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Shentel refutes it used firm's 'trade secrets'

By Alex Bridges -- abridges@nvdaily.com

Attorneys for Shentel asked a federal judge this week to throw out a lawsuit claiming the company owes an accounting firm millions of dollars for tax services.

Texas-based Cablecom Tax Services Inc., doing business as Property Tax Accounting, filed a complaint in U.S. District Court in Harrisonburg against Shenandoah Telecommunications Company and its subsidiaries. Cablecom alleges it provided services to Shentel that included finding ways the telecommunications company could save money on taxes in exchange for a percentage of the proceeds. Cablecom claims Shentel has not paid what is owed for the services. The lawsuit also alleges the defendants used proprietary trade secrets belonging to Cablecom for their financial gain.

Shentel refutes the claims in a motion to dismiss filed Wednesday by Harrisonburg attorney Thomas E. Ullrich. The defense argues the complaint fails to prove how tax advice constitutes a trade secret. Also, the motion claims no representatives from Cablecom signed any tax service agreements. Rather the contracts at issue were signed by a representative of a firm not incorporated in either Texas or Virginia.

"Cablecom did not sign the contracts on which it bases its lawsuit," the motion states. "Rather, these contracts are purported to be signed by Michelle Krueger, as 'duly authorized Agent' of 'Property Tax Accounting.' Property Tax Accounting is not alleged by Plaintiff to be an entity itself, rather it is alleged to be an assumed name for Cablecom."

The motion adds that the defendants believe Cablecom lacks authority under Virginia or Texas law to do business under the fictitious or assumed name of Property Tax Accounting. The motion goes on to state that "on Nov. 4, 2011, on behalf of Cablecom, Michel Kruger filed a 'Certificate of Ownership for Unincorporated Business or Profession (Assumed Name)' with the County Clerk's Office in Denton, Texas, identify in PTA as an assumed name for Cablecom." However, according to the defense attorney, information available on the website of the Texas Secretary of State shows Cablecom has made no such filing and therefore lacks the authority to operate as "Property Tax Accounting."

The motion states that on Aug. 25, 2010, the date Property Tax Accounting purported to sign contracts with Shentel, Cablecom had been "dissolved" and the state of Texas had revoked the firm's charter and authority to operate.

An entity known as Property Tax Accounting Service Incorporated once existed as a corporation in Texas, according to the motion. That corporation dissolved effective Feb. 19, 1997, when Texas revoked its charter, the motion states. A corporation with the same name and incorporator, identified as John A. White, existed in Indiana until it dissolved effective Jan. 21, 2004.

Neither Cablecom nor Property Tax Accounting have registered with the State Corporation Commission in Virginia to operate and do business in the commonwealth, according to the motion.

The motion also refutes the allegation that Shentel willfully and maliciously misappropriated any trade secrets. The defense motion states Cablecom's tax services would not count as trade secrets.

"Advice based on an understanding of publicly available statutes and regulations does not, as a matter of law, constitute a trade secret" the motion states.

The plaintiff seeks $3 million in punitive damages related to the allegation the defendants misappropriated "trade secrets." However, Virginia law caps any award of such kind at $350,000.

Shentel asks the court to throw out the entire complaint or, in the alternative, dismiss the count regarding trade secrets and the claim for punitive damages. The motion also asks the court to award the defendants the costs expended on their behalf.

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