299 F. Supp. 3d 836
E.D. Tex.2018Background
- PEG Bandwidth TX, LLC contracted with Texhoma Fiber, LLC in a 30-year Dark Fiber Lease to build and lease a continuous fiber network in Wichita Falls; PEG paid $2.24 million and received exclusive use of 6 fibers (2 backbone, 4 laterals) for cellular backhaul.
- Lease §18.1 prohibited Texhoma, "directly or indirectly through other customers," from offering services to licensed CMRS carriers at sites in Exhibit A without PEG's written consent (a 30-year non‑circumvention covenant).
- Texhoma attempted to acquire the fiber owner (Comcell) but instead settled, conveyed half the route fibers to Comcell, and assigned the Lease to Comcell; PEG was not a party to that settlement.
- After assignment, Comcell’s fibers continued servicing PEG; Texhoma later leased some remaining fibers to Dobson, which provided backhaul to US Cellular at sites listed in Exhibit A after US Cellular switched vendors.
- PEG sued for breach of the non‑circumvention covenant and sought declaratory relief; parties cross‑moved for summary judgment. The court denied Texhoma summary judgment on breach, granted PEG partial summary judgment declaring Texhoma bound by §18.1 for the lease term, and dismissed PEG’s claim for attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Texhoma breached §18.1 by enabling service to CMRS carriers at Exhibit A sites | PEG: Texhoma indirectly provided service via Dobson at Exhibit A sites, violating §18.1 | Texhoma: Assignment to Comcell transferred rights and obligations, relieving Texhoma of §18.1; no breach by Texhoma | Held: Texhoma remains bound by §18.1; summary judgment for PEG on liability (only damages remain) |
| Whether Texhoma's assignment to Comcell extinguished its obligations (novation/assignment effect) | PEG: Assignment did not release Texhoma; novation not shown and Texhoma retained half the fibers | Texhoma: §18.10 permits assignment of rights and obligations without PEG's consent (with notice) | Held: Assignment alone did not release Texhoma; absent novation, assignor remains liable under Texas law (Seagull) |
| Whether §18.1 is an unenforceable restraint (Texas Covenants Not to Compete/antitrust) | PEG: Covenant is not governed by Covenants Not to Compete Act; is a property‑linked restriction | Texhoma: §18.1 is an unlawful/unreasonable noncompete subject to statutory limits | Held: §18.1 is a restrictive covenant running with the land/fibers and not governed by Texas Covenants Not to Compete Act; enforceable as written for purposes of summary judgment |
| Whether PEG may recover attorneys’ fees from Texhoma | PEG: Seeks fees under contract/common law | Texhoma: Lease does not permit fees; Texas statute restricts recovery against LLCs | Held: Fees claim dismissed—statutory/precedential gap prevents fee recovery from an LLC here; Texhoma’s summary judgment granted as to fees |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard for movant)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine dispute standard at summary judgment)
- Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342 (Tex. 2006) (assignment does not discharge assignor's obligations absent novation)
- Sun Oil Co. v. Madeley, 626 S.W.2d 726 (Tex. 1981) (interpretation of contractual intent governs construction)
- Fulcrum Central v. AutoTester, Inc., 102 S.W.3d 274 (Tex. App. Dallas) (elements required to prove novation)
- In re Energytec, Inc., 739 F.3d 215 (5th Cir. 2013) (covenants running with property-like infrastructure rights)