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Feud on D.C. Metro Cell Service Work Advanced

WASHINGTON (CN) - Several charges in a lawsuit against four top cellphone carriers were dismissed by a federal judge, who wrote that the subcontractor suing them did not prove it was misled.

Telecommunications firm Intelect sued Verizon Wireless, Sprint, AT&T, and T-Mobile, seeking $1 million in unpaid labor and equipment costs. The money stems from an ongoing project to modernize Washington, D.C., Metro's underground rail tunnels.

In 2008, D.C. planned to upgrade its cellphone infrastructure so that cellphones could be used within the city's Metro underground rail tunnels. The project called for building seamless wireless coverage for 47 underground stations and more than 50 miles of tunnels.

The four cellphone carriers took on the project, worth upwards of $65 million, in 2009, and subcontracted it to Santa Ana, Calif.-based Powerwave Technologies. Powerwave then hired Intelect to complete part of the project worth more than $5 million, according to court records.

Powerwave had been struggling financially, however, and filed for Chapter 11 bankruptcy in January 2013.

Saying it was never paid what it was owed, Intelect claimed the cellphone carriers knew the Metro project wasn't fully bonded, which was a requirement under policies of the Washington Metropolitan Area Transit Authority (WMATA). Powerwave secured a bond for only $5 million, well under the full anticipated budget, Intelect said.

Intelect sued for more than $1 million in Washington, but set its sights past Powerwave to focus on the four cellphone giants, alleging they knew the project wasn't fully bonded and failed to warn Intelect and other subcontractors working on the project.

In response to the lawsuit, the carriers filed motions to dismiss and to also change venue to bankruptcy court in Delaware, where all four companies are incorporated.

On Feb. 5, U.S. District Judge Rudolph Contreras denied the motion to change venue but granted the motion to dismissal Intelect's charges of negligent misrepresentation and constructive fraud.

Under D.C. law, a plaintiff needs to show that the defendant made a false statement or omitted material facts they had a duty to disclose, upon which the plaintiff might have relied.

Contreras, however, found that Intelect did not allege any particular disclosure and failed to pass that test. The judge also noted that Intelect was able to discover the amount of the payment bond Powerwave obtained without that information being directly provided.

"All parties are sophisticated business entities and there is no indication that Intelect either entrusted its affairs to [the cellphone carriers] or was particularly susceptible to [their] influence," the judge wrote.

Three of Intelect's charges, which include negligence and third-party contract claims, remain intact. Contreras also dismissed Intelect's promissory estoppel claim, but allowed it 14 days to amend its complaint.

Cellphone coverage remains spotty in Metro stations. The project was given greater attention after a Metro disaster on the Red Line in 2009, but it has not met the 2012 deadline. Some estimates suggest the project might now take until 2019 to be completed.

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