The Palms of Destin Club, LLC v. Communications Processing Systems Inc.

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-12202
Non-Argument Calendar
____________________
THE PALMS OF DESTIN CLUB, LLC,
Plaintiff-Appellant,
versus
COMMUNICATIONS PROCESSING SYSTEMS INC,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Florida
D.C. Docket No. 3:20-cv-05386-HTC
____________________
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 1 of 16

-- 1 of 16 --

2 Opinion of the Court 21-12202
Before J ILL PRYOR , BRANCH, and BRASHER , Circuit Judges.
PER CURIAM:
The Palms of Destin Club, LLC appeals the magistrate
judge’s denial of its motion for summary judgment and the court’s
grant of summary judgment to Communication Processing
Systems Inc. (CPS), a telecommunications provider.1 The Palms of
Destin Club argues that the district court erred in determining that
CPS is not subject to the exclusivity prohibitions of Section 628 of
the Communications Act of 1934 (codified at 47 U.S.C. § 548) and
implementing Federal Communications Commission (FCC)
regulations, and that its claim for declaratory relief is barred by res
judicata. After review, we affirm.
I. Background
The Palms Resort is a condominium development developed
by DRB Development, LLC (the Development Company),
consisting of two towers and related property, including a
clubhouse and other amenities. The Palms Resort properties are
governed by certain Declarations, Covenants, and Restrictions,
recorded on January 2, 2007. While the Development Company
sold the condominium units to the unit owners, it maintained
ownership of the communal clubhouse property through The
1 The parties consented to the magistrate judge conducting the underlying
proceedings and entering final judgment.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 2 of 16

-- 2 of 16 --

21-12202 Opinion of the Court 3
Palms of Destin Resort, Inc., a Florida company controlled by one
of the Development Company’s affiliates, Becnel/Kelly Club, LLC.
The Palms of Destin Resort and Conference Center Condominium
Association, Inc. (the Condo Association) is the owners’ association
for the Palms Resort which collected member dues and paid them
to the owners of the clubhouse property, The Palms of Destin
Resort, Inc.
Pursuant to the initial Declarations, Covenants, and
Restrictions, the Development Company reserved the right to
construct and install “over, through, under, across and upon any
portion of the Property for the use of the [unit] [o]wners, one or
more cable and/or telecommunication” systems. The
Development Company also reserved a “perpetual and exclusive
right, privilege, easement and right of way for the installation,
construction, and maintenance of the System, together with
perpetual and exclusive right and privilege” of “[u]nlimited ingress
and egress” for “installing, constructing, and inspecting, repairing,
maintaining, altering, moving, improving, and replacing the
facilities and equipment constituting the System.”
Under the initial Declarations, Covenants, and Restrictions, the
Development Company and The Palms of Destin Resort, Inc. also
retained “the right to enter contracts for the exclusive provision of
the System” as they deemed, “in their sole respective discretion, to
be in the best interest of the Property.”
In March 2007, Becnel/Kelly Club—the entity that controlled
The Palms of Destin Resort, Inc.—entered into a service
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 3 of 16

-- 3 of 16 --

4 Opinion of the Court 21-12202
agreement contract with CPS, another entity affiliated with the
Development Company, under which CPS would be the
telecommunications provider to the Palms Resort. Under the
agreement, CPS would charge each unit $75.00 per month for
services for a term of ten years, renewable annually when the term
expired. To facilitate the service agreement contract, the
Development Company entered into other agreements with CPS,
including a lease agreement and the grant of a non-exclusive utility
easement and utility facilities quitclaim deed.
In 2015, the Condo Association sued CPS (as well as
Becnel/Kelly Club and the Development Company) for violating
47 U.S.C. § 548 and 47 C.F.R. § 76.2000, which prohibit cable
operators from harming competition through exclusivity
agreements. 2
The Palms of Destin Resort and Conference Center
Condominium Assoc., Inc. v. Communications Processing
Systems, Inc., Case No. 3:15-cv-212 (N.D. Fla. 2015). 47 U.S.C.
§ 548 states:
It shall be unlawful for a cable operator, a satellite
cable programming vendor in which a cable operator
has an attributable interest, or a satellite broadcast
programming vendor to engage in unfair methods of
2 The Condo Association also sued the parties in state court on other grounds.
The state case was settled with the federal case in the Palms Settlement
Agreement.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 4 of 16

-- 4 of 16 --

21-12202 Opinion of the Court 5
competition or unfair or deceptive acts or practices,
the purpose or effect of which is to hinder
significantly or to prevent any multichannel video
programming distributor from providing satellite
cable programming or satellite broadcast
programming to subscribers or consumers.
47 U.S.C. § 548. This statute also empowers the FCC to
promulgate regulations for this purpose.
Id. § 548(a)–(c). One such
regulation, 47 C.F.R. § 76.2000, states that:
No cable operator or other provider of [multichannel
video programming distributor] service subject to 47
U.S.C. 548 shall enforce or execute any provision in a
contract that grants to it the exclusive right to provide
any video programming service (alone or in
combination with other services) to a [multiple
dwelling unit building]. All such exclusivity clauses
are null and void.
47 C.F.R. § 76.2000(a). In the 2015 lawsuit, the Condo Association
alleged that the Development Company created the Declarations,
Covenants and Restrictions to ensure that its affiliate Becnel/Kelly
Club retained easements and exclusive access to
telecommunications infrastructure so it could grant a
telecommunications contract to another affiliate, CPS. Count 1 of
the 2015 complaint against CPS alleged that the “various contracts
and affiliated operations of the three defendants . . . are in violation
of 47 U.S.C. § 548 and 47 C.F.R. § 76.2000” and asked the court to
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 5 of 16

-- 5 of 16 --

6 Opinion of the Court 21-12202
void the agreements making CPS the exclusive
telecommunications provider for the Palms Resort. Counts 2 and
3 of the complaint asserted the same claims against Becnel/Kelly
Club and the Development Company.
The Condo Association, CPS, Becnel/Kelly Club, and the
Development Company settled the federal and state cases in
January 2016.3 The parties executed a settlement agreement (the
Palms Settlement Agreement) and filed a stipulation of dismissal in
the state and federal courts, and on March 21, 2016, the district
court issued a judgment of dismissal with prejudice.
The Palms Settlement Agreement contained a
“Releases/Dismissals” section, which said that, after “full
performance of all their various obligations,” the parties would
“execute mutually acceptable releases releasing the applicable
Party and their successors and assigns from any further liability
under the agreed upon obligation.” The settlement agreement also
stated that:
CPS is the exclusive provider of cable, telephone,
internet, telecommunications, and receiving and
distribution systems . . . servicing the Palms Resort
and unit owners in the Resort community. The
parties acknowledge that CPS invested significant
capital in developing the infrastructure for the
3 Non-parties with disputes with the Condo Association were also included in
the settlement.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 6 of 16

-- 6 of 16 --

21-12202 Opinion of the Court 7
Telecommunication System that services the Palms
Resort. CPS and Association have reached an
agreement to upgrade the Telecommunications
System as shown in attached Exhibit “H,” which will
be executed simultaneously with this Agreement.
As part of the Palms Settlement Agreement, the Condo Association
and CPS executed an Agreement as to CPS Services and Charges
that was attached to the settlement agreement as Exhibit H and an
Option Agreement that was attached as Exhibit A to the settlement
agreement. Exhibit H, the Agreement as to CPS Services and
Charges, acknowledged the litigation and stated that the two
parties to the agreement, the Condo Association and CPS, “wish to
reach an Agreement for the benefit of all Parties involved and for
the health of the community moving forward.” CPS and the
Condo Association also agreed that CPS would upgrade its
television, internet, and telephone services, while the Condo
Association agreed to a schedule of payments through 2021 and
beyond.
The Option Agreement, Exhibit A of the settlement agreement,
gave the Condo Association the right to purchase the clubhouse
property from Becnel/Kelly Club free of encumbrances except
“the existing easement, agreements, and leases between
[Becnel/Kelly Club]” and “CPS.” The Condo Association and
Becnel/Kelly Club executed a Purchase Agreement on May 16,
2016. Under the Purchase Agreement, the Condo Association
agreed to purchase the clubhouse property subject to any leases or
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 7 of 16

-- 7 of 16 --

8 Opinion of the Court 21-12202
agreements existing at the time. The Purchase Agreement also
included a reservation of the right for Becnel/Kelly Club to extend
the CPS service agreement for an additional forty years, which it
did on October 31, 2016, in an addendum to the original service
agreement between Becnel/Kelly Club and CPS.
The Purchase Agreement required that the Condo Association
form a new entity to hold title to the clubhouse property after the
sale, which it did. The new entity created was The Palms of Destin
Club, the plaintiff in this lawsuit. The Condo Association is the sole
managing member of The Palms of Destin Club. To complete the
transfer of the property from Becnel/Kelly Club to the new entity,
the Condo Association, Becnel/Kelly Club, and The Palms of
Destin Club executed an addendum to the Settlement Agreement
in which The Palms of Destin Club agreed to “be bound by the
terms, conditions and obligations set forth” in the Palms
Settlement Agreement.
The Palms of Destin Club, the Condo Association, and the
Development Company also executed an amendment to the
original Declarations, Covenants, and Restrictions governing The
Palms Resort, re-defining the owner of the clubhouse property as
The Palms of Destin Club (rather than Becnel/Kelly Club), and
amending the declarations to provide that CPS “shall be the sole
and exclusive provider of television, cable, internet and telephone
services” to the Palms Resort.
On April 13, 2020, The Palms of Destin Club filed a complaint
in the Northern District of Florida seeking a declaratory judgment
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 8 of 16

-- 8 of 16 --

21-12202 Opinion of the Court 9
that the “various documents designating CPS as an exclusive
service provider for The Palms community violate” 47 C.F.R.
76.2000 and 47 C.F.R. § 64.25004 and are void. The relevant portion
of 47 C.F.R. § 64.2500 states:
No common carrier shall enter into or enforce any
contract, written or oral, that would in any way restrict
the right of any residential multiunit premises owner, or
any agent or representative thereof, to permit any other
common carrier to access and serve residential tenants
on that premises.
47 C.F.R. § 64.2500(b).
The case was referred to a magistrate judge. CPS filed a motion
to dismiss that was denied. The parties filed cross-motions for
summary judgment. The magistrate judge granted CPS’s motion
for summary judgment, holding that the case was barred by res
judicata and, even if it was not, CPS is not a cable operator subject
to 47 U.S.C. § 548. The magistrate judge denied The Palms of
Destin Club’s motion for summary judgment. The Palms of Destin
Club appeals.
II. Standard of Review
We review a district court’s grant of summary judgment
de
novo, “view[ing] the evidence in the light most favorable to the
4 While the Condo Association sued under 47 C.F.R. § 76.2000 in the 2015
lawsuit, it had not previously sued under 47 C.F.R. § 64.2500.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 9 of 16

-- 9 of 16 --

10 Opinion of the Court 21-12202
non-moving party.”
Gogel v. Kia Motors Mfg. of Georgia, Inc., 967
F.3d 1121, 1134 (11th Cir. 2020) (en banc) (quotations omitted).
Summary judgment is proper if the materials in the record indicate
“that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a)–(c). “We also review de novo a district court’s determination
of res judicata or collateral estoppel.”
E.E.O.C. v. Pemco Aeroplex,
Inc., 383 F.3d 1280, 1285 (11th Cir. 2004). “However, whether a
party is in privity with another for preclusion purposes is a question
of fact that is reviewed for clear error.”
Id.
III. Discussion
A. The Palms of Destin Club’s Claim for Declaratory Relief
The Palms of Destin Club argues that because it was not
formed as a corporate entity until after the Palms Settlement
Agreement was executed, res judicata does not bar its claim seeking
declaratory relief to void its contract with CPS. Additionally, The
Palms of Destin Club argues that because CPS is a multichannel
video programming distributor and cable provider, it cannot enter
into exclusivity agreements under federal law. 5 We disagree with
5 The Palms of Destin Club does not argue that res judicata should not apply
to the current cause of action because it sued for violations of 47 C.F.R.
§ 64.2500(b), a regulation not implicated in the 2015 suit. However, the Palms
of Destin Club does not contest the magistrate judge’s finding that “[t]here is
no dispute in this case that the claims raised in this suit are duplicative of the
claims raised by the COA against CPS in prior litigation.”
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 10 of 16

-- 10 of 16 --

21-12202 Opinion of the Court 11
The Palms of Destin Club and hold that res judicata bars this
action.
Res judicata applies when “a final judgment on the merits
bars the parties to a prior action from re-litigating a cause of action
that was or could have been raised in that action.”
In re Piper
Aircraft Corp., 244 F.3d 1289, 1296 (11th Cir. 2001).
Res judicata may be properly applied only if certain
prerequisites are met. In the Eleventh Circuit, a party
seeking to invoke the doctrine must establish its
propriety by satisfying four initial elements: (1) the
prior decision must have been rendered by a court of
competent jurisdiction; (2) there must have been a
final judgment on the merits; (3) both cases must
involve the same parties or their privies; and (4) both
cases must involve the same causes of action.
Id. (citations omitted). If one of these elements is missing, res
judicata does not apply.
Id. The burden is on the party asserting
res judicata (here, CPS) to show that the doctrine applies.
Id.
Under the third element of res judicata, if the cases do not
involve the same parties, res judicata may still bar a subsequent
action when a party in the new suit is in privity with one involved
in the prior decision. Privity
is defined as a relationship between one who is a
party of record and a nonparty that is sufficiently
close so a judgment for or against the party should
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 11 of 16

-- 11 of 16 --

12 Opinion of the Court 21-12202
bind or protect the nonparty. Privity exists where
the nonparty’s interests were represented adequately
by the party in the original suit. Privity also exists
where a party to the original suit is so closely aligned
to a nonparty’s interest as to be his virtual
representative.
NAACP v. Hunt, 891 F.2d 1555, 1560–61 (11th Cir. 1990)
(quotations omitted). Additionally, “[a] person who agrees to be
bound by the determination of issues in an action between others
is bound in accordance with the terms of his agreement.”
Taylor
v. Sturgell, 553 U.S. 880, 893 (2008) (quotation omitted).
A stipulated dismissal with prejudice ordinarily has res
judicata effect.
Norfolk S. Corp. v. Chevron, U.S.A., Inc., 371 F.3d
1285, 1288 (11th Cir. 2004). However, when the “consent to such
a dismissal [is] based on a settlement agreement, the principles of
res judicata apply (in a somewhat modified form) to the matters
specified in the settlement agreement, rather than the original
complaint.”
Id. at 1288. To determine if the parties intended
resolve specific claims, the court should use principles of contract
interpretation, because a settlement is essentially a contract.
Id. at
1289. “The best evidence of that intent is, of course, the settlement
agreement itself.”
Id. at 1289. “A settlement agreement entered
into in the context of a voluntary dismissal with prejudice under
Rule 41 should be interpreted according to its express terms, rather
than according to traditional principles of res judicata.”
Id. at 1291.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 12 of 16

-- 12 of 16 --

21-12202 Opinion of the Court 13
It is undisputed that the federal court in the previous
litigation had competent jurisdiction to dismiss the suits with
prejudice. It is also undisputed that a dismissal with prejudice is a
final judgment on the merits, and that the current complaint and
the previous federal complaint involved the same claim—that
federal telecommunications law bars the exclusivity agreement
between The Palms of Destin Club and CPS. Therefore, elements
one, two, and four of res judicata are met.
The Palms of Destin Club argues that the third element,
sameness in parties or privity, was not met because The Palms of
Destin Club was not formed until October 2016, after the January
2016 Palms Settlement Agreement, and therefore was not a party
to the agreement. The Palms of Destin Club also argues that even
if the parties were the same, res judicata should not bar its suit
against CPS because the text of the Palms Settlement Agreement
itself does not display an intent to prevent any future company
from bringing federal claims against CPS in the future.
Although it is true that The Palms of Destin Club did not yet
exist when the settlement agreement was signed, the Condo
Association, which is the sole member of The Palms of Destin
Club, did exist. The Palms of Destin Club’s “interests were
represented adequately by the party in the original suit,” the Condo
Association, because the Condo Association was a party to the
original suit and now has sole control over The Palms of Destin
Club.
See Hunt, 891 F.2d at 1560–61 (“Privity exists where the
nonparty’s interests were represented adequately by the party in
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 13 of 16

-- 13 of 16 --

14 Opinion of the Court 21-12202
the original suit.”). The Palms of Destin Club also “agree[d] to be
bound by the terms, conditions, and obligations set forth in the
[Palms Settlement] Agreement” in an addendum to the Palms
Settlement Agreement made in October 2016 and is therefore
“bound in accordance with the terms.”
See Taylor, 553 U.S. at 893.
Accordingly, The Palms of Destin Club is in privity with the Condo
Association for the purposes of res judicata.
Having determined that The Palms of Destin Club is in
privity with the Condo Association and agreed to be bound by the
settlement agreement, we now look to the text of the Palms
Settlement Agreement to determine if, by its express terms, the
parties intended to settle the question of the agreement’s
compliance with federal telecommunications law in a preclusive
manner.
See Norfolk S. Corp., 371 F.3d at 1291.
The settlement agreement contains a “Releases/Dismissals”
section, which states that, “upon full performance of all their
various obligations in this Agreement, the Parties shall execute
mutually acceptable releases releasing the applicable Party and
their successors and assigns from any further liability under the
agreed upon obligation.” The settlement states that
Pursuant to section 14.13 of the Restrictive
Covenants, CPS is the exclusive provider of
cable, telephone, internet,
telecommunications, and receiving and
distribution systems . . . servicing the Palms
Resort and unit owners in the Resort
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 14 of 16

-- 14 of 16 --

21-12202 Opinion of the Court 15
community. The parties acknowledge that
CPS invested significant capital in developing
the infrastructure for the Telecommunication
System that services the Palms Resort. CPS
and Association have reached an agreement to
upgrade the Telecommunications System as
shown in attached Exhibit “H,” which will be
executed simultaneously with this Agreement.
One “express term” of the settlement is therefore the “obligation”
of The Palms of Destin Club to accept CPS as the “exclusive
provider of cable, telephone, internet, telecommunications, and
receiving and distribution systems . . . servicing the Palms Resort
and unit owners in the Resort community.”
See id. The Palms
Settlement Agreement therefore specifically releases CPS, “the
applicable party . . . from any further liability under the agreed
upon obligation,” exclusive provision of telecommunications
services. Applying the “Releases/Dismissals” provision to this
obligation indicates the parties’ intent to resolve the claims for
violations of federal exclusivity prohibitions.
Additionally, in the Agreement to CPS Services and Charges
that was attached to the Palms Settlement Agreement the parties
also agreed to another obligation, that CPS would upgrade its
television, internet, and telephone services and, in exchange, the
Condo Association would pay CPS an increasing amount yearly
through 2021 and beyond. The settlement agreement and
addendums do not contain an “express reservation of the right to
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 15 of 16

-- 15 of 16 --

16 Opinion of the Court 21-12202
sue” CPS for violations of the federal telecommunications law in
the future.
See Norfolk, 371 F.3d at 1289. Instead, the plain text of
the settlement and addendums indicate that the intent of the
parties was that “upon full performance of all their various
obligations in this Agreement,” including Exhibit H’s list of
improvements and payment schedule, “the Parties shall execute
mutually acceptable releases releasing the applicable Party and
their successors and assigns from any further liability under the
agreed upon obligation.” And as discussed previously, part of the
“agreed upon obligation” is that CPS is to be the “exclusive”
telecommunications provider. Accordingly, the parties agreed to
release future liability for claims under CPS’s exclusive provision
of telecommunications services to The Palms, which includes the
claims under 47 C.F.R. § 76.2000 and 47 C.F.R. § 64.2500(b) at issue
in this case.
Therefore, The Palms of Destin Club’s claim for declaratory
relief is barred by res judicata, and we need not reach the merits of
The Palms of Destin Club’s federal claim.
AFFIRMED.
USCA11 Case: 21-12202 Date Filed: 02/01/2022 Page: 16 of 16

-- 16 of 16 --