The Business Court has dismissed competing fraud claims in a dispute between AT&T and a former service provider over the termination of a lucrative alliance over “kickbacks” allegedly paid by the provider to AT&T employees.
Fiberwave, Inc., f/k/a Spearhead Consulting, Inc. v. AT&T Enterprises, LLC, f/k/a AT&T Corp. v. Fiberwave, Inc., f/k/a Spearhead Consutling, Inc., Spearhead Networks Tech, Inc., Faisal Chaudhry, and Chris Percy (2026 Tex. Bus. 50; July 24, 2026) arose from a contract dispute. In 2022 the parties entered into a contract for services that was subequently terminated for cause. Neither the agreement nor an incorporated “guidebook” defined “cause,” but in any event, the guidebook provided that Fiberwave retained a “vested interest in earned Residual Compensation for Orders or Renewals earning Residual Compensation for no more than 36 monthly payments remaining on an order.” AT&T contended that the 36 monthly payments should be counted from the start date or the order, whereas Fiberwave argued that they should start on the date of termination.
In an opinion by Judge Bouressa, the court determined that the agreement was ambiguous on this point. Since the guidebook also explicitly provided for a vested interest to be retained in certain other compensation “for no more than [a number of] months from the date of Termination,” the court concluded that “[w]here the parties inteneded a time period to run from Termination, they expressly stated as much.” At the same time, however, “remaining” and “no more than” don’t mean the thing, as AT&T asserted. As the court pointed out, “[a]n order does not have an inherent or discernable end date and cannot have ‘remaining’ monthly payments until some other event occurs. If the meaning was as AT&T suggests, the parties could have provided for the vesting of the first 36 monthly payments of an Order’s lifepsan, with no need for ‘remaining.’” Once an order had already generated more than 36 payments, in other words, “a Solution Provider could (theoretically) be on the hook for Chargebacks or Offset for monthly payments disbursed to the Solution Provider—perhaps for many years—before a Termination for cause, with such payments having lost their vested status upon the occurrence of the later cause.” Whatever the guidebook meant, consequently, was a factissue for the jury and extraneous evidence may be admitted to help determine the language’s meaning.”
The court then explained a number of dispositive rulings that it previously made in a July 7 omnibus order. First, Fiberwave asserted a fraudulent inducement claim on the basis that AT&T never intended to perform the 2022 agreement. The court agreed that Fiberwave offered no evidence of such intent, only pure speculation. But even if Fiberwave had come up with some evidence, it wouldn’t make any difference since the court determined that “any reliance on a misrepresentation was unjustified as a matter of law.” Here the 2022 agreement contained a waiver provision and merger clause, both of which “negat[ed] any justificable reliance by Fiberwave on any alleged promise by AT&T to pay post-termination Residual Compensation despite alleged knowledge by AT&T of past conduct that would permit deductions, offsets, or limitations of the same.” Specifically, the agreement provided that “[n]o course of dealing or failure” to strictly enforce any contract provision “will be construed as a general waiver or relinquishment of such” provision. The merger provision likewise ruled out any contradictory external “understandings or representations.”
Similarly, however, AT&T couldn’t prevail on its fraud claim against Chaudhry. AT&T alleged that Chaudhry, an employee of Spearhead, paid kickbacks to AT&T employees “for the purpose of ensuring continued business with AT&T” and sought disgorgement of commissions it would not otherwise have paid had it discovered the fraud. The court found that AT&T didn’t “make a single reference to any exhibit or testimony in its argument concerning Chaudhry’s alleged intent to induce reliance by AT&T,” nor did it “identify any particular law, state or federal, that was violated by the alleged conduct of Chaudhry.” Chaudhry also established the affirmative defense of the economic loss rule. AT&T’s fraud claims against Fiberwave and Percy likewise fell by the wayside for the same reasons.
With the fraud claims dismissed, the parties’ remaining contract claims will head to a jury trial. The court stated that it would permit the introduction of extrinsic evidence at trial to address the ambiguity in the contract and guidebook.
