                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       MAY 26 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

NORTH COUNTY COMMUNICATIONS                     No.    15-56678
CORPORATION, a California corporation,
                                                D.C. No.
      Plaintiff-counter-defendant-              3:09-cv-02685-CAB-JLB
      Appellant,

 v.                                             MEMORANDUM*

SPRINT COMMUNICATIONS
COMPANY, L.P., a Delaware limited
partnership,

      Defendant-counter-claimant-
      Appellee.


NORTH COUNTY COMMUNICATIONS                     No.    15-56722
CORPORATION, a California corporation,
                                                D.C. No.
      Plaintiff-counter- defendant-             3:09-cv-02685-CAB-JLB
      Appellee,

 v.

SPRINT COMMUNICATIONS
COMPANY, L.P., a Delaware limited
partnership,

      Defendant-counter-claimant-
      Appellant.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                   Appeal from the United States District Court
                      for the Southern District of California
                 Cathy Ann Bencivengo, District Judge, Presiding

                        Argued and Submitted May 8, 2017
                              Pasadena, California

Before: CLIFTON and FRIEDLAND, Circuit Judges, and RICE,** Chief District
Judge.

      North County Communications (NCC) and Sprint both appeal the district

court’s order resolving their contract dispute in favor of Sprint but holding that

Sprint had no recoverable damages within the applicable statute of limitations.

      The parties’ relationship was governed by their 2002 Settlement and

Switched Access Service Agreement (“the Agreement”). We review de novo a

district court’s interpretation of a contract. United States v. 1.377 Acres of Land,

352 F.3d 1259, 1264 (9th Cir. 2003). If its interpretation is based on extrinsic

evidence, however, then we review any related factual determinations for clear

error and the application of law de novo. See id. (citing Tamen v. Alhambra World

Inv., Inc. (In re Tamen), 22 F.3d 199, 203 (9th Cir. 1994)).

      The Agreement was premised on NCC’s provision of local exchange

service. Because the FCC’s interpretation and application of the Communications




      **
             The Honorable Thomas O. Rice, Chief United States District Judge
for the Eastern District of Washington, sitting by designation.

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Act of 1934 was incorporated into the Agreement, the district court looked to the

Act’s definition of “telephone exchange service” to determine whether NCC

provided local exchange service. We agree with this approach.

      Based on its examination of a substantial amount of evidence, the district

court held that HFT, the only entity to which NCC terminated calls, was not a bona

fide subscriber of local exchange services and that NCC therefore had not provided

local exchange services as required by the Agreement. Specifically, the court

found that “the whole payment arrangement between NCC and HFT is a sham

business deal designed to create the illusion of a bona fide carrier-customer

relationship in compliance with . . . its contractual obligation with Sprint.” It

further found that “NCC made a wilfully false attempt to demonstrate a business

arrangement with HFT,” including by generating “false and misleading

documents” and “false discovery responses.” These findings of fact were not

clearly erroneous. Applying the Agreement—as informed by the Communications

Act and the FCC’s interpretation thereof—to these facts, we also conclude that

NCC did not provide local exchange services. We thus affirm the district court’s

conclusion that NCC’s breach of contract claim fails and Sprint’s breach of

contract counterclaim succeeds.

      The parties dispute the applicable statute of limitations for Sprint’s

counterclaim. We conclude that the district court should have applied California


                                           3
law’s four-year statute of limitations rather than the Communications Act’s two-

year statute of limitations. Although the Agreement provides that it is “expressly

subject to the Communications Act,” it also states that “California law governs all

substantive matters pertaining to the interpretation and enforcement of the terms of

this Agreement.” Because all the claims and counterclaims that were tried in this

case arose under state law, the district court should have applied the state’s statute

of limitations to those claims, especially given the parties’ clear intent that state

law govern the enforcement of the Agreement.

      Finally, Sprint argued, citing Chavez v. City of Hayward, No. 14-cv-00470-

DMR, 2015 WL 3562166, at *4 (N.D. Cal. June 8, 2015), that the district court

erred by calculating the limitations period for Sprint’s counterclaim from the date

it filed its answer rather than the date that NCC filed the complaint. See also

Burlington Indus. v. Milliken & Co., 690 F.2d 380, 389 (4th Cir. 1982) (“[T]he

better view holds that ‘the institution of plaintiff’s suit tolls or suspends the

running of the statute of limitations governing a compulsory counterclaim.’”

(quoting 6 C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1419, at

109 (1971) (footnote omitted)); Trindade v. Super. Ct., 106 Cal. Rptr. 48, 49-50

(Ct. App. 1973). NCC has not disputed that the district court erred in this regard.

See Clem v. Lomeli, 566 F.3d 1177, 1182 (9th Cir. 2009). We thus reverse the

district court’s application of the statute of limitations and remand for it to


                                            4
calculate the limitations period based on the date of the filing of the complaint.

      Accordingly, we AFFIRM IN PART, REVERSE IN PART, and

REMAND for the district court to apply the California law limitations period,

calculated based on the filing of the complaint. Costs are awarded to Sprint.




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