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New Talk, Inc. v. Southwestern Bell Telephone Co.

Court of Appeals of Texas, Second District, Fort Worth

May 11, 2017

NEW TALK, INC. APPELLANT
v.
SOUTHWESTERN BELL TELEPHONE COMPANY D/B/A AT&T TEXAS APPELLEE

         FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY TRIAL COURT NO. 141-277582-15

          PANEL: WALKER, GABRIEL, and KERR, JJ.

          OPINION

          ELIZABETH KERR JUSTICE.

         In part to ameliorate the monopoly that local telecommunications carriers such as Southwestern Bell Telephone Company-now more recognizable as AT&T Texas-had historically enjoyed and to foster competition, by law they must now allow local competitors to use their infrastructure. Those competitors, of which New Talk, Inc., is one, must of course pay for the piggybacked services. This dispute arose because New Talk believed that AT&T Texas was overcharging it by not giving certain credits under their agreement; over a period of time, then, New Talk engaged in what was essentially self-help by unilaterally reducing what it paid AT&T Texas. Dissatisfied that the trial court sided with AT&T Texas by concluding that an earlier Public Utility Commission arbitration in AT&T Texas's favor precluded New Talk from getting a do-over, New Talk is now before this court.

         In five issues, New Talk appeals from the summary judgment entered in favor of AT&T Texas. We affirm.

         I. Background

         AT&T Texas (which we will shorten to simply AT&T) is an incumbent local-exchange carrier (ILEC) under the Federal Telecommunications Act of 1996. See 47 U.S.C.A. § 251(h) (West 2014). The Act requires ILECs to provide "interconnection with the [ILEC's] network" for "the facilities and equipment of any requesting telecommunications carrier." Id. § 251(c)(2); see Sw. Bell Tel. Co. v. Fitch, 801 F.Supp.2d 555, 559 (S.D. Tex. 2011). This is accomplished through "interconnection agreements" with competitive local-exchange carriers (CLECs) like New Talk. See 47 U.S.C.A. §§ 251-52 (West 2014); see also Fitch, 801 F.Supp.2d at 559. All interconnection agreements must be approved by the appropriate state commission, which, in this case, is the Public Utility Commission of Texas (PUC). See 47 U.S.C.A. § 252(e)(1).

         In August 2008, AT&T and New Talk entered into an interconnection agreement[1] under which New Talk agreed to pay AT&T for the wholesale resale telecommunication services it provided to New Talk. The agreement became effective when the PUC approved it in September 2008.

         The interconnection agreement provided that in the event of any dispute related to it, including "billing disputes, " either party could "invoke dispute resolution procedures available pursuant to the dispute resolution rules . . . of the [PUC]." A billing dispute did eventually arise between the parties, and in June 2010, New Talk filed a complaint with the PUC alleging that AT&T had threatened to discontinue service to New Talk and seeking injunctive relief to prevent AT&T from doing so. New Talk alleged that AT&T owed New Talk roughly $2.8 million in promotional credits under the interconnection agreement. New Talk also claimed that AT&T wrongfully assessed roughly $300, 000 in late charges and inappropriately required a $260, 000 security deposit. In addition to injunctive relief, New Talk also requested that the PUC enter an order directing AT&T to credit the promotional credits and late charges to New Talk's account and to return New Talk's security deposit. PUC arbitrators entered an order prohibiting AT&T from discontinuing or suspending service to New Talk.

         In August 2010, New Talk and AT&T agreed to stay the PUC proceeding, and the proceeding was stayed for over a year, until November 2011. After the stay was lifted, AT&T counterclaimed based on New Talk's failure to pay for the wholesale resale services that AT&T had provided under the interconnection agreement from May 2009 through March 2012. In response, New Talk admitted that it was not paying the full amounts of AT&T's invoices but asserted that the interconnection agreement allowed it to withhold disputed amounts.

         Over the next year, the parties conducted discovery. AT&T and New Talk each moved for a summary decision regarding AT&T's methodology for calculating the promotional credits that New Talk claimed. The arbitrators determined that AT&T's methodology was correct and granted AT&T's motion. In August 2012, the arbitrators then held a two-day evidentiary hearing on the parties' claims.

         Roughly a year later, the arbitrators entered a 42-page arbitration award finding that New Talk "unlawfully withheld payments for wholesale resale services provisioned and billed by AT&T in violation of the parties' [interconnection agreement]." Concerning the amounts AT&T claimed New Talk owed for unpaid wholesale services from May 2009 through March 2012, the arbitrators further found:

Based on review of AT&T's evidence in support of its claim for $12, 678, 536.90 and New Talk's evidence in support of its disputed claim amounts, the Arbitrators grant AT&T the past due amount of $12, 255, 887.25 before credits for late payment charges for disputed amounts resolved in New Talk's favor are applied to New Talk's bills.

         The arbitrators also required AT&T to issue credits for the late-payment charges after the arbitration award was issued. According to AT&T, the late-payment charges were $31, 698.72, which reduced New Talk's past-due balance to $12, 224, 188.53. New Talk did not move for reconsideration or for rehearing and did not, as it could have, seek judicial review of the arbitrators' decision.

         New Talk did not pay the arbitration-determined amounts due to AT&T. In October 2013, AT&T sued New Talk, asserting claims for breach of contract and unjust enrichment based on New Talk's failure to pay for wholesale resale services provided under the interconnection agreement. AT&T also asserted an attorney's-fees claim. New Talk generally denied AT&T's claims and asserted several affirmative defenses, including limitations, offset, credit, and recoupment.

         New Talk counterclaimed for breach of contract, and AT&T moved to dismiss the counterclaim. At the hearing on the motion, the trial court deferred its ruling, suggested that AT&T move for summary judgment on its claims for affirmative relief, and stayed discovery for 60 days to allow AT&T time to file, and the trial court to hear, such a motion. The trial court further concluded that no discovery was necessary because AT&T would be moving for summary judgment on the legal effect of the PUC arbitration award, not on any factual issues.

         AT&T moved for summary judgment in late July 2014. In mid-August 2014, New Talk moved to continue the summary-judgment hearing, arguing that it needed to conduct discovery so that it could respond to the motion. The trial court granted a continuance, but it denied New Talk's request to conduct discovery because AT&T's summary-judgment motion was based on legal, not factual, issues.

         In September 2014, AT&T amended its summary-judgment motion, arguing that it was entitled to summary judgment as a matter of law on its breach-of-contract claim and on each of New Talk's affirmative defenses because the arbitration award had res-judicata and collateral-estoppel effects. New Talk responded that the award had no preclusive effect and that AT&T's claims were barred by limitations. In its response, New Talk also again objected to the trial court's considering AT&T's summary-judgment motion without allowing New Talk the opportunity to conduct discovery and asked the trial court to continue the summary-judgment response deadline and hearing so that it could do so. New Talk also filed a motion to show authority, asserting that AT&T's attorney did not have authority to represent AT&T because she was employed by AT&T Services, Inc., not by AT&T. See Tex. R. Civ. P. 12.

         In October 2014, the trial court heard New Talk's motion to show authority and AT&T's amended summary-judgment motion. The court orally denied New Talk's motion to show authority and indicated that New Talk's request for a continuance to conduct discovery was also denied.

         In December 2014, the trial court granted AT&T summary judgment on its breach-of-contract claim and awarded AT&T $12, 224, 188.53 in damages. AT&T abandoned its claims for unjust enrichment and for attorney's fees. See Tex. R. Civ. P. 165. On AT&T's motion, the trial court severed AT&T's breach-of-contract claim, making its order on AT&T's summary-judgment motion final and appealable.

         II. Motion to Show Authority

         We address New Talk's fourth and fifth issues first because they challenge AT&T's trial counsel's authority to file and maintain a suit on AT&T's behalf. In its fourth issue, New Talk argues that the trial court erred by denying its motion to show authority. See Tex. R. Civ. P. 12. In its fifth issue, New Talk asserts that because AT&T's trial counsel lacked authority, the trial court consequently erred by considering and granting AT&T's summary-judgment motion.

         New Talk asserted in the trial court and continues to assert on appeal that because AT&T's trial counsel was employed by a different AT&T entity-AT&T Services, Inc.-she did not have the legal authority to represent AT&T. We will review the trial court's denial of New Talk's motion de novo. See Penny v. El ...


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