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FAX TELECOMMUNICACIONES v. AT&T

December 30, 1996

FAX TELECOMMUNICACIONES, Plaintiff, against AT&T, Defendant.


The opinion of the court was delivered by: SEYBERT

 SEYBERT, District Judge:

 Plaintiff Fax Telecommunicaciones ("Fax") originally brought this action in state court against defendant AT&T, alleging that AT&T overbilled it in connection with certain overseas and domestic long-distance telephone services provided by AT&T. Defendant AT&T then removed the action to federal court, claiming federal question jurisdiction under the Federal Communications Act of 1934, 47 U.S.C. § 151 et seq. AT&T now moves for summary judgment dismissing Fax's claims pursuant to Rule 56 of the Federal Rules of Civil Procedure and in favor of AT&T's counterclaim for the balance due on Fax's account of $ 2,321,390.71. The Court heard oral argument on the summary judgment motion on June 7, 1996 and reserved decision. As set forth below, the Court now decides this motion and hereby grants in part and denies in part AT&T's motion for summary judgment.

 FACTUAL BACKGROUND

 Fax is a New York corporation that operates telephone arcades in Brooklyn and Queens, New York. The arcades, which provide long distance service, are open to the public. Fax's customers pay a deposit, make their call, and then are billed a certain rate based on the country they call and the length of the phone call. Ospino Aff. P 2. Approximately 80 to 85% of Fax's calls go to Colombia, the rest are directed to other Latin American countries. Id. Id. P 3.

 In August, 1993, Fax's president David Ospino met with representatives from AT&T to analyze Fax's calling needs and to negotiate a service plan from AT&T. Ospino Aff. P 3, Stotts Aff. P 4. On December 21, 1993, Richard Stotts, an AT&T representative, presented a plan to Ospino for service under AT&T's "Uniplan Conquest" tariff. Ospino Aff. P 4, Stotts Aff. P 8. At the time, according to Ospino, AT&T promised to amend the existing "Conquest" tariff to allow for volume discounts for dedicated service in a way that would more accurately fit Fax's needs. *fn1" Ospino Aff. P 4.

 At the December 21, 1993 meeting, Stotts also presented Ospino with a "Network Services Commitment Form" giving Fax the three year "Uniplan Conquest" offer. Stotts Aff. P 8. Ospino signed the offering form with the understanding that Fax's bills would be re-rated retroactively upon the filing of the amendment to the Conquest tariff allowing the desired discounts for dedicated service. *fn2" Stotts Aff. P 8. In the interim, AT&T would provide Fax with service under the "CustomNet" tariff, which bills at a much higher rate than the Conquest tariff. Stotts Aff. P 8. Fax, however, never signed a contract for the CustomNet service. Id.

 On or about January 8, 1994, Fax began using AT&T as its long-distance carrier Ospino Aff. P 5. On approximately January 14, 1994, Ospino met with Stotts again, at which time Stotts gave Ospino an unsigned letter, an "Authority to Quote" or "ATQ," that purported to describe the service that AT&T would provide to Fax. *fn3" Ospino Aff. P 5. In connection with the services that Fax intended to receive from AT&T, Fax also made a $ 3,500 deposit and ordered certain digital pipe for a "T1 System to provide direct dedicated service from AT&T. Ospino Aff. P 5, Stotts Aff. P 17. Stotts also informed Ospino that the draft ATQ would soon be completed and filed with the Federal Communications Commission (the "FCC"). Id. P 6.

 Between January and March 1994, another AT&T representative, Fabio Herrera, directed eight other calling centers to Fax. Ospino Aff. P 7. AT&T informed Fax that these smaller centers, which did not have the volume to qualify for AT&T's lowest rates, could obtain AT&T service through Fax and all be billed under one service umbrella. Id. In this way, the smaller centers could pool their calling volume with Fax to maximize volume discounts.

 In February 1994, Fax received its first service bill from AT&T. To Ospino's surprise, the rates billed did not reflect the rates described in the January 14, 1994 ATQ. Ospino Aff. P 8. Ospino contacted Stotts and Herrera about the invoice amount, and they informed Ospino that the next bill would reflect a credit to Fax. Id. Ospino then remitted approximately $ 75,000 to AT&T, based upon his calculations of what was due under the rates and discounts in the ATQ. Id. P 9.

 In March 1994, Fax received a second invoice. Again, the bill reflected higher rates than Fax was promised, and this time, included a past due amount of $ 120,000. Ospino Aff. P 10. Ospino attempted to contact Stotts, but discovered that he had moved to another district. Id. P 11. Ospino then contacted Herrera, who informed Ospino that Fax's tariff was still being processed at the FCC and assured him that the billing problems would be straightened out. Id. Ospino then remitted approximately $ 85,000 to AT&T, again based upon his calculations of what was due under the rates and discounts promised in the ATQ. Id. P 12.

 In March 1994, Michael Gilmartin, another AT&T representative, met with Ospino to discuss Fax's billing problems. Gilmartin Aff. P 3, Ospino Aff. P 13. During Gilmartin's visit with Ospino, Gilmartin assisted in preparing local advertisements for Fax's rate of $ .57 per minute for calls to Columbia. Ospino Aff. P 13. Gilmartin also informed Ospino that he would investigate the billing problems. Ospino Aff. P 13.

 In April 1994, however, Fax received another bill from AT&T that exceeded the rates promised under the ATQ. Fax remitted $ 90,000, again in accordance with Ospino's calculations of the amount that should be due under the ATQ. Ospino Aff. P 14. Because of the continuing past due account with AT&T, Ospino also contacted AT&T's billing department to seek assurances that Fax's service would not be disconnected. Id. The same events transpired in May 1994. Id. P 15.

 Finally, in June 1994, Gilmartin informed Ospino that AT&T would not be able to charge the rates promised in the ATQ and presented a different tariff for Ospino to accept. Ospino Aff. P 16. By letter dated June 23, 1994, AT&T offered a new ATQ and a proposal for service to switched locations such as Fax. *fn4" Mandeen Aff. P 9. Ospino refused, and Gilmartin informed him that AT&T planned to disconnect Fax's service. Ospino Aff. P 16. As of June 1994, Fax stopped making payments to AT&T altogether. Id. P 18. In September 1994, AT&T offered Fax a $ 750,000 credit towards its outstanding account balance of $ 2.5 million. Id. P 19. The bill, however, still amounted to three times the amount actually collected from Fax's customers. Id. Finally, in October 1994, AT&T terminated Fax's service.

 Subsequently, Fax obtained long distance telephone service from Saetel, another secondary carrier. Ospino Aff. P 24. Saetel in turn purchased its long distance service from AT&T. Id. P 23. Fax received long distance service from Saetel from October 1994 to July 1995, when Saetel went out of business. Id. P 25.

 Fax was to be the first user to contract for the amended Conquest tariff proposed in December 1993. Stotts Aff. P 14. AT&T's tariff had already been amended thousands of times. Id. P 16. Once a tariff amendment is written, the customer must enter into the contract for the tariff to become effective. Id. P 14. The carrier must then file the tariff amendment with the FCC, together with a letter stating that the contract tariff was necessary due to competitive necessity. Id. P 14. AT&T, however, never filed the Uniplan Conquest rate, and Fax was left on the much more expensive CustomNet tariff through the termination of its service in October 1994. Id. P 16. From January 1994 to October 1994, therefore, Fax used and was billed pursuant to AT&T's CustomNet tariff under AT&T Tariff F.C.C. No. 1. Lowenberg Aff. P 5-7.

 The parties dispute several factual issues. According to AT&T, Fax never contracted for the Conquest service. AT&T supports this contention by demonstrating that the rates described in the January 14, 1994 ATQ were merely drafts and furthermore would be impossible to deliver. First, there was a typographical error referring to rates per minute rather than per second. Second, rates were rounded off to the second decimal point rather than the fourth decimal point. Third, the Conquest promotion had a $ 3,500 per month cap on available discounts. Finally, the ATQ referred to re-rating, which is not possible under the terms of the Conquest tariff. Mandeen Aff. P 10.

 Fax, on the other hand, disputes the impossibility of charging the rates in the ATQ, notwithstanding the typographical error. First, Fax claims that AT&T charged Saetel a lower rate than the rate charged to Fax for similar services. Fax asserts that AT&T filed a tariff with the FCC for the service plan it provided to Saetel, which AT&T then could have provided to Fax, which would qualify for even greater discounts based on Fax's volume and calling patterns. Pltf's Mem. in Opp., at 8. Second, Fax asserts that the rates promised in the January 14, 1994 ATQ were not impossible to provide if all discounts and bonuses were considered in applying the rate. Stotts Aff. P 23.

 Fax seeks the following relief: (1) declaratory judgment that the January 14, 1994 ATQ is a binding agreement between Fax and AT&T; (2) specific performance of the ATQ; (3) declaratory judgment that AT&T contracted to install the T1 pipe. In the alternative, Fax seeks monetary and punitive damages from AT&T for failure to perform such contracts.

 I. STANDARDS GOVERNING MOTIONS FOR ...


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