Tri-County Electric Cooperative, Inc. v. GTE Southwest Incorporated D/B/A Verizon Southwest
490 S.W.3d 530
Tex. App.2016Background
- Tri-County Electric and successors to two telephone companies (now Verizon) were parties to long-standing industry-standard Joint Use Agreements (JUAs) governing shared use of utility poles, rent, and procedures for additional attachments. Tri-County amended rates in past decades; last adjustments were 1993 (Southwestern) and 1981 (Continental).
- Tri-County sent a 2003 request under Article XII/Appendix B to adjust rentals and requested Verizon cost data; Verizon did not provide the requested cost information. Parties continued to bill/pay under prior amended rates until Tri-County’s 2005 notice terminating the JUA effective February 1, 2008.
- After termination Tri-County billed Verizon at higher rates (initially $31.17, later $29.21); Verizon stopped paying full rental and tendered a lower amount. Verizon kept attachments on Tri-County poles beyond the termination date.
- A 2010 third-party pole inventory revealed materially more Verizon attachments than Tri-County believed had been reported, prompting Tri-County to sue for breach of contract, trespass, trespass to try title, declaratory relief, inventory costs, exemplary damages, and attorney’s fees.
- Trial court granted summary judgment to Verizon (final take-nothing judgment) and awarded Verizon attorney’s fees. Tri-County appealed; the Court of Appeals reviewed contract construction, holdover-tenancy law, and whether summary judgment was appropriate on the pleaded claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether attachments must be removed on JUA termination | Tri-County: Article X/XIX context + purpose of JUA show termination requires removal; termination notice effective Feb 1, 2008 | Verizon: JUA limits termination to "future granting of joint use"; attachments existing at termination may remain; rentals increase only if "agreed upon" | Court: JUA construed to require removal on termination; denial of Tri-County partial SJ on this point was error and was rendered in Tri-County’s favor |
| Whether Verizon became a holdover tenant and if Tri-County elected to treat it as tenant-at-will (precluding trespass) | Tri-County: demanded removal, rejected Verizon payments, but also negotiated — factual dispute whether landlord consented | Verizon: Tri-County’s invoicing, negotiations, and accepting some conduct show consent → tenancy at will | Court: Genuine fact issue exists whether Tri-County consented; trial court erred granting SJ for Verizon on trespass/breach related to holdover; Tri-County established at least partial SJ that Verizon was a holdover and Tri-County could demand removal |
| Whether Appendix B formula governs rental adjustments (and whether Tri-County breached Article XII by demanding increases) | Tri-County: Article XI/XII expressly require Appendix B calculations; amendments are "subject to Article XII" and thus Appendix B governs increases | Verizon: Adjustments require mutual agreement; asterisk note permits agreement to set rentals if average costs exceed table — so no unilateral Appendix B obligation | Court: Appendix B and Article XI/XII obligate parties to base adjustments on Appendix B; parties must still mutually agree on average cost but cannot ignore Appendix B guidance; material fact issues remain for breach claims |
| Whether Tri-County can recover inventory costs, exemplary damages, and attorney’s fees | Tri-County: inventory was foreseeable consequence of Verizon’s failure to report attachments; exemplary damages available for malicious trespass; attorney’s fees depend on prevailing claims | Verizon: inventory not required by JUA; no clear/convincing evidence of malice; fees unavailable absent prevailing substantive claims | Court: Inventory cost and declaratory/fee claims cannot be summarily denied because material fact issues exist; exemplary damages summary judgment for Verizon affirmed (Tri-County failed to raise malice by clear and convincing evidence) |
Key Cases Cited
- Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909 (Tex. 2013) (defines holdover tenant, tenancy at will vs. tenancy at sufferance, and when landlord’s conduct creates tenancy at will)
- Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494 (Tex. 2010) (defendant who conclusively negates an essential element is entitled to summary judgment)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (summary-judgment review standards: view evidence favorable to nonmovant and indulge reasonable inferences)