United States District Court, W.D. North Carolina, Asheville Division
MEMORANDUM OF DECISION AND ORDER
MATTER is before the Court on the Defendant's
Motion for Judgment on the Pleadings [Doc. 23] and the
Defendant's Motion for Summary Judgment [Doc. 39]. A
hearing was held on these motions on July 6, 2018.
Plaintiff Planet Earth TV, LLC is a North Carolina start-up
company that proposed to provide on-demand television content
via the internet to retail customers. Defendant Level 3
Communications, LLC is a Delaware company that provides
Defendant extended to the Plaintiff a proposal whereby the
Defendant would provide “Origin Storage” and
“Video Delivery” services to the Plaintiff, along
with access to Adaptive Origin Servers (“AOSs”).
The “Origin Storage” consisted of the
Defendant's servers for the storage of the video content
the Plaintiff sought to provide to its customers, and
“Video Delivery” pertained to the means by which
that content would be delivered to the Plaintiff's
customers. The AOSs are the physical servers necessary to
store the content in a manner such that it is accessible to
the Plaintiff's customers on demand.
Defendant's proposal called for the agreement between the
Plaintiff and the Defendant to commence on January 1, 2016,
with the first two months' service to be provided free of
charge. Thereafter, the Plaintiff was to pay a $3, 500 set-up
fee plus $8, 000 per month. The Plaintiff signed this
proposal, thus constituting an offer, which the Defendant
accepted. Though not specifically addressed in the proposal,
the Defendant required that the Plaintiff post a letter of
credit to secure the payments due. The Plaintiff provided the
Letter of Credit through BB&T. By its terms, the Letter
of Credit expired on November 10, 2016.
Plaintiff never connected to the Defendant's network. The
main point of contention between the parties is whether the
Defendant effectively provided the “ingest IP
address” to the Plaintiff. This is, in essence, the
access code by which the Plaintiff would be able to begin
uploading its content to the Defendant's network. Without
it, the Defendant's services were useless to the
Plaintiff. There is a factual dispute as to whether the
Defendant provided this ingest IP address at all, and if the
Defendant did, whether it was provided in a manner that was
ineffective and thus nevertheless constituted a material
breach of the contract.
Plaintiff paid the $8, 000 invoice for March 2016 but never
made another payment. The Defendant drew on the Letter of
Credit on November I, 2016, mere days before it was set to
expire, in the amount of $67, 500. The Defendant terminated
service on November 18, 2016, though the Plaintiff had never
connected or uploaded any content.
Plaintiff asserts five causes of action against the
Defendant: (1) breach of contract; (2) conversion, including
a claim for punitive damages; (3) declaratory judgment; (4)
rescission; and (5) unjust enrichment. The Defendant, in
turn, asserts a counterclaim against the Plaintiff for breach
STANDARD OF REVIEW
judgment is proper “if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A fact is “material” if it “might
affect the outcome of the case.” N&O Pub. Co.
v. RDU Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010).
A “genuine dispute” exists “if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).
asserting that a fact cannot be genuinely disputed must
support its assertion with citations to the record or by
showing that the adverse party cannot produce admissible
evidence to support that fact. Fed.R.Civ.P. 56(c)(1).
“Regardless of whether he may ultimately be responsible
for proof and persuasion, the party seeking summary judgment
bears an initial burden of demonstrating the absence of a
genuine issue of material fact.” Bouchat v.
Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522
(4th Cir. 2003). If this showing is made, the burden then
shifts to the non-moving party who must convince the court
that a triable issue exists. Id. Finally, in
considering a party's summary judgment motion, the Court
must view the pleadings and materials presented in the light
most favorable to the non-moving party, and must draw all
reasonable inferences in favor of the non-movant as well.
Adams v. Trustees of Univ. of N.C. -Wilmington, 640
F.3d 550, 556 (4th Cir. 2011).
Breach of Contract The crux of this case is whether
the Defendant materially breached its contractual obligation
to provide the “ingest IP address” needed for the
Plaintiff to access the Defendant's network and services.
The parties' evidence is in conflict on this point, and