United States District Court, S.D. Alabama, Southern Division
K. DuBOSE, CHIEF UNITED STATES DISTRICT JUDGE.
matter is before the Court on Defendants' motion for
summary judgment (Doc. 46), Plaintiffs' Response (Doc.
48) and Defendants' Reply (Doc. 51). The motion is
DENIED, except as otherwise indicated herein
case involves Plaintiffs Harbor Communications, LLC, Boihem
Investment Company, LLC, and J&L, LLC (Plaintiffs
collectively / individually Harbor, Boihem, J&L), and
Defendants Southern Light, LLC (Southern Light) and Uniti
Fiber Holdings, Inc., (Uniti). On February 3, 2018,
Plaintiffs initiated a state court litigation against
Southern Light and Uniti in the Circuit Court of Baldwin
County, Alabama (05-CV-2018-900143.00) alleging breach of the
2016 settlement agreement (the contract) related to
resolution of a prior state court case (CV-2013-900392).
(Doc. 1-1). Plaintiffs seek damages including costs and
March 9, 2018, Defendants removed the case to this Court on
the basis of federal diversity subject matter jurisdiction.
Subsequently, Defendants filed an answer and Southern Light
asserted a counterclaim against Harbor for breach of
contract. (Docs. 2, 5 (amended)). Southern Light seeks
damages from Harbor including interest, costs, and reasonable
Breach of Contract Claim & Counterclaim
breach of contract claims are rooted primarily in the alleged
failure of Southern Light to "properly build out"
the seven (7) COs -- to leave or create space to accommodate
a MUX in the buildout Southern Light performed. Plaintiffs
specify the following "non-exhaustive list of the
ways" the Defendants breached:
(a) Defendants failed to timely transfer to Harbor certain
equipment located in seven COs in Mobile and Baldwin
Counties. Defendants failed to consult and work together with
Harbor to facilitate the buildout and transfer. Defendants
failed to pay for and build the new rack space which was
required to facilitate the transfer of all such equipment to
(b) Defendants failed to pay all costs and fees (including
certain fees owed to AT&T) arising as part of the
transfer and buildout.
(c) Defendants failed to perform the transfer and buildout
“as soon as [could] be reasonably coordinated”
after the execution of the parties' settlement agreement
in December of 2016. The work required by the settlement
agreement should have been completed on or before June of
(d) Throughout 2017, Southern Light demonstrated a general
lack of diligence in regard to performance of its obligations
under the settlement agreement. In or around September of
2017, Southern Light repudiated the settlement agreement by
stating that it was not obligated to perform its terms.
Specifically, Southern Light has refused to complete the
transfer and buildout contemplated by Paragraph 3 of the
(e) Defendants breached the settlement agreement by failing
to give Harbor a ten percent discount below its real
wholesale pricing on certain services.
(f) Harbor has approximately 600 voice line customers being
serviced out of the seven COs affected by the settlement
agreement. 370 of those lines are connected to equipment in
four of the COs to which Harbor lacks direct access. The
Defendants' failure to perform under the settlement
agreement restricts Harbor's access to this equipment. In
the event Harbor's equipment in these COs is in need of
service, Harbor is unable to access it. The revenue stream
which is put in jeopardy by this lack of access is
approximately $290, 000.00 per year.
(g) Southern Light failed to provide Harbor with 6 strands of
dark fiber between all 8 of the COs in Mobile and Baldwin
Counties for Harbor's use.
(Doc. 1-1 at 7). Plaintiffs also allege a
"non-exhaustive list" of damages stemming from the
breach. (Id. at 8-9).
respond that Harbor -- unilaterally and mistakenly -- assumed
Southern Light would leave space for a MUX while never making
it a settlement agreement (contract) term. Also, Southern
Light counterclaims that "Harbor's refusal to accept
colocation space under the terms of the settlement agreement
constitutes a breach[, ]" which has damaged Southern
Light. (Doc. 5 at 4).
attempt to rebut Defendants stance by asserting that it is
common knowledge a MUX would be required, even if not
specified in the contract. Plaintiffs argue that the implied
covenant of good faith and fair dealing supports their
claims. For same, Plaintiffs argue a MUX space was essential
to the contract -- an impliedly known or understood necessity
for carrying out the purpose for which the contract was made,
such that its rejection of the buildout is excused due to
Southern Light's non-performance (failure to
leave/accommodate for MUX space). See,
e.g., Lloyd Noland Fdn., Inc. v. City of
Fairfield Healthcare Auth., 837 So.2d 253, 267 (Ala.
2002) (when a contract fails to specify an obligation
intended to be assumed, the law implies an agreement for that
obligation -- "that according to reason and justice the
parties should do…to carry out the purpose for which
the contract was made"). In sum, Plaintiffs claim the
need for MUX space was a known or understood obligation among
the parties to implement the buildout (as necessary to make
things work), and that Southern Light's failure to meet
this obligation (by not leaving MUX space and failing to use
best efforts to remedy this) is the breach for which they
seek to recover damages.
respond that industry practice/knowledge requires
precise rack design -- i.e., that telecommunication
companies do not make assumptions for other entities about
rack space and require exact disclosure
(diagrams/specs). Thus, rack space for a MUX is not an
implied term of the agreement.
Court finds that there are issues of material fact regarding
the claims made by each party. Specifically, whether MUX
space was an impliedly known or understood necessity for
carrying out the purpose for which the contract was made must
be resolved by a factfinder. However, as to available damages
for each claimed breach, the Court makes the following
findings of fact and conclusions of law.
Findings of Fact
to the settlement -- and the current dispute arising from
same -- are four (4) documents executed by the parties: 1)
the Settlement and Services Agreement (SSA - Doc. 48-1 at
2-14), 2) the Mutual Release which incorporates the SSA
(Release - Doc. 48-1 at 108-115), 3) the Optical Fiber IRU
Agreement (IRU - Doc. 48-1 at 16-50), and 4) the Master
Services Agreement (MSA - Doc. 48-1 at 52-68). The SSA
specifies that the MSA and the IRU, together with the SSA,
"shall constitute the entire relationship between the
parties. Any and all prior
agreements….are…terminated." (Doc. 48-1 at
3-4 at ¶6).
incorporation, the SSA is part of the Release: “The
Settlement and Services Agreement is hereby adopted and
incorporated as if set forth fully herein." (Doc. 48-1
at 109 at ¶2). Regarding damages, the Release provides:
"NO PARTY TO THIS AGREEMENT SHALL BE LIABLE FOR SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES." (Doc.
48-1 at 110 at ¶9) (emphasis in the
argues that the Release covers claims in the prior litigation
and does not speak to anything in the future concerning the
parties' obligations (arising after the effective date of
the Release). As such, Harbor argues that this limitation on
damages in the Release is inapplicable to the current claims
of breach of the SSA. The Court finds that adopting
Harbor's interpretation would make the limitation
provision nonsensical. Earlier in the Release, the parties
released each other from “any and
all…damages” and “liabilities of any
kind” arising from the prior claims. (Doc. 48-1 at
109). Logically the more narrow limitation of liability
provision (which does not exclude “liabilities of any
kind” or “any and all damages”), found
later in the Release, would not apply to prior claims. Thus,
the provision could only be construed to apply to future
claims related any alleged breach of the incorporated SSA.
Harbor's allegations related to Southern Light's
obligation to build out racks (delineated above as claims
(a), (c), (d) and (f)), and Southern Light's