Cequel Communications, LLC v. Mox Networks, LLC

Background

Cequel Communications, LLC, doing business as Suddenlink Communications, and Mox Networks, LLC entered into a Dark Fiber IRU and Construction Agreement on October 31, 2017. Cequel agreed to build a fiber-optic route and grant Mox an indefeasible right of use for certain fibers for 20 years. Mox agreed to pay IRU fees under three related network orders.

The agreement provided that 75% of the IRU fees would be invoiced on the “Acceptance Date.” The agreement listed three alternative ways to trigger that date: Mox could give written acceptance, fail to reject certified testing results within the evaluation period, or use the fibers for purposes other than acceptance testing. The agreement also required Mox to dispute an invoice in writing, identify the invoice number, explain the dispute, and do so within 45 days after receiving the invoice.

In March 2020, before all testing was complete and before Cequel delivered the final certified results, Mox began using some of the fibers commercially. Mox provided testing information and fiber access to Comcast, sent Comcast a notice that the service was installed and functioning, and had active traffic on at least some of the fibers. Mox also invoiced and received payment from Comcast for granting Comcast an interest in certain fibers.

Cequel sent Mox an invoice for $4,825,822.85 on April 23, 2020. Mox disputed the invoice by telephone on April 29 and later sent a written dispute on June 23, 2020. Mox did not pay any part of the invoice.

Motions and Issues

Cequel sued Mox for three breach-of-contract claims based on Mox’s failure to pay the invoice, along with other claims. Mox asserted counterclaims. After discovery, Cequel moved for summary judgment on its first three breach-of-contract claims, and Mox filed a cross-motion for partial summary judgment on the contract-interpretation issue.

Mox argued that the contract required Cequel to deliver the certified testing results before the acceptance date could be triggered by Mox’s non-testing use of the fibers. Cequel argued that the contract’s three acceptance methods were alternatives and that commercial use triggered the acceptance date regardless of whether the certified results had been delivered.

Court’s Analysis

Applying New York law, the court treated the contract as unambiguous and interpreted it according to its text, structure, and purpose. The court concluded that the provision concerning non-testing use did not expressly require delivery of certified results first. By contrast, the provision concerning failure to reject the certified results expressly depended on delivery of those results. The court therefore declined to read delivery of the certified results as a condition that applied to every method of acceptance.

The court also relied on the agreement’s statement that the certified results would be “deemed accepted” when Mox accepted the fibers through any listed method. The court explained that this language treated the results as accepted when Mox used the fibers for non-testing purposes, even if the results had not actually been delivered. The court further reasoned that requiring payment after commercial use was consistent with the agreement’s purpose and avoided allowing Mox to earn revenue from the fibers without paying Cequel.

The court found that the undisputed facts established non-testing commercial use in March 2020. Those facts included Mox’s arrangements with Comcast, delivery of testing information to Comcast, the notice of completion, the availability of two fibers for Comcast’s use, active traffic on the route, and Mox’s receipt of payment from Comcast. This use triggered the acceptance date and gave Cequel the contractual right to issue the invoice.

The court then held that Mox did not strictly comply with the contract’s invoice-dispute procedures. Although Mox raised objections earlier, it did not provide the required written dispute identifying the invoice and explaining the issues until June 23, 2020—61 days after Cequel sent the invoice. The court rejected Mox’s argument that substantial compliance was enough, concluding that the contract’s 45-day written-notice requirement was mandatory. The court held that Mox was therefore obligated to pay the full invoice amount.

Disposition

The court denied Mox’s cross-motion for partial summary judgment and granted Cequel’s motion for summary judgment on its first three breach-of-contract claims. The court stated that Cequel was entitled to the full amount of the invoice. The court did not resolve the force-majeure dispute because it concluded that Mox owed the full invoiced amount.

The court stated that the following claims remained: Cequel’s quantum-meruit claim concerning labor and materials, Cequel’s contract claim concerning allegedly defective fiber materials, and Mox’s counterclaims. Judge Naomi Reice Buchwald directed the parties to submit a proposed schedule if they could not resolve those remaining claims.