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Southern California Gas Company, A v. Syntellect

March 28, 2011

SOUTHERN CALIFORNIA GAS COMPANY, A CALIFORNIA CORPORATION,
PLAINTIFF,
v.
SYNTELLECT, INC., A DELAWARE AND CORPORATION, DEFENDANT.
SYNTELLECT, INC., A DELAWARE CORPORATION, COUNTERCLAIMANT, SOUTHERN CALIFORNIA GAS COMPANY, A CALIFORNIA CORPORATION, COUNTERDEFENDANT.



The opinion of the court was delivered by: Hon. Roger T. BenitezUnited States District Judge

ORDER:

1. GRANTING SOUTHERN CALIFORNIA GAS COMPANY'S MOTION FOR PARTIAL SUMMARY ADJUDICATION [Dkt. No. 49];

2. DENYING SYNTELLECT'S MOTION FOR SUMMARY JUDGMENT, OR ALTERNATIVELY, PARTIAL SUMMARY JUDGMENT [Dkt. No. 52];

3. GRANTING MOTION FOR SUPPLEMENTAL BRIEF [Dkt. No. 71]

Plaintiff Southern California Gas Company moves for partial summary adjudication for one element of its breach of contract claim for relief. Specifically, Southern California Gas seeks adjudication that Defendant Syntellect, Inc. breached a contract whereby Syntellect was to defend and indemnify Southern California Gas from a lawsuit brought by a third party. Syntellect opposes. At the same time Syntellect seeks summary judgment on each of Southern California Gas' claims.*fn1

I. BACKGROUND

Southern California Gas is a California utility company. In 2001, Southern California Gas entered into a written contract with Syntellect to purchase an automated interactive telephone system which Southern California Gas could use for handling incoming customer phone calls. Southern California Gas informed Syntellect of its system requirements by way of a request for proposal. The request for proposal was made part of the contract. Also made part of the contract were two indemnity provisions. One provision in particular obligated Syntellect to defend and indemnify Southern California Gas in the event Southern California Gas was sued for intellectual property infringement in connection with the automated interactive telephone system.

As it turns out, in 2007, Southern California Gas was sued. Ronald A. Katz Technology Licensing, LP ("Katz") sued Southern California Gas for patent infringement due to the use of the automated interactive telephone system Syntellect provided. Southern California Gas notified Syntellect of the suit and requested a defense. Syntellect declined. Southern California Gas then settled with Katz and demanded indemnity from Syntellect. Syntellect again declined. Southern California Gas then brought this action.

II. LEGAL STANDARDS

The standards to be used in evaluating a motion for summary judgment or summary adjudication are well known and need not be repeated in detail. The main point is this: summary judgment is appropriate only if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982). The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If the moving party can identify evidence that demonstrates the absence of a genuine issue of material fact, then the burden shifts to the opposing party to produce evidence creating a genuine issue of fact. If genuine issues exist, then summary judgment is not appropriate. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

The opposing party's evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The party opposing summary judgment must identify facts showing there is a genuine issue for trial. Butler v. San Diego Dist. Attorney's Office, 370 F.3d 956, 958 (9th Cir. 2004) (where defendant produces enough evidence to require plaintiff to go beyond pleadings, plaintiff must counter by producing evidence of his own). If summary judgment is not rendered on the whole action, the court may determine what facts are not disputed or may render partial summary adjudication on part of the claim or on liability alone. Fed. R. Civ. P. 56(g).

In cases resting on diversity jurisdiction, a federal court applies the law of the state in which it sits. California law generally recognizes agreed choice-of-law provisions in a contract. Witkin, 1 Summary of California Law, Contracts, §§ 67-68 (10th ed. 2005). Section 28 of the contract between Southern California Gas and Syntellect designates California law as the parties' choice in matters of interpretation and performance of the contract. Consequently, California law applies to this dispute.

Under California law, the interpretation of a contract is generally a question of law for the trial court to decide. Oceanside 84, Ltd. v. Fidelity Fed. Bank, 56 Cal. App. 4th 1441, 1448 (Cal.Ct.App. 1997). The Oceanside 84 court held:

The interpretation of a written instrument, even though it involves what might properly be called questions of fact, is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.

Id. at 1451 (quoting Parsons v. Bristol Dev. Co., 62 Cal. 2d 861, 865 (1965)). "When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is 'reasonably susceptible' to the interpretation urged by the party. If it is not, the case is over. If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the ...


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