131 F. Supp. 3d 1130
D. Colo.2015Background
- TBM Land Conservancy leased land to Nextel in 1997 for communications facilities; Nextel had an initial 5-year term plus four 5-year renewal options and exercised through a term ending March 13, 2017.
- The lease allowed Nextel, after the initial term, to terminate the lease if it determined the premises were "not appropriate for its operations for technological reasons, including, without limitation, signal interference."
- In 2013 Nextel informed TBM it would decommission the Site as "technologically obsolete," citing migration from iDEN (2G) to CDMA/EVDO/LTE and redundancy with Sprint facilities; Nextel vacated the Site in February 2014.
- TBM sued in Colorado state court asserting breach of contract, injunctive relief, breach of the implied covenant of good faith and fair dealing, tortious interference, and attorneys’ fees; Nextel removed and moved to dismiss all claims except the injunctive-relief claim.
- The parties agree the August 27, 2013 Nextel letter states Nextel’s reasons for termination; the dispute is whether that explanation qualifies as a "technological reason" under the lease.
- The district court concluded Nextel’s stated obsolescence/redundancy rationale satisfied the lease’s "technological reasons" termination clause and dismissed TBM’s breach, implied-covenant, tortious-interference, and attorneys’ fees claims with prejudice; the injunctive claim remains.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nextel breached the lease by terminating for "technological reasons" | TBM: "technological reasons" requires a site-specific defect (the ground) or impossibility to operate there; Nextel’s redundancy/technology-obsolescence rationale is insufficient | Nextel: lease permits termination if the Site is not appropriate for Nextel’s operations for technological reasons, including obsolescence and network migration | Court: Held for Nextel — obsolescence/redundancy due to network migration satisfies "technological reasons;" breach claim dismissed |
| Whether TBM may pursue breach of the implied covenant by demanding Nextel produce supporting technical data | TBM: Nextel’s refusal to provide evidence breaches the implied covenant; TBM expected substantiation | Nextel: lease grants unilateral determination power; no contractual obligation to produce data; implied covenant cannot add express obligations | Court: Held for Nextel — no contractual requirement to produce data; implied covenant claim dismissed |
| Whether derivative claims (tortious interference, attorneys’ fees) survive if contract claim fails | TBM: asserts separate tort and fees claims | Nextel: those claims fall with the breach claim | Court: Held for Nextel — derivative claims dismissed |
Key Cases Cited
- Alvarado v. KOB-TV, LLC, 493 F.3d 1210 (10th Cir.) (complaint facts accepted as true on Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
- Bryson v. Gonzales, 534 F.3d 1282 (10th Cir.) (distinction between plausible relief and factual plausibility)
- Dubbs v. Head Start, Inc., 336 F.3d 1194 (10th Cir.) (12(b)(6) standard)
- Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo. 1995) (implied covenant of good faith and fair dealing in Colorado contracts)
- Salt Lake Tribune Publ’g Co. v. AT&T Corp., 320 F.3d 1081 (10th Cir.) (illustrating application of implied covenant principles)
