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
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
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
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
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,
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
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).
The California Civil Code sets forth numerous guidelines under
which a contract must be interpreted. "A contract must be so
interpreted as to give effect to the
mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful."
Cal. Civ.Code § 1636. When interpreting a contract, California
courts begin their analysis with the language itself. "The
language of a contract is to govern its interpretation, if the
language is clear and explicit, and does not involve an
absurdity." Id. at § 1638. "[T]he intention of the parties is
to be ascertained from the writing alone, if possible. . . ."
Id. at § 1639. "The whole of a contract is to be taken
together, so as to give effect to every part, if reasonably
practicable, each clause helping to interpret the other." Id.
at § 1641. "The words of a contract are to be understood in their
ordinary and popular sense, rather than according to their strict
legal meaning; unless used by the parties in a technical sense,
or unless a special meaning is given to them by usage, in which
case the latter must be followed." Id. at 1644.
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 ...