Opinion
216-2020-CV-00555
12-08-2023
New Hampshire Electric Cooperative, Inc. v. Consolidated Communications of Northern New England Company, LLC
ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
David A. Anderson, Associate Justice.
Plaintiff New Hampshire Electric Cooperative ("NHEC") filed suit on July 31, 2020, against Defendant Consolidated Communications ("Consolidated") alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment/quantum meruit. Plaintiff also seeks a number of declaratory judgments pertaining to the timing, effect, and scope of the termination of an agreement between the parties. (Pls.' Compl. (Doc. 1.)) Defendant has filed a counterclaim, seeking its own declaratory judgments and alleging claims for rescission, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. NHEC now moves for partial summary judgment on its breach of contract claim (Count IV) and Consolidated's declaratory judgment claim (Count I) (Pl's Mot. Summ. J. (Doc. 93.)) Consolidated objects. (Def.'s Obj. (Doc. 118.)) For the reasons stated below, the Court DENIES NHEC's motion for partial summary judgment.
As the Court will more fully explain below, although NHEC's motion is denied, the Court finds NHEC's argument regarding collaboration correct as a matter of law.
Facts
The following facts are undisputed unless otherwise noted. NHEC and Consolidated are both parties to a General Agreement Joint Use of Wood Poles ("JUA") that NHEC and Consolidated's predecessor in interest signed on July 1, 1977. (See generally, Doc. 1, Ex. A.) In November 2007, NHEC and FairPoint Communications ("FairPoint") entered into three agreements documents relevant to the JUA, most relevant here Inter-Company Operating Procedure Number 8 ("IOP No. 8".) (Consolidated's Reply to NHEC's Statement of Material Facts ("Def.'s SMF"(Doc. 199 ¶ 2)); (Doc. 1, Ex. D at 83.) Consolidated succeeded FairPoint's interest in the JUA and IOP No. 8 effective July 3, 2017. (Def's SMF ¶ 1.)
As the moving party, NHEC failed to file their response to Consolidated's additional facts in a single, consolidated document, as required under Superior Court Rule 12(g)(3)(e). Thus, the Court will need to refer to two separate statements of material facts. Failure to comply with the rule could result in the Court granting or denying the motion. Rule 12(g)(8).
This page number refers to the PDF page number.
Article VII(d) of the JUA states in relevant part, "[n]othing in the foregoing shall preclude the parties hereto from making any mutually agreeable arrangement for jointly contracting for or otherwise providing for maintenance trimming." (Doc. 1, Ex. A § Art. VII(d).) Additionally, appendix D to the JUA, which governs enforceability of IOPs, states:
This Appendix contains the Intercompany Operating Procedures (supplemental operating routines or working practices) that the parties to this Agreement mutually agree to be necessary or desirable to effectively administer the provisions of this Agreement as provided under Article XXI.
Intercompany Operating Procedures (IOP's) when approved and executed shall be attached hereto. The provisions of any Intercompany Procedures shall be subject to review at the request of either party made in writing to the other party. In case of revision following such review the new arrangements mutually agreed upon shall remain in effect until again revised. In the event of any inconsistency or disagreement between the terms of this Agreement and the terms of the IOP's the terms of this Agreement shall govern. (Id., Ex. D at 57.) IOP No. 8's purpose "is to establish a definite joint Vegetation Management Standard, roles and responsibilities for the clearing and re-clearing activities, and a method of allocating the costs of these activities associated with the construction of lines and maintenance of rights-of-way where both NHEC and FairPoint are attached (or intend to attach) to poles, regardless of ownership or maintenance area." (Doc. 1, Ex. D at 83.) IOP No. 8 divides vegetation management into three categories: construction clearing, maintenance re-clearing, and storm damage cleanup. (Id. at 84.) Maintenance Re-Clearing shall mean:
1. Re-clearing necessary to restore and/or maintain existing rights of-way to the appropriate Joint Vegetation Management Standard set forth above in Section I of this IOP based upon cycles that are generally used or approved by a significant portion of the regional electric distribution industry. Maintenance Re-Clearing shall include ground cutting, trimming of trees and limbs, and the application of appropriate herbicides; and
2. Clearing of any vegetation, including limbs and danger trees, which present an imminent danger to plant and/or equipment.(Id.) Section III of IOP No. 8 establishes the division of roles and responsibilities in regards to maintenance re-clearing, providing:
Maintenance Re-Clearing. NHEC and FairPoint shall meet on or before September 1 of each year or another mutually agreeable date in advance of company budget cycles to collaboratively develop a Maintenance ReClearing plan and budget for the following year. NHEC shall then prepare the Maintenance Re-Clearing plan for the areas described in Section III(A) of this IOP, and shall manage such Maintenance Re-Clearing. NHEC and FairPoint shall review Maintenance Re-Clearing schedules at least monthly during the trimming season. NHEC and FairPoint shall review Maintenance Re-Clearing that is not completed on schedule and shall collaboratively develop a plan to resolve such Maintenance Re-Clearing.(Id. at § 111(A)(2).) Additionally, Section IV of IOP No. 8 allocates how NHEC and Consolidated would share costs, stating:
1. Construction Clearing. NHEC shall pay sixty (60%) percent, and FairPoint shall pay forty (40%) percent, of all costs for Construction Clearing in areas described in Section IV(A) of this IOP. 2. Maintenance Re-Clearing. Beginning on the first January 1 after the closing of the FairPoint / Verizon merger, NHEC shall invoice FairPoint each year for forty (40%) percent of the Maintenance Re-Clearing costs incurred by NHEC in the prior calendar year concerning all poles in areas described in Section IV(A) of this IOP. 3. Storm Damage Cleanup. NHEC and FairPoint shall each pay fifty (50%) percent of costs for Storm Damage Cleanup in areas described in Section IV(A) of this IOP.(Id. at §IV(A).)
In 2018, after Consolidated became a party to the JUA, Consolidated sent NHEC a letter hoping to renegotiate provisions of the JUA and IOP No. 8. (Doc. 119 ¶¶ 17, 18.) Consolidated also provided notice of termination of both documents. (Id.) In a previous order, this Court found that despite the attempted termination, provisions of IOP No. 8 as they applied to JUA poles remained in effect. (Doc. 32 at 12.) After the attempted termination, Consolidated only paid fifty percent of the invoices that NHEC billed to Consolidated in 2019. (Doc. 119 ¶¶ 203, 204.) Consolidated has not paid any of NHEC's billed invoices since 2019. (Id.)
Consolidated attempts to dispute this fact because NHEC has not put the invoices at question into evidence. However, nowhere does Consolidated argue or put into evidence that it actually paid the invoices in question. Therefore, the Court does not view this dispute as genuine.
The parties dispute a variety of material facts, most relevant to the current dispute including: (1) the extent of both Consolidated and NHEC's efforts in reaching mutually agreeable maintenance plans and invoices and (2) whether NHEC's invoices comply with the scope required in IOP No. 8. (See generally Doc. 119 &Doc. 142.)
Analysis
To prevail on a motion for summary judgment, the moving party must establish that there is "no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law." Sabato v. Fed. Nat'l Mortg. Assn, 172 N.H. 128, 131 (2019). The Court decides summary judgment motions by considering "the affidavits and other evidence, and all inferences properly drawn from them, in the light most favorable to the non-moving party." New London Hosp. Ass'n v. Town of Newport, 174 N.H. 68, 71 (2021). In order to defeat summary judgment, the non-moving party "must put forth contradictory evidence under oath sufficient to indicate that a genuine issue of material fact exists." Brown v. Concord Grp. Ins. Co., 163 N.H. 522, 527 (2012). "An issue of fact is 'material' for purposes of summary judgment if it affects the outcome of the litigation under the applicable substantive law." Crowe v. Appalachian Stitching Co., LLC, 174 N.H. 679, 682 (2021). "If there is no genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, the grant of summary judgment is proper." Cincinnati Specialty Underwriters Ins. Co. v. Best Way Homes, 175 N.H. 142, 146 (2022); see also RSA 491:8-a, III.
I. Breach of Contract (Count IV)
NHEC argues that Consolidated breached the JUA and IOP No. 8 without legal excuse when it failed to pay the invoices for maintenance re-clearing that NHEC billed to it after 2019. (Doc. 93 at 6.) Broadly, Consolidated contends that it was not obligated to pay the billed invoices because NHEC failed to collaborate with Consolidated on creating a joint vegetation management agreement, as the JUA and IOP No. 8 require. (Doc. 118 at 6-7.) Consolidated further maintains that NHEC's failure to meaningfully collaborate frustrated the purpose of the contract and demonstrates that NHEC cannot present a prima facie case for breach of contract. (Id. at 18-19.) Consolidated also argues that NHEC's invoices attempted to bill Consolidated for work done outside the scope of IOP No. 8 and billed Consolidated monthly rather than annually, as IOP No. 8 required. (Id. at 11-12.)
"Under New Hampshire law, a breach of contract occurs when there is a failure without legal excuse to perform any promise which forms the whole or part of a contract." Teatotaller, LLC v. Facebook, Inc., 173 N.H. 442, 447 (2020) (quotation omitted). The party seeking to prove a breach of contract must do so by a preponderance of the evidence. See Audette v. Cummings, 165 N.H. 763, 770 (2013). "[F]or a breach of contract to be material, it must go to the root or essence of the agreement between the parties, or be one which touches the fundamental purpose of the contract and defeats the object of the parties in entering into the contract." Found. for Seacoast Health v. Hosp. Corp. of America, 165 N.H. 168, 182 (2013). "A breach is material if: (1) a party fails to perform a substantial part of the contract or one or more of its essential terms or conditions; (2) the breach substantially defeats the contract's purpose; or (3) the breach is such that upon a reasonable interpretation of the contract, the parties considered the breach as vital to the existence of the contract." Id.
The Court will first address the parties' arguments on NHEC's duty to collaborate because the bulk of Consolidated's motion is so focused. Broadly, Consolidated argues that NHEC's failure to collaborate with it and jointly create a maintenance re-clearing plan and budget provided it with legal excuse from complying with IOP No. 8 Section IV(A)(2). More specifically, Consolidated argues that IOP No. Section III(A)(2) is a condition precedent for the application of Section IV(A)(2) and NHEC's failure to so comply relieves Consolidated of its obligation to follow Section IV(A)(2). The Court disagrees, both because the collaboration requirement is not a condition precedent and that even if NHEC breached its duty collaborate, it would not be a material breach.
"Where the occurrence of a condition is required by the agreement of the parties, rather than as a matter of law, a rule of strict compliance traditionally applies." Renovest Co. v. Hodges Dev. Corp., 135 N.H. 72, 78 (1991). "The reasoning behind this rule is that when the parties expressly condition their performance upon the occurrence or non-occurrence of an event, rather than simply including the event as one of the general terms of the contract, the parties' bargained-for expectation of strict compliance should be given effect." Id. at 78-79. "Conditions precedent are not favored in the law, and we will not construe contracts to include them unless required by the plain language of the agreement in question." Greenwald v. Keating, 172 N.H. 292, 298 (2019). "As a rule of thumb, provisions which commence with words such as 'if,' 'on condition that,' 'subject to' and 'provided' create conditions precedent." Id.
Here, Consolidated's argument that IOP No. 8, Section III(A)(2) is a condition precedent overlooks the fact that the section's plain language does not contain words that create a condition. For example, Consolidated relies on the phrase "collaboratively developed" to demonstrate that invoices must be mutually agreed upon as a way to prevent one party from unilaterally imposing costs on one another. (Doc. 118 at 7.) However, neither the phrase "collaboratively develop" nor any other language in IOP No. 8 Section III(A)(2) or the JUA contains the kind of language that expressly creates conditions precedent. See Greenwald, 172 N.H. at 298 (finding that the phrase "in the event that" created a condition precedent); see also Renovest Co., 135 N.H. at 78 (holding that the phrase "subject to" created a condition precedent which made plaintiff's duty to perform contingent on the defendant's performance of certain conditions). Indeed, in order for the Court to find that any language in Section 111(A)(2) created a condition precedent, the Court would have to do at the expense of the Section's plain language, which this Court will not do. Greenwald, 172 N.H. at 298. Accordingly, NHEC's duty to collaborate with Consolidated is not a condition precedent. Id.
Moreover, even assuming that NHEC breached Section III (A)(3), that breach is not material and would not constitute Consolidated's legal excuse not to comply with Section IV (A)(4). Only a material breach of a contract will excuse the other party's nonperformance of its contractual obligations. See Fitz v. Coutinho, 136 N.H. 721, 725 (1993) (holding that because the plaintiff's breach of contract was not material, the defendant's non-performance under said contract was not legally excused). The purpose of IOP No. 8 is two-fold: (1) creating vegetation management standards to comply with national standards and (2) establishing a joint agreement to allocate costs for maintenance re-clearing costs. (Doc. 1, Ex. D at 83.) Thus, arguably, collaboration for invoices and maintenance plans is a purpose behind IOP No. 8. However, this fact is insufficient to show that NHEC's failure to so collaborate "substantially defeats" the contract's purpose because even despite NHEC's lack of collaboration, IOP No. 8 still otherwise provides joint guidelines for vegetation management and does not defeat the essential purpose of the contract. See Ellis v. Candia Trailers and Snow Equip., Inc., 164 N.H. 457, 467-68 (2012) (finding that a breach of a non-compete provision constituted a material breach because "the [non-compete agreement] itself makes it clear that the promise not to compete is vital to the existence of the contract.").
For example, things might turn out differently if there were allegations that one party expressly refused to collaborate with the other party upon request. The Court interprets IOP No.8 Section III(A)(2) to confer on NHEC a duty to collaborate only if Consolidated specifically asked for such collaboration in order to resolve a dispute over a specific invoice. In such a scenario, NHEC's failure to meet and collaborate with Consolidated would be material because its lack of compliance would defeat the essential purpose of the contract because it would signal that NHEC was not interested in acting with any degree of cooperation, in contravention of IOP No. 8's purpose. See id. However, at best, Consolidated's version of events allege that NHEC failed to reach out to Consolidated to collaborate out of a bad faith attempt to unilaterally control the vegetation management costs. (Doc. 142 ¶¶ 23-43.) Without more, NHEC's alleged behavior does not evidence that absence of the collaboration contemplated in IOP No. 8 would substantially defeat its purpose. See Found. for Seacoast Health, 165 N.H. at 182. Therefore, even if the undisputed facts demonstrated that NHEC breached IOP No. 8 Section III(A)(2), the breach is not material and therefore would not excuse Consolidated's breach of Section IV(A)(2). See Fitz, 136 N.H. at 725. Accordingly, the Court finds as a matter of law that IOP No. 8 does not provide a broad requirement of collaboration that would foreclose Consolidated's liability on Count I.
However, the Court finds that NHEC is not entitled to judgment as a matter of law because genuine disputes of material fact remain over whether NHEC's billed invoices comply with the scope IOP No. 8 Section IV(A)(2). Resolving the parties' arguments requires the Court to engage in contract interpretation. "When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole." Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 196 (2010). A court will give a contract's language its plain and ordinary meaning unless the language of the contract is ambiguous. See id. "The language of a contract is ambiguous if the parties to the contract could reasonably disagree as to the meaning of that language." Id. "If the agreement's language is ambiguous, it must be determined, under an objective standard, what the parties, as reasonable people, mutually understood the ambiguous language to mean." Id. "In applying this standard, a court should examine the contract as a whole, the circumstances surrounding execution and the object intended by the agreement, while keeping in mind the goal of giving effect to the intentions of the parties." Id. at 196-97.
The Court starts with the plain language of IOP No. 8, Section IV(A)(2) which provides that for maintenance re-clearing costs, "NHEC shall invoice FairPoint each year for forty (40%) percent of Maintenance Re-Clearing costs incurred by NHEC." (Doc. 1, Ex. D at 84.) Thus, IOP No. 8's plain language establishes that Consolidated was responsible for forty percent of maintenance re-clearing costs that NHEC incurred. See Birch Broad., 161 N.H. at 196. Neither party argues, nor does the Court find, that the above language is ambiguous. Id. Similarly, neither party meaningfully disputes the fact that Consolidated only paid fifty percent of the money it owed in 2019 and none thereafter. (Doc. 119 ¶¶ 203, 204.) Therefore, according to IOP No. 8's plain language, Consolidated would be in breach of its payment obligations if it failed to pay forty percent of maintenance re-clearing costs. See Birch Broad., 161 N.H. at 196.
Moreover, maintenance re-clearing costs are defined in Section II(B) and "shall include ground cutting, trimming of trees and limbs, and the application of appropriate herbicides." (Doc. 1, Ex. D at 83.) Thus, consistent with above, Consolidated must pay forty percent of costs consistent with the above definition. However, Consolidated argues that the invoices it received from NHEC exceeded IOP No. 8's scope. For example, Consolidated points to invoices that NHEC sent it for tree removal, which Consolidated claims is outside the scope of the invoices that it is liable to pay. (Doc. 142 ¶¶ 68, 78.) NHEC does not dispute that it sent the invoices in question to Consolidated in 2022, but rather insists that the invoices comply with IOP No. 8 because the poles in question were covered under IOP No. 8. (Id.) Additionally, as a further example, Consolidated argues that some of NHEC's invoices billed Consolidated for "danger trees", which it argues were explicitly outside the scope of IOP No. 8 Section IV(A)(2). (Id. ¶ 69.) In particular, Consolidated points out that an invoice from Evans Tree Service that included trimming for a tree that was not deemed to be an immediate danger was nevertheless billed as a danger tree. (Id. ¶¶ 73-74.) NHEC does not dispute that it billed the foregoing invoice as a danger tree but explains that the tree was considered a danger. (Id.)
Here, NHEC is only entitled to judgment as a matter of law if the undisputed facts here show that its invoices complied with IOP No. 8 Section IV(A)(2). The above disputed facts demonstrate that material questions remain over whether NHEC's invoices complied with IOP No. 8's plain language. As explained above, the definition of maintenance re-clearing costs expressly does not include tree removal. Indeed, as Consolidated points out, it has provided multiple examples of NHEC billing it for tree removal. Additionally, the Evans Tree Service invoice in particular highlights that there are factual disputes questions as to whether NHEC's billing practices were accurate regarding damage trees. Thus, based on the present facts, the Court cannot determine that NHEC complied with IOP No. 8 Section IV(A)(2)'s plain language. See Birch Broad., 161 N.H. at 196.
NHEC's arguments to the contrary are not persuasive. NHEC argues that the invoices that Consolidated relied on above are from 2022 and thus are not material because Consolidated's initial breach in 2019 discharged NHEC's duty of continued compliance. However, the Court finds that these invoices are material because they show potential systematic issues with NHEC's billing practices and that these billing practices go to the heart of Consolidated's potential liability. See Crowe, 174 N.H. at 682. NHEC further asserts that its employees explained under oath that its billing and invoices practices complied with IOP No. 8. (Geronaitis Aff. ¶ 19.) Nevertheless, as Consolidated points outs, the NHEC's billed invoices that were provided to the Court demonstrates that there could be discrepancies indicating that the invoices did not comply with IOP No. 8. The Court agrees with NHEC that it would not be feasible for them to submit every invoice along with its summary judgment motion. However, as the non-moving party, Consolidated has met its burden in pointing to sufficient contradictory evidence to defeat summary judgment. (See McHugh Aff. ¶ 25); see also Brown 163 N.H. at 527 (finding that non-moving party's deposition testimony sufficiently created a factual dispute to defeat summary judgment). Accordingly, NHEC is not entitled to summary judgment as a matter of law because the task of determining whether NHEC's invoices complied with IOP No. 8 Section IV(A)(2) is an inherently factual determination that is not appropriate for summary judgment. Brown 163 N.H. at 527.
Additionally, in its objection, NHEC argues that Consolidated's scope argument goes only to damages, and because NHEC is only moving for summary judgment as to liability, its argument is premature. (Doc. 145 at 21.) Consolidated contends that this is an issue that goes to liability and not damages because Consolidated would only be liable to pay invoices that complied with IOP No. 8 Section IV(A)(2), which includes scope limitations. (Doc. 152 at 12.) The Court agrees. Consolidated's argument goes to the heart of its purported liability. If the invoices exceeded the scope of IOP No. 8, which Consolidated so contends, then it follows that Consolidated would have no liability to pay the invoices in the first place. NHEC must first prove Consolidated's liability before it can calculate its amount of damages. Accordingly, there is a genuine dispute about whether NHEC's invoices comply with the substantive requirements of IOP No. 8 because the Court presently cannot determine if NHEC's invoices were properly ones for maintenance re-clearing costs. Therefore, summary judgment is not appropriate as to Consolidated's liability. See RSA 491:8-a, III.
In its pleadings, NHEC argues that it is entitled to storm damage clean-up costs because those arguably are not dependent on NHEC's duty to collaborate. However, since the thrust of the parties' arguments focus only on maintenance re-clearing costs, the Court declines to address NHEC's entitlement to storm damage clean-up costs.
To reiterate, the Court finds as a matter of law that Consolidated's arguments stemming from NHEC's alleged lack of collaboration are without merit. There is no condition precedent requiring collaboration prior to the enforcement of Section IV(A)(2) and the undisputed facts here show that the requisite triggering event for NHEC's duty to collaborate-Consolidated specifically asking for collaboration in dispute of an invoice-never occurred. The Court declines to address the parties' other arguments because the Court's above ruling is dispositive regarding NHEC's duty to collaborate. See Antosz v. Allain, 163 N.H. 298, 302 (2012) (declining to address parties' other arguments where the court's holding on one issue was dispositive). However, the Court finds that there is a genuine dispute of material fact as to whether NHEC's invoices complied with IOP No. 8 Section IV(A)(2)'s requirements. Accordingly, NHEC's motion for summary judgment is DENIED.
II. Declaratory Judgment (Counterclaim Count I)
NHEC also seeks summary judgment on Consolidated's Count I, in which Consolidated seeks various declaratory judgments relating to the termination of the JUA. NHEC argues that the Court's previous summary judgment order did not fully resolve all of Consolidated's prayers for relief in Count I. (Doc. 93 at 20-21.) NHEC contends that the Court's previous ruling-that the JUA was not terminated in its entirety-should therefore entitle NHEC to judgment on Count I in its entirety. (Id.) Consolidated argues that the Court's previous ruling granted NHEC summary judgment on the entirety of Count I, and thus it is unnecessary for the Court to grant it summary judgment again. (Doc. 118 at 25.)
The parties do not seem to dispute that the Court's previous ruling substantively disposes of Consolidated's Count I. Accordingly, to the extent that the May 3, 2021 order did not fully grant summary judgment to NHEC, NHEC's current motion for summary judgment as to Consolidated's Count I is GRANTED.
Conclusion
The Court DENIES NHEC's motion for summary judgment as to its Count IV and GRANTS it as to Consolidated's Count I.
SO ORDERED.