Southern Telecom, Inc. v. TW Telecom of Georgia, L.P.

741 S.E.2d 234, 321 Ga. App. 110, 2013 Fulton County D. Rep. 1255, 2013 WL 1277818, 2013 Ga. App. LEXIS 328
CourtCourt of Appeals of Georgia
DecidedMarch 29, 2013
DocketA12A2381
StatusPublished
Cited by12 cases

This text of 741 S.E.2d 234 (Southern Telecom, Inc. v. TW Telecom of Georgia, L.P.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Telecom, Inc. v. TW Telecom of Georgia, L.P., 741 S.E.2d 234, 321 Ga. App. 110, 2013 Fulton County D. Rep. 1255, 2013 WL 1277818, 2013 Ga. App. LEXIS 328 (Ga. Ct. App. 2013).

Opinion

McFadden, Judge.

This dispute is about the interpretation of certain contracts for the creation of telecommunications networks in Atlanta and Birmingham, Alabama. Those contracts were entered in the 1990s between the parties’ predecessors in interest. Appellant Southern Telecom and its predecessors are affiliates of the Southern Company, [111]*111whose subsidiaries own power lines, power poles, conduits, rights-of-way and related equipment. Appellees TW Telecom of Georgia, LP and TW Telecom of Alabama, LLC (together, “TW”), like their predecessors, are in the telecommunications business. TW’s predecessors contracted to run cable and fibers along power lines and rights-of-way and through conduits belonging to Southern Telecom’s affiliates in the Atlanta and Birmingham areas. Under the terms of those contracts Southern Telecom is entitled to a share of the revenue generated over TW’s predecessors’ Atlanta and Birmingham telecommunications networks.

The parties now disagree about the scope of the telecommunication networks from which Southern Telecom’s fee is calculated. The subject networks are identified and their scope is defined in the subject contracts. Those definitions specify how the subject networks at issue are to be distinguished from other networks to which they are interconnected. The subject networks are defined broadly, and the definitions contemplate future growth through expansion.

But the parties did not bargain for growth through acquisition, which is what has occurred. When the TW entities acquired their predecessors in interest, they had preexisting networks of their own in Atlanta and Birmingham. Southern Telecom now claims a right to share in the revenues of those preexisting networks. We find no warrant for that claim in the contracts. The contractual definitions of the subject networks do not support that claim. We find instead that Southern Telecom’s claim to revenue from the preexisting networks is controlled —■ and defeated — by the general rule that assignees’ rights and obligations are no greater than their assignors’.

Ruling on cross-motions for summary judgment, the trial court held that Southern Telecom’s right to a share of revenues, and consequently to information needed to calculate amounts owed, is limited to the networks as they existed at the time the contracts were first assigned. The trial court properly rejected Southern Telecom’s claim to revenue from TW’s preexisting networks and properly ruled that TW was not required to provide financial records related to its preexisting networks. We therefore affirm.

1. Facts.

Summary judgment is appropriate when the pleadings and evidence “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” OCGA § 9-11-56 (c). “On appeal from the grant or denial of summary judgment, we conduct a de novo review, with all reasonable inferences construed in the light most favorable to the nonmoving party.” (Citations omitted.) Forsyth County v. Waterscape Svcs., 303 Ga. App. 623 (694 SE2d 102) (2010).

[112]*112So viewed, the record shows that Southern Telecom’s predecessor entered a contract with ICG Telecom Group, Inc. (“ICGT”) to construct and operate a telecommunications network in Atlanta using Georgia Power facilities, such as power poles, conduits and rights-of-way. Another Southern Telecom predecessor entered a contract with ICG Access Services, Inc. to construct and operate a telecommunications network in Birmingham, Alabama, using Alabama Power facilities. The contracts contained provisions that entitled the Southern Telecom predecessors to a percentage of the revenues the TW predecessors generated from the sale of telecommunications services.

(a) The Atlanta contract’s terms.

In addition to a $5.5 million initial payment, the contract required ICGT to pay during the contract term a “Network Fee,” which it defined as a “percentage [ ] of ICGT’s On-Net Revenue.” The contract defined “On-Net Revenue” as “the gross revenue... received by ICGT or any of its Affiliates derived directly or indirectly from the sale of Telecommunication Services provided over the ICGT Network to Telecommunications Customers located in any On-Net Building by ICGT or any of its Affiliates.” The contract defined “On-Net Building” as “any building, facility, plant, operation or structure in the Atlanta [area] directly or indirectly connected to the ICGT Network.” The contract defined “ICGT Network” as:

the digital telecommunications facilities of ICGT within the Atlanta [area], including, without limitation, the ICGT Fibers as well as other fibers utilized by ICGT, associated equipment and other digital telecommunications facilities that directly or indirectly intersect or connect to any ICGT Fibers or Cable, whether existing on the date hereof or constructed hereafter.

(Although the contract did not define “digital telecommunications facilities,” Federal Standard 1037C defines “telecommunications facilities” as “[t]he aggregate of equipment, such as radios, telephones, teletypewriters, facsimile equipment, data equipment, cables, and switches, used for providing telecommunications services.” Telecommunications: Glossary of Telecommunication Terms at http://www.its.bldrdoc.gOv/fs-1037//dir-036/_5352.htm.)

The contract goes on to distinguish between portions of the ICGT Network that were installed on Georgia Power facilities, which are called “Route Segments,” and portions installed on facilities owned by entities other than Georgia Power, called “Alternate Route Segments.” Southern Telecom was entitled to payments calculated on the [113]*113basis of both, but smaller payments for Alternate Route Segments. The contract defined “Route Segments” as the portion of “fiber optic cable incorporating the ICGT Fibers, to be used by or installed for or on behalf of ICGT’ on Georgia Power facilities. The contract required the parties to designate the Route Segments on Exhibit A to the contract. Exhibit A, in turn, referred to and incorporated a map that set forth the build-out plan for the ICGT Network.

The contract provided that ICGT could propose Route Segments as additions to Exhibit A. Georgia Power could then accept or reject the proposed additions. If Georgia Power rejected a proposed addition, ICGT could use non-Georgia Power facilities, thereby creating an Alternate Route Segment. Alternate Route Segments were part of the ICGT Network, but “any On-Net Revenue generated by any On-Net Building connected to the ICGT Network by an Alternate Route Segment,” would be reduced “for the purpose of calculating the Network Fee due Southern Telecom. . . .”

The contract contained a provision authorizing assignment by ICGT, should ICGT merge or sell all of its assets, “so long as the surviving entity or purchaser . . . assumes all of the obligations of ICGT.” It also provided that it would be governed by Georgia law.

(b) The Birmingham contract’s terms.

Although the Birmingham contract was similar to the Atlanta contract, it defined the revenue to which the Southern Telecom predecessor was entitled in a different manner.

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741 S.E.2d 234, 321 Ga. App. 110, 2013 Fulton County D. Rep. 1255, 2013 WL 1277818, 2013 Ga. App. LEXIS 328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-telecom-inc-v-tw-telecom-of-georgia-lp-gactapp-2013.