United States District Court, District of Columbia
SEGAL HUVELLE UNITED STATES DISTRICT JUDGE.
2006, FiberLight, LLC, and the Washington Metropolitan Area
Transit Authority (“WMATA”) entered into a
contract pursuant to which, inter alia, FiberLight
agreed to pay WMATA on an annual basis for the right to
install and operate its fiber optic cable and associated
equipment inside WMATA's Metrorail System (the
“License Agreement”). FiberLight now believes
that WMATA leased rights that it did not possess and has sued
for breach of contract, declaratory judgment and breach of
the implied covenant of good faith and fair dealing
(see First Am. Compl., ECF No. 13 (“Am.
Compl.”); WMATA has filed counterclaims for breach of
contract and unjust enrichment (see WMATA's
Amended Answer to the First Am. Compl. & Amended
Counterclaims, ECF No. 15 (“Am. Ans. &
Counterclaims”). Before the Court is WMATA's motion
to dismiss FiberLight's first amended complaint.
(See WMATA's Mot. to Dismiss, ECF No. 16.
(“Mot.”).) For the reasons stated herein, the
motion will be denied.
FACTUAL BACKGROUND 
is a company that “constructs, owns, and operates fiber
optic facilities for sale or lease to government and
commercial carrier customers in the Washington, D.C.
metropolitan area.” (Am. Compl. ¶ 1.) On September
16, 2005, the Public Service Commission of the District of
Columbia granted FiberLight's application “to
provide resold and facilities-based local exchange
telecommunication services in the District of
Columbia.” See Order No. 13761, Application
of FiberLight, LLC to Provide Local Telecommunications
Services in the District of Columbia, Formal Case No. TA 05-9
(Sept. 16, 2005); (see also Am. Compl. ¶ 2).
Under District of Columbia law, “‘[a]ny
telecommunications provider in the District shall have the
right to utilize the public right-of-ways of the District for
installation, maintenance, repair, replacement, and operation
of its telecommunications system . . . .'” (Am.
Compl. ¶ 5 (quoting D.C. Code § 34-2004(a)).
is a regional transportation authority and the operator of a
“public mass transit rail system in the Washington,
D.C. metropolitan area” (the “WMATA
System”). (See Am. Compl. ¶ 9 & Ex. 1
(“License Agreement”), at 1.) It is “the
product of an interstate compact entered into by Maryland,
Virginia and the District of Columbia” (the
“WMATA Compact”). KiSKA Const. Corp. v.
Washington Metro. Area Transit Auth., 321 F.3d 1151,
1158 (D.C. Cir. 2003).
about October 23, 2006, FiberLight and WMATA entered into the
“License Agreement” that underlies this lawsuit.
(Am. Compl. ¶ 10.) In relevant part, the License
Agreement provides that WMATA, in exchange for an annual
license fee, will allow FiberLight to install and operate
telecommunications facilities within the WMATA System's
“surface transportation corridors and undergrounds
tunnels” (the “WMATA ROW” or “WMATA
Right-of-Way”). (License Agreement, at 1, art. 10,
& Schedule 1 thereto; see also Am. Compl.
¶¶ 10, 21, 24, 26.) The License Agreement includes
an affirmative representation by WMATA that “it has the
power and authority . . . to lease conduit rights in the
WMATA ROW to FIBERLIGHT for the operation and maintenance of
the FiberLight System . . . .” (License Agreement, art.
2014, FiberLight accepted the Article 14.1 representation as
true, assuming that WMATA “would not attempt to license
real or personal property rights that it did not
possess.” (Am. Compl. ¶ 28.) At some point during
2014, though, FiberLight “observed that much of the
WMATA network lay directly beneath the public rights-of-way,
an area that FiberLight already had the right to occupy as a
certificated public utility.” (Am. Compl. ¶ 27.)
“The realization that the WMATA network lay directly
beneath the public rights-of-way led FiberLight to inquire
whether WMATA had some form of independent ownership of such
real property beneath the public rights-of-way.” (Am.
Compl. ¶ 28.) This realization led FiberLight to raise
the issue with WMATA, in a letter dated August 22, 2014. (Am.
Compl. ¶ 22.) In that letter, after stating that it was
“currently expanding [its] fiber network in the DC area
and seek[ing] to clearly understand the nature of the license
contemplated under the [License] Agreement, ”
FiberLight asked WMATA to respond to “several questions
regarding the [License] Agreement”:
1. Regarding Section 14.1 of the Agreement in which WMATA
represents it has the power and authority to ‘own and
operate the WMATA System, and to lease conduit right in the
WMATA ROW [right-of-way] to FIBERLIGHT for the operation and
maintenance of the FIBERLIGHT System . . .', will you
please inform us of the source and nature of that
2. What is the nature of the WMATA ROW? From whom is it
granted and is it exclusive in nature?
3. Where the WMATA ROW intersects or runs parallel to the
public ROW, which ROW holder has precedence?
4. Will WMATA provide us a copy of the DC Mayor's permit
for sections of the WMATA ROW that lie within the public
ROW which we believe is required under D.C. Code Ann. §
10-1141.03.? If WMATA believes that it is not subject to this
Code section, please provide an explanation?
5. Does the license contemplated in the Agreement cover use
of real property (i.e. use of WMATA's ROW) or personal
(Am. Compl., Ex. 2, at 1-2 (quoting License Agreement, art.
14.1) (emphasis in original).)
response came in a letter dated January 22, 2015. (Am.
Compl., Ex. 3.) It identified the WMATA Compact as the source
of its authority to own and operate the WMATA System, and the
November 20, 1969 “Master Agreement with the District
of Columbia” as the source of “the terms and
conditions associated with the construction of the Metrorail
System on D.C. government property.” (Am. Compl., Ex.
3, at 1-3.) WMATA's letter attached a copy of the 1967
WMATA Compact, but not the 1969 Master Agreement.
(See Am. Compl., Ex. 3, at 3.) The letter described
“WMATA's Right of Way” as “private
property used for a public purpose, ” adding that
“[a]ny particular parcel of WMATA property may be held
as fee simple property, permanent or temporary easement, or
as some less-than-fee estate.” (Am. Compl., Ex.3, at
1-2.) However, WMATA “never produced or identified any
such land record, deed or title.” (Am. Compl. ¶
found WMATA's response to be unsatisfactory (see
Am. Compl. ¶ 30 (“WMATA could not provide a
straightforward answer”) and ultimately
“concluded that that representation by WMATA in Article
14.1 . . . ‘was untrue in a material
respect.'” (Am. Compl. ¶¶ 30, 38-39
(quoting License Agreement, art. 21.1).) Presumably based on
this conclusion, FiberLight did not pay WMATA's 2014 or
2015 annual invoices.
August 24, 2016, WMATA sent FiberLight a letter as a
“notice of failure of Licensee to make payment”
and stating that it “expect[ed] payment of the
outstanding amount of $789, 213.90 plus interest in full, and
within 15 business days.” (Am. Compl., Ex. 4, at 1.)
WMATA further advised FiberLight that “if payment is
not received within this time period, [FiberLight] will be in
default of [its] obligations in accordance with Article 20
[of the License Agreement]” and, if that happened,
WMATA “may exercise one or more of the [r]emedies
provided pursuant to Article 21 [of the License Agreement],
which include, but are not limited to, termination of the
License.” (Am. Compl., Ex. 4, at 1-2.).
21.1 of the License Agreement provides that:
Upon the occurrence and during the continuance of any
event of default, the non-defaulting party may, at its
option, declare this License Agreement to be in default and
may, in addition to any other remedies provided herein,
terminate this License Agreement. No remedy is intended to be
exclusive, but each shall be cumulative and in addition to
and may be exercised concurrently with any other remedy
available to WMATA or FIBERLIGHT at law or in equity.
Agreement, art. 21.1 (emphasis added).) However, it also
In addition to all other remedies contained herein, WMATA and
FIBERLIGHT agree that if any representation made in this
License Agreement is untrue in any material respect when made
and the non-defaulting party elects not to terminate this
License Agreement, the parties shall negotiate in good faith
an equitable adjustment to the payment terms with the
intention of reasonably compensating the other party for any
damages it may have sustained as a result of such
representation being untrue when made.
(License Agreement, art. 21.1 (emphasis added).) In addition,
Article 27.4 of the License Agreement provides that
“the parties shall negotiate in good faith to
resolve [any] claim or dispute or, upon the failure to
resolve such claim or dispute through good faith
negotiations, the parties may attempt to resolve such claim
or dispute through alternative dispute resolution (ADR)
techniques.” (License Agreement, art. 27.4 (emphasis
did not make the payments WMATA demanded, but on August 30,
2016, it “requested good faith negotiations with
WMATA.” (Am. Compl. ¶ 63.) On September 14, 2016,
FiberLight and WMATA met. (Am. Compl. ¶ 64.) At that
meeting, FiberLight “again requested good faith
negotiations, ” while WMATA “advised it would
provide FiberLight written evidence to substantiate its
Article 14.1 representations.” (Am. Compl. ¶ 64.)
“never provide[d] the written response it committed to
provide and never provided any evidence that substantiate[d]
its Article 14.1 representations.” (Am. Compl. §
65.) “Instead, on October 14, 2016, WMATA warned
FiberLight that within fifteen (15) days, it would advise
FiberLight of WMATA's election to accept ownership of the
FiberLight System, or have it removed.” (Am. Compl.
October 25, 2016, “pursuant to Article 27.4 of the
License Agreement, . . . FiberLight recommended to WMATA that
the parties engage in mediation as a form of voluntary
dispute resolution to resolve this dispute, ” but it
also “advised WMATA that, pursuant to Article 27.5 of
the License Agreement, it was providing notice that it could
invoke its right to litigation to resolve this
dispute.” (Am. Compl. ¶¶ 66-67.)
letter dated November 2, 2016, WMATA declined the offer to
engage in mediation. (See Am. Compl., Ex. 5.)
WMATA's letter stated that it “ha[d] engaged in
good faith negotiations with FiberLight for nearly two years,
” but that the “parties' positions remain
unchanged” and “[p]rolonged negotiations, or even
mediation, serve only to allow FiberLight to continue to
engage in contractually prohibited self-help.” (Am.
Compl., Ex. 5.) WMATA's letter also stated that
“(i) the [License] Agreement was terminated; and (ii)
unless FiberLight immediately pays the amounts past due,
including applicable interest, in full, WMATA intends to
initiate litigation within ten (10) days from the date of
this letter to enforce its right to payment under the
[License] Agreement.” Finally, WMATA's letter asked
FiberLight to provide WMATA with FiberLight's
“proposed plan for orderly termination pursuant to
Article 23 of the [License] Agreement.” (Am. Compl., Ex.
5, at 1-2.)
December 6, 2016, FiberLight sent WMATA a letter asking it to
“confirm that FiberLight will continue to have
unimpeded access to the . . . WMATA System” for the
purpose of installing new fiber. (See Am. Compl.,
Ex. 6, at 1.) WMATA responded, in a letter dated December 16,
2016, that FiberLight's request was
“surprising” given that WMATA had
“terminated” the License Agreement and that, as a
result and by operation of Article 2.4 of the License
Agreement, the FiberLight System had become WMATA's
property. (Am. Compl., Ex. 6, at 1 (quoting License
Agreement, art. 2.4 (“[U]pon termination of this
License Agreement . . . the FiberLight System shall, at the
sole and unfettered discretion of WMATA, . . . become the
property of WMATA.”).)
November 11, 2016, before the last exchange of letters,
FiberLight initiated litigation. (See Compl., ECF
No. 1.) It filed an amended complaint on December 28, 2016,
which includes three counts. Count I is a claim for breach of
contract, which claims that: (1) “WMATA is in material
breach of the License Agreement because it has made a
materially untrue representation under Article 14.1 that it
has the right ‘to lease conduit rights in the WMATA ROW
to FIBERLIGHT for the operation and maintenance of the
FiberLight System . . .' and refused to provide any
evidence supporting its power and authority to lease
FiberLight rights in the WMATA ROW” (Am. Compl. ¶
82 (quoting License Agreement, art. 14.1)); and (2)
“WMATA breached Articles 21.1 and 27.4 of the License
Agreement when it failed to negotiate in good faith an
equitable adjustment to the payment terms of the License
Agreement after it was advised of its materially untrue
statement.” (Am. Compl. ¶ 83.) Count II seeks a
declaratory judgment that:
(1) WMATA is in breach of the License Agreement and
FiberLight is not; (2) WMATA cannot charge FiberLight an
annual license fee under the License Agreement for placing
the FiberLight System in the public rights-of-way; (3) WMATA
must continue to provide FiberLight access to the FiberLight
System as required pursuant to, inter alia, Article
11 of the License Agreement; (4) FiberLight has independent
authority to place, operate and expand its network in the
public rights-of-way; (5) WMATA's purported termination
of the License Agreement was invalid; and, (6) WMATA has not
taken and ...