Cmc Telecom Inc v. Neyer Tiseo & Hindo Ltd, 327955

CMC Telecom (plaintiff) resold long-distance/international service and provided voicemail with call-forwarding to Neyer Tiseo & Hindo (defendant) starting in 2006; parties’ relationship governed by a Service Terms agreement (integrated) and a Customer Service Order (CSO).
In March 2011 hackers compromised defendant’s voicemail and used the “call forwarding always” feature to place >20,000 international calls routed through plaintiff/Level 3; plaintiff invoiced defendant $224,082.58 and defendant paid only undisputed charges, disputing ~$210,000.
The April 10, 2011 invoice (280 pages) was prepared by plaintiff’s vendor (Profitec) from Level 3 call data; plaintiff offered no witness from Profitec or Level 3 and made no independent verification of call data.
At trial plaintiff called three witnesses (accounts receivable manager, switch manager, and plaintiff’s president); proffered trade-usage and industry-policy documents were excluded (no offer of proof for trade usage; hearsay/catch-all exception rejected).
Trial court found plaintiff failed to prove breach by preponderance; court treated contract language as latently ambiguous (term “services” undefined; CSO requires payment for services “ordered or otherwise used”) and applied contra proferentem against plaintiff. Appeal affirms.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of trade-usage evidence	Trade usage shows industry practice that customers pay for toll fraud; evidence should be admitted	Evidence was not properly proved or preserved; no competent witness or offer of proof	Exclusion affirmed; plaintiff failed to preserve by offer of proof and cannot show plain prejudice
Contract interpretation: who pays for fraudulent calls	CSO/Service Terms require customer to pay for all "services ... ordered or otherwise used," so defendant must pay	Contract ambiguous; "services" unclear re: third-party misuse; limitation of liability does not make customer liable	Court found latent ambiguity; lacking admissible extrinsic evidence, construed against drafter (plaintiff) — defendant not liable
Sufficiency of proof/invoice accuracy	Invoice based on Level 3 data proves calls occurred and defendant owes billed charges	Plaintiff did not verify raw Level 3 data, failed to call Profitec/Level 3; invoice not proven reliable	Plaintiff failed to meet burden to prove invoice accuracy or breach; trial court’s factual findings not clearly erroneous
Use of extrinsic federal authority	Federal cases should govern interpretation of telecom billing disputes	Contract interpretation is matter of state law; federal precedent not controlling	State law controls; federal authority not binding here

Miller-Davis Co. v. Ahrens Constr., Inc., 495 Mich. 161 (court reviews contract interpretation de novo; trial court findings of fact for clear error)
Shay v. Aldrich, 487 Mich. 648 (distinguishes patent vs. latent ambiguities in contracts)
Blackhawk Dev. Corp. v. Village of Dexter, 473 Mich. 33 (use of extrinsic evidence permitted only when contract ambiguous)
Kloian v. Domino’s Pizza LLC, 273 Mich. App. 449 (existence and interpretation of contract governed by state law)
Woodington v. Shokoohi, 288 Mich. App. 352 (contra proferentem applied after conventional interpretation fails)
Landin v. Healthsource Saginaw, Inc., 305 Mich. App. 519 (plain error review requires showing prejudice)
People v. Carines, 460 Mich. 750 (three-prong plain error test)
Wilcoxon v. Minnesota Mining & Mfg. Co., 235 Mich. App. 347 (federal precedent persuasive but not binding on state courts)