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CENTIGRAM ARGENTINA, S.A. v. CENTIGRAM INC.

August 18, 1999

CENTIGRAM ARGENTINA., S.A., AN ARGENTINA CORPORATION, PLAINTIFF,
v.
CENTIGRAM INCORPORATED, A CALIFORNIA CORPORATION, DEFENDANT. CENTIGRAM COMMUNICATIONS CORPORATION, A DELAWARE CORPORATION, COUNTERCLAIM PLAINTIFF, V. CENTIGRAM ARGENTINA, S.A., AN ARGENTINA CORPORATION, AND JUSTO MILAN, COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Infante, United States Magistrate Judge.

ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION FOR
  SUMMARY JUDGMENT

I. INTRODUCTION

Presently before the Court is Defendant Centigram Communications Corporation's Motion for Summary Judgment, which came on for hearing on August 2, 1999. The parties appeared through their respective counsel of record. Having considered the papers submitted by the parties and the arguments of counsel at oral argument, and good cause appearing for the reasons set forth below, the Court denies in part and grants in part Defendant's motion.

II. BACKGROUND

Defendant Centigram Communications ("Centigram") is a California corporation that provides voicemail equipment and services. Plaintiff Centigram Argentina ("CASA") is an Argentina corporation who was the exclusive distributor for Centigram's voicemail equipment and services in portions of South America, specifically Argentina, Paraguay and Uruguay. Plaintiff has sued Defendant for breach of contract and for business torts (intentional and negligent interference with existing and prospective economic advantage, and breach of the implied covenant of good faith and fair dealing). Defendant has now moved for summary judgment on all claims.

On March 10, 1994, the parties entered into a two-page Letter Agreement (Curet Declaration, Exh. A). No further formalized distributor contract was executed by the parties. Four years later, on April 14, 1998, Centigram gave notice to CASA of its intent to terminate the agreement, effective 90 days later, on July 15, 1998.

During the four-year relationship, several events occurred that are relevant to the present dispute. First, one of Centigram's existing customers was Movicom, an account that CASA began to service. Movicom became dissatisfied with the Centigram voicemail products because of technical difficulties that could not be resolved to Movicom's satisfaction, and ceased purchasing equipment or services from Centigram or CASA at least six months before Centigram terminated the distributorship. Movicom and CASA, however, were in discussions regarding a renewed service agreement when Movicom was informed that Centigram had terminated the distributorship agreement. No service agreement was finalized.

A second voicemail products and services customer in Argentina is Miniphone. Miniphone refused to deal with CASA or Centigram because CASA and Centigram provided equipment and services to Miniphone's competitor, Movicom. Centigram, however, sold PCM-manufactured equipment to Miniphone in Argentina through a distribution company called BSA. CASA contends that Centigram's sales through BSA to Miniphone violated the Letter Agreement which provided CASA with territorial exclusivity to distribute Centigram's products.

CASA contends that Centigram breached the Letter Agreement in two ways: first, by terminating the agreement, and second, by the sale of equipment to Miniphone through BSA. CASA also contends that Centigram's act of terminating the agreement and sales through BSA constituted intentional and negligent interference with existing and prospective economic advantage and breaches of the implied covenant of good faith and fair dealing.

Defendant now seeks summary judgment on all of Plaintiff's claims. Specifically, Defendant seeks summary judgment:

  1) that it did not breach the exclusivity provision
    in the Letter Agreement by its sales of PCM
    equipment through BSA, or alternatively, even if it
    did, summary judgment is required because Plaintiff
    suffered no damages;
  2) that it did not breach the Letter Agreement by
    giving notice of termination; and,
  3) on each of Plaintiff's business tort claims, on
    the ground that Plaintiff has not offered evidence
    necessary to support each element of the claims,
    including damages.

III. LEGAL STANDARD

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). However, the moving party has no burden to negate or disprove matters on which the non-moving party will have the burden of proof at trial. The moving party need only point out to the court that there is an absence of evidence to support the non-moving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. at 2554.

The burden then shifts to the non-moving party to "designate `specific facts showing that there is a genuine issue for trial.'" Id. 477 U.S. at 324, 106 S.Ct. at 2553 (quoting Rule 56(e)). To carry this burden, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Evidence that "is merely colorable, or is not significantly probative," is not sufficient to avoid summary judgment. Id. 477 U.S. at 249-50, 106 S.Ct. at 2511.

Summary judgment cannot be granted where a genuine dispute exists as to any material fact. Rule 56(c), F.R.Civ.P. A "material" fact is one which might affect the outcome of the case under the applicable law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A dispute about a material fact is genuine if a reasonable jury could return a verdict for the non-moving party. Id. In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all justifiable inferences are to be drawn in its favor. Id. at 477 U.S. at 255, 106 S.Ct. at 2513. Moreover, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge [when] he is ruling on a motion for summary judgment." Id.

IV. DISCUSSION

The Letter Agreement provides that the agreement should be governed and construed under the laws of the State of California, which the parties do not dispute. Letter Agreement, ¶ C.

Under California law, "[t]he fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties." Bank of the West v. Superior Court, 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545 (1992). "The mutual intention to which the courts give effect is determined by objective manifestations of the parties' intent, including the words used in the agreement, as well as extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties." Morey v. Vannucci, 64 Cal.App.4th 904, 912, 75 Cal.Rptr.2d 573, 578-79 (1998).

Where, as here, the meaning of the words in a contract is disputed, "the trial court must provisionally receive any proffered extrinsic evidence which is relevant to show whether the contract is reasonably susceptible of a particular meaning." Morey, 75 Cal.Rptr.2d at 578. It is reversible error for a trial court to refuse to consider such extrinsic evidence on the basis of the trial court's own conclusion that the language of the contract appears to be clear and unambiguous on its face. Id.; Pacific Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging, Co., 69 Cal.2d 33, 40, n. 8, 69 Cal.Rptr. 561, 442 P.2d 641 (1968). "If in light of the extrinsic evidence the court decides the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step — interpreting the contract." WYDA Assocs. v. Merner, 42 Cal.App.4th 1702, 1710, 50 Cal.Rptr.2d 323 (1996). The Court's determination of whether an ambiguity exists is a question of law. Id.

  Interpretation of the contract is an issue of law if a) the
contract is not ambiguous, or b) the contract is ambiguous but no
parol evidence is admitted or the parol evidence is not in
conflict. WYDA Assocs., 42 Cal.App.4th at 1710, 50 Cal.Rptr.2d 323;
 Morey, 75 Cal.Rptr.2d at 579. "Furthermore, `[w]hen two
equally plausible interpretations of the language of a contract
may be made . . . parol evidence is admissible to aid in
interpreting the agreement, thereby presenting a question of fact
which precludes summary judgment if the evidence is
contradictory.'" WYDA Assocs., 42 ...

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