Time Warner Entertainment Co. v. Everest Midwest Licensee, L.L.C.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
AUG 27 2004
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

TIME WARNER ENTERTAINMENT
COMPANY, L.P., a Delaware limited
partnership; and LIBERTY CABLE
OF MISSOURI, INC., a Missouri
corporation,

Plaintiffs - Counter Defendants
- Appellants,

EVEREST MIDWEST LICENSEE,
L.L.C., dba Everest Connections
Corp.,

Defendant - Appellee,

ATRIUM PARTNERS, L.P., a Kansas
No. 03-3005
limited partnership,

Defendant - Counter Claimant -
Appellee.

NATIONAL MULTIHOUSING
COUNCIL, COMMUNITY
ASSOCIATIONS INSTITUTE,
INSTITUTE OF REAL ESTATE
MANAGEMENT, NATIONAL
APARTMENT ASSOCIATION,
NATIONAL ASSOCIATION OF
REAL ESTATE INVESTMENT
TRUSTS, REAL ESTATE
ROUNDTABLE, AND REAL
ACCESS ALLIANCE,

Amici Curiae.
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 02-CV-2343-CM)

Michael W. Quinn (Bernard J. Rhodes, Lathrop & Gage, L.C., Kansas City,
Missouri, with him on the briefs), Time Warner Cable, Stamford, Connecticut, for
the Plaintiffs-Appellants.

Lee M. Smithyman (Rachel Lipman Reiber, Everest Midwest Licensee, L.L.C.,
Kansas City, Missouri, with him on the brief), Smithyman & Zakoura, Chartered,
Overland Park, Kansas, for the Defendant-Appellee.

Matthew C. Ames, Gerard Lavery Lederer, Miller & Van Eaton, P.L.L.C.,
Washington, D.C.; Roger Platt, Vice President & Counsel, The Real Estate
Roundtable, Washington, D.C.; Molly Foley-Healey, Community Associations
Institute, Alexandria, Virginia; Tony Edwards and Robert Cohen, National
Association of Real Estate Investment Trusts, Washington, D.C., on the brief for
the Amici Curiae.

Before LUCERO, McKAY, and HARTZ, Circuit Judges.

LUCERO, Circuit Judge.

At issue in this case is the application of the Federal Communication

Commission’s (“FCC”) cable television “inside wiring rules” under an agreement

which grants an incumbent cable provider, Time Warner, a license to maintain the

cable wiring its predecessor installed within an apartment complex, The Atriums.

The Atriums argues that the license is limited to the wiring currently being used

-2-
to provide cable television services, and therefore that it may invoke an FCC

regulation which requires the incumbent cable provider to sell, abandon, or

remove wiring the incumbent cable provider no longer has an legally enforceable

right to maintain. See 47 C.F.R. § 76.804. The district court agreed, finding that

the license between Time Warner and The Atriums did not extend to wiring not in

use providing cable services, and accordingly that The Atriums could invoke the

regulations against Time Warner. Exercising jurisdiction under 28 U.S.C. § 1291,

we AFFIRM.

In April 1987, Joseph Tutera, representing The Atriums, a multi-unit

retirement complex, entered into a non-exclusive license agreement with

TeleCable of Overland Park (“TeleCable”), Time Warner’s predecessor, to

provide cable television to The Atriums. The Atriums and TeleCable (now Time

Warner 1) executed the standard license agreement, without change; according to

the agreement Time Warner received “the right, license and permission to install,

operate and maintain” the equipment necessary “to provide CATV and Pay TV

services” to The Atriums’ tenants. (I App. at 17.) By the contract’s terms Time

Warner retains property ownership of the equipment installed.

1
As Time Warner is TeleCable’s successor, all references in the opinion
going forward will be to Time Warner.

-3-
Pursuant to the agreement, Time Warner installed a cable distribution

system at The Atriums. There are three general parts to a cable distribution

system. First, there is the riser, a large cable that runs into the building through a

utility closet on the ground floor, and up through utility closets on each of the

floors. Next runs the “home run wiring” at issue in this litigation, which consists

of wires that run from the riser through the hallway ceilings on each floor and

toward each individual apartment. Finally, there are “home wires”; approximately

twelve inches outside each apartment the “home run wiring” becomes “home

wires” (there is no physical demarcation between “home run wires” and “home

wires”). The “home wires” run into each individual apartment unit. See 47

C.F.R. § 76.5(ll–mm).

In June 2002, The Atriums sent a letter to Time Warner, stating that it

intended to allow Everest Midwest Licensee (“Everest”), which received a

franchise to provide telecommunication services in Overland Park in the summer

of 2001, to compete with Time Warner in the provision of cable television and

high speed internet services in The Atriums. To accomplish this goal, The

Atriums demanded Time Warner elect to abandon, sell, or remove its home run

wires in The Atriums which were not currently being used by Time Warner

subscribers, pursuant to recently enacted FCC regulations, specifically 47 C.F.R.

§ 76.804(b). Section 76.804(b)(1) states:

-4-
Where an MVPD [multichannel video programming distributor] owns
the home run wiring in an MDU [multiple dwelling unit] and does not (or
will not at the conclusion of the notice period) have a legally enforceable
right to maintain any home run wire dedicated to an particular unit on the
premises against the MDU owner’s wishes, the MDU owner may permit
multiple MVPDs to compete for the right to use the individual home run
wires dedicated to each unit in the MDU. . . . The incumbent MVPD will
then have . . . to provide a single written election to the MDU owner as to
whether, for each and every one of its home run wires dedicated to a
subscriber who chooses an alternative provider’s service, the incumbent
MVPD will: remove the wiring and restore the MDU building consistent
with state law; abandon the wiring without disabling it; or sell the wiring to
the MDU owner. If the MDU owner refuses to purchase the home run
wiring, the MDU owner may permit the alternative provider to purchase it.
If the alternative provider is permitted to purchase the wiring, it will be
required to make a similar election . . . for each home run wire solely
dedicated to a subscriber who switches back from the alternative provider
to the incumbent MVPD.

47 C.F.R. § 76.804(b)(1).

In its letter invoking § 76.804(b), The Atriums expressed hope that Time

Warner would agree to sell the home run wiring to Everest, as it perceived that

such an outcome would “facilitate the ability of tenants to switch from Time

Warner to Everest and vice versa on a seamless basis.” (I App. at 165.) Time

Warner refused, arguing that an MDU owner may invoke the regulations only

when the incumbent provider lacks a legally enforceable interest in maintaining

the home run wires on the property. Claiming that it retained a legally

enforceable interest, Time Warner relied on its interpretation of the license

agreement between The Atriums and Time Warner, which stated, in part, that:

-5-
1. Subject to the terms and conditions hereinafter set out, Owner [The
Atriums] hereby grants to TeleCable [Time Warner] the right, license and
permission to install, operate and maintain such of the facilities as
TeleCable [Time Warner] deems necessary or desirable in or on the
Owner’s [The Atriums’] property and in the Project in order to provide
CATV and Pay TV services to tenants in the Project. TeleCable [Time
Warner] shall have the right to enter the Project at any time to perform
maintenance on and make repairs and replacements of the facilities, or any
part thereof, and to install or disconnect customers.

(I App. at 17.) As a result, Time Warner concluded that under the license

agreement it retained a legal right to maintain all of its home run wiring. Under

this interpretation of the agreement, The Atriums could allow Everest into the

building to construct its own cable services facilities, i.e., lay its own wiring;

however, Time Warner was not obligated under § 76.804(b) to abandon, sell, or

remove its home run wiring in The Atriums.

Time Warner proceeded to file suit in federal district court in July 2002,

seeking a declaratory judgment that 47 C.F.R. § 76.804(b) did not apply to its

home run wiring in The Atriums. 2 Specifically, Time Warner maintained that it

had a preexisting, legally enforceable right to maintain its wires on the property.

Time Warner also requested a preliminary injunction preventing The Atriums

from invoking the regulations. The parties agreed to consolidate the hearing on

2
47 C.F.R. § 76.804(c) provides that “[t]he procedures set forth in
paragraphs (a) and (b) of this section shall apply unless and until the incumbent
provider obtains a court ruling or an injunction within forty-five (45) days
following the initial notice enjoining its displacement.”

-6-
Time Warner’s preliminary injunction motion with a hearing on the merits. Time

Warner Entertainment Co., LP v. Atriums Partners, LP, 232 F. Supp.2d 1257,

1258 (D. Kan. 2002). On November 26, 2002, the district court denied the

request for the preliminary injunction and found that Time Warner had a legal

right only to the home run wires running to apartments of current Time Warner

subscribers. Id. at 1268. For the home run wires running to apartments of non-

subscribers, the district court found that The Atriums could invoke § 76.804(b),

thereby requiring Time Warner to abandon, sell, or remove those home run wires.

Id. at 1269. Time Warner appeals.

Because the federal home run wiring regulations only apply if an incumbent

provider no longer has a legally enforceable right to maintain its home run wires

in an MDU, our interpretation of the license agreement necessarily implicates

whether the federal regulations apply in this circumstance. However, in addition

to analyzing the license agreement between Time Warner and The Atriums, we

must also interpret the federal regulations in order to determine if the regulations

apply to the facts before us. The FCC regulations contain two provisions

potentially relevant to the home run wiring at issue: the building-by-building

provision and the unit-by-unit provision. See 47 C.F.R. § 76.804(a) & (b). Under

either of the two home run wiring provisions, Time Warner is not obligated to

-7-
abandon, sell, or remove its home run wiring if it has a legally enforceable right

to either remain on the premises (in the building-by-building context) or maintain

any particular home run wiring (in the unit-by-unit context). Id. Accordingly, we

begin with an analysis of the license agreement between Time Warner and The

Atriums, followed by an analysis of the federal regulations at issue.

State law claims 3 before a federal court on supplemental jurisdiction are

governed by state law, Olcott v. Del. Flood Co., 327 F.3d 1115, 1126 (10th Cir.

2003), and we review a federal district court’s determination of state law de novo.

Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991). Whether a contract’s

language is ambiguous is also reviewed de novo. Sanpete Water Conservancy

Dist. v. Carbon Water Conservancy Dist., 226 F.3d 1170, 1178 (10th Cir. 2000).

“Where the parties have negotiated and entered into a written contract which

3
Time Warner filed suit in the United States District Court, District of
Kansas pursuant to 28 U.S.C. §§ 1331 & 2201, and as required by the home run
wiring regulations, 47 C.F.R. § 76.804(c), seeking a declaratory judgment
regarding the applicability of the FCC home run wiring regulations under the
license between Time Warner and The Atriums. Because the interpretation of the
license agreement was necessary to Time Warner’s request for a declaratory
judgment, the district court properly had jurisdiction over the contract claims
under 28 U.S.C. § 1367. Neither party disputes that Kansas law governs the
license interpretation in this case.

-8-
addresses the issues negotiated between them, the written contract determines

their rights,” Flight Concepts Ltd. P’ship v. Boeing Co., 38 F.3d 1152, 1157 (10th

Cir. 1994) (citing Albers v. Nelson, 809 P.2d 1194, 1197 (Kan. 1991)), and no

interpretation by the court is necessary. However, if the language of a contract is

susceptible to conflicting interpretations, the contract is ambiguous, Liggatt v.

Employers Mutual Casualty Co., 46 P.3d 1120, 1125 (Kan. 2002), and

interpretation is required.

In interpreting a contract, the primary role of the court is to ascertain and

effectuate the parties’ intentions where possible. In re Villa West Assoc. v. Kay,

146 F.3d 798, 803 (10th Cir. 1998) (citing Ryco Packaging Corp. v. Chapelle

Int’l, Ltd., 926 P.2d 669, 674 (Kan. Ct. App. 1996)). “Reasonable rather than

unreasonable interpretations of contracts are favored,” and accordingly,

interpretations which lead to absurdity or negate the purpose of the contract

should be avoided. In re Villa, 146 F.3d at 803 (quoting Kansas State Bank &

Trust Co. v. DeLorean, 640 P.2d 343, 349 (Kan. Ct. App. 1982)). All provisions

of the agreement should be read “together and in harmony with each other.”

Berry v. Farmland Indust., Inc., 114 F. Supp.2d 1150, 1157 (D. Kan. 2000)

(quoting In re Cherokee County, Kansas Health Care Facility Revenue Bonds, 946

P.2d 83, 91 (Kan. 1997). Where a contract’s terms are ambiguous, those terms

should be construed strictly against the drafter and liberally toward the non-

-9-
drafting party. Dillard Dep’t Stores, Inc. v. Kan. Dept. of Human Res., 13 P.3d

358, 363 (Kan. Ct. App. 2000).

The Atriums argues on appeal that our interpretation of the contract should

be informed by three factors: (1) Time Warner drafted the agreement; (2) the

agreement was a contract of adhesion; and (3) the anticompetitive nature of Time

Warner’s interpretation of the agreement is against the public interest. Therefore,

The Atriums urges, we must read the agreement narrowly, any ambiguity should

be construed strictly against Time Warner, and the agreement should be liberally

construed to favor the public. Addressing the interpretation of the contract

between Time Warner and The Atriums, the district court noted that its

construction was informed by those factors. First, the district court found,

because Time Warner drafted the license agreement, any ambiguity found therein

must be construed strictly against Time Warner. Second, because there was

essentially no competition in the cable services market when The Atriums signed

the licensing agreement, the district court concluded that the contract was an

adhesion contract, which also required that the agreement be strictly construed

against Time Warner. Last, because this license agreement affected the public

interest, the court liberally construed the contract to favor the public.

Neither party disputes that Time Warner drafted the agreement, and we

agree that under Kansas law any ambiguity in the agreement is to be construed

-10-
against the drafter, Dillard Dep’t Stores, 13 P.3d at 363. Accordingly, we will do

so where appropriate. We also agree that this license agreement affects the public

interest and should therefore be liberally construed, where appropriate, to favor

the public. 4 “[C]ontracts affecting the public’s interest generally are liberally

interpreted to favor the public.” Simon v. Farmland Indus., Inc., 505 F. Supp. 59,

61 (D. Kan. 1980) (citation omitted); Restatement (Second) of Contracts § 207

(1981) (“In choosing among the reasonable meanings of a promise or agreement

or a term thereof, a meaning that serves the public interest is generally

preferred.”); 5 A. Corbin, Corbin on Contracts § 24.25 (rev. 1998) (“[C]ourts

favor a construction in the public interest . . . . [C]ontracts by which the public

interest is affected should be interpreted in the manner most favorable to the

public. . . . [T]his rule is often applied to contracts involving public franchises.”).

Not only does this contract involve the interpretation of a license granted to

a public franchise; in this case, the contract implicates The Atriums’ right to avail

itself of regulations promulgated by the FCC to encourage competition amongst

cable services providers in the MDU market. See 47 U.S.C. § 521(6) (purposes of

cable regulations). The FCC estimates that as of 1997, thirty million Americans

resided in MDUs, and there were approximately 600,000 MDUs in the United

4
Because we will construe any ambiguity strictly and against Time Warner
as drafter, we need not reach the issue of whether the license agreement was one
of adhesion.

-11-
States. Inside Wiring, 62 Fed. Reg. 61016, 1997 WL 704275 at *61018 (Jan. 29,

2003) (to be codified at 47 C.F.R. pt. 76) (“Final Rule”). Moreover, when the

city of Overland Park licensed Time Warner, it considered in its franchise grants

whether the franchise “provide[s] to the residents of the City a useful and

desirable service for the benefit of the public welfare of the residents.” (I App. at

104.) Finally, both the Everest and Time Warner franchise grants are subject to

city regulation of the services provided and rates charged. (See, e.g., id.; I App.

at 48; I App. at 88.) Given this evidence, we conclude that this contract affects

the public interest and where appropriate, we will construe it accordingly.

The Atriums contends that under such a reading the license agreement

granted Time Warner only the right to provide cable television to a tenant;

therefore, if Time Warner is not actually providing cable television to such tenant,

it retains no legally enforceable right to maintain any wiring to that tenant’s

residence. Time Warner counters that, when read as a whole the license

agreement is unambiguous and grants Time Warner a legally enforceable right to

maintain all of its home run wires at The Atriums, regardless of whether the home

run wires are currently in use by Time Warner to provide cable television to

tenants.

With respect to the question of whether Time Warner retains a legally

enforceable right to maintain its home run wiring at The Atriums, the following

-12-
clauses of the license agreement between Time Warner and The Atriums are

particularly relevant:

PREMISES:
...

C. TeleCable [Time Warner] desires to install, operate and maintain its
cable, junction boxes, and other facilities incidental or related to the
provision of its services to tenants in the Project (“the facilities”) in order
to serve those tenants of Owner [The Atriums] who shall from time to time
pay TeleCable [Time Warner] for its services; . . .

D. Owner [The Atriums] recognizes that the provision of TeleCable [Time
Warner] of cable television and Pay TV service to tenants in the Project is
of benefit to Owner [The Atriums], and accordingly, Owner [The Atriums]
is willing to grant the license and permissions hereinafter set forth:

NOW, THEREFORE, the parties hereto agree as follows:

1. Subject to the terms and conditions hereinafter set out, Owner [The
Atriums] hereby grants to TeleCable [Time Warner] the right, license and
permission to install, operate and maintain such of the facilities as
TeleCable [Time Warner] deems necessary or desirable in or on the
Owner’s [The Atriums’] property and in the Project in order to provide
CATV and Pay TV services to tenants in the Project. TeleCable [Time
Warner] shall have the right to enter the Project at any time to perform
maintenance on and make repairs and replacement of the facilities, or any
part thereof, and to install or disconnect customers.

2. . . . It is agreed that the facilities installed by TeleCable [Time Warner]
in the Project or elsewhere on Owner’s [The Atriums] property shall be and
remain the sole and exclusive property of TeleCable [Time Warner] and
shall be treated as personal property of TeleCable [Time Warner] for all
purposes.

(I App. at 17–18.)

These considerations in mind, we must determine whether Time Warner

-13-
retains a legally enforceable right under its license agreement to maintain all of

its home run wiring in The Atriums. The district court relied in part upon section

C of the “PREMISES” of the license agreement, which states:

TeleCable [Time Warner] desires to install, operate and maintain its cable,
junction boxes, and other facilities incidental or related to the provision of
its services to tenants in the Project (“the facilities”) in order to serve those
tenants of Owner [The Atriums] who shall from time to time pay TeleCable
[Time Warner] for its services[.]

(I App. at 17.) Accordingly, the district court concluded that the license granted

Time Warner the right to maintain its facilities only when it was providing service

to a tenant. Reasoning that “provide” does not mean that Time Warner can

“store” its wires in anticipation of offering services to new tenants, the district

court determined that “provide” limits Time Warner’s rights to only those home

run wires currently in use by Time Warner subscribers. Time Warner, 232

F. Supp. 2d at 1267. As a result, the court determined, Time Warner simply has

no license pertaining to the home run wires running to apartments not currently

subscribing to Time Warner’s cable television services. In addition, the district

court reasoned that the phrase “in order to serve those tenants of Owner who shall

from time to time pay [Time Warner] for its services” is ambiguous and best

resolved against Time Warner to refer to tenants who periodically pay (i.e.

monthly) Time Warner for its services. Id. Finally, the district court concluded

that while Time Warner maintains ownership of unused wiring, its license extends

-14-
to the provision of cable services; because Time Warner clearly has no right to

provide cable services to tenants who have not requested such services, its ability

under the license agreement to maintain facilities in order to provide service

extends only to current subscribers of Time Warner. Id. at 1268.

On appeal, Time Warner contests the district court’s interpretation of the

license agreement on three main grounds: (1) the agreement is unambiguous; (2)

the clear language supports Time Warner’s interpretation of the agreement; and

(3) the district court’s interpretation results in absurdity. First, Time Warner

argues that the agreement is not ambiguous, and that the parties’ intent is easily

determined in the context of the entire agreement; that intent, Time Warner

contends, was to grant Time Warner a license to maintain all of its home run

wiring in The Atriums, including unused home wiring, in anticipation of offering

its services to tenants in the future. Bolstering its argument that this

interpretation reflects the parties’ intent as measured when the agreement was

entered into in 1987, Time Warner draws our attention to the fact that for the

fifteen years following its entry into the agreement, The Atriums allowed Time

Warner to maintain all of its home run wires, regardless of whether the particular

apartment’s tenant was a current subscriber. However, this objection ignores The

Atriums’ contention that Time Warner was the only available cable services

provider in Overland Park when the agreement was signed; therefore, The

-15-
Atriums could not have sought to allow another provider to buy or use Time

Warner’s home run wires to provide cable service in the building. Also notable is

the fact that Everest was granted a license to offer cable services in Overland

Park only a year before The Atriums sought to introduce Everest as a competitor

to Time Warner in the building. As a result, we consider Time Warner’s

argument that The Atriums’ fifteen year acquiescence in Time Warner’s exclusive

provision of cable services as inconclusive evidence of the parties’ intent. 5

Second, Time Warner argues that the clear language of the agreement

granted it the right to operate and maintain such facilities as necessary or

desirable for Time Warner to be able to provide cable services to the tenants of

The Atriums. Because the agreement clearly contemplated that Time Warner

would retain ownership of the wiring and was given access to maintain those

facilities, and because, according to Time Warner, numerous provisions in the

5
Suggesting that The Atriums would not have demanded Time Warner
remove any unused cable wiring, and accordingly that The Atriums would not
have objected to an unconditional license, the dissent suggests that the agreement
should be read to grant Time Warner an unconditional license. However, we
agree with the dissent that The Atriums would not have demanded the costly and
purposeless removal of wiring in the absence of an alternative cable provider
because it would have been plainly against its self-interest. However, this
observation explains just as persuasively why Time Warner would not have
demanded an unconditional license when the contract was entered into—viz., it
would have been unnecessary. Thus, the license is more reasonably read as being
conditioned on the provision of cable services. Moreover, as noted above, in the
event of ambiguity the license must be read strictly against Time Warner.

-16-
license agreement contemplate that it would not be continually supplying cable

services to all units, it insists that the agreement unambiguously grants it a legally

enforceable right to maintain all the home run wires. The district court’s

interpretation, Time Warner stresses, improperly emphasizes the phrase “in order

to provide” service at the expense of the other clauses of the agreement. In fact,

Time Warner insists that “in order to provide” was a mere “descriptive clause”

which “cannot reasonably be read to limit the term of the license granted.”

(Appellant Br. at 26.)

We disagree; to the contrary, the license agreement’s purpose is clearly

stated in the “PREMISES” section of the agreement, i.e., The Atriums grants

Time Warner a license in order to provide cable television services. (See License

Agreement C (“TeleCable [Time Warner] desires to install, operate and

maintain . . . facilities incidental or related to the provision of its services to

tenants . . . in order to serve those tenants of Owner [The Atriums] who shall

from time to time pay TeleCable [Time Warner] for its services”) and D (“Owner

[The Atriums] recognizes that the provision of . . . cable television and Pay TV

service to tenants . . . is of benefit to Owner [The Atriums], and accordingly,

Owner [The Atriums] is willing to grant the license and permissions hereinafter

set forth”), I App. at 17.) The installation and maintenance of the cable wiring is

expressly incidental and related to the primary purpose of the license—the

-17-
provision of cable services to tenants of The Atriums. Indeed, “in order to serve

those tenants . . . who shall from time to time pay TeleCable” seems best read to

mean that the license is limited to the maintenance of wiring related to the

provision of cable services to current Time Warner subscribers. We are simply

not persuaded that the district court was incorrect in focusing on the primary

purpose of the agreement—the provision of cable services—in its analysis. 6

Next, Time Warner argues that the district court’s interpretation of the

contract leads to absurdity in that the logical conclusion of its reading is that

Time Warner’s license vanishes each time a tenant moves out, a tenant cancels its

subscription with Time Warner, or a tenant chooses a competing cable service.

Not only do we disagree with Time Warner that the district court’s interpretation

of the contract is absurd; we consider it to be the most reasonable interpretation.

First, the license agreement explicitly provides Time Warner access to The

6
The dissent argues that our reliance on language in the preamble of the
contract is erroneous and leads to an unjustified emphasis on the purpose of the
contract—provision of cable TV services to tenants of The Atriums. Notably, the
preamble’s emphasis on the provision of cable services is echoed in the numbered
provisions of the contract, i.e., Time Warner has the right to “install, operate and
maintain such of the facilities as [Time Warner] deems necessary or desirable
. . . in order to provide CATV and Pay TV services to tenants.” (License
Agreement 1, I App. at 17.) (emphasis added.) The scope of the contract is
therefore limited by the purpose of the contract—to provide cable TV
services—in the operative sections just as it is informed by the purpose in the
preamble.

-18-
Atriums during transition periods such as the installation or cancellation of

services. “TeleCable [Time Warner] shall have the right to enter the Project at

any time . . . to install or disconnect customers.” (License Agreement, 2, I App.

at 17.) Thus, the license anticipates that subscriptions to cable services will be

periodically entered into and cancelled, and provides for that eventuality. If Time

Warner had a right to enter The Atriums at any time to maintain unused wires, it

would be unnecessary to include a clause that ensured that it had access to The

Atriums to start and stop service, for Time Warner could simply enter at any time

to maintain any wiring. Moreover, the installation clause makes perfect sense

when the agreement is read as the district court indicated, to wit, that Time

Warner’s license to maintain the wires extends only to those wires which are

currently in use to provide cable television services, and that the installation

clause extends the license granted to Time Warner to enter the building to those

periods required to start and stop service. 7

Further, subsection C of the license agreement conditions the installation,

operation, and maintenance of cable wiring on the provision of cable services.

(See License Agreement, C, I App. at 17.) The installation, operation, and

7
The license agreement specifically grants Time Warner “permission to
install [its cable equipment] . . . in order to provide CATV and Pay TV services to
tenants” of The Atriums. (License Agreement, 1, I App. at 17.) Given this
express provision, the dissent’s suggestion that our reading would not allow Time
Warner to install cable wiring in the absence of a subscription is unpersuasive.

-19-
maintenance of the wiring is for the sole purpose of “serv[ing] those tenants

. . . who shall from time to time pay [Time Warner] for its services.” Id. Nothing

in this clause, or any other clause of the agreement, implies that Time Warner has

a license to install, operate, or maintain wiring for any purpose other than

providing cable television services, nor is there any indication that Time Warner

could refuse to provide cable television services, yet continue to maintain its

wiring. In fact, section 1 of the license agreement reiterates that the license is

granted “in order to provide CATV and Pay TV services to tenants” of The

Atriums. (License Agreement, 1, I App. at 17.)

Additionally, Time Warner is required, under the new FCC regulations, to

sell, abandon, or remove home run wiring which it lacks a legally enforceable

right to maintain. See 47 C.F.R. § 76.804(a) & (b). As a result, under our

reading of the license agreement, should a tenant cancel service with Time

Warner, Time Warner would have to sell its lines to a competitor. 8 Similarly, if

the tenant then cancelled its subscription with a competitor, and wished to

subscribe with Time Warner, that competitor would then be obligated to sell the

lines to Time Warner under the regulations. 9 We recognize that the FCC’s

regulations were not in existence at the time the parties entered into the

8
Or abandon or remove its home run wiring.
9
Or abandon or remove its home run wiring.

-20-
agreement; however, as demonstrated above, the license itself anticipated that

Time Warner’s right to enter the premises would be conditioned on whether it was

actively providing service to a particular unit. We observe only that our

interpretation of the agreement, even following the promulgation of the FCC

regulations, results in a logical and tenable outcome.

Finally we note that Time Warner’s interpretation suffers from the same

fault it attributes to the present reading; specifically, it reads clauses of the

agreement out of existence. Under Time Warner’s reading, it would retain a

license to maintain home run wiring even if it was providing no cable television

services to any resident of The Atriums, or if it were to lose its franchise rights in

Overland Park. Time Warner’s interpretation would therefore read out of the

agreement the phrases “facilities incidental or related to the provision of its

services to tenants . . . in order to serve those tenants . . . who shall from time to

time pay [Time Warner] for its services”, “in order to provide CATV and Pay TV

services to tenants.” (License Agreement C, 1, I App. at 17 (emphasis added).)

We conclude that the overriding purpose of the license agreement was the

provision of cable television services to the residents of The Atriums; any

interpretation of the license agreement which would allow the license to continue

without the provision of cable services is directly contrary to the purpose of the

agreement and must be disfavored. Consequently, we agree with the district court

-21-
that the license agreement grants Time Warner a legally enforceable right to

maintain its home run wiring to a particular unit only when Time Warner is

providing cable services to that unit.
B

Having decided that the district court’s interpretation of the license

agreement was correct, we turn to whether the district court properly interpreted

the FCC’s home run wiring regulations to deny Time Warner’s request to

permanently enjoin The Atriums from invoking the procedures outlined in

§ 76.804(b). We review the district court’s interpretation of federal regulations

de novo, United States v. Brown, 348 F.3d 1200, 1208 (10th Cir. 2003), applying

general rules of statutory construction, beginning with the plain language of the

regulations. Valley Camp of Utah, Inc. v. Babbitt, 24 F.3d 1263, 1270 (10th Cir.

1994), see also, Aspenwood Investment Co. v. Martinez, 355 F.3d 1256, 1261

(10th Cir. 2004). As with statutory construction, in interpreting regulations, we

strive to construe the text so that all of its provisions are given effect and no part

is rendered superfluous. APWU, AFL-CIO v. Potter, 343 F.3d 619, 626 (2d Cir.

2003). Additionally, a regulation must be interpreted in such a way as to not

conflict with the objective of its organic statute. Joy Technologies, Inc. v. Sec. of

Labor, 99 F.3d 991, 996 (10th Cir. 1996).

To set the proper stage for our analysis, we review briefly the context under

which the federal regulations were enacted. The home run wiring regulations at

-22-
issue were developed under the auspices of the Cable Television Consumer

Protection and Competition Act, Pub. L. 102-385, 106 Stat. 1460 (1992), which

instructed the FCC to promulgate rules which would “enable consumers to utilize

the wiring with an alternative multichannel video delivery system and avoid any

disruption the removal of such wiring may cause.” H.R. Rep. No. 102-628 at 118

(1992). See 47 U.S.C. § 544(i) (directing the FCC to prescribe rules regarding

the disposition of cable wiring upon termination of cable service). “The new

rules were intended to foster opportunities for multichannel video programming

distributors (‘MVPDs’) to provide service in multiple dwelling unit buildings

(‘MDU’s’) by establishing procedures regarding how and under what

circumstances the existing cable home run wiring would be made available to

alternative video service providers.” FCC First Order on Reconsideration and

Second Report and Order, In the Matter of Telecommunications Services Inside

Wiring: Implementation of the Cable Television Consumer Protection and

Competition Act of 1992; Cable Home Run Wiring, CS Docket No. 95-184, MM

Docket No. 92-260, 2003 WL 183999, at *1343 (Jan. 29, 2003) (“FCC Second

Report”); 47 C.F.R. § 76.800 (Definitions). Moreover, the rules were “adopted

for the purpose of facilitating competition between and among MVPDs.

Competition is welcome.” FCC Second Report at *1355.

To foster competition, the home run wiring rules establish the procedures

-23-
used to require “the sale, removal, or abandonment of home run wiring in MDU’s

where the incumbent provider no longer has an enforceable right to remain in the

building or serve particular units,” and the MDU owner intends either to terminate

service by the incumbent for the entire building or to allow more than one MVPD

to compete to use the home run wiring on a unit-by-unit basis. Id. at *1344; 47

C.F.R. § 76.804(a) & (b). The new home run wiring rules also require that

“[a]fter the effective date of this rule, MVPDs shall include a provision in all

service contracts entered into with MDU owners for the disposition of any home

run wiring in the MDU upon the termination of the contract.” 47 C.F.R.

§ 76.804(d). Thus, the rules attempt to remove an impediment to competition

among cable providers in multiple dwelling units—the reluctance of MDU owners

to allow the installation of multiple home run wires by alternative cable service

providers in their buildings due to concerns regarding aesthetics and possible

property damage, disruption and inconvenience to residents, and space

constraints. See Final Rule at *61018. “By facilitating the entry of new providers

into MDU communities” the cable inside wiring rules are intended to advance

Congress’s directive to provide a “pro-competitive, de-regulatory national policy

framework” to encourage the provision of “advanced information technologies

and services to all Americans.” FCC Second Report at *1344.

Section 76.804 of the “cable inside wiring rules” addresses the disposition

-24-
of home run wiring. 47 C.F.R. § 76.804. The rule is divided into two parts:

building-by-building disposition of home run wiring (subsection (a)), and unit-by-

unit disposition of home run wiring (subsection (b)). Under § 76.804(a), the

building-by-building section, a multichannel video programming distributor

(“MVPD”), which does not have “a legally enforceable right to remain on the

premises against the wishes” of the multiple dwelling unit (“MDU”) building

owner, must upon receiving notice from the MDU that it intends to invoke the

procedures of this section, either remove all the home run wiring inside the MDU,

abandon the home run wiring without disabling it, or sell the wiring to the

building owner. 47 C.F.R. § 76.804(a)(1). Thus, the home run wiring regulations

allow a building owner under an exclusive contract with a single incumbent

provider to contract with a new cable services company to provide exclusive

services to the entire building if the incumbent provider no longer has a legally

enforceable right to remain on the premises. Under such circumstances, the

incumbent, who is no longer providing cable service to the building, has the

option of selling, abandoning, or removing its home run wires.

Under the unit-by-unit section, § 76.804(b), the same options regarding the

home run wiring are found: the MVPD must remove, abandon, or sell its home

run wiring. This subsection varies only in that the MVPD’s obligation is

triggered when it receives notice from the MDU if the MVPD does not “have a

-25-
legally enforceable right to maintain any particular home run wire dedicated to a

particular unit on the premises against the MDU owner’s wishes.” 47 C.F.R.

§ 76.804(b)(1) (emphasis added). Thus, under this provision, the owner could

choose to allow competition among MVPD’s for the right to provide service in an

individual unit, if the incumbent has no right to maintain the home run wire

running to that particular unit. Under this regulation more than one cable services

provider will be present and competing within an individual building.

The relevant issue for our purposes is whether § 76.804(b)’s unit-by-unit

provisions should apply in this case, given our conclusion that Time Warner does

not have a legally enforceable right to maintain home run wiring to units to which

it does not provide cable service. One federal district court has addressed a

similar situation. Although its conclusion is not binding on us, we consider it in

some detail. In CSC Holdings, the district court for the Southern District of New

York found that as long as a provider “retains the right to service so much as one

customer in the building” the home run wiring regulations—both § 76.804(a) &

(b)—are inapplicable. CSC Holdings, Inc. v. Westchester Terrace at Crisfield

Condo., et al, 235 F. Supp.2d 243, 248 (S.D.N.Y. 2002). Applying this logic to

the case before us, Time Warner argues that because it retains a license to provide

cable services to current subscribers, The Atriums can invoke neither the

building-by-building nor unit-by-unit home run wiring regulations.

-26-
To support its conclusion that the home run wiring regulations do not apply

in situations where the incumbent cable provider retains the right to service at

least one subscriber in the building, the CSC Holdings court relied upon

paragraph 69 of the FCC’s Report and Order and Second Further Notice 10 of

Proposed Rulemaking in the Matter of Telecommunications Services Inside

Wiring, 1997 WL 644031, FCC No. 97-376 (Oct. 17, 1997) (“FCC Second

Further Notice”). See CSC Holdings, 235 F. Supp.2d at 248. Paragraph 69

reiterates the explicit reservation contained in the regulations, specifically that the

home run wiring provisions “will not apply where the incumbent provider has a

contractual, statutory or common law right to maintain its home run wiring on the

property.” FCC Second Further Notice at *3693 ¶ 69 (Application of Procedural

Framework). In addition, the report states that the FCC “adopt[s] specific

procedural mechanisms requiring the sale, removal or abandonment of the home

run wiring where the MDU owner (1) terminates service for the entire building

and wishes to use the home run wiring for an alternative video service provider,

or (2) wants to permit more than one multichannel video programming distributor

(“MVPD”) to compete for the right to use the home run wiring on a unit-by-unit

basis.” FCC Second Further Notice ¶ 2 at *3661–62. The correct interpretation

10
The FCC Second Further Notice is a report and order issued to address
concerns raised in the notice of proposed rulemaking regarding proposed
telephone and cable wiring rules. See FCC Second Further Notice ¶ 1.

-27-
of this language, according to CSC Holdings, leads to the conclusion that neither

the building-by-building or unit-by-unit regulation applies, even against the MDU

owner’s wishes, as long as the incumbent has a legal right to maintain its home

wiring to any subscriber, because the incumbent maintains the right to remain on

the premises under either provision.

We disagree with this conclusion. The plain language of 47 C.F.R.

§ 76.804(a) & (b) demonstrates that under (a), the provisions apply when the

cable provider “does not . . . have a legally enforceable right to remain on the

premises” (emphasis added) while under (b), the provisions apply when the cable

provider “does not . . . have a legally enforceable right to maintain any particular

home run wire dedicated to a particular unit,” (emphasis added). In our view, the

CSC Holdings reading conflates these two provisions. Taken to its logical

conclusion, if the MVPD has a right to remain on the premises to serve even one

cable subscriber, a building owner may invoke neither provision of the

regulations. Under such an interpretation, moreover, the unit-by-unit provision

would apply only when the MVPD has lost any right “to remain on the premises.”

This reading contravenes the specific language of § 76.804(b) and reads the

language of § 76.804(a) into § 76.804(b). As noted above, we interpret the

language of regulations as we construe the language of statutes; accordingly, we

must read the regulations such that every word is operative. See Potter, 343 F.3d

-28-
at 626; Finley v. United States, 123 F.3d 1342, 1347 (10th Cir. 1997) (stating that

we must construe statutes “in such a manner that every word has some operative

effect”). As a result, we reject the CSC Holdings interpretation limiting § 76.804

to only those circumstances where the incumbent provider has been, or will be

imminently, ejected from the building.

More convincing, in our view, is the district court’s interpretation of the

regulations in the instant case. 11 We agree that under the building-by-building

regulation, where the incumbent provider retains a right to remain on the

premises, the regulation cannot by its terms be invoked. This conclusion is amply

supported not only by the plain language of § 76.804(a) (§ 76.804(a)’s provisions

apply when the cable provider “does not . . . have a legally enforceable right to

remain on the premises” (emphasis added)), but is also supported by the FCC

Second Further Notice, which makes clear the distinction between the building-

by-building and unit-by-unit context. Specifically, it states “[i]n the building-by-

building context, the procedures will not apply where the incumbent provider has

a legally enforceable right to maintain its home run wiring on the premises . . ..

11
In Coxcom, Inc. v. Picerne Real Estate Group, 2003 WL 22048781 (R.I.
Super. 2003), the Superior Court of Rhode Island, in an unpublished opinion, also
rejected the CSC Holdings interpretation of the regulations and concluded that
“[a] thorough and complete analysis of the federal regulations reveals that the
Time Warner court reached the only conclusion that would be consistent with the
purpose of the FCC in enacting the legislation.” 2003 WL 22048781 at *11.

-29-
In the unit-by-unit context, the procedures will not apply where the incumbent

provider has a legally enforceable right to keep a particular home run wire

dedicated to a particular unit . . . on the premises.” FCC Second Further Notice at

*3693 ¶ 69. This distinction is again reiterated in the FCC’s discussion of the

procedures applicable in mandatory access states. Id. at *3699 ¶ 79.

Thus, it is apparent that the FCC did not intend to divest an incumbent

cable operator of its right to service customers in the building by allowing

building owners to invoke the building-by-building regulations to eject the

incumbent and install another competitor, with exclusive rights to service the

entire building, when the incumbent still retained a legal right to service the

building. Rather, the building-by-building regulation applies only when the

incumbent no longer retains a legal right to service any customer in the building;

in that circumstance, the building owner becomes free to negotiate with other

cable providers and enter into an agreement allowing a new provider the right to

“convert the entire building to a new service provider.” FCC Second Further

Notice, *3680 ¶ 39.

The unit-by-unit regulation, however, is not intended to be limited only to

situations where the incumbent provider no longer has a legal right to service any

customer in the building. The FCC’s discussion of the Procedures for the

Disposition of Home Run Wiring bolsters this conclusion. FCC Second Notice at

-30-
*3680–93 ¶ 39–68. The report explains that the underlying purpose of the

procedures regulating the disposition of home run wiring is to “promote

competition and consumer choice by bringing order and certainty to the

disposition of the MDU home run wiring upon termination of service.” Id. at

*3680 ¶ 39. When discussing the unit-by-unit disposition, the report instructs that

the regulation allows an MDU owner to permit head-to-head competition “in the

building for the right to use the individual home run wires dedicated to each

unit.” Id. at *3685 ¶ 49. After the MDU owner has informed the incumbent cable

service provider of its decision to invoke the unit-by-unit regulations, the

incumbent provider must

make a single election for how it will handle the disposition of the
individual home run wires whenever a subscriber wishes to switch video
service providers; the election will then be implemented each time an
individual subscriber switches service providers. If the MDU owner
permits the alternative service provider to purchase the home run wiring,
the alternative service provider will be required to make a similar election
. . . for any home run wiring that the alternative provider subsequently
owns . . . and that is solely dedicated to a subscriber who switches back
from the alternative provider to the incumbent.

Id. at *3685–86 ¶ 49. Consequently, under the unit-by-unit regulations, once an

MDU owner has properly notified an incumbent cable service provider, which

does not have a legally enforceable right to maintain its home run wiring to any

particular unit on the premises, of its intention to allow head-to-head competition

in the provision of cable services in the building, the incumbent cable services

-31-
provider must make a determination of how it will dispose of the home run

wiring: remove the wiring, abandon the wiring, or sell the wiring.

Notably, the incumbent provider’s election is not effective immediately as

to all of the incumbent’s home run wiring; rather, the home run wiring will be

disposed of, according to the incumbent’s election, as the need arises, i.e., as

individual tenants elect to terminate cable service with the incumbent and begin

service with the alternative cable provider. See § 76.804(b)(3); Second Further

Notice at *3688 ¶ 54. Further, the alternative provider must also make an

election as to the disposition of any home run wiring it may own; thus, if the

incumbent sells to the alternative provider, the alternative provider must decide

how it will dispose of the home run wiring it owns should any of its subscribers

terminate service and, for example, resume service with the incumbent. See

§ 76.804(d). Under this scenario, the FCC anticipated that in the unit-by-unit

context, individual subscribers would have the opportunity to switch from the

incumbent provider to the alternative provider, but that this transition would not

be mandatory, nor would the entire building be switched simultaneously. It

follows that the unit-by-unit regulation anticipates that the incumbent provider

may still be providing services in the building, contemporaneously and in

competition with the alternative provider. This differs from the building-by-

building provision, which does not contemplate continued cable service from the

-32-
incumbent provider, but addresses the complete cessation of service by the

incumbent, to be replaced by an alternative service provider.

Explaining further the precise process contemplated in the regulations, the

FCC Second Further Notice clarifies the difference between the building-by-

building context and the unit-by-unit context. Incumbent providers, under the

unit-by-unit option, will not be expected to remove, abandon, or sell all of their

home run wiring once the building owner has chosen to allow head-to-head

competition. Id. at *3688 ¶ 54. Instead, the report notes that the incumbent, if it

has chosen to remove its home run wiring, will have only seven days following

notification by the subscriber that the subscriber intends to terminate service in

favor of an alternative provider, to remove the subscriber’s wiring. This limited

time frame, reasoned the FCC, is adequate because “unlike in the building-by-

building context, the provider will only be required to remove a single home run

wire” when the building owner has invoked the unit-by-unit regulation. Id. at

*3688 ¶ 54.

Finally, we note that the FCC refused to require the incumbent service

provider to remove its home run wiring, when removal was the option selected by

the incumbent, when a subscriber terminated service, but did not indicate it was

switching to an alternative service provider. See § 76.804(b)(4). The FCC

Second Further Notice explains that “[i]n such cases, we do not believe that it

-33-
would be appropriate to require the incumbent to sell, remove, or abandon the

home run wiring when it might have every reasonable expectation that the next

tenant will request its service.” FCC Second Further Notice at *3688 ¶ 56.

Again, it is clear that the regulations do not anticipate that the incumbent

provider, in the unit-by-unit context, has lost all rights to provide cable service to

tenants in the building. Rather, the regulations accommodate both the incumbent

provider and any alternative provider who enters subsequent to the building

owner’s invocation of the unit-by-unit regulation. Therefore, we conclude, based

on the foregoing, that the unit-by-unit regulation is appropriately invoked by the

building owner in order to allow head-to-head competition from an alternative

video services provider when the incumbent cable services provider no longer has

the legally enforceable right to maintain the wires servicing a particular unit.

III

Applying this interpretation of the license agreement and the federal

regulations to the case at hand, we conclude that under the license agreement

between The Atriums and Time Warner, The Atriums may invoke the procedures

outlined in 47 C.F.R. § 76.804(b) as to the home run wiring dedicated to units not

subscribing to Time Warner’s services. Accordingly, the decision of the district

court is AFFIRMED.

-34-
No. 03-3005 - Time Warner v. Atrium Partners

HARTZ, Circuit Judge, dissenting:

I respectfully dissent. I agree with the majority opinion’s analysis and

discussion of the FCC’s home run wiring rules. But I disagree with the

application of the rules to this case because I read the licensing agreement

differently than the majority does.

The majority opinion states that Time Warner (for simplicity I shall refer to

both TeleCable and Time Warner as Time Warner) has a license to maintain home

run wires to each apartment in The Atriums but that this license is conditional—it

exists only so long as the tenant subscribes to Time Warner’s cable service.

Before explaining why I think that this is not a proper construction of the terms of

the license agreement, I should note that it would be rather surprising if the

parties had in fact imposed the condition that the majority opinion reads into the

agreement. Without a license, Time Warner would be a trespasser, and hence

could be required to remove its home run wires at the whim of The Atriums. The

Atriums, however, would have had no legitimate reason to require Time Warner

to remove the wires whenever an individual tenant canceled service. To be sure,

under the new FCC regulations The Atriums might have a good reason to restrict

Time Warner’s license—the restriction would enable The Atriums to require Time

Warner to compete with other cable providers for the patronage of the tenants.
But no one suggests that the new regulations were foreseeable when the license

agreement was executed.

In my view, the majority opinion errs in (1) reading too much into the

preamble of the agreement, (2) failing to consider the clear operative language of

the agreement, (3) overlooking the parties’ initial construction of the agreement,

and (4) misconceiving the “access” provision of the agreement, which merely sets

forth the time during which Time Warner can enter The Atriums in connection

with its license.

1. The Preamble

Rather than relying on the operative terms of the agreement—the numbered

paragraphs following the words “NOW, THEREFORE, the parties hereto agree as

follows”—the majority opinion relies on language in the preamble. It focuses on

the language in Paragraph C of the preamble stating that “[Time Warner] desires

to install, operate and maintain its . . . facilities . . . in the Project . . . in order to

serve those tenants . . . who shall from time to time pay [Time Warner] for its

services.” (emphasis added). According to the majority opinion, the emphasized

language shows that the license for maintaining the home run wire to an

apartment is limited to those periods during which the apartment’s tenant is a paid

subscriber to Time Warner’s services.

I cannot agree. Although the purpose of the agreement undoubtedly is to

-2-
provide cable service to the tenants while they are paid subscribers, that purpose

does not fully determine the scope of the license. Perhaps that purpose could be

adequately served by terminating the license to maintain the home run wire

whenever the tenant cancels service. But that purpose could also be properly

served by permitting continuation of the license to maintain those wires even

when the tenant cancels. Continuation of the license despite cancellation would

free Time Warner from the risk that The Atriums would whimsically demand

removal of the wires; Time Warner could then be sure that it could promptly

resume service (without the need to reinstall the home run wire) if a new tenant

desired cable television. When the agreement was executed, continuation of the

license would have served the convenience of Time Warner and tenants while

causing no inconvenience or harm to The Atriums.

One must therefore look to the operative provisions of the agreement to

determine the scope of the license. Indeed, the preamble to a contract does not

define the rights and duties of the parties; it serves only as an aid in

interpretation. See Grynberg v. FERC, 71 F.3d 413, 416 (D.C. Cir. 1995) (“[I]t is

standard contract law that a Whereas clause, while sometimes useful as an aid to

interpretation, cannot create any right beyond that arising from the operative

terms of the document.” (internal quotation marks omitted)). A leading treatise

on contract law approves the statement that “‘[t]he generally accepted interpretive

-3-
rule is that a general, preliminary clause should not ordinarily take precedence

over specific provisions of a contract.’” 11 Williston on Contracts § 32:15 (4th

ed.) (quoting Parkhurst v. Gibson, 573 A.2d 454, 458 (NH 1990)); see Rose v.

M/V “Gulf Stream Falcon,” 186 F.3d 1345, 1350 (11th Cir. 1999) (“under Florida

law . . . ‘whereas’ or other prefatory clauses are not binding”).

2. Operative Language

The relevant operative provision of the license agreement is the first

sentence of Paragraph 1:

Subject to the terms and conditions hereinafter set out, [The
Atriums] hereby grants to [Time Warner] the right, license and
permission to install, operate and maintain such of the facilities as
[Time Warner] deems necessary or desirable in or on [The Atriums’]
property and in the Project in order to provide CATV and Pay TV
services to tenants in the Project.

(emphasis added). (Although the majority opinion quotes Paragraph 1 when it

sets forth most of the agreement, it never addresses this language.) There can be

no dispute that Time Warner deems it desirable to keep its home run wire on the

premises even after a tenant cancels service. Leaving the wire in place enables

Time Warner to provide service to an apartment more readily if the tenant (or a

new tenant) decides to resume service.

One could argue that when the agreement was executed Time Warner did

not need a license that would prevent The Atriums from ordering removal of the

home run wire whenever a tenant discontinued service. Such protection at that

-4-
time would have seemed unnecessary because The Atriums would surely not have

made the purposeless, destructive demand that Time Warner remove the wire.

But that argument demonstrates why The Atriums would not have resisted an

unconditional license—one that continues even when a tenant terminates service.

Accordingly, I would read the agreement to grant a license to maintain the home

run wire to an apartment regardless of whether the tenant is a current paid

subscriber. In my view, this construction of the agreement is compelled even if

the agreement is read strictly against the interests of Time Warner.

To say that the license is “unconditional” is not to say that the “in order to

provide [cable] services” clause of Paragraph 1 is meaningless. It has at least two

important functions. First, when Time Warner can no longer provide cable

service—for example, it might lose its franchise—the license is useless and

becomes void, so Time Warner could not reasonably “deem[] [it] necessary or

desirable” to maintain home run wires. Second, and more importantly, the license

is limited to cable service. Time Warner would not be permitted to use the

license for, say, telephone service.

3. Initial Construction of Agreement

There is an additional compelling reason not to construe Paragraph 1 as

limiting the home-run-wire license to the period when the tenant subscribes to

Time Warner service. Such a construction of Paragraph 1 would be contrary to

-5-
the conduct of the parties at the outset of the agreement’s operation. The home

run wiring was installed before there were tenants. Yet the phrase “in order to

provide CATV and Pay TV services to tenants in the Project” applies not only to

maintenance of the home run wires but also to their initial installation. To quote

again the first sentence of Paragraph 1:

(emphasis added). If the “in order to provide” language limits the privilege

granted to Time Warner to the period when it is serving a current subscriber, then

home run wiring to an apartment could not have been installed until the

apartment’s tenant became a subscriber. Moreover, it would be remarkable for

The Atriums to permit Time Warner to install home run wire to an unoccupied

apartment but then deny a license to keep the installed wire in place if the first

tenant decided not to subscribe. The parties’ construction of the agreement so

close to the time of the agreement’s execution is strongly probative of the parties’

understanding of the agreement at the time of execution. See Heyen v. Hartnett,

679 P.2d 1152, 1157 (Kan. 1984).

4. “Access” Provision

I fail to understand the majority opinion’s reliance on the “access”

-6-
provision in the agreement, the second sentence of Paragraph 1: “[Time Warner]

shall have the right to enter the Project at any time to perform maintenance on and

make repairs and replacements of the facilities, or any part thereof, and to install

or disconnect customers.” Focusing on the words giving Time Warner “the right

to enter the Project at any time . . . to install or disconnect customers,” the

majority opinion contends that this provision would be unnecessary if Time

Warner “had a right to enter The Atriums at any time to maintain unused wires.”

Op. at 18.

This argument misconceives the access provision. The provision merely

clarifies Time Warner’s right of entry onto The Atriums’ premises to perform

work in connection with its license. It is one thing to grant a license to install and

maintain wiring, and quite another to set the times when the licensee can enter the

premises in connection with the license. The access provision addresses only the

latter issue. Without the access provision one might interpret the agreement to

allow access onto the premises only at “reasonable” times—such as during regular

business hours. Indeed, the following sentence of Paragraph 1 restricts the time

during which Time Warner can market its services on the premises: “ [Time

Warner] shall have the right between the hours of 9:00 AM and 5:00 PM to enter

the Project to solicit new customers.”

-7-