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Fiberlight, LLC v. National Railroad Passenger Corp.

United States District Court, D. Columbia.

March 2, 2015


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[Copyrighted Material Omitted]

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For FIBERLIGHT, LLC, Plaintiff: Charles A. Zdebski, James Christopher Falvey, Jeffrey Paul Brundage, LEAD ATTORNEYS, Charles Anthony Zdebski, ECKERT, SEAMANS, CHERIN & MELLOTT, LLC, Washington, DC.


For TW TELECOM OF DC LLC, Defendant: Allison D. Rule, Christopher Anthony Canter, LEAD ATTORNEY, MARASHLIAN & DONAHUE, LLC, McLean, VA; Jacqueline R. Hankins, LEAD ATTORNEY, PRO HAC VICE, McLean, VA.

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KETANJI BROWN JACKSON, United States District Judge.

Plaintiff FiberLight, LLC (" FiberLight" ) is a Delaware-based company that constructs, owns, and operates fiber optic cables that carry digital information over long distances underground. FiberLight manages a fiber optic cable network that runs from Maryland to Virginia, and that passes through the District of Columbia. In this lawsuit, FiberLight alleges that it has purchased most of the fiber optic cable that lies beneath the property surrounding Union Station, but that Defendant National Railroad Passenger Corporation (" Amtrak" ), which manages the property, will not permit FiberLight employees to access that cable for maintenance unless FiberLight involves the former owner of the cable network, Defendant tw Telecom of DC (" TWTC" ), or executes a right-of-way agreement with Amtrak that includes payment of a fee. At the heart of this dispute are two contracts that pertain to the property interests at issue: (1) an asset purchase agreement (" Purchase Agreement" ) between FiberLight and TWTC's predecessor-in-interest, pursuant to which FiberLight purchased the cable at issue in this case, and (2) a " Railroad Right-of-Way License Agreement" (" ROW Agreement" ) between TWTC and Amtrak, which permits TWTC to access the cable underneath the Union Station property in exchange for an annual license fee. It is undisputed that all three parties failed to execute an assignment of TWTC's interest in the ROW Agreement to FiberLight after the Purchase Agreement was signed. It is also undisputed that TWTC has continued to pay Amtrak the annual access fees owed under the ROW Agreement despite its sale of most of the cable to FiberLight.

In recent months, both TWTC and Amtrak apparently have made clear to FiberLight that they intend to take steps to alter the status quo: TWTC allegedly has announced that it will not renew the ROW Agreement with Amtrak (an action that apparently would result in ownership of FiberLight's cable vesting to Amtrak under the terms of the ROW Agreement), and TWTC has also demanded that FiberLight reimburse it for the access payments that TWTC has made to Amtrak since FiberLight purchased the cable. Furthermore, both Defendants allegedly have requested that FiberLight remove its cable entirely. In response, FiberLight filed the instant complaint, which not only claims that the Union Station property upon which FiberLight's cable is buried was dedicated to public use in 1914 (and thus challenges Amtrak's right to exclude FiberLight and/or to charge access fees), but also seeks a declaratory judgment regarding rights and obligations under the ROW Agreement--a contract to which FiberLight is not a party.

Before this Court at present are two separate motions to dismiss the complaint that Amtrak and TWTC have filed. (Amtrak

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Mot. to Dismiss Pl.'s Amended Compl. Pursuant to F.R.C.P. 12(b)(1), 12(b)(6), and 9(b) (" Amtrak's Mot." ), ECF No. 24; Def. TW Telecom of DC. LLC's Mot. to Dismiss (" TWTC's Mot" ), ECF No. 23.) Both Amtrak and TWTC argue that this Court lacks subject matter jurisdiction over most of FiberLight's complaint because FiberLight has not suffered an injury-in-fact and has requested a declaration of rights under a contract to which it is neither a party nor a third-party beneficiary. ((Mem. in Supp. of Amtrak's Mot. (" Amtrak's Mem." ), ECF No. 24-2, at 28-37; Def. TW Telecom's Mem. in Supp. of TWTC's Mot. (" TWTC's Mem." ), ECF No. 23-1, at 16-32.)[1] Defendants also invoke Federal Rule of Civil Procedure 12(b)(6) to challenge certain of FiberLight's claims for failure to state a claim upon which relief can be granted (Amtrak's Mem. at 13-28, 38-47; TWTC's Mem. at 32-37), and Defendants further argue that this Court should decline to hear the claims that FiberLight has brought under the Declaratory Judgment Act, given the Court's discretion under the Act. (Amtrak's Mem. at 37-38; TWTC's Mem. at 37-42).

For the reasons explained fully below, this Court concludes that FiberLight lacks standing to bring claims that request clarification or rescission of provisions of the ROW Agreement. Moreover, to the extent that FiberLight is asking this Court to exercise supplemental jurisdiction over the anticipatory breach claim against TWTC, and also to declare both that FiberLight has a right to access the cable it purchased without being deemed a trespasser and that FiberLight is immune from future suit by TWTC to recover the access fees that TWTC has paid to Amtrak on FiberLight's behalf, this Court is exercising its discretion to decline to provide any such relief. Consequently, both Defendants' motions to dismiss will be GRANTED, and this case will be DISMISSED without prejudice and in its entirety. A separate order consistent with this opinion will follow.


A. Factual Background

According to the complaint, a network of fiber optic cables carrying digital information for telephone, cable, and internet use is buried underneath the property surrounding Union Station in the District of Columbia, unbeknownst to most train travelers. (Am. Compl. ¶ 12.) Amtrak is a DC-based for-profit railroad corporation that the United States government majority owns; Amtrak manages and leases the property in and around Union Station. (Id. ¶ ¶ 2, 5.) TWTC is a Delaware-based telecommunications service provider for businesses in the DC area. (Id. ¶ 3.) As relevant here, TWTC's predecessor--hereinafter referred to throughout as " TWTC" --owned and serviced the fiber optic cable network that lies beneath the Union Station property in 1999, when that company and Amtrak entered into a right-of-way license agreement that permitted the fiber optics company to access the cable network for maintenance. (Am. Compl. ¶ 11; see also ROW Agreement, Ex. 1 to Amtrak's Mem., ECF No. 24-3, at 5.)

1. The ROW Agreement[2]

Four terms of the ROW Agreement between Amtrak and TWTC are directly relevant

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to the claims that have been brought in this case. First, the agreement grants TWTC a " license" for a five-year period, permitting " the construction, installation, operation and maintenance" of fiber optic cable and related equipment in certain specified areas of " raw land around Union Station[.]" (ROW Agreement § § 2.1, 2.1.1, 3.1; see also Am. Compl. ¶ 11.) The agreement provides that the licensee " shall have the option to renew and extend this Agreement for five (5) consecutive 'Renewal Terms' of five (5) years each[.]" ( Id. § 3.1)

Second, the agreement establishes that, in exchange for use of the property, the licensee will pay an " Annual License Fee" to Amtrak. (ROW Agreement § 3.2; Am. Compl. ¶ 11.) The agreement specifies that this license fee will be adjusted upward annually. (ROW Agreement § 3.3.) According to the complaint, the annual fee was $62,164 as of 2002, and it grew to nearly $80,000 in 2013. (Am. Compl. ¶ 11.)

Third, the ROW Agreement specifically provides that the licensee " shall not assign, sell, sublease or transfer" its rights or obligations under the contract or " sublease all or any part of the Licensed Premises or the [fiber optic cable] without [Amtrak's] consent." (ROW Agreement § 5.1.) Furthermore, with respect to third parties, the ROW Agreement provides that " [n]othing contained in this Agreement, express or implied, is intended to confer on any person other than the parties hereto or their respective successor and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement." ( Id. § 14.10.) The contract also states that the ROW Agreement " shall be binding upon and shall inure to the benefit of both parties hereto and their respective . . . assigns." ( Id. § 14.12.)

Fourth and finally, the ROW Agreement contains a series of provisions that address ownership and removal of the fiber optic cable network (" FOC" ) if the agreement expires or is terminated. Two such provisions are relevant to the arguments the parties make here; these two provisions state as follows:

4.2 Ownership Upon Termination. Upon the expiration of this Agreement, or termination of the Agreement for any reason, Licensee shall notify Licensor as to whether Licensee intends to retain title and ownership of the FOC, and if Licensee has not already removed the FOC and/or if Licensee does not so notify Licensor within ninety (90) days of such expiration or termination, title to and ownership of the FOC shall immediately and completely vest in Licensor, without the need for either party to take any action or execute any document . . . . If Licensee notifies Licensor that it intends to retain such title and ownership of the FOC, Licensee shall remove the FOC in accordance with Section 4.3. . . .
4.3 Removal of the FOC. Within ninety (90) days of expiration of this Agreement or termination of this Agreement for any reason, Licensor may require Licensee in writing to remove all or any portion of the FOC from the Licensed Premises . . . and Licensee shall remove the FOC solely at its own expense within one-hundred eighty (180) days of receiving notice from Licensor requiring such removal. . . . If Licensee fails to remove the FOC from the Licensed Premises after Licensor requests such removal pursuant to this Section 4.3,

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Licensor may hire contractors to remove the FOC, and Licensee shall . . . reimburse Licensor for all costs and expenses incurred by Licensor for such removal.

( Id. § § 4.2, 4.3.)

2. The TWTC-FiberLight Asset Purchase Agreement

The complaint alleges that TWTC operated and maintained a fiber-optic network in and around Union Station in accordance with the terms of the ROW Agreement and as a licensee of Amtrak from March 1, 1999, until May 9, 2005--the date on which FiberLight closed a deal to purchase " virtually all of TWTC's fiber optic cable network under and around the Union Station Property, including all related facilities, ducts conduit, and ancillary equipment." ( Id. ¶ 13; see also Asset Purchase Agreement (" Purchase Agreement" ), Ex. 1 to Am. Compl., ECF No. 16-1, § § 2.01, 2.04, 2.05 (noting that as of the closing date and upon payment of consideration, ownership in the fiber optic cable vests to FiberLight).)[3] As relevant here, the specific terms of the Purchase Agreement are as follows.

The Purchase Agreement provides that the Seller (TWTC) will transfer the assets (the fiber optic cable network) to the Buyer (FiberLight) in exchange for $7,480,000 in cash. ( See Purchase Agreement § § 2.04, 2.05.) Pursuant to the terms of the Purchase Agreement, TWTC and FiberLight also agree that " [a]ll contracts material to the operation of Seller's business in the ordinary course of business are being assigned to Buyer pursuant to this Agreement" ( id. § 3.05), and that " no consent, waiver of approval of any party to such an Assigned Contract is necessary for the execution and delivery of this Agreement or the consummation by Seller of the transactions contemplated hereby" ( id.). Furthermore, the Purchase Agreement states that " all permits and licenses required for operation" of the business " may be transferred or reissued" to FiberLight " without the approval of any third party[.]" ( Id. § 3.06(b).) The ROW Agreement is one of the Seller's licenses that the Purchase Agreement lists as subject to assignment to the Buyer. (Am. Compl. ¶ 15; Purchase Agreement § § 2.01(d), 2.01(o), 3.05; id. Schedule 3.06(b).)

3. The Parties' Stalemate Over Assignment Of The ROW Agreement

According to the complaint, FiberLight has owned and operated the fiber optic cable at issue since execution of the Purchase Agreement in 2005, and, accordingly, has provided telecommunications services to its customers using that cable. (Am. Compl. ¶ 17.) Meanwhile, in the years since the Purchase Agreement was executed, TWTC and FiberLight have executed and completed assignment of each of the licenses and contracts related to operation and maintenance of the cable network, except for TWTC's interest in the ROW Agreement. (Id. ¶ ¶ 18-19.) The complaint emphasizes that FiberLight does not have a right-of-way to access its fiber optic cable network even to this day--nearly 10 years after FiberLight purchased the cable; apparently, this extended and persistent delay in assigning the ROW Agreement has at least two causes, each of which is addressed in detail in FiberLight's complaint.

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First, there were hiccups in the normal negotiation processes related to reaching consensus on the terms of the assignment. FiberLight alleges that it submitted a draft ROW Agreement to Amtrak in September of 2006-16 months after the Purchase Agreement was executed--and that Amtrak responded with edits on July 16, 2007. (Id. ¶ ¶ 21-22.) As part of these negotiations, FiberLight wanted a " walk-through" of where the cable was placed in Union Station so that it could determine how much of the fiber optic cable FiberLight owned and how much TWTC had retained so that the parties' respective lease payments to Amtrak could be apportioned properly. (See id. ¶ ¶ 23, 25.) Arranging this walk-through took time because, allegedly, Amtrak would not let FiberLight onto the property without TWTC's permission, given that TWTC was the only party with a legal right-of-way to access the property. (See id. ¶ ¶ 25-26.) FiberLight also alleges that the negotiations were delayed due to an unrelated outstanding financial issue with TWTC. (Id. ¶ 24.) Eventually, the financial issue was resolved and TWTC facilitated the requested walk-throughs, which apparently were not completed until early 2011, nearly six years after FiberLight purchased the fiber optic cable at issue. (Id. ¶ ¶ 24, 26.)

Second, although the parties supposedly restarted negotiations over assignment of the ROW Agreement in early 2013 ( id. ¶ 29), in May of 2013, FiberLight allegedly discovered documents that, in its view, cast doubt on Amtrak's legal authority to charge lease fees for a right-of-way to access the property in and around Union Station. ( Id.) Specifically, FiberLight reviewed detailed land records of the Baltimore & Ohio Railroad Company, which, according to the complaint, indicate that the tracks at Union Station were " dedicated to public use" in 1914. ( See id. ¶ 29 (citing Interstate Commerce Comm'n Valuation Order No. 7 (Nov. 21, 1914)).) As a result, FiberLight suspected that " it is no longer lawful for Amtrak or any other entity to charge fees for access to such land" ( id. (citing Payne v. Godwin, 147 Va. 1019, 133 S.E. 481, 483 (Va. 1926))), and it sent a letter to Amtrak requesting proof of ownership and authority to charge a fee for accessing the property ( id. ¶ 30). Amtrak refused to provide any such proof, stating by return letter that it " has no contract with FiberLight; owes no obligations to FiberLight and hence, need not make any representations to FiberLight." ( Id.)

One month later, in June of 2013, FiberLight announced that it would no longer accept assignment of the ROW Agreement absent proof that Amtrak owned the property and had authority to charge a fee. (Id. ¶ 31.) At the same time, FiberLight also offered to enter into an alternative right-of-way agreement that reduced the amount of the lease fees set forth in the ROW Agreement. (Id. ¶ ¶ 31-32.) FiberLight alleges that it repeatedly reached out to Amtrak to negotiate, but Amtrak refused. (Id. ¶ ¶ 32-36.) Instead, Amtrak allegedly threatened to remove FiberLight's cable because the fiber optic cable network was not being maintained by TWTC pursuant to the ROW Agreement. (Id. ¶ 36.) Thus, according to the complaint, FiberLight currently has no right-of-way agreement with Amtrak to enter the Union Station property to maintain its cable, and the parties have reached a stalemate regarding assignment of the existing ROW Agreement-- i.e., FiberLight refuses to accept assignment of the ROW Agreement until Amtrak provides proof that it has authority to charge an access fee, and Amtrak refuses to supply any such proof, on the grounds that it is not in privity with FiberLight and thus does not owe FiberLight

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any such obligation. (Id. ¶ ¶ 47, 50.) In the meantime, for its part, TWTC has continued to pay annual license fees to Amtrak pursuant to the ROW Agreement for a fiber optic cable network that FiberLight now owns. ( Id. ¶ 39.)

4. The Recent Changed Circumstances

The complaint alleges that a series of events occurred in the summer of 2013 that brought this matter to a head and prompted FiberLight to file the instant lawsuit. First, on June 5, 2013, TWTC sent FiberLight a letter demanding reimbursement from FiberLight for the more than $540,000 TWTC has paid to Amtrak pursuant to the terms of the ROW Agreement since FiberLight purchased the cable network. ( Id. ¶ 42.) FiberLight alleges that TWTC is requiring repayment of these fees as a condition of assigning its interest in the ROW Agreement to FiberLight. ( Id. ¶ 47.) Then, both TWTC and Amtrak sent FiberLight a number of letters between June 23, 2013, and July 22, 2013, allegedly demanding that FiberLight either execute an assignment of the ROW Agreement or remove its fiber optic cable from the Union Station property altogether. ( Id. ¶ ¶ 48-49.) In one of these letters, TWTC imposed a deadline of July 31, 2013. ( Id. ΒΆ 48.) Furthermore, on August 8, 2013, TWTC provided notice ...

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