## Facts

- Telecom International America, Ltd. (TIA) was a newly formed, thinly capitalized U.S. subsidiary of a large Japanese telecommunications company, created to pursue the transactions at issue.
- TIA contracted with AT&T Corp. (AT&T) for a “Diamond Net” arrangement that involved multiple written agreements and related documents.
- TIA entered into a series of written equipment purchase/sale agreements and related writings (the equipment contracts) under which AT&T agreed to provide a telecommunications system for TIA’s business.
- The equipment contracts contained written, affirmative statements about system performance (including end-to-end service and specified levels of call-completion and reliability) but also contained warranty-disclaimer language, limits on remedies/damages, and an integration clause.
- Separately, TIA’s purchase of AT&T long-distance services was governed by a negotiated contract tariff filed with the FCC, which included minimum-usage commitments and substantial charges if TIA failed to meet them.
- After the system was installed, TIA complained of performance problems and asserted that AT&T had promised a higher level of performance for a working, unified system than was reflected in the signed writings.
- To support those alleged additional promises, TIA sought to rely on materials and communications outside the executed contracts, including AT&T proposals, oral statements by AT&T personnel, and internal AT&T communications.
- TIA sued AT&T in the Southern District of New York asserting breach of contract and breach of express warranty, along with fraud-based and other claims; AT&T counterclaimed for amounts allegedly owed under the parties’ agreements and tariff-based obligations.
- AT&T also sought to hold TIA’s parent company liable by piercing TIA’s corporate veil based on TIA’s undercapitalization and corporate structure.

## Issues

1. Whether the equipment contracts and related writings constituted integrated agreements such that the parol-evidence rule barred TIA from using proposals, oral statements, and internal communications to add to or vary the written terms.
2. Whether TIA could maintain breach-of-contract and breach-of-express-warranty claims based on alleged guarantees of a higher-quality, unified system notwithstanding the contracts’ disclaimers, limitations of remedies/damages, and integration clause.
3. Whether TIA’s fraud-based theories were independent of its contract theories or were impermissible attempts to restate a nonperformance dispute as tort.
4. Whether TIA’s other theories (including unfair competition/misappropriation and Communications Act claims) stated actionable wrongdoing given the parties’ contractual and tariff-based relationship.
5. Whether AT&T was entitled to summary judgment on its counterclaims against TIA for unpaid charges, including amounts due under the FCC-filed contract tariff.
6. Whether AT&T could pierce TIA’s corporate veil to impose liability on TIA’s parent based on undercapitalization and the parent-subsidiary relationship.

## Decision

- Affirmed summary judgment for AT&T dismissing TIA’s breach-of-contract claim to the extent it depended on extrinsic promises inconsistent with or additional to the integrated written agreements.
- Affirmed rejection of TIA’s breach-of-express-warranty theory on the record presented, enforcing the written allocation of risk and contractual limits rather than alleged extra-contractual quality guarantees.
- Affirmed dismissal of TIA’s fraud-based claims as duplicative of its contract dispute and unsupported as an independent tort.
- Affirmed dismissal of TIA’s unfair competition/misappropriation and Communications Act claims.
- Affirmed judgment for AT&T on its counterclaims against TIA for amounts due under the governing agreements, including tariff-based obligations.
- Affirmed dismissal of AT&T’s veil-piercing counterclaim against TIA’s parent company.

## Legal Principles

- A clear integration clause in a commercial agreement generally renders the writing the final expression of the parties’ deal and bars prior or contemporaneous extrinsic evidence offered to add to or contradict the written terms.
- A party cannot avoid the parol-evidence rule by recasting alleged pre-contract proposals or oral assurances as part of a broader “single” agreement when the executed writings state that each contract is separate and fully integrated.
- Contractual allocations of risk in sophisticated commercial transactions—such as disclaimers, limits on remedies, caps on damages, and exclusions of consequential damages—are generally enforceable absent a recognized basis for invalidation.
- Fraud claims must be based on misrepresentations that are collateral to the contract and supported by evidence; claims that merely allege nonperformance or an “intent to breach” are not independent torts.
- Where the parties’ relationship is governed by filed-rate/tariff terms and negotiated contracts, statutory and quasi-tort theories cannot be used to obtain remedies inconsistent with that framework.
- Veil piercing requires more than ownership and undercapitalization; it requires proof that the corporate form was used to commit a fraud or wrong that caused the plaintiff’s injury, particularly where a sophisticated counterparty chose to contract with the subsidiary.

## Conclusion

The Second Circuit treated the parties’ written telecom agreements as integrated and enforced their risk-allocation terms, holding that TIA could not use proposals, oral assurances, or internal communications to transform the deal into a broader guarantee of unified-system performance; it also upheld dismissal of TIA’s tort and statutory theories, affirmed AT&T’s recovery of amounts owed by TIA under the agreements (including tariff-based obligations), and refused to impose liability on TIA’s parent absent proof satisfying veil-piercing standards.


Telecom International America, Ltd. v. AT&T Corp., 280 F.3d 175 (2001)