Opinion
CASE NO. 99-72913
February 13, 2003
OPINION AND ORDER
AT A SESSION of said Court, held in the United States Courthouse, in the City of Detroit, State of Michigan, on 13 FEB 2003
PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF CHIEF UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
This matter is before the Court on Plaintiff/Counter-Defendant NetworkTwo's Cross-Motion for Summary Judgment as to Defendant/Counter-Plaintiff CommunityISP Inc.'s First Amended Counter-Claim. CommunityISP has responded and NetworkTwo has replied to the response. Also before the Court is Defendant/Counter-Plaintiff CommunityISP Inc.'s Cross-Motion for Summary Judgment. NetworkTwo has responded. The Court finds that the facts and legal arguments are adequately presented in the parties' briefs and the decisional process would not be significantly aided by oral argument. Therefore, pursuant to E.D.MICH. LR 7.1(e)(2), it is hereby ORDERED that the Cross-Motions be resolved on the briefs submitted. For the reasons set forth below, Plaintiff/Counter-Defendant NetworkTwo's Cross-Motion for Summary Judgment as to Defendant/Counter-Plaintiff CommunityISP Inc.'s First Amended Counter-Claim is GRANTED; and Defendant/Counter-Plaintiff CommunityISP Inc.'s Cross-Motion for Summary Judgment is DENIED.
II. BACKGROUND
The facts of this case are set out in detail in this Court's Opinion and Order of February 15, 2001. A summary of the facts and procedural history, however, is appropriate. The present dispute arises out of the failed business relationship between Plaintiff/Counter-Defendant NetworkTwo Communications Group, Inc., an Internet Service Provider based in Ann Arbor, Michigan, and CommunityISP, Inc., an internet business started by Spring Valley Marketing Group which specialized in hosting online websites for other companies, associations, and organizations.
On August 27, 1998, Plaintiff NetworkTwo and Defendant CommunityISP, entered into a Master Communications Services Agreement wherein NetworkTwo agreed to provide internet service to CommunityISP, which would sell access to that service to Subscribers, or End Users. In order to execute the Agreement, NetworkTwo required CommunityISP to pay a $100,000.00 "Commitment Fee." This Commitment Fee was set out in the Agreement:
B. Commitment Fee
In addition to any other fees and/or obligations to be paid by [CommunityISP] to NetworkTwo in connection with this Agreement, [CommunityISP] will pay a commitment fee to NetworkTwo in the amount of $100,000.00 in order to partially compensate NetworkTwo for its expenses in developing increased technical and service infrastructure support in anticipation of increased subscription volume caused by [CommunityISP]'s activities involving End Users.See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment as to CommunityISP's First Amended Counter-Claim, Ex. A, Schedule D, ¶ B. The Agreement also provided, however, that if CommunityISP were to achieve a certain amount of Subscribers by a certain date, CommunityISP would be entitled to a credit of $100,000.00. The Agreement provided:
C. Volume Discounts and/or Penalties
. . .
If [CommunityISP] has reached a level of 200,000 paid subscribers as described above prior to the expiration of the 24th month, then NetworkTwo shall provide [CommunityISP] a bonus credit in the amount $100,000 on its first invoice for service following the month in which [CommunityISP] has obtained 100,000 paid subscribers as described above.See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment as to CommunityISP's First Amended Counter-Claim, Ex. A, Schedule D, ¶ C.
The parties relationship quickly disintegrated, however, and CommunityISP eventually looked to outside parties to provide the services that, under the Agreement, were to be provided by NetworkTwo. While CommunityISP had paid NetworkTwo the $100,000.00 Commitment Fee, CommunityISP never attained, nor received, the $100,000.00 bonus credit. On May 3, 1999, CommunityISP and Spring Valley Marketing Group filed suit against NetworkTwo in Louisiana state court for allegedly violating the Master Communications Services Agreement. On June 8, 1999, NetworkTwo removed the Louisiana action to Louisiana federal court, and, on the same day, filed a five count Complaint in this Court, naming Spring Valley Marketing Group and CommunityISP as Defendants. Plaintiff's five count Complaint contained the following counts:
Count I Breach of Contract against Spring Valley Marketing Group;
Count II Breach of Contract against CommunityISP;
Count III Tortious Interference with Contractual Relations against CommunityISP;
Count IV Civil Conspiracy against Spring Valley and CommunityISP; and
Count V Declaratory Judgment against CommunityISP.
Only Count V of Plaintiff's Complaint, however, related directly to the Master Communications Services Agreement. With Count V of its Complaint, NetworkTwo sought to have the Court declare that NetworkTwo had fully complied with the terms of the Master Communications Services Agreement, which was at issue in the Louisiana action.
A. CommunityISP's First Amended Counter-Claim
On March 13, 2000, the Louisiana federal court presiding over CommunityISP and Spring Valley's action granted NetworkTwo's motion to transfer, and on April 11, 2000, Defendant CommunityISP filed a three count Counter-Claim in this Court against Plaintiff NetworkTwo, based upon NetworkTwo's alleged violation of the Master Communications Services Agreement that had been at issue in the Louisiana action. Defendant/Counter-Plaintiff CommunityISP's three count Counter-Claim alleged:
Count I Breach of Contract;
Count II Fraud in the Inducement; and
Count III Misrepresentation.
With its Breach of Contract Counter-Claim (Count I), CommunityISP alleged that NetworkTwo, shortly after executing the August 27, 1998, Master Communications Services Agreement, realized that it did not have the capability of meeting its obligations as defined by the Agreement and unilaterally breached the Agreement by failing to perform as required. This breach, CommunityISP argued, required CommunityISP to obtain the services to be rendered by NetworkTwo from outside sources. Specifically, CommunityISP claimed NetworkTwo's inability to meet the requirements of the Agreement caused CommunityISP to enter into a more expensive agreement with a different telecommunications carrier, an entity called SplitRock Communications Group, Inc. CommunityISP sought recovery for the damages caused by NetworkTwo's alleged breach of the Agreement.
B. NetworkTwo's June 27, 2000, and August 21, 2000, Motions for Summary Judgment
Subsequent to the filing of CommunityISP's Counter-Claim, Plaintiff/Counter Defendant NetworkTwo filed two separate motions seeking to dismiss all three Counts of the Counter-Claim. On June 27, 2000, Plaintiff/Counter-Defendant NetworkTwo filed a Motion to Dismiss Counts II and III of Defendant/Counter-Plaintiff CommunityISP's First Amended Counter-Claim, and on August 21, 2000, Plaintiff/Counter-Defendant NetworkTwo filed a Motion for Summary Judgment as to Count I of CommunityISP's First Amended Counter-Claim. In ruling on NetworkTwo's Motions, this Court treated NetworkTwo's Motion to Dismiss as a Motion for Summary Judgment, and on February 15, 2001, this Court granted Network Two's Motion for Summary Judgment as to Counts II and III of CommunityISP's First Amended Counter-Claim, dismissed Counts II and III, and granted in part NetworkTwo's Motion for Summary Judgment as to Count I.
Defendant/Counter-Plaintiff CommunityISP had filed a First Amended Counter-Claim on June 2, 2000.
With its August 21, 2000, Motion for Summary Judgment as to CommunityISP's Breach of Contract Counter-Claim, NetworkTwo had argued that the language of the Master Communications Services Agreement prevented CommunityISP from recovering its alleged damages. Specifically, NetworkTwo argued that the Master Communications Services Agreement contained two enforceable damage limitation provisions which precluded recovery by CommunityISP. The first damage limitation provision relied upon by NetworkTwo provided the following:
NETWORKTWO'S LIABILITY ARISING FROM ANY CLAIM MADE BY CUSTOMER OR ANYONE ELSE RELATIVE TO ANY NETWORKTWO OBLIGATION UNDER THIS AGREEMENT OR RELATING TO NETWORKTWO'S NEGLIGENCE OR RELATING TO ANY OTHER CAUSE OR REASON SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE PRORATED CHARGE TO THE CUSTOMER FOR THE AFFECTED TRANSMISSION. IN NO EVENT SHALL NETWORKTWO BE LIABLE FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT SUCH DAMAGES WERE FORESEEABLE OR ACTUALLY FORESEEN.See Defendant/Counter-Plaintiff CommunityISP's Cross-Motion for Summary Judgment, Ex. C ¶ 7.C. The second damages limitation provision referred to the situation where NetworkTwo was incapable of meeting its contractual obligations regarding internet access performance. The Agreement provided that NetworkTwo would use "reasonable efforts" to comply with the following:
1. Availability
a. The network including internet access will be available no less than 95.5% of the time per month.See Defendant/Counter-Plaintiff CommunityISP's Cross-Motion for Summary Judgment, Ex. C. Schedule C, ¶ A.1.a. The Agreement also provided, however, that
. . . if NetworkTwo fails to substantially meet the network performance standards set forth in section 1 above for fifteen (15) consecutive days after issuance of a trouble ticket, Customer can notify NetworkTwo in writing that the performance standards are not being met. And describing in detail the deficiency and its likely causes. NetworkTwo will have five (5) days to provide Customer with a reasonable plan to cure the network performance issues. NetworkTwo will then have fifteen (15) business days to implement this plan. After NetworkTwo has implemented this plan, if the network statistics fall below the network performance standards in section 1 above based upon the same deficiency described in the first notice under this section 2, for an additional period of fifteen (15) consecutive days, Customer will as its sole remedy have the option to terminate this agreement by providing NetworkTwo thirty (30) days written notice. In such event, neither party shall have any further obligation to the other.See Defendant/Counter-Plaintiff CommunityISP's Cross-Motion for Summary Judgment, Ex. C. Schedule C, ¶ B.2 (emphasis added). NetworkTwo pointed out that CommunityISP's First Amended Counter-Claim sought the following by way of damages: (1) the higher rates CommunityISP paid SplitRock to replace NetworkTwo as telecommunications provider; (2) all of CommunityISP's past and present damages caused by the alleged breach of the Master Communications Services Agreement; and (3) costs and reasonable fees. But since, under the terms of the Agreement, CommunityISP's potential recovery was limited to "the prorated charge . . . for the affected transmission," see Defendant/Counter-Plaintiff CommunityISP's Cross-Motion for Summary Judgment, Ex. C ¶ 7.C, the Agreement prevented CommunityISP from recovering its damages.
In opposition to NetworkTwo's August 21, 2000, Cross-Motion for Summary Judgment CommunityISP made three arguments. First, CommunityISP argued that the damage limitation provisions were unconscionable because they were adopted in contemplation of the possibility of the intermittent unavailability of internet access, but not the total unavailability of service due to NetworkTwo's "abandonment" of the contract. Second, CommunityISP argued that NetworkTwo should not be allowed to enforce the damage limitation provisions because NetworkTwo acted in bad faith. Specifically, CommunityISP claimed that at the time of contracting, in August 1998, NetworkTwo knew that it might not have the capability of fulfilling its contractual obligations, and that, therefore, NetworkTwo should not be allowed to rely upon the damage limitation provisions to preclude the recovery of damages. Finally, CommunityISP argued that summary judgment was inappropriate because discovery had not yet been completed.
C. Opinion and Order of February 15, 2001
In its Opinion and Order of February 15, 2001, this Court dismissed Counts II and III of CommunityISP's Counter-Claim and upheld the enforceability of the damage limitation provisions contained in the Master Communications Services Agreement. With regards to the enforceability of the damage limitation provisions, the Court rejected CommunityISP's arguments and stated the following:
Moreover, the damage limitation provisions do not fail of their essential purpose and render the damages available to Defendant, or Plaintiff's obligations under the Agreement, illusory. As in WXON-TV, Plaintiff's obligation to use reasonable efforts to meet performance standards, coupled with its obligations to refund any charges in connection with unsatisfactory transmissions or permit Defendant to terminate the contract if Plaintiff provides deficient services, is sufficient to create a binding mutual contract.
The Court finds that the damage limitation clauses are not unconscionable or illusory and are therefore valid and effective. Therefore, Plaintiff's Motion for Summary Judgment as to Count I is GRANTED as to the issue of the legal validity of the damage limitation provisions in the Agreement. However, pursuant to the damage limitation provisions, Defendant may recover prorated charges for any unsatisfactory transmission or terminate the Agreement if Plaintiff has provided deficient services.See Opinion and Order of February 15, 2001, pp. 11-12.
WXON-TV, Inc. v. A.C. Nielsen Co., 740 F. Supp. 1261, 1264 (E.D. Mich. 1990).
Shortly after the Court issued its Opinion and Order of February 15, 2001, NetworkTwo filed for bankruptcy, and the entire action was stayed. The stay was lifted on May 17, 2002. After the stay was lifted, CommunityISP was allowed to pursue its remaining Breach of Contract Counter-Claim against NetworkTwo, but its Counter-Claim is limited to those amounts recoverable under NetworkTwo's insurance policies. As a result, Spring Valley is no longer a party to the proceedings, and the only matter still pending before the Court is CommunityISP's Breach of Contract Counter-Claim.
D. The Parties' Cross-Motions for Summary Judgment
On October 7, 2002, both NetworkTwo and CommunityISP filed Motions for Summary Judgment regarding the issue of damages and CommunityISP's Breach of Contract Counter-Claim. The parties have stipulated that the Motions are to be treated as Cross-Motions.
1. CommunityISP's Cross-Motion for Summary Judgment
In its Cross-Motion for Summary Judgment, CommunityISP argues that there is no genuine issue of material fact as to NetworkTwo's breach of the Master Communications Services Agreement and as to whether this breach caused CommunityISP to incur damages. CommunityISP requests that this Court determine, as a matter of law, that all of the elements of CommunityISP's Breach of Contract Counter-Claim have been satisfied.
In addition, however, CommunityISP argues that there is no genuine issue of material fact that as a result of NetworkTwo's breach of the Master Communications Services Agreement, CommunityISP has incurred damages totaling $300,000.00. Specifically, CommunityISP seeks (1) the return of the $100,000.00 Commitment Fee that CommunityISP paid to NetworkTwo at the time of contracting; (2) an award of $100,000.00, equal to the Commitment Fee CommunityISP paid to SplitRock in order to obtain SplitRock's substitute internet services; and (3) an additional award of $100,000.00, which is equal to the amount CommunityISP was forced to pay NetSurfer in order to obtain a substitute internet surfing kit that was originally supposed to be supplied by NetworkTwo.
In support of this argument, CommunityISP first acknowledges that while its damages are limited to either "prorated charges for any unsatisfactory transmissions" or termination of the Agreement if NetworkTwo provided deficient services, see CommunityISP's Brief in Support of Cross-Motion for Summary Judgment, pp. 11-12, since its actual damages are "direct damages" resulting from NetworkTwo's failure to deliver the internet connections it had contracted to provide, CommunityISP's damages, therefore, are not the "special, indirect, or consequential damages" that are barred by the terms of the Agreement. See CommunityISP's Brief in Support of Cross-Motion for Summary Judgment, p. 12. Accordingly, CommunityISP asks that the Court grant its motion and "award CommunityISP $300,000.00 for those expenses lost or directly incurred as a result of NetworkTwo's affected transmissions and breach of contract." See CommunityISP's Brief in Support of Cross-Motion for Summary Judgment, p. 12.
2. NetworkTwo's Cross-Motion for Summary Judgment
NetworkTwo does not contest CommunityISP's assertion that NetworkTwo breached the terms of Master Communications Services Agreement. Plaintiff NetworkTwo makes the same argument in response to CommunityISP's Cross-Motion for Summary Judgment as it makes in support of its own Cross-Motion for Summary Judgment. Furthermore, this argument is the same as the argument presented in its Motion for Summary Judgment filed in August 2000. NetworkTwo relies upon the damage limitation provisions contained in the Master Communications Services Agreement.
NetworkTwo argues that under the express language of the damage limitation provisions, and pursuant to this Court's Opinion and Order of February 15, 2001, upholding the enforceability of those provisions, CommunityISP's potential damages are limited to "prorated charges for any unsatisfactory transmission," or termination of the Agreement. See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment, p. 4. And since CommunityISP is unable to present evidence of these "prorated charges" and actually seeks consequential damages, CommunityISP's Cross-Motion for Summary Judgment must be denied, and NetworkTwo's own Cross-Motion for Summary Judgment granted, and CommunityISP's Counter-Claim dismissed.
In addition, NetworkTwo claims that the arguments presented by CommunityISP are contrary to the arguments CommunityISP presented in opposition to NetworkTwo's August 21, 2000, Motion for Summary Judgment. NetworkTwo points out that in opposition to NetworkTwo's August 21, 2000, Motion for Summary Judgment, CommunityISP had argued that the damage limitation provisions were unconscionable because they did not contemplate the situation that actually arose or the corresponding damages that are presently at issue. See NetworkTwo's Response Brief to CommunityISP's Cross-Motion for Summary Judgment, p. 5-6. See also supra Part II.B. CommunityISP's current position, NetworkTwo claims, is that the $300,000.00 in damages falls within the damages allowed by the damage limitation provisions because it flows directly from NetworkTwo's alleged breach of the Master Communications Services Agreement. This, however, is contrary to CommunityISP's previous position because CommunityISP had previously argued that the damage limitation provisions "fail[ed] of [their] essential purpose. . . ." See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment, p. 7. While CommunityISP previously sought to invalidate the damage limitation provisions, once the Court, in its Opinion and Order of February 15, 2001, upheld their enforceability, CommunityISP changed tactics and sought to recategorize its alleged damages in order to prevent application of the damage limitation provisions.
III. LEGAL STANDARD
Summary judgment is appropriate only if the answers to the interrogatories, depositions, admissions, and pleadings combined with the affidavits in support show that no genuine issue as to any material fact remains and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c). A genuine issue of material fact exists when there is "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (citations omitted). In application of this summary judgment standard, the Court must view all materials supplied, including all pleadings, in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).
The moving party bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record that establish the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial. See FED. R. CIV. P. 56(e); Celotex, 477 U.S. at 324. The non-moving party must do more than show that there is some metaphysical doubt as to the material facts. It must present significant probative evidence in support of its opposition to the motion for summary judgment in order to defeat the motion for summary judgment. See Moore v. Phillip Morris Co., 8 F.3d 335, 339-40 (6th Cir. 1993).
IV. ANALYSIS
Defendant/Counter-Plaintiff CommunityISP's remaining Counter-Claim is for breach of contract. To recover, CommunityISP must prove: (1) the existence of a contract; (2) the terms of the contract; (3) that NetworkTwo breached the contract; and (4) that the breach caused CommunityISP injury. See Webster v. Edward D. Jones Co., 197 F.3d 815, 819 (6th Cir. 1999). Plaintiff NetworkTwo does not contest that Defendant CommunityISP has met the required elements of its Breach of Contract Counter-Claim. NetworkTwo's sole contention is that the damages CommunityISP seeks are barred by application of the damage limitation provisions contained in the Master Communications Services Agreement. The Court, therefore, finds that the CommunityISP has demonstrated the existence of a contract between CommunityISP and NetworkTwo, has adequately set forth the terms of the contract, and that NetworkTwo has breached the contract. This present dispute involves whether CommunityISP has sufficiently demonstrated its damages for the injury alleged.
Under Michigan law, "[t]he damages recoverable for breach of contract are those that arise naturally from the breach or those that were in contemplation of the parties at the time the contract was made." Lawrence v. Will Darrah Assocs., Inc., 516 N.W.2d 43, 45 (Mich. 1994) (quoting Kewin v. Massachusetts Mut. Life Ins. Co., 295 N.W.2d 50 (Mich. 1980)). Application of this principle usually results in the plaintiff's recovery being limited to "the monetary value of the contract had the breaching party fully performed under it," or in other words, the claimant's expectation interest. Lawrence, 516 N.W.2d at 45. See RESTATEMENT (SECOND) CONTRACTS § 344(a) ("[Plaintiff's] `expectation interest' is his interest in having the benefit of the bargain by being put in as good a position as he would have been in had the contract been performed.").
This concept of damages, taken from the well known case of Hadley v. Baxendale, 156 Eng. Rep. 145 (Ex. 1854), actually encompasses two separate and distinct concepts. These two concepts are direct damages, and consequential damages. Direct damages are those damages "as may fairly and reasonably be considered . . . arising naturally, i.e., according to the usual course of things, from such breach of contract itself." Hadley, 156 Eng. Rep. at 145. See also BLACK'S LAW DICTIONARY 352 (Special Deluxe 5th ed. 1979) ("Direct damages are such as follow immediately upon the act done. Damages which arise naturally or ordinarily from breach of contract; they are damages which, in the ordinary course of human experience, can be expected to result from breach."). Consequential damages are those damages as "may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it." Hadley, 156 Eng. Rep. at 145. See also BLACK'S LAW DICTIONARY 352 (Special Deluxe 5th ed. 1979) ("Such damage, loss or injury as does not flow directly and immediately from the act of the party, but only from some of the consequences or results of such act."). Michigan law allows a plaintiff to collect consequential damages, even lost profits, if the damages are objectively foreseeable at the time of contracting. See Lawrence, 516 N.W.2d at 45. In order to collect any damages, however, a claimant must demonstrate, by a fair preponderance of the evidence, the actual or proximate amount of the loss sustained. If this cannot be done with a reasonable degree of certainty, then damages cannot be recovered. See Grand Trunk R. Co. v. H.W Nelson Co., 116 F.2d 823, 837 (6th Cir. 1941).
Pursuant to the terms of the damage limitation provisions contained in the Master Communications Services Agreement, and pursuant to this Court's Opinion and Order of February 15, 2001, CommunityISP may pursue its Breach of Contract Counter-Claim, but its recovery is limited to prorated charges for any unsatisfactory transmission or termination of the Agreement if NetworkTwo had provided deficient services. CommunityISP's claim is further limited because, according to the terms of the Agreement, in no event may CommunityISP recover any special, indirect, or consequential damages, regardless of whether or not the consequential damages were foreseeable or actually foreseen. See Defendant/Counter-Plaintiff CommunityISP's Cross-Motion for Summary Judgment, Ex. C ¶ 7.C. Accordingly, in order to determine whether CommunityISP is entitled to any recovery, the Court must decide whether any of CommunityISP's alleged damages can be considered a "prorated charge" to CommunityISP for any affected or unsatisfactory transmission. In order to make its determination, the Court must interpret the language "an amount equal to the prorated charge to the Customer for any affected transmission."
In determining contractual rights and obligations, this Court must look to the intention of the parties; and the contract should always be construed so that it carries that intention into effect. When the words of a written contract are clear, unambiguous and have a definite meaning, the Court has no right to look to extrinsic evidence to determine the parties' intent. If the language of the entire contract is clear and unambiguous, there is no room for construction and the language must be held to express the intentions of the parties. See DeVries v. Brydges, 225 N.W.2d 195, 198 (Mich.Ct.App. 1974).
The Court finds that the contract language is clear and unambiguous. The parties anticipated that NetworkTwo would provide internet service to CommunityISP, which would sell that service to the "End Users" or the "Subscribers." See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment, Ex. A, Schedule D, ¶¶ C D. The parties contemplated that, at times, the transmission of internet service from NetworkTwo to an End User may become affected, and unsatisfactory to that End User, (or to CommunityISP). In such instances, the End User would most likely look to CommunityISP for a refund equivalent to the time the service was "affected" or unsatisfactory. Since the End User would pay for the service as a monthly charge, see NetworkTwo's Brief in Support of Motion for Summary Judgment, Ex. A, Schedule F, ¶ F, the amount to be returned would be prorated over the course of the month as a percentage of the monthly fee. For example, if CommunityISP charged $30.00 a month to an End User for its service, and the service was down for three days out of thirty, then CommunityISP would return only ten percent of the monthly fee to that End User, or $3.00, as a prorated charge for the affected transmission. CommunityISP would then look to NetworkTwo to reimburse CommunityISP for that charge pursuant to the Agreement.
In the present case, CommunityISP has not set forth any evidence to sufficiently demonstrate the amount of loss CommunityISP actually sustained in the aforementioned manner. See Grand Trunk R. Co., 116 F.2d at 837. In fact, CommunityISP's calculation of damages does not take into account any of the prorated charges it refunded to End Users on account of affected transmissions from NetworkTwo, even though the deposition testimony of Crystal Miller, Accounting Administrator at CommunityISP, suggests that this maybe a significant amount. See NetworkTwo's Brief in Support of Cross-Motion for Summary Judgment, Ex. J., pp. 12-15. Therefore, the Court finds that CommunityISP is not entitled to the damages allowed by the damage limitation provisions because the damages CommunityISP seeks do not fall within the meaning of the term "prorated charge for the affected transmission."
CommunityISP seeks $300,000.00 in total damages: (1) the $100,000.00 Commitment Fee paid to NetworkTwo at the time of contracting; (2) the $100,000.00 Commitment Fee paid to SplitRock to obtain SplitRock's substitute internet services; and (3) the $100,000.00 CommunityISP paid NetSurfer in order to obtain a substitute internet surfing kit. CommunityISP seeks to include the $100,000.00 Commitment Fee paid to NetworkTwo within the meaning of the term "prorated charge," but it is objectively clear from the language of the Agreement that the parties did not so intend. Rather than interpret the language of the damage limitation provisions so as to give the Agreement a meaning never intended at the time of contracting, the Court must give the language its full effect. See DeVries, 225 N.W.2d at 198. In addition, since the need to procure substitute services arose naturally from NetworkTwo's breach of the Agreement, CommunityISP is correct in its assertion that the $100,000.00 paid to SplitRock and the $100,000.00 paid to NetSurfer constitute direct damages. It cannot seriously be contended that in the ordinary course of human experience, one would not expect a buyer of services to cover its losses by obtaining the services to be provided under the contract from an outside source. Even so, these particular damages do not fall within the definition of allowable damages, as defined by the damage limitation provisions of the Master Communications Service Agreement and, therefore, are not allowed.
CommunityISP paid $100,000.00 to NetSurfer in order to purchase Compact Discs containing the substitute internet surfing kit. To the extent the Uniform Commercial Code governs NetworkTwo's obligations under the Agreement pertaining to the supply of these Compact Discs, the outcome is unchanged. See MICH. COMP. LAWS §§ 440.2712 440.2719.
The Court concludes that CommunityISP's alleged damages are barred by the terms of the Master Communications Services Agreement. While NetworkTwo does not contest that they have breached the terms of the Master Communications Service Agreement, there is no genuine issue of material fact that the $300,000.00 sought by CommunityISP is barred by the terms of the Agreement. After issuing its Opinion and Order of February 15, 2001, this Court provided CommunityISP with the opportunity to present evidence of any prorated charges for unsatisfactory transmissions. CommunityISP has not presented any such evidence and has failed to rebut NetworkTwo's Motion for Summary Judgment. Since CommunityISP must sufficiently demonstrate its damages in order to succeed on its Breach of Contract Counter-Claim (Count I), and since CommunityISP has been unable to do so, this Court must grant NetworkTwo's Motion for Summary Judgment and dismiss CommunityISP's Counter-Claim with prejudice.
V. CONCLUSION
Accordingly, and for the reasons set forth above, Plaintiff/Counter-Defendant NetworkTwo's Cross-Motion for Summary Judgment as to Defendant/Counter-Plaintiff CommunityISP Inc.'s First Amended Counter-Claim is GRANTED. CommunityISP's Counter-Claim is DISMISSED WITH PREJUDICE. Accordingly, Defendant/Counter-Plaintiff CommunityISP Inc's Cross-Motion for Summary Judgment is DENIED. This resolves the last matter pending before the Court, and this cause of action, therefore, is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.