IN THE UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF FLORIDA 

CHT HOLDINGS, LLC, 

Plaintiff, 

v. 

TELEFONICA INTERNATIONAL 

WHOLESALE SERVICES AMERICA, S.A. 

and 

TELXIUS CABLE REPUBLICA 

DOMINICANA, S.A.S., 

Defendants. 

Civil Case No. __________________ 

COMPLAINT 

Plaintiff CHT Holdings, LLC (“CHT”), by and through undersigned counsel, as and for 

its complaint against Telefonica International Wholesale Services America, S.A. and Telxius 

Cable Republica Dominicana, S.A.S. (together, “Telxius”), states as follows: 

NATURE OF ACTION 

1. This is a complaint for damages arising from the parties’ efforts to develop 

submarine cable and other international telecommunications facilities between and among 

locations in the continental United States, Puerto Rico, the Dominican Republic and Haiti. CHT 

is the purchaser and Telxius is the seller of certain telecommunications assets that have not been 

delivered as agreed. By this action, CHT seeks damages for the loss of use and loss of value in 

the assets it agreed to purchase, and for losses it suffered as a result of misrepresentations made 

to it by Telxius. 

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PARTIES 

2. Plaintiff CHT Holdings LLC (“CHT”) is a limited liability company organized 

under the laws of Delaware with its principal place of business in 1820 N Corporate Lakes Blvd, 

Ste. 101, Weston, Florida, 33326. CHT has two members. One member is an individual who is 

a resident of Florida. The other member is a Delaware corporation with its principal place of 

business in North Carolina. CHT is in the business of delivering international 

telecommunication voice services to customers around the globe. As relevant here, CHT 

provides services to customers in the Puerto Rico and Dominican Republic markets, directly and 

through its affiliates. 

3. Defendant Telefonica International Wholesale Services America (“TIWS”) is a 

corporation organized under the laws of Uruguay with its principal place of business in Av. Luis 

A. de Herrera 1248, piso 4, Montevideo, Uruguay. TIWS is the infrastructure affiliate of 

Telefónica, S.A. one of the largest telecommunications providers in the world by number of 

customers. Trading under the name “Telxius Cable America S.A.,” TIWS maintains more than 

thirty thousand sites across Europe and the Americas, and operates a network of 87,000 km of 

high-capacity fiber optic submarine cable. Among other assets, TIWS operates the “Brusa” and 

“SAm-1” submarine fiber optic cable networks. 

4. Defendant Telxius Cable República Dominicana, S.A.S. (“Telxius-Dominicana”) 

is a corporation organized under the laws of the Dominican Republic with its principal place of 

business at Av. Ronda de la Comunicación, s/n, Districto C, Edificio Norte 2, 1* Planta 28050 

Madrid, España. Trading under the name “Telxius,” Telxius-Dominicana is the Dominican 

affiliate of TIWS, through which it contracts for services in the Dominican Republic. 

Defendants TIWS and Telxius-Dominicana are collectively referred to herein as “Telxius.” 

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JURISDICTION AND VENUE 

5. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332 because the 

parties are citizens of different states and the amount in controversy exceeds $75,000. 

6. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) because Telxius 

transacts business in this district through its affiliate Telxius Cable USA, Inc., a Florida 

corporation, and because CHT and Telxius have agreed to submit to the exclusive jurisdiction of 

the Florida state courts and the United States District Court for the Southern District of Florida 

for the resolution of any disputes arising under their agreement. 

BACKGROUND 

A. Latin America Telecommunications Infrastructure 

7. One of Telxius’s central lines of business is building and selling capacity on a 

number of submarine telecommunications cable networks that it operates with strategic landing 

points across the Atlantic and Pacific coasts of Latin America and select locations in the United 

States and Europe. Telxius’s customers are local telecommunications and data providers with 

facilities in locations accessible to a Telxius network connection point. By interconnecting with 

these local networks, Telxius is able to provide capacity for that carrier’s traffic to flow over a 

Telxius backbone for delivery to its destination. 

8. Two of these Telxius networks are called “SAm-1” and “Brusa,” respectively, 

with interconnection points in the United States and specified locations in Latin America, as 

indicated in the illustration below, drawn from Telxius’s web site. 

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9. SAm-1 is a pre-existing network serving points throughout South and Central 

America with US connection points in San Juan, Puerto Rico and Boca Raton, Florida (the name 

“SAm-1” is an abbreviation of “South America-1”). The primary SAm-1 network has been in 

service for well over a decade, and for all times relevant to this dispute. Brusa is a newer, highspeed cable network designed to provide a direct connection between Brazil and the United 

States (the name “BRUSA” is a compound abbreviation of “BRazil” and “USA”)—specifically, 

to a domestic landing in Virginia. Brusa went into service in 2018. Other networks operated by 

Telxius are not at issue here. 

10. Both SAm-1 and Brusa are subsea fiber optic cable systems designed to carry 

telecommunications and data traffic between interconnection points. SAm-1 comprises two fiber 

pairs of optical cable, and Brusa comprises eight fiber pairs of optical cable, and the Brusa cable 

is a newer generation, lower latency cable than employed in SAm-1. Telxius advertises the 

capacity of SAm-1 at 20 Tbps (terabits per second), and Brusa at 160 Tbps. 

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B. History of the SAm-1 and Brusa network expansion 

11. For a number of years prior to the events of this dispute, the SAm-1 network 

existed but did not include any fiber extensions to the Dominican Republic. The Brusa network 

did not yet exist. 

12. Not later than early 2016, Telxius entered into discussions with non-party 

Broadband Access Ventures Group (“BAVG”), a limited liability company based in Puerto Rico 

for the purpose of funding a planned expansion of SAm-1 to Punta Cana, Dominican Republic. 

The goal of that venture was to provide a direct connection from the Dominican Republic to 

Puerto Rico, where that new extension could interconnect with the newer Brusa cable that 

Telxius was planning to build for high-speed and high-capacity transmission to the United States. 

The primary value of this venture was that the ability to directly connect the Dominican Republic 

to the continental United States through Brusa was unique among existing telecommunications 

network facilities. With a dearth of providers in the market, the counterparty—at the time, 

BAVG—would have a competitive advantage on high-speed high-capacity telecommunications 

and data service to and from the Dominican Republic until such time as competing carriers could 

build and market their own parallel networks. Upon information and belief, certain 

representatives of Telxius had undisclosed financial interests in BAVG. 

13. Telxius and BAVG executed an agreement dated March 30, 2016 to implement 

the SAm-1 extension to the Dominican Republic. Under that agreement, BAVG agreed to pay 

one million dollars within thirty days followed by another six million three months later, and 

additional scheduled payments ultimately totaling sixty million dollars. Telxius estimated 

delivery of the Brusa and Sam-1 cable at 3Q 2018. 

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14. BAVG paid the first million dollars under its agreement with Telxius, but did not 

make the second installment of six million dollars. Telxius thereafter declared BAVG in default 

and in 2017 Telxius approached CHT in 2017 to discuss essentially the same project. Telxius 

wanted CHT to purchase (and fund) the proposed expansion of SAm-1 from San Juan to Punta 

Cana (the “Dominican extension”), and a portion of the Brusa spectrum being extended from 

Virginia Beach to San Juan (the “PR extension”). CHT was unaware that Telxius had previously 

contracted with BAVG and previously declared BAVG in default under their agreement. 

15. BAVG subsequently reorganized into what is today known as Blackburn 

Networks (trading under the name “Blackburn Technologies”), a wholesale telecommunications 

carrier based in Guaynabo, Puerto Rico (hereinafter, “Blackburn”). 

C. The Telxius-CHT Venture 

16. In August 2017, Telxius and CHT signed a Memorandum of Understanding 

reflecting their agreement to collaborate on the development of the PR extension and the 

Dominican extension. In general terms, CHT agreed to purchase and fund construction of the 

SAm-1 extension, and purchase a portion of the Brusa spectrum accessible in San Juan. 

17. During the period that Telxius was negotiating with CHT, Telxius was 

simultaneously negotiating with Blackburn to sell the same assets. 

18. By Service Agreement dated December 14, 2017 (“Master Agreement”), Telxius 

and CHT formalized their agreement. A copy of the Master Agreement is attached hereto as 

Exhibit A. 

19. In relevant part, the Master Agreement provides that Telxius would sell, and CHT 

would purchase the following for a term of not less than eighteen (18) years beginning upon the 

later delivery of: 

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a. SAm-1: the entire two-pair fiber optic cable between Punta Cana (DR) and San 

Juan (PR); and 

b. Brusa: spectrum equivalent to a half pair of fiber and, if necessary, any additional 

spectrum to reach a minimum of 9.5 Tbps. 

20. CHT’s contemplated ownership interest in the respective assets is an indefeasible 

right of use (“IRU”), which is a form of long-term exclusive right of use (similar to a lease) but 

in which the entirety of the encumbered asset is beneficially owned—during the IRU term—by 

the purchaser. 

21. While both assets were purchased as IRUs, the nature of the assets differed 

between the two networks. 

22. With respect to SAm-1, CHT purchased the entirety of the two fiber pairs. The 

Dominican extension was designed exclusively for the purpose of supporting direct highcapacity telecommunications services between the Dominican Republic and continental United 

States, through Puerto Rico. 

23. With respect to Brusa, CHT did not purchase any single identifiable fiber or fiber 

pair; rather, CHT purchased roughly 6.25% (1/16

th) of the spectrum achieved from the eight fiber 

pairs that make up the network. In the language of the Master Agreement, Telxius sold CHT 

“the spectrum equivalent to half fiber pair of BRUSA and, if necessary, any additional spectrum 

to reach a minimum of 9.5 Tbps in BRUSA . . . .” 

24. By selling “spectrum” rather than any particular level of “capacity,” the parties 

were agreeing that CHT was acquiring an asset, rather than merely using an asset that remained 

owned by Telxius. As the parties clarified on the eve of the Master Agreement, “[I]f Telxius 

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sells capacity in DR and Haiti it will buy it from CHT until capacity is exhausted during the life 

of the agreement.” Telxius was explicit that “CHT is the owner of the assets.” 

25. For all intents and purposes, CHT was purchasing its interests (either the full 

interest in the Dominican extension or the spectrum portion of the PR extension) for the life of 

the respective networks. The stated term of both IRUs was eighteen years beginning upon the 

later activation of Brusa and SAm-1, but “the IRU Service Term will be extended for the Useful 

Economic Life of the cable’s Useful Economic Life if it exceed[s] 18 years.” At the time of the 

parties’ MOU, Telxius estimated that both networks would be up and running within twelve 

months—i.e., by August 2018. By the time of the Master Agreement, the parties agreed to 

soften the precision of that deliverable to “3Q 2018,” (i.e., sometime in July, August, or 

September 2018). 

26. Because construction of the SAm-1 network was not going to be operational until 

the third quarter of 2018, CHT demanded and Telxius agreed to provide interim capacity of 30 

Gbps (0.03 Tbps) until the activation date of SAm-1. 

27. In exchange for timely delivery by Telxius of both fully-functional assets and the 

interim capacity specified above, CHT agreed to pay six million dollars ($6,000,000) within the 

first thirty days following execution of the Master Agreement, and another twenty-five million 

dollars ($25,000,000) on specified dates after activation of the later of the two networks and 

delivery of service to the purchaser. CHT also agreed to pay certain operations and maintenance 

(“O&M”) expenses on an ongoing basis after the two networks were both in service. 

28. The market value of the assets being sold by Telxius declined between 2015 and 

the end of 2017, when it signed the Master Agreement with CHT. While CHT agreed to pay a 

total of $31 million for the purchase, BAVG had been willing to pay $60 million the year prior. 

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That price differential is the reason that Telxius continued to negotiate with BAVG even after 

contracting with CHT. CHT was not aware of those continued negotiations at the time. 

29. Under the Master Agreement, Telxius was solely responsible for providing the 

building—called a cable landing station or “CLS”—as well as HVAC, power, physical security, 

and any necessary rights-of-way, occupancy permits, and other regulatory approvals. Telxius 

also was responsible for all testing of Brusa and SAm-1 to assure full functionality prior to 

delivery. 

30. CHT paid all amounts due, but Telxius has not delivered any of the promised 

IRUs—in Brusa or SAm-1, including any of the interim capacity. 

D. Post-Contracting Activity 

31. The parties executed the Master Agreement in December 2017, but Telxius failed 

to deliver the annexes, appendices, exhibits, and schedules that the parties would need for future 

performance. 

32. The parties contracted on the basis of Telxius’s projection that it would complete 

construction—using the money CHT advanced—within six to nine months, by the third quarter 

of 2018. 

33. On that basis, CHT began financing activities premised on obtaining the 

purchased collateral on the scheduled timetable. Similarly, CHT began marketing 

telecommunications capacity to the Dominican Republic and Puerto Rico to other 

telecommunications carriers and large telecommunications customers. 

34. Yet as 2018 progressed, Telxius began to delay, and was never able to provide 

CHT, its financing partners, or any CHT prospective customers, with reasonable assurances that 

the purchased assets would be delivered as promised. 

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35. In September 2018, CHT requested that Telxius provide a customer order form 

(“COF”) so that CHT could accommodate Telxius’s procedure for demanding activation of 

network capacity. Because CHT knew that it would not be able to timely deliver the network, it 

delayed providing CHT a COF in September 2018, or at any time through the remainder of the 

year or throughout 2019. Telxius later provided a COF reflecting 200 Gb of capacity in January 

2020, with a date that did not correspond to CHT’s original request. 

36. In reliance on Telxius’s assurances that it would be able to deliver the first 200 

Gb of ordered capacity, CHT acquired an IP circuit with non-party Cogent Communications 

(“Cogent”), a Virginia-based optical fiber provider, to connect to Telxius’s network for the 

purpose of transmitting the anticipated data. Because Telxius has still never activated the 

network (including the first $200 Gb of data capacity), CHT has incurred losses in excess of 

$400,000 from the cost of obtaining from Cogent services that Telxius knew it would not be able 

to activate and deliver to the Dominican Republic. 

37. Upon learning of the Telxius/CHT agreement, Blackburn reached an agreement 

with Telxius by which Blackburn purchased an interest in the Brusa PR extension, which may 

have purported to include certain exclusive rights in derogation of CHT’s rights. 

38. While CHT was awaiting Telxius’s work in 2018, the parties began taking steps 

to register for the appropriate licenses with the Federal Communications Commission (“FCC”). 

In response to CHT’s efforts to register the Dominican extension with the FCC, Telxius asserted 

that the process would take too long to register in CHT’s name (because CHT was a new 

registrant) and that it would be easier to register under Telxius’s existing licenses with CHT 

identified as a “partner” assigned to manage capacity in the Dominican Republic. Telxius 

asserted that registering under CHT’s name would prevent it from delivering the cable on time 

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due to the lengthy FCC process. In reliance on Telxius’s assertion that the licensing would not 

alter CHT’s ownership of the purchased assets, CHT halted its own registration efforts with the 

FCC. 

39. Notwithstanding Telxius’s ability to register in its own name, the third quarter of 

2018 came and went without Telxius providing the two networks. 

40. Cognizant that it would miss the 3Q18 projected delivery and that it still had not 

provided even the 30 Gbps of interim capacity, Telxius proposed an amendment to the Master 

Agreement that would modify the timetables and financial obligations of the parties. 

41. Telxius calculated at that time (about three months after the 180-day deadline by 

which Telxius was required to provide interim service), that the 30 Gbps of interim capacity not 

delivered during the prior three months was valued at approximately $2 million for the threemonth period, or approximately $22,000 per Gb per month. 

42. During this period, CHT approached the law firm of Hunton Andrews Kurth LLP 

(“Hunton”) to obtain legal advice concerning its rights with respect to negotiating a modification 

to the Master Agreement in light of Telxius’s nonperformance. Throughout the summer and fall 

of 2018, counsel at Hunton repeatedly counseled against taking action adverse to Telxius, and 

lobbied repeatedly for CHT to simply agree to Telxius’s proposed terms. 

43. CHT was unsatisfied with the Hunton representation, and in November 2018 

approached an attorney at DLA Piper about helping CHT negotiate a modification. That 

attorney advised that because the firm had a relationship with Telxius, it would require a waiver 

from Telxius before proceeding. DLA Piper and CHT requested that waiver, but Telxius 

refused. 

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44. The parties’ negotiations ended without any modification or amendment being 

finalized. 

45. By the end of the fourth quarter of 2018, Telxius still had not completed 

construction, or landed its cable, or tested its network, or activated any of the contracted assets. 

46. Telxius also failed to perform by the end of the first quarter of 2019, or the second 

quarter of 2019. 

47. By June 2019, the duration of Telxius’s non-performance had exceeded by 100% 

the entire estimated time line for construction and delivery of the two networks. At that point, in 

mitigation of its already incurred and ongoing damages and in furtherance of efforts to enable 

some measure of performance under the Master Agreement, CHT incurred additional expenses 

of obtaining and providing to Telxius a building within which Telxius would construct the cable 

landing station in the Dominican Republic, which Telxius had not been able to deliver. The 

parties caused an 18-year lease to be executed under which Telxius would rent the building from 

a CHT affiliate for a fixed amount each month, beginning after Telxius’s final acceptance of the 

CLS built by CHT. 

48. Telxius recommended to CHT that it hire a company called Thallus Innovations 

(“Thallus”) as the construction contractor for the CLS. Telxius represented that Thallus was 

reputable, competent for the proposed bespoke structure, and independent of Telxius. These 

statements were knowingly false. In fact, Thallus conspired with Telxius to undermine CHT’s 

performance under its affiliate’s agreement to build the CLS. Thallus delayed performance 

while providing regular reports to Telxius in hopes of being engaged by Telxius as the main 

contractor to maintain the terrestrial fiber optic connection built for Telxius from the beach 

where the submarine cable arrived to CHT land. Essentially, Thallus has been controlling the 

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arrival of the cable and was employed by Telxius at the same time that it built the CLS for CHT, 

creating an obvious conflict of interest. 

49. The CLS contract between CHT’s affiliate and Telxius was a pre-existing Telxius 

form that included a “step in” right—i.e., under certain circumstances, Telxius could “step in” to 

CHT’s shoes and direct the completion of construction. The CLS contract provided that Thallus 

would be the only party allowed to perform any work commissioned under this “step in” right, 

providing an incentive for Thallus to underperform for CHT because it knew Telxius would 

engage it to address any uncompleted items. 

50. As the project continued through the fall of 2019, the parties were unable to reach 

agreement on an appropriate testing and delivery protocol reflecting objective measures for 

Telxius to demonstrate adequate functionality of the cable it was planning to deliver to CHT. 

51. The value of the purchased assets has diminished materially since 3Q 2018, and is 

no longer worth the price CHT would have paid had Telxius timely performed. While the assets 

were devaluing, Telxius failed to make services available to CHT to monetize its interests in 

Puerto Rico, which CHT was entitled to pursue under the Master Agreement. 

52. In the fall of 2019, CHT began to suspect that part of the reason Telxius was so 

delayed in its performance is that it was negotiating with third parties to monetize the same 

assets it had already sold to CHT. Telxius acknowledged that it had failed to perform as 

planned, and it knew that CHT would insist on price reductions for the assets by the time they 

ultimately might be delivered. If Telxius were able to discourage CHT from proceeding under 

the Master Agreement, then it might have an opportunity to extract from Blackburn some of the 

increased value that Blackburn had placed on the assets relative to CHT ($60 million vs. $31 

million). 

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53. In this same period, Telxius stated an intent to complete the cable connection and 

activate service on the SAm-1 network without demonstrating adequacy of the fiber and without 

acknowledging the material economic impacts of Telxius’s many failures. Upon information 

and belief, Telxius was pursuing an agreement with Blackburn by which Telxius would attempt 

to declare a default by CHT’s affiliate in the construction of the CLS, thereby creating the 

potential of Telxius selling some portion of the project to Blackburn. 

54. In November 2019, CHT advised its counsel at Hunton that it was considering 

legal action against Telxius arising from the latter’s misrepresentations and failures to perform, 

upon which Hunton advised that it would not agree to represent CHT in such a dispute. Not until 

a meeting in Madrid on February 28, 2020 did CHT learn that Hunton was Telxius’s outside 

counsel, and that representatives of Telefónica had been conferring with the very same Hunton 

attorney regarding the CHT dispute since 2018. 

55. During the same February 2020 meeting, Telxius suggested to CHT that 

Blackburn be a perfect candidate to join the project as a co-investor with CHT, ostensibly to 

share the costs of the bespoke assets. Because Blackburn and CHT are competing 

telecommunications providers, the prospect of a co-investment is irreconcilable with the primary 

purpose (and basis for value) in the venture. Because CHT purchased the entirety of the two 

fiber pairs of SAm-1 between San Juan and Punta Cana, no other telecommunications carrier is 

able to utilize that particular route without contracting directly with, or through, CHT. The true 

motivation for introducing Blackburn to the discussions was to bypass the central provisions of 

the Master Agreement—exclusivity to CHT of the route to the Dominican Republic and Haiti—

and undermine the entire premise of the commercial venture for CHT. 

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56. Throughout the spring and summer of 2020, Telxius continued to state an intent to 

complete the cable connection and activate service on the SAm-1 network without demonstrating 

adequacy of the fiber (and again, without acknowledging the material economic impacts of 

Telxius’s failures). 

57. During this period, Telxius agreed to not enforce any “step in” right so long as the 

parties were meeting regularly to work toward completion. Notwithstanding that agreement, 

Telxius began sending formal reservations of rights to “step in” as a result of Thallus’s 

nonperformance. 

58. CHT had little choice but to engage a third-party technical consultant to evaluate 

the technical aspects of Telxius’s work and hold Telxius accountable for adequate testing and 

functionality of the SAm-1 extension. To date, the parties have not agreed on an objective 

protocol for testing and delivery. 

59. As a result of Telxius’s delay, CHT was unable to take possession of the 

purchased assets in 3Q 2018 as agreed, and CHT was unable to use the value of the undelivered 

assets to support CHT’s financing activities in 2018 and 2019. Moreover, CHT was unable to 

generate revenues from the sale of telecommunications capacity using the purchased assets. So 

CHT’s debt load increased while its revenues flatlined. 

60. Notwithstanding its own failures, Telxius has threatened to unilaterally activate 

the SAm-1 network and pursue claims against CHT for the entirety of the $25 million originally 

contemplated for a fully tested and functioning network due (but not delivered) two years ago. 

COUNT ONE 

(Breach of Contract - Damages) 

61. CHT incorporates the allegations of paragraph 1 through 60 as if fully set forth 

herein. 

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62. Telxius sold, and CHT purchased, the two fiber pairs of SAm-1 and spectrum 

equivalent to a half fiber pair of Brusa, for delivery and activation in 3Q 2018. 

63. As part of the parties’ agreement, Telxius agreed to deliver interim capacity of 30 

Gbps in Telxius’s fiber networks, through and including the date of activation of SAm-1. 

64. CHT has paid all sums and done all actions required under the parties’ agreement 

prior to 3Q 2018. 

65. Telxius has not delivered and activated both Brusa and SAm-1 networks, and has 

not delivered interim capacity of 30 Gbps to CHT. 

66. Telxius’s failures constitute material breaches of the Master Agreement for which 

CHT is entitled to damages. 

COUNT TWO 

(Breach of Contract – Setoff and Recoupment) 

67. CHT incorporates the allegations of paragraph 1 through 60 as if fully set forth 

herein. 

68. Telxius sold, and CHT purchased, the two fiber pairs of SAm-1 and spectrum 

equivalent to a half fiber pair of Brusa, for delivery and activation in 3Q 2018. 

69. As part of the parties’ agreement, Telxius agreed to deliver interim capacity of 30 

Gbps in Telxius’s fiber networks, through and including the date of activation of SAm-1. 

70. CHT has paid all sums and done all actions required under the parties’ agreement 

prior to 3Q 2018. 

71. Telxius has not delivered and activated both Brusa and SAm-1 networks, and has 

not delivered interim capacity of 30 Gbps to CHT. 

72. Telxius’s failures constitute material breaches of the Master Agreement sufficient 

to excuse CHT from further performance should it so elect, including with respect to payment of 

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additional sums calculated at the time of contracting on the basis of performance by Telxius that 

has not occurred. 

73. As a result of injuries caused by Telxius’s breaches, CHT is entitled in its future 

performance under the Master Agreement to setoff all damages incurred, including the 

diminution in value of the assets purchased, as against any further amounts otherwise due and 

payable from CHT to Telxius. 

COUNT THREE 

(Implied Covenant of Good Faith and Fair Dealing) 

74. CHT incorporates the allegations of paragraph 1 through 60 as if fully set forth 

herein. 

75. The Master Agreement incorporates an implied covenant of good faith and fair 

dealing in addition to its express terms. The implied covenant governs Telxius’s exercise of 

discretion in carrying out its duties under the Master Agreement, and generally obligates it to act 

in accordance with both parties’ reasonable contractual expectations, so that Telxius does not 

deny CHT the intended benefits of the contract. 

76. Here, Telxius violated the implied covenant by the following conscious and 

deliberate acts, among other acts and omissions, for which the Master Agreement is silent but 

which tend to frustrate the Master Agreement and deprive CHT of the intended benefits and 

reasonable expectations of the parties’ agreement: 

a. Telxius withholding or delaying delivery of annexes, appendices, exhibits, and 

schedules necessary for the parties to govern their future performance under the 

Master Agreement; 

b. Telxius attempting to pass off a hotel store room as a “CLS” site supposedly in 

discharge of its obligation to provide a landing station for CHT’s benefit; 

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c. Telxius refusing to deliver a COF for 200 Gb of activated service in or about 

September 2018, while representing to CHT that Telxius would be able to timely 

perform; 

d. Telxius insisting on registering the Dominican extension in its own name while 

representing to CHT that CHT would own the cable; 

e. Telxius encouraging CHT to engage contractors and service providers (including 

counsel) with whom Telxius maintained relationships, to gain insight into CHT’s 

dealings and undermine CHT’s ability to extract value from those relationships, 

and by extension, from the Master Agreement; 

f. Telxius falsely indicating an intent to waive the provisions of “step in” language 

in its pre-existing form contract for CLS lease; 

g. Telxius refusing to document protocols for adequate objective testing and 

performance monitoring prior to “delivering” cable service to CHT; 

h. Telxius continuing to negotiate with Blackburn and its predecessors in interest to 

extract economic value from the purchased assets in contravention of CHT’s 

exclusive rights; and 

i. Telxius maintaining an extended dialogue with CHT’s counsel during the 

construction phase of the CLS and amendment of the Master Agreement, in an 

effort to deny CHT the economic benefits of the venture. 

77. As a result of Telxius’s conduct, CHT has been harmed in the amount of the 

diminished value of the purchased assets, the direct expenses incurred by CHT in mitigation of 

Telxius’s failures, including by having to engage a third-party technical contractor for testing and 

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delivery protocols, and injury to CHT’s reputation and relationships with counterparties in 

connection with the PR extension and the Dominican extension. 

COUNT FOUR 

(Tortious Interference) 

78. CHT incorporates the allegations of paragraph 1 through 60 as if fully set forth 

herein. 

79. Throughout the course of its dealings with Telxius, CHT has maintained business 

relationships with its attorneys at Hunton and with certain other consultants and contractors 

known to Telxius, including Thallus, and also the local Dominican electricity supplier, CEPM. 

Telxius also interfered with CHT’s licensing relationship with the FCC. 

80. Telxius intentionally and unjustifiably interfered with CHT’s business 

relationships in the following ways: 

a. Hunton: Telxius maintained an ongoing dialogue with CHT’s lawyer during the 

course of its engagement, exploiting confidential knowledge about CHT’s rights, 

concerns, and legal theories, and influencing the substantive legal advice that 

CHT was receiving, thus depriving CHT the benefit of independent confidential 

legal advice and utilizing CHT’s confidential information in furtherance of 

Telxius’s own interests. 

b. Thallus: Telxius pursued an ongoing undisclosed relationship with Thallus to 

delay construction of the CLS while simultaneously gaining confidential 

information about CHT. Telxius promised to compensate Thallus for any delayed 

work, and to engage Thallus in its own name upon Telxius “stepping in” under 

the CLS lease agreement with CHT’s affiliate. 

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c. CEPM: Telxius repeatedly contacted CEPM, representing that Telxius rather than 

CHT was the real party in interest for provision of electricity to the CLS, and 

interfering with CHT’s ability to obtain timely and adequate electricity service for 

the CLS. 

d. FCC: While representing to CHT that Telxius recognized CHT’s purchase of the 

assets, Telxius falsely represented to the FCC that the PR extension and 

Dominican extension were Telxius’s property without disclosing any ownership, 

beneficial interest, or encumbrance in favor of CHT. As a result, CHT was 

denied the licensing rights necessary to utilize the benefits of the assets it 

purchased from Telxius, by activating telecommunications and data services and 

otherwise freely negotiating the purchased assets. 

81. As a result of Telxius’s interference, CHT has been damaged in the ways stated 

above. 

COUNT FIVE 

(Unjust Enrichment) 

82. CHT incorporates the allegations of paragraph 1 through 60 as if fully set forth 

herein. 

83. In the alternative to CHT’s contract claims, insofar as the Master Agreement is 

determined to be invalid or fails to address fully the relationship between the parties, then CHT 

is entitled to recover from Telxius the value of the benefit conferred on it by CHT. 

84. CHT has advanced six million dollars ($6,000,000) in contemplation of acquiring 

assets that Telxius failed to timely deliver (and as of this date, has not delivered at all). 

85. The SAm-1 (Dominican) extension was designed specifically for the purpose of 

creating the exclusive rights to provide high-speed high-capacity service to the Dominican 

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Republic through Puerto Rico (using the Brusa connection to the continental United States) that 

CHT purchased. 

86. Telxius has used CHT’s money to construct the SAm-1 extension (and may have 

used those funds to complete the PR extension of Brusa), thereby increasing the value of 

Telxius’s fiber optic network. 

87. Telxius has knowingly accepted the benefit of CHT’s efforts, know-how, and 

money, as well as access to the CLS in Punta Cana, under circumstances in which it is 

inequitable for Telxius to retain those benefits without compensating CHT therefor. 

* * * 

WHEREFORE, CHT demands damages in an amount to be proved at trial, and 

immediate performance of the Master Agreement by Telxius, subject to set-off in CHT’s 

remaining obligations to the extent of the injuries caused by Telxius. 

Dated: August 13, 2020 Respectfully submitted, 

s/Clay M. Carlton 

Clay M. Carlton, FL Bar No. 85767 

clay.carlton@morganlewis.com 

Morgan, Lewis & Bockius LLP 

200 South Biscayne Boulevard, Suite 5300 

Miami, Florida 33131-2339 

Telephone: 305.415.3447 

Facsimile: 305.415.3001 

Jason R. Scherr (pro hac vice forthcoming) 

jr.scherr@morganlewis.com 

Morgan, Lewis & Bockius LLP 

1111 Pennsylvania Avenue, NW 

Washington, DC 20004-2541 

Telephone: 202.373.6709 

Facsimile: 202.373.6460 

Counsel for CHT Holdings LLC 

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