Preview
FILED
3/9/2021 2:09 PM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Treva Parker-Ayodele DEPUTY
CAUSE NO. DC-21-00837
AT&T SERVICES, INC., § IN THE DISTRICT COURT
Plaintiff,
v. : DALLAS COUNTY, TEXAS
GENESIS NETWORKS TELECOM. :
SERVICES, LLC, § 193" JUDICIAL DISTRICT
§
Defendant.
AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR
ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION
STATE OF TEXAS §
§
COUNTY OF DALLAS §
Before me, the undersigned authority, personally appeared Christin J. Jones, who upon being
duly sworn upon her oath deposed and stated as follows:
i My name is Christin J. Jones. 1 am over the age of eighteen and have never been
convicted of a felony or a crime involving moral turpitude, and am otherwise competent to make
this affidavit.
2, I am an attorney in the law firm of Kilpatrick Townsend & Stockton LLP (the
“Firm’). I am licensed to practice law in the State of Texas since 2009, and have practiced law in the
State of Texas continually since 2009.
3. The Firm has a longstanding relationship serving as counsel for Plaintiff AT&T
Services, Inc. (“AT&T”), and represented AT&T in the underlying Arbitration and Georgia Lawsuit
that bring rise to AT&T’s Application to Confirm and Enter Final Judgment of Arbitration Award
filed on January 20, 2021. I hereby certify the Facts as stated therein ate true and correct.
AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR PaGE1
ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION
1179964 / 18195963.14 I further certify that true and correct copies of the following documents are attached
hereto and submitted to the Court in support of AT&T’s Motion for Entry of Default Judgment of
Arbitration Confirmation:
Exhibit A: The Interim Arbitration Award' entered by Arbitrator Lewis on November
18, 2020, awarding AT&T the full settlement amount and defense costs
against Genesis in the Georgia Lawsuit.
Exhibit B: The Final Award entered by Arbitrator Lewis on December 17, 2020,
additionally awarding AT&T arbitration costs and attorneys’ fees against
Genesis, for a total award of $12,313,402.24.
Exhibit C: The Return of Service for Defendant Genesis Networks Telecom Services,
LLC (“Genesis”), effectuated on January 29, 2021, and on file with this Court
as of February 12, 2021.
FURTHER AFFIANT SAYETH NOT.
Christin J. Jones
SUBSCRIBED AND SWORN TO ME on this 9th day of March, 2021, to certify which
witness my hand and official seal:
>, _DEANA ANDERSON )
hy Notary ID #8769889 fo
My Commission Expires ic i
ore May 6, 2024 Notaty Public in and for the State of Texas
1 The specific amounts of a settlement with third-party Technicolor and other limited confidential information have
been redacted to protect such confidential information, as it is immaterial for the relief requested in AT&T’s Original
Petition and Application to Confirm and Enter Final Judgment of Arbitration Award.
AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR PAGE 2
ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION
1179964 / 18195963.1EXHIBIT AAMERICAN ARBITRATION ASSOCIATION
AAA NO. 01-20-0000-5855
AT&T SERVICES, INC.,
Claimant,
vs.
GENESIS NETWORKS TELECOM SERVICES, LLC,
Respondent.
INTERIM AWARD
The undersigned Arbitrator, having been designated in accordance with the arbitration
agreement entered into by the parties and having been duly sworn, states as follows:
Preliminary Statement
This dispute arises out of an alleged breach of contractual obligations and a subsequent
settlement agreement. The parties to this action are AT&T Services, Inc. (“AT&T”) and Genesis
Networks Telecom Services, LLC (“Genesis”).
Section 4.8 of the parties’ contract provides:
If the Parties are unable promptly to resolve a dispute informally or
by mediation, the Party alleging a material breach (the “Moving
Party”) may initiate arbitration by providing the other Party written
notice of its intent to arbitrate.... If a dispute is submitted to an
arbitrator, it shall be finally resolved through binding arbitration in
Dallas, Texas, according to the Commercial Arbitration Rules of
the AAA, except as modified herein. The award rendered by the
arbitrator shall be final and binding on the Parties and shall be
deemed enforceable in any court having jurisdiction thereof.
AT&T filed its Statement of Claims on February 19, 2020, and its Amended Statement of
Claims on April 13, 2020. Genesis filed its Answering Statement on March 20, 2020, and its
Amended Answering Statement on May 11, 2020.In light of the COVID-19 pandemic and pursuant to the parties' Videoconferencing and
Testing Order filed on August 26, 2020, the parties agreed to a remote video-conferenced
evidentiary hearing in this matter as well as to technology and witness protocols. The parties also
agreed that for all purposes the hearing was considered to have taken place in Dallas, Texas as
provided in Section 4.8 of their contract.
As agreed by the parties, following submission of joint evidentiary exhibits (which the
parties agreed to treat as admitted), briefs and authorities, a three-day evidentiary hearing was
held from September 1 to September 3, 2020. AT&T was represented at the hearing by its
outside counsel, John Jett and Ava Conger of Kilpatrick Townsend & Stockton LLP, along with
a paralegal, Monica Roberts, and in-house counsel, Matt Justus. The Corporate Representative
for AT&T was Anthony Lewis. Genesis was represented at the hearing by its outside counsel,
W. Stephen Benesh and David Springer of Bracewell LLP, along with a paralegal, Georgette
South, and in-house counsel, Anthony Fetter. The Corporate Representative for Genesis was
James Goodman. In addition, there were technology representatives from each firm and from
Lexitas, which provided technological support and court reporting for the arbitration.
I have considered all of the testimony, including the direct examinations and full cross-
examinations of witnesses at the hearing; the exhibits submitted in evidence (as well as all
reasonable inferences to be derived from that evidence); and the case law and the arguments
presented at the hearing and in post-hearing briefs. My assessment is based on the parties’
contracts and applicable law, as well as close attention to the demeanor and content of the
witnesses' testimony, the contemporaneous writings and actions of key actors involved, and the
candor demonstrated. The facts stated in my analysis are those found by me to be true and
necessary to this Award. To the extent that my description differs from a party's position, that is
the result of determinations as to relevance, burden of proof, weighing of record evidence and
credibility as well as the parties' contemporaneous interactions and negotiations, and discounting
inconsistent positions or rejecting certain arguments made in the arbitration.
Party Positions
The summary below is not an exhaustive restatement of the parties' respective assertions.
JT assume the parties' familiarity with the underlying facts pleaded and offered in proof by bothsides and the roles of the various people who are cited, and I do not repeat here all of the
background facts that gave rise to the relevant aspects of their relationship or to their later
disputes except as needed.
AT&T claims that Genesis failed to uphold its contractual obligations under the parties’
Value Added Reseller (“VAR”) Agreement and the supplement thereto (the “VAR
Supplement”). First, AT&T alleges that Genesis failed to bind its subcontractor, Technicolor
Connected Home USA, LLC (“Technicolor”), to mirrored terms of the VAR Agreement, as
required under section 4.22 of that agreement. As a result, AT&T was forced to defend against a
lawsuit brought by Technicolor in a Georgia state court. Second, AT&T argues that Genesis
failed to indemnify and defend AT&T in that lawsuit pursuant to section 3.13 of the VAR.
Finally, AT&T contends that Genesis failed to contribute to the settlement of the Georgia lawsuit
after inducing AT&T to settle the action with an enforceable offer of settlement authority.
Genesis disputes AT&T’s theory of the case and contends that the absence of the
mirrored terms in its contract with Technicolor was caused by AT&T and, in any event, Genesis
was not under a duty to bind Technicolor to mirrored terms because Technicolor was not a
subcontractor to Genesis. Genesis also disputes AT&T’s claim that it was required to defend and
indemnify AT&T on grounds that the obligation to do so had not been triggered. Finally,
Genesis challenges the existence of an enforceable settlement, claiming instead that AT&T
rejected a material term of its settlement offer.
Analysis
While, as stated above, I do not undertake an exhaustive recitation of the parties' conduct,
it is important to note that conduct has been given appropriate weight when its consideration is
legally necessary to resolve substantive issues presented. My evidentiary analysis does not
address each element of each assertion or position taken, but rather the material and relevant
evidence relating to dispositive issues, focusing on the issues pressed most heavily by the parties
and critical to the disposition of the claims. The omission of an issue of fact or an argument
from the discussion does not imply any specific conclusion as to how the issue was determined
or whether the issue was reached or not, but only that it was not deemed essential to support the
rulings in this Interim Award.I hereby find and conclude, for purposes of this Interim Award, as follows:
Background Facts
In July 2011, AT&T and Cisco Systems, Inc. (“Cisco”) entered into a Subordinate
Material Agreement governing the supply of products for AT&T’s Digital Life product line,
which provides a platform for home automation and security functions. Of particular
significance to this arbitration, Cisco manufactured and supplied the Digital Life Controllers
(“DLCs”) to AT&T, which served as the “brain” for the Digital Life systems and ran the Digital
Life software.
In November 2015, Technicolor purchased the DLC product line from Cisco and
assumed the manufacturing of the DLCs. Because AT&T and Technicolor did not have a
contractual relationship, AT&T could not, based on company policy, purchase the DLCs from
Technicolor. Thus, to facilitate ongoing sales to AT&T, Technicolor and Cisco entered into a
transitional services agreement (“TSA”) to temporarily permit AT&T to order DLCs from Cisco
while AT&T and Technicolor negotiated and implemented their own direct written contract. The
TSA was set to expire in July 2016.
In December 2015, Technicolor and AT&T launched a new series of the DLC — the
DLC-200. Although they did not yet have a master agreement in place, in March 2016,
Technicolor and AT&T agreed upon discounted volume-tiered pricing. Technicolor and AT&T
reached this agreement based on Technicolor’s desire to prevent a competitor from entering the
market.
Despite their efforts, AT&T and Technicolor were unable to execute a contract before the
expiration of the TSA in mid-2016. In order to avoid interruption in the supply of products for
the Digital Life product line, AT&T and Technicolor turned to Genesis, who already served as a
long-standing reseller for AT&T, to facilitate the purchasing of DLCs and batteries from
Technicolor, while AT&T and Technicolor continued to negotiate a master agreement.
On August 19, 2016, AT&T and Genesis supplemented their VAR Agreement, which
governed AT&T and Genesis’s business relationship. The sole purpose of executing the VAR
Supplement was to memorialize Genesis’s role as a reseller of the Technicolor-manufacturedDLCs and batteries to AT&T. At the same time, Genesis and Technicolor memorialized the
terms of their agreement by entering into a Letter of Intent (“LOT”) in July 2016, and a
subsequent Letter of Agreement (“LOA”) on September 28, 2016, which enabled Genesis to
perform its obligations to deliver DLCs and batteries to AT&T under the VAR Supplement.
Pursuant to the terms of the VAR Supplement, the LOI and the LOA, AT&T submitted
purchase orders for DLCs to Genesis and Genesis, in turn, issued mirrored purchase orders to
Technicolor. Genesis invoiced AT&T for the DLCs. Within sixty days of issuing the invoice to
AT&T, Genesis would remit payment to Technicolor.
To ensure that supply would meet demand, the VAR Agreement and the VAR
Supplement provided that AT&T would forecast its projected need for DLCs and batteries
through weekly rolling Collaborative Planning Forecasting and Replenishment (“CPFR”)
documents. AT&T provided both Genesis and Technicolor with weekly forecasts of their
production needs through these documents, which were analyzed, reviewed and discussed during
weekly telephone calls with representatives of all three parties present during the calls.
Beginning in October 2016, AT&T’s CPFRs indicated a significant decline in its
projected need for DLCs and batteries. Technicolor raised its concerns with AT&T regarding
the decline in forecasts. is
On December 10, 2018, Technicolor filed a lawsuit against AT&T in a Georgia state
court for breach of contract, promissory estoppel, and negligent misrepresentation, seeking
damages in excess of $33 million. Technicolor’s claims were based on AT&T’s alleged
decrease in its forecasted projected need for DLCs and batteries, and their failure to purchase
DLCs and batteries at quantities indicated in their forecasting documents a
Technicolor alleged in the Complaint that “[t]he parties entered into an agreement
pursuant to which Technicolor would provide DLC units and batteries to AT&T at agreed-uponpricing and at quantities set forth in the CPFRs provided by AT&T. See Complaint, at | 69.
Technicolor further asserted that AT&T repeatedly promised and/or represented that it would
purchase “quantities of DLCs and DLC batteries consistent with the CPFRs provided by AT&T
from time to time.” Jd. at §§] 77, 87.
On December 28, 2018, AT&T tendered the lawsuit to Genesis pursuant to section
3.13(a) of the VAR Agreement, which provides that Genesis would defend and indemnify
AT&T for any claim “arising from or in connection with, or resulting from” the “Materials or
Services furnished by [Genesis]” or any “acts or omissions” with respect to the VAR Agreement.
See J-2, at § 3.13. AT&T also requested that Genesis provide a copy of its contract with
Technicolor to assist in the defense of the lawsuit. After issuing several demands to produce the
contract, Genesis produced a copy to AT&T, which revealed that the contract did not contain a
provision describing AT&T’s forecasts as non-binding, impacting AT&T’s ability to defend
against the lawsuit.
In the interim, AT&T moved to dismiss Technicolor’s claims. On November 7, 2019, the
Georgia court denied AT&T’s motion to dismiss, finding that if Technicolor’s allegations were
true, Technicolor had alleged a cognizable claim for breach of contract. See Order (Ex. L to
Statement of Claims).
On January 17, 2020, Genesis denied AT&T’s request for defense and indemnification,
claiming that the Georgia court’s ruling on AT&T’s motion to dismiss precluded AT&T’s
indemnity demand because “the court found that AT&T and Technicolor entered into a separate
agreement pursuant to which Technicolor would provide ‘discounted volume-tiered pricing
based on high purchase volume thresholds of more than half-a-million units for DLC products,’”
and AT&T would ‘purchase quantities consistent with the CPFRs provided to Technicolor.”” J-
74. (As I discuss later in this decision, there is insufficient evidence to conclude that AT&T and
Technicolor had entered into a separate agreement.) In response, AT&T filed this Arbitration on
February 19, 2020.
On March 3, 2020, AT&T and Technicolor mediated the claims in the Georgia lawsuit.
While the mediation was ongoing, Genesis offered AT&T $8 million toward the settlement of
Technicolor’s claims. In exchange, Genesis requested that AT&T “work in good faith to provideGenesis with future business opportunities consistent with Genesis’s contribution to the
settlement of this lawsuit.” J-76. AT&T and Technicolor were unable to settle the claims that
day, but the mediation was left open. On March 25, 2020, Genesis increased the amount offered
from $8 million to $12 million. Genesis once again requested future business opportunities from
AT&T and also asserted that AT&T could not offset unpaid settlement amounts from amounts
otherwise due Genesis. J-77.
On March 27, 2020, AT&T and Technicolor reached a settlement a
| AT&T and Technicolor also agreed to assign to AT&T any
claims against Genesis relative to the Georgia lawsuit.
AT&T communicated the tentative settlement agreement to Genesis on April 2, 2020.
On May 18, 2020, after AT&T finalized the terms of a formal agreement with Technicolor,
AT&T requested that Genesis “provide proposed terms for installment payments” and informed
Genesis that it “would not be willing to relinquish its setoff rights against Genesis or its
affiliates, [but would] welcome suggestions as to other forms of security sufficient to ensure
AT&T will collect the full lm over the six-year payment term.” J-79. In response,
Genesis withdrew its March 25, 2020 offer, claiming that AT&T’s May 18 email “constituted a
rejection of Genesis’ offer and a counter-offer, not an acceptance.” Id.
The Controlling Law
The VAR Agreement specifically provides that the laws of the State of Texas govern this
Arbitration. See J-2, at § 3.11. The VAR Agreement and the VAR Supplement contain several
key contract provisions that are at the center of the parties’ dispute, which I will discuss in turn
as they pertain to the arguments raised by each party.
Claims Raised
I. Genesis ’s Breach of the VAR Agreement
AT&T first claims that Genesis failed to uphold its contractual obligation pursuant to
Section 4.22 of the VAR Agreement, which provides that Genesis must “bind every
subcontractor to the terms of [the VAR] Agreement.” See J-2, at § 4.22. Central to the parties’dispute is Section 4.28 of the VAR Agreement, which provides a thorough explanation of
AT&T’s forecasting policies and procedures. Under this section, AT&T asserts no less than
three times that its forecasts are not binding, are not commitments of any kind, and do not create
any obligation to place purchase orders based on the forecasts:
a. AT&T shall use commercially reasonable efforts to provide Supplier with a
six (6) month rolling forecast updated by the tenth (10) business day of each
month, showing prospective Orders by product model, forecasted order date
and estimated Delivery Date. Such forecasts are for planning purposes only,
and do not constitute commitments of any kind and shall not be binding on
AT&T nor shall 7 create 7 7 or ie on the - ‘ AT&T.
ee
b. Without limiting the generality of the foregoing, such forecasts shall not
obligate AT&T to place any Orders, nor for supplier to fulfill Orders
subsequently placed by AT&T except as provided herein. While AT&T will
provide forecast to Supplier to help Supplier plan future order requirements,
AT&T reserves the right to place Orders based on price, quality of Material,
performance of Material, and on going Supplier Scorecard reviews.
Supplier’s ability to maintain business will be contingent on their ability to
meet or exceed the above requirements.
* RK
However, as stated above any notice provided by AT&T shall
not obligate AT&T to any specific commitment to purchase for any Material
outside of Orders already placed. AT&T shall, in good faith, work to
diminish any inventory held (excluding raw material) by Supplier upon suchnotice of termination as applicable under Section entitled “Cancellation and
Termination”.
J-2, at § 4.28 (emphasis added).
It is undisputed that both the LOI and LOA between Genesis and Technicolor do not
contain any reference to these terms or otherwise discuss the non-binding nature of AT&T’s
forecasts. Rather, Genesis contends that it was not required to bind Technicolor to these terms
because (1) Technicolor was not a subcontractor for purposes of section 4,22 of the VAR
Agreement; and (2) because Technicolor’s refusal to agree to these terms was caused by AT&T.
I find both of these arguments to be unpersuasive.
A. Technicolor’s Role as a Subcontractor
At the outset, the record demonstrates that Genesis understood its obligation to bind
Technicolor to the non-binding nature of the forecasts in accordance with Section 4.28. First,
while attempting to negotiate a master agreement with Technicolor, Genesis included a nearly
verbatim recitation of section 4.28, including the language regarding the non-binding, non-
committal nature of the forecasts. See J-15, at page 44. Moreover, James Goodman, the
chairman and CEO of Genesis, admitted that “Genesis was required to bind subcontractors it
used under the VAR [A]greement to the terms of the VAR [A]greement,” including the term that
AT&T’s forecasts are non-binding. See J-89, at 54:10-23, 103:14-104:23; see also Day | Tr., at
263:17-265:6.'
Genesis’s contention that Technicolor was not a subcontractor is belied by the record.
Section 2.28 of the VAR Agreement provides the following unambiguous definition of a
subcontractor:
1 Although Mr. Goodman qualified his answer during the hearing by disputing the fact that
Technicolor was a subcontractor, Mr. Goodman’s testimony was unequivocal that Genesis was
required to bind subcontractors to the terms of the VAR Agreement. See Day 1 Tr., at 263:17-
265:6.“Subcontractor” or “subcontractor” means any person or entity
(including an agent) supplying labor or materials to perform any or
all of Supplier’s obligations under this Agreement, including any
person or entity at any tier of subcontractors, and shall not be
limited to those persons or entities with a direct relationship with
supplier.
J-2, at § 2.28.
The contractual agreements at issue here — between AT&T and Genesis on the one hand,
and between Genesis and Technicolor on the other hand — address the role that each party played
in the supply chain of DLCs to AT&T. Although Genesis claims that it “was a mere facilitator
of the primary partnership between AT&T and Technicolor,” the exhibits and testimony reflect
an entirely different reality.
The VAR Supplement and Genesis and Technicolor’s LOI and LOA demonstrate that all
obligations owed to AT&T rested exclusively with Genesis. Genesis issued purchase orders to
Technicolor based on the purchase orders it received from AT&T. AT&T never submitted
purchase orders to Technicolor. [iis
a
Day 1 Tr., at 177:8-178:18.
Technicolor supplied the DLCs to Genesis directly, and Genesis would “resell [the]
material to AT&T.” See J-24, at ff 6, 8. Genesis would then invoice AT&T for the DLCs and
would “submit payment to Technicolor within 60 days of the date of invoice to AT&T.” See J-
23; see also Day 1 Tr., at 177:8-178:7, 259:3-8; see also J-91, at 47:6-48:1. Thus, pursuant to
this contractual arrangement, Technicolor supplied Genesis with the DLCs necessary to fulfill
the purchase orders that AT&T submitted to Genesis. Under the clear and unambiguous
language of the VAR Agreement, Technicolor, therefore, was “supplying materials [to Genesis]
to perform any or all of [Genesis’s] obligations under [the VAR] Agreement,” which I find
matches the definition of a subcontractor for purposes of the agreement.
I further find that Genesis’s attempt to label Technicolor exclusively as an Original
Equipment Manufacturer (“OEM”) rather than a subcontractor to avoid this conclusion is
misplaced. Although Technicolor, as the manufacturer of the DLCs at issue, is undoubtedly an
10OEM, by virtue of the parties’ relationships, Technicolor was also a subcontractor to Genesis.
There is no provision in the VAR Agreement or VAR Supplement that supports the conclusion
that Technicolor’s status as an OEM and as a subcontractor to Genesis’s contractual relationship
with AT&T must be mutually exclusive.
Genesis’s claim that Technicolor was not a subcontractor because Technicolor chose
Genesis similarly fails. Simply, Genesis continues to ignore or fails to recognize the role of each
party in the contractual arrangements at issue in this Arbitration. The plain terms of each
contract demonstrate that under the definition provided in section 2.28 of the VAR Agreement,
Technicolor acted as a subcontractor to Genesis in the supply chain of DLCs to AT&T.
B. Technicolor’s Refusal to Agree to Non-Binding Forecast Term
Finally, there is no compelling evidence that the absence of the non-binding nature of
AT&T’s forecasting in Genesis’s LOA with Technicolor was caused by AT&T. Genesis alleges
that while attempting to negotiate a Master Service Agreement (“MSA”) with AT&T,
Technicolor refused to agree to the term that AT&T’s forecasts were non-binding, and that this
obviated the need for Genesis to enforce this term in its agreement with Technicolor. This
argument is flawed for several reasons.
First, the parties offered competing testimony as to the timing and circumstances of
Technicolor’s alleged rejection of the non-binding term in its negotiations with AT&T regarding
a MSA. While Genesis argues that AT&T’s conduct and “inability to consummate a written
agreement with Technicolor that contained ‘forecasts aren’t binding’ language” caused
Technicolor to reject the same term in the LOI and LOA, Mr. Shreeram admitted that he was
unsure about the timing of Technicolor’s rejection. See J-91, at 102:7-103:4. Meanwhile, Philip
Jurecky, a senior sourcing manager in the supply chain at AT&T, testified during the hearing that
Technicolor did not reject this term until 2017. See Day 2 Tr., at 430:2-15, 433:2-434:3, 454:12-
455:15. Neither party, however, could offer definitive evidence regarding the timing of
Technicolor’s apparent rejection of the term.
The rationale for Technicolor’s alleged rejection of the term in its LOI and LOA with
Genesis was equally inconclusive. Jason Shreeram, Technicolor’s corporate representative,
11initially testified that Technicolor removed the term from the LOI because of “expediency”
issues. Mr. Shreeram explained that the negotiations with Genesis were very difficult and long
and they “didn’t have that time to go through a 50- or 60-page document.” See J-91, at 39:20-
41:17. This testimony seemingly competes with Mr. Shreeram’s testimony that Technicolor’s
legal team rejected the term because it “didn’t want to put terms out to Genesis that weren’t
going to be reciprocal in our MSA [with AT&T]. So we didn’t want any of this until we had
something that, you, know, we had a like-for-like between AT&T and Technicolor.” See id. at
42:2-43:20, 107:12-108:25. Absent clear evidence that Technicolor refused this term with
Genesis because of its negotiations with AT&T, I cannot conclude that Genesis was under no
obligation to include this term in its contract with Technicolor because it was the fault of AT&T.
Even if Genesis had offered sufficient evidence, Genesis, by its own admission, was
required to bind subcontractors to the terms of the VAR Agreement, not the terms of AT&T’s
MSA. Thus, even if Genesis had established that Technicolor rejected this term because it would
be inconsistent with its MSA with AT&T, Genesis has not established that it was relieved of its
duty and obligation to bind Technicolor to this provision, particularly because Genesis never
notified AT&T that Technicolor refused to agree to the non-binding forecast term. See Day 1
Tr., at 133:11-15; Day 2 Tr., at 444:15-19.
Accordingly, because the VAR Agreement required Genesis to bind Technicolor to the
terms and Genesis failed to do so, and Genesis’s claims are unpersuasive, I conclude that AT&T
has established a breach of contract.
Il. Genesis’s Breach of its Duty to Defend and Indemnify for Failing to Include a Non-
Binding Forecast Term
AT&T’s second claim is that Genesis failed to uphold its contractual obligation to
indemnify AT&T in the Georgia lawsuit. The duty to indemnify and defend, provided by
Section 3.13 of the VAR Agreement, requires Genesis to indemnify AT&T for “any Loss arising
from or in connection with, or resulting from the Materials or Services furnished by [Genesis] or
[Genesis]’s acts or omissions with respect to [the VAR] Agreement.” See J-2, at 3.13(a)-(b). A
“Loss” includes any “... suit, cause of action, [or] settlement payment.” Jd.
12AT&T specifically alleges that in addition to constituting an independent breach of the
VAR Agreement, Genesis’s failure to include the non-binding forecast term in its agreement
with Technicolor constitutes an omission from which Technicolor’s Georgia lawsuit arose,
requiring Genesis to indemnify and defend AT&T. I agree.
Mr. Shreeram’s testimony establishes that Technicolor’s claims in the Georgia lawsuit
were based on AT&T’s declining forecasts Pe
HE )-9 1, 2¢ 61:16-23, 63:16-19. Technicolor’s lawsuit,
therefore, arose out of AT&T’s forecasts and purchase orders for DLCs, which the parties agreed
constitute a “Material” under the VAR Agreement. See Day 1 Tr., at 163:12-16; Day 2 Tr., at
258:22-24. Moreover, Technicolor’s lawsuit was based on AT&T’s alleged breach of the
forecasts, which the VAR Agreement identified as non-binding. Thus, Genesis’s failure to
incorporate the non-binding nature of AT&T’s forecasts in the LOA directly resulted in the
Georgia litigation.
AT&T has sufficiently demonstrated that under Texas law, broad “arising from”
language means only that “there must be ‘some nexus between’ the actions taken or omitted.”
See AT&T’s Post-Hearing Brief, at 15 (citing Crimson Exploration, Inc. v. Intermarket Mgmt.,
LLC, 341 S.W.3d 432, 443 (Tex. App. — Houston [1st Dist.] 2010, no pet.); Coastal Mart Inc. v.
Sw. Bell Tel. Co., 154 S.W.3d 839, 845 (Tex. App. — Corpus Christi 2005, pet. Granted, jdugm’t
vacated); Banner Sign & Barricade, Inc. v. Berry GP, Inc., 2008 WL 4352634, at *5-6 (Tex.
App. — Corpus Christi-Edinburg Sept. 25, 2008, pet denied)). The direct link between the failure
to include the relevant term and Technicolor’s claims against AT&T undoubtedly meet this
threshold.
Genesis’s assertion that AT&T’s claim for indemnity falls outside the scope of the
indemnity provision because Technicolor’s claims against AT&T arose out of a separate oral
contract between Technicolor and AT&T is not supported by any evidence. Genesis admitted,
through Mr. Goodman’s testimony, that it was not aware of the terms of this contract between
+g &
AT&T and Technicolor, but instead was taking Technicolor’s
existed.” See Day 1 Tr., at 337:23-338:13.
‘word for it that this agreement
13Genesis, however, relies on Mr. Shreeram’s testimony that AT&T and Technicolor
entered into a “good faith agreement” for a discounted volume-tiered pricing agreement. See J-
91, at 125:12-127:24. Notably absent from Mr. Shreeram’s testimony regarding this “good faith
agreement” was any claim that AT&T committed to purchase a particular volume of DLCs. At
most, Mr. Shreeram alleged that AT&T entered into a good faith agreement that Technicolor
would provide discounted volume-tiered pricing in exchange for AT&T’s agreement to make
purchases consistent with their CPFRs. See J-91, at 131:13-25. Mr. Shreeram admitted that
AT&T did not agree to purchase any specific number of DLCs. See J-91, at 184:14-16. Mr.
Shreeram further testified that he understood that there was a distinction between inventory not
committed and AT&T’s purchase orders. See J-91, at 58:2-61:21.
The record also reflects that the parties agreed to the discounted volume-tiered pricing
arrangement to prevent Technicolor’s competitors from interfering with the market share, since
the discount pricing would incentivize AT&T to procure more product from Technicolor rather
than from other suppliers. See Day 1 Tr., at 213:12-19, 214:7-23; Day 2 Tr., at 435:15-436:7;
see also 191, :16-71,
As Genesis acknowledges, “[o]bjective manifestations of intent control.” See Genesis’s
Post-Hearing Brief, at 19 (quoting UR/, Inc. v. Kelberg Cty., 543 S.W.3d 755, 763-64 (Tex.
2018)). Based on the objective intent of the parties described above, there is no evidence that
AT&T and Technicolor intended to, or did, enter into a separate contract for DLCs. At all
relevant times, the obligations with respect to the purchase and sale of DLCs flowed exclusively
through the parties’ contractual agreements with Genesis. The discounted volume-tiered pricing
did not alter this arrangement.
14Genesis next engages in semantics in an attempt to avoid a finding of a duty to indemnify
by claiming that Technicolor’s claims against AT&T “concern the lack of materials or services”
rather than the furnishing of materials and services. See id. at 34, § 61. I find Genesis’s attempt
to distinguish between DLCs that ultimately were not purchased and DLCs that were purchased
insufficient to defeat the broad language of the indemnity clause. As previously discussed,
AT&T was only required to demonstrate “some nexus” between the lawsuit and the “Materials
or Services” furnished by Genesis. Here, the claims in Technicolor’s lawsuit involved the DLCs,
which again constituted a “Material” furnished by Genesis, thus triggering Genesis’s obligation
to indemnify AT&T in the lawsuit.
Accordingly, I conclude that Genesis failed to uphold its contractual obligation to
indemnify AT&T in the Georgia lawsuit.
Ill. — Inducement to Settle
AT&T also argues that it suffered a loss under section 3.13 of the VAR Agreement when
Genesis induced AT&T to settle Technicolor’s claims through its March 25, 2020 offer of $12
million toward the settlement of the claims, but failed to contribute to the settlement. For the
following reasons, I am persuaded that Genesis’s conduct and March 25, 2020 email offering
$12 million toward a settlement did induce AT&T to settle the claims brought against it by
Technicolor in the Georgia lawsuit.
First, despite Genesis’s refusal to indemnify AT&T in the Georgia lawsuit, Mr. Goodman
had assured AT&T that “all roads lead to me.” J-57. Mr. Goodman testified that he wanted to
convey to AT&T that although he could not represent AT&T or settle the claims on its behalf, he
would “do [his] best to try to go help resolve [the claims].” See Day 1 Tr., at 314:8-315:10;
367:3-19. AT&T initially did not engage in settlement discussions with Technicolor based on
Mr. Goodman’s assurances. See Day | Tr., at 193:3-17.
Second, within two days of Genesis’s March 25, 2020 offer of $12 million toward the
settlement, AT&T settled Technicolor’s claims. Both Thornton Fears, the assistant vice
president for AT&T’s Digital Life business unit, and Ms. Pulliam credibly testified that AT&T
settled Technicolor’s claims based upon what they reasonably perceived as the settlement
authority (specifically, $12 million) provided by Genesis. See Day 1 Tr., at 194:5-20; Day 2 Tr.,
15at 614:22-615:8. The timing and the substance of the settlement with Technicolor demonstrate
that Genesis’s March 25, 2020 offer gave AT&T the clear indication to proceed to settle the
claims, which is sufficient, in my view, to satisfy the theory of inducement.
Third, AT&T’s emails notifying Genesis of its settlement with Technicolor support the
conclusion that AT&T believed that the settlement was in accordance with Genesis’s March 25,
2020 offer, subject to final discussions. In its April 2, 2020 email, AT&T informed Genesis that
it had reached an agreement with Technicolor “to settle its claims against AT&T for
a. subject to finalizing and memorializing the terms of a formal agreement. Given
this development, AT&T looks forward to finalizing discussions with Genesis.” J-79. Then, on
May 18, 2020, following its negotiations with Technicolor, AT&T provided Genesis with an
update regarding the status of its settlement agreement with Technicolor and, for the first time,
directly responded to and purported to accept the terms of Genesis’s March 25 settlement offer,
stating:
AT&T and Technicolor have agreed in principle
settlement payment will be well below the $12
million in settlement authority Genesis granted to AT&T back on
March 25. Additionally, and subject to finalization of the
settlement agreement, Technicolor also has agreed to assign to
AT&T any and all claims it may have against Genesis relative to
the claims in the Georgia Litigation, which AT&T will release
(along with AT&T’s claims against Genesis in this arbitration) in
exchange for Genesis’s payment
Thus,
subject to finalization of the Technicolor settlement, AT&T and
Genesis have now reached agreement on the essential terms of a
settlement.
Please provide proposed terms for installment payments that would
be in line with Genesis’s forecasted business. Although AT&T
presently would not be willing to relinquish its setoff rights against
Genesis or its affiliates, we welcome suggestions as to other forms
of security sufficient to ensure AT&T will collect the full
—») over the six-year payment term.
16We'd appreciate you getting back to us with your thoughts by
Wednesday so that we can begin drafting a formal agreement to
memorialize the settlement.
Id.
Genesis’s May 19, 2020 response to AT&T’s purported acceptance marked the first time
that Genesis indicated that AT&T’s view of the essential terms of the offer was not aligned with
its own view. Specifically, while AT&T viewed the no-offsets and future business terms to be
negotiable terms regarding the structure of payments and security reserved for the final
memorialization of the settlement agreement, in this correspondence, Genesis expressed that
these terms were essential:
As you may recall ... my client’s proposal, apart from installation
payments, included assurance by AT&T of no set-offs or
deductions and confirmation by AT&T of an effort to provide
future business to my client that [i]s consistent with my client’s
financial contribution toward settlement. Without a conversation
about these additional proposed terms, it makes little sense to
discuss a settlement sum. Without consideration of these
additional terms, your “good news” is really just an invitation for
Genesis to pay AT&T = = instead of $12 million, to settle
a claim that Genesis does not regard as well grounded.
Id.
I find it significant that despite Genesis’s protestation that “it makes little sense to discuss
a settlement sum,” Genesis had already done precisely that — twice — by this time by offering
specific amounts to be applied toward settlement: first on March 3, and again on March 25,
2020. That glaring contradiction alone leads me to conclude that AT&T’s view that it had
reached an agreement as to the settlement amount, and was authorized to engage in settlement
discussions with Technicolor based on that offer, was reasonable under the circumstances that
existed at the time. Specifically, I find that Mr. Goodman’s assurances to resolve the matter,
coupled with Genesis’s offer to contribute $12 million toward the settlement, and AT&T’s belief
that the settlement amount and full release of liability were the only essential terms to Genesis’s
offer, induced AT&T to settle with Technicolor.
17IV. Genesis’s Breach of Enforceable Settlement Agreement
However, AT&T’s argument that Genesis committed a breach of contract when it
reneged upon and withdrew an enforceable settlement agreement must be rejected.
AT&T contends that because the parties agreed to the settlement amount and a release of
liability, the essential terms were met and any outstanding issues concerning payment
installments, payment term, and security did not render the settlement agreement unenforceable
under Texas law. See Gen. Metal Fabricating Corp. v. Stergion, 438 S.W.3d 737 (Tex. App. —
Houston [1st Dist.] 2014, no pet.); Montanaro v. Montanaro, 946 S.W.2d 428, 431 (Tex. App. —
Corpus Christi 1997, no writ.). Conversely, Genesis claims that AT&T’s response to the March
25, 2020 offer was a rejection of an essential term and counter-offer — specifically, AT&T’s
refusal to relinquish its setoff rights against Genesis or agree to future business opportunities.
Although Genesis claims that a promise of “future business” was an essential term, I find
that Mr. Goodman’s testimony establishes that the request for future business was nothing more
than “a hope” to do strategic business together to reduce the financial impact to Genesis. See
Day 1 Tr., at 321:1-322:18. Mr. Goodman understood that AT&T had a company policy that
prohibits quid pro quos, and thus was looking for a way to structure an agreement “that wouldn’t
have been a quid pro quo and would have met, you know, both AT&T and Genesis’ needs.” Id.
at 323:10-15.
Based on this testimony, I find that Genesis knew its request for future business
opportunities would be a point of further negotiation and discussion, and subjectively understood
that it was not an essential term. AT&T’s failure to explicitly agree to Genesis’s term for future
business opportunities did not constitute a rejection of an essential term.
But, with respect to Genesis’s contention that the no-offsets term was a material term to
its settlement offer, I find that this issue is a very close call. Under Texas law, I am required to
discern whether, based upon the intent of the parties, the term is a “vitally important element[] of
their bargain.” See Kanan v. Plantation Homeowner's Ass'n Inc., 407 S.W.3d 320 (Tex. App. —
Corpus Christi-Edinburg 2013, no pet.); Southern v. Goetting, 353 S.W.3d 295, 300 (Tex. App. —
El Paso 2011, pet. denied). Based upon my review of the testimony and evidence submitted on
this issue, I find that the no-offset term was “vitally important” to Genesis. It is important to
18emphasize that Genesis’s intent here is entitled to the weight it deserves as the party authorizing
payment, despite AT&T’s otherwise reasonable understanding which induced it to settle.
Genesis attached a condition to that payment. And Mr. Goodman’s testimony revealed that
Genesis included that term with intentionality because it would suffer severe financial hardship
and could not “continue to be a financially viable company” if AT&T were able to offset the $12
million against Genesis’s receivables. See Day 1 Tr., at 378:2-16. It is impossible for me to
conclude that AT&T’s response was not a rejection of that term under Texas law.
Accordingly, and despite my finding of inducement, and only with the benefit of a
thorough retrospective analysis of later correspondence and testimony regarding Genesis’s intent
behind each term of its March 25, 2020 offer, I am constrained to conclude that AT&T’s view
that an agreement was reached as to the essential terms of Genesis’s offer cannot be squared with
Texas law. Because of this, I do not find that an enforceable settlement agreement existed
between Genesis and AT&T, and therefore Genesis’s withdrawal of the offer does not constitute
an independent breach of contract.
Interim Award
Based on the foregoing findings and conclusions, the undersigned Arbitrator hereby
enters judgment in favor of AT&T.
Pursuant to the August 26, 2020 Order on Pre-Hearing and Hearing Logistics, AT&T is
directed to submit a fee petition within two weeks of the date of this Interim Award. Genesis’s
response to AT&T’s fee petition is due within one week after receipt of AT&T’s fee petition.
My final award will be issued within two weeks thereafter.
jews
Timothy K. Lewis
Dated: November 18, 2020
19EXHIBIT BAMERICAN ARBITRATION ASSOCIATION
AAA NO. 01-20-0000-5855
AT&T SERVICES, INC.,
Claimant,
vs.
GENESIS NETWORKS TELECOM SERVICES, LLC,
Respondent.
FINAL AWARD
In my Interim Award, dated November 18, 2020, I entered judgment in favor of AT&T.
That judgment reflected my conclusion that Genesis breached the parties’ VAR Agreement by
failing to uphold its contractual obligation to bind Technicolor to a non-binding forecast term
and by failing to uphold its contractual obligation to indemnify AT&T in the Georgia lawsuit
brought by Technicolor. I also found that AT&T suffered a loss under section 3.13 of the VAR
Agreement when Genesis induced AT&T to settle the underlying Technicolor action but failed to
contribute to the settlement, although I also concluded that the settlement agreement was not
enforceable.
On December 2, 2020, AT&T submitted a Fee Petition pursuant to the August 26, 2020
Order on Pre-Hearing and Hearing Logistics, seeking $787,489.69 in attorneys’ fees and
$112,747.36 in expenses and costs in connection with its prosecution of this arbitration.
Genesis timely filed a Response in opposition on December 14, 2020. Although Genesis
did not challenge the majority of AT&T’s Fee Petition, Genesis disputed (1) the reasonableness
and necessity of AT&T’s request for attorneys’ fees attributable to C. Allen Garrett, Jr.; and (2)
AT&T’s request for “attorneys” fees incurred in connection with the prosecution of [AT&T’s]
unsuccessful claim that Genesis breached an agreement to participate in a settlement of the
underlying dispute.” See Response at §{ 7-8.After reviewing the VAR Agreement and the parties’ submissions, I have concluded that
AT&T’s requested attorneys’ fees are appropriate and reasonable in terms of both the hourly
rates and the amount of hours devoted to the prosecution of this arbitration, with one exception.
Upon consideration of Genesis’s claim that Mr. Garrett’s attorneys’ fees should be excluded on
the grounds that his participation was “redundant, excessive, and unnecessary,” I conclude that
Mr. Garrett’s fees should be reduced by $978.75.
In reaching my conclusion, I reject a wholesale exclusion of Mr. Garrett’s fees. First, I
am unpersuaded that Mr. Garrett’s billing was excessive. With the exception of the June 1, 2020
time entry raised in Genesis’s Response, I have found no other instance of an unreasonable
amount of time spent by Mr. Garrett to perform the services described in his time entries.
Moreover, my careful review of the time entries submitted by AT&T reveals no
widespread duplication of efforts or billing by Mr. Garrett and Mr. Jett such that the trial team’s
consultation with Mr. Garrett was “redundant, excessive, and unnecessary.” To the contrary, the
time entries demonstrate that Mr. Garrett’s efforts in this arbitration were centered on legal and
strategic analysis, while Mr. Jett engaged in professional services that included drafting
outlines/submissions, participating in depositions and hearings, consulting with representatives at
AT&T, and conferring with Genesis’s counsel. By extension, these time entries explain Mr.
Garrett’s role in this arbitration and undercut Genesis’s contention that Mr. Garrett’s
participation was unnecessary because he did not “appear on any filing in this arbitration or on
any phone call or at any hearing, much less [was] never once [] visible to the Arbitrator and other
parties.” See Genesis’s Response at {| 18.
Nevertheless, while I do not believe Mr. Garrett’s fees should be excluded in their
entirety, I agree with Genesis that Mr. Garrett’s June 1, 2020 time entry for “review[ing]
arbitrator’s orders denying leave to file dispositive motions” was excessive. See id. at § 19.
Accordingly, AT&T’s request for attorneys’ fees will be reduced by $978.75.
With respect to the second dispute raised by Genesis, I am unpersuaded by Genesis’s
argument that AT&T’s request for fees relating to its claims that Genesis committed a breach of
an enforceable settlement agreement are not appropriate. As Genesis itself asserts, there is no
need to segregate fees “when the attorney’s fees rendered are in connection with claims arisingout of the same transaction and are so interrelated that their prosecution or defense entails proof
or denial of essentially the same facts.” See Genesis’s Fee Petition Response, at 8, § 26. In this
arbitration, AT&T presented two separate theories of breach relating to AT&T’s settlement with
Technicolor: (1) that Genesis induced AT&T to settle Technicolor’s claims, and (2) that Genesis
committed a breach of contract when it reneged upon and withdrew an enforceable settlement
agreement by failing to contribute to the settlement. Both of these claims were based on the
same facts and evidence -- specifically, correspondence between AT&T and Genesis at the outset
of the Technicolor lawsuit, in March 2020 during the mediation, and after AT&T reached a
settlement agreement with Technicolor — and were “inextricably intertwined.”
I note that Genesis is correct that “AT&T’s settlement agreement theory is entirely
distinct from its other two breach of contract theories” regarding Genesis’s failure to include a
non-binding forecast term in its contract with Technicolor and refusal to indemnify and defend
AT&T in the Georgia lawsuit. See id. at 10, § 29. However, this ignores my conclusion that
although there was no enforceable settlement agreement between Genesis and AT&T, Genesis
induced AT&T to settle Technicolor’s claims. Thus, Genesis’s assertion that AT&T was
unsuccessful in its prosecution of its claims relating to the settlement is inaccurate to the extent it
fails to consider that portion of the Interim Award.
Finally, I conclude that AT&T’s request for costs is adequately supported by
documentation and reflects the total amount of costs incurred during this arbitration.
Accordingly, I FINALLY AWARD as follows with respect to the claims and
counterclaims of the parties in these arbitral proceedings:
= Pursuant to Section 3.13 of the VAR Agreement, which permits AT&T to recover the
losses it suffered, including any “settlement, payment, cost and expense ... and
Litigation Expense[s],”” AT&T is awarded $11,420,196.44 in settlement costs,
attorneys’ fees, and costs incurred in defending the Technicolor lawsuit for Genesis’s
breach of th
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FILED 3/9/2021 2:09 PM FELICIA PITRE DISTRICT CLERK DALLAS CO., TEXAS Treva Parker-Ayodele DEPUTY CAUSE NO. DC-21-00837 AT&T SERVICES, INC., § IN THE DISTRICT COURT Plaintiff, v. : DALLAS COUNTY, TEXAS GENESIS NETWORKS TELECOM. : SERVICES, LLC, § 193" JUDICIAL DISTRICT § Defendant. AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION STATE OF TEXAS § § COUNTY OF DALLAS § Before me, the undersigned authority, personally appeared Christin J. Jones, who upon being duly sworn upon her oath deposed and stated as follows: i My name is Christin J. Jones. 1 am over the age of eighteen and have never been convicted of a felony or a crime involving moral turpitude, and am otherwise competent to make this affidavit. 2, I am an attorney in the law firm of Kilpatrick Townsend & Stockton LLP (the “Firm’). I am licensed to practice law in the State of Texas since 2009, and have practiced law in the State of Texas continually since 2009. 3. The Firm has a longstanding relationship serving as counsel for Plaintiff AT&T Services, Inc. (“AT&T”), and represented AT&T in the underlying Arbitration and Georgia Lawsuit that bring rise to AT&T’s Application to Confirm and Enter Final Judgment of Arbitration Award filed on January 20, 2021. I hereby certify the Facts as stated therein ate true and correct. AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR PaGE1 ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION 1179964 / 18195963.14 I further certify that true and correct copies of the following documents are attached hereto and submitted to the Court in support of AT&T’s Motion for Entry of Default Judgment of Arbitration Confirmation: Exhibit A: The Interim Arbitration Award' entered by Arbitrator Lewis on November 18, 2020, awarding AT&T the full settlement amount and defense costs against Genesis in the Georgia Lawsuit. Exhibit B: The Final Award entered by Arbitrator Lewis on December 17, 2020, additionally awarding AT&T arbitration costs and attorneys’ fees against Genesis, for a total award of $12,313,402.24. Exhibit C: The Return of Service for Defendant Genesis Networks Telecom Services, LLC (“Genesis”), effectuated on January 29, 2021, and on file with this Court as of February 12, 2021. FURTHER AFFIANT SAYETH NOT. Christin J. Jones SUBSCRIBED AND SWORN TO ME on this 9th day of March, 2021, to certify which witness my hand and official seal: >, _DEANA ANDERSON ) hy Notary ID #8769889 fo My Commission Expires ic i ore May 6, 2024 Notaty Public in and for the State of Texas 1 The specific amounts of a settlement with third-party Technicolor and other limited confidential information have been redacted to protect such confidential information, as it is immaterial for the relief requested in AT&T’s Original Petition and Application to Confirm and Enter Final Judgment of Arbitration Award. AFFIDAVIT OF CHRISTIN J. JONES IN SUPPORT OF PLAINTIFF’S MOTION FOR PAGE 2 ENTRY OF DEFAULT JUDGMENT OF ARBITRATION CONFIRMATION 1179964 / 18195963.1EXHIBIT AAMERICAN ARBITRATION ASSOCIATION AAA NO. 01-20-0000-5855 AT&T SERVICES, INC., Claimant, vs. GENESIS NETWORKS TELECOM SERVICES, LLC, Respondent. INTERIM AWARD The undersigned Arbitrator, having been designated in accordance with the arbitration agreement entered into by the parties and having been duly sworn, states as follows: Preliminary Statement This dispute arises out of an alleged breach of contractual obligations and a subsequent settlement agreement. The parties to this action are AT&T Services, Inc. (“AT&T”) and Genesis Networks Telecom Services, LLC (“Genesis”). Section 4.8 of the parties’ contract provides: If the Parties are unable promptly to resolve a dispute informally or by mediation, the Party alleging a material breach (the “Moving Party”) may initiate arbitration by providing the other Party written notice of its intent to arbitrate.... If a dispute is submitted to an arbitrator, it shall be finally resolved through binding arbitration in Dallas, Texas, according to the Commercial Arbitration Rules of the AAA, except as modified herein. The award rendered by the arbitrator shall be final and binding on the Parties and shall be deemed enforceable in any court having jurisdiction thereof. AT&T filed its Statement of Claims on February 19, 2020, and its Amended Statement of Claims on April 13, 2020. Genesis filed its Answering Statement on March 20, 2020, and its Amended Answering Statement on May 11, 2020.In light of the COVID-19 pandemic and pursuant to the parties' Videoconferencing and Testing Order filed on August 26, 2020, the parties agreed to a remote video-conferenced evidentiary hearing in this matter as well as to technology and witness protocols. The parties also agreed that for all purposes the hearing was considered to have taken place in Dallas, Texas as provided in Section 4.8 of their contract. As agreed by the parties, following submission of joint evidentiary exhibits (which the parties agreed to treat as admitted), briefs and authorities, a three-day evidentiary hearing was held from September 1 to September 3, 2020. AT&T was represented at the hearing by its outside counsel, John Jett and Ava Conger of Kilpatrick Townsend & Stockton LLP, along with a paralegal, Monica Roberts, and in-house counsel, Matt Justus. The Corporate Representative for AT&T was Anthony Lewis. Genesis was represented at the hearing by its outside counsel, W. Stephen Benesh and David Springer of Bracewell LLP, along with a paralegal, Georgette South, and in-house counsel, Anthony Fetter. The Corporate Representative for Genesis was James Goodman. In addition, there were technology representatives from each firm and from Lexitas, which provided technological support and court reporting for the arbitration. I have considered all of the testimony, including the direct examinations and full cross- examinations of witnesses at the hearing; the exhibits submitted in evidence (as well as all reasonable inferences to be derived from that evidence); and the case law and the arguments presented at the hearing and in post-hearing briefs. My assessment is based on the parties’ contracts and applicable law, as well as close attention to the demeanor and content of the witnesses' testimony, the contemporaneous writings and actions of key actors involved, and the candor demonstrated. The facts stated in my analysis are those found by me to be true and necessary to this Award. To the extent that my description differs from a party's position, that is the result of determinations as to relevance, burden of proof, weighing of record evidence and credibility as well as the parties' contemporaneous interactions and negotiations, and discounting inconsistent positions or rejecting certain arguments made in the arbitration. Party Positions The summary below is not an exhaustive restatement of the parties' respective assertions. JT assume the parties' familiarity with the underlying facts pleaded and offered in proof by bothsides and the roles of the various people who are cited, and I do not repeat here all of the background facts that gave rise to the relevant aspects of their relationship or to their later disputes except as needed. AT&T claims that Genesis failed to uphold its contractual obligations under the parties’ Value Added Reseller (“VAR”) Agreement and the supplement thereto (the “VAR Supplement”). First, AT&T alleges that Genesis failed to bind its subcontractor, Technicolor Connected Home USA, LLC (“Technicolor”), to mirrored terms of the VAR Agreement, as required under section 4.22 of that agreement. As a result, AT&T was forced to defend against a lawsuit brought by Technicolor in a Georgia state court. Second, AT&T argues that Genesis failed to indemnify and defend AT&T in that lawsuit pursuant to section 3.13 of the VAR. Finally, AT&T contends that Genesis failed to contribute to the settlement of the Georgia lawsuit after inducing AT&T to settle the action with an enforceable offer of settlement authority. Genesis disputes AT&T’s theory of the case and contends that the absence of the mirrored terms in its contract with Technicolor was caused by AT&T and, in any event, Genesis was not under a duty to bind Technicolor to mirrored terms because Technicolor was not a subcontractor to Genesis. Genesis also disputes AT&T’s claim that it was required to defend and indemnify AT&T on grounds that the obligation to do so had not been triggered. Finally, Genesis challenges the existence of an enforceable settlement, claiming instead that AT&T rejected a material term of its settlement offer. Analysis While, as stated above, I do not undertake an exhaustive recitation of the parties' conduct, it is important to note that conduct has been given appropriate weight when its consideration is legally necessary to resolve substantive issues presented. My evidentiary analysis does not address each element of each assertion or position taken, but rather the material and relevant evidence relating to dispositive issues, focusing on the issues pressed most heavily by the parties and critical to the disposition of the claims. The omission of an issue of fact or an argument from the discussion does not imply any specific conclusion as to how the issue was determined or whether the issue was reached or not, but only that it was not deemed essential to support the rulings in this Interim Award.I hereby find and conclude, for purposes of this Interim Award, as follows: Background Facts In July 2011, AT&T and Cisco Systems, Inc. (“Cisco”) entered into a Subordinate Material Agreement governing the supply of products for AT&T’s Digital Life product line, which provides a platform for home automation and security functions. Of particular significance to this arbitration, Cisco manufactured and supplied the Digital Life Controllers (“DLCs”) to AT&T, which served as the “brain” for the Digital Life systems and ran the Digital Life software. In November 2015, Technicolor purchased the DLC product line from Cisco and assumed the manufacturing of the DLCs. Because AT&T and Technicolor did not have a contractual relationship, AT&T could not, based on company policy, purchase the DLCs from Technicolor. Thus, to facilitate ongoing sales to AT&T, Technicolor and Cisco entered into a transitional services agreement (“TSA”) to temporarily permit AT&T to order DLCs from Cisco while AT&T and Technicolor negotiated and implemented their own direct written contract. The TSA was set to expire in July 2016. In December 2015, Technicolor and AT&T launched a new series of the DLC — the DLC-200. Although they did not yet have a master agreement in place, in March 2016, Technicolor and AT&T agreed upon discounted volume-tiered pricing. Technicolor and AT&T reached this agreement based on Technicolor’s desire to prevent a competitor from entering the market. Despite their efforts, AT&T and Technicolor were unable to execute a contract before the expiration of the TSA in mid-2016. In order to avoid interruption in the supply of products for the Digital Life product line, AT&T and Technicolor turned to Genesis, who already served as a long-standing reseller for AT&T, to facilitate the purchasing of DLCs and batteries from Technicolor, while AT&T and Technicolor continued to negotiate a master agreement. On August 19, 2016, AT&T and Genesis supplemented their VAR Agreement, which governed AT&T and Genesis’s business relationship. The sole purpose of executing the VAR Supplement was to memorialize Genesis’s role as a reseller of the Technicolor-manufacturedDLCs and batteries to AT&T. At the same time, Genesis and Technicolor memorialized the terms of their agreement by entering into a Letter of Intent (“LOT”) in July 2016, and a subsequent Letter of Agreement (“LOA”) on September 28, 2016, which enabled Genesis to perform its obligations to deliver DLCs and batteries to AT&T under the VAR Supplement. Pursuant to the terms of the VAR Supplement, the LOI and the LOA, AT&T submitted purchase orders for DLCs to Genesis and Genesis, in turn, issued mirrored purchase orders to Technicolor. Genesis invoiced AT&T for the DLCs. Within sixty days of issuing the invoice to AT&T, Genesis would remit payment to Technicolor. To ensure that supply would meet demand, the VAR Agreement and the VAR Supplement provided that AT&T would forecast its projected need for DLCs and batteries through weekly rolling Collaborative Planning Forecasting and Replenishment (“CPFR”) documents. AT&T provided both Genesis and Technicolor with weekly forecasts of their production needs through these documents, which were analyzed, reviewed and discussed during weekly telephone calls with representatives of all three parties present during the calls. Beginning in October 2016, AT&T’s CPFRs indicated a significant decline in its projected need for DLCs and batteries. Technicolor raised its concerns with AT&T regarding the decline in forecasts. is On December 10, 2018, Technicolor filed a lawsuit against AT&T in a Georgia state court for breach of contract, promissory estoppel, and negligent misrepresentation, seeking damages in excess of $33 million. Technicolor’s claims were based on AT&T’s alleged decrease in its forecasted projected need for DLCs and batteries, and their failure to purchase DLCs and batteries at quantities indicated in their forecasting documents a Technicolor alleged in the Complaint that “[t]he parties entered into an agreement pursuant to which Technicolor would provide DLC units and batteries to AT&T at agreed-uponpricing and at quantities set forth in the CPFRs provided by AT&T. See Complaint, at | 69. Technicolor further asserted that AT&T repeatedly promised and/or represented that it would purchase “quantities of DLCs and DLC batteries consistent with the CPFRs provided by AT&T from time to time.” Jd. at §§] 77, 87. On December 28, 2018, AT&T tendered the lawsuit to Genesis pursuant to section 3.13(a) of the VAR Agreement, which provides that Genesis would defend and indemnify AT&T for any claim “arising from or in connection with, or resulting from” the “Materials or Services furnished by [Genesis]” or any “acts or omissions” with respect to the VAR Agreement. See J-2, at § 3.13. AT&T also requested that Genesis provide a copy of its contract with Technicolor to assist in the defense of the lawsuit. After issuing several demands to produce the contract, Genesis produced a copy to AT&T, which revealed that the contract did not contain a provision describing AT&T’s forecasts as non-binding, impacting AT&T’s ability to defend against the lawsuit. In the interim, AT&T moved to dismiss Technicolor’s claims. On November 7, 2019, the Georgia court denied AT&T’s motion to dismiss, finding that if Technicolor’s allegations were true, Technicolor had alleged a cognizable claim for breach of contract. See Order (Ex. L to Statement of Claims). On January 17, 2020, Genesis denied AT&T’s request for defense and indemnification, claiming that the Georgia court’s ruling on AT&T’s motion to dismiss precluded AT&T’s indemnity demand because “the court found that AT&T and Technicolor entered into a separate agreement pursuant to which Technicolor would provide ‘discounted volume-tiered pricing based on high purchase volume thresholds of more than half-a-million units for DLC products,’” and AT&T would ‘purchase quantities consistent with the CPFRs provided to Technicolor.”” J- 74. (As I discuss later in this decision, there is insufficient evidence to conclude that AT&T and Technicolor had entered into a separate agreement.) In response, AT&T filed this Arbitration on February 19, 2020. On March 3, 2020, AT&T and Technicolor mediated the claims in the Georgia lawsuit. While the mediation was ongoing, Genesis offered AT&T $8 million toward the settlement of Technicolor’s claims. In exchange, Genesis requested that AT&T “work in good faith to provideGenesis with future business opportunities consistent with Genesis’s contribution to the settlement of this lawsuit.” J-76. AT&T and Technicolor were unable to settle the claims that day, but the mediation was left open. On March 25, 2020, Genesis increased the amount offered from $8 million to $12 million. Genesis once again requested future business opportunities from AT&T and also asserted that AT&T could not offset unpaid settlement amounts from amounts otherwise due Genesis. J-77. On March 27, 2020, AT&T and Technicolor reached a settlement a | AT&T and Technicolor also agreed to assign to AT&T any claims against Genesis relative to the Georgia lawsuit. AT&T communicated the tentative settlement agreement to Genesis on April 2, 2020. On May 18, 2020, after AT&T finalized the terms of a formal agreement with Technicolor, AT&T requested that Genesis “provide proposed terms for installment payments” and informed Genesis that it “would not be willing to relinquish its setoff rights against Genesis or its affiliates, [but would] welcome suggestions as to other forms of security sufficient to ensure AT&T will collect the full lm over the six-year payment term.” J-79. In response, Genesis withdrew its March 25, 2020 offer, claiming that AT&T’s May 18 email “constituted a rejection of Genesis’ offer and a counter-offer, not an acceptance.” Id. The Controlling Law The VAR Agreement specifically provides that the laws of the State of Texas govern this Arbitration. See J-2, at § 3.11. The VAR Agreement and the VAR Supplement contain several key contract provisions that are at the center of the parties’ dispute, which I will discuss in turn as they pertain to the arguments raised by each party. Claims Raised I. Genesis ’s Breach of the VAR Agreement AT&T first claims that Genesis failed to uphold its contractual obligation pursuant to Section 4.22 of the VAR Agreement, which provides that Genesis must “bind every subcontractor to the terms of [the VAR] Agreement.” See J-2, at § 4.22. Central to the parties’dispute is Section 4.28 of the VAR Agreement, which provides a thorough explanation of AT&T’s forecasting policies and procedures. Under this section, AT&T asserts no less than three times that its forecasts are not binding, are not commitments of any kind, and do not create any obligation to place purchase orders based on the forecasts: a. AT&T shall use commercially reasonable efforts to provide Supplier with a six (6) month rolling forecast updated by the tenth (10) business day of each month, showing prospective Orders by product model, forecasted order date and estimated Delivery Date. Such forecasts are for planning purposes only, and do not constitute commitments of any kind and shall not be binding on AT&T nor shall 7 create 7 7 or ie on the - ‘ AT&T. ee b. Without limiting the generality of the foregoing, such forecasts shall not obligate AT&T to place any Orders, nor for supplier to fulfill Orders subsequently placed by AT&T except as provided herein. While AT&T will provide forecast to Supplier to help Supplier plan future order requirements, AT&T reserves the right to place Orders based on price, quality of Material, performance of Material, and on going Supplier Scorecard reviews. Supplier’s ability to maintain business will be contingent on their ability to meet or exceed the above requirements. * RK However, as stated above any notice provided by AT&T shall not obligate AT&T to any specific commitment to purchase for any Material outside of Orders already placed. AT&T shall, in good faith, work to diminish any inventory held (excluding raw material) by Supplier upon suchnotice of termination as applicable under Section entitled “Cancellation and Termination”. J-2, at § 4.28 (emphasis added). It is undisputed that both the LOI and LOA between Genesis and Technicolor do not contain any reference to these terms or otherwise discuss the non-binding nature of AT&T’s forecasts. Rather, Genesis contends that it was not required to bind Technicolor to these terms because (1) Technicolor was not a subcontractor for purposes of section 4,22 of the VAR Agreement; and (2) because Technicolor’s refusal to agree to these terms was caused by AT&T. I find both of these arguments to be unpersuasive. A. Technicolor’s Role as a Subcontractor At the outset, the record demonstrates that Genesis understood its obligation to bind Technicolor to the non-binding nature of the forecasts in accordance with Section 4.28. First, while attempting to negotiate a master agreement with Technicolor, Genesis included a nearly verbatim recitation of section 4.28, including the language regarding the non-binding, non- committal nature of the forecasts. See J-15, at page 44. Moreover, James Goodman, the chairman and CEO of Genesis, admitted that “Genesis was required to bind subcontractors it used under the VAR [A]greement to the terms of the VAR [A]greement,” including the term that AT&T’s forecasts are non-binding. See J-89, at 54:10-23, 103:14-104:23; see also Day | Tr., at 263:17-265:6.' Genesis’s contention that Technicolor was not a subcontractor is belied by the record. Section 2.28 of the VAR Agreement provides the following unambiguous definition of a subcontractor: 1 Although Mr. Goodman qualified his answer during the hearing by disputing the fact that Technicolor was a subcontractor, Mr. Goodman’s testimony was unequivocal that Genesis was required to bind subcontractors to the terms of the VAR Agreement. See Day 1 Tr., at 263:17- 265:6.“Subcontractor” or “subcontractor” means any person or entity (including an agent) supplying labor or materials to perform any or all of Supplier’s obligations under this Agreement, including any person or entity at any tier of subcontractors, and shall not be limited to those persons or entities with a direct relationship with supplier. J-2, at § 2.28. The contractual agreements at issue here — between AT&T and Genesis on the one hand, and between Genesis and Technicolor on the other hand — address the role that each party played in the supply chain of DLCs to AT&T. Although Genesis claims that it “was a mere facilitator of the primary partnership between AT&T and Technicolor,” the exhibits and testimony reflect an entirely different reality. The VAR Supplement and Genesis and Technicolor’s LOI and LOA demonstrate that all obligations owed to AT&T rested exclusively with Genesis. Genesis issued purchase orders to Technicolor based on the purchase orders it received from AT&T. AT&T never submitted purchase orders to Technicolor. [iis a Day 1 Tr., at 177:8-178:18. Technicolor supplied the DLCs to Genesis directly, and Genesis would “resell [the] material to AT&T.” See J-24, at ff 6, 8. Genesis would then invoice AT&T for the DLCs and would “submit payment to Technicolor within 60 days of the date of invoice to AT&T.” See J- 23; see also Day 1 Tr., at 177:8-178:7, 259:3-8; see also J-91, at 47:6-48:1. Thus, pursuant to this contractual arrangement, Technicolor supplied Genesis with the DLCs necessary to fulfill the purchase orders that AT&T submitted to Genesis. Under the clear and unambiguous language of the VAR Agreement, Technicolor, therefore, was “supplying materials [to Genesis] to perform any or all of [Genesis’s] obligations under [the VAR] Agreement,” which I find matches the definition of a subcontractor for purposes of the agreement. I further find that Genesis’s attempt to label Technicolor exclusively as an Original Equipment Manufacturer (“OEM”) rather than a subcontractor to avoid this conclusion is misplaced. Although Technicolor, as the manufacturer of the DLCs at issue, is undoubtedly an 10OEM, by virtue of the parties’ relationships, Technicolor was also a subcontractor to Genesis. There is no provision in the VAR Agreement or VAR Supplement that supports the conclusion that Technicolor’s status as an OEM and as a subcontractor to Genesis’s contractual relationship with AT&T must be mutually exclusive. Genesis’s claim that Technicolor was not a subcontractor because Technicolor chose Genesis similarly fails. Simply, Genesis continues to ignore or fails to recognize the role of each party in the contractual arrangements at issue in this Arbitration. The plain terms of each contract demonstrate that under the definition provided in section 2.28 of the VAR Agreement, Technicolor acted as a subcontractor to Genesis in the supply chain of DLCs to AT&T. B. Technicolor’s Refusal to Agree to Non-Binding Forecast Term Finally, there is no compelling evidence that the absence of the non-binding nature of AT&T’s forecasting in Genesis’s LOA with Technicolor was caused by AT&T. Genesis alleges that while attempting to negotiate a Master Service Agreement (“MSA”) with AT&T, Technicolor refused to agree to the term that AT&T’s forecasts were non-binding, and that this obviated the need for Genesis to enforce this term in its agreement with Technicolor. This argument is flawed for several reasons. First, the parties offered competing testimony as to the timing and circumstances of Technicolor’s alleged rejection of the non-binding term in its negotiations with AT&T regarding a MSA. While Genesis argues that AT&T’s conduct and “inability to consummate a written agreement with Technicolor that contained ‘forecasts aren’t binding’ language” caused Technicolor to reject the same term in the LOI and LOA, Mr. Shreeram admitted that he was unsure about the timing of Technicolor’s rejection. See J-91, at 102:7-103:4. Meanwhile, Philip Jurecky, a senior sourcing manager in the supply chain at AT&T, testified during the hearing that Technicolor did not reject this term until 2017. See Day 2 Tr., at 430:2-15, 433:2-434:3, 454:12- 455:15. Neither party, however, could offer definitive evidence regarding the timing of Technicolor’s apparent rejection of the term. The rationale for Technicolor’s alleged rejection of the term in its LOI and LOA with Genesis was equally inconclusive. Jason Shreeram, Technicolor’s corporate representative, 11initially testified that Technicolor removed the term from the LOI because of “expediency” issues. Mr. Shreeram explained that the negotiations with Genesis were very difficult and long and they “didn’t have that time to go through a 50- or 60-page document.” See J-91, at 39:20- 41:17. This testimony seemingly competes with Mr. Shreeram’s testimony that Technicolor’s legal team rejected the term because it “didn’t want to put terms out to Genesis that weren’t going to be reciprocal in our MSA [with AT&T]. So we didn’t want any of this until we had something that, you, know, we had a like-for-like between AT&T and Technicolor.” See id. at 42:2-43:20, 107:12-108:25. Absent clear evidence that Technicolor refused this term with Genesis because of its negotiations with AT&T, I cannot conclude that Genesis was under no obligation to include this term in its contract with Technicolor because it was the fault of AT&T. Even if Genesis had offered sufficient evidence, Genesis, by its own admission, was required to bind subcontractors to the terms of the VAR Agreement, not the terms of AT&T’s MSA. Thus, even if Genesis had established that Technicolor rejected this term because it would be inconsistent with its MSA with AT&T, Genesis has not established that it was relieved of its duty and obligation to bind Technicolor to this provision, particularly because Genesis never notified AT&T that Technicolor refused to agree to the non-binding forecast term. See Day 1 Tr., at 133:11-15; Day 2 Tr., at 444:15-19. Accordingly, because the VAR Agreement required Genesis to bind Technicolor to the terms and Genesis failed to do so, and Genesis’s claims are unpersuasive, I conclude that AT&T has established a breach of contract. Il. Genesis’s Breach of its Duty to Defend and Indemnify for Failing to Include a Non- Binding Forecast Term AT&T’s second claim is that Genesis failed to uphold its contractual obligation to indemnify AT&T in the Georgia lawsuit. The duty to indemnify and defend, provided by Section 3.13 of the VAR Agreement, requires Genesis to indemnify AT&T for “any Loss arising from or in connection with, or resulting from the Materials or Services furnished by [Genesis] or [Genesis]’s acts or omissions with respect to [the VAR] Agreement.” See J-2, at 3.13(a)-(b). A “Loss” includes any “... suit, cause of action, [or] settlement payment.” Jd. 12AT&T specifically alleges that in addition to constituting an independent breach of the VAR Agreement, Genesis’s failure to include the non-binding forecast term in its agreement with Technicolor constitutes an omission from which Technicolor’s Georgia lawsuit arose, requiring Genesis to indemnify and defend AT&T. I agree. Mr. Shreeram’s testimony establishes that Technicolor’s claims in the Georgia lawsuit were based on AT&T’s declining forecasts Pe HE )-9 1, 2¢ 61:16-23, 63:16-19. Technicolor’s lawsuit, therefore, arose out of AT&T’s forecasts and purchase orders for DLCs, which the parties agreed constitute a “Material” under the VAR Agreement. See Day 1 Tr., at 163:12-16; Day 2 Tr., at 258:22-24. Moreover, Technicolor’s lawsuit was based on AT&T’s alleged breach of the forecasts, which the VAR Agreement identified as non-binding. Thus, Genesis’s failure to incorporate the non-binding nature of AT&T’s forecasts in the LOA directly resulted in the Georgia litigation. AT&T has sufficiently demonstrated that under Texas law, broad “arising from” language means only that “there must be ‘some nexus between’ the actions taken or omitted.” See AT&T’s Post-Hearing Brief, at 15 (citing Crimson Exploration, Inc. v. Intermarket Mgmt., LLC, 341 S.W.3d 432, 443 (Tex. App. — Houston [1st Dist.] 2010, no pet.); Coastal Mart Inc. v. Sw. Bell Tel. Co., 154 S.W.3d 839, 845 (Tex. App. — Corpus Christi 2005, pet. Granted, jdugm’t vacated); Banner Sign & Barricade, Inc. v. Berry GP, Inc., 2008 WL 4352634, at *5-6 (Tex. App. — Corpus Christi-Edinburg Sept. 25, 2008, pet denied)). The direct link between the failure to include the relevant term and Technicolor’s claims against AT&T undoubtedly meet this threshold. Genesis’s assertion that AT&T’s claim for indemnity falls outside the scope of the indemnity provision because Technicolor’s claims against AT&T arose out of a separate oral contract between Technicolor and AT&T is not supported by any evidence. Genesis admitted, through Mr. Goodman’s testimony, that it was not aware of the terms of this contract between +g & AT&T and Technicolor, but instead was taking Technicolor’s existed.” See Day 1 Tr., at 337:23-338:13. ‘word for it that this agreement 13Genesis, however, relies on Mr. Shreeram’s testimony that AT&T and Technicolor entered into a “good faith agreement” for a discounted volume-tiered pricing agreement. See J- 91, at 125:12-127:24. Notably absent from Mr. Shreeram’s testimony regarding this “good faith agreement” was any claim that AT&T committed to purchase a particular volume of DLCs. At most, Mr. Shreeram alleged that AT&T entered into a good faith agreement that Technicolor would provide discounted volume-tiered pricing in exchange for AT&T’s agreement to make purchases consistent with their CPFRs. See J-91, at 131:13-25. Mr. Shreeram admitted that AT&T did not agree to purchase any specific number of DLCs. See J-91, at 184:14-16. Mr. Shreeram further testified that he understood that there was a distinction between inventory not committed and AT&T’s purchase orders. See J-91, at 58:2-61:21. The record also reflects that the parties agreed to the discounted volume-tiered pricing arrangement to prevent Technicolor’s competitors from interfering with the market share, since the discount pricing would incentivize AT&T to procure more product from Technicolor rather than from other suppliers. See Day 1 Tr., at 213:12-19, 214:7-23; Day 2 Tr., at 435:15-436:7; see also 191, :16-71, As Genesis acknowledges, “[o]bjective manifestations of intent control.” See Genesis’s Post-Hearing Brief, at 19 (quoting UR/, Inc. v. Kelberg Cty., 543 S.W.3d 755, 763-64 (Tex. 2018)). Based on the objective intent of the parties described above, there is no evidence that AT&T and Technicolor intended to, or did, enter into a separate contract for DLCs. At all relevant times, the obligations with respect to the purchase and sale of DLCs flowed exclusively through the parties’ contractual agreements with Genesis. The discounted volume-tiered pricing did not alter this arrangement. 14Genesis next engages in semantics in an attempt to avoid a finding of a duty to indemnify by claiming that Technicolor’s claims against AT&T “concern the lack of materials or services” rather than the furnishing of materials and services. See id. at 34, § 61. I find Genesis’s attempt to distinguish between DLCs that ultimately were not purchased and DLCs that were purchased insufficient to defeat the broad language of the indemnity clause. As previously discussed, AT&T was only required to demonstrate “some nexus” between the lawsuit and the “Materials or Services” furnished by Genesis. Here, the claims in Technicolor’s lawsuit involved the DLCs, which again constituted a “Material” furnished by Genesis, thus triggering Genesis’s obligation to indemnify AT&T in the lawsuit. Accordingly, I conclude that Genesis failed to uphold its contractual obligation to indemnify AT&T in the Georgia lawsuit. Ill. — Inducement to Settle AT&T also argues that it suffered a loss under section 3.13 of the VAR Agreement when Genesis induced AT&T to settle Technicolor’s claims through its March 25, 2020 offer of $12 million toward the settlement of the claims, but failed to contribute to the settlement. For the following reasons, I am persuaded that Genesis’s conduct and March 25, 2020 email offering $12 million toward a settlement did induce AT&T to settle the claims brought against it by Technicolor in the Georgia lawsuit. First, despite Genesis’s refusal to indemnify AT&T in the Georgia lawsuit, Mr. Goodman had assured AT&T that “all roads lead to me.” J-57. Mr. Goodman testified that he wanted to convey to AT&T that although he could not represent AT&T or settle the claims on its behalf, he would “do [his] best to try to go help resolve [the claims].” See Day 1 Tr., at 314:8-315:10; 367:3-19. AT&T initially did not engage in settlement discussions with Technicolor based on Mr. Goodman’s assurances. See Day | Tr., at 193:3-17. Second, within two days of Genesis’s March 25, 2020 offer of $12 million toward the settlement, AT&T settled Technicolor’s claims. Both Thornton Fears, the assistant vice president for AT&T’s Digital Life business unit, and Ms. Pulliam credibly testified that AT&T settled Technicolor’s claims based upon what they reasonably perceived as the settlement authority (specifically, $12 million) provided by Genesis. See Day 1 Tr., at 194:5-20; Day 2 Tr., 15at 614:22-615:8. The timing and the substance of the settlement with Technicolor demonstrate that Genesis’s March 25, 2020 offer gave AT&T the clear indication to proceed to settle the claims, which is sufficient, in my view, to satisfy the theory of inducement. Third, AT&T’s emails notifying Genesis of its settlement with Technicolor support the conclusion that AT&T believed that the settlement was in accordance with Genesis’s March 25, 2020 offer, subject to final discussions. In its April 2, 2020 email, AT&T informed Genesis that it had reached an agreement with Technicolor “to settle its claims against AT&T for a. subject to finalizing and memorializing the terms of a formal agreement. Given this development, AT&T looks forward to finalizing discussions with Genesis.” J-79. Then, on May 18, 2020, following its negotiations with Technicolor, AT&T provided Genesis with an update regarding the status of its settlement agreement with Technicolor and, for the first time, directly responded to and purported to accept the terms of Genesis’s March 25 settlement offer, stating: AT&T and Technicolor have agreed in principle settlement payment will be well below the $12 million in settlement authority Genesis granted to AT&T back on March 25. Additionally, and subject to finalization of the settlement agreement, Technicolor also has agreed to assign to AT&T any and all claims it may have against Genesis relative to the claims in the Georgia Litigation, which AT&T will release (along with AT&T’s claims against Genesis in this arbitration) in exchange for Genesis’s payment Thus, subject to finalization of the Technicolor settlement, AT&T and Genesis have now reached agreement on the essential terms of a settlement. Please provide proposed terms for installment payments that would be in line with Genesis’s forecasted business. Although AT&T presently would not be willing to relinquish its setoff rights against Genesis or its affiliates, we welcome suggestions as to other forms of security sufficient to ensure AT&T will collect the full —») over the six-year payment term. 16We'd appreciate you getting back to us with your thoughts by Wednesday so that we can begin drafting a formal agreement to memorialize the settlement. Id. Genesis’s May 19, 2020 response to AT&T’s purported acceptance marked the first time that Genesis indicated that AT&T’s view of the essential terms of the offer was not aligned with its own view. Specifically, while AT&T viewed the no-offsets and future business terms to be negotiable terms regarding the structure of payments and security reserved for the final memorialization of the settlement agreement, in this correspondence, Genesis expressed that these terms were essential: As you may recall ... my client’s proposal, apart from installation payments, included assurance by AT&T of no set-offs or deductions and confirmation by AT&T of an effort to provide future business to my client that [i]s consistent with my client’s financial contribution toward settlement. Without a conversation about these additional proposed terms, it makes little sense to discuss a settlement sum. Without consideration of these additional terms, your “good news” is really just an invitation for Genesis to pay AT&T = = instead of $12 million, to settle a claim that Genesis does not regard as well grounded. Id. I find it significant that despite Genesis’s protestation that “it makes little sense to discuss a settlement sum,” Genesis had already done precisely that — twice — by this time by offering specific amounts to be applied toward settlement: first on March 3, and again on March 25, 2020. That glaring contradiction alone leads me to conclude that AT&T’s view that it had reached an agreement as to the settlement amount, and was authorized to engage in settlement discussions with Technicolor based on that offer, was reasonable under the circumstances that existed at the time. Specifically, I find that Mr. Goodman’s assurances to resolve the matter, coupled with Genesis’s offer to contribute $12 million toward the settlement, and AT&T’s belief that the settlement amount and full release of liability were the only essential terms to Genesis’s offer, induced AT&T to settle with Technicolor. 17IV. Genesis’s Breach of Enforceable Settlement Agreement However, AT&T’s argument that Genesis committed a breach of contract when it reneged upon and withdrew an enforceable settlement agreement must be rejected. AT&T contends that because the parties agreed to the settlement amount and a release of liability, the essential terms were met and any outstanding issues concerning payment installments, payment term, and security did not render the settlement agreement unenforceable under Texas law. See Gen. Metal Fabricating Corp. v. Stergion, 438 S.W.3d 737 (Tex. App. — Houston [1st Dist.] 2014, no pet.); Montanaro v. Montanaro, 946 S.W.2d 428, 431 (Tex. App. — Corpus Christi 1997, no writ.). Conversely, Genesis claims that AT&T’s response to the March 25, 2020 offer was a rejection of an essential term and counter-offer — specifically, AT&T’s refusal to relinquish its setoff rights against Genesis or agree to future business opportunities. Although Genesis claims that a promise of “future business” was an essential term, I find that Mr. Goodman’s testimony establishes that the request for future business was nothing more than “a hope” to do strategic business together to reduce the financial impact to Genesis. See Day 1 Tr., at 321:1-322:18. Mr. Goodman understood that AT&T had a company policy that prohibits quid pro quos, and thus was looking for a way to structure an agreement “that wouldn’t have been a quid pro quo and would have met, you know, both AT&T and Genesis’ needs.” Id. at 323:10-15. Based on this testimony, I find that Genesis knew its request for future business opportunities would be a point of further negotiation and discussion, and subjectively understood that it was not an essential term. AT&T’s failure to explicitly agree to Genesis’s term for future business opportunities did not constitute a rejection of an essential term. But, with respect to Genesis’s contention that the no-offsets term was a material term to its settlement offer, I find that this issue is a very close call. Under Texas law, I am required to discern whether, based upon the intent of the parties, the term is a “vitally important element[] of their bargain.” See Kanan v. Plantation Homeowner's Ass'n Inc., 407 S.W.3d 320 (Tex. App. — Corpus Christi-Edinburg 2013, no pet.); Southern v. Goetting, 353 S.W.3d 295, 300 (Tex. App. — El Paso 2011, pet. denied). Based upon my review of the testimony and evidence submitted on this issue, I find that the no-offset term was “vitally important” to Genesis. It is important to 18emphasize that Genesis’s intent here is entitled to the weight it deserves as the party authorizing payment, despite AT&T’s otherwise reasonable understanding which induced it to settle. Genesis attached a condition to that payment. And Mr. Goodman’s testimony revealed that Genesis included that term with intentionality because it would suffer severe financial hardship and could not “continue to be a financially viable company” if AT&T were able to offset the $12 million against Genesis’s receivables. See Day 1 Tr., at 378:2-16. It is impossible for me to conclude that AT&T’s response was not a rejection of that term under Texas law. Accordingly, and despite my finding of inducement, and only with the benefit of a thorough retrospective analysis of later correspondence and testimony regarding Genesis’s intent behind each term of its March 25, 2020 offer, I am constrained to conclude that AT&T’s view that an agreement was reached as to the essential terms of Genesis’s offer cannot be squared with Texas law. Because of this, I do not find that an enforceable settlement agreement existed between Genesis and AT&T, and therefore Genesis’s withdrawal of the offer does not constitute an independent breach of contract. Interim Award Based on the foregoing findings and conclusions, the undersigned Arbitrator hereby enters judgment in favor of AT&T. Pursuant to the August 26, 2020 Order on Pre-Hearing and Hearing Logistics, AT&T is directed to submit a fee petition within two weeks of the date of this Interim Award. Genesis’s response to AT&T’s fee petition is due within one week after receipt of AT&T’s fee petition. My final award will be issued within two weeks thereafter. jews Timothy K. Lewis Dated: November 18, 2020 19EXHIBIT BAMERICAN ARBITRATION ASSOCIATION AAA NO. 01-20-0000-5855 AT&T SERVICES, INC., Claimant, vs. GENESIS NETWORKS TELECOM SERVICES, LLC, Respondent. FINAL AWARD In my Interim Award, dated November 18, 2020, I entered judgment in favor of AT&T. That judgment reflected my conclusion that Genesis breached the parties’ VAR Agreement by failing to uphold its contractual obligation to bind Technicolor to a non-binding forecast term and by failing to uphold its contractual obligation to indemnify AT&T in the Georgia lawsuit brought by Technicolor. I also found that AT&T suffered a loss under section 3.13 of the VAR Agreement when Genesis induced AT&T to settle the underlying Technicolor action but failed to contribute to the settlement, although I also concluded that the settlement agreement was not enforceable. On December 2, 2020, AT&T submitted a Fee Petition pursuant to the August 26, 2020 Order on Pre-Hearing and Hearing Logistics, seeking $787,489.69 in attorneys’ fees and $112,747.36 in expenses and costs in connection with its prosecution of this arbitration. Genesis timely filed a Response in opposition on December 14, 2020. Although Genesis did not challenge the majority of AT&T’s Fee Petition, Genesis disputed (1) the reasonableness and necessity of AT&T’s request for attorneys’ fees attributable to C. Allen Garrett, Jr.; and (2) AT&T’s request for “attorneys” fees incurred in connection with the prosecution of [AT&T’s] unsuccessful claim that Genesis breached an agreement to participate in a settlement of the underlying dispute.” See Response at §{ 7-8.After reviewing the VAR Agreement and the parties’ submissions, I have concluded that AT&T’s requested attorneys’ fees are appropriate and reasonable in terms of both the hourly rates and the amount of hours devoted to the prosecution of this arbitration, with one exception. Upon consideration of Genesis’s claim that Mr. Garrett’s attorneys’ fees should be excluded on the grounds that his participation was “redundant, excessive, and unnecessary,” I conclude that Mr. Garrett’s fees should be reduced by $978.75. In reaching my conclusion, I reject a wholesale exclusion of Mr. Garrett’s fees. First, I am unpersuaded that Mr. Garrett’s billing was excessive. With the exception of the June 1, 2020 time entry raised in Genesis’s Response, I have found no other instance of an unreasonable amount of time spent by Mr. Garrett to perform the services described in his time entries. Moreover, my careful review of the time entries submitted by AT&T reveals no widespread duplication of efforts or billing by Mr. Garrett and Mr. Jett such that the trial team’s consultation with Mr. Garrett was “redundant, excessive, and unnecessary.” To the contrary, the time entries demonstrate that Mr. Garrett’s efforts in this arbitration were centered on legal and strategic analysis, while Mr. Jett engaged in professional services that included drafting outlines/submissions, participating in depositions and hearings, consulting with representatives at AT&T, and conferring with Genesis’s counsel. By extension, these time entries explain Mr. Garrett’s role in this arbitration and undercut Genesis’s contention that Mr. Garrett’s participation was unnecessary because he did not “appear on any filing in this arbitration or on any phone call or at any hearing, much less [was] never once [] visible to the Arbitrator and other parties.” See Genesis’s Response at {| 18. Nevertheless, while I do not believe Mr. Garrett’s fees should be excluded in their entirety, I agree with Genesis that Mr. Garrett’s June 1, 2020 time entry for “review[ing] arbitrator’s orders denying leave to file dispositive motions” was excessive. See id. at § 19. Accordingly, AT&T’s request for attorneys’ fees will be reduced by $978.75. With respect to the second dispute raised by Genesis, I am unpersuaded by Genesis’s argument that AT&T’s request for fees relating to its claims that Genesis committed a breach of an enforceable settlement agreement are not appropriate. As Genesis itself asserts, there is no need to segregate fees “when the attorney’s fees rendered are in connection with claims arisingout of the same transaction and are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts.” See Genesis’s Fee Petition Response, at 8, § 26. In this arbitration, AT&T presented two separate theories of breach relating to AT&T’s settlement with Technicolor: (1) that Genesis induced AT&T to settle Technicolor’s claims, and (2) that Genesis committed a breach of contract when it reneged upon and withdrew an enforceable settlement agreement by failing to contribute to the settlement. Both of these claims were based on the same facts and evidence -- specifically, correspondence between AT&T and Genesis at the outset of the Technicolor lawsuit, in March 2020 during the mediation, and after AT&T reached a settlement agreement with Technicolor — and were “inextricably intertwined.” I note that Genesis is correct that “AT&T’s settlement agreement theory is entirely distinct from its other two breach of contract theories” regarding Genesis’s failure to include a non-binding forecast term in its contract with Technicolor and refusal to indemnify and defend AT&T in the Georgia lawsuit. See id. at 10, § 29. However, this ignores my conclusion that although there was no enforceable settlement agreement between Genesis and AT&T, Genesis induced AT&T to settle Technicolor’s claims. Thus, Genesis’s assertion that AT&T was unsuccessful in its prosecution of its claims relating to the settlement is inaccurate to the extent it fails to consider that portion of the Interim Award. Finally, I conclude that AT&T’s request for costs is adequately supported by documentation and reflects the total amount of costs incurred during this arbitration. Accordingly, I FINALLY AWARD as follows with respect to the claims and counterclaims of the parties in these arbitral proceedings: = Pursuant to Section 3.13 of the VAR Agreement, which permits AT&T to recover the losses it suffered, including any “settlement, payment, cost and expense ... and Litigation Expense[s],”” AT&T is awarded $11,420,196.44 in settlement costs, attorneys’ fees, and costs incurred in defending the Technicolor lawsuit for Genesis’s breach of th