CCT Communications, Inc. v. Zone Telecom, Inc.
153 A.3d 1249
| Conn. | 2017Background
- CCT Communications (plaintiff) agreed to resell long-distance service to Zone Telecom (defendant) under a November 1, 2006 purchase agreement; performance depended on circuits and a wholesale supplier, Global Crossing (Global).
- The agreement included a take-or-pay minimum usage guarantee, a limitation of liability clause, and a fees-and-costs/attorney’s-fees provision for the prevailing party.
- From December 2006 to January–March 2007, Global recorded service problems and disputes with CCT (traffic volume, billing/credit issues) that led Global to throttle and then terminate service to CCT, causing the circuits to become inoperative.
- CCT filed a voluntary Chapter 11 petition on January 29, 2007; Global briefly reconnected due to the automatic stay but later removed service; the relevant circuit went into alarm on March 15, 2007 and was never restored because CCT did not request restoration from Global.
- Zone terminated the purchase agreement (Feb. 5, 2007 letter relying on a bankruptcy-driven termination clause). Trial court found CCT breached by failing to provide services and awarded Zone $694,000 (limit of liability), costs $655, and attorney’s fees $936,441.18. CCT appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CCT breached the purchase agreement | Breach finding was premised solely on CCT’s bankruptcy petition and raises legal issues for de novo review | Trial court found CCT failed to provide services (factual findings supported by record); review should be clearly erroneous standard | Court: affirmed breach finding; ample factual findings (service disruptions, Global termination, CCT’s inaction) support trial court under clearly erroneous standard |
| Whether plaintiff was entitled to damages for unpaid invoices (Dec 2006–Mar 2007) | CCT sought $221,390.99 plus interest for unpaid invoices and shortfall charges | Zone: evidence favors Zone; CCT failed to prove it suffered damages (no proof CCT paid Global for those months); later invoices foreclosed by CCT’s own breach | Court: affirmed denial of CCT’s claimed damages — plaintiff failed to prove breach claim/damages |
| Proper application of the contract's limitation of liability (§4(c)) | Limitation should cap liability to amounts paid for services; initial $459,000 paid was for equipment, not services, so limit should bar Zone’s larger recovery | The clause covers amounts paid for specific equipment or services; trial court properly included $459,000 (equipment) plus $235,000 credit to reach $694,000 cap | Court: interpreted clause as unambiguous; included payments for equipment and credits; limited Zone’s damages to $694,000 |
| Whether attorney’s fees award is limited by the limitation-of-liability clause | Attorney’s fees should be subject to the §4(c) cap on liability | Fees/ costs governed by separate §16 (prevailing-party recovery) and are not referenced in the limitation clause | Court: fees and costs are not damages under §4(c); §16 entitles prevailing party to actual costs and reasonable fees; award of fees not subject to the liability cap |
Key Cases Cited
- Crowell v. Danforth, 222 Conn. 150 (trial court factual findings subject to clearly erroneous standard)
- Bristol v. Ocean State Job Lot Stores of Connecticut, Inc., 284 Conn. 1 (contract interpretation — definitive language is question of law)
- Gianetti v. Norwalk Hospital, 304 Conn. 754 (damage calculation under contract is factual)
- United Components, Inc. v. Wdowiak, 239 Conn. 259 (deference to trial court findings where testimony conflicts)
- Nor’easter Group, Inc. v. Colossale Concrete, Inc., 207 Conn. 468 (trial court findings binding unless clearly erroneous)
- Sullivan v. Thorndike, 104 Conn. App. 297 (elements of breach of contract)
- Connecticut National Bank v. Giacomi, 242 Conn. 17 (standards for reviewing factual findings)