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BellSouth Telecommunications LLC v. Calls Plus Inc.

United States District Court, W.D. Louisiana, Lafayette Division

February 5, 2018

BellSouth Telecommunication LLC
Calls Plus Inc.



         Before the Court is a Motion To Dismiss Complaint In Intervention Under FRCP 12(b)(1) and 12(B)(6), filed by Plaintiff BellSouth Telecommunications, LLC dba AT&T Louisiana (“AT&T”) [Rec. Doc. 51], a Memorandum In Opposition filed by Intervenor Plaintiffs, Barbara Lamont and Ludwig Gelobter (collectively, “Intervenors”) [Rec. Doc. 59] and AT&T's Reply thereto [Rec. Doc. 63]. For the reasons that follow, the Court recommends that the motion be granted.

         I. Background

         BellSouth Telecommunications, LLC dba AT&T Louisiana (“AT&T”), a Georgia limited liability company with its principal place of business in Atlanta, Georgia, is a common carrier under the Communications Act of 1934, 47 U.S.C. § 201 et seq (“Communications Act”) (“AT&T”). R. 59. New Orleans Transport Inc. dba Calls Plus (“Calls Plus”), a Louisiana corporation with its principal place of business in Lafayette, Louisiana, provides telephone answering services and telephone-based support and services to various customers around the United States. R. 1. Calls Plus is owned by Intervenors.

         AT&T's Complaint, R.1, states the following. On or about July 23, 2010, AT&T and Calls Plus entered into a contract (“PRI Agreement”) for, among other things, certain Primary Rate ISDN[1] services (the “PRI Services”). In connection with the PRI Services, AT&T billed Calls Plus for the PRI Services under the “PRI Account.” R. 1, Exh. I. On or about June 26, 2014, the PRI Agreement expired by its terms, and, thereafter, the PRI Services were billed at the rates set forth by the AT&T Tariffs applicable to the PRI Services provided and the location thereof (Louisiana).[2]

         From approximately November 26, 2013, and continuing through January 26, 2015, Calls Plus continued to make partial payments on the PRI Account for the PRI Services. Beginning on or about February 2015, and at all times thereafter, Calls Plus failed to pay the amounts due and owing under the PRI Account whether incurred under the PRI Agreement or the Tariffs. As of the date of the instant motion, Calls Plus owes AT&T a total of $147, 977.34 under the PRI Account, including late fees. AT&T demanded payment for the PRI Services provided to Calls Plus under the PRI Account, to no avail. AT&T also alleges that Calls Plus is responsible for the costs, including attorneys' fees, as specifically provided in the PRI Agreement.[3]

         AT&T further contends that on or about August 26, 2009, AT&T and Calls Plus entered into a written agreement for certain telecommunication services entitled Master Agreement (the “Master Agreement”). The Master Agreement provides that “[T]his Master Agreement will apply to all services and equipment Customer buys from AT&T, now and in the future, that are provided under Pricing Schedules attached to or referencing this Master Agreement....” Id., ¶ 13, Exh. 2.

         Under the terms of the Master Agreement, Calls Plus agreed to satisfy a “Minimum Annual Revenue Commitment” (“MARC”). At the end of each 12 consecutive month period, if Calls Plus failed to satisfy the MARC for that 12-month period, it was invoiced a shortfall charge in an amount equal to the difference between the MARC and the total of the applicable charges incurred during the 12-month period. In connection with the Master Agreement, Calls Plus agreed to a pricing schedule contract for certain Business Network Services (“ABN Agreement”) Id., ¶ 15, Exh.3. The ABN Agreement provides a MARC for Calls Plus in the amount of $20, 000.00 for each year of the three year term of the ABN Agreement.

         AT&T alleges Calls Plus failed to meet the MARC for 2012, the last year of the MARC Commitment term. Therefore, AT&T assessed a shortfall charge to Calls Plus in the amount of $20, 000.00. Calls Plus failed to pay the shortfall assessment despite AT&T's demand for payment which, at the time of filing the Complaint, was a total amount of $20, 311.02. AT&T also alleges Calls Plus is responsible for the debt as the Master Agreement provides, “Customer shall reimburse AT&T for all costs associated with collecting delinquent or dishonored payments, including reasonable attorney's fees.” Id., ¶ 22.

         On or about November 22, 2016, AT&T filed suit against Calls Plus for (1) Breach of Contract, (2) Breach of Tariff, (3) Open Book Account, (4) Account Stated and (5) Quantum Meruit for each of the two Agreements-the PRI Agreement and the ABN Account. R. 1. On or about, March 7, 2017, Call Plus filed its Answer to the Complaint, which included a counterclaim against AT&T for breach of contract and unjust and unreasonable charges and practices by a common carrier in violation of 45 U.S.C. §201(b). R. 9. On August 16, 2017, Barbara Lamont and Ludwig Gelobter filed a Motion to Intervene. The Motion to Intervene was granted by this Court on October 30, 2017, under FRCP 24. R. 43, 44.

         II. Contentions of the Parties

         In its motion, AT&T initially asserts that the Intervenors do not have Article III standing to bring their claims in this Court based on the alleged injury sustained or wrong done to the corporation, Calls Plus, in which they are the shareholders and officers. AT&T also asserts, presumably in the alternative, that the Intervenors claims should be dismissed because: (1) Intervenors may not recover damages from AT&T for mental anguish caused by another's injury or suffering; (2) Intervenors cannot recover presumed damages for emotional distress or mental anguish arising from alleged violations under the Telecommunications Act; (3) the Telecommunications Act does not provide a statutory right to intervene and no jurisprudence exists to show otherwise; (4) Intervenors do not have legally protected interests in the Agreements at issue in this action; (5) Intervenors' claims for mental anguish/emotional distress depart from those of the main action; and (6) Intervenors' claims are barred by “The Economic Loss Doctrine.”

         In opposition, Intervenors argue they have requisite standing to assert claims for damages because their claims are the same as the injuries claimed by the corporation, Calls Plus. Intervenors further argue they have stated a cause of action under the Communications Act and their damages are not “presumed” but rather “are compensable.” They contend that “the law-of-the-case doctrine” prohibits AT&T's arguments regarding intervention under Rule 24. Finally, they argue that the Economic Loss Doctrine does not bar their claims under the Communications Act.

         The Court will first consider AT&T's 12(b)(1) motion for lack of standing. Thereafter, the Court will consider ST&T's 12(b)(6) motion.

         III. Law And Analysis

         A. Motion To Dismiss For Lack of Standing Under Rule 12(b)(1)

         1. Legal Standard

         Under Federal Rule of Civil Procedure 12(b)(1), a claim is “properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the claim.” In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012). In order to “prevent a court without jurisdiction from prematurely dismissing a case with prejudice, ” a court should consider a Rule 12(b)(1) motion for lack of subject-matter jurisdiction before addressing any motions that concern the merits of a case. Id. at 286-87. A motion to dismiss under Rule 12(b)(1) is analyzed under the same standard as a motion to dismiss under Rule 12(b)(6). Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992).

         “To establish standing, a plaintiff must prove that (1) he has sustained an ‘injury in fact' that is both (a) ‘concrete and particularized' and (b) ‘actual or imminent, not conjectural or hypothetical, ' (2) there is ‘a causal connection between the injury and the conduct complained of, ' and (3) a favorable decision is likely to redress the injury.” Planned Parenthood of Gulf Coast, Inc. v. Gee, 862 F.3d 445, 454 (5th Cir. 2017). Thus, unlike a Rule 12(b)(6) motion to dismiss for failure to state a claim, the district court is entitled to consider disputed facts as well as undisputed facts in the record. See Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir.1986). Uncontroverted allegations of the complaint, however, must be accepted as true. Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir.2001).

         “The injury-in-fact element requires that a plaintiff show that he or she ‘has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct and the injury or threat of injury must be both real and immediate, not conjectural or hypothetical.' ” Roark & Hardee LP v. City of Austin, 522 F.3d 533, 542 (5th Cir. 2008)). “An allegation of future injury may suffice if the threatened injury is certainly impending or there is a substantial risk that the harm will occur.” Planned Parenthood, 862 F.3d at 454.

         2. Whether or Not Intervenors Have Standing

         Intervenors are the owners and chief managers of CallsPlus who contend they have suffered personal damages in the form of “mental anguish” and “severe stress” caused by the “unjust, unfair, and unlawful” charges and practices imposed by AT&T. R. 23. The Constitution requires that prospective Intervenors have Article III standing to litigate their claims in federal court. See, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs (TOC), 528 U.S. 167, 180 (2000)(stating that courts have an obligation to assure that plaintiff has Article III standing at the outset of the litigation). In general, corporations exist separately and distinctly from their respective shareholders. New Castle Siding Co. v. Wolfson, 97 A.D.2d 501 (1983). “The law is clear that only a corporation and not its shareholders, not even a sole shareholder, have standing to complain of an injury sustained by, or a wrong done to, the corporation.” United States v. Palmer, 578 F.2d 144, 145-146 (5th Cir.1978) (citing Mendenhall v. Fleming Co., 504 F.2d 879, 881 (5th Cir.1974) (Holding that plaintiffs who created corporation had no standing to recover personally for damages because the damages sought were direct damage to the corporate worth and “the right of recovery was the entity's right alone.”). This rule is premised on the theory that shareholders accept the risk of loss from third party wrongdoing in proportion to the amount of shares he or she holds, and likewise should benefit when the corporate entity wins an action. Cunningham v. Kartridg Pak Co., 332 N.W.2d 881, 885 (Iowa, 1983).

         “There exists, however, a well recognized exception to this general rule. Where the act complained of creates not only a cause of action in favor of the corporation but also creates a cause of action in favor of the stockholder, as an individual, for violation of a duty owing directly to him, the stockholder may bring suit as an individual.” Empire Life Ins. Co. of America v. Valdak Corp., 468 F.2d 330, 335 (5th Cir. 1972); see also North v. Wick, 104 Ohio App. 332, 334(1957). Courts have interpreted this exception to mean either that the injury arose out of a special duty owed directly to the shareholders, see, e.g., Empire Life Insurance, 468 F.2d at 335, or the injury was separate and distinct from that suffered by the other shareholders, see, ...

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