Spectrum Gulf Coast, LLC v. City of San Antonio, Acting by and Through City Public Service Board

Supreme Court of Texas
                             ══════════
                              No. 24-0794
                             ══════════

                      Spectrum Gulf Coast, LLC,
                                Petitioner,

                                     v.
             City of San Antonio, acting by and through
                      City Public Service Board,
                               Respondent
   ═══════════════════════════════════════
               On Petition for Review from the
     Court of Appeals for the Thirteenth District of Texas
   ═══════════════════════════════════════

                      Argued February 11, 2026

      JUSTICE YOUNG delivered the opinion of the Court.

      Justice Bland and Justice Sullivan did not participate in the decision.

      The legislature has imposed various statutory limitations on how
much public utilities may charge telecommunications providers that wish to
attach equipment to a utility’s poles. The sole question before us is whether
the parties’ contract allows them to enforce these statutory requirements.
      We hold that it does. The parties promised each other that, “at all
times,” they would “observe and comply with . . . all laws, ordinances, and
regulations which in any manner affect the rights and obligations of the
parties hereto under this [a]greement” and that the agreement itself was
made “subject to” those “laws, ordinances, and regulations.” This express
language confirms that the parties anticipated legal changes that would
affect their rights—a common and foreseeable circumstance for highly
regulated public utilities. The contract’s express language also confirms
that relevant legal developments would be brought within and made
enforceable under the contract.
      Because the court of appeals reached a contrary conclusion, we
reverse its judgment and remand the case to the trial court.
                                    I
      CPS Energy, a public utility owned by the City of San Antonio, owns
poles that hold lines to distribute electric power to customers. In the
normal course of business, other entities—including telephone and cable
companies—attach equipment to CPS’s pre-existing power poles to
provide services in the same area to the same customers. This case’s
beginnings lie in 1984, when Spectrum’s predecessor in interest executed
an agreement that allowed it to attach equipment to CPS’s poles and thus
deliver telecommunications services.
      The agreement initially required an annual payment of $3.75 for
every pole used in this way. An agreed-upon escalator clause authorized
potential annual rate increases. The agreement further provided that the
parties
      shall at all times observe and comply with, and the provisions
      of the [a]greement are subject to, all laws, ordinances, and
      regulations which in any manner affect the rights and
      obligations of the parties hereto under this [a]greement, so
      long as such laws, ordinances or regulations remain in effect.




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The agreement also allowed either party to terminate the agreement at
any time with six months’ notice. In January 1987, CPS and AT&T
entered into a similar agreement, although without an escalator clause.
      Over the years, Spectrum continued to pay an increasing pole-
attachment rate, while AT&T continued to pay the circa-1984 rate of $3.75
per pole. In 2007, CPS began invoicing AT&T and Spectrum for what it
viewed as the maximum allowable rate. AT&T kept paying $3.75 per pole;
Spectrum paid its invoiced rate.
      Spectrum sued CPS in late 2008 seeking damages and declaratory
relief based on CPS’s alleged breach of contract and violations of pricing
requirements in the Public Utility Regulatory Act (“PURA”). In particular,
PURA’s 2005 amendments prohibit municipalities and municipally owned
utilities from discriminating for or against telecommunications providers,
including as to terms and pole-attachment rates. See Tex. Util. Code
§ 54.204(b)–(c).
      CPS filed a plea in abatement asserting that the Public Utility
Commission had primary jurisdiction. The trial court sustained the plea
and abated the action pending a further order. In January 2009, CPS filed
a petition that asked the commission to (1) order both AT&T and Spectrum
to pay CPS allegedly overdue and future pole-attachment fees and (2) find
that the method used by CPS was reasonable and consistent with PURA.
      The commission ultimately ordered CPS to comply with § 54.204
going forward. The trial court affirmed this decision. The Third Court of
Appeals reversed, holding that because CPS had invoiced Spectrum and
AT&T at the same rate, its ineffective collection efforts did not violate
§ 54.204. CPS Energy v. PUC, 537 S.W.3d 157, 200 (Tex. App.—Austin




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2017), rev’d in part sub nom. Time Warner Cable Tex. LLC v. CPS Energy,
593 S.W.3d 291 (Tex. 2019). We reversed that decision, holding that the
commission reasonably found a violation based on CPS’s lack of a “serious
or meaningful effort” to collect the higher rates from AT&T while collecting
far more from Spectrum. Time Warner, 593 S.W.3d at 296. We did not
address whether CPS’s conduct violated § 54.204(c), which cabins pole-
attachment rates to a federal maximum and requires municipally owned
utilities to charge “a single, uniform” pole-attachment rate.
      On remand, Spectrum amended its petition to allege that CPS’s
discriminatory rates violated § 54.204(b) and (c). This failure to comply
with existing law, it alleged, breached the parties’ agreement and unjustly
enriched CPS. CPS amended its counterclaims and moved for partial
summary judgment, alleging that Spectrum breached the agreement by
failing to pay the invoiced rate between 2009 and 2016. The trial court
granted CPS’s motion for partial summary judgment and dismissed
Spectrum’s statutory and unjust-enrichment claims, but it granted
summary judgment for Spectrum on its breach-of-contract claim. That
court then granted CPS’s request for a permissive appeal on the following
question, while reserving damages for later proceedings: “Whether CPS
Energy breached the parties’ agreement by unlawfully imposing
discriminatory rates on Spectrum.”
      For docket-equalization purposes, we transferred the appeal to the
Thirteenth Court of Appeals, which reversed the trial court’s judgment and
held that the 1984 agreement did not “renew[]” each year and thus did not
incorporate new statutes into its terms. 727 S.W.3d 206, 213 (Tex. App.—
Corpus Christi–Edinburg 2024). Because it held that § 54.204(b) and (c)




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were not brought within the parties’ contractual rights or obligations, the
court of appeals rejected Spectrum’s breach-of-contract claim. Id.
                                    II
      When this case was last before us, CPS asserted that PURA did not
even apply to the agreement. It had not raised that argument in the lower
courts, though, so we declined to address it. See Time Warner, 593 S.W.3d
at 296 n.28. On remand, CPS pressed the point and has preserved it for
our review. We hold that PURA applies to this agreement between a
municipally owned utility and a regulated telecommunications company.
      First, § 51.003(4) provides that, “[e]xcept as otherwise expressly
provided by this title, this title does not apply to . . . community antenna
television services.” (Emphasis added.) Second, § 54.204(b) commands
without caveat that “a municipality or municipally owned utility may not
discriminate in favor of or against a certificated telecommunications
provider” for pole-attachment rates or terms. (Emphasis added.) Third,
§ 54.204(c) mandates that entities like CPS charge uniform rates and that a
      municipality or a municipally owned utility may not charge
      any entity, regardless of the nature of the services provided by
      that entity, a pole attachment rate or underground conduit
      rate that exceeds the fee the municipality or municipally
      owned utility would be permitted to charge under rules
      adopted by the Federal Communications Commission under
      47 U.S.C. Section 224(e) . . . .
(Emphasis added.)
      AT&T is a certified telecommunications utility and certificated
telecommunications provider, and Spectrum is a franchised cable
operator—and not a certificated telecommunications provider. See Tex.
Util. Code §§ 17.002(3), 51.002(10). Here, a violation of § 54.204(b)—i.e.,
positive discrimination by CPS for AT&T—necessarily affects Spectrum’s



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position in the competitive marketplace, thus causing provable economic
harm.
        Beyond that, the “all laws” clause of the parties’ agreement goes
further. It reaches “all laws, ordinances, and regulations which in any
manner affect the rights and obligations of the parties.” (Emphasis added.)
Positive discrimination by the monopoly (CPS) in a closed market with high
barriers to entry and few market participants would unavoidably affect the
rates and terms Spectrum would pay for pole-attachments. That is part of
what makes a monopoly a monopoly.
        In addition, Spectrum long ago abandoned providing solely
“community antenna television services” with its allotted space on the
poles. CPS knew this, which is why it charged more per year. That is a
key part of this suit: CPS alleged years ago that it was charging a proper
rate for the new services offered, under the telecommunications rate. See
Tex. Util. Code § 54.204(c) (citing 47 U.S.C. § 224(e)). And under the
exceptions set forth in § 51.003(1)–(5), this sort of service would be covered
under PURA. Accordingly, § 54.204(b) covers the alleged violative conduct.
        Likewise, § 54.204(c)’s plain text also functions as an exception to
the exception found in § 51.003(4). Subsection (c) expressly states that a
municipally owned utility “may not charge any entity, regardless of the
nature of the services provided by that entity, a pole attachment rate . . .
that exceeds [the federal rate].” (Emphasis added.) Even if Spectrum
provided only community antenna television service, thus remaining a
technological dinosaur, § 54.204(c) would still apply a federal ceiling to
CPS’s charged rate.




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                                    III
      We next determine whether the agreement is a contract that
incorporates post-1984 legal changes as to the rights and obligations of
both parties. The parties heavily debate whether the initial agreement
remains intact or whether it “renews” annually, thus creating distinct
contracts that embrace new legal obligations that arise with each renewal.
We need not address that dispute, however, because even assuming that
CPS is correct that there has been only one agreement between the parties,
we hold that its “all laws” clause incorporates post-1984 legal changes that
affect the parties’ rights and obligations.
      The agreement’s context helps explain its contents.            CPS is
undisputedly a natural monopoly. Utilities, like insurance companies, are
heavily regulated with an eye toward consumer welfare and policing
monopolies. The legislature has identified the need for oversight because
“the normal forces of competition . . . do not operate” in that context. Id.
§ 11.002(b). Thus, “[p]ublic agencies regulate utility rates, operations, and
services as a substitute for competition.” Id. The history of utilities, with
the attendant development of utility law, reflects the rise of a cohesive
regulatory framework to foster healthy market competition and disallow
monopoly rent-collection. See, e.g., Shelley Welton et al., Networks,
Platforms, and Utilities: Law and Policy 321–27, 652–54 (2022).
      The role of contracts involving utilities, therefore, is somewhat
different than in purely private transactions. It is doubtful that a
monopolistic utility could use contracts to evade utilities laws imposed by
the legislature. But as the parties’ agreement here reflects, contracts can
usefully and sensibly facilitate long-term relationships by accounting for—




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not seeking to evade—future regulatory changes.             Pole-attachment
agreements are premised on an anticipated relationship enduring for
decades. One way to help such a relationship endure without discord is
to bring new legal obligations within the contract rather than require its
termination or continual renegotiation whenever such obligations arise.
       This context helps explain the parties’ mutual commitment “at all
times [to] observe and comply with . . . all laws . . . which in any manner
affect the rights and obligations of the parties . . . so long as such
laws . . . remain in effect.” This broad provision reflects that the parties
in 1984 anticipated future legal changes. Of course they did: they were
as aware as anyone of the intensely regulated nature of utilities. The
parties had the right to terminate the agreement with six months’ notice,
but otherwise, the contract prevented the need for constant renegotiation
by embracing the shared obligation of complying with the law. “All laws”
and “all times” implicate whatever laws apply at any point during the
contract’s life, not just those in force at its inception. “[S]o long as” those
laws “remain in effect” can only mean that previously operative laws that
no longer have force are to be disregarded, while whatever law takes their
place is to be followed.
       The parties all seem to recognize that this contract was intended to
endure. They knew that its subject matter was volatile and dynamic. The
text to which they agreed confirms that they were sensibly anticipating
the inevitable winds of legal change. Nothing else in the agreement’s
text—including other provisions that assign specific obligations to one
party or the other or remove doubt about whether particular topics fall
within the parties’ general promise to obey all laws at all times—comes




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close to displacing that forward-looking commitment.
      Thus, the agreement envisions the applicability of subsequent
PURA amendments, including Utilities Code § 54.204(b) and (c). This
Court has already held that § 54.204(b) prohibits discriminatory charging
and collecting of rates. Time Warner, 593 S.W.3d at 295. The record
demonstrates that CPS charged Spectrum and AT&T the same rate but
collected the higher rate only from Spectrum. As we concluded in Time
Warner, this constitutes discrimination under subsection (b). Spectrum
also alleges a violation of subsection (c), which bars charging above the
incorporated federal ceiling. Spectrum therefore may proceed with its
breach-of-contract claim based on CPS’s alleged violation of its obligation
to comply with the relevant laws in effect. To that end, we reverse the
judgment of the court of appeals and remand the case to the trial court for
further proceedings.



                                        Evan A. Young
                                        Justice

OPINION DELIVERED: April 10, 2026




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