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RCN CORPORATION v. NEWTOWN TOWNSHIP

February 11, 2004.

RCN CORPORATION and RCN TELECOM SERVICES OF PHILADELPHIA, INC., Plaintiffs,
v.
NEWTOWN TOWNSHIP, BUCKS COUNTY, COMMONWEALTH OF PENNSYLVANIA, Defendant



The opinion of the court was delivered by: JAMES KELLY, Senior District Judge

MEMORANDUM AND ORDER

Presently before the Court is a Motion for Summary Judgment filed by Defendant Newtown Township (the "Township"), located in Bucks County, Pennsylvania requesting that judgment as a matter of law be entered in its favor, dismissing the Complaint by which Plaintiffs RCN Corporation and RCN Telecom Services of Philadelphia, Inc. (collectively, "RCN") seek relief under the Cable Communications Policy Act of 1984 (the "Act"), 47 U.S.C. § 545 (2003). In its Complaint, RCN, a cable television operator, seeks, inter alia, modification of the "Non-Exclusive Cable Television Franchise Agreement" (the "Franchise Agreement") it entered into with the Township, the franchising authority, claiming that its provisions are commercially impracticable within the purview of the Act. The Township contends that although the Act authorizes some modifications of franchise agreements, RCN's proposed modifications are beyond the scope of the Act's authority, and RCN effectively seeks to terminate and replace the current Franchise Agreement. For the following Page 2 reasons, the Township's Motion for Summary Judgment is GRANTED.

I. BACKGROUND

  On December 16, 1998, the Township and RCN entered into the Franchise Agreement which granted RCN a 15-year non-exclusive franchise right to construct and maintain a cable television system for the Township.

  In August 2001, RCN met with Township officials to verbally request modification of the Franchise Agreement, and on October 16, 2001, RCN submitted its written request to the Township, which included a draft franchise agreement to that effect. (RCN's Compl. Ex. A.) This draft proposes several modifications, including the creation of a regional franchising entity comprised of multiple townships and a larger geographic scope wherein RCN would install and operate a cable television system, in contrast to the purely local system agreed upon in the original Franchise Agreement.*fn1

  The Township rejected RCN's proposed service area modification, and, in turn, served RCN with a notice of default under the Franchise Agreement. Reacting to RCN's perceived Page 3 default, the Township also drew down on RCN's $250,000.00 letter of credit and made a claim against a $100,000.00 performance bond RCN posted pursuant to the Franchise Agreement terms. In a letter to the Township dated December 20, 2001, RCN objected to the notice of default and to the Township's allegation that it was in non-compliance with the Franchise Agreement. (Compl. Ex. E.)

  On February 28, 2002, the Township's Board of Supervisors (the "Board") held a public hearing to determine whether RCN breached the Franchise Agreement. On that same day, before the hearing convened, RCN hand-delivered a written request to the Township seeking the same modifications of the Franchise Agreement as set forth in RCN's October 16, 2001 proposal, and restoration of the $250,000.00 letter of credit drawn down by the Township in November 2001. (Compl. Ex. F.) The Board did not address RCN's modification request during that hearing.

  On March 14, 2002, the Board issued an opinion stating that RCN committed anticipatory material breach of the Franchise Agreement and entered judgment against RCN for $2,192,000.00 in liquidated damages. (Compl. Ex. G.) On April 12, 2002, RCN appealed the Board's decision to the Bucks County Court of Common Pleas where RCN avers it is currently pending.

  Since RCN's request for modification was not addressed at the February 28, 2002 hearing, the Board held a public hearing Page 4 addressing that request on August 14, 2002. On August 28, 2002, the Board denied RCN's petition for modification, prompting RCN to file the instant action for declaratory and injunctive relief pursuant to Section 545 of the Act.*fn2

  RCN contends that the Township's refusal to modify the Franchise Agreement violates Section 545, which permits modification of franchise "facilities or equipment" in the event the agreement provisions become commercially impracticable for the cable operator. See 47 U.S.C. § 545(a)(1)(A). In its Complaint, RCN petitions this Court for a trial de novo, to modify the Franchise Agreement's commercially impracticable provisions, vacate the $2,192,000.00 judgment rendered by the Board, and order the Township to restore RCN's $250,000.00 letter of credit. Further, RCN requests an order staying the Township's claim against the $100,000.00 performance bond and the action in the Bucks County Court of Common Pleas.

  In its instant Motion for Summary Judgment, the Township Page 5 contends that there is no genuine issue of material fact in dispute as RCN's modification request is neither a proper modification request nor an allowable modification under the Act.

  II. STANDARD OF REVIEW

  Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, this Court is required, in resolving a motion for summary judgment under Rule 56, to determine whether "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In making this determination, the evidence of the nonmoving party is to be believed, and the district court must draw all reasonable inferences in the nonmoving party's favor. Id. at 255. Furthermore, while the movant bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact, Rule 56(c) requires the entry of summary judgment "after adequate time for discovery and upon motion, against a party who fails to make Page 6 a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Chelates Corp. v. Citrate, 477 U.S. 317, 322-23 (1986).

  ...


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