Free Brief - District Court of Colorado - Colorado

Case 1:01-cv-00568-LTB-PAC

Document 414

Filed 01/19/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-CV-00568-LTB-PAC CROSS COUNTRY LAND SERVICES, INC., a Texas corporation, Plaintiff, v. PB NETWORK SERVICES, INC., a Delaware corporation, PB TELECOMMUNICATIONS, INC., a Delaware corporation, LEVEL 3 COMMUNICATIONS, LLC, a Delaware limited liability company, KIEWIT NETWORK SERVICES CO., a Delaware corporation, and KIEWIT CONSTRUCTION CO., a Delaware corporation, Defendants, and PB NETWORK SERVICES, INC., a Delaware corporation, LEVEL 3 COMMUNICATIONS, LLC, a Delaware limited liability company, and KIEWIT NETWORK SERVICES CO., a Delaware corporation, Third-Party Plaintiffs, v. JAMES STEVENSON, WILLIAM STEVENSON, ED CROWSTON, and LARRY ORTH, Third-Party Defendants. _____________________________________________________________________________ DEFENDANTS' BRIEF REGARDING ISSUES REMAINING TO BE DETERMINED IN DAMAGES TRIAL _____________________________________________________________________________ Defendants PB Network Services, Inc. ("PBNS"), Level 3 Communications, LLC ("Level 3"), Kiewit Network Services Co. ("KNS") and Kiewit Construction Co. ("KCC"), by counsel, Grimshaw & Harring, P.C., and pursuant to the Court's Findings of Fact, Conclusions of Law and Order of December 30, 2005, submit the following brief regarding the issues remaining to be tried in a damages trial.

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A. 1.

Cross Country's Land Services, Inc.'s Claims. First claim for relief: breach of the Memorandum of Understanding.

Judgment on this claim has been entered in favor of PBNS pursuant to the Court's Order of December 30, 2005. There are no remaining issues to be decided with respect to this claim. 2. Second claim for relief: breach of the PBNS-Cross Country Contract.

This claim was dismissed pursuant to the Court's Order of May 25, 2004 (the Order addressing the consequences of Cross Country's election to seek rescission of the PBNS-Cross Country Contract). There are no remaining issues to be decided with respect to this claim. 3. Third claim for relief: fraud­ false representation.

Judgment on this claim has been entered in favor of PBNS pursuant to the Court's Order of December 30, 2005. There are no remaining issues to be decided with respect to this claim. 4. Fourth claim for relief: fraud­ concealment.

Judgment on this claim has been entered in favor of PBNS pursuant to the Court's Order of December 30, 2005. There are no remaining issues to be decided with respect to this claim. 5. Fifth claim for relief: common law constructive trust.

Judgment on this claim has been entered in favor of Cross Country and against KNS pursuant to the Court's Order of December 30, 2005. KNS has been ordered to hold $358,307.31 in trust for Cross Country. First, it should be noted that the defendants believe that the $358,307.31 dollar amount for the imposition of a constructive trust is in error; rather, $344,810.60 is the correct amount. $344,810.60 is the amount that PBNS offered to tender to the Court in its Motion to Amend and Join Additional Parties filed on March 29, 2002 and subsequently withdrawn. Cross Country, in its proposed findings and conclusions, asked the Court to impose a constructive trust on

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$344,810.60, and, in fact, $344,810.60 is the amount that KNS was refunded by PBNS. Therefore, as an initial matter, the amount of the constructive trust order should be amended. With respect to a determination of the amount of the funds ordered to be held in constructive trust that should actually be paid to Cross Country, defendants submit that the following issues remain to be resolved by the Court: A. The $344,810.60 relates to the disallowance of certain items on several Cross

Country invoices for work performed from October 23, 1998 through April 9, 1999. PBNS initially disallowed approximately $634,000 on these invoices, but after additional documentation was provided by Cross Country and upon further review, PBNS--well after execution of the PBNSCross Country Contract--approved for payment approximately $389,000 of the initially disallowed $634,000. KNS subsequently reviewed the invoices and approved $329,000 of the $389,000. Additionally, PBNS and KNS approved approximately $15,000 in other, current Cross Country invoices, resulting in the $344,810.60 amount that was referenced in the interpleader motion. To the extent the $344,810.60 is comprised of amounts invoiced prior to the execution of the PBNS-Cross Country Contract, that is, under the PBNS-Cross Country Memorandum of Understanding ("MOU"), these amounts are not due and owing to Cross Country because, as the Court has held, the PBNS-Cross Country Contract constitutes an accord and satisfaction of all disputes under the MOU. To the extent the $344,810.60 is comprised of amounts invoiced after the execution of the PBNS-Cross Country Contract, these amounts are not due and owing to Cross Country because, following Cross Country's election to pursue rescission rather than its claim of breach of the PBNS-Cross Country Contract, the Court has dismissed Cross Country's breach of contract claim. Therefore, even though PBNS at one time tendered the $344,810.60 to the Court and asserted no claim to that amount, the Court should conclude that Cross Country has no right to these funds either because of the accord and satisfaction or because Cross Country elected to seek rescission of the contract rather than to pursue a claim under the contract.

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B.

Furthermore, even if Cross Country has a present, enforceable claim to any portion

of the $344,810.60, it must certify that it has paid its subcontractors and service providers as a condition precedent to payment, pursuant to section 12.1 of the PBNS-Cross Country Contract. Therefore, based upon the testimony that was presented at the liability trial that the service providers have not been paid significant amounts, the Court should conclude that Cross Country has no right to any portion of the $344,810. 60 unless and until Cross Country certifies that all of its subcontractors and service providers have been paid in full. 6. Sixth claim for relief: rights in stolen property.

This claim was dismissed pursuant to the Court's Order of May 25, 2004. There are no remaining issues to be decided with respect to this claim. 7. Seventh claim for relief: breach of contract against KNS.

Judgment on this claim has been entered in favor of KNS pursuant to the Court's Order of December 30, 2005. There are no remaining issues to be decided with respect to this claim. 8. Eighth claim for relief: breach of contract against KCC.

Judgment on this claim has been entered in favor of KCC pursuant to the Court's Order of December 30, 2005. There are no remaining issues to be decided with respect to this claim. 9. Ninth claim for relief: intentional interference with contractual relations.

This claim was dismissed pursuant to the Court's Order of May 25, 2004. There are no remaining issues to be decided with respect to this claim. 10. Tenth claim for relief: unjust enrichment.

This claim was dismissed pursuant to the Court's Order of May 25, 2004. There are no remaining issues to be decided with respect to this claim. 11. Eleventh claim for relief: exemplary damages.

This claim no longer exists as there is no tort judgment that would support such a claim. There are no remaining issues to be decided with respect to this claim.

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12.

Twelfth claim for relief: promissory estoppel.

This claim was dismissed pursuant to the Court's Order of December 26, 2003. There are no remaining issues to be decided with respect to this claim.

B.

PBNS' Claims. PBNS has no claims remaining for determination in the damages

trial. However, the Court should now determine that PBNS is a prevailing party and PBNS should be awarded its costs pursuant to Fed. R.Civ.P. 54(d)(1). Furthermore, because it is the prevailing party, PBNS should be awarded its reasonable attorneys fees pursuant to section 21.1 of the PBNSCross Country Contract, which provides: After any unsuccessful negotiation or mediation, should either Party request arbitration or bring suit in court against the other Party in connection with any dispute or matter pertaining to this Agreement, the prevailing Party shall be entitled to recover reasonable attorney's fees in addition to any other relief granted by the arbitrator or court. PBNS' claim for costs and attorneys fees should be submitted by motion and affidavit pursuant to D.C. Colo. LCivR 54. 1 & 54.3.

C.

KNS' Claims. KNS has no claims remaining for determination in the second trial.

However, KNS should be determined to be a prevailing party and should be awarded its costs pursuant to Fed.R.Civ.P. 54(d)(1). KNS' claim for costs should be submitted by motion and

affidavit pursuant to D.C. Colo. LCivR 54. 1.

D.

Level 3's Claims. Level 3 prevailed on its claim for breach of contract against

Cross Country. The amount of this judgment should be the reasonable amount of attorneys fees and costs that Level 3 incurred as a result of the claims of the original plaintiff in this action, Capital Land Services, Inc. In addition, Level 3 should be determined to be a prevailing party and

should be awarded its costs pursuant to Fed.R.Civ.P. 54(d)(1). Level 3' s claim for costs and

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attorneys fees should be submitted by motion and affidavit pursuant to D. C. Colo. LCivR 54.1 & 54.3. CONCLUSION Because of the resolution of the claims as set forth above, the defendants submit that a damages trial is not necessary. The Court should presently find that Cross Country is not entitled to any portion of the amount that KNS has been ordered to hold in constructive trust because Cross Country's only entitlement to such funds is based upon the breach of MOU and breach of contract claims that have been dismissed by the Court. The Court should presently find that PBNS, KNS and Level 3 are the prevailing parties in this litigation, award them their costs pursuant to D. Colo. LCivR 54.1 and award Level 3 and PBNS their appropriate attorneys fees pursuant to D.Colo. LCivR 54. 3.

Dated this 19th day of January, 2006.

Respectfully submitted, GRIMSHAW & HARRING, P. C. s/ Philip M. Quatrochi Richard L. Harring Philip M. Quatrochi 1700 Lincoln Street, Suite 3800 Denver, Colorado 80203 Telephone: (303) 839-3800 Attorneys for Defendants PB Network Services, Inc., Level 3 Communications, LLC, Kiewit Network Services Co. and Kiewit Construction Co.

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CERTIFICATE OF SERVICE I hereby certify that on January 19, 2006, I electronically filed the foregoing DEFENDANTS' BRIEF REGARDING ISSUES REMAINING TO BE DETERMINED IN SECOND TRIAL using the CM/ECF system which will send notification of such filing to the following: Gregory C. Smith Fairfield and Woods, P.C. Wells Fargo Center, Suite 2400 1700 Lincoln Street Denver, CO 80203-4524 Martin Pedata 115 E. Indiana Ave. De Land, FL 32724

s/ Philip M. Quatrochi

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