Summary
In MCI, there was no question as to the validity of the easements as opposed to this case where the court has ruled the easements of no effect because of the failure to secure the signature of Helen because of her homestead interest.
Summary of this case from Marlow, LLC v. Bellsouth Telecommunications, Inc.Opinion
Case No. 02-13533 (AJG) (Jointly Administered).
February 1, 2006
ORDER ON MOTION OF REORGANIZED DEBTOR, MCI, INC. FOR SUMMARY JUDGMENT ON AND TO DISMISS THE CLAIM OF MAX V. McLAUGHLIN
Upon consideration of the Motion of Reorganized Debtor MCI, Inc. for Summary Judgment on and to Dismiss the Claim of Max V. McLaughlin (the "Summary Judgment Motion") and the parties' briefs and argument on the Summary Judgment Motion, and for the reasons stated in the Court's December 13, 2005 decision on the Summary Judgment Motion, which is attached hereto as Exhibit A, it is hereby
ORDERED that the Summary Judgment Motion is granted, and it is further
ORDERED that the claim of Max V. McLaughlin, No. 12223, is dismissed with prejudice.
EXHIBIT A
AS REVIEWED AND MODIFIED BY THE COURT ON 12/13/05.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
In re Case No. WORLDCOM, INC., et al, 02-13533 * * SEE BELOW Reorganized Debtors.
December 13, 2005 3:05 p.m.
United States Custom House One Bowling Green New York, New York 10004
DIGITALLY RECORDED PROCEEDINGS E X C E R P T
03:05 WORLDCOM, INC., ET AL DECISION TO BE RENDERED
Motion filed by the Debtors for Summary Judgment on claim of Max McLaughlin, Claim No. 12223.
Response by Max McLaughlin filed.
B E F O R E:
THE HONORABLE ARTHUR J. GONZALEZ United States Bankruptcy Judge
DEBORAH HUNTSMAN, Court Reporter 198 Broadway, Suite 903 New York, New York 10038 (212) 608-9053 (917) 723-9898
A P P E A R A N C E S:
JENNER BLOCK LLP Special Counsel for Reorganized Debtors 601 Thirteenth Street, N.W. Suite 1200 South Washington, D.C. 20005
BY: ALEX WARD, ESQ. (via telephone)
Proceedings
(Whereupon, the following is an excerpt from 12/13/05 in re WorldCom, Inc., et al, case no. 02-13533.)
JUDGE GONZALEZ: Please be seated. Are any of the parties on the phone?
MR. WARD: Good afternoon, Your Honor. This is Alex Ward for MCI.
JUDGE GONZALEZ: All right. Are any of the other parties present in the courtroom?
(Whereupon, no response was heard.)
JUDGE GONZALEZ: All right. This is the McLaughlin decision. I am reading something into the record, but earlier today I had my pupils dilated for an eye exam and it is difficult to read. So I will provide what I am reading from, as I normally would anyway, to the Court reporter for citations, but there may be certain other changes made, if I do not include everything that is written here as I read through it.
* * * *
Before the Court is a Motion for Summary Judgment filed by the Debtor MCI, Inc. to disallow Claim No. 12223 ("McLaughlin Claim") filed by Claimant Max V. McLaughlin, et al, ("McLaughlin"). The Debtor contends that no issues of material fact exist and that, pursuant to Federal Rule of Civil Procedure 56(c), as incorporated by Federal Rule of Bankruptcy Procedure 7056 and Federal Rule of Bankruptcy Procedure 9014, it is entitled to summary judgment in its favor and disallowance of the claim. McLaughlin argues in response that material facts are in dispute, and thus that the Court should either reject the Debtor's Motion or grant relief pursuant to Federal Rule of Civil Procedure 56(f).
The McLaughlin Claim arose out of McLaughlin's class-action suit against Mississippi Power Company ("MPC") in the United States District Court for the District of Mississippi in 2001. That suit related to MPC's installation of a fiber optic cable system on power line easements granted by the class-action members' predecessors-in-interest. McLaughlin alleged that the use of the easements for fiber optic telecommunications violated the terms of the easements and demand ed relief on theories of trespass, unjust enrichment, and negligence. During the course of that suit, MPC joined the Debtor, who leases spare capacity on MPC's fiber optic system and helped finance the installation of that system, to the federal district court action as a necessary party under Federal Rule of Civil Procedure 19(a). In his Amended Complaint, McLaughlin alleges that the Debtor is liable for violation of the subject easements in connection with the installation and use of the fiber optic cable system, and is further liable for trespass, unjust enrichment, and negligence.
As McLaughlin filed a proof of claim against the Debtor based on the state law claims asserted in the district court litigation, this Court has "core" jurisdiction to resolve the proof of claim pursuant to 28 U.S.C. 1334 and 28 U.S.C. 157(b)(1). In re S.G. Phillips Constructors, Inc., 45 F.3rd 702, 705 (2nd Cir. 1995).
Rule 56(c) states that summary judgment should be granted if the record demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." A "genuine issue" exists where "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). The evidence must be "viewed in the light most favorable to the party opposing the motion." Terminate Control Corp. v. Horowitz, 28 F.3d 1335, 1352 (2nd Cir. 1994) (citations omitted). "When the movant demonstrates through competent evidence that no material facts are genuinely in dispute, the non-movant must set forth specific facts showing that there is a genuine issue for trial." Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2nd Cir. 1990) (internal quotation omitted). "However, mere conclusory allegations, speculation, or conjecture will not avail a party resisting summary judgment." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2nd Cir. 1996). "The non-movant cannot `escape summary judgment by merely vaguely asserting the existence of some unspecified disputed material facts.'" Western World, 922 F.2d, at 121 (citing Borthwick v. First Georgetown Securities, Inc., 892 F.2d 178, 181 (2nd Cir. 1989)).
Rule 56(f) provides that the non-moving party may file an affidavit stating the reasons why it cannot provide the facts necessary to deny the summary judgment motion. This affidavit must explain "1) what facts are sought and how they are to be obtained, 2) how those facts are reasonably expect ed to create a genuine issue of material fact, 3) what effort the affiant has made to obtain them, and 4) why the affiant was un successful in those attempts." Hudson River Sloop Clearwater, Inc. v. Department of the Navy, 891 F.2d 414, 422 (2nd Cir. 1989). Ordinarily, it is true that summary judgment is not appropriate where the non-movant has not "had the opportunity to discover information that is essential to the motion for summary judgment." Hellstrom v. U.S. Dept. of Veteran Affairs, 201 F.3d 94, 97 (2nd Cir. 2000) (citations omitted). However, it is equally true that it is within the discretion of the Court to reject the 56(f) affidavit where the affidavit "merely restates the conclusory allegations contained in [the] complaint and amplifies them only with speculation about what discovery might uncover." Contemporary Mission, Inc. v. U.S. Postal Service, 648 F.2d 97, 107 (2d Cir. 1981). See also, Trebor Sportswear Co., Inc. v. The Limited Stores, Inc., 865 F.2d 506, 512 (2nd Cir. 1989) (Affiant "proffered no persuasive basis for the district court to conclude that further discovery would yield proof.")
The state law claims assert ed in the McLaughlin Claim are founded on the misuse of easements the class-action members' predecessors-in-interest granted MPC for the construction of power lines. These easements state in their relevant part that MPC has the right "to construct, operate and maintain electric transmission lines and all telegraph and telephone lines, towers, poles and appliances necessary or convenient therewith. . . . ." Debtor's Memorandum in Support of Motion, Exhibit H. In a similar case litigated by M PC involving other easements containing the same language, the Mississippi Supreme Court interpreted the easement as allowing the installation of fiber optic cable, but also as limiting the use of the cable to purposes "necessary or convenient" to the provision of electricity. McDonald v. Mississippi Power Company, 732 So.2d 893, 897 (Miss. 1999). TheMcDonald Court held that material issues of fact existed as to whether MPC's sublease of spare capacity to telecommunications providers, such as the Debtor, was "necessary or convenient" to the provision of electricity, and therefore reversed the trial court's grant of summary judgment on that issue and remanded.Id. A Mississippi Chancery court in a separate, but related action subsequently concluded that such subleasing does not in fact violate the terms of the easement, but that finding of fact was not reviewed by the Mississippi Supreme Court on appeal.See Mississippi Power Company v. Hanson, 905 So.2d 547, 550 (Miss. Jan. 6, 2005). The record here before the Court does show that the issue unresolved by McDonald, that is, whether or not MPC's subleasing of spare capacity is "necessary or convenient" to the provision of electricity, is a genuine issue of material fact, as McLaughlin's Rule 56(f) affidavit is almost solely focused on disputing the Debtor's contention that such subleasing is "necessary." Therefore, this issue is not a proper subject for summary judgment.
However, this conclusion is not dispositive of the summary judgment motion before the Court. McLaughlin alleges that the Debtor is liable for misuse of the easement, a different issue. The first question this Court must address in resolving the liability of the Debtor concerns what action or actions could constitute violation of the subject easement s. This Court recognizes that McDonald, upon which decision McLaughlin's claims rest, found that the potential violation of the easement related to the granting of a sublease to another party. Accordingly, this Court also recognizes that no material facts are in dispute that could lead to the conclusion that the Debtor is liable for violating the subject easements. Most obviously, MPC, not the Debtor, is a party to the easement and bound by its terms. The Debtor simply entered into an otherwise valid lease agreement with MPC unrelated to any easements. Moreover, the Debtor did not and could not grant a sub lease, that is, commit the action that might constitute misuse of the easement underMcDonald. MPC alone was in the position to sublease any spare capacity. McLaughlin argues, however, that the Debtor could be liable as an assign of MPC, thus holding the same rights and bearing the same responsibilities as the assignor. It is true, as McDonald recognized, that an assign may be liable for misuse of the easement. However, no factual dispute has been raised as to whether the Debtor is an assignee of MPC rather than a sublesee. McLaughlin offers a vague suggestion that the Debtor is an assign and that discovery is need ed to resolve a factual dispute as to the exact relationship between MPC and the Debtor. This is, however, only a conclusory allegation and thus insufficient to raise a factual dispute and preclude summary judgment. Moreover, as the affidavit offers no basis upon which to believe that discovery might possibly prove fruitful as to this issue, McLaughlin has not satisfied the requirements of Rule 56(f). Accordingly, this Court finds as a matter of law that the Debtor has not violated the easement and is entitled to summary judgment on this claim.
The Court will now turn to McLaughlin's trespass claims. Mississippi trespass law "allows a plaintiff damaged by a physical invasion to recover upon a simple showing that the defendant was responsible for the physical invasion." Donald v. Amoco Prod. Co., 735 So.2d 161, 169 (Miss. 1999) (quoting City of Jackson v. Filtrol Corp., 624 F.2d 1384, 1389 (5th Cir. 1980). McLaughlin's first trespass claim is founded upon MPC's physical invasion of the class-action members' property during the installation of those fiber optic cables that violate the easement. The second alleges that the presence of those fiber optic cables that violate the easement constitutes a physical invasion of the class-action members' property. To surmountMcDonald's legal conclusion that MPC had the authority under the easement to install the fiber optic cable, McLaughlin proposes to quantitatively sever "necessary" from "unnecessary" cable. This Court finds no need to accept McLaughlin's invitation to engage in a minute parsing of fiber optic cables to determine which strands exceed the easement. Rather, as with the easement claim, these two trespass claims fail to put on any material facts into dispute that would suggest the Debtor is "responsible" for either purported invasion. McLaughlin offers only speculation to dispute the Debtor's proof that these fiber optic cables are owned by MPC, and thus that M PC is liable for any physical invasion due to the physical presence of the cables. Similarly, McLaughlin's contention that the Debtor could be liable under an agency theory if the Debtor paid MPC to commit the trespass is inapposite where it is supported only by suppositions that the Debtor exercised that degree of control. Moreover, McLaughlin's Rule 56(f) affidavit fails to provide any support for these speculations and suppositions or any grounds for a reasonable expectation that discovery would provide such support.
McLaughlin's third trespass claim concerns the Debtor's use of the fiber optic cable. McLaughlin alleges that the "pulses of light" that flow through a fiber optic cable during use constitute a physical invasion of the class-action members' property and therefore trespass. However, "trespass requires an actual physical invasion of the plaintiff's property." Leaf River Forest Products, Inc. v. Simmons, 697 So.2d 1083, 1085 (Miss. 1996) (en banc) (citing Blue v. Charles F. Hayes Associates, Inc., 215 So.2d 426 (Miss. 1968). Interpreting Mississippi case law, this Court concludes as a matter of law that "pulses of light" do not satisfy the requirement of a "physical" invasion, and are, in the language of other decisions, "intangible" physical presences. See e.g., this Court's decisions in In re Worldcom, Inc., 320 B.R. 772 (Bankr. S.D.N.Y. 2005) and In re Worldcom, 2005 WL 1691048 (Bankr. S.D.N.Y. 2005).See also, Cook v. Rockwell International Corp., 273 F. Supp. 2d 1175, 1200-1201 (D. Colo. 2003); Maddy v. Vulcan Materials Co., 737 F. Supp. 1528, 1540 (D.Kan. 1990); Borland v. Sanders Lead Co., 369 So.2d 523, 531 (Ala. 1979). To hold that these presences constitute trespass would be to render the "physical" requirement meaningless. "Pulses of light" are nothing more than energy radiation of specific frequencies, like radio waves, x-rays, and UHF transmissions, and considering such an energy radiation "physical" for purposes of trespass law would be inappropriate. This is to say nothing of the addition al problem of determining what party owns or is responsible for such pulses of light in the course of a fiber optic communication.
Mississippi law does recognize, however, that such "intangible" invasions can constitute trespass when they result in damage to the physical property. Where "the property of the plaintiff was damaged by the physical invasion of deleterious agents . . . the right of the plaintiff to recover damages to the extent that it may be shown that they proceed from a physical invasion by harmful agents proceeding from the plant of the defendant is clear." King v. Vicksburg Ry. Light Co., 42 So. 204 (Miss. 1906). In King the "deleterious agents" were noise, smoke, shoot, cinders, and vibration, which may be analogized to "pulses of light." Even under this theory, however, McLaughlin's claim fails, for there is no factual dispute that the "pulses of light" are harmless to the class-action members' property.
Therefore, this Court concludes as a matter of law that the Debtor is not liable on any of McLaughlin's theories of trespass, and is thus entitled to summary judgment on those claims.
McLaughlin has alleged two additional claims for unjust enrichment and negligence. To sustain a claim for unjust enrichment under Mississippi law, "the plaintiff need only allege and show that the defendant holds money which in equity and good conscience belongs to the plaintiff." Dorsey Mississippi Sales, Inc. v. Newell, 168 So.2d 645, 651 (Miss. 1964). See also, Koval v. Koval, 576 So. 2d 134, 136 (Miss. 1991) (unjust enrichment is found where "the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain but should deliver to another"). As McLaughlin has not provided evidence, or suggested the production of such evidence in his Rule 56(f) affidavit, that the Debtor engaged in any illegal or inequitable conduct in relation to McLaughlin, this Court finds as a matter of law that the Debtor is not liable for unjust enrichment and grants the Debtor summary judgment on this claim.
As to McLaughlin's claim of negligence, the complaint and supporting documents fail to state a recognizable cause of action for negligence. McLaughlin's Rule 56(f) affidavit similarly fails to state any basis upon which discovery may proceed on this issue. Therefore, this Court grants the Debtor summary judgment on this claim.
Finally, McLaughlin has requested an injunction against the Debtor to enjoin further use of the fiber optic cable passing across the class-action members' property. Though it is true that injunctions may be granted to halt or prevent misuse of an easement, this Court declines to do so here. McLaughlin has no valid claim upon which to rest such an injunction as a remedy. Moreover, even if there was such a claim, the re medial imposition of an injunction is foreclosed by the eminent domain provisions under Miss. Code Ann. Section 77-9-715.
Based upon the foregoing, McLaughlin's Rule 56(f) request is denied, the Debtor's Motion for Summary Judgment is granted, and Claim No. 12223 is disallowed in its entirety and no injunction is granted.
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The Debtor is to settle an Order consistent with this Court's opinion. Further, in the settling of the Order, the Debtor should settle a copy of the transcript of this Court's decision as read into the record today.
C E R T I F I C A T E STATE OF NEW YORK ) : SS: COUNTY OF NEW YORK )
I, DEBORAH HUNTSMAN, a Shorthand Reporter and Notary Public within and for the State of New York, do hereby certify:
That the within is a true and accurate transcript of the proceedings taken on the 13th day of December, 2005.
I further certify that I am not related by blood or marriage to any of the parties and that I am not interested in the outcome of this matter.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of December, 2005.
_____________________________ DEBORAH HUNTSMAN
AS REVIEWED AND MODIFIED BY THE COURT ON 12/13/05.