A federal appeals court judge today barred Montgomery County from seizing $5 million collateral from Tribune-United Cable Co. but allowed the county to go forward with proceedings in its attempt to revoke the company's cable television franchise.
After a closed proceeding here, Judge Harrison Winter of the U.S. Fourth Circuit Court of Appeals overruled yesterday's decision by a lower court that would have allowed the county to seize collateral funds and impose stiff fines on Tribune-United for halting construction of the cable system and other alleged contract violations.
Winter referred the issue of collateral and fines to a three-judge appellate panel, which will take up the case in January.
"It was a good news, bad news decision," said County Attorney Paul McGuckian. "The good news is the county can proceed with revocation actions . . . . The bad news is the judge enjoined the county from seeking monetary relief until January."
County officials announced last week that as a result of poor service and repeated contract violations, the county would seek to revoke the franchise, seize a $5 million letter of credit and impose $9,000-a-day penalties on Tribune-United.
On Nov. 8, just prior to the county's decison to take action against Tribune-United, the company asked for modifications in its franchise agreement, saying it would have to scale back on promised services it now finds economically unfeasible.
The firm's attorneys argued today that under the federal Cable Communications Policy Act of 1974, the county cannot seize company collateral or impose fines while the company's request to modify its contract is pending. Under the cable act, cable systems like Montgomery's have the right to contract revisions if they can prove that promises they made when they won their franchises have become commercially impractical.
In a written opinion issued late today, Winter said he believes there is "substantial likelihood" that Tribune-United will be able to prove its 1983 franchise agreement should be modified. Such proof would have to be provided to the county in administrative proceedings.
"What is at issue is promises for exotic services and equipment which have failed to materialize, not only in Montgomery County but in cable systems anywhere in the country," said Tribune-United lawyer Jay E. Ricks after today's hearing in Winter's chambers. "The county has simply been skeptical that the franchise is uneconomical."
Lawyers for both sides said they plan to negotiate on the issue of contract changes within the next month. "They'd like to settle it and we'd like to settle it too," said McGuckian.
While those negotiations are going on, the county intends to proceed with its efforts to revoke Tribune-United's franchise.
In his decision today, Winter also ordered Tribune-United to continue to pay salaries and operating expenses for Montgomery County Television, the public access channel.
Tribune-United is seeking to get out of the cable business and is looking for buyers for the cable systems it owns around the country, including the Montgomery system.
Winter refused to allow reporters to attend today's hearing and refused requests to meet with them afterward. He offered no explanation about why the hearing was closed to the press.