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Global Crossing Bandwidth, Inc. v. PNG Telecommunications

May 15, 2008

GLOBAL CROSSING BANDWIDTH, INC., PLAINTIFF,
v.
PNG TELECOMMUNICATIONS, INC., DEFENDANT.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Plaintiff Global Crossing Bandwidth, Inc., ("Global Crossing") brings this action pursuant to diversity jurisdiction alleging that the defendant PNG Telecommunications, Inc., ("PNG") breached a contract entered into by the parties. Specifically, Global Crossing contends that PNG breached an agreement to purchase certain telecommunications services for three years by discontinuing those services after only one year. Plaintiff further alleges that PNG failed to honor a non-contractual obligation to retain services for three years. Plaintiff seeks damages for the defendant's alleged breach of contract as well as a declaratory judgment against PNG.

Global Crossing moves for summary judgment on all counts of the Amended Complaint claiming that there are no material issues of fact in dispute, and that it is entitled to judgment as a matter of law. PNG opposes plaintiff's motion, and cross-moves for summary judgment on grounds that because there is no provision in the contract for damages in the case of early termination of the contract, plaintiff is not entitled to such damages.

For the reasons set forth below, I grant plaintiff's motion for summary judgment, and deny defendant's cross-motion for summary judgment.

BACKGROUND

In 1998, plaintiff Global Crossing (by its predecessor in interest) and defendant PNG entered into a Carrier Services Switchless Agreement ("CSSA") under which PNG agreed to purchase various commercial voice communications services from Global Crossing. The CSSA was amended on several occasions over the years, and in June, 2003, the parties entered into Amendment No. 10 (the "Amendment"). Under this Amendment, PNG undertook to purchase data communications services from Global Crossing, including "wavelength" services. Wavelength Service is described in Amendment 10 as "a fiber-optic, transponder based point to point circuit between Global Crossing Points of Presence." See Specific Service Terms and Conditions for Global Crossing Wavelength Service, (hereinafter "the Agreement")(attached as Exhibit "S" to Amendment #10 to Carrier Switchless Agreement) at § 1.1. The Agreement further provides that the service may be purchased in two ways: either as an annual lease of the circuit for a term of years, with a monthly service charge, or a pre-paid lease of the circuit for a term of years. Agreement at § 1.6.

Pursuant to the Agreement, PNG leased 11 circuits from Global Crossing for a term of three years, with a monthly recurring charge of $121,702. Specifically, the Agreement provided that "Each circuit shall have a specific in-service term commitment of three years which shall be separate and distinct from the term of the Carrier Services Switchless Agreement." Agreement at § 5. The Agreement also provided discounts to PNG during the first year of the three-year term of each circuit. Pursuant to Section 6 of the Agreement, PNG received a 75% discount for each circuit during the first six months of the Agreement, and received a 50% discount during the next sixth months. Thereafter, PNG was to pay the full price for each circuit. Agreement at § 6.

In November, 2004, after PNG had received all of the discounts under the Agreement, PNG terminated its wavelength service. Thereafter, Global Crossing made a demand for payment for the remaining monthly charges due under the agreement. PNG declined to pay for the remaining months, contending that because Amendment 10, (unlike several other Amendments to the CSSA) did not contain an early termination liability clause, PNG was free to terminate the contract without penalty. This lawsuit ensued.

DISCUSSION I. The Parties' Motions for Summary Judgment Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." When considering a motion for summary judgment, all genuinely disputed facts must be resolved in favor of the party against whom summary judgment is sought. Scott v. Harris, U.S. , ; 127 S.Ct. 1769, 1776 (2007) . If, after considering the evidence in the light most favorable to the nonmoving party, the court finds that no rational jury could find in favor of that party, a grant of summary judgment is appropriate. Scott, U.S. at ; 127 S.Ct. at 1776 (citing Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587.

II. PNG has Breached Amendment 10 to the CSSA To state a claim for breach of contract under New York law, a plaintiff must establish: (1) the existence of a valid contract, (2) performance of the contract by the plaintiff; (3) breach of the contract by the defendant; and (4) damages. First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2nd Cir. 1998)(citing Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir.1994). In the instant case, as set forth below, Global Crossing has established all four elements of its claim for breach of contract.

There is no dispute that Global Crossing and PNG entered into a valid contract: the CSSA. Further, there is no dispute that the parties entered into Amendment 10, which required Global Crossing to provide wavelength services to PNG, and required PNG to pay for those services. Accordingly, Global Crossing has established the first element of its case for breach of contract.

Nor is there any dispute that Global Crossing provided wavelength services to PNG as required under the CSSA. Global Crossing alleges that it provided the circuits for PNG's use as set forth in the contract, and PNG does not dispute this allegation. Accordingly, plaintiff has established the second element of its claim for breach of contract: that it performed its duties under the contract.

Global Crossing contends that PNG breached Amendment 10 of the agreement by discontinuing wavelength services prior to the end of the three year commitment period set forth in the contract. PNG contends that because Amendment 10 does not contain a clause specifying liability or any amount of damages in the event of early termination of the agreement by PNG, it is not liable ...


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