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QUETEL CORP. v. COLUMBIA COMMUNS. INTL.

March 20, 1992

QUETEL CORPORATION, Plaintiff,
v.
COLUMBIA COMMUNICATIONS INTERNATIONAL, INC., et al., Defendants.



The opinion of the court was delivered by: CHARLES R. RICHEY

 Before this Court is a Motion for Summary Judgment filed by those Defendants who are partners of the law firm Cohen, Todd, Kite and Stanford ("Cohen, Todd"). *fn1" Upon further consideration of Defendant Cohen, Todd's Motion for Summary Judgment, Plaintiff QueTel's opposition thereto, the applicable law and the entire record herein, the Court shall grant Defendant's Motion pursuant to Federal Rule of Civil Procedure 56.

 I. Background

 In 1988 Plaintiff QueTel entered into a subcontract with Defendant Columbia Communications International, Inc. ("CCI") *fn2" to supply materials to CCI pursuant to CCI's prime contract with the United States Department of State ("State Department"). During the performance of the subcontract, difficulties arose with respect to payments from CCI to QueTel for services and/or equipment. To address that problem, QueTel, CCI and CCI's law firm, Cohen, Todd, arranged for a payment procedure, primarily an escrow agreement.

 According to the November 1988 escrow agreement, an account was to be opened at the Fifth Third Bank ("the Bank") in Cincinnati, Ohio. Thereafter, the State Department was to deposit funds owed to CCI in the account, and Cohen, Todd, acting as escrow agent of the account, was to subsequently disburse payments owed by CCI to QueTel. See Pltf. Complaint, Ex. 8.

 The escrow account described in the agreement was opened in November 1988 with an initial deposit of $ 100. No additional funds were ever deposited in the account. In fact, the monthly service charges of the Bank depleted the account until, by October 1989, it had no remaining balance. See Cohen, Todd's Memo at 3; Affidavit of Robert M. Erickson at P3 ("Erickson Aff."). Although no deposits were made, CCI did make payments to QueTel in 1989 and 1990, presumably independently of the escrow account mechanism. In December of 1990, however, QueTel did not receive payment. See Pltf. Complaint at P13-14; Pltf. Reply at 2.

 Because QueTel believed that both CCI and Cohen, Todd were responsible for payment, this action ensued. Of sole concern for this Court are Plaintiff QueTel's allegations against Defendant Cohen, Todd. Specifically, QueTel alleges that Cohen, Todd breached the escrow contract entered into with CCI and QueTel, and that Cohen, Todd committed malpractice by negligently failing to fulfill its contractual duty. See Pltf. Complaint at 5-7; Pltf. Opposition at 2 ("Pltf. Opp.").

 II. Analysis

 Summary judgment is awarded when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Where there is a properly supported motion for summary judgment, the adverse party may not rest upon the "mere allegations of denial" of its pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); see Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S. Ct. 3177, 3188-89, 111 L. Ed. 2d 695 (1990). The moving party is also entitled to summary judgment upon a showing that there is an absence of evidence supporting an essential element of the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 QueTel's breach of contract claim essentially alleges that Cohen, Todd had a contractual obligation to establish and administer the escrow account in a manner consistent with the November 1988 agreement. See Pltf. Complaint at 5; Pltf. Opp. at 14-15. QueTel asserts that Cohen, Todd initially breached its obligation when the "wrong account number" was opened at the Bank. See Pltf. Statement of Material Facts at P3 ("Pltf. Mat. Facts"). According to the escrow agreement, Cohen, Todd was to act as sole signatory on Account #771-51156, and the State Department was to pay monies owed to CCI into that same account. In actuality, John G. Cobey of Cohen, Todd opened Account #711-51156. QueTel alleges that because Cohen, Todd opened the wrong account number, the State Department was precluded from making payments into the account. See Pltf. Opp. at 15; Pltf. Mat. Facts at P3.

 The Court finds nothing in the record that supports QueTel's allegations. The record shows that Defendant Cohen, Todd opened bank account number 711-51156. Cohen, Todd has provided evidence demonstrating that this in fact was not the wrong account number. Rather, as Cohen, Todd's evidence suggests, transposed prefix numbers, such as "771" in place of "711", do occur occasionally as typographical errors. See Erickson Aff. at P4. The Bank has never had an account numbered 771-51156 in the name of any person or entity, nor would that account number ever be assigned. This is because the three-digit prefix "771-" does not correspond to any account prefix used by the Bank. Id. It is the Court's finding that Cohen, Todd did not in fact open the wrong account number, rather a typographical error was made on the escrow agreement. This typographical error did not impair the State Department from making deposits in the escrow account. Cohen, Todd has provided unrebutted testimony from a senior trust officer of the Bank indicating that any payments or transfers directed to an account number with the prefix "771-" would be routed to an actual account with the "711-" prefix. Id. Plaintiff QueTel has offered no evidence to the contrary in support of its claim that the State Department was precluded from making deposits in the account, nor is there any statement or document from the State Department in the record indicating there was any such preclusion in fact.

 QueTel also claims that Cohen, Todd "was responsible for insuring that it received payments into its escrow account . . ." Pltf. Mat. Facts at P6. By failing to secure deposits for the escrow account, Cohen, Todd allegedly breached a contractual duty. The Court finds that QueTel has misinterpreted Cohen Todd's duty in this regard. As the escrow agreement makes clear, Cohen, Todd had a duty to act as sole signatory on the account and to disburse funds to QueTel. The agreement read, in pertinent part:

 Within two working days following receipt of the monies and clearing of the payment from the State Department . . . a law partner from (Cohen, Todd) . . . will authorize the ...


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