NILAC Intl Mktg v. Ameritech Serv

• Court: Court of Appeals for the Sixth Circuit
• Decided: March 30, 2004
• Docket: 02-2212
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 NILAC Int’l Mktg. Group v. No. 02-2212 ELECTRONIC CITATION: 2004 FED App. 0092P (6th Cir.) Ameritech Serv. Inc. File Name: 04a0092p.06 Morganroth, Mayer Morganroth, Daniel E. Harold, MORGANROTH & MORGANROTH, Southfield, Michigan, UNITED STATES COURT OF APPEALS for Appellant. Lawrence G. Campbell, Paul R. Bernard, FOR THE SIXTH CIRCUIT Jennifer K. Nowaczok, DICKINSON WRIGHT, PLLC, _________________ Detroit, Michigan, Rawle Andrews, ANDREWS & BOWE, Washington, D.C., for Appellee. NILAC INTERNATIONAL X _________________ MARKETING GROUP, - Plaintiff-Appellant, - OPINION - No. 02-2212 _________________ - v. > ROGERS, Circuit Judge. The question presented in this , breach of contract action is whether there were triable issues - AMERITECH SERVICES, INC., of fact as to whether a contractual agreement between NILAC - Defendant-Appellee. - International Marketing Group (“NILAC”) and Ameritech Services, Inc. (“Ameritech”) obligated Ameritech to include - NILAC in Ameritech’s bid for the public pay telephone N concession at Detroit Metropolitan Wayne County Airport. Appeal from the United States District Court NILAC maintains that the contract with Ameritech and for the Eastern District of Michigan at Detroit. Ameritech’s extrinsic manifestations after the execution of the No. 01-71116—Arthur J. Tarnow, District Judge. agreement indicated mutual assent to include NILAC as the prepaid calling card concessionaire in Ameritech’s bid. Argued: February 6, 2004 Ameritech counters that the agreement provided only for the inclusion of NILAC as the concessionaire in a Decided and Filed: March 30, 2004 contemporaneous, separate bid for local-only telephone services. The district court awarded summary judgment in Before: NELSON, GILMAN, and ROGERS, Circuit favor of Ameritech. Because the contract was at least Judges. ambiguous, and because NILAC raised genuine issues of material fact as to whether the contract should be read in _________________ NILAC’s favor, we reverse the judgment of the district court and remand this matter for further proceedings. COUNSEL NILAC is a general partnership organized under Michigan ARGUED: Jeffrey B. Morganroth, MORGANROTH & law with its principal place of business in Wayne County, MORGANROTH, Southfield, Michigan, for Appellant. Michigan. NILAC is engaged in the marketing, sale and Lawrence G. Campbell, DICKINSON WRIGHT, PLLC, distribution of prepaid telephone calling cards. Ameritech is Detroit, Michigan, for Appellee. ON BRIEF: Jeffrey B. a corporation organized under Delaware law with its principal

1 No. 02-2212 NILAC Int’l Mktg. Group v. 3 4 NILAC Int’l Mktg. Group v. No. 02-2212 Ameritech Serv. Inc. Ameritech Serv. Inc.

place of business in Chicago, Illinois. Ameritech is a major (“DBE”) in its prospective provision of services.2 Ameritech provider of telecommunications services and owns roughly sought NILAC’s participation as one of its DBE 250,000 public telephones in the Great Lakes region. subcontractors in its bid. The parties agreed to work together in providing Ameritech’s response to the RFP. To this end, In 1998, Wayne County sought bids from contractors to the parties entered a teaming agreement that provided, in provide public pay telephone services in the Detroit relevant part: Metropolitan Wayne County Airport, as well as in several other county facilities. In a document styled “Request for The Parties agree to cooperatively prepare a single Proposals, Local Public Payphone Concession, Detroit response to a certain Request for Proposal for a Local Metropolitan Wayne County Airport” (“RFP”), Wayne Public Payphone Concession at Wayne County County sought bids for three different categories of service. Department of Airports and other various Wayne County In the first category (“Category I”), the county sought bids to Facilities, (“RFP”). The Parties further agree that provide service for calls within the local calling area. The Ameritech shall be represented as the primary bidder, second category (“Category II”) sought bids to provide solely and NILAC shall be represented as one of Ameritech’s long-distance services. The third category (“Category III” or Disadvantaged Business Enterprise (DBE) partner [sic] “Turnkey”) sought bids to provide both local and long- . . . In exchange for Ameritech’s invitation to NILAC to distance calling services. The county would either award one participate in the RFP process as Ameritech’s DBE Category III contract to a contractor able to provide both local partner, NILAC agrees not to participate in the RFP and long-distance services, or it would award contracts to one bidding process with any third party bidder. Category I bidder and one Category II bidder; the two successful bidders would then team for the provision of all In the event Ameritech is awarded the contract for the services. Local Public Payphone Concession at Wayne County Department of Airports and other various Wayne County Ameritech chose to submit bids for both Categories I and Facilities, the Parties shall enter into a subcontract III. Ameritech was legally empowered under its agreement which shall set forth the terms and conditions telecommunications tariff to provide local services, but not to of NILAC’s participation as a subcontractor for provide long-distance services. Therefore, submitting a Ameritech. viable Category III bid necessitated that Ameritech team with a telecommunications provider able to provide long-distance The contract was executed by Charles Mosley on behalf of services. Ameritech consequently agreed with AT&T to Ameritech, and by Kevin Warrenton for NILAC. On the submit jointly a Category III bid.1 same day, the parties entered into a standard form non- disclosure agreement by which they agreed not to reveal Wayne County’s bid procedure required that Ameritech confidential information exchanged for purposes of seek the inclusion of Disadvantaged Business Enterprises

2 W ayne County appears to consider DB E’s to be businesses that are 1 primarily minority-owned, start-ups or businesses from economically AT &T is not a party to this litigatio n. dep ressed areas. The parties stipulate that NILAC is a DB E. No. 02-2212 NILAC Int’l Mktg. Group v. 5 6 NILAC Int’l Mktg. Group v. No. 02-2212 Ameritech Serv. Inc. Ameritech Serv. Inc.

developing the bid proposal. Both documents were prepared On February 12, 2001, NILAC filed a five-count complaint by Kurt Moser, a paralegal in Ameritech’s legal department. against Ameritech in the Circuit Court for Wayne County, NILAC alleges that, after the teaming agreement was alleging breach of contract, fraud, conversion, breach of executed, NILAC and Ameritech discussed the details of the implied contract, and tortious interference with business calling card concession. NILAC also maintains that it entered relations. On March 21, 2001, Ameritech removed the into agreements with third parties to sell calling cards with the lawsuit to the United States District Court on the basis of logos, trademarks and likenesses of various Detroit area diversity jurisdiction. At the close of discovery, Ameritech professional sports franchises. filed a Motion to Dismiss, or Alternatively for Summary Judgment, or for a Declaratory Judgment, arguing that the When Ameritech submitted its Category I and III bids in teaming agreement and non-disclosure agreement did not May 1998, however, it included NILAC only in its Category oblige Ameritech to grant NILAC a subcontract for the I bid. The prepaid calling card provision of Ameritech’s prepaid calling card concession. Category III bid instead contained the language that “AT&T will be utilizing a certified Wayne County DBE for 100% of The district court granted Ameritech’s motion for summary this concession.” NILAC did not learn that it had not been judgment. The district court first found that the language “In included as the prepaid calling card concessionaire in the the event Ameritech is awarded the contract for the Local Category III bid until December 1999, well after Ameritech Public Payphone Concession” indicated an unambiguous was awarded the Category III contract. agreement to include NILAC in the Category I proposal alone. Second, the district court concluded that, because the On September 24, 1998, Ameritech made a presentation to teaming agreement, while prohibiting NILAC from teaming a Wayne County committee regarding its bid for the Category with other bidders, contains no language restricting Ameritech III concession. Ameritech included its various bidding from teaming with other parties, Ameritech was free to partners, including NILAC and AT&T. At this presentation, contract with other parties in connection with its Category III Ameritech held out NILAC to its other bidding partners and bid. This appeal followed. to Wayne County as its prepaid calling card concessionaire. Warrenton was invited to speak to the committee with regard We review de novo a district court’s decision to grant to NILAC’s participation in the bid. summary judgment. Tinker v. Sears, Roebuck & Co., 127 F.3d 519, 521 (6th Cir. 1997). Summary judgment is Mosley, the Ameritech official who executed the teaming appropriate when “the pleadings, depositions, answers to agreement with NILAC, testified in his deposition that he did interrogatories, and admissions on file, together with the not learn until December 1999 that NILAC had not been affidavits, if any, show that there is no genuine issue of included in the Category III bid. After learning early in 1999 material fact and the moving party is entitled to judgment as that Ameritech had been awarded the Category III contract, a matter of law.” Fed. R. Civ. P. 56(c). In determining NILAC attempted on several occasions to contact Ameritech whether a factual issue is genuine for the purposes of to discuss a subcontract agreement. Finally, in December summary judgment, a court must decide “whether reasonable 1999, Ameritech’s general manager of sales contacted jurors could find by a preponderance of the evidence that the Warrenton to notify him that NILAC would not be included plaintiff is entitled to a verdict.” Anderson v. Liberty Lobby, in the Category III contract. Inc., 477 U.S. 242, 252 (1986). No. 02-2212 NILAC Int’l Mktg. Group v. 7 8 NILAC Int’l Mktg. Group v. No. 02-2212 Ameritech Serv. Inc. Ameritech Serv. Inc.

NILAC presented sufficient evidence for reasonable jurors Under Michigan law, the question of whether contractual to conclude by a preponderance of the evidence that it is terms are ambiguous is a question of law. Port Huron Educ. entitled to prevail on its breach of contract claim. First, the Assn., MEA/NEA v. Port Huron Area Sch. Dist., 550 N.W.2d operative language in the teaming agreement is ambiguous. 228, 237 (Mich. 1996). If contract language is clear and Second, NILAC presented sufficient evidence to establish that unambiguous, the meaning of that language is also a question its understanding of the operative terms is the agreed-upon of law; the meaning of ambiguous language, however, is a meaning of those terms. question of fact. Id. Initially, we note that Michigan law applies to the analysis The teaming agreement is at least ambiguous as to of the teaming agreement. As a federal court sitting in NILAC’s role in Ameritech’s bid submissions for the public diversity, we apply the choice-of-law provisions of the forum payphone concession. Contrary to Ameritech’s assertion, the state. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. contract phrases “single response” and “Local Public 487, 496 (1941). Where, as here, a contract contains no Payphone Concession” do not together convey the express choice-of-law provision, Michigan courts apply the unambiguous meaning that NILAC was to be a participant law of the forum state unless (1) there is no substantial only in the Category I bid for local public payphone service. relationship between the forum state and the contract or (2) the application of the forum state’s law would conflict with a Ameritech argues that the phrase “single response” policy prerogative of a state with a greater interest in the indicates that NILAC would be included in just one response contract than the forum state. See Kipin Indus., Inc. v. Van to the RFP—a response to the Category I request. This Deilen Intern., Inc., 182 F.3d 490, 493 (6th Cir. 1999) reading ignores the possibility that “single response” could (explaining that Michigan courts follow the choice-of-law also mean that Ameritech would provide the collective rules of the Restatement (Second) of Conflict of Laws). response of both parties to the bid request. The latter reading Neither is the case here; therefore, Michigan law governs the is borne out by the provisions that the parties would interpretation of the teaming agreement. The non-disclosure “cooperatively prepare” their response and that Ameritech agreement contains an apparently valid forum-selection would be the primary bidder. Moreover, the contract never clause which subjects it to Illinois law.3 contemplates that NILAC would respond individually to the RFP; on the contrary, NILAC’s proposal for the provision of its services would be incorporated within the larger bid 3 proposals of Ameritech. Even if Ameritech’s understanding Ameritech suggested, both in its briefs and at oral argument, that we of the phrase were correct, there is no language in the contract should treat the teaming agreement and the non-disclosure agreement as a unified agreement so that the forum-selection and merger clauses contained in paragraph 16 of the non-disclosure agreement apply to the teaming agreement. We decline to do so, because under the laws of b oth must clearly show intent that outside document be considered part of the Michigan and Illinois, the parties must manifest clearly an intent to contract). Although paragraph 16 inc orporates an “Attachment A” into incorporate an outside document into a co ntract. See, e.g., 188 LLC v. the agreement, Attachment A is merely a handwritten description of the Trinity Indus., Inc., 300 F.3d 730, 736 (7th Cir. 200 2) (ap plying Illino is venture. The non-disclosure agreement contains no reference to the law in explaining that a reference to an outside document must show an teaming agreement. The teaming agreement likewise contains no intent to incorp orate that document into the con tract); Forge v. Sm ith, 580 reference to the non-disclosure agreement or any other a ttempt to N.W.2d 876, 881 n.21 (Mich. 1998) (noting that incorporating instrument incorporate it. No. 02-2212 NILAC Int’l Mktg. Group v. 9 10 NILAC Int’l Mktg. Group v. No. 02-2212 Ameritech Serv. Inc. Ameritech Serv. Inc.

indicating whether the one response is to the Category I Coe Pontiac, Inc., 220 N.W.2d 664, 671 (Mich. 1974)).4 If request or the Category III request—except the term “Local.” the trial court has determined that the contractual language is ambiguous, the jury should consider extrinsic evidence in “Local” itself, however, is also ambiguous. The second determining the intended meaning of ambiguous language. paragraph of the teaming agreement states that the parties Klapp v. United Ins. Group Agency, Inc., 663 N.W.2d 447, agreed to prepare a response to “a certain Request for 454 (Mich. 2003). If, after a review of the relevant extrinsic Proposal for a Local Public Payphone Concession at Wayne evidence, the factfinder remains unable to determine the County Department of Airports.” This particular language intent of the parties, the ambiguities are to be construed tracks, nearly verbatim, the title of the RFP, which included against the drafter of the contract. Id. at 454. requests for Category I, II, and III bids. At oral argument, NILAC suggested that Wayne County may have meant the NILAC has introduced evidence showing that Ameritech’s term “Local” to refer to the location of the phones at the agent believed the contract to include both Category I and III airport and county facilities. Even if this reading is not bids, that Ameritech held NILAC out to Wayne County as its compelling, it is at least possible, given that the contract prepaid calling card provider for its Category III bid, and that language tracks so closely the overall RFP language. Ameritech executives discussed the particulars of a prepaid Moreover, Ameritech chose this language in drafting the calling card subcontract with NILAC’s Warrenton after the agreement. Ameritech is a sophisticated party and admits that contract had been signed. This is enough evidence, when this document was drafted by a member of its legal staff, considered in the light most favorable to NILAC, to create presumably under the supervision of its in-house counsel. If triable issues of fact for a jury. Ameritech had intended to limit the scope of the teaming agreement to include NILAC in only the Category I bid, In addition to its contract claim, NILAC also asserted four Ameritech could have used more specific language in drafting tort claims which were disposed of in the district court’s the document. Ameritech’s understanding of “Local” is not summary judgment order. The district court found that these required as a matter of law in the face of NILAC’s equally claims were derivative of NILAC’s contract claim, and plausible reading. because the contract claim failed, the tort claims failed as well. In light of our decision to reverse the grant of summary Moreover, NILAC’s extrinsic evidence raises material judgment on the contract claim, we remand these claims for issues of fact as to whether Ameritech breached its consideration by the district court. contractual obligations. Although the parol evidence rule precludes courts from using extrinsic evidence to alter the terms of a final and unambiguous contract, it does not bar the introduction of extrinsic evidence “to disclose ambiguity or 4 In 1976, the Supreme C ourt of M ichigan applied a d ifferent test to to show that there is none, as well as to resolve any ambiguity determine whether the parol evidence rule applied—that is, whether the proven to exist.” American Anodco, Inc v. Reynolds Metal extrinsic evidence was inco nsistent with the written agreement. Un ion O il Co., 743 F.2d 417, 422 (6th Cir. 1984) (citing Goodwin v. v. Newton, 245 N.W .2d 11 (M ich. 1976). “If there is no inconsistency, the parol evidence is admissible.” Id. at 12. The differently stated standard does not appear to lead to a different result in this case, where the extrinsic evidence is consistent with one possible reading of the written language. No. 02-2212 NILAC Int’l Mktg. Group v. 11 Ameritech Serv. Inc.

CONCLUSION For the foregoing reasons, the judgment of the district court is REVERSED, and the matter is REMANDED to the district court for further proceedings consistent with this opinion.