This adversarial proceeding arose from the Chapter 11 bankruptcy of Paniolo Cable Company, LLC, which owned undersea telecommunications infrastructure connecting five Hawaiian islands. The dispute was between the bankruptcy trustee, David C. Farmer, and Clearcom, Inc. regarding Clearcom's contractual obligations to provide access to this infrastructure under a Master Services Agreement (MSA) and an Emergency Service Order (ESO). The bankruptcy court had previously granted partial summary judgment to the trustee, ruling that Clearcom breached its contract and was liable for unjust enrichment. The Bankruptcy Appellate Panel affirmed that decision, and Clearcom appealed to the Ninth Circuit.
The Ninth Circuit reviewed the case de novo, viewing the evidence in the light most favorable to the non-moving party. On the breach of contract claim, the court found that the MSA and ESO were intended to remain in effect until terminated by written notice, despite a clause stating they would terminate after thirty-six months. Evidence showed payments were made under these agreements as late as February 2022, shifting the burden to Clearcom to prove the agreements were no longer in effect. Clearcom failed to meet this burden because its declarations were conclusory and self-serving, and it offered no evidence that the agreements concerned assets other than the Paniolo infrastructure. The court rejected Clearcom's argument that the agreements automatically terminated, noting that reading did not square with the contract language. Regarding the claim of unjust enrichment, the court acknowledged that Clearcom retained payments for leasing access to the infrastructure. Clearcom's argument that some payments were unrelated to the infrastructure went only to the amount of restitution, not the existence of the enrichment itself. Finally, the court addressed Clearcom's motion for reconsideration, finding no abuse of discretion because Clearcom did not explain why it could not have used formal discovery processes, like subpoenas, to secure testimony from a Charter employee.
The decision affirms Clearcom's liability for damages resulting from its breach of contract and unjust enrichment. However, the court remanded the specific calculation of restitution, allowing Clearcom to introduce evidence at a later stage to challenge the amount of payments it must return. The ruling clarifies that conclusory affidavits are insufficient to defeat summary judgment when the non-moving party has established a prima facie case of contract validity and breach.