Opinion
2013-1257
05-09-2016
TOWN OF UNION and Village of Johnson City, Plaintiffs, v. TIME WARNER ENTERTAINMENT–ADVANCE/NEWHOUSE PARTNERSHIP d/b/a Time Warner Cable, Defendant.
Coughlin & Gerhart, LLP by Oliver N. Blaise, III, Esq., of Counsel, Binghamton, Counsel for Plaintiffs. Barclay Damon, LLP by David G. Burch, Jr., Esq., of Counsel, Syracuse, Counsel for Defendant.
Coughlin & Gerhart, LLP by Oliver N. Blaise, III, Esq., of Counsel, Binghamton, Counsel for Plaintiffs.
Barclay Damon, LLP by David G. Burch, Jr., Esq., of Counsel, Syracuse, Counsel for Defendant.
FERRIS D. LEBOUS, J. Plaintiffs Town of Union and Village of Johnson City have commenced this action against defendant Time Warner Entertainment–Advance/ Newhouse Partnership d/b/a Time Warner Cable (hereinafter “Time Warner”) for breach of contract arising from cable television franchise agreements.
Plaintiff Town of Union (hereinafter “Town”) moves for summary judgment on the complaint alleging breach of contract and for a judgment in the amount of $525,022.59. Plaintiff Village of Johnson City (hereinafter “Village”) also moves for summary judgment on the complaint alleging breach of contract and for a judgment in the sum of $481,517.50.
Defendant Time Warner opposes the motion and cross-moves for summary judgment on its counterclaim for moneys had and received by plaintiffs.
As discussed with counsel at oral argument, this Decision & Order is limited to the issue of the effective date of the subject cable television franchise agreements. All other issues raised such as the calculations of gross revenues and franchise fees, interest rates, and late payment fees will be addressed, if necessary, as part of a later scheduled inquest.
BACKGROUND
The subject contracts at issue are Cable Television Franchise Renewal Agreements (hereinafter “Franchise Agreements”) entered into between each of the respective municipalities and Time Warner. The Franchise Agreement between the Town and Time Warner was signed by the Town on July 2, 2008. The Franchise Agreement between the Village and Time Warner was signed by the Village on July 15, 2008. The Public Service Commission approved both Franchise Agreements on January 2, 2009.
As agreed, the sole issue before the court on these motions is whether the Franchise Agreements became effective as of the date of approval by the Town and Village (July 2, 2008 and July 15, 2008, respectively) or the date of the Public Service Commission's approval (January 2, 2009). The relevant provisions of the Franchise Agreements on this limited issue are as follows:
SECTION 1—DEFINED TERMS
(f)'Effective Date' of this agreement shall be the date of approval by the municipality.
* * *
SECTION 19—SEVERABILITY, GOVERNING LAW, POLICE POWERS REQUESTS FOR AUTHORIZATION AND NON–DISCRIMINATION
(g)The terms of the franchise are subject to the approval of the Public Service Commission (PSC).
(Plaintiffs' Exhibits A & O).
Obviously, the calculations of the amounts due and owing under the Franchise Agreements vary greatly depending on whether the approximate six month gap between municipal approval and Public Service Commission approval is factored into said totals. This action was commenced by the filing of a summons and complaint on May 22, 2013. Defendant interposed an answer with counterclaims on July 31, 2013. The court heard oral argument from counsel on February 5, 2016.
At the parties' request, on February 23, 2016, the court and counsel held one subsequent conference in an effort to reach a global settlement. Any briefs and/or correspondence submitted in connection with said conference were not considered in relation to this Decision & Order.
DISCUSSION
I. LAW
A party moving for summary judgment must make a prima facie case by presenting evidentiary facts showing entitlement to judgment as a matter of law, offering sufficient evidence to demonstrate the absence of any material issue of fact (Friends of Animals v. Associated Fur Mfrs., 46 N.Y.2d 1065, 1067–1068, 416 N.Y.S.2d 790, 390 N.E.2d 298 [1979] ). Once the burden shifts, the opposing party must present evidentiary proof in admissible form that demonstrates the existence of a factual issue (Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). The court must accept the non-moving party's evidence as true and grant her every favorable inference (Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ). The parties agree that the sole issue presented for resolution is the proper effective date of these Franchise Agreements and that said determination involves only questions of law.
With respect to contract interpretation, it is well-settled that “[t]he primary rule of construction of contracts [is] that when the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and the parties' reasonable expectations [citations omitted]” (Slamow v. Del Col., 174 A.D.2d 725, 726, 571 N.Y.S.2d 335 [2d Dept.1991], affirmed 79 N.Y.2d 1016, 584 N.Y.S.2d 424, 594 N.E.2d 918 [1992] ). A “[w]ritten agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms [citations omitted]” (Greenfield v. Philles Records, 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780 N.E.2d 166 [2002] ). A contract should be read as a whole to ensure that undue emphasis is not placed upon particular words and phrases (South Rd. Assoc., LLC v. International Bus. Machs. Corp., 4 N.Y.3d 272, 277, 793 N.Y.S.2d 835, 826 N.E.2d 806 [2005] ). Finally, it is also well- settled that contract ambiguities should be construed against the drafter (Dube v. Horowitz, 258 A.D.2d 724, 684 N.Y.S.2d 689 [3d Dept. 1999] ).
II. CONTRACT INTERPRETATION
Plaintiffs contend that the terms of these Franchise Agreements are clear and unambiguous as to the effective date by stating the “[e]ffective date of this agreement shall be the date of approval by the municipality” (Plaintiffs' Exhibits A & O, Section 1[f] ).
Time Warner argues that the terms of the Franchise Agreements are ambiguous as to their effective dates because a conflict exists between Section 1(f) [“effective date of this agreement shall be the date of approval by the municipality”] and Section 19(g) [“the terms of the franchise are subject to the approval of the Public Service Commission”].
According to Time Warner these provisions create a conflict between contractual language and Public Service Law § 222. More specifically, Public Service Law § 222(1) states that “[n]o transfer, renewal or amendment of any franchise ... shall be effective without prior approval of the commission. Such approval shall be required in addition to any municipal approval required under the franchise or by law”. Thus, Time Warner argues that the statutory provisions of PSL § 222 do not permit said agreements to be effective upon municipal approval.
This court finds that the Franchise Agreements are clear and unambiguous in that they unequivocally state that their effective dates are the date of municipal approval under Section 1(f) thereof. Further, the court finds that the terms of the Franchise Agreements are not contrary to public policy and do not contradict PSL § 222. Rather, the court finds that Section 19 of the Franchise Agreements (that the terms of said agreements are subject to the approval of the PSC) is nothing more than a condition subsequent. It is well-settled that “[a] condition subsequent does not delay the enforceability of a contract; it only preserves the possibility that a contract can be set aside later in time if the condition is not fulfilled [citations omitted]” (Matter of Benincasa v. Garrubbo, 141 A.D.2d 636, 638, 529 N.Y.S.2d 797 [2d Dept.1988] ). In sum, contrary to Time Warner's arguments, there is no ambiguity in these Franchise Agreements with respect to their effective dates nor is there any public policy violation.
It is undisputed that Time Warner drafted these Franchise Agreements and, as such, even if the court had found the effective date language to be ambiguous, it would have been construed against Time Warner as the drafter.
At best, as a condition subsequent, the calculations of monies due could be delayed until PSC approval.
III. FALLSBURG
The parties' second argument revolves around the PSC's Fallsburg agency determination entitled the Application of Time Warner Cable [Liberty Division] for Approval of Renewal of its Cable Television Franchise for the Town of Fallsburg [Sullivan County], Case 01–V–0201, June 2, 2008) (referred to herein simply as “Fallsburg ”). Plaintiff argues that Fallsburg is controlling. Time Warner argues that Fallsburg is factually distinguishable from the case at bar and that in any event such agency determinations are not entitled to any deference by the courts.
In Fallsburg, the PSC addressed whether the term of an agreement should run from the date of PSC approval or the effective date as stated in the agreement as of the parties' signature.
The PSC determination states, in pertinent part, as follows:
[t]he agreement further provides that the Town of Fallsburg and Time Warner agree that they are bound by and must comply with the franchise agreement from the effective date until the date of Commission confirmation. The Commission does not require that the term of an agreement run from the date of Commission approval. In addition, the Town of Fallsburg Resolution, dated December 26, 2000, allows a ten year term. The franchise agreement, by its plain language, provides for a ten year term
from the effective date of the parties' signature, January 29, 2001.
(Fallsburg, p. 4).
Time Warner argues that Fallsburg is factually distinguishable from the case at bar because the Fallsburg agreement contained specific language that the parties agreed to be bound for the interim period between the effective date and the date of the PSC approval. On one hand, Time Warner argues that Fallsburg does not govern here because the case at bar does not include the so-called magic language that the parties had expressly agreed to be bound for the interim period prior to the date of PSC approval. On the other hand, Time Warner argues that even if these agreements did contain the Fallsburg magic language that such language should be deemed contrary to public policy as addressed above. The court finds Time Warner's arguments to be inconsistent and without merit.
While there may have been logistical reasons behind the scenes for the insertion of the magic language in Fallsburg in the first instance, the court finds Fallsburg instructive, even if not formally controlling. This court gives great weight and deference to the PSC's decisions and ruling because the legislature has determined “[t]hat the public service commission is the agency best suited to oversee development of the cable television industry in this state in accordance with a statewide service plan and consistent with state communications policy generally; [and] to review the suitability of practices for franchising cable television companies to protect the public interest” (PSL § 211 ). In this court's view, following Fallsburg is consistent with the legislature's policy and designation of the PSC as the agency designed to fulfill its policy statement as set forth in PSL § 211.
One possibility of such logistical reasoning suggested by defendant's counsel is the extreme time lag (8 years was apparently not atypical) that existed between dates of agreements and PSC approval in the era of the Fallsburg decision.
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Any remaining arguments not addressed herein are found to be without merit.
CONCLUSION
In view of the foregoing, the court finds as follows:
1. Plaintiffs' motion is granted to the extent of finding that the effective dates of the Franchise Agreements shall be the dates of approval by the Town and Village, namely July 2, 2008 and July 15, 2008, respectively, with all other issues reserved for determination after an inquest on damages; and
2. Defendant's cross-motion is denied.
This constitutes the order of the court. The court will schedule a conference with counsel for the purpose of scheduling an inquest on damages.