting in dismissal of Count Two of the FAC, along with defendant AT&T. (Doc. No. 41 (Memorandum Opinion and Order).) Only Count One for breach of contract against NCW and Tower Holdings
The sole remaining claim
Under the lease agreement, NCW was permitted to construct on the District's "Premises" a cellular tower (defined in the agreement as a "Pole") for transmitting and receiving wireless communications signals. (Doc. No. 93-2, Lease Agreement
(Id. § 3.) NCW had the right to "assign this Agreement and its other rights hereunder to any person or business entity without the prior consent of [the District]." (Id. § 10(a).)
NCW agreed to construct the cellular tower so it had a capacity "for up to two (2) additional wireless communications service providers." (Id. § 1(E).) This was necessary to comply with North Canton zoning regulations under which, to obtain a conditional use permit for a telecommunications tower in the city, the property owner where the tower would be installed had to present written documentation to the planning commission showing that it had agreed to "collocation," that is, "[t]he use of a wireless telecommunications facility by more than one wireless telecommunications provider." (Doc. No. 93-4, North Canton Zoning Ordinance § 1157.02(a).) NCW and the District agreed to share the monthly revenue generated by any collocation. (Original Lease § 10(b).
NCW also agreed to "keep and maintain the Premises [at its expense] in commercially reasonable condition and repair during the Term of this Agreement." (Id. § 7(c).) The District's Director of Business, Raymond Nist ("Nist"), understood that NCW could meet these obligations by hiring third-party contractors. (Doc. No. 97-1, Deposition of Raymond Stephen Nist
On July 29, 2013, the parties entered into an amendment to the lease agreement, under which NCW was permitted to build a second cellular tower. (Doc. No. 93-8, First Amendment to Lease Agreement (the "First Amendment") (together with Original Lease—the "Lease").) The ground rent was increased, and NCW prepaid the first $25,000 of such rent. (Id. § 4.) The term "Pole" in the Original Lease was deleted and replaced with a new definition that encompassed "two (2) antenna structures located at the Premises[.]" (Id. § 6.) The first—known as the "Flag Pole"— accommodated "up to two (2) additional wireless communications service providers[,]" and the second—known as the
On October 18, 2013, AT&T (and its subsidiaries, which include defendants here
Under this Master Agreement, Crown formed a limited liability company (the "Tower Operator"—CCATT here
AT&T and the Tower Operator entered into (1) a master prepaid lease for the relevant sites,
(Id. at 3238.) "Excluded Assets" was further defined in some detail in the Master Agreement. (Id. at 3234-35.) Notably, among the excluded assets were "any and all licenses granted by the FCC or any other Governmental Authority[.]" (Id. at 3235.) Crown paid a lump sum in "Consideration," as defined by the Master Agreement. (Id. at 3233; see also id. § 3.2.)
As to the District's site in particular, the AT&T-Crown Transaction included an assignment by NCW to Tower Holdings (both AT&T subsidiaries) of (1) certain rights and "all payments, terms and obligations" under the Ground Lease; (2) the "Included Property"—primarily NCW's interest in the land and the towers; and (3) the Collocation Agreements with Verizon and T-Mobile, the only two collocators at the time. (Doc. No. 93-12, Assignment and Assumption of Ground Leases; Doc. No. 93-13, AT&T Internal Transfers Agreement & Schedule 1; Doc. No. 93-14, Master Prepaid Lease at 3428 & 3431.) NCW retained, inter alia, its FCC licenses, its wireless communications equipment on the Towers, and the right to use its existing space on the Towers. (Master Agreement at 3238 & 3234-35; Doc. No. 93-15, MPL Site Master Lease Agreement, §§ 2(a), 9(b), 9(f).) Crown paid a lump sum, in cash, to AT&T Mobility II, LLC's bank account.
Tower Holdings then engaged CCATT to manage and discharge its obligations under the Lease, including paying the District the monthly ground rent and the revenue sharing owed from use of the Premises by collocators Verizon and T-Mobile. (See Doc. No. 93-16 ("Management Agreement"); Viron Dep. at 2353-54.) In exchange, CCATT obtained Tower Holdings' right to the revenue generated by the collocators' use of the Towers (as well as any additional future collocators), subject to the revenue sharing provisions under the Lease.
After CCATT began to manage the District's site, a dispute arose over the amounts allegedly not paid under the First Amendment. (Viron Dep. at 2517.) The District also claimed it was entitled to share the amount allocated to its site in the AT&T-Crown Transaction. (Doc. No. 96-1, Deposition of Owen Rarric ("Rarric Dep.") at 4953-54; Doc. No. 96-13, Rarric Dep. Ex. 12.)
To resolve their differences, in June 2015, the parties entered into a Second Amendment to the Lease Agreement (Doc. No. 93-19 (the "Second Amendment"))
(Id.) The parties agreed to a "Payment Reconciliation" whereby CCATT/Tower Holdings paid the District $15,133.44 of "additional rent," $34,369.52 of "additional
The Estoppel Certificate noted that the Lease, as twice amended, "constitutes the entire agreement between the parties with respect to the property subject to the Lease[.]" (Estoppel Certificate at 3782 ¶ 2.) The parties also agreed on the amount of "the current monthly ground rent due to" the District and the "current monthly compensation due to Lessor [the District] from Lessee [Tower Holdings] arising from T-Mobile and Verizon's use of the towers[.]" (Id. ¶ 5.)
Eleven months after executing the Second Amendment, the District filed this lawsuit.
When a party files a motion for summary judgment, it must be granted "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).
Fed. R. Civ. P. 56(c)(1).
In reviewing summary judgment motions, this Court must view the evidence in a light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L. Ed. 2d 142 (1970); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943-44 (6th Cir. 1990), impliedly overruled on other grounds by Salve Regina Coll. v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 113 L. Ed. 2d 190 (1991). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L. Ed. 2d 202 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards.
"Once the moving party has presented evidence sufficient to support a motion for summary judgment, the nonmoving party is not entitled to trial merely on the basis of allegations; significant probative evidence must be presented to support the complaint." Goins v. Clorox Co., 926 F.2d 559, 561 (6th Cir. 1991). The party opposing the motion for summary judgment may not rely solely on the pleadings but must present evidence supporting the claims asserted by the party. Banks v. Wolfe Cty. Bd. of Educ., 330 F.3d 888, 892 (6th Cir. 2003); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L. Ed. 2d 265 (1986) (finding that summary judgment is appropriate whenever the nonmoving party
Under this standard, the mere existence of some factual dispute will not frustrate an otherwise proper summary judgment motion. Dunigan v. Noble, 390 F.3d 486, 491 (6th Cir. 2004) (quotation marks omitted) (citing Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
The underlying dispute in this case is not complicated: the District claims that the defendants have breached Section 10(b) of the Lease by mischaracterizing their arrangement with CCATT as a "management agreement" so as not to have to share the revenue from that arrangement with the District. (See generally FAC ¶¶ 63-72; Prayer for Relief (a).) The defendants, on the other hand, are of the view that CCATT merely stepped into their shoes with respect to the towers on the District's premises. They are of the view that the District has received (and continues to receive) all that it is due and, if the District were to share in the payment exchanged between defendants and CCATT, the District would be double-dipping.
The Lease here between NCW and the District is governed by Ohio law. (Original Lease § 27(a).) Under Ohio law, a plaintiff bears the burden of establishing "the existence of a contract, the failure without legal excuse of the other party to perform when performance is due, and damages or loss resulting from the breach." Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St.3d 453, 97 N.E.3d 458, 469 (2018) (quoted by Doe v. Univ. of Dayton, 766 Fed.Appx. 275, 284 (6th Cir. 2019)). No one disputes the existence of a contract; the dispute relates to its interpretation.
"The interpretation of a written contract, including whether the language admits of any ambiguity, is a question of law for determination by the court. Courts may not use extrinsic evidence to create an ambiguity, rather, the ambiguity must be present on the face of the contract." Am. Aluminum Extrusions of Ohio, LLC v. Neb. Plastics, Inc., No. 5:09 CV 00763, 2010 WL 2342485, at *2 (N.D. Ohio June 8, 2010) (internal citations omitted). "When confronted with an issue of contractual
The particular section of the Lease that the District claims has been breached by the defendants is Section 10(b), which provides:
(Original Lease § 10(b).)
In their motion for summary judgment, defendants raise several arguments all focused on showing that their arrangement with CCATT does not constitute "allow[ing] another party's use of the Premises, including the Pole," that would entitle the District "to share [in] the rent, revenue or other consideration" from the AT&T-Crown Castle Transaction.
Although the District insists that CCATT does "use" the Premises, the District also argues, in its own dispositive motion, that Section 10(b) is two-pronged, and that defendants are completely ignoring the first prong under which the District is entitled to share in rent, revenue or consideration from "subleas[ing] [of] space on the Premises, including the Pole[.]" The District argues that the arrangement between the defendants and CCATT is a sublease.
The Court will address each motion separately below, but first it will address the underlying contract interpretation. The Court explicitly concludes that Section 10(b) of the Lease is unambiguous because it can be given a definite legal meaning.
In interpreting a contract, a court is "required, if possible, to give effect to every provision of the contract." Sunoco, Inc. (R & M) v. Toledo Edison Co., 129 Ohio St.3d 397, 953 N.E.2d 285, 295 (2011). Here, as properly argued by the District, Section 10(b) has two prongs. The lessee may (1) sublease space on the Premises, including the Pole,
The second prong (the "use" prong) is narrow and links to Section 3 of the
The Court now turns to the separate motions for summary judgment
Defendants' focus is on the "use" prong of the lease. They first assert that CCATT is not an "other party using the Premises[]" because it merely "processes payments and inspects the Tower annually on Tower Holdings' behalf." (MSJ at 3110.) According to defendants, CCATT is contracted to discharge the obligations of Tower Holdings, which the District admits is permissible under the Lease (see Nist Dep. at 5317); therefore, CCATT merely acts on behalf of Tower Holdings.
Although "use" is not specifically defined in the Lease, Section 3 provides:
(Original Lease § 3.) Therefore, to be a party "using the Premises" within the meaning of the second prong of Section 10(b), one must be engaged in the two activities licensed under Section 3.
The unrefuted testimony of Vicky Davis, who was, at relevant times, one of the CCATT employees responsible for the District's site
The District counters that this payment by Crown proves that the arrangement was not a true management agreement where Crown would have received, not made, payment. (MSJ Opp'n at 7728-29; see also MPSJ at 4399-400.) The District says this is a sublease "masquerading" as a management agreement, with CCATT masquerading as a manager. (MSJ Opp'n at 7729.) But this arrangement was adequately explained by Viron in his deposition. Viron's unrefuted testimony is that the $696,247 paid by Crown to AT&T in a lump sum represented the "value of [the] asset" underlying the management agreement at "a point in time[.]" (Viron Dep. at 2337.) This value incorporated "the rev[enue] share that's paid to North Canton under [section] 10(b) [of the Lease]," the amounts anticipated from the collocators (T-Mobile and Verizon), anticipated ground rent, and costs, calculated "over a period of time[.]" (Id. at 2336-37.) In other words, in exchange for gaining AT&T's right, rather than having the manager pay AT&T month-by-month over the period of the management agreement, the value of defendants' share was calculated in advance and paid by Crown in one agreed-upon lump sum, which Crown would recoup over time. It is not difficult to see how this method would have benefited both parties—giving AT&T a one-time infusion that it could immediately use, and saving the manager from performance of a monthly administrative task. This arrangement, which has not been refuted by the District, does not destroy the "management" nature of the agreement.
The Court concludes that the revenue sharing provision in Section 10(b) of the Lease relating to "use" of the premises was not triggered by the AT&T-Crown Castle Transaction because CCATT is not itself "using" the premises to transmit telecommunications, but has merely stepped into the shoes of defendants to perform certain tasks relating to defendants' (and the collocators') use of the Premises. To that extent, defendants are entitled to summary judgment on the breach of contract claim.
The District moves for summary judgment under both prongs of Section 10(b). To the extent the Court has already determined that the defendants are entitled to summary judgment under the second prong (the "use" prong), the District's motion is denied.
The District also claims, under the first prong of Section 10(b) (the "sublease" prong), that "[t]he Management Agreement between [d]efendants and CCATT is, as a matter of law, actually a sublease[]" because Tower Holdings "transfer[ed] an interest in the premises that is less than
In opposition, the defendants argue that the District already contractually agreed that CCATT is a manager, not a sublessee, when the District entered into the Second Amendment, which specifies that "CCATT manages and operates the site related to the Lease for Lessee[.]" (MPSJ Opp'n at 7452, quoting Second Amendment, emphasis omitted.) Furthermore, the defendants assert that, although there is a difference under Ohio law between an assignment of a lease and a sublease, both require that some property interest is transferred. Defendants assert that CCATT has no property interest in the Premises, which is fatal to any claim that CCATT is a sublessee. (Id. at 7453-54, citing cases.) Defendants claim that the District is "gloss[ing] over this point by insisting that any transfer of less than an entire estate is a sublease." (Id. at 7454.)
Defendants have the correct view here. A transfer is not a sublease if the original lessee (Tower Holdings here) retains its property interest and transfers only property-management-related contractual rights and obligations to a third party (CCATT here). Numerous courts have recognized this. (Id. at 7454-55, citing cases.)
But even more determinative, in the Court's view, is the actual language of the "sublease" prong of Section 10(b), which says that the lessee (Tower Holdings) "may sublease space on the Premises, including the Pole[.]" (Original Lease § 10(b), emphasis added.) "Premises" is defined as follows:
(Id. § 1(F).)
This prong of the Original Lease is in addition to the "use" prong. It covers other subletting of the space that comprises the Premises, including any Pole on the Premises. So, for example, Tower Holdings could have sublet a corner of the Premises for someone to build a storage shed and, in that case, any rent paid would have to be shared with the District. Or, as another example, Tower Holdings could have sublet space on the Pole located on the Premises for someone to install a billboard to advertise a business and, in that case, any rent paid would also have to be shared with the District. Or, for that matter, Tower Holdings could have sublet space on the Premises for "uses that go beyond [the] cell tower[,]" such as "Wi-Fi and WiMAX and ... Internet and the broadband," (Doc. No. 90-1, Deposition of Terry Moore
The Court concludes that the revenue sharing provision in Section 10(b) of the Lease relating to "sublease" of the premises was not triggered by the AT&T-Crown Castle Transaction because CCATT is not subleasing space on the Premises. There is nothing in this record to suggest that CCATT has any physical presence on the Premises or on the Pole. Therefore, the District is not entitled to summary judgment and, in fact, the defendants are entitled to summary judgment as to the "sublease" prong of Section 10(b) and the same will be granted.
One last issue must be explicitly discussed. In its motion for partial summary judgment, the District claims it has "preserved for trial[] ... [o]ther breaches
The FAC was filed on April 3, 2017, after this Court dismissed Count One as to AT&T and Counts Two, Four and Five as to all defendants. Fact discovery ended on September 19, 2018, after three extensions of the original December 4, 2017 deadline were granted, and a fourth requested extension was denied. Between September 19, 2018 and February 4, 2019, when the dispositive motions were due, plaintiff made no request to file a second amended complaint or to otherwise clarify that, in its view, its breach of contract claim was broader than the facts arising under the relevant AT&T-Crown Castle Transaction —the only facts alleged in the FAC and the only claim raised in Count One. (See generally, FAC ¶¶ 63-72; see specifically FAC ¶ 66 ("Despite the [District's] demand for payment and notice of default, [defendants] have refused to remit payment to the [District] for the revenue or other consideration that AT&T received from Crown."); Prayer for Relief (a) (seeking as to the breach of contract claim, damages, late fee, and interest "on the unpaid amounts from the date that Crown paid AT&T under the AT&T-Crown Transaction, plus attorneys' fees, expert fees, costs of suit, and court costs").)
The District has not properly preserved any "other breaches" and, liberal pleading standards do not apply "[o]nce a case has progressed to the summary judgment stage[.]" Tucker v. Union of Needletrades, Indus. & Textile Emps., 407 F.3d 784, 788 (6th Cir. 2005) (citing Gilmour v. Gates, McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004) (holding that a plaintiff could not raise a new claim in response to a summary judgment motion)).
Nor need this Court consider any unmade request for leave to amend yet again. See generally Brumbalough v. Camelot Care Ctrs., Inc., 427 F.3d 996, 1001 (6th Cir. 2005) (setting forth factors to consider in determining whether to permit an amendment, including: undue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party, and futility of amendment). This case has been hard-fought from the outset, with the parties disagreeing virtually every step of the way, requiring considerable judicial resources, including referrals to a magistrate judge for resolution of discovery disputes. There was nothing to prevent the District from seeking leave to file a second amended complaint as soon as it discovered "new" claims and/or allegations.
At the very least, the District should have sought such leave during the time it was preparing its summary judgment motion and/or its response to the defendants' summary judgment motion, where it declared that it has "preserved" this late-discovered issue. In both of those documents, the District admits that it believed it had uncovered new claims during discovery —a virtual concession that such claims were not contained in the FAC. Yet, the District did not act or otherwise seek the guidance of the Court, despite its previous proclivity for doing so. (See, e.g., Doc. Nos. 11, 40, 64, 69, 81.)
For the reasons set forth herein, plaintiff's motion for partial summary judgment (Doc. No. 95) is denied and defendants' motion for summary judgment (Doc. No. 93) is granted. Case closed.