This matter is before the court on the following motions:
(1) The renewed motion of the defendant, Birch Communications, Inc, for summary judgment (DN 105).
(2) The motions of the plaintiff, Telecom Decision Makers, Inc., for leave to file a sur-reply (DN 123) and an amended sur-reply (DN 125).
(3) The motion of the defendant, Birch Communications, Inc., to exclude the affidavit of Andrew C. Smith (DN 119).
(4) The motion of the plaintiff, Telecom Decision Makers, Inc., for hearing and oral argument (DN 139).
A number of prior opinions of this court recount the basic legal and factual contentions of the parties herein. For purposes of continuity, the court will resurrect portions of our prior rulings to present the current posture of the case. We will then address the issues raised on summary judgment.*fn1
This is a declaratory judgment action seeking to ascertain the rights and obligations, if any, of the parties, Telecom Decision Makers, Inc. ("Telecom") and Birch Communications, Inc. f/k/a Access Integrated Networks, Inc. ("Birch") under a Sales Representative Agreement between Telecom and a non-party, Navigator Telecommunications LLC ("Navigator"). Telecom, an independent sales agent for the telecommunications industry, entered into an agreement with Navigator, a telecommunications provider and non-party to the suit, for Telecom to develop residential and business accounts for Navigator's local and long distance telephone services. The contract provided, in part, that Navigator would pay Telecom continuing commissions (referred to in the agreement as "residual commissions," and also referred to by the parties as "evergreen commissions.") on revenue-generating accounts established by Telecom until termination of the customer contract. (Confidential Independent Sales Representative Agreement for Voice Products and Services (hereinafter, the "Telecom/Navigator agreement," or simply "the agreement"), ¶ 8). The agreement further provided that
This agreement is binding upon and shall inure to the benefit of the successors and assigns of Navigator in connection with and in contemplation of any reorganization, bankruptcy, merger, consolidation, or sale of all or substantially all of the ownership interest or assets of Navigator, or any other transaction substantially similar in effect (collectively "Change of Control"). Upon a Change of Control, this Agreement will be deemed assigned to Navigator's successor notwithstanding that the Assignment is formally reduced to writing or not... (Contract, ¶ 13).
Birch purchased certain business and residential lines from Navigator in 2008. Prior to the execution of an Asset Purchase Agreement between Navigator and Birch (referred to herein as the "APA"), Navigator gave Telecom notice that it intended to exercise a provision in the Telecom/Navigator agreement which allowed Navigator to terminate its arrangement with Telecom for its own convenience, but required that Navigator continue to make all payments (e.g. commissions) then due to Telecom under the terms of the agreement. Contract, ¶ 11. Later, but still prior to execution of the APA, Birch notified Telecom that it was purchasing substantially all of the residential and business local and long distance customer accounts of Navigator. Once the APA was signed, Birch indicated that it had not assumed responsibility for and would not pay residual commissions to Telecom under the Telecom/Navigator agreement.
Telecom filed this action to obtain a declaration that Birch is obligated to pay commissions under the agreement. Telecom contends that Birch's purchase constituted a "Change of Control," triggering an assignment of the obligation to pay commissions under paragraph 13 of the agreement. Birch denies that its purchase constituted a "Change of Control" because it contends that the transaction did not involve all or substantially all of Navigator's assets. Birch urges that Navigator's retention of a significant volume of other lines (referred to as "coin lines") precludes a finding of a "Change of Control." Birch also contends that because it terminated the agreement for its convenience pursuant to paragraph 11, there was no agreement in existence to assign to Birch in any event.
Early on in the case, Birch moved for dismissal on the ground that a provision in the APA reciting that Birch was not acquiring all or substantially all of Navigator's assets established that the purchase did not, in fact, result in a "Change of Control." Birch argued, essentially, that it did not purchase all or substantially all of the assets of Navigator because it said that it did not do so. In denying the motion, the court stated that
There is thus a dispute of fact concerning the specifics of the asset purchase. Therefore, dismissal will be denied. Birch's APA language stands in juxtaposition with TDM's allegation, taken as true, that there was a "Change of Control," as that term is defined by its agreement with Navigator, when the asset purchase was made. 6/20/09 Mem.Op. and Ord., p. 3.
The parties engaged in discovery to address the threshold issue of whether there was a "Change of Control" as a result of Birch's acquisition. There has been significant debate over the proper scope of discovery on this issue. The magistrate judge ruled that Telecom was entitled to discover information that tended to support its theory of "Change of Control." Birch sought unsuccessfully to limit discovery to "number of lines sold" and "gross revenue" for determining "Change of Control." The magistrate judge found that this interpretation was "far too narrow." The magistrate judge stated that, "In the court's view, the plaintiff is entitled to its evidence and the opportunity to prove profitability as a legitimate measure of "Change of Control" or a transaction with a substantially similar effect. It may or may not ultimately prevail on this theory, but to deny the information as a threshold matter is unwarranted." 4/19/10 Mem. and Ord., p. 4.
After receiving various documents, Telecom moved twice for leave to amend its complaint to allege, among other things, civil conspiracy and tortious ...