XO Communications, Inc. v. MetroPCS, Inc.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 05-1218

XO COMMUNICATIONS, INCORPORATED,

Plaintiff - Appellant,

versus

METROPCS, INCORPORATED,

Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. T. S. Ellis, III, District
Judge. (CA-04-845)

Argued: May 22, 2006 Decided: June 20, 2006

Before NIEMEYER, SHEDD, and DUNCAN, Circuit Judges.

Affirmed by unpublished per curiam opinion. Judge Duncan wrote a
separate concurring opinion.

John Alexander Fraser, III, Clifton, Virginia, for Appellant.
Charles Lee Perry, ANDREWS & KURTH, L.L.P., Dallas, Texas, for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

XO Communications, Inc. appeals the summary judgment entered

in favor of MetroPCS, Inc. We affirm.1

The material facts are not in dispute, and we need only

briefly recite them in this opinion. XO is a telecommunications

carrier. MetroPCS provides wireless telephone service in the

Miami, Florida, area. After negotiations, XO and MetroPCS entered

into two separate (but identical) one-year contracts for “Dedicated

IntraLATA DS-3 Voice Service for Calls Originating and Terminating

Within LATA 460 (Miami, Florida).” J.A. 1286. Generally, under

these contracts, MetroPCS’ customers used MetroPCS equipment to

make telephone calls which MetroPCS then routed to XO’s network for

completion. XO provided this service to MetroPCS and billed

MetroPCS periodically.

The parties’ dispute involves approximately $350,000 that XO

contends MetroPCS owes as a result of XO’s delivery of MetroPCS

calls to BellSouth for completion. BellSouth assessed XO for this

amount. MetroPCS refused to pay XO, contending that it is not

liable because the contracts unambiguously provide that it was only

obligated to pay XO a flat monthly rate of $11,200 (per contract).

MetroPCS specifically relies on the addendum to the contracts,

which sets the “rates” for the specified service as being a monthly

1
We review de novo an award of summary judgment. Chawla v.
Transamerica Occidental Life Ins. Co., 440 F.3d 639, 644 (4th Cir.
2006).

2
recurring charge of $11,200 with no non-recurring charge. J.A.

1286.

On cross-motions for summary judgment, the district court

analyzed the various provisions of the contracts, found XO’s

proposed reading of the contracts to be untenable, and concluded

that MetroPCS is not liable for the BellSouth charges under the

unambiguous terms of the contracts. See J.A. 1273 (“It is the

Court’s view, . . . without reference to anything other than the

contract documents, . . . that it is unambiguous, and that the

addendum makes clear that the only charge is [$]11,200. . . . It’s

not conceivable to the Court that this contract is unambiguous the

other way.”). Alternatively, the district court held that if XO’s

proposed reading of the contracts is plausible, then the contracts

are, at best, ambiguous. Continuing this line of reasoning, the

district court stated that in the event of such an ambiguity, the

parol evidence establishes as a matter of law that the parties

intended for MetroPCS to pay only a monthly flat rate of $11,200

per contract. See J.A. 1276 (“[E]ven assuming that there was some

plausibility to the plaintiff’s argument on the construction of the

addendum, . . . that would render the contract ambiguous and,

therefore, resort to parol evidence would be appropriate. . . .

3
There is no evidence contradicting what Mr. Ibanez told Mr. Madsen

in their negotiation of the contract.”).2

On appeal, XO reiterates its contention that the contracts

unambiguously require MetroPCS to pay the BellSouth charges. At

oral argument, XO’s counsel readily conceded that unless we

conclude that the contracts are unambiguous in XO’s favor on this

point, then MetroPCS must prevail in this litigation. In making

this concession, XO’s counsel specifically agreed that if resort to

parol evidence is necessary because of an ambiguity in the

contracts, then MetroPCS must prevail.

Having carefully considered the parties’ arguments, we agree

with the district court that the contracts do not unambiguously

support XO’s position. Instead, we believe that the contracts are,

at best, ambiguous concerning MetroPCS’ payment obligation. Given

this ambiguity, and in light of XO’s concession and our review of

the record, we conclude that the undisputed parol evidence

establishes as a matter of law that MetroPCS was only obligated to

pay a monthly flat rate of $11,200 per contract and, therefore, is

not liable for the BellSouth charges. Accordingly, we affirm the

summary judgment.

AFFIRMED

2
Ibanez, the XO Vice-President who negotiated the contracts
with MetroPCS, admitted during discovery that he had represented
that MetroPCS would not incur any usage charges under the
contracts.

4
DUNCAN, Circuit Judge, concurring:

I write separately to explain the basis of my agreement with

the majority.

I believe that the term “rate” in the Addendum is a term of

art used within the telecommunications industry to denote charges

imposed by a particular carrier. As such, a “rate” would not

include taxes, fees, or the BellSouth transit charges at issue.

Interpreting “rate” as specific to a carrier would also harmonize

the agreement before us. So interpreted, the term as used in the

Addendum could be read consistently with the provisions allowing

for the pass through of third party fees such as taxes and other

carrier’s charges instead of overruling them.

Although my interpretation is a plausible, and, I think, more

compelling one, unfortunately for XO it is not the only one that

can be drawn from this agreement. The agreement appears to use the

terms “rates” and “fees” interchangeably; in fact, the multiple

references to components of a customer’s costs make it difficult to

tell what one’s rate comprises.

As the drafter of the agreement, XO was in a position to

define the term “rate,” or otherwise make its meaning clear. Its

failure to do so creates an ambiguity that renders resort to parol

evidence appropriate.

5