Columbia Communications Corp. v. EchoStar Satellite Corp.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
COLUMBIA COMMUNICATIONS 
CORPORATION, a Delaware
Corporation,
Plaintiff-Appellee,
v.  No. 99-1761
ECHOSTAR SATELLITE CORPORATION, a
Colorado Corporation,
Defendant-Appellant.

COLUMBIA COMMUNICATIONS 
CORPORATION, a Delaware
Corporation,
Plaintiff-Appellant,
v.  No. 99-1835
ECHOSTAR SATELLITE CORPORATION, a
Colorado Corporation,
Defendant-Appellee.

COLUMBIA COMMUNICATIONS 
CORPORATION, a Delaware
Corporation,
Plaintiff-Appellee,
v.  No. 00-1626
ECHOSTAR SATELLITE CORPORATION, a
Colorado Corporation,
Defendant-Appellant.

2 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
Appeals from the United States District Court
for the District of Maryland, at Greenbelt.
Deborah K. Chasanow, District Judge.
(CA-96-2047-DKC)
Argued: April 3, 2000
Decided: January 25, 2001
Before WIDENER, Circuit Judge, Claude M. HILTON, Chief
United States District Judge for the Eastern District of Virginia,
sitting by designation, and David A. FABER, United States District
Judge for the Southern District of West Virginia, sitting by
designation.
Affirmed by unpublished opinion. Chief Judge Hilton wrote the opin-
ion, in which Judge Widener and Judge Faber joined.
COUNSEL
ARGUED: Bradshaw Rost, TENENBAUM & SAAS, P.C.,
Bethesda, Maryland, for Appellant. Mark Douglas Colley, HOL-
LAND & KNIGHT, L.L.P., Washington, D.C., for Appellee. ON
BRIEF: T. Wade Welch, T. WADE WELCH & ASSOCIATES,
Houston, Texas, for Appellant. Melinda C. Burrows, Jennifer A.
Short, HOLLAND & KNIGHT, L.L.P., Washington, D.C., for Appel-
lee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 3
OPINION
HILTON, Chief District Judge:
Both EchoStar Satellite Corporation ("EchoStar") (Docket No. 99-
1761) and Columbia Communications Corporation ("Columbia")
(Docket No. 99-1835) appeal various rulings of the district court
which found EchoStar liable for breach of contract after a jury trial.
Oral argument was heard by the Court on April 3, 2000.* After the
appeal was filed and briefing began, EchoStar filed a motion in the
district court pursuant to Fed. R. Civ. P. 60(b)(3) requesting a new
trial based on alleged discovery misconduct by Columbia. The district
court denied the motion on April 5, 2000, finding that the motion was
untimely. EchoStar separately appealed that ruling (Docket No. 00-
1626). On November 14, 2000, an order was entered consolidating
the appeals and ruling that further oral argument was not necessary.
The issues in the third appeal are virtually identical to the first two
and involve the same set of facts; thus, consolidation was warranted.
Columbia has also filed a motion for sanctions against EchoStar for
filing what it characterizes as a frivolous appeal.
I.
The dispute in this case arose over a contract for the use of a satel-
lite transponder to transmit television programs. EchoStar refused to
pay Columbia for the use of Columbia’s satellite technology claiming
that the satellite it provided was not up to the standards in the con-
tract.
The equipment involved was located on a satellite owned and oper-
ated by the United States through the National Aeronautics and Space
Administration ("NASA"). The satellite is part of the Tracking and
Data Relay Satellite System ("TDRSS") used in the space shuttle pro-
gram. NASA awarded Columbia exclusive rights to operate and mar-
ket the C-Band transponders, or commercial transmission modules,
*Because of an error in the calculation of time for oral argument,
counsel for Columbia has filed a letter supplementing his oral argument.
EchoStar’s counsel filed a response. We have considered those submis-
sions from counsel in lieu of having additional oral argument.
4 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
located aboard the TDRSS satellites. Columbia leases these transpon-
ders to third parties, sharing revenues with NASA.
The TDRSS satellite at issue here, the "TDRS-5," is positioned
over the Pacific Ocean. It retransmits signals it receives to an area
encompassing eastern Asia, the western United States, and the Pacific
Ocean. For the last several years, Columbia has marketed and leased
the transponder capacity aboard the TDRS-5 satellite to companies
such as EchoStar.
EchoStar is in the business of distributing television programming
through satellite transmissions. Columbia and EchoStar executed a
Transponder Lease Agreement ("TLA") on December 28, 1995,
whereby EchoStar leased the transponder for a 22-month term com-
mencing March 1, 1996, in exchange for monthly payments of
$66,666. The TLA permitted Columbia to terminate the lease upon
EchoStar’s non-payment. The TLA required Columbia to allow Echo-
Star to test the satellite prior to the commencement of the lease. Echo-
Star could terminate the lease prior to commencement if the test
results were below the TLA performance standards. The TLA had a
provision which required EchoStar to give Columbia notice and an
opportunity to cure material performance problems. EchoStar could
terminate the contract with five days written notice in the event of a
"service failure" as measured by the minimum performance standards
in the contract, provided Columbia was put on notice of the problem.
EchoStar could also terminate in the event of a "material breach" pro-
vided it gave Columbia written notice and allowed Columbia thirty
days to cure any problem. EchoStar neither invoked the termination
provision nor notified Columbia of a "service failure" or "material
breach."
As the second lease payment came due, EchoStar informed Colum-
bia that the performance standards were "problematic." EchoStar
thereafter refused to make any lease payments. Columbia then noti-
fied EchoStar that if past due charges were not paid by June 24, 1996,
Columbia would terminate the lease. EchoStar neither paid nor
responded, so Columbia terminated the lease.
Columbia filed this breach of contract action on July 2, 1996,
against EchoStar in the United States District Court for the District of
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 5
Maryland, Southern Division. EchoStar filed a motion to dismiss,
which the district court denied. On April 16, 1997, EchoStar filed a
motion for judgment on the pleadings, seeking to strike Columbia’s
claim for attorneys’ fees. EchoStar thereafter filed its amended
answer and counterclaims on April 25, 1997. EchoStar’s answer con-
tended that the transponder leased by EchoStar from Columbia failed
to perform in accordance with the minimum performance standards
promised under the contract. EchoStar also counterclaimed that
Columbia breached the contract and committed negligent and/or
intentional misrepresentation.
In July 1997, EchoStar and Columbia filed cross motions for sum-
mary judgment. On January 29, 1998, the district court granted partial
summary judgment for both parties. The district court struck Colum-
bia’s claim for attorneys’ fees and narrowed the remaining liability
issues to one fact-based question: whether Columbia was ready, will-
ing and able to perform its part of the contract.
In April 1998, at the direction of the district court, the parties sub-
mitted additional memoranda of law on the issue of liquidated dam-
ages sought by Columbia. The district court resolved that issue on
May 11, 1998, by denying liquidated damages to Columbia. The dis-
trict court thereafter also denied EchoStar’s pre-trial Daubert motion,
which sought to exclude the testimony of Columbia’s expert witness,
Terry Berman.
The district court impaneled a jury on September 8, 1998. The trial
lasted approximately four days. During the trial, EchoStar requested
that the court dismiss Columbia’s case or, in the alternative, impose
sanctions due to two instances of alleged discovery misconduct. In
addition, EchoStar moved the district court to reopen the presentation
of evidence to admit documentary evidence previously undiscovered.
The court denied all motions. The jury rendered its verdict in favor
of Columbia on September 15, 1998.
EchoStar filed a motion for a new trial, arguing primarily that the
verdict was not based on all the evidence, alleging discovery impro-
prieties by Columbia. The motion was denied and EchoStar filed its
appeal.
6 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
II.
EchoStar appeals four rulings of the district court: (1) denying
Echostar’s motion for a new trial for alleged discovery misconduct;
(2) permitting the testimony of Columbia’s expert witness; (3) deny-
ing Echostar’s renewed motion for judgment as a matter of law; and
(4) failing to instruct the jury about contract ambiguities. We find no
error in any of these rulings.
A.
EchoStar’s first argument on appeal is that Columbia committed
discovery misconduct and that the district court should have granted
a new trial as a result. The parties disagree about the procedural pos-
ture of EchoStar’s motion for a new trial below. Although EchoStar’s
motion before the district court states that it was brought "pursuant to
. . . Fed. R. Civ. P. 59," it nevertheless argues that we should review
the district court’s ruling as if it were a motion brought pursuant to
Rule 60(b)(3), which permits relief from a final judgment because of
"misconduct" by an opposing party. Under either Rule 59 or Rule
60(b)(3), the district court’s decision is reviewed for "abuse of discre-
tion." See Atlas Food Systems and Services, Inc. v. Crane National
Vendors, Inc., 99 F.3d 587, 594 (4th Cir. 1996) (Rule 59 motion);
Schultz v. Butcher, 24 F.3d 626 (4th Cir. 1994) (Rule 60(b)(3)
motion). A Rule 59 motion will be granted if "(1) the verdict is
against the clear weight of the evidence, or (2) is based upon evidence
which is false, or (3) will result in a miscarriage of justice, even
though there may be substantial evidence which would prevent the
direction of a verdict." Atlas Food Systems, 99 F.3d at 594. In con-
trast, a Rule 60(b)(3) motion will be granted if: (1) the moving party
has a meritorious defense; (2) the misconduct is proved by clear and
convincing evidence; and (3) the misconduct prevented the moving
party from fully presenting its case. See Schultz, 24 F.3d at 630.
EchoStar’s argument that its Rule 59 motion should really be
treated as a Rule 60(b)(3) motion is without merit. When it filed its
motion with the district court, it specifically stated that it was moving
for a new trial pursuant to Rule 59. It also cited Rule 59 as the test
to be applied by the district court which is as follows: "the Court
should set aside a verdict if it finds that it is against the clear weight
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 7
of the evidence, is based on false evidence, or will result in a miscar-
riage of justice." Id. (citing Zervitz v. Hollywood Pictures, 995 F.
Supp. 596, 598 (D. Md. 1996)). Essentially its argument is that the
district court erred in applying the very rule it asked the court to
apply. This cannot be error. A party cannot complain when a court
entertains a motion it suggests. If EchoStar wanted the district court
to consider relief under Rule 60(b)(3) then it should have made such
a motion.
EchoStar relies on a decision of the Ninth Circuit, Jones v.
Aero/Chem Corp., 921 F.2d 875, 878 (9th Cir. 1990), holding that a
Rule 59 motion for a new trial based on discovery misconduct should
be treated substantively like a Rule 60(b)(3) motion. In Jones, the
court held, "The test to be applied when discovery misconduct is
alleged in a Rule 59 motion must be borrowed from cases interpreting
Rule 60(b)(3), just as the test applied to a Rule 59 motion alleging
newly discovered evidence is borrowed from Rule 60(b)(2)." Jones,
921 F.2d at 878. We do not find this authority to be persuasive. There
exists an analytical link between Rule 59 and Rule 60(b)(2) because
of the plain language of Rule 60(b) itself:
(b) On motion and upon such terms as are just, the court
may relieve a party or a party’s legal representative
from a final judgment, order, or proceeding for the fol-
lowing reasons: . . .
(2) newly discovered evidence which by due dil-
igence could not have been discovered in
time to move for a new trial under Rule
59(b);
(3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation, or
other misconduct of an adverse party.
Fed. R. Civ. P. 60(b) (emphasis added). Rule 60(b)(2) specifically
mentions Rule 59 while Rule 60(b)(3) does not. The rule clearly envi-
sions the same substantive test for a "newly discovered evidence"
motion under Rule 60(b)(2) as for a motion brought under Rule 59 on
the same ground. The difference lies only in the timing: a Rule 59
8 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
motion must be brought "no later than 10 days after entry of judg-
ment," while a Rule 60(b)(2) motion must be brought within a "rea-
sonable time" but no more than one year after the judgment, order, or
proceeding was entered or taken, provided of course that due dili-
gence can be shown.
While this appeal was pending, EchoStar filed a Rule 60(b)(3)
motion before the district court making much the same arguments as
in its briefings here. The district court denied the motion because it
was untimely. EchoStar appealed that ruling to this Court. Judgment
was entered by the district court on September 15, 1998. EchoStar’s
Rule 60 motion was not filed until December 20, 1999—some fifteen
months after judgment was entered for Columbia. We conclude on
that basis that EchoStar’s motion was not timely filed and is thus
barred by Rule 60(b). Rule 60(b) is clear: "The motion shall be made
within a reasonable time . . . [and] not more than one year after the
judgment, order, or proceeding was entered or taken" (emphasis
added). Even if the motion was filed within the one-year time period,
we agree with the district court that EchoStar’s delay in filing the
motion was unreasonable. The issues in this case were briefed and
argued at length before and during trial. EchoStar’s Rule 60(b)(3)
motion was therefore merely cumulative.
In sum, EchoStar has two theories in which it tries to bootstrap its
Rule 60(b)(3) arguments before this Court: (1) it claims that its Rule
59 motion (clearly labeled as such) was in actuality a disguised Rule
60(b)(3) motion; and (2) its appeal from the denial of its December,
1999, motion pursuant to Rule 60(b)(3). Having rejected both theo-
ries, we turn to the merits of EchoStar’s Rule 59 motion.
A Rule 59 motion should be granted when: "(1) the verdict is
against the clear weight of the evidence, or (2) is based upon evidence
which is false, or (3) will result in a miscarriage of justice, even
though there may be substantial evidence which would prevent the
direction of a verdict." Atlas Food Systems, 99 F.3d at 594. EchoStar
argues that Columbia’s failure to turn over certain computer databases
during discovery meets this very high standard.
At trial, the issue for the jury was whether Columbia was ready,
willing and able to perform its part of the contract. EchoStar alleged
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 9
that Columbia’s transponder was not, in laymen’s terms, producing a
strong enough signal to be of use. During discovery, EchoStar
requested all relevant "link budget databases"—databases that tracked
the transponder’s signal strength at different locations on the Earth’s
surface. Columbia turned over to EchoStar at least two link budget
databases that indicated the downlink signal strength in Manila of the
TDRS-5 satellite. The first link budget indicated that the downlink
strength of a signal transmitted from Denver to Manila via the TDRS-
5 satellite was 22.2 decibel watts ("dBW"). The second link budget
indicated that the downlink strength of a signal transmitted from
Cheyenne to Manila via the TDRS-5 satellite was 20.0 dBW. Colum-
bia asserted that this second number was a typographical error and
that the strength of the TDRS-5 signal in Manila never dipped below
22.2 dBW.
Columbia produced no more databases. Columbia claims that it
discovered in August 1998, shortly before trial, additional databases.
Any other versions however, were not preserved for trial and were
destroyed when Columbia networked its computers sometime in 1997
or 1998.
EchoStar claimed that it was prejudiced at trial because of the non-
production of the additional Columbia databases in the following two
ways. First, the reference to the possible existence of other databases
corroborated Columbia’s evidence that the 22.2 dBW figure was cor-
rect and that the 20.0 dBW figure was a mistake. Second, EchoStar
claimed that it was prejudiced because it never had access to the other
versions which may have reflected a value of 20.0 dBW or lower.
With that evidence before it, the trial court ruled that the various
databases fell within the scope of EchoStar’s document requests but
that Columbia’s failure to produce those databases did not justify a
judgment for EchoStar or a new trial. The district court found no evi-
dence that Columbia had intentionally destroyed other versions of the
database and was not convinced that Columbia had acted in bad faith.
The district court also found that the prejudice caused by Columbia’s
non-compliance did not warrant judgment for EchoStar or a new trial.
EchoStar speculates that there might have been additional data-
bases that would have indicated additional occasions in which the sat-
10 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
ellite’s signal strength was lower than normal. Such low readings—
even if they did exist—would have been only marginally helpful to
EchoStar. As the district court noted, EchoStar already had one docu-
ment that listed the signal strength at 20.0 dBW, a figure that was
allegedly below normal. Additional documents would only have been
cumulative of the argument that the signal strength was low in the
past.
EchoStar also contends that the district court erred in not ordering
a new trial because Columbia failed to disclose city tables—
documents which list several major cities, grouped together by region,
with details about those locations’ signal strengths—posted on its
Internet website. In response to interrogatories, Columbia disclosed
the existence of the website in June 1998 and a 26-page printout of
the website. The city tables were not included in the 26-page printout.
EchoStar claimed that it learned through its own investigation that the
city tables contained a 20 dBW value for Manila and a 19 dBW value
for Honolulu. The district court found that the exclusion of the city
tables from the printout was "strategic" but not extreme enough to
justify the sanctions which EchoStar sought.
The district court in its discretion found that a new trial was not
warranted because EchoStar could have discovered the city tables ear-
lier, and the website city tables would not have been admissible so
they would not have changed the outcome of the trial. Further, the
city tables were irrelevant because the TDRS-5 satellite’s perfor-
mance after March 1, 1996 was not at issue. The critical issue at trial
was whether by March 1, 1996, the TDRS-5 satellite could provide
the signal strength bargained for in the TLA.
B.
EchoStar also contends that the district court erred in allowing
Columbia’s expert witness, Terry Berman, to testify about the
strength of the TDRS-5 signal in Manila as of March 1, 1996. A dis-
trict court’s decision to admit the testimony of an expert witness is
reviewed for abuse of discretion. See General Electric Co. v. Joiner,
522 U.S. 136 (1997). The admissibility of expert testimony is gov-
erned by Federal Rule of Evidence 702 which provides: "If scientific,
technical, or other specialized knowledge will assist the trier of fact
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 11
to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion or otherwise."
Under Rule 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc.,
expert testimony is admissible if it: (1) concerns scientific, technical,
or other specialized knowledge; (2) that knowledge will assist the trier
of fact to understand or resolve a fact at issue; and (3) the witness is
qualified as an expert based on knowledge, skill, experience, training,
or education. See Fed. R. Evid. 702; Daubert v. Merrell Dow Phar-
maceuticals, Inc., 509 U.S. 579 (1993); Hardin v. Ski Venture, 50
F.3d 1291 (4th Cir. 1995).
Mr. Berman’s testimony clearly involved specialized knowledge
(satellite design and testing) that was beyond the lay ken of the jury.
Further, the district court properly found that his specialized knowl-
edge would assist the jury because his opinion testimony spoke to the
strength of satellite signal strength in general and of the TDRS-5, spe-
cifically. The district court found in its discretion that Mr. Berman
was "quite qualified" to be an expert witness after considering his
studies in electrical engineering and computer science and his twenty
years of work experience in the satellite industry. He testified that he
had measured satellite signal strength dozens of times. On these facts,
we concur with the district court that Mr. Berman qualified as an
expert witness.
EchoStar’s arguments essentially boil down to the following: It dis-
agrees with Mr. Berman’s opinions. It is entitled to do so. It was also
entitled to the opportunity to challenge the witness’ opinions on cross-
examination, through the introduction of an expert of its own if it so
chose, and during closing argument. EchoStar’s arguments were
rejected by the jury and provide no basis on which this Court can find
an abuse of discretion in the qualification of Mr. Berman as an expert
witness or the admission of his testimony.
C.
EchoStar also appeals the denial of its renewed motion for judg-
ment as a matter of law. A motion for judgment as a matter of law
is granted only when, without weighing the credibility of witnesses
or the evidence, there can be only one reasonable conclusion as to the
12 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
proper judgment. See Princess Cruises, Inc. v. General Electric Co.,
143 F.3d 828, 831 (4th Cir. 1998). We review the district court’s
denial of EchoStar’s motion de novo, see In re Wildewood Litigation,
52 F.3d 499, 502 (4th Cir. 1995), and consider the evidence in the
light most favorable to the nonmovant to determine whether the evi-
dence presented at trial was sufficient to allow a reasonable jury to
render a verdict in the nonmovant’s favor. See Princess Cruises, 143
F.3d at 831. EchoStar’s argument, essentially, is that the district court
erred in admitting the evidence Columbia offered to prove that the
satellite had a sufficient signal strength and, hence, Columbia had no
proof that it was ready, willing, and able to perform under the con-
tract. Specifically, EchoStar argues that the district court improperly
admitted the testimony of Columbia’s expert witness, Terry Berman
and improperly admitted evidence that Columbia had received no cus-
tomer complaints during the relevant time period.
While a motion for judgment as a matter of law is reviewed de
novo, a district court’s rulings on the admissibility of certain evidence
are reviewed for abuse of discretion. See Ridge v. Cessna Aircraft
Co., 117 F.3d 126, 129 (4th Cir. 1997). As was discussed supra, the
district court did not abuse its discretion in admitting the expert testi-
mony of Mr. Berman.
EchoStar argues that the district court should have excluded evi-
dence regarding the absence of complaints by other users of the
TDRS-5 satellite because it was hearsay and more prejudicial than
probative. Testimony is inadmissible hearsay when it is a statement
by an out-of-court declarant that is offered for the truth of the matter
asserted which does not fit into one of the innumerable exemptions
or exceptions to the rule. See Fed. R. Evid. 801(c). The issue here is
whether a witness’ testimony about the absence of customer com-
plaints contains a "statement" for purposes of Rule 801. Rule 801(a)
provides that a "statement" is either: (1) an oral or written assertion;
or (2) nonverbal conduct of a person that is intended to be an asser-
tion. A company’s failure to make a complaint is clearly not an oral
or written assertion. It cannot fall under the second prong because its
silence was not intended to communicate anything at all. In fact, it is
not even affirmative "conduct" in the sense that the companies did not
do anything. It is the non-existence of their conduct that is offered
into evidence. The evidence is thus not a "statement" and not hearsay.
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 13
The district court also properly found that the evidence was not
overly prejudicial. The district court noted that evidence of the
absence of prior accidents or complaints is fairly common in cases
where one of the parties has alleged that a product was defective. See,
e.g., Espeaignnette v. Gene Tierney Co., 43 F.3d 1, 9 (1st Cir. 1994).
Further, the district court found that Columbia laid the proper founda-
tion by offering testimony that other customers such as MCI, Sprint,
Globecom and Associated Press Television also leased capacity on
the TDRS-5 satellite.
D.
EchoStar also takes issue with the district court’s refusal to instruct
the jury that all ambiguities in the TLA should have been resolved
against Columbia since Columbia was the principal drafter of the
agreement. We review challenges to jury instructions for abuse of dis-
cretion. See Nelson v. Green Ford, Inc., 788 F.2d 205 (4th Cir. 1986).
The district court did not abuse its discretion when it denied Echo-
Star’s request. The requested jury instruction is given only when one
of the parties did not participate in the drafting of the contract or one
of the parties is unsophisticated. See Rouse Co. v. Federal Ins. Co.,
991 F. Supp. 460, 466 (D. Md. 1998); St. Paul Fire and Marine Ins.
Co. v. House, 554 A.2d 404, 410 (Md. 1989). Here, EchoStar is nei-
ther. The evidence before the district court was that both parties had
equal knowledge and sophistication about the subject involved and
both negotiated the contract. Unlike many insurance contracts or other
one-sided agreements, both parties in this case went into contract
negotiations as equals. Accordingly, EchoStar was entitled to no spe-
cial instruction.
III.
Columbia raises two issues on cross-appeal: (1) the district court’s
refusal to apply Article 2A of the Maryland Uniform Commercial
Code ("MUCC"); and (2) the method of interest calculation. Colum-
bia has also moved for sanctions against EchoStar.
A.
The district court held that Article 2A of the MUCC—which gov-
erns leases—did not apply to this case. We review the district court’s
14 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
interpretation of the parties’ contract de novo. See Bailey v. Blue
Cross & Blue Shield of Virginia, 67 F.3d 53, 56 (4th Cir. 1995).
Article 2A "applies to any transaction, regardless of form, that
creates a lease." Md. Code Ann., Com. Law I § 2A-102. The question
before the Court is whether the parties’ contract was a lease. Colum-
bia argues that the TLA is a lease. The district court, however, found
that the TLA was like a license and was not a lease of the transponder
itself.
Columbia argues that the transponder it offered to EchoStar is
movable, identifiable, able to be touched, held and contained, and is
therefore a good which can be leased. However, the transponder
which was to be used by EchoStar was neither identifiable nor mov-
able at the time of contracting because Columbia reserved the right
to move EchoStar between transponders. The contract itself refers to
"services" which would indicate that EchoStar was not contracting for
the right to use a particular transponder, but the right to use a certain
amount of transponder bandwith, the specifics of which were variable
under the contract. Also, unlike a "good" under ordinary circum-
stances which would actually exist in the physical sense, the transpon-
der alone was not what the parties bargained for. EchoStar needed a
certain bandwidth to use, not the actual, physical satellite. According
to the TLA, Columbia could change which transponder and frequency
on the satellite was available for EchoStar’s use. Therefore, the con-
tract provisions demonstrate that EchoStar did not obtain the right to
exclusively occupy a particular transponder, which would be the cen-
tral feature of a lease for transponder use. Although the contract is
labeled as a "lease," it is the substance of the contract that matters, not
its label.
Once the district court determined that the MUCC does not apply,
it properly denied Columbia’s motion for summary judgment on that
ground. The district court also properly held that the liquidated dam-
ages clause did not apply once it was determined that the MUCC was
inapplicable.
B.
Columbia’s last challenge on cross-appeal relates to the calculation
of interest for the late payments. The TLA contained a clause which
COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE 15
permitted Columbia to charge 1.5% per month for late payments but
only if the charges are undisputed. The district court correctly held
that the charges in question were in dispute—hence this litigation—
and therefore were not subject to the late payment clause of the TLA.
Columbia also argues for compound instead of simple interest.
Maryland, not federal, common law applies. Under Maryland law the
rate of prejudgment interest is simple, not compound. See Md. Code
Ann., Com. Law I § 12-102; see also United Cable Television of Bal-
timore Ltd. Partnership v. Burch, 732 A.2d 887, 892 (Md. 1999) (rate
of prejudgment interest applied to breach of contract damages under
Maryland law is 6% simple).
C.
Columbia has also filed a motion, pursuant to Fed. R. App. P. 38,
for sanctions against EchoStar. Rule 38 provides, "If a court of
appeals determines that an appeal is frivolous, it may, after a sepa-
rately filed motion or notice from the court and reasonable opportu-
nity to respond, award just damages and single or double costs to the
appellee." This Court has previously imposed sanctions in cases
where a party appeals for the sole purpose of gaining a tactical advan-
tage in other litigation, see, e.g., Dyntel Corp. v. Ebner, 120 F.3d 488(4th Cir. 1997), where the appeal or litigation is really a recast of pre-
vious litigation, see, e.g., In re Lane, 991 F.2d 105 (4th Cir. 1993),
where an attorney misleads the Court regarding the record, see, e.g.,
Holcomb v. Colony Bay Coal Co., 852 F.2d 792 (4th Cir. 1988), or
where a prisoner files a lawsuit or appeal for the sole purpose of tying
up the work of the courts rather than litigating a meritorious claim
under the laws of the United States, see, e.g., Vestal v. Clinton, 106
F.3d 553 (4th Cir. 1997) (sanctions imposed when sole basis for pris-
oner’s appeal was that the President of the United States and Gover-
nor of North Carolina had broken the "laws of God"); In re Vincent,
105 F.3d 943 (4th Cir. 1997) (sanctions imposed for a prisoner’s fil-
ing of a repetitive petition for a writ of mandamus); Brock v. Ange-
lone, 105 F.3d 952 (4th Cir. 1997) (sanctions imposed for a prisoner’s
filing of a lawsuit under 42 U.S.C. § 1983 over the ingredients in pan-
cake syrup). Although we have rejected EchoStar’s arguments, its
appeal does not meet the very demanding standard of frivolousness.
Accordingly, we deny Columbia’s motion for sanctions.
16 COLUMBIA COMMUNICATIONS v. ECHOSTAR SATELLITE
IV.
For the foregoing reasons, the judgment of the district court is
affirmed.
AFFIRMED