Opinion
1:20-cv-01626-CL
11-17-2021
JOSHUA M. SCOTT, Trustee of the Winona Road Trust u/t/d July 24, 2020, Plaintiff, v. MCI COMMUNICATION SERVICES, INC., a Delaware corporation, dba VERIZON BUSINESS SERVICES, Defendant.
FINDINGS AND RECOMMENDATION
MARK D. CLARKE UNITED STATES MAGISTRATE JUDGE
Plaintiff Joshua M. Scott, Trustee of the Winona Road Trust ("Plaintiff') brings claims against the defendant, MCI Communication Services, Inc., doing business as Verizon Business Services ("Verizon"). The case comes before the Court on cross-motions for summary judgment. The Court held a telephonic oral argument hearing on September 8, 2021. For the reasons below, Verizon's motion (#43) should be GRANTED and Plaintiffs motion (#49) should be DENIED.
LEGAL STANDARD
Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material of fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party has the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). The court cannot weigh the evidence or determine the truth but may only determine whether there is a genuine issue of fact. Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir. 2002). An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
When a properly supported motion for summary judgment is made, the burden shifts to the opposing party to set forth specific facts showing that there is a genuine issue for trial. Id. at 250. Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposing party must, by affidavit or as otherwise provided by Rule 56, designate specific facts which show there is a genuine issue for trial. Devereaux, 263 F.3d at 1076. In assessing whether a party has met its burden, the court views the evidence in the light most favorable to the non-moving party. Allen v. City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995).
BACKGROUND
On November 9, 1990, defendant Verizon and the owners of 2602 Winona Road, Grants Pass, Josephine County, Oregon, Plaintiffs predecessors in interest, entered into a Lease Agreement for an approximately 30' by 90' area for Verizon to install and maintain a telecommunications regeneration station, as part of Verizon's fiber optic transmission line from Portland to Sacramento. The regeneration station is connected to the fiber optic transmission line by a cable that runs through an easement to a splice can on a pole (the "Easement") located on Pacific Power's right-of-way on 2620 Winona Road, Grants Pass, Oregon (the "Adjacent Property"), which is directly adjacent to the Property. The "splice can" is a metal canister located at the top of a power pole, where the fiber running to the regeneration station connects into the fiber running between Sacramento and Portland on the Pacific Power lines. Quails Decl. ¶ 3. The Lease Agreement includes an access easement to the leased area. Verizon performed a survey of the approximately 30' by 90' leased area (the "Leased Premises") of the Property and attached a legal description of the area to the Lease. Verizon has the lease for a term of 60 years, and the rental amount of $3,516.50 is paid on an annual basis. Ex. 3 to PL Dep. at ¶¶ 2-4.
Jeanette Goodwin purchased 2602 Winona Road, Grants Pass ("the Property") on August 6, 2002. Ex. 3 to PL Dep. The parties engaged in protracted litigation after Ms. Goodwin attempted to terminate the Lease in 2004 but was ultimately unsuccessful; judgment was entered against her claims on April 8, 2009. Then, in February of 2018, Ms. Goodwin filed another lawsuit against Verizon for Commercial Eviction, Declaratory Judgment, Unjust Enrichment and Fraudulent Filing Under 26 U.S.C. §7434-claims all relating to the Lease. Goodwin v. MCI Commc'n Servs, Inc., Josephine County Oregon Circuit Court No. 18LT02075. Verizon removed the lawsuit to federal court. Goodwin v. MCI Commc'n Servs, Inc., Civ. No. 1: 18-cv-00853-CL.
In May of 2019, Goodwin and Verizon entered into a Settlement Agreement and Mutual Release of Claims resolving their disputes (the "Settlement Agreement"), and the case was dismissed with prejudice on May 6, 2019. Goodwin v. MCI Commc 'n Servs, Inc. (#30). As part of the settlement, Verizon agreed to remove its regeneration equipment and restore the Premises to its prior condition no later than October 1, 2019 ("Removal and Restoration Project"). If the Removal and Restoration Project could not be completed by that time, Verizon agreed to pay Goodwin $500 per day starting October 2, 2019, until completion of the Removal and Restoration Project. The accrued amount is due within 30 days after the completion of the Removal and Restoration Project. On September 30, 2019, when Verizon anticipated that the project would not be completed by the end of October, Verizon sent the Fooses a check for $15,000.
Verizon has not made and other payments under this clause, and it now claims that this clause of the Settlement Agreement is unenforceable.
After the execution of the Settlement Agreement, Richard and Martha Foos purchased the Property from Goodwin. On July 31, 2019, Ms. Goodwin conveyed all of her rights and interest in the Settlement Agreement to the Fooses. One year later, on July 31, 2020, the Fooses transferred the property to Joshua M. Scott as trustee of the Winona Road Trust. On August 25, 2020, the Fooses assigned their interest in the Settlement Agreement to Scott as well.
On September 18, 2020, Plaintiff filed the Complaint in this matter claiming breach of contract and trespass, and seeking an injunction under the Settlement Agreement. On July 2, 2021 the District Court entered an Order (#52) adopting this Court's Findings and Recommendation (#32) and denying a partial summary judgment motion filed by Plaintiff. The Court determined that the Settlement Agreement did not extinguish the terms of the Lease Agreement and that the agreements affirmatively granted Verizon access to the property to complete the Removal and Restoration Project.
INTRODUCTION AND SUMMARY
At the heart of this case is a longstanding, contentious relationship between a series of successors-in-interest to a piece of land in Josephine, County, Oregon, and the telecom corporation, Verizon. Plaintiff seeks to enforce his property rights in the land so zealously that he obstructs the entire purpose of the bargain struck by the parties in entering into the Settlement Agreement, which was to remove the regeneration station and restore the property to its original condition. Defendant Verizon has submitted substantial evidence to show that it has attempted to complete the Removal and Restoration Project, as intended by the agreement. Plaintiffs obstruction is not reasonable and has materially breached the Settlement, the Lease, and the implied covenant of good faith and fair dealing. The Court should grant the relief sought by Verizon so that the project can be completed once and for all.
DISCUSSION
Verizon moves for summary judgment on all claims and counterclaims, including Plaintiffs claims for breach of the Settlement Agreement, trespass, and injunctive relief, and Verizon's counterclaims for breach of the Lease and the Settlement, breach of the implied duty of good faith and fair dealing, and declaratory relief. Plaintiff moves for summary judgment as to Plaintiffs claims for breach of contract, trespass, and permanent injunction, as well as Verizon's counterclaim for breach of the lease agreement. For the reasons below, the defendant's motion (#43) should be granted and Plaintiffs (#49) motion should be denied.
Verizon does not move for summary judgment on its counterclaims for injunctive relief and conversion. However, Verizon states that it does not intend to pursue these claims unless, presuming a favorable outcome here for Verizon, Plaintiff fails to comply with the Court's Order to allow Verizon access to the property. The Court sees no reason that Plaintiff would not comply with a Court Order in this or any other case. Therefore, the Court assumes that Verizon will voluntarily dismiss its remaining claims, and this case will be entirely resolved by these motions.
I. Verizon's motion for summary judgment should be GRANTED.
In moving for summary judgment on all claims, Verizon asserts that it has been unable to remove the equipment and restore the property to its prior condition because Plaintiff has denied Verizon reasonable access to the property. In particular, Verizon claims that it is not feasible to complete the Removal and Restoration Project as long as Plaintiff refuses to allow passage for Verizon's vehicles to get to the fiber optic pole for splicing and decommissioning of the regeneration station.
Defendant Verizon submits the following evidence. First, following the settlement of the Goodwin litigation, Verizon worked diligently to formulate a plan to timely execute the Removal and Restoration Project. Quails Decl. ¶ 4; Gentry Decl. ¶ 3. This included figuring out the necessary engineering to route communications traffic around the Grants Pass regeneration station. Quails Decl. ¶4. To do so, Verizon had to install new equipment at the regeneration stations on either side of the Grants Pass regeneration station (located in Glendale, Oregon and Gold Hill, Oregon) and then splice out the Grants Pass regeneration station. Id. ¶¶ 3-4. However, Verizon was unable to procure the necessary equipment to perform the upgrades prior to October 1, 2019. Id. ¶ 5. Additionally, due to the remote nature of the locations and the lead time it took to both install and test the new equipment, Verizon faced further delays. Id. Verizon submits that, had it removed the Grants Pass regeneration station without first installing the new equipment at the Glendale and Gold Hill regeneration stations, and without performing the splice at Grants Pass, a countless No. of customers would have been left without communications services, including emergency services such as 911. Id. Verizon promptly communicated the anticipated delay and inability to complete the project on time, sending the Fooses a letter on September 30, 2019, containing a check in the amount of $15,000. The letter stated:
As you know, the Settlement Agreement and Mutual Release of Claims between Verizon and Ms. Goodwin required Verizon to remove the equipment on your property by October 1, 2019. Verizon is unable to complete the removal by then. As a result, please see enclosed check No. 54229 in the amount of $15,000, which represents $500/per day for the 30 days from October 2 through October 31.Decl. Selvig Ex. G.
Second, Verizon submits evidence that Plaintiff prohibited Verizon from reasonably accessing the property. Plaintiff did this by posting signs such as:
M.C.L VERIZON, VERIZON EMPLOYEES, CONTRACTORS AND SUBCONTRACTORS
AS OF 11-18-2019 M.C.L VERIZON NO LONGER HAS ACCESS TO THIS PROPERTY
IF ANY M.C.I. VERIZON EMPLOYEES- CONTRACTORS OR SUB CONTRACTORS ENTER THIS PROPERTY BOTH VERIZON AND THAT PERSON OR PERSONS WILL BE CHARGERED [SIC] WIT TRESSPASSING [SIC], BRAKING [SIC] AND ENTERING AND DESTRUTION [SIC] OF PROPERTY.
PROPERTY OWNER
RICHARD FOOSEx. 12 to Pl. Dep.; Pl. Dep. at 192:12-21.
This is just one of several notes that Plaintiff left at the Property entrance. Each note specified that if Verizon accessed the Property, it would be "trespassing." See also Exs. 13 and 14 to Pl. Dep. Plaintiff does not dispute that these signs were posted; Joshua Scott testified that Exhibit 13 is the first note that he posted, sometime in mid to late October 2019. Pl. Dep. at 195:17 to 196:9.
Plaintiff also prevented Verizon from accessing the property in other ways. Verizon completed the upgrades at the Glendale and Gold Hill regeneration stations on November 14, 2019, which meant Verizon could move forward with splicing the Grants Pass regeneration station out of the network. Quails Decl. ¶6. To do so, Verizon needed to coordinate with Pacific Power, because the splice can that connects the Grants Pass regeneration station to the fiber optic line is located on Pacific Power's right-of-way through the adjacent property. Id. Verizon arranged a site visit with Pacific Power on December 2, 2019, so it could assess what it would need to perform the splice and move forward with the Removal and Restoration Project. Id. Verizon was unaware at the time that the adjacent property had been acquired by the Fooses approximately one month earlier. Id. On December 2, 2019, Pacific Power escorted a Verizon employee and Verizon's contractor to the splice can via Pacific Power's right-of-way, Ex. 16 to Pl. Dep. Shortly thereafter, Plaintiff appeared on site, told them that he was the property owner and that they were trespassing, and demanded that they leave immediately. Id.; PL Dep. at 186:23 to 187:24. They left immediately. Ex. 16 to Pl. Dep.; Pl. Dep. at 187:23 to 188:1.
Per an agreement with Pacific Power. Pacific Power granted Verizon a right of access to its right of way-Qualls Decl., ¶ 3.
On February 6, 2020, Verizon provided the Fooses with fourteen days' notice that it planned to commence the Removal and Restoration Project, beginning on February 20, 2020, and would need to access to the adjacent property to perform the splice. Dkt. # 21 If 2, Ex. 1 at 13-14. However, the Fooses denied Verizon access to the adjacent property, claiming that such access was outside the scope of the Settlement Agreement. Id. In particular, the Fooses denied Verizon the access necessary to get a bucket truck to the fiber optic pole. Id. at 13-14. As a result, Verizon could not commence the Removal and Restoration Project on February 20, 2020, as planned. Id. On March 9, 2020, Verizon notified the Fooses that their withholding of reasonable access rendered its performance under the Settlement Agreement impossible. Dkt. #21 ¶2, Ex. 1 at 1.
It is undisputed that Verizon has an Easement from the regeneration station to the right-of-way on the adjacent property where the power pole is located (the fiber optic line runs underground along this Easement), but this Easement is not accessible for a vehicle because the regeneration station itself is in the way. Dec. Selvig Ex. M. As discussed below, the bucket truck would need to make a different annrnach.
Third, Verizon submits that it "stands ready to commence the Removal and Restoration Project as soon as Plaintiff or this Court grants it the necessary access to the Property and the adjacent property to perform the splice and proceed with removing the regeneration station and restoring the Leased Premises to its original condition." Quails Decl. ¶7; Gentry Decl. ¶ 9. To safely perform the splice, Verizon will need to rely on Pacific Power to lower the splice can from the pole and to test the voltage of the can. Quails Decl. ¶ 8. This will require the use of a large bucket truck. Id. Once Pacific Power notifies Verizon that it is safe to proceed with the splice, Verizon's fiber optic contractor will open the splice case and cut the 96-count lateral fiber that connects to the Grants Pass regeneration station. Id. ¶9. The contractor will then splice the north and south fibers by taking fiber one on the north-facing cable and splicing it to fiber one on the south-facing cable, then fiber two, and so on until all 48 fibers are spliced past the Grants Pass regeneration station. Id. This is a time-consuming process that requires the use of specialized and powered equipment. Id.,
To safely perform the splice, Verizon asserts that it must utilize the Pacific Power right-of-way to transport its vehicles to the splice can. Dkt. # 45 ¶ 10. The vehicles are needed to haul Verizon's and its contractor's equipment, including generators, and all associated fiber splicing materials and cable stripping and cutting tools. Id. The vehicles are also required to provide backup power to the splicing equipment and any lighting and miscellaneous powered tools, such as a fiber fusion splicer and any motorized hand tools. Id. The required equipment may vary depending on the weather and lighting conditions, as well as the condition of the fiber. Id.
Once the splice is completed, Verizon can proceed with removing the regeneration station and restoring the Leased Premises to its original condition. Dkt. # 45 ¶ 7. Verizon plans to utilize a DC contractor, American Power Systems ("APS"), to remove the batteries, rectifiers, DC equipment racks, and associated cabling. Dkt. # 46 ¶ 4. APS estimates that they will require six days with 24/7 access to complete their work. Id. APS plans to utilize a 4x4 pick-up truck to access the Pacific Power right-of-way and shuttle back and forth to a transport vehicle (box truck) staged at Winona Road. Id.
Verizon plans to use a general contractor, TNT Builders Inc. ("TNT"), to perform the remainder of the Removal and Restoration Project. Dkt. # 46 ¶ 5. TNT estimates its portion of the Removal and Restoration Project will require 21 days with 24/7 site access. Id. The site consists of a 30' x 90' compound with an 8' chain link fence, two 7' gates, one LPG 45kW Generator installed in a 10' x 10' shelter, one 11' x 24' equipment shelter, one 1, 000-gallon LPG tank, 120/240volt 200amp meter board with underground service, a 60' pole with two-way antenna, two 60' concrete retaining walls, two shelter concrete pads, site back-fill material, seed, and straw. Id. TNT plans to utilize a 4x4 pick-up truck, track-hoe with a hydraulic hammer, D6 or D9 bulldozer, dump trucks, semis with low-boy trailer, a water truck, and a water trailer to perform the Removal and Restoration Project. Id. TNT will need to grade the Pacific Power right-of-way for site access. Id.
Verizon asserts that if it is not allowed to perform the splice and access to the Parcel via the Pacific Power right-of-way, the Removal and Restoration Project will become significantly more complicated and would present logistical and safety-related difficulties. Dkt. # 46 If 6; Dkt. # 45 ¶ 12. It is not possible for Verizon to drive vehicles through the Parcel and the Easement to the splice can due to the fence surrounding the regeneration station. Dkt. # 45 ¶12. Even if Verizon were to cut or remove the fence that surrounds the regeneration station, it still could not utilize its vehicles due to the presence of the regeneration station, and it would leave the regeneration station exposed. Id. Alternatively, if Verizon were to direct its employees and contractors to climb over the fence carrying scaffolding to access the splice can and the heavy equipment necessary to perform the splice, setting aside the obvious safety-related issues with such a plan, Verizon would still be unable to utilize its vehicles to power its equipment or lighting necessary to perform the splice. Id.
As for removal of the regeneration station, without access to the Pacific Power right-of-way, Verizon would be forced to utilize Plaintiffs private driveway, which is recommended only for passenger vehicle use. Dkt. # 46 ¶ 6. The private driveway consists of approximately one quarter mile of degraded asphalt, a 10' wood beam bridge, and a tree-lined canopy from start to finish. Id. Heavy equipment and semi-trucks would likely damage the tree-lined canopy. Id. Additionally, the trailer is wide-load-permitted at 11.5', which is wider than the 10' bridge located on the private driveway. Id. The weight of the equipment and materials being removed will likely cause damage to the driveway. Id. The 11' x 24' equipment shelter weighs 22, 000 lbs., the 10' x 10' shelter with generator weighs 12, 000 lbs., and the two shelter concrete pads alone weigh approximately 210, 000 lbs., which will require eight to ten loaded dump trucks to access the asphalt driveway. Id. This may result in severe cracks and deep ruts, and the driveway may break apart. Id.
In response, Plaintiff asserts that, while the Lease and the Settlement might grant Verizon access to the Leased Premises and adjacent lands, the terms only provide for specific tasks, such as "for the purpose of bringing electricity, gas, water and telephone to the [Leased] Premises." Plaintiff notes that free access to the pole with the fiber optic splice can, located on the adjacent property, is not one of the specified terms. Therefore, Plaintiff claims that Verizon has no right to access to the Pacific Power right-of-way in order to reach the can or "to drive a bucket truck or use other construction equipment where it wants over on Plaintiffs property or to access the easement to the power pole on the neighboring property in whatever way it wishes for convenience's sake." Plf. Mtn (#49) at 19.
According to Plaintiff, Verizon could use the existing Easement to disconnect the regeneration station from the power pole on the adjacent property:
The easement on the Property is not accessible for a bucket truck because the regeneration station is in the way; however, there is a walkway through the regeneration station and through the easements by which employees could carry scaffolding which can be used to reach the "can" on the power line.Id. at 21. Plaintiff submits evidence that the scaffolding idea was part of the original plans put forth by the vendor before they knew that Pacific Power could assist them. Dec. Selvig Exs. L, Q and R. Thus, because Verizon's performance is not entirely impossible without the right-of-way access, Plaintiff argues Verizon is the party in breach of the settlement agreement for failure to complete the Removal and Restoration project.
As discussed below, Plaintiffs response is not sufficient to raise a question of fact regarding whether Verizon has diligently attempted to complete performance under the Settlement, nor is it sufficient to rebut Verizon's evidence that Plaintiff has prevented Verizon from doing so. For the reasons below, Verizon is entitled to summary judgment on all claims.
a. Plaintiff has breached the Lease and the Settlement by denying Verizon access to the property; Verizon is entitled to summary judgment on both claims.
Verizon claims that Plaintiff has breached both the Lease and the Settlement Agreement; Verizon's motion for summary judgment should be granted as to both claims. Under Oregon law, to prevail on a breach of contract claim, a claimant must prove: (1) the existence of a contract; (2) its relevant terms; (3) the claimant's substantial performance or a valid excuse for failure to perform; and (4) the opposing party's breach resulting in damage to the claimant. See Navagium Vectorium, LLC v. Sutton, No. 1:13-CV-00162-CL5 2015 WL 6001281, at *5 (D. Or. Oct. 14, 2015) (citing Iron Horse Eng'g Co., Inc. v. Northwest Rubber Extruders, Inc., 193 Or.App. 402, 416, 89 P.3d 1249 (2004); Slover v. Oregon State Bd. of Clinical Soc. Workers, 144 Or.App. 565, 570, 927 P.2d 1098 (1996)).
There is no dispute that the Settlement Agreement is an enforceable contract given that Plaintiff also seeks to enforce it. Likewise, the Court has already determined that the Lease remains in effect. Because Plaintiff materially breached the unambiguous terms of both contracts by preventing Verizon from accessing the property to complete the Removal and Restoration Project, Verizon has a valid excuse for failure to perform. Plaintiffs breach has resulted in damage to Verizon, and Verizon is entitled to summary judgment.
i. The relevant terms of the Lease and Settlement are unambiguous and they grant Verizon all necessary access to the property to complete the Removal and Restoration Project.
"In a contract dispute, a party will be entitled to summary judgment only if the governing terms of the contract are unambiguous." Milne v. Milne Const. Co., 207 Or.App. 382, 388, 142 P.3d 475 (2006). "[W]hether the terms of a contract are ambiguous is, in the first instance, a question of law." Pac. First Bankv. New Morgan Park Corp., 319 Or. 342, 347, 876 P.2d 761 (1994). "A contract provision is ambiguous if it has no definite significance or if it is capable of more than one sensible and reasonable interpretation[.]" Batzer Const. Inc. v. Boyer, 204 Or.App. 309, 313, 129 P.3d 773 (2006) (citation omitted; alteration in original). To determine whether a contract is ambiguous, courts must look to the text and context of the agreement by examining the words of the disputed provision and considering the contract as a whole. See Yogman v. Parrot, 325 Or. 358, 361, 937 P.2d 1019 (1997). "If the provision is clear, the analysis ends." Id.
Here, the unambiguous terms of both the Lease and the Settlement Agreement entitle Verizon to access the Leased Premises and the splice can, via the Pacific Power right-of-way and to access more than just the private driveway, the Parcel, and the Easement for purposes of the Removal and Restoration Project.
Section 1 of the Lease provides as follows:
1. Landlord hereby leases unto Tenant, and Tenant hereby hires from Landlord, for all purposes which Tenant may desire, the parcel of land (hereinafter called the "Premises") measuring approximately 30' by 90' as shown on the plan annexed hereto as Exhibit A and specifically incorporated herein by reference.
TOGETHER WITH 1) any improvements that may now or hereafter be located thereon, 2) such rights of way and easements on, over, under, across and through the adjoining lands of Landlord, extending from the Premises to the nearest convenient public road, and of standard vehicular width, as shall be necessary for ingress and egress to and from the Premises, 3) such other rights of way and easements on, over, under, across and through the adjoining lands of Landlord as may be required by Tenant for the purpose of bringing electricity, gas, water and telephone to the Premises, and 4) the right to park vehicles on or about the Premises and the lands immediately adjacent thereto during periods of construction, site inspection and at times of necessary repair and maintenance work.Ex. 3 to Pl. Dep. Section 1 describes not only the actual land area Verizon is leasing, but all of the rights and interests associated with the lease of that land area. The language stating the permitted uses under the Lease as "all purposes which Tenant may desire" is extremely broad; it unambiguously encompasses the Removal and Restoration Project.
The phrase "TOGETHER WITH" clarifies that the rights and interests set forth in the prior paragraph are of equal standing to Verizon's rights in and to the Parcel. Specifically, the second clause grants Verizon access to and from the Premises "on, over, under, across and through the adjoining lands of Landlord" to the nearest convenient public road "as shall be necessary for ingress and egress to and from the Premises." This clause unambiguously grants Verizon the right to utilize Plaintiffs "adjoining" lands for ingress and egress to the Parcel, including the adjacent property. Likewise, this clause does not limit Verizon's access to the existing private driveway, nor does it contain any fixed boundaries.
The fourth clause grants Verizon the right to park vehicles on "lands immediately adjacent" to the Parcel "during periods of construction, site inspection and at times of necessary repair and maintenance work." This clause anticipates that some of Verizon's permitted uses of the Premises include construction, repair, and maintenance. Plaintiff does not dispute that the Removal and Restoration Project is a form of construction. Moreover, Plaintiff does not seriously dispute that the Pacific Power right-of-way is "immediately adjacent" to the Parcel. Thus, the Lease unambiguously grants Verizon the right to utilize the Pacific Power right-of-way for purposes of the Removal and Restoration Project, as well as any other lands "immediately adjacent" to the Parcel.
Section 1 of the Lease further provides as follows:
IT IS UNDERSTOOD and agreed that Tenant shall have the right to construct, maintain and repair a roadway to the Premises over the aforementioned rights of way and easements, including such work as may be necessary for slope and drainage, and to install within said rights of way and easements and the Premises such poles, wires, pipes, cables, conduits and related appurtenances as shall be necessary for the proper conduct of Tenant's business and for bringing electricity, gas, water, telephone and fuel as Tenant shall deem necessary in its sole discretion for an emergency/auxiliary power supply for Tenant's business.Ex. 3 to Pl. Dep. (emphasis added). In this paragraph, Verizon's right to construct a roadway on
Plaintiffs adjoining land is limited only by the reference to "the aforementioned rights of way and easements." This refers back to the "rights of way and easements" described in the second and third clauses of the second paragraph which, as discussed above, are very broad in their scope and apply to "the adjoining lands of [Plaintiff]." Verizon's rights described in this paragraph permit the installation of various items and appurtenances "as shall be necessary for the proper conduct of Tenant's business...." The "proper conduct of Tenant's business" clearly includes the Removal and Restoration Project, and thus this paragraph grants Verizon the right to grade the land in the Pacific Power right-of-way for purposes of performing the Removal and Restoration Project.
Similarly, the terms of the Settlement Agreement unambiguously grant Verizon the necessary access to complete the Removal and Restoration Project. First, the Court has previously held that the Settlement Agreement unambiguously incorporates the Lease by reference as Exhibit 1 and that the Settlement Agreement in no way extinguishes the Lease or the broad right of access granted in the terms discussed above. Second, under the express terms of the Settlement Agreement itself, Plaintiff is required to "give Verizon permission to enter the Leased Premises for [the Removal and Restoration Project]." Ex. 4 to Pl. Dep. at p. 1. The Settlement Agreement does not specify that Verizon may only enter the Leased Premises via the private driveway, nor does it require Verizon to stay within the confines of the driveway, Parcel, and Easement for purposes of performing the Removal and Restoration Project. The only reasonable reading of this provision is that it grants Verizon the necessary access to the property to accomplish the Removal and Restoration Project-i.e., the entire objective of the Settlement Agreement.
Finally, nothing in the terms of either agreement requires Verizon to provide its plans for accomplishing the Removal and Restoration Project to Plaintiff for approval, nor do the terms require Verizon to utilize the least invasive means to do so. Verizon must restore the property to its original condition, but it has wide latitude to complete the Project as it sees fit. Verizon, along with the contractors it uses, has the knowledge and expertise to accomplish the task in a safe, efficient manner. The evidence submitted by Verizon to demonstrate this expertise cannot be outweighed or even called in to question by Plaintiffs bare assertion that it could be done differently. Verizon is entitled to consider what methods would be the safest, most efficient, and yes, most convenient. The clear intent of the Settlement Agreement is to achieve the removal of the regeneration station and the restoration of Plaintiff s land. Plaintiffs overly restrictive reading of the terms of the Settlement and the Lease do not align with that intent in any way.
ii. By failing to grant Verizon reasonable access to the property, Plaintiff has materially breached the Lease and the Settlement, providing Verizon with a valid excuse for non-performance.
Under Oregon law, only a material breach of contract excuses a party from nonperformance. See Burgess v. North Bend School District, 216 Or.App. 510, 516 (2007). "A breach is material if it goes to the very substance of the contract and defeats the object of the parties in entering into the contract." Bisio v. Madenwald, 33 Or.App. 325, 576 P.2d 801 (1978). In evaluating whether a breach is material, Oregon courts weigh heavily whether the breach prevents a party from continuing to perform under the contract. See, e.g., Weaver v. Williams, 211 Or. 668, 679, 317 P.2d 1108 (1957) ("When a breach of contract is, in effect, a total breach, it is only necessary that a plaintiff show he has carried out his contractual promises insofar as the conduct of the defendant has permitted him to do."), "[W]here the facts are undisputed, whether a breach is material is a question of law and may be appropriately resolved on summary judgment." N. Am. Specialty Ins. Co. v. Access Equip. Rental, LLC, 2013 WL 1150002, at *2 (D. Or. Mar. 15, 2013).
It is undisputed in the record that Plaintiff has insisted, and in fact Plaintiff continues to persist in arguing to the Court, that Verizon must access the Leased Premises only through the private driveway and that Verizon must not step outside the bounds of the Leased Premises, Parcel, or Easement. Plaintiff has failed to grant Verizon the broad, unrestricted access to the property as contemplated by the terms of the Lease, as well as the terms of the Settlement Agreement to accomplish the Removal and Restoration Project. Verizon has submitted evidence that without such access, it has been unable to complete the project.
Plaintiff asserts that there are other ways Verizon could have accessed the property, completed the splice, and performed the Removal and Restoration Project. In particular, Plaintiff asserts that the terms of the agreements do not grant Verizon unrestricted access to the power pole on the neighboring property, where the fiber optic splice must take place. Plaintiff concedes that Verizon's Easement is not accessible for a bucket truck because the regeneration station is in the way, but he insists that "there is a walkway through the regeneration station and through the easements by which employees could carry scaffolding which can be used to reach the 'can' on the power line." Plf, Mtn (#49) at 21. Plaintiff therefore asserts that the lack of access is not a material barrier to Verizon's completion of the Removal and Restoration Project but instead is a mere request "for convenience's sake." The Court disagrees.
Verizon has submitted declarations and affidavits stating that to safely perform the splice, Verizon will need a bucket truck to lower the splice can from the pole and test the voltage of the can. Verizon has also submitted evidence to show that asking employees to carry heavy equipment and scaffolding on foot in lieu of a bucket truck would not be safe or even feasible to complete the splice itself. Plaintiff has not submitted sufficient opposing evidence to raise a material question of fact as to Verizon's plan or its efforts to complete the project. Nothing in the Settlement requires that Verizon get Plaintiffs approval before proceeding with a plan to complete the Removal and Restoration project. Even if a bucket truck is not absolutely crucial, or if an alternative method is available, Verizon is not required to utilize the method that Plaintiff prefers.
The terms of the Lease and the Settlement clearly grant Verizon broad access to the property to complete the Project, including the right to access the regeneration station and the splice can via the Pacific Power right-of-way and to access more than just the private driveway, the Parcel, and the Easement for purposes of the Removal and Restoration Project. Plaintiff has breached those terms by failing to provide Verizon the necessary access and thus preventing Verizon from performing. Therefore, Plaintiff has materially breached the terms of the contract, and Verizon has a valid excuse for performance. Verizon is entitled to summary judgment.
iii. Plaintiffs breach has resulted in damage to Verizon and Verizon is entitled to specific performance.
Verizon has been damaged by Plaintiffs breach of the Lease and the Settlement. In particular, by refusing to grant Verizon access to its splice can via the Pacific Power right-of-way, Plaintiff has prevented Verizon from splicing the regeneration station out of its network, creating a situation where Verizon can never perform and can never extricate its operation from Plaintiffs land. Moreover, Plaintiff continues to claim that Verizon owes rent on the Lease and damages of $500 per day until the project is completed. Therefore, Plaintiffs breach has resulted in damage to Verizon, and Verizon is entitled to summary judgment on both counterclaims for breach of the Lease and the Settlement.
Given the difficulties in proving Verizon's precise monetary damages, Verizon is entitled to specific performance, requiring Plaintiff to grant it the necessary access to perform the Removal & Restoration Project. See, e.g., Pittenger Equip. Co. v. Timber Struct., Inc., 189 Or. 1, 20-22, 217 P.2d 770 (1950) (if damages cannot be proved with reasonable certainty, or if the damages are difficult to prove because of the circumstances or the nature of the subject matter, specific performance may be justified).
b. Verizon has a valid excuse for non-performance and has not otherwise materially breached the Settlement Agreement; Verizon is entitled to summary judgment on Plaintiffs breach of contract claim.
Plaintiff claims that Verizon has breached the Settlement Agreement by failing to complete the Removal and Restoration Project. As discussed above, under Oregon law, "only a material breach of contract excuses a party from nonperformance. See, 216 Or.App. At 516. In evaluating whether a breach is material, Oregon courts weigh heavily whether the breach prevents a party from continuing to perform under the contract. See, e.g., Weaver v. Williams, 211 Or. at 679. Usually, a contracting party's failure to timely perform is not a material breach of the contract. See Walton v. Denhart, 226 Or. 254, 260-261, 359 P.2d 890 (1961) (Finding failure to construct house by deadline was not a material breach given delays that arise in construction).
Verizon's failure to complete the Removal and Restoration Project by the contracted deadline is not a material breach. First, as discussed above, Verizon has a valid excuse for nonperformance because Plaintiff has materially breached the agreements and prevented Verizon's performance. Second, the Settlement Agreement does not contain a "time is of the essence" provision. See Ex. 4 to Pl. Dep. Third, Verizon has submitted substantial evidence showing why it did not initially meet the contractual deadline and how it has attempted to proceed with the project with all due diligence. Fourth, Plaintiffs undisputed actions - placing "no trespass" signs at the entrance to the Property, chasing Verizon off the Adjacent Property, and taking the unreasonable position that Verizon cannot even step one inch outside of the boundaries of the private driveway, Parcel, or Easement - are contrary to the notion that "time is of the essence" or that the time of performance is material. See, e.g., Patterson v. Amundson, 201 Or.App. 486, 496, 11.9 P.3d 264 (2005) (finding plaintiff did not breach contract for failing to close sale on time given that defendant's actions were inconsistent with an intent to enforce any time-of-the- essence provision). For all of these reasons, Verizon's failure to timely perform is not a material breach of the Settlement Agreement.
Verizon's failure to pay timely rent under the Lease Agreement during the pendency of performance under the Settlement Agreement is not also not a material breach. The purpose of the Settlement Agreement is for Verizon to remove the regeneration station and restore the property to its original condition. Payment of rent is not material to this objective, particularly when it is the Plaintiffs actions that have prevented Verizon from completing performance. Additionally, Verizon submits evidence that Plaintiffand his predecessors, the Fooses, failed to submit the proper paperwork required to transfer payment of the rent from the Fooses' predecessor, Ms. Goodwin. Plaintiffs response that this paperwork is not actually necessary is unavailing. Verizon is entitled to require certain paperwork to ensure that the rental payment is sent to the proper recipient, and Plaintiff has not shown that the paperwork required was overly burdensome or onerous.
Plaintiff makes an evidentiary objection regarding Verizon's inclusion of a 2005 deposition of Mr. Scott, claiming it misrepresents that Mr. Scott was aware of Verizon's W-9 requirement. The Court does not rely on the deposition excerpts to make a determination and recommendation on this issue. Therefore.
Plaintiff cannot demonstrate that Verizon has materially breached the Settlement for failure to pay rent and failure to meet the October 1, 2019 deadline to perform the Removal and Restoration Project, nor can Plaintiff establish his own substantial performance under the Settlement. Verizon is entitled to summary judgment on Plaintiffs breach of contract claim.
c. Plaintiff has breached the implied covenant of good faith and fair dealing; Verizon is entitled to summary judgment on this claim.
In Oregon, there is "a duty of good faith and fair dealing with respect to all contracts to facilitate performance and enforcement of the contract where it is consistent with and in furtherance of the agreed-upon terms of the contract or where it effectuates the reasonable contractual expectations of the parties." Swenson v. Legacy Health Sys., 169 Or.App. 546, 554- 55, 9 P.3d 145 (2000). "The heart of each party's good faith and fair dealing obligation is the duty 'to perform the contract, including exercising any discretion that the contract provides, in a way that will effectuate the objectively reasonable contractual expectations of the parties.'" Veloz v. Foremost Ins. Co. Grand Rapids, Michigan, 306 F.Supp.3d 1271, 1280 (D. Or. 2018) (quoting Pollock v. D.R. Norton, Inc.-Portland, 190 Or.App. 1, 77 P.3d 1120 (2003)). "The purpose of the duty is to prohibit improper behavior in the performance and enforcement of contracts, and to ensure that the parties will refrain from any act that would have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Klamath Off-Project Water Users, Inc. v. Pacificorp, 237 Or.App. 434, 445, 240 P.3d 94, 101 (2010) (internal quotation marks omitted). The duty "does not operate in a vacuumf, ]" but rather it "focuses on the 'agreed common purpose' and the 'justified expectations' of the parties, both of which are intimately related to the parties' manifestation of their purposes and expectations in the express provisions of the contract." Oregon Univ. Sys. (OUS) v. Oregon Pub. Employees Union, Local 503, 185 Or.App. 506, 515-16, 60 P.3d 567 (2002).
Here, the Settlement Agreement provides that "Verizon will remove all its equipment and all improvements, including concrete, and restore the Leased Premises to a comparable condition it was in prior to the commencement of the Lease[.]" Ex. 4 to Pl. Dep. at ¶1. Plaintiff does not dispute that the purpose of the Settlement Agreement was to resolve all prior disputes between the parties and for Verizon to remove its equipment from the Property and restore it to its original condition. Pl. Dep. at 136:15-24. Verizon cannot remove its equipment without access to the Parcel via the Pacific Power right-of-way or the ability to exceed the precise bounds of the private driveway, Parcel, and Easement. Instead of allowing Verizon the access needed to remove its equipment from the Property, Plaintiff filed this lawsuit. Indeed, Plaintiff refuses to allow Verizon to step even one inch outside of what Plaintiff considers the "Leased Premises" in order to perform the Removal and Restoration Project. Pl. Dep. at 75:9-17. When asked why he did not grant Verizon the requested access in February 2020, Plaintiff testified, "[b]ecause it's not in the lease . ., [t]hey designed [the Lease]. They designed the footprint, and going outside the footprint - we tried to negotiate. They refused to - and going outside the footprint would be trampling on my private property." Id. at 64:2-11. This is Plaintiffs position, notwithstanding the fact that he acknowledges that Pacific Power has the right to do whatever it wants within the right-of-way. Id. at 92:14 to 93:4. When asked how he proposed Verizon perform the Removal and Restoration Project without access to the right-of-way or areas outside of the Leased Premises, Plaintiff testified he "was curious about that [him]self." Id., at 59:23-25. Plaintiff maintains that Verizon "either should have put it in the [settlement] agreement somehow, or if they want to negotiate a way around it, they can talk to me about that." Id. at 106:15-24. Essentially, Plaintiff knows that it would be impossible for Verizon to perform under the Settlement Agreement under his interpretation of the terms and yet he continues to refuse to grant Verizon the needed access.
Verizon's reasonable expectation under the Settlement Agreement is that Plaintiff will allow access to the property so that it can remove its equipment and restore Plaintiffs land to its original condition, which is the purpose of the Settlement. Plaintiff has not shown that allowing such access will damage or harm his interests in any way. His refusal to allow Verizon such access is a breach of the implied covenant of good faith and fair dealing because he is unreasonably hindering, instead of taking reasonable actions to facilitate, Verizon's performance under the Settlement. Accordingly, Plaintiff has breached this implied duty of good faith and fair dealing, and Verizon is entitled to summary judgment.
d. Verizon is not trespassing; it is entitled to summary judgment on this claim. Plaintiff claims that "Verizon leaving the regeneration station on the property after the breach of the Settlement Agreement and termination of the Lease for non-payment is a trespass on the Property." A person is liable for trespass 'if he intentionally: (a) enters land in the possession of the "other, or causes a thing or a third person to do so, or (b) remains on the land, or (c) fails to remove a thing from the land a thing which he is under a duty to remove.'" W. Radio Servs. Co. v. Allen, 147 F.Supp.3d 1132, 1145 (D. Or. Nov. 24, 2015). As discussed above, Verizon is not in breach of the Settlement, and the neither the Lease nor the Settlement have been terminated for non-payment of rent. Verizon is not trespassing on the property.
e. It is unnecessary to determine whether the liquidated damages clause is enforceable; Plaintiff is not entitled to any damages at this time.
Pursuant to Section 1 of the Settlement Agreement, the parties agreed that Verizon would pay Goodwin "$500 a day starting October 2, 2019 if the Removal and Restoration Project [was] not complete at such time." Indeed, when Verizon became aware that it was not going to be able to complete, or even begin the Removal and Restoration project by the October 1, 2019 deadline, Verizon sent the Fooses a check for $15,000. However, based on the terms of the Settlement, any payment under this clause of Section 1 should not be due until completion of the Project. No further payment has been made under this clause, and now Verizon claims that this is a liquidated damages clause and an unenforceable penalty provision under Oregon law. Because the Court has determined above that Verizon's lack of performance under the Settlement Agreement is excused by Plaintiffs material breach in prohibiting reasonable access to the pole on the adjacent property in order to splice the fiber optic line, and other access to the property, it is unnecessary to determine whether the $500 per day penalty is enforceable. Plaintiff is not entitled to these damages, whether they are enforceable or not. Further, Plaintiff has not prevailed on any claims in this action and is not entitled to any damages at this time.
f. Verizon is entitled to summary judgment as to Plaintiffs requests for punitive damages and a permanent injunction.
Under Oregon law, punitive damages are "a penalty for conduct that is culpable by reason of motive, intent, or extraordinary disregard of or indifference to known or highly probable risks to others." Andor by Affatigato v. United Air Lines, Inc., 303 Or. 505, 517 (1987). Punitive damages "are not recoverable in a civil action unless it is proven by clear and convincing evidence that the party against whom punitive damages are sought has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others." ORS 31.730(1). Evidence meets the clear and convincing standard when the "truth of the facts asserted is highly probable." Thompson ex rel Thorp Family Charitable Remainder Unitrust v. Federico, 324 F.Supp.2d 1152, 1170 (D. Or. 2004) (applying "clear and convincing" standard in motion for summary judgment on punitive damages claim).
Plaintiffs request for punitive damages is based on the allegation that Defendant "intentionally exceeds its boundary rights" for "possibly thousands of properties." Dkt. # 1 ¶ 21. Plaintiff has submitted no evidence to support this allegation, and Plaintiff testified that he did not know of any instances of this occurring. Pl. Dep. at 131:22 to 132:2. Plaintiff is not entitled to punitive damages. Verizon is entitled to summary judgment on this claim, Similarly, and for all of the reasons discussed above, Plaintiff is not entitled to injunctive relief. Plaintiff has not submitted evidence to raise a question of material fact as to any of his claims, nor to prevail on any claims as a matter of law. By contrast, Verizon submits sufficient evidence to prevail on all of the claims at issue here. Therefore, Verizon is also entitled to summary judgment on Plaintiffs claim for a permanent injunction.
g. Verizon is entitled to a declaratory judgment granting all necessary access to the property perform the Removal and Restoration Project, including access to the power pole via the Pacific Power right-of-way.
The Federal Declaratory Judgment Act provides that this Court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). "The two criteria supporting entry of declaratory judgment occur where: (1) the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) the judgment will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Sherman v. Kasch, 2020 WL 4587510, at *2 (D. Or. Aug. 10, 2020).
Declaratory relief is appropriate here. The dispute in this case centers on the parties' rights with respect to the performance of the Removal and Restoration Project. A declaratory judgment specifying Verizon's right to access certain portions of the Property and Adjacent Property to perform the Removal and Restoration Project will resolve a critical issue in this case, separate and apart from whether either party breached the Lease and/or Settlement Agreement and will "terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding."
This relief is additionally appropriate as it is essentially identical to Verizon's requested relief for Plaintiffs breach of the Settlement Agreement. Given the difficulties in proving Verizon's precise monetary damages as a result of that breach, Verizon requests and is entitled to specific performance, requiring Plaintiff to grant it the necessary access to perform the Removal and Restoration Project. See, e.g., Pittenger Equip. Co. v. Timber Struct, Inc., 189 Or. 1, 20-22, 217 P.2d 770 (1950) (if damages cannot be proved with reasonable certainty, or if the damages are difficult to prove because of the circumstances or the nature of the subject matter, specific performance may be justified).
II. Plaintiffs motion for summary judgment should be denied.
Plaintiff moves for summary judgment on Plaintiffs claims for breach of contract, trespass, and permanent injunction, as well as Verizon's counterclaim for breach of the lease agreement. Each of these claims is discussed above, and Plaintiffs motion as to each of them should be denied for all of the same reasons. Plaintiff has materially breached the Settlement Agreement by preventing performance by Verizon. Plaintiffs motion should be denied.
RECOMMENDATION
For the reasons above, the defendant's motion for summary judgment (#43) should be GRANTED and Plaintiffs motion (#49) should be DENIED. Verizon is entitled to summary judgment as to Plaintiffs claims for breach of the Settlement Agreement, trespass, and injunctive relief, as well as Verizon's counterclaims for breach of the Lease and breach of the Settlement, breach of the implied duty of good faith and fair dealing, and declaratory relief. The Court should declare:
1. Verizon is entitled to access and utilize the Pacific Power right-of-way for purposes of the Removal and Restoration Project by virtue of the Lease and the Settlement Agreement
2. Verizon is entitled to all necessary access to the Property in order to complete the Removal and Restoration Project by virtue of the Lease and the Settlement Agreement.
Finally, Verizon should either file a notice stating its intent to pursue the final two remaining claims for conversion and injunctive relief or move to dismiss those claims.
SCHEDULING
This Findings and Recommendation will be referred to a district judge. Objections, if any, are due no later than fourteen (14) days after the date this recommendation is entered. If objections are filed, any response is due within fourteen (14) days after the date the objections are filed. See Fed.R.Civ.P. 72, 6. Parties are advised that the failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).