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MacPhee v. Verizon Communications Inc.

January 14, 2008


The opinion of the court was delivered by: Barbara S. Jones United States District Judge


In a complaint dated September 29, 2006 (the "Complaint"), Plaintiff Veronica Mahanger MacPhee, d/b/a Mahanger Consulting Associates ("Mahanger" or "Plaintiff"), alleges that Defendant Verizon Communications, Inc.*fn1 ("Verizon") refuses and has failed to pay her a performance bonus for her consulting work related to Verizon's "joint use" agreements. Verizon does not dispute that MacPhee performed consulting services for Verizon from Spring 2002 through Spring 2004, but argues that there is no merit to Plaintiff's claim that an oral promise was made to her that she was entitled to a performance bonus. Presently before the Court is Defendants' partial motion to dismiss certain of the claims asserted by Plaintiff. For the reasons outlined herein, the motion is GRANTED in part and DENIED in part.


Since 1986, Mahanger has worked as one of a small number of experts in the field of "joint use" agreements. These agreements are entered into by power companies and telecommunications companies for rental attachment space on utility poles which are, for the most part, owned by the power companies. Mahanger is retained by telecommunications companies like Verizon as part of their effort to reduce the fees they pay under joint use agreements or to avoid new fees. Mahanger's services include reviewing existing agreements and developing strategies for their renegotiation; assisting the negotiation, drafting and consummation of new agreements; preparing expert opinions and analyses; and, providing assistance before industry regulatory bodies and agencies.

In the winter of 2002, Verizon solicited Mahanger to become a consultant for several of its subsidiaries' joint use agreements.*fn3 In response, on or about February 27, 2002, Mahanger sent a letter to Ed Dudley ("Dudley"), the Vice President of Infrastructure Provisioning of Verizon Communications,*fn4 that detailed a "Joint Use Proposal." The proposal laid out the "enormous" expense savings that could be realized by Verizon in relation to its joint use agreements. Plaintiff was subsequently retained by Verizon, in or about late March 2002, to perform analytical consulting services related to Verizon West's joint use agreements. At the same time, Dudley and Mahanger began negotiating a consulting agreement to describe the services that Mahanger had begun performing for the various subsidiaries, including the material terms of her compensation.

Mahanger alleges that on or about April 24, 2002, she and Dudley entered into an agreement setting forth all material terms of the consulting agreement. Mahanger was to be paid $150.00 per hour. Mahanger notes that this is "markedly lower" than her standard rate of $195.00 per hour, but that she agreed to the reduced rate in consideration of Dudley's representation and agreement that Verizon would pay her a 5% performance bonus based upon any savings realized by Verizon with respect to any consummated joint use agreement or other joint use matter for which she provided consulting services to Verizon. Mahanger and Dudley also agreed to a minimum retainer of $15,000.00 per month, even if she worked fewer than 100 hours in any monthly period. Mahanger prepared and remitted her first invoice to Verizon on or about May 3, 2002 in the amount of $15,000.00 for 100 hours of work performed through April 30, 2002. This amount was promptly paid by Verizon.

On or about May 16, 2002, after Dudley and Mahanger entered into the consulting agreement, Dudley sent Mahanger an email that attached three documents: 1) a proposed draft consulting agreement that Dudley said was drafted by the corporate sourcing group for Verizon in New York; 2) a statement regarding Mahanger's "unique qualifications" for the work to be performed; and, 3) a non-disclosure agreement. The proposed draft consulting agreement was drafted in the name of Telesector (the "Telesector Draft"). The Telesector Draft did not correspond with Mahanger and Dudley's prior agreement in that it provided for: 1) a flat hourly rate of $95.00 per hour if the total hours worked exceeded one hundred, and 2) a flat hourly rate of $195.00 per hour if the total hours worked was less than one hundred. The Telesector Draft did not include the guaranteed minimum of $15,000.00 per month or the performance bonus.

Mahanger informed Dudley that the terms of the Telesector Draft were not those that they had previously agreed upon. In response, Dudley told Mahanger to revise the draft to reflect the terms Dudley had agreed to on Verizon's behalf. Accordingly, Mahanger deleted the material compensation terms included in the Telesector Draft and replaced them with the terms that she and Dudley had previously agreed to, including:

a) Verizon would pay her $150.00 per hour with a minimum monthly retainer of $15,000.00, and b) Verizon would pay Mahanger a performance bonus of 5% of the savings realized with respect to any joint use agreement or other joint use matter for which she had provided consulting services. Mahanger made these and additional changes to the Telesector Draft and sent the revised 24-page document*fn5 to Dudley via email on or about May 21, 2002 and then by express mail on or about May 22, 2002.

Defendants never responded to the version of the agreement sent by Mahanger to Dudley in May 2002. However, Mahanger continued to perform services which Defendants continued to accept and pay for at the hourly rate and minimum retention initially agreed to and indicated in the revised document she sent to Dudley to correct the Telesector Draft. To wit, Defendants paid Mahanger $15,000.00 per month over two years. However, Defendants have refused to pay Mahanger the performance bonus outlined in the revised agreement. According to the Complaint, the consulting work provided by Mahanger from the spring of 2002 until her agreement was terminated in June 2004 was "instrumental in saving Defendants well in excess of one hundred million dollars." Mahanger alleges that just her work on successive disputes between Verizon and power companies under six joint use agreements allowed Defendants to save an estimated $105,636,000.00. She asserts that she provided extensive consultation work on numerous other joint use agreements, the savings from which are not included in that amount. Furthermore, Mahanger prepared a "White Paper" analysis regarding approximately 375 total agreements, the savings of which Plaintiff has not yet been able to calculate.

Based on the foregoing, Plaintiff asserts that she is owed a performance bonus of 5% of the amount in savings she achieved for Verizon, plus interest, attorneys fees, and punitive damages of no less than $50,000,000.00. The Complaint sets forth the following claims: i) breach of contract; ii) breach of preliminary agreement; iii) breach of preliminary commitment; iv) fraud; v) fraudulent misrepresentation; vi) promissory estoppel; vii) equitable estoppel; viii) unjust enrichment; ix) tortious interference with contract by Telesector; and x) breach of good faith and fair dealing. Defendants have moved to dismiss the claims for fraud and fraudulent misrepresentation, unjust enrichment, tortious interference with contract, and breach of good faith and fair dealing. For the reasons set forth below, Defendants' partial motion to dismiss is GRANTED in part and DENIED in part.


I. Jurisdiction

The Court has subject matter jurisdiction over this action based on the parties' diversity and alleged damages of more than $75,000. See U.S. Const. art. III, § 2; 28 U.S.C. § 1332(a)(1), (c)(1); St. Paul Fire & Marine Ins. Co. ...

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