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North Canton Board of Education v. AT&T, Inc.

United States District Court, N.D. Ohio, Eastern Division

July 3, 2019




         Before the Court are the following fully-briefed motions: (1) the motion for summary judgment filed by defendants New Cingular Wireless PCS, LLC (“NCW”) and NCWPCS MPL 30-Year Tower Holdings, LLC (“Tower Holdings”) (collectively, “defendants”) (Doc. No. 93 (“MSJ”)[1]), and (2) the motion for partial summary judgment filed by plaintiff North Canton Board of Education (the “District”) (Doc. No. 95 (“MPSJ”)[2]). For the reasons set forth herein, plaintiff's motion is denied and defendants' motion is granted.


         On May 6, 2016, the District filed a complaint in the Court of Common Pleas of Stark County, Ohio against AT&T, Inc. (“AT&T”), NCW, and Tower Holdings, which defendants removed to this Court on June 10, 2016, alleging diversity jurisdiction. (Doc. No. 1.) The complaint was amended on April 3, 2017. (Doc. No. 27 (First Amended Complaint [“FAC”]).)

         The three defendants moved to dismiss the FAC for failure to state a claim. On October 5, 2017, this Court granted the motion to dismiss, in part, resulting in dismissal of Count Two of the FAC, along with defendant AT&T. (Doc. No. 41 (Memorandum Opinion and Order).) Only Count One for breach of contract against NCW and Tower Holdings[3] currently remains.


         The sole remaining claim[4] in this lawsuit turns on interpretation of a lease agreement executed by the parties on May 25, 2005, which was subsequently amended twice. The District's claim is that the defendants breached Section 10(b) of the lease agreement by failing to remit to the District 50% of the “rent, revenue, or other consideration” from a transaction between AT&T and Crown Castle International Corporation.

         A. The Lease Agreement and the First Amendment to the Lease Agreement

         Under the lease agreement, NCW was permitted to construct on the District's “Premises” a cellular tower (defined in the agreement as a “Pole”) for transmitting and receiving wireless communications signals. (Doc. No. 93-2, Lease Agreement[5] (“Original Lease”), §§ 1(E), (F), 2 and 7.) In addition to the $70, 000 NCW paid the District for the right to construct the cellular tower, it also agreed to pay a monthly rent (id. § 5) for:

a non-exclusive license to use the Premises for (i) the installation, operation, maintenance, repair, replacement and relocation of all of the Equipment comprising the Cell Site and (ii) for the transmission and reception of communication signals pursuant to all rules and regulations of the Federal Communications Commission (“FCC”).

(Id. § 3.) NCW had the right to “assign this Agreement and its other rights hereunder to any person or business entity without the prior consent of [the District].” (Id. § 10(a).)

         NCW agreed to construct the cellular tower so it had a capacity “for up to two (2) additional wireless communications service providers.” (Id. § 1(E).) This was necessary to comply with North Canton zoning regulations under which, to obtain a conditional use permit for a telecommunications tower in the city, the property owner where the tower would be installed had to present written documentation to the planning commission showing that it had agreed to “collocation, ” that is, “[t]he use of a wireless telecommunications facility by more than one wireless telecommunications provider.” (Doc. No. 93-4, North Canton Zoning Ordinance § 1157.02(a).) NCW and the District agreed to share the monthly revenue generated by any collocation. (Original Lease § 10(b).[6])

         NCW also agreed to “keep and maintain the Premises [at its expense] in commercially reasonable condition and repair during the Term of this Agreement.” (Id. § 7(c).) The District's Director of Business, Raymond Nist (“Nist”), understood that NCW could meet these obligations by hiring third-party contractors. (Doc. No. 97-1, Deposition of Raymond Stephen Nist[7] (“Nist Dep.”) at 5317.[8])

         On July 29, 2013, the parties entered into an amendment to the lease agreement, under which NCW was permitted to build a second cellular tower. (Doc. No. 93-8, First Amendment to Lease Agreement (the “First Amendment”) (together with Original Lease-the “Lease”).) The ground rent was increased, and NCW prepaid the first $25, 000 of such rent. (Id. § 4.) The term “Pole” in the Original Lease was deleted and replaced with a new definition that encompassed “two (2) antenna structures located at the Premises[.]” (Id. § 6.) The first-known as the “Flag Pole”-accommodated “up to two (2) additional wireless communications service providers[, ]” and the second-known as the “Monopole”-would accommodate “at least one (1) additional wireless communications service provider[.]” (Id.) The parties also modified the revenue-sharing requirements to reflect the additional capacity. (Id. § 7.)

         B. The AT&T-Crown Castle Transaction

         On October 18, 2013, AT&T (and its subsidiaries, which include defendants here[9]) entered into a Master Agreement with Crown Castle International Corporation (“Crown”) (and its subsidiaries). Crown was in the business of cellular tower management; it did not provide cellular service. (Doc. No. 99-1, Deposition of Vicky Davis (“Davis Dep.”) at 6997.) Defendants assert that the “deal involved transferring rights to over 9, 700 towers with a variety of different lease/contractual arrangements with the various landowners[, ]” (MSJ at 3106), but with the same general purpose: “the AT&T entity with telecommunications equipment on the tower would keep its equipment on the tower and a [Crown] entity would take over management of the cellular site, i.e., maintaining the towers (but not the telecommunications equipment) and paying the landowner the ground rent and any revenue sharing due for collocators.” (Id.)

         Under this Master Agreement, Crown formed a limited liability company (the “Tower Operator”-CCATT here[10]) that would “enter into a management agreement . . . to operate each Managed Site (including the Included Property thereof) … .” The Tower Operator was to “market all available capacity at the [relevant] [s]ites [including the District's site] . . . and [ ] maximize the collocation revenue that may be derived therefrom[.]” (Doc. No. 93-9, Master Agreement (“Master Agreement”) at 3227 (3rd & 6th Recitals).)

         AT&T and the Tower Operator entered into (1) a master prepaid lease for the relevant sites, [11] under which the Tower Operator leased the “included property” (as defined by the Master Agreement), with an option to purchase, and (2) a General Assignment and Assumption Agreement, under which AT&T entities conveyed certain rights and the Tower Operator assumed certain liabilities with respect to the Collocation Agreements for the relevant sites.[12] (Id. at 3228 (7th Recital); § 2.2(d).)[13] “Included Property” was defined as:

(i) the Land related to [each] Site (including the applicable interest in any Ground Lease), (ii) the Tower located on such Site (including the AT&T Collocation Space) and (iii) the related Improvements (excluding AT&T Improvements and any Tower Subtenant's Improvements) and the Tower Related Assets with respect to such Site; but excluding, in each case of (i), (ii), and (iii), any Excluded Assets and all Tower Subtenant Communications Equipment.

(Id. at 3238.) “Excluded Assets” was further defined in some detail in the Master Agreement. (Id. at 3234-35.) Notably, among the excluded assets were “any and all licenses granted by the FCC or any other Governmental Authority[.]” (Id. at 3235.) Crown paid a lump sum in “Consideration, ” as defined by the Master Agreement. (Id. at 3233; see also Id. § 3.2.)

         As to the District's site in particular, the AT&T-Crown Transaction included an assignment by NCW to Tower Holdings (both AT&T subsidiaries) of (1) certain rights and “all payments, terms and obligations” under the Ground Lease; (2) the “Included Property”-primarily NCW's interest in the land and the towers; and (3) the Collocation Agreements with Verizon and T-Mobile, the only two collocators at the time. (Doc. No. 93-12, Assignment and Assumption of Ground Leases; Doc. No. 93-13, AT&T Internal Transfers Agreement & Schedule 1; Doc. No. 93-14, Master Prepaid Lease at 3428 & 3431.) NCW retained, inter alia, its FCC licenses, its wireless communications equipment on the Towers, and the right to use its existing space on the Towers. (Master Agreement at 3238 & 3234-35; Doc. No. 93-15, MPL Site Master Lease Agreement, §§ 2(a), 9(b), 9(f).) Crown paid a lump sum, in cash, to AT&T Mobility II, LLC's bank account.

         Tower Holdings then engaged CCATT to manage and discharge its obligations under the Lease, including paying the District the monthly ground rent and the revenue sharing owed from use of the Premises by collocators Verizon and T-Mobile. (See Doc. No. 93-16 (“Management Agreement”); Viron Dep. at 2353-54.) In exchange, CCATT obtained Tower Holdings' right to the revenue generated by the collocators' use of the Towers (as well as any additional future collocators), subject to the revenue sharing provisions under the Lease.

         C. The Second Amendment to the Lease Agreement

         After CCATT began to manage the District's site, a dispute arose over the amounts allegedly not paid under the First Amendment. (Viron Dep. at 2517.) The District also claimed it was entitled to share the amount allocated to its site in the AT&T-Crown Transaction. (Doc. No. 96-1, Deposition of Owen Rarric (“Rarric Dep.”) at 4953-54; Doc. No. 96-13, Rarric Dep. Ex. 12.)

         To resolve their differences, in June 2015, the parties entered into a Second Amendment to the Lease Agreement (Doc. No. 93-19 (the “Second Amendment”))[14] and an Estoppel Certificate (Doc. No. 93-20 (the “Estoppel Certificate”)). The Second Amendment included an acknowledgment by the District that CCATT was acting as the “attorney in fact” for Tower Holdings (Second Amendment at 3775), plus the following:

WHEREAS, New Cingular Wireless PCS, LLC has transferred its rights and obligations under the Lease to an affiliate, NCWPCS MPL 30-Year Sites Tower Holdings, LLC, as permitted under Section 10 of the Lease; and
WHEREAS CCATT manages and operates the site related to the Lease for Lessee [Tower Holdings] and is obligated to comply with the terms of the Lease[.]

(Id.) The parties agreed to a “Payment Reconciliation” whereby CCATT/Tower Holdings paid the District $15, 133.44 of “additional rent, ” $34, 369.52 of “additional ground rent, ” and $7, 500.00 for “legal fees incurred[.]” (Id.) The Second Amendment also provided for the handling of “future defaults.” (Id. at 3775-76.)

         The Estoppel Certificate noted that the Lease, as twice amended, “constitutes the entire agreement between the parties with respect to the property subject to the Lease[.]” (Estoppel Certificate at 3782 ¶ 2.) The parties also agreed on the amount of “the current monthly ground rent due to” the District and the “current monthly compensation due to Lessor [the District] from Lessee [Tower Holdings] arising from T-Mobile and Verizon's use of the towers[.]” (Id. ¶ 5.)

         Eleven months after executing the Second Amendment, the District filed this lawsuit.

         III. STANDARD ON ...

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