No Payday for Would-Be Broker of AT&T Merger

     DALLAS (CN) – A private equity firm knew AT&T would not pay it for trying to broker the acquisition of T-Mobile and thus cannot sue now for $30 million, a Texas appeals court ruled.
     General Capital Group Beteiligungsberatung GmbH sued Dallas-based AT&T in 2011, claiming that it had been promised $780 million on a contingent, success-fee basis for brokering the merger.
     The German company claimed to have reached the deal orally during a January 2009 conference call and said the fee represented 2 percent of the $39 billion deal.
     AT&T announced its intent to purchase T-Mobile in March 2011, nearly two years since its last communication with General Capital.
     The German firm sued AT&T soon after, claiming that the telecom had denied that there had been any agreement in place.
     AT&T abandoned the bid in the face of opposition from the Department of Justice and Federal Communications Commission, and it argued that General Capital was owed nothing since the bid failed.
     General Capital then amended its petition to no longer seek the $780 million success fee but $30 million for the reasonable value of services provided. A Dallas County judge then granted AT&T summary judgment on fraud and quantum meruit claims, and the Fifth District of the Texas Court of Appeals affirmed on July 31.
     AT&T did not cause General Capital to suffer any damages under its fraud claim, according to the ruling from a two-judge panel.
     General Capital also failed to show that a contingent interest in a transaction may have market value that is a compensable interest in tort, the panel found.
     “The purchase of an interest in a gas project in exchange for financing differs significantly from a contract in which payment is contingent upon the successful completion of an acquisition,” Justice Kerry Fitzgerald wrote for the court.
     “Even if we characterize GC’s expenditures as an ‘interest’ in the TM deal, GC was only to recovery the value of that interest if the acquisition actually occurred,” Fitzgerald added, abbreviating General Capital and T-Mobile.
     In rejecting the quantum meruit claim, Fitzgerald found that the evidence shows General Capital did not expect to be paid and AT&T did not expect to pay unless the purchase was “actually consummated.”
     “The transaction never occurred,” Fitzgerald wrote. “Thus, there was no expectation of payment and therefore no basis for GC to reover in quantum meruit.”

%d bloggers like this: