Time Warner Entertainment-Advance/Newhouse Partnership v. Consolidated Smart Broadband Systems, LLC et al, No. 5:2007cv00473 - Document 171 (C.D. Cal. 2008)

Court Description: ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYINGDEFENDANTS' MOTION FOR SUMMARY JUDGMENT by Judge Virginia A. Phillips, re MOTION for Partial Summary Judgment 152 . MOTION for Summary Judgment as to Plaintiff's Claims 155 . Plaintiff's Motion for PartialSummary Judgment is GRANTED and Defendants' Motion forSummary Judgment is DENIED. (am)

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Time Warner Entertainment-Advance/Newhouse Partnership v. Consolidated Sm...dband Systems, LLC et al Doc. 171 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 TIME WARNER ) ENTERTAINMENT - ADVANCE ) 12 / NEWHOUSE PARTNERSHIP ) d/b/a TIME WARNER CABLE, ) 13 a New York general ) partnership, ) 14 ) Plaintiff, ) 15 ) v. ) 16 ) STEADFAST ORCHARD PARK, ) 17 L.P., a California ) Limited Partnership; ) 18 CONSOLIDATED SMART ) BROADBAND SYSTEMS, LLC, ) 19 a California Limited ) Liability Corporation, ) 20 and DOES 1 through 10, ) ) 21 Defendants. ) ________________________ ) 22 Case No. EDCV 07-473-VAP (OPx) [Motion filed on August 11, 2008] ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 23 Defendants' Motion for Summary Judgment, as well as 24 Plaintiff’s Motion for Partial Summary Judgment, came 25 before the Court for hearing on September 22, 2008. 26 After reviewing and considering all papers filed in 27 support of, and in opposition to, the Motions, as well as 28 the arguments advanced by counsel at the hearing, the Dockets.Justia.com 1 Court GRANTS Plaintiff’s Motion for Summary Judgment and 2 DENIES Defendants' Motion for Summary Judgment. 3 4 I. BACKGROUND 5 A. Procedural History 6 On March 29, 2007, Plaintiff Time Warner 7 Entertainment -- Advance/Newhouse Partnership d/b/a Time 8 Warner Cable ("TWC") filed a Complaint in California 9 Superior Court for the County of Riverside, naming as 10 Defendant Consolidated Smart Broadband Systems, LLC 11 ("Consolidated"). On April 20, 2007, Consolidated 12 removed the case to this Court. On June 15, 2007, 13 Plaintiff filed a First Amended Complaint for Damages and 14 Injunctive Relief ("FAC"), which joined Steadfast Orchard 15 Park, L.P. ("Steadfast") as a defendant and asserted 16 eight claims: 17 18 19 20 21 22 23 24 25 (1) Breach of Contract, against Steadfast; (2) Breach of Contract, against Steadfast; (3) Interference with Contract, against Consolidated; (4) Interference with Prospective Economic Advantage, against Consolidated and Steadfast; (5) Negligent Interference with Contract, against Consolidated; (6) Negligent Interference with Prospective Economic Advantage, against Consolidated and Steadfast; (7) Conversion, against Consolidated; and (8) Unjust Enrichment, against Consolidated and Steadfast. 26 /// 27 /// 28 2 1 (FAC at 8-16.) On June 19, 2007, Plaintiff filed a 2 Motion for Preliminary Injunction, which the Court denied 3 on September 4, 2007. 4 5 Trial in this matter was initially set for July 29, 6 2008. The parties filed several Motions in Limine on 7 June 30, 2008. On July 3, 2008, Plaintiff filed an 8 Application to File Documents Supporting Plaintiff's 9 Motions in Limine Under Seal. 10 Application on July 8, 2008. 11 on the Motions in Limine. The Court denied the On July 25, the Court ruled The Court: (1) granted 12 Defendants' Motion in Limine to Preclude References to 13 Any Contract Between Plaintiff and Steadfast; (2) denied 14 Defendants' Motion in Limine to Preclude References to 15 "Theft"; and (3) granted in part Defendants' Motion in 16 Limine to Preclude Any Alleged Pattern of Unfair 17 Behavior. On July 25, the Court also (1) denied 18 Plaintiff's Motion in Limine to Preclude Argument and 19 Evidence re: FCC Regulations; (2) granted Plaintiff's 20 Motion in Limine to Exclude Evidence of Customer 21 Communications; and (3) granted Plaintiff's Motion in 22 Limine to Exclude Evidence Regarding Profanity. 23 24 At a pretrial conference on July 24, 2008, the Court 25 vacated the trial date and permitted the parties to file 26 motions for summary judgment. 27 /// 28 3 1 Defendants Steadfast and Consolidated filed a Notice 2 of Motion and Motion for Summary Judgment ("Defs.' 3 Mot."), a supporting Memorandum of Points and Authorities 4 ("Defs.' Mem. P. & A."), a Proposed Statement of 5 Uncontroverted Facts and Conclusions of Law ("Defs.' 6 SUF"), and six (6) supporting declarations. Plaintiff 7 filed an Opposition to the Motion for Summary Judgment 8 ("Pl.'s Opp'n"), as well as a Statement of Genuine Issues 9 of Material Fact ("Pl.'s SGIF"). On September 8, 2008, 10 Defendants filed a Reply Memorandum of Points and 11 Authorities in Support Defendants' Motion for Summary 12 Judgment ("Reply"). 13 14 Plaintiff filed a Motion for Partial Summary Judgment 15 ("Pl.'s Mot."), along with a Memorandum of Points and 16 Authorities ("Pl.'s Mem. P. & A."), a Statement of 17 Uncontroverted Facts ("Pl.'s SUF"), and three (3) 18 supporting declarations. Defendants filed an Opposition 19 to the Plaintiff's Motion for Partial Summary Judgment 20 ("Defs.' Opp'n"). On September 8, 2008, Plaintiff filed 21 a Reply to Defendants' Opposition to Motion for Partial 22 Summary Judgment ("Pl.'s Reply"). 23 24 B. Factual Background 25 This dispute revolves around several contracts 26 relating to the provision of cable television services at 27 /// 28 4 1 a Banning, California, apartment complex called Orchard 2 Park. 3 4 1. Uncontroverted Facts 5 The following material facts have been adequately 6 supported by admissible evidence and are uncontroverted. 7 They are "admitted to exist without controversy" for the 8 purposes of this Motion. See Local R. 56-3. 9 10 Defendant Steadfast owns the Orchard Park apartment 11 complex in Banning, California ("Orchard Park"). (See 12 Pl.'s SUF ¶ 1.) 13 14 a. 1998 Contract between MediaOne and California Investors VI 15 In July 1998, Colony Communications d/b/a MediaOne 16 entered into a ten-year contract with California 17 Investors VI, then the owner of Orchard Park Apartments. 18 (Pl.'s SUF ¶ 1; Barnes Decl. Ex. 2, Cable Television 19 Installation and Service Agreement ("1998 Contract").) 20 21 Under the heading "Assignment," the parties agreed 22 that the Contract would bind "successors and assign 23 [sic], and runs with the land." (Barnes Decl. Ex. 2, 24 1998 Contract ¶ 12; Pl.'s SUF ¶ 9.) 25 26 The 1998 Contract granted MediaOne and "its 27 successors and assigns" a ten-year "irrevocable license 28 5 1 in gross" to gain access to Orchard Park to offer 2 services. 3 Contract (Pl.'s SUF ¶ 2; Barnes Decl. Ex. 2, 1998 ¶¶ 2(a)-(b), 9.) In fact, the 1998 Contract 4 gave MediaOne both the right and the obligation to offer 5 cable television services to Orchard Park residents. 6 (Barnes Decl. Ex. 2, 1998 Contract ¶¶ 3, 2(c).) 7 8 Under the 1998 Contract, MediaOne "own[ed] and 9 operat[ed] a cable television system" in Orchard Park. 10 (Id. at recitals.) MediaOne had ownership of all cable 11 equipment and facilities, as well as the right to remove 12 any of it.1 Finally, the 1998 Contract gave MediaOne the 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 1 The Contract defined "Equipment and Facilities" as: "all property installed and/or used in the distribution of the SERVICE (hereinafter described) and broadband communication service at the PROPERTY, including equipment and appurtenances reasonably necessary or useful, or which may become necessary or useful . . . for furnishing broadband communications services which COMPANY may from time to time provide to the PROPERTY . . ." (Barnes Decl. Ex. 2, 1998 Contract ¶ 4.) The 1998 Contract further provided: "Title to the System and all of the equipment and facilities associated therewith shall be and remain vested with COMPANY and no part of the System shall be deemed a fixture. No person or entity, including OWNER, shall acquire any rights in or to the System or shall in any way move, disturb, alter or change any of COMPANY’s equipment and facilities or attach, directly or indirectly, in whole or in part, any equipment or device to the System without the prior written consent of COMPANY." (Barnes Decl. Ex. 2, 1998 Contract ¶ 4.) 28 6 1 right to "remove any or all of its Equipment"; any 2 deactivated equipment would remain the property of 3 MediaOne. (Id. at ¶ 11.) 4 5 Barring "Acts of God" and the like, termination of 6 the 1998 Contract could only take place upon sixty days’ 7 written notice from MediaOne if the latter was unable to 8 continue serving the Orchard Park complex because of 9 laws, rules, regulations, a court judgment, or “any 10 similar reason beyond the reasonable control” of 11 MediaOne. (Id. at ¶¶ 10, 21.) The 1998 Contract did not 12 provide for unilateral termination of the contract by the 13 owner of Orchard Park. (Id.) 14 15 16 b. 1999 Asset Exchange Agreement In 1999, a Time Warner Cable affiliate, Summit Cable 17 Services of Georgia, Inc., obtained rights to the 1998 18 Contract by executing an Asset Exchange Agreement with 19 MediaOne. (Pl.'s SUF ¶¶ 12-14; Declaration of Steven T. 20 Coopersmith in Support of Time Warner Cable's Motion for 21 Partial Summary Judgment ("Coopersmith Decl.") ¶¶ 2, 7, 22 Ex. 7, Declaration of Valerie Tyler ("Tyler Decl.") ¶ 1, 23 Ex. 1, Asset Exchange Agreement 1.)2 All contracts not 24 specifically excluded in the 1999 contract were 25 transferred to the Time Warner Cable affiliate. (Pl.'s 26 2 The Court overrules objections to the portions of the Coopersmith and Tyler Declarations to the extent that 28 they are cited here. 27 7 1 SUF 20.) The 1999 Asset Exchange Agreement excluded no 2 Multi-Dwelling Units ("MDU"), and Orchard Park is an MDU. 3 (Pl.'s SUF 20-21; Tyler Decl. Ex. 1, § 2.1.) 4 5 6 c. 2001 Asset Purchase Agreement On June 14, 2001, TWC obtained rights to the 1998 7 Contract through an internal restructuring agreement 8 executed between Summit and TWC. 9 Pl.'s SUF ¶¶ 12, 22-24.) (Pl.'s Mem. P. & A. 6; The interests transferred by 10 the contract included those affected by the Asset 11 Exchange Agreement between MediaOne and Summit, including 12 cable systems in Banning, California. (Pl.'s SUF ¶¶ 2413 27; Tyler Decl. Ex. 2, Asset Purchase Agreement, 14 recitals, Art. 1.1.) 15 d. 16 2003 Real Estate Purchase Agreement On January 13, 2003, Steadfast Properties and 17 18 Development, Inc.3 executed a contract with California 19 Investors VI for the purchase of Orchard Park. (Pl.'s 20 SUF ¶ 29; Declaration of Ana Marie Del Rio ("Del Rio 21 Decl.") Ex. 1, Real Estate Purchase Agreement ("Purchase 22 Agreement") at 15-39.) 23 /// 24 /// 25 26 3 Steadfast Properties and Development, Inc. and Steadfast L.P. are different entities. These two 27 Steadfast entities executed an agreement between 28 themselves on June 3, 2003, discussed below. 8 1 The agreement expressed Steadfast’s "wishes to 2 purchase the Apartment Development on the terms provided 3 in this Agreement." (Id. at 1.) Steadfast "disclaim[ed] 4 all warranties," stated that it was an experienced 5 purchaser, accepted the property "as is," and agreed to 6 accept adverse economic conditions not revealed by its 7 investigations. (Id. at ¶ 9(c).) 8 9 Steadfast bought the complex, including California 10 Investors VI’s "right, title, and interest" "under all 11 contracts to which Seller is a party relating to the 12 operation, maintenance or management of the Property, 13 including any agreements for . . . cable television . . . 14 (collectively, the 'Service Contracts')." (Defs.' SUF ¶¶ 15 26-27; Pl.'s SUF ¶ 30; Del Rio Decl. Ex. 1, Purchase 16 Agreement ¶ 2(E)). 17 18 The Purchase Agreement required Steadfast to deposit, 19 before the close of escrow, "an instrument (the 20 'Assumption'), executed by Buyer, assuming Seller's 21 obligations under all Leases and Service Contracts . . . 22 ." (Del Rio Decl. Ex. 1, Purchase Agreement ¶ 5(c)(iii); 23 Defs.' SUF ¶ 28.) 24 25 26 e. 2003 Amendments to the Purchase Agreement On February 20, 2003, Steadfast and California 27 Investors VI executed the First Amendment of Real Estate 28 9 1 Purchase Agreement. (Coopersmith Decl. Ex. 3, First 2 Amendment ("First Am.") ¶ 2(a).) The First Amendment 3 modified some provisions of the Purchase Agreement, did 4 not mention cable services, and otherwise affirmed all 5 terms of the Purchase Agreement. (Id. at ¶¶ 1, 2(a).) 6 7 On April 10, 2003, Steadfast and California Investors 8 VI executed the Second Amendment of Real Estate Purchase 9 Agreement. (Coopersmith Decl. Ex. 4, Second Amendment 10 ("Second Am.").) It changed some provisions of the 11 Purchase Agreement, did not mention cable television, and 12 otherwise affirmed all terms of the Purchase Agreement. 13 (Id. at ¶¶ 1, 2(a).) 14 15 16 f. 2003 Agreement Between Steadfast Entities On June 3, 2003, Steadfast Properties and 17 Development, Inc. transferred all its interest in the 18 Orchard Park property to Steadfast Orchard Park, L.P. 19 The assignee Steadfast entity assumed all the obligations 20 previously incurred by the assignor. 21 42; Barnes Decl. Ex. 3 recitals.) 22 /// 23 /// 24 /// 25 /// 26 /// 27 28 10 (Defs.' SUF ¶¶ 41- 1 2 g. "Assignment & Assumption of Contracts, Intangibles, Warranties and Plans" Later in 2003,4 pursuant to paragraph 5(c)(iii) of 3 the Purchase Agreement, Steadfast executed the 4 "Assumption & Assignment of Contracts, Intangibles, 5 Warranties and Plans." (Defs.' SUF ¶¶ 30-31; Pl.'s SGIF 6 ¶ 4; Coopersmith Decl. Ex. 5, Assignment and Assumption 7 of Real Estate Purchase Agreement ("Assumption").) Under 8 the Purchase Agreement, Steadfast was to assume "all 9 Leases and Service Contracts" in the Assumption. (Del 10 Rio Decl. Ex. 1, Purchase Agreement ¶ 5(c)(iii).) 11 12 The Assumption on its face and as executed does not 13 appear to comply with the requirements of Purchase 14 Agreement paragraph 5 (c) (iii). (See Coopersmith Decl. 15 Ex. 5, Assumption.) The title of the Assumption 16 complies with the Purchase Agreement: it includes 17 "contracts." The text of the Assumption, however, 18 appears to stray from the requirements of the Purchase 19 Agreement: it does not mention any contracts. Instead, 20 it lists other categories mentioned at Purchase Agreement 21 paragraph 5(c)(iii), including warranties, permits, 22 23 24 25 26 27 28 4 The Assumption does not have a date. Defendants claim it was executed after the assignment between the two Steadfast entities. (Second Supplemental Declaration of Ana Marie Del Rio ("Second Supp. Del Rio Decl.") ¶ 5.) Plaintiff objects that Del Rio lacks personal knowledge and her statement is speculative. (Plaintiff's Evidentiary Objections to Second Supplemental Declaration of Ana Marie Del Rio ¶ 2.) The Court sustains this objection. 11 1 intangibles, and plans. (Defs.' SUF ¶¶ 31-32; 2 Coopersmith Decl. Ex. 5, Assumption at Title, ¶ 1(d).) 3 In the text of the Assumption, Steadfast expressly 4 assumed all the obligations of the items listed therein. 5 (Coopersmith Decl. Ex. 5, Assumption ¶ 3.) 6 7 8 h. Steadfast's Due Diligence Investigation As part of the 2003 purchase of Orchard Park, 9 Steadfast performed a "due diligence" investigation. 10 (Defs.' SUF ¶ 47.) Steadfast’s normal due diligence 11 efforts include searching for cable television contracts. 12 (Defs.' SUF ¶ 48.)5 13 14 When Orchard Park was sold to Steadfast, cable 15 service was provided by Plaintiff TWC. (Pl.'s SUF ¶ 28.) 16 Pedestals, as well as lockboxes and associated equipment, 17 would have been visible on the Orchard Park grounds. 18 (See Declaration of Ronald DiGrandi ("DiGrandi Decl.") ¶ 19 56; Declaration of Michael Sagona in Support of 20 Plaintiff's Reply to Defendants' Opposition to 21 22 23 24 25 26 5 At the hearing on September 22, 2008, Defendants' counsel argued that Steadfast asked the Orchard Park property manager whether there was a contract for cable television services at Orchard Park as part of Steadfast's due diligence investigation, and that the property manager indicated that there was no such contract. A review of the evidence submitted discloses no basis for this statement. 6 Defendants object that DiGrandi is drawing legal conclusions. The Court relies on the declaration only to 28 the extent that it describes facilities at Orchard Park. 27 12 1 Plaintiff's Motion for Preliminary Injunction ("Sagona 2 Reply Decl.") ¶¶ 6-9, 11-12 Ex. 1-2.)7 3 4 5 i. TWC Service to Orchard Park On June 10, 2003, TWC’s computerized records show 6 that someone from Orchard Park’s Leasing Office called 7 TWC Desert Cities to order internet service for the 8 office. (Pl.'s SUF ¶ 35; Declaration of Patti Johnson 9 ("Johnson Decl.") ¶ 6, Ex. 2.)8 From June 17, 2003 to 10 December 2006, Steadfast’s Orchard Park office received 11 monthly invoices from Time Warner Cable Desert Cities. 12 (Pl.'s SUF ¶ 36; Johnson Decl. Ex 1.) TWC’s summary of 13 its computerized records indicate that personnel from 14 Orchard Park requested service or repairs for Orchard 15 Park in 2003, 2005, and 2006. (Johnson Decl. ¶ 6, Ex. 2; 16 Pl.'s SUF ¶¶ 38-41.) 17 18 19 j. 2006 Change in Service to Orchard Park In late 2004 or early 2005, Defendant Steadfast began 20 discussing replacement of TWC’s services with 21 Consolidated. (Del Rio Decl. ¶ 14.) Steadfast never 22 contacted the TWC Desert Cities office about this change. 23 24 7 Submitted July 31, 2007 in support of Plaintiff TWC's Reply to Defendants' Opposition to Plaintiff's 25 Motion for Preliminary Injunction. 26 8 Defendants object to the information cited here as hearsay or inadmissible business records (Defs.' Obj. to 27 Evidence Submitted in Support of Pl.'s Mot. 2.) The Court 28 overrules the objection. 13 1 (Declaration of Steven T. Coopersmith in Support of Time 2 Warner Cable's Opposition to Defendants' Motion for 3 Summary Judgment ("Coopersmith Opp'n Decl.") Ex. B, 4 Defs.' Admis. No. 14.) In January 2005, Steadfast (with 5 Consolidated's assistance) sent a letter by certified 6 mail to TWC's Los Angeles office stating its belief that 7 there was no contract between them, and TWC was providing 8 services to Orchard Park residents on a month-to-month 9 basis. (Del Rio Decl. ¶¶ 17-19, Ex. 2.) The letter 10 indicated that Steadfast intended to grant Consolidated 11 access to the property pursuant to FCC regulations, and 12 went on to state that TWC could either remove, sell, or 13 abandon its existing inside wiring. 14 2.) 15 24.) (Id. ¶¶ 18-19, Ex. No response to this letter was received. (Id. ¶ In February 2006, Steadfast and Consolidated 16 entered into a contract granting Consolidated the 17 exclusive right to provide television programming 18 services at Orchard Park. (Id. ¶¶ 28, 31.) 19 20 After the new contract was executed, Consolidated 21 disconnected TWC's equipment, installed its own 22 equipment, and began transmitting its own signal in 23 Orchard Park in December 2006. (Hernandez Decl. ¶¶ 2, 7; 24 Coopersmith Opp'n Decl. Ex. D, Sagona Decl. ¶ 1.) 25 /// 26 /// 27 /// 28 14 1 In July 2008 the Contract between MediaOne and 2 California Investors VI expired. (Barnes Decl. Ex. 2, 3 1998 Contract ¶ 9.) 4 5 2. a. 6 7 Disputed Facts Recording of the 1998 Contract Defendants seek to establish that the 1998 Contract 8 between California Investors VI and MediaOne does not 9 bind Defendants because it was not recorded. 10 ¶ 93.) (Defs.' SUF Defendants filed a Request for Judicial Notice of 11 Plaintiff's Lack of A Real Property Interest on July 24, 12 2008 ("Request for Judicial Notice"). Plaintiff argues 13 that Steadfast's alleged failure to find the 1998 14 Contract during its due diligence investigation does not 15 show that the contract was not recorded. 16 8.) (Pl.'s SGIF ¶ Plaintiff filed an Opposition to Defendants' Request 17 for Judicial Notice on August 25, 2008. This dispute 18 over the Contract's recordation is relevant to the bona 19 fide purchaser defense to the breach of contract and 20 conversion claims. 21 22 Judicial notice is proper where facts are generally 23 known or easily determined from sources the accuracy of 24 which cannot reasonably be questioned. 25 201(b). Fed. R. Evid. Facts in public records are suitable for 26 judicial notice. Metropolitan Creditors' Trust v. 27 /// 28 15 1 PriceWaterHouseCoopers, 463 F. Supp. 2d 1193, 1197 (E.D. 2 Wash. 2006). 3 4 "To prove the absence of a record" however, the 5 Federal Rules of Evidence provide a different procedure. 6 "To prove the absence of a record" the proponent should 7 submit "evidence in the form of a certification in 8 accordance with [Federal] [R]ule [of Evidence] 902 or 9 testimony, that diligent search failed to disclose the 10 record, report, statement, or data compilation, or 11 entry." Fed. R. Evid. 803(10). 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Here Defendants seek to establish the absence of the 1998 Contract in a public record. As production of the necessary county records would be onerous, they refer to a privately-obtained preliminary title report. (Request for Judicial Notice 2; Del Rio Decl. Ex. 1.) The title report document is not suitable for judicial notice as it is not a public record or otherwise beyond reasonable dispute. Defendants do not cite to any cases where such a document has been the subject of judicial notice, nor has the Court's research uncovered such authorities. (Id. at 2-4.) The correct procedure for establishing failure to record is therefore submission of the title report and a statement that a diligent search failed to disclose the 1998 Contract. See Fed. R. Evid. 803(10). Here Defendants have submitted such materials and the Court 28 16 1 considers them as evidence, simply not as matters 2 warranting judicial notice. Plaintiff has not produced 3 evidence to show affirmatively that the Contract was 4 recorded. 5 6 7 8 In any event, whether or not the 1998 Contract was recorded, Steadfast was not a bona fide purchaser for the reasons discussed below. 9 10 b. 11 12 Results of the Due Diligence Investigation According to Defendants, Steadfast created a file 13 folder for cable contracts during its due diligence 14 investigation, and at the end of the investigation, the 15 folder was empty. (Defs.' SUF ¶ 48; Supplemental 16 Declaration of Ana Marie Del Rio ("Supp. Del Rio Decl.") 17 ¶ 7, Ex. 2.) 18 19 Plaintiff objects that this evidence of Steadfast's 20 efforts lacks foundation and is unreliable because there 21 is no indication that the file folder was created at the 22 same time as the due diligence investigations. 23 (Plaintiff's Evidentiary Objections to the Supplemental 24 Declaration of Ana Marie Del Rio ¶ 2.) 25 overrules this objection. 26 27 /// 28 17 The Court 1 c. Likelihood that Service at Orchard Park was Provided on a Month-to-Month Basis Defendants claim that month-to-month cable television 2 3 service was sufficiently prevalent in the market around 4 Orchard Park that Steadfast had a reasonable belief that 5 TWC provided cable service on a month-to-month basis at 6 Orchard Park. (Defs.' SUF ¶¶ 52-53; Second Supplemental 7 Declaration of Ana Marie Del Rio ("Second Supp'l Del Rio 8 Decl.") ¶¶ 11-12.) Plaintiff objects to these assertions 9 as improper lay or expert opinion testimony. (Plaintiff's 10 Evidentiary Objection to Second Supplemental Declaration 11 of Ana Maria Del Rio ¶ 6.) The Court sustains this 12 objection. 13 14 d. 15 16 17 18 19 Communications Regarding Change in Service at Orchard Park The parties dispute who Steadfast did or did not contact at TWC regarding Steadfast's interest in changing the cable television arrangements at Orchard Park.9 The /// 20 21 22 23 24 25 26 27 9 Defendants claim that Steadfast contacted TWC’s Los Angeles Division and communicated with Stuart Costello. (DiGrandi Decl. ¶ 11; Del Rio Decl. ¶ 21.) Costello disagrees with other TWC staff, namely Scott Koehler and Ronald DiGrandi, about whether Costello forwarded a January 2005 inquiry letter from Steadfast to the appropriate people at TWC Desert Cities. (Declaration of Scott Koehler ("Koehler Decl.") ¶¶ 7-9; DiGrandi Decl. ¶¶ 11-12; Koehler Decl. ¶¶ 7-9.) Both Koehler and DiGrandi were responsible for responding to requests about TWC contracts at various apartment complexes. (Koehler ¶ 6; DiGrandi ¶ 9.) 28 18 1 Court need not resolve this issue in order to decide 2 Plaintiff's motion for partial summary judgment. 3 4 II. LEGAL STANDARD 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Plaintiff filed a motion for "partial summary judgment," more properly construed here as one for summary adjudication because Plaintiff seeks the adjudication of certain issues rather than judgment on entire claims. Summary adjudication "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Civ. P. 56 (c). Fed. R. These standards are the same as for a motion for summary judgment. See State of California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998); Castlerock Estates, Inc. v. Estate of Markham, 871 F. Supp. 360, 363 (N.D. Cal. 1994). A motion for summary judgment shall be granted when the moving party shows that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson, 477 U.S. at 250. 24 25 Generally, the burden is on the moving party to 26 demonstrate that it is entitled to summary judgment. 27 Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998); 28 19 1 Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 2 F.2d 1030, 1033 (9th Cir. 1983). The moving party bears 3 the initial burden of identifying the elements of the 4 claim or defense and evidence that it believes 5 demonstrates the absence of an issue of material fact. 6 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 7 8 9 10 11 12 13 14 Where the non-moving party has the burden at trial, however, the moving party need not produce evidence negating or disproving every essential element of the non-moving party’s case. Celotex, 477 U.S. at 325. Instead, the moving party’s burden is met by pointing out that there is an absence of evidence supporting the nonmoving party’s case. Id. 15 16 17 The burden then shifts to the non-moving party to 18 show that there is a genuine issue of material fact that 19 must be resolved at trial. Fed. R. Civ. P. 56(e); 20 Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256. The 21 non-moving party must make an affirmative showing on all 22 matters placed in issue by the motion as to which it has 23 the burden of proof at trial. Celotex, 477 U.S. at 322; 24 Anderson, 477 U.S. at 252. See also William W. 25 Schwarzer, A. Wallace Tashima & James M. Wagstaffe, 26 Federal Civil Procedure Before Trial § 14:144. 27 /// 28 20 1 A genuine issue of material fact will exist "if the 2 evidence is such that a reasonable jury could return a 3 verdict for the non-moving party." 4 248. Anderson, 477 U.S. at In ruling on a motion for summary judgment, the 5 Court construes the evidence in the light most favorable 6 to the non-moving party. Barlow v. Ground, 943 F.2d 7 1132, 1135 (9th Cir. 1991); T.W. Electrical Serv. Inc. v. 8 Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630-31 9 (9th Cir. 1987). 10 11 III. DISCUSSION 12 Plaintiff seeks adjudication of the following issues: 13 14 1. That TWC is the rightful successor-in-interest to 15 MediaOne under the 1998 Contract; 16 2. That Defendant Steadfast is the rightful successor- 17 in-interest to the rights and obligations of 18 California Investors VI under the 1998 Contract; 19 3. 20 That the FCC Regulations codified at 47 C.F.R. § 76.804(a) do not apply; 21 4. That Steadfast was not entitled to terminate the 1998 22 Contract or TWC's irrevocable license; and 23 24 5. 25 That Steadfast may not assert the defense that it was a bona fide purchaser at trial. 26 /// 27 /// 28 21 (Pl.'s Mot. 2.) 1 Defendants seek summary judgment on each of 2 Plaintiff's claims. (Defs.' Mot. 2.) 3 4 5 6 For the reasons set forth below, Plaintiff's motion for summary adjudication is GRANTED and Defendants' motion for Summary Judgment is DENIED. 7 8 9 A. 10 Successors and Assigns Under the 1998 Contract Plaintiff seeks to establish that the 1998 Contract 11 between California Investors VI and MediaOne binds both 12 Defendant Steadfast and Plaintiff TWC. 13 2.) (See Pl.'s Mot. Defendants assert that the burden of the 1998 14 Contract does not run to Steadfast, either explicitly or 15 implicitly, and therefore they are entitled to summary 16 judgment in their favor on Plaintiff's claims for breach 17 of contract, intentional and negligent interference with 18 contract, and intentional and negligent interference with 19 prospective economic advantage. (Defs.' Mem. P. & A. 1020 12.) If Plaintiff can demonstrate the burdens and 21 benefits of the 1998 Contract run to Steadfast and TWC, 22 respectively, then it can show that Steadfast was not 23 entitled to terminate the 1998 Contract by granting 24 Consolidated exclusive access to the Orchard Park 25 property. As the Court grants Plaintiff's motion for 26 partial summary judgment, it denies Defendants' request 27 for summary judgment on claims one through six. 28 22 1 Breach of contract is the wrongful failure to perform 2 a contract. The parties agree that California courts 3 determine the meaning of a contract, including whether it 4 binds successors and assigns, by examining the parties’ 5 intent at the time of contracting, as shown by acts, 6 subject matter, and words. Cal. Civ. Code § 1636; 7 Weidner v. Zieglar, 218 Cal. 345, 349 (1933); Enterprise 8 Leasing Corp. v. Shugart Corp., 231 Cal. App. 3d 737, 745 9 (1991); Defs.' SUF ¶¶ 14-15; 7 California Jurisprudence 10 3d Assignments § 18. "Such intent is to be inferred, if 11 possible, solely from the written provisions of the 12 contract . . . . If contractual language is clear and 13 explicit, it governs." Powerine Oil Co., Inc. v. 14 Superior Court, 37 Cal. 4th 377, 390 (2005) (internal 15 citations omitted); Cal. Civ. Code §§ 1639. 16 17 18 19 20 21 22 23 24 1. Successor in interest to California Investors VI Where a contract states that it shall be binding on successors and assigns, "[n]o express assumption of those obligations by an assignee [is], therefore, necessary." Brady v. Fowler, 45 Cal. App. 592, 595 (1920); see also Weidner, 281 Cal. 345, 349; 7 California Jurisprudence 3d Assignments § 18. 25 26 The burdens of the 1998 Contract run to Defendant 27 Steadfast under both the terms of the 1998 Contract and 28 23 1 the 2003 Purchase Agreement. Plaintiff has produced 2 sufficient evidence to show that Steadfast will not be 3 able to support its contention that it was a bona fide 4 purchaser. 5 6 a. Intent to Bind Successors and Assigns 7 8 9 10 11 12 13 14 15 16 17 18 19 The meaning of contracts is to be inferred, to the greatest extent possible, from the text of the contract. Powerine, 37 Cal. 4th 390. The plain language of the 1998 Contract shows the parties’ intent to bind successors and assigns. At Paragraph twelve of the contract it states: "[t]his Agreement shall be binding upon OWNER and COMPANY, their successors and assign [sic], and runs with the land." Under California law, this is sufficient to bind Steadfast and TWC to the 1998 Contract unless Steadfast can benefit from an affirmative defense. See Brady, 45 Cal. App. at 595; see also Weidner, 218 Cal. at 350. 20 21 Defendants' attempt to avoid the passage of the 22 burdens of the 1998 Contract absent Steadfast's express 23 assumption of them might succeed if the common law rule 24 applied, but it is doomed to fail under California's 25 rule. See Enterprise, 231 Cal. App. 3d at 745 26 (distinguishing California and common law rules). 27 Furthermore, Defendants' reliance on Enterprise to argue 28 24 1 that the 1998 Contract does not bind Steadfast is 2 misplaced. Enterprise only discusses the requirement of 3 an explicit assumption of the burdens of a contract for a 4 real estate lease, but not the requirements for a real 5 estate sale. Id. at 745, 746. In other words, 6 Enterprise is distinguishable on its facts and does not 7 control. 8 9 b. Intent to Assume Obligations 10 11 12 13 14 15 16 17 18 The terms of the 2003 Purchase Agreement strengthen the conclusion that the 1998 Contract is binding on Steadfast. The first section of the Purchase Agreement explicitly establishes that it expresses Steadfast’s "wishes" to buy Orchard Park "on the terms provided in this Agreement." (Del Rio Decl. Ex. 1, Purchase Agreement at 1.) The Purchase Agreement, then, expresses Steadfast's intent. See Powerine, 37 Cal. 4th at 390. 19 20 In the body of the Purchase Agreement, Steadfast 21 "agrees to purchase . . . all right, title and interest 22 of [California Investors] . . . under all . . . 23 agreements for . . . cable television . . . ." 24 Decl. Ex. 1, Purchase Agreement ¶ 2(E)). (Del Rio The plain 25 meaning of this language is that Steadfast agreed to buy 26 the Orchard Park complex subject to any cable television 27 contract that might be in place. 28 25 See Powerine, 37 Cal. 1 4th at 390. Steadfast reaffirmed this commitment in the 2 First and Second Amendments to the Purchase Agreement 3 when it confirmed all terms not explicitly modified by 4 the amendments. (Coopersmith Decl. Ex. 3, First Am. ¶ 5 2(a); Coopersmith Decl. Ex. 4, Second Am. ¶ 2(a).) This 6 demonstrates that, although Steadfast did not explicitly 7 assume the obligations of the 1998 Contract as such, it 8 intended to assume the burdens of any such contract at 9 Orchard Park in the Purchase Agreement. See Brady, 45 10 Cal. App. at 595; Powerine, 37 Cal. 4th at 390. 11 12 13 14 c. Effect of the Assumption Defendants argue that Steadfast is not bound by the 15 1998 Contract because it did not expressly assume those 16 obligations under the terms of the Purchase Agreement. 17 Alternatively, they contend that even if Steadfast had 18 done so, any expressed intent to assume the burdens of a 19 cable television contract was thwarted by the language of 20 the Assumption. These arguments are unpersuasive. The 21 language of the 2003 Purchase Agreement clearly reveals 22 Steadfast’s intent to assume "all contracts . . . 23 relating to the operation, maintenance or management of 24 the Property . . . .," not merely those listed in the 25 Assumption. (Del Rio Decl. Ex. 1, Purchase Agreement ¶ 26 2(E) (emphasis added)). The Court "will not rewrite the 27 /// 28 26 1 [contract] to insert a provision that was omitted." 2 Powerine, 37 Cal. App. 4th 401. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 It is undisputed that the Assumption says "contracts" in the title but does not list specifically any contracts in its text. (Coopersmith Decl. Ex. 5, Assumption.) Defendants assert that the omission of the 1998 Contract from the text of the Assumption amended the Purchase Agreement to exclude cable television contracts from the obligations that Steadfast would assume. 13.) (Defs.' Opp'n Defendants' interpretation of the Assumption as an amendment is untenable. The parties had demonstrated they knew how to amend the contract – they executed two amendments before they entered into the Assumption and when they did so, they stated the document was "an amendment" to the Purchase Agreement. (Coopersmith Decl. Ex. 3, First Am. para. 1; Coopersmith Decl. Ex. 4, Second Am. para. 1.) The Assumption does not say that it is an amendment, however, and the Court declines to construe it as one. See Powerine, 37 Cal. 4th at 390. 21 22 23 This construction does not rise to a requirement that 24 parties recite "amendment" as a meaningless but magical 25 word; rather, it interprets the intent of the parties 26 through their words. (Contra Defs.' Opp'n 11-12); see 27 Powerine, 37 Cal. 4th at 390. In any case, Defendants 28 admit that the Assumption may have been executed 27 1 incorrectly: "there appears to be a discrepancy between 2 what was originally contemplated by the Purchase 3 Agreement to be assumed and what is actually in the 4 Assumption Agreement." (Defs.' Mem. P. & A. 6.) In 5 other words, the purpose of the Assumption was to comply 6 with, not amend, the original document. This further 7 supports the conclusion the Assumption should not be read 8 as an amendment to the Purchase Agreement. See Powerine, 9 37 Cal. 4th at 390.10 10 11 12 13 14 15 16 17 18 19 In sum, the terms of the 1998 Contract show an intent to bind successors and assigns. See Brady, 45 Cal. App. at 595; see also Weidner, 218 Cal. at 350. Steadfast, in the 2003 Purchase Agreement, intended to assume all benefits and burdens of any cable contract at Orchard Park. See Powerine, 37 Cal. 4th at 390. Defendant Steadfast therefore is bound to the burdens of the 1998 Contract unless it can establish that it purchased the Orchard Park complex as a bona fide purchaser. 20 21 22 2. Bona Fide Purchaser Defense 23 Steadfast argues that the 1998 Contract does not bind 24 it because it had no reason to know of the Contract's 25 10 Defendants' argument, advanced at the September 22, 2008 hearing, that the Assumption governs is unpersuasive 27 because it fails to account for the language of the Purchase Agreement showing Steadfasts's intent to assume 28 all burdens of contracts at Orchard Park. 26 28 1 existence when it executed the Purchase Agreement. 2 (Defs.' Mem. P. & A. 9; Defs.' SUF ¶¶ 90, 93.) Steadfast 3 argues that it "normally looks for cable contracts" and 4 that at the end of its due diligence investigation at 5 Orchard Park it had an empty cable contracts folder. 6 (Defs.' SUF ¶ 48.) Steadfast alleges these facts were 7 consistent with provision of cable services to the 8 apartment complex without a contract; in other words, 9 Steadfast asserts that it was a bona fide purchaser. 10 11 12 13 14 15 16 17 18 19 20 i. Information Sufficient to Defeat Bona Fide Purchaser Defense A bona fide purchaser obtains title without notice of a prior unrecorded interest. 173 Cal. 506, 510 (1916). See Kowalsky v. Kimberlin, Unrecorded interests are invalid against a bona fide purchaser. 11; Cal. Civ. Code § 1217. See id. at 510- One with actual or constructive notice of a contract is not a bona fide purchaser. See Kowalsky, 173 Cal. at 510-11; Cal. Civ. Code § 1217. 21 22 Very little information is necessary to give actual 23 or constructive knowledge to a purchaser sufficient to 24 defeat a bona fide purchaser defense. "Actual notice may 25 attach if a subsequent encumbrancer is told of the prior 26 interest, hears it discussed, or sees a document 27 referring to the interest." In re Yepremian, 116 F.3d 28 29 1 1295, 1296 (9th Cir. 1997) (per curiam) (citations 2 omitted, applying California law). A purchaser with 3 actual knowledge sufficient to require inquiry obtains 4 constructive knowledge of what a (reasonable) search 5 would have discovered. California Civil Code § 19; First 6 Fidelity Thrift & Loan Ass'n v. Alliance Bank, 60 Cal. 7 App. 4th 1433, 1436-37, 1444-46 (1998) ("A prudent 8 purchaser is charged with knowledge of information that a 9 reasonable inspection of the property would have 10 revealed."); Yepremian, 116 F.3d at 1296. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 The duty to inspect, and the kind of knowledge sufficient to defeat a bona fide purchaser defense in the context of the purchase of a business, is illustrated by Gregers v. Peterson Ice Cream Company, Inc., 158 Cal. App. 2d. 746 (1958). In Gregers, the plaintiffs contracted with a party named Peterson for the purchase of dairy products. Id. at 751. Peterson’s business in a contract that did not specifically mention the Gregers contract, although Defendant knew that one existed. Id. at 749. Defendant then sought to escape the burdens of the Gregers contract, claiming it did not intend to assume them because the Gregers contract was not listed in the instrument by which defendant purchased Peterson's business. See id. at 749. 27 28 Defendant bought /// 30 1 The California Court of Appeal found that defendant 2 was bound by the Gregers contract. Id. at 751. The 3 circumstances were such that defendant should have known 4 of the contract: defendant "knew that Gregers were 5 customers . . . in purchasing Peterson’s business they 6 were obligated to make some inquiry, if they had not 7 already been told, to learn the terms under which the 8 Gregers were on Peterson’s list of customers." Id. at 9 751. 10 11 12 13 ii. Steadfast's Knowledge Plaintiff has met its burden of establishing that 14 Steadfast should not be able to assert the defense that 15 it was a bona fide purchaser. Plaintiff has provided 16 evidence that will preclude Steadfast from showing that 17 it had (1) no reason to know a contract with TWC to 18 provide cable television services existed and (2) no 19 reason to inquire further. 20 21 First, the Purchase Agreement explicitly listed 22 "cable television" and stated that Orchard Park was 23 transferred "as is." (Del Rio Decl. Ex. 1, Purchase 24 Agreement ¶ 9(c).) Although Steadfast argues that 25 mention of a cable television contract was common in real 26 estate contracts (at an unspecified date) and does not 27 prove that such a contract existed (Defs.' Opp'n 14 n.6), 28 31 1 the mention of such a contract in the Purchase Agreement 2 tends to demonstrate Steadfast's awareness that a cable 3 contract might well exist at Orchard Park. This is 4 sufficient to confer on Steadfast constructive knowledge 5 of what inquiry into the contract would have discovered. 6 (Del Rio Decl. Ex. 1, Purchase Agreement ¶ 9(c)); see 7 Yepremian, 116 F.3d at 1296; Gregers, 158 Cal. App. 2d at 8 751; Cal. Civ. Code § 19. 9 10 Furthermore, at the time of purchase, an inspection 11 12 13 14 15 16 17 18 of Orchard Park would have revealed the presence of TWC pedestals and lockboxes, if not inside wiring and an underground conduit, obvious indications that cable television services were provided. (See Pl.'s SUF ¶ 28 (continuous provision of service); Defs.' SUF ¶ 67 (conduit, wiring, pedestals and lockboxes as cable equipment at Orchard Park).) 19 20 Defendants cite First Fidelity to support their 21 argument that the law requires only a reasonable inquiry 22 and that Steadfast's due diligence efforts met this 23 standard. (Defs.' Opp'n 21); First Fidelity, 60 Cal. 24 App. 4th at 1445. Steadfasts's inquiry does not measure 25 up to that found sufficient in First Fidelity. 26 Cal. App. 4th at 1436-37; 1440. 27 /// 28 32 See 60 1 In First Fidelity the Court found the claimant's 2 obligation to make a reasonable investigation was 3 discharged once claimant sought out an explanation of 4 discrepancies in loan documents. 5 37. See id. at 1440, 1436- By contrast, Steadfast never sought an explanation 6 in the face of an allegedly empty file folder and 7 California Investors VI's failure to produce a cable 8 television services contract. It is undisputed that 9 Steadfast never contacted TWC's Desert Cities office 10 during the course of the due diligence investigation; a 11 call to that office could have revealed the existence of 12 the 1998 Contract. (See Koehler Decl. ¶¶ 5-6; DiGrandi 13 Decl. ¶¶ 9, 10 (persons at TWC who checked contracts for 14 apartment buildings).) Given all the circumstances 15 present here, if Steadfast assumed that there was no 16 cable television contract covering the Orchard Park 17 premises, it did so at its own risk.11 As explained in 18 First Fidelity, Defendant Steadfast had an obligation to 19 resolve the discrepancy between the empty folder and the 20 obvious presence of cable service at Orchard Park. As a 21 purchaser of property, Steadfast had a duty to inspect 22 23 24 25 26 27 28 11 Defendants also seek to evade the burdens of the 1998 Contract by arguing that California Investors VI never gave them the contract. (Defs. Mem. P. & A. 6-7.) This contention lacks merit. The 2003 Purchase Agreement provides that Steadfast will conduct all inspections and investigations it deems necessary regarding all matters relevant to Orchard Park and that it will accept the property subject to adverse economic conditions not revealed by its inspections and investigations. (Del Rio Decl. Ex. 1, Purchase Agreement ¶ 9(c).) 33 1 the property under Cal. Civ. Code § 19. According to 2 Gregers, Steadfast had a duty to determine the terms of 3 TWC's presence. See Gregers, 158 Cal. App. 2d at 751; 4 see also First Fidelity, 60 Cal. App. 4th at 1436-37, 5 1440; Yepremian, 116 F.3d at 1297.12 Taken together, 6 these facts allow Plaintiff to demonstrate that Steadfast 7 will not be able to show that it did not know or have 8 reason to know of an outstanding cable television 9 contract when Steadfast purchased Orchard Park. 10 11 12 Defendants' reliance on Oakland Bank of Savings v. 12 California Pressed Brick Company, 183 Cal. 295, 302-03 (1920), for the proposition that a purchaser is not bound 13 by an unrecorded contract, is misplaced. In Oakland Bank, the Court held a buyer of a manufacturing plant 14 with "no knowledge or notice" that certain equipment was a fixture to be a bona fide purchaser. Id. at 297-98. Oakland Bank is distinguishable for at least two reasons. 15 16 First, the buyer in that case had "no knowledge or notice" whereas Steadfast, as demonstrated above, had 17 constructive knowledge and notice. See id. at 297-98. 18 Second, the Oakland Bank court assumed that the seller of the disputed equipment had agreed that the 19 machines should be converted into real property. Id. at 20 302-03. In contrast, here the 1998 Contract clearly stated that the cable system would not become a fixture, 21 as discussed below. (Barnes Decl. Ex. 2, 1998 Contract ¶¶ 4-11.) 22 Defendants also rely on Unterberger v. Red Bull North America, Inc., 162 Cal. App. 4th 414, 421 (2008) but that 23 case is distinguishable as well. (See Defs.' Mem. P. & 24 A. 4.) The writing at issue about the distribution of beverages in Unterberger, if a contract, was not formally drawn up as one, and was "at will." Id. at 420. This 25 reflected the parties' intent for a far more fragile, 26 temporary relationship than that shown by the 1998 and 2003 contracts here. It therefore is not surprising that 27 the Unterberger court declined to find that defendants had sufficient knowledge of the obligations of the 28 arrangement to be bound by it. See id. at 420-21. 34 1 Accordingly, the Court finds that Defendant Steadfast is 2 bound by the terms of the 1998 Contract. 3 4 3. Successor in Interest to MediaOne 5 TWC is the proper successor-in-interest to MediaOne 6 7 8 9 10 11 12 13 14 15 under the 1998 Contract because TWC obtained MediaOne's interest in the contract through two contracts, the first in 1999 and the second in 2001. Plaintiff has carried its burden of demonstrating that no dispute of material fact exists regarding the existence or meaning of the contracts through which it obtained an interest in providing services to Orchard Park. For the reasons set forth below, the benefits of the 1998 Contract run to TWC. 16 17 The first contract was executed in 1999 between a 18 subsidiary of TWC, called Summit Cable Services of 19 Georgia ("Summit"), and MediaOne. (Pl.'s SUF 13-14.) 20 Through the contract, called the Asset Exchange 21 Agreement, the TWC affiliate obtained MediaOne’s rights 22 under the 1998 Contract. (Pl.'s SUF ¶¶ 13-14; Tyler 23 Decl. ¶ 1, Ex. 1, Asset Exchange Agreement at recitals, 24 §§ 1.3, 2.1.); see Powerine, 37 Cal. 4th at 390. All 25 contracts not specifically excluded were transferred. 26 (Pl.'s SUF ¶ 20; Tyler Decl. ¶ 1, Ex. 1, Asset Exchange 27 Agreement §§ 1.3, 2.1.) Orchard Park is an MDU 28 35 and no 1 MDUs were excluded. (Pl.'s SUF ¶¶ 20-21; Tyler Decl. Ex. 2 1, Asset Exchange Agreement, §§ 1.3, 2.1., Schedule 3 2.1(c)(I).) 4 5 6 7 8 9 10 11 12 The second contract passing an interest in the 1998 Contract for cable television services at Orchard Park was executed in 2001. (Pl.'s SUF ¶ 22.) Summit sold the rights to the 1998 Contract to TWC, the Plaintiff in this case. (Pl.'s SUF ¶¶ 22-25; Tyler Decl. Ex. 2, Asset Purchase Agreement at 1.) Therefore, TWC obtained an interest in providing cable television services at Orchard Park. 13 14 15 B. Right to Terminate 1998 Contract 16 Having found that the benefits and burdens of the 17 1998 Contract run to the parties in this case, the Court 18 now turns to the second issue that Plaintiff seeks to 19 have summarily adjudicated, i.e., whether Steadfast had 20 the right to terminate the 1998 Contract. 21 22 Plaintiff has shown that the 1998 Contract gave 23 24 25 26 27 28 MediaOne the right until 2008 to provide services and bound Orchard Park management to permit the provision of such services. (Barnes Decl. Ex. 2, 1998 Contract ¶ 2.) Termination of the 1998 Contract was not possible through /// 36 1 the unilateral decision of the owners of Orchard Park. 2 (See id. at ¶ 10.) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 There is no dispute that in February 2006 Steadfast entered into a contract giving Consolidated exclusive access to Orchard Park to provide cable services. Del Rio Decl. ¶ 28.) (See By demonstrating that the benefits and burdens of the 1998 Contract ran to Plaintiff and Defendant Steadfast, Plaintiff also has demonstrated that Steadfast took action inconsistent with and unauthorized by the 1998 Contract. These actions had an impact on Plaintiff’s business. The parties agree that in December 2006 Defendants Steadfast and Consolidated prevented TWC from providing cable services to Orchard Park residents. (Hernandez Decl. ¶¶ 7-8; see Del Rio Decl. ¶ 30.) Plaintiff has established that termination of the 1998 Contract through the 2006 contract was wrongful. 18 19 20 To summarize, Plaintiff has demonstrated that the 21 benefits and burdens of the 1998 Contract bind Plaintiff 22 and Defendant Steadfast. Accordingly, the Court grants 23 Plaintiff's first request for summary adjudication 24 because it finds that TWC is the successor in interest to 25 MediaOne under the 1998 Contract. It grants Plaintiff's 26 second request for summary adjudication because it finds 27 that Steadfast is the successor in interest to California 28 Investors VI under the 1998 Contract. The Court grants 37 1 Plaintiff's fifth request for summary adjudication 2 because it finds that Steadfast cannot assert a bona fide 3 purchaser defense at trial. Also, as Plaintiff has shown 4 that Defendant Steadfast wrongly acted inconsistently 5 with the 1998 Contract, the Court grants Plaintiff's 6 fourth request for summary adjudication: it finds that 7 Steadfast was not entitled to terminate the 1998 8 Contract. 9 10 11 12 13 14 15 16 As discussed above, the Court has found that the 1998 Contract binds both Steadfast and TWC. The Court therefore denies Defendants' motion as to Plaintiff's first, second, third, and fifth claims, that is, for breach of contract, breach of contract (specific performance), interference with contract, and negligent interference with contract. 17 18 19 Defendants have also sought summary judgment on 20 Plaintiff's fourth and sixth claims, for interference 21 with prospective economic advantage and negligent 22 interference with prospective economic advantage, 23 respectively. Defendants have the burden at the summary 24 judgment stage to demonstrate why Plaintiff will not be 25 able to succeed on these claims. For Plaintiff to 26 succeed on either claim, Plaintiff would have to show 27 that, absent Defendants' actions, it would have enjoyed 28 /// 38 1 future economic relationships with Orchard Park 2 residents. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Defendants have argued that Plaintiff will be unable to show that the 1998 Contract binds; from this Defendants argue that Plaintiff will fail at demonstrating a right to continue to enter Orchard Park and pursue commercial relationships with residents. (Defs.' Mem. P. & A. 10-12; Defs.' Reply 8-9.) Here Plaintiff has shown the validity of the 1998 Contract. Therefore, Defendants' initial premise fails. (See Defs.' Mem. P. & A. 10-12; Defs.' Reply 8-9.) Defendants cannot carry their burden as to claims four and six with the arguments presented in support of their motion for summary judgment. Although the Court does not grant Plaintiff Summary Judgment on claims four and six, it denies Defendants summary judgment on the same. 18 19 20 21 C. FCC Regulations Plaintiff seeks summary adjudication that the FCC 22 Regulations codified at 47 C.F.R. § 76.804(a) do not 23 apply. These regulations provide procedures for the 24 transfer of cable television wiring where a former cable 25 television provider no longer has the right to remain on 26 a property. Id. They do not apply where a cable 27 television provider has a legal right to remain on the 28 property. 39 1 As Plaintiff has demonstrated that it had the right 2 to remain at Orchard Park pursuant to the 1998 Contract, 3 the FCC regulations do not apply here. Therefore, the 4 Court grants Plaintiff's third request for summary 5 adjudication and finds that the FCC Regulations codified 6 at 47 C.F.R. § 76.804(a) do not apply. 7 8 9 D. Remaining Claims The Court has granted Plaintiff's Motion for Partial 10 11 Summary Judgment. This precludes summary judgment for 12 Defendants as to claims one through six, as described 13 above. Defendants seek summary judgment on two remaining 14 claims: (1) for conversion, against Consolidated, and (2) 15 unjust enrichment, against Consolidated and Steadfast. 16 17 1. Conversion 18 Plaintiff has alleged a claim for conversion against 19 Consolidated. To recover on this claim, Plaintiff must 20 demonstrate ownership or a right to possess equipment at 21 Orchard Park and Defendant Consolidated's conversion by 22 wrongful act or disposition of Plaintiff's property 23 right. See Burlesci v. Peterson, 68 Cal. App. 4th 1062, 24 1066 (1998). A showing that the cable equipment, 25 including wiring and appurtenances, is a fixture would 26 defeat the conversion claim because it would indicate 27 28 /// 40 1 ownership of these items by Defendant Steadfast. See 2 Cal. Civ. Code §§ 660, 1013. 3 4 5 6 7 8 9 Although Plaintiff has not moved for summary judgment or adjudication on the conversion claim, Defendants seek summary judgment on it. (Pl.'s Mot. 2; Defs.' Mot. 2.) Defendants therefore have the burden of demonstrating that judgment against Plaintiff is appropriate. See Fed. R. Civ. P. 56. 10 11 12 Defendants have not carried their burden here. The 13 1998 Contract governs the ownership of the cable system 14 at Orchard Park and by its plain language grants 15 Plaintiff title in the cable television system: "no part 16 of the System shall be deemed a fixture. No person or 17 entity, including OWNER, shall acquire any rights in or 18 to the System . . . ." (Barnes Decl. Ex. 2, 1998 19 Contract ¶ 4.) The 1998 Contract broadly refuses the 20 owner of Orchard Park any interest in "the System and all 21 of the equipment and facilities associated therewith . . 22 . ." ( Id. ¶ 4.) The contract's failure to define 23 "System" is not fatal to Plaintiff's conversion claim 24 because the contract language expresses a broad intent to 25 vest title to the cable equipment and facilities at 26 Orchard Park in MediaOne and its rightful successors 27 (contra Defs.' Mem. P. & A. 21). The 1998 Contract 28 grants MediaOne the power to remove cable equipment, 41 1 which further undermines Defendants' argument. 2 Decl. Ex. 2, 1998 Contract ¶ 11.) (Barnes The cable system 3 provider's right to remove equipment is consistent with 4 ownership by MediaOne, and hence a conversion claim. It 5 is inconsistent with the equipment's status as a fixture 6 and hence weighs against summary judgment for Defendants 7 on the conversion claim. See Cal. Civ. Code §§ 660, 8 1013. 9 10 11 12 13 14 15 16 Finally, Defendants try to cast themselves as "innocent purchasers" of Orchard Park in order to escape liability for Plaintiff's conversion claim. P. & A. 16.) (Defs.' Mem. As the Court found above that Defendants were not bona fide purchasers, this defense fails here as well. Accordingly, the Court denies Defendants' motion for summary judgment as to the conversion claim. 17 18 19 2. Unjust Enrichment 20 Defendants purport to move for summary judgment on 21 all claims, but never discuss Plaintiff's eighth claim, 22 for unjust enrichment, in their motion. Defendants, as 23 the moving parties, must show that they are entitled to 24 judgment as a matter of law. See Fed. R. Civ. P. 56. 25 Defendants' failure to discuss unjust enrichment 26 precludes a finding in their favor on Plaintiff's eighth 27 claim. Accordingly, the Court denies Defendants' Motion 28 42 1 for Summary Judgment on Plaintiff's claim for Unjust 2 Enrichment. 3 4 IV. CONCLUSION 5 6 7 8 For the reasons above, Plaintiff's Motion for Partial Summary Judgment is GRANTED and Defendants' Motion for Summary Judgment is DENIED. 9 10 11 Dated: 12 September 23, 2008 VIRGINIA A. PHILLIPS United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 43

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