The United States District Court for the Western District of Tennessee, Eastern Division (Breen, C.J.), entered summary judgment today in favor of our client, GTP Structures I, LLC (“GTP”) on its breach of contract claim against Wisper II, LLC (“Wisper II”).
In July, 2012, Wisper LLC, a wireless internet service provider, entered master lease agreements (“MLAs”) and site license agreements (“SLAs”) to lease space for its equipment to provide internet access services, on cellular towers owned by NTCH-West Tennessee, Inc. (“NTCH”). GTP succeeded to NTCH’s rights, title and interest under the MLAs and SLAs through an asset purchase and assignment. After filing a voluntary petition under Chapter 11 of the Bankruptcy Law, pursuant to a Plan of Reorganization (“Plan”) confirmed by the Bankruptcy Court and a consent order for the assumption and assignment of unexpired leases, Wisper LLC merged into Wisper II with Wisper II, the surviving entity, taking an assignment of and assuming all obligations under the MLAs and SLAs.
While the MLAs and SLAs had three years remaining on their initial terms, in July, 2014, Wisper II ceased making lease payments to GTP. When Wisper II refused GTP’s demands that it cure its ongoing default, the Firm brought suit on GTP’s behalf to recover all lease payments owed for the remainder of the MLAs and SLAs’ unexpired initial terms, along with past lease balances due plus interest at 1.5 percent per month as provided under the MLAs, which were governed by Florida law.
Following the close of discovery during which the Firm elicited several critical admissions from Wisper II, the Firm moved for summary judgment on GTP’s behalf arguing that there was no issue of fact that (i) Wisper II defaulted under the MLAs and SLAs, leaving unpaid nearly $2 million in rent over the remaining three years of the initial term, which rent was immediately due and owing to GTP and that (ii) GTP provided Wisper II with actual and proper notice of that default pursuant to the terms of the MLAs and SLAs. Wisper II opposed the motion and cross-moved for summary judgment, arguing that: (i) GTP failed to comply with notice provisions in the MLAs that constituted condition precedents to GTP’s right to file the action; (ii) there were disputed issues of fact as to whether GTP properly mitigated its alleged damages; and (iii) Wisper II’s liability was capped at $300k under the Plan.
Following extensive briefing on the competing motions, the Court agreed with the Firm’s multiple arguments and awarded GTP summary judgment on its breach of contract claim. The Court agreed with the Firm that, under Florida law, the action was properly brought after GTP at least substantially complied with the MLAs’ notice provisions and, even had that not been the case, Wisper II did not demonstrate it was prejudiced by any deviation therefrom. The Court also agreed with the Firm that Wisper II’s argument to cap its damages at $300k was undermined by a Bankruptcy Court order that stated Wisper II already owed in excess of that amount in cure costs through an earlier date and bankruptcy law that holds it is “well establish[ed] that executory contracts [like the MLAs and SLAs] assumed in bankruptcy must be taken in their entirety.” The Court also agreed with the Firm’s arguments that GTP was “not required to mitigate its damages upon [Wisper II’s] breach” since the MLAs and SLAs were “non-exclusive” contracts, but that GTP nevertheless properly attempted to mitigate through “reasonable, ameliorative efforts to replace Wisper II as a tenant.”
Upon awarding GTP summary judgment, the Court directed the parties to submit additional briefing on the issue of GTP’s damages.
A copy of the Court’s decision granting the Firm’s motion can be found here.
