Sprint Nextel Corp. v. Middle Man, Inc.

FILED
United States Court of Appeals
Tenth Circuit
May 10, 2016
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
SPRINT NEXTEL
CORPORATION,
Plaintiff Counter Defendant-
Appellee,
v. No. 15-3108
THE MIDDLE MAN, INC.,
Defendant Counterclaimant-
Appellant,
and
BRIAN K. VASQUEZ,
Defendant Counterclaimant.
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 2:12-CV-02159-JTM)
Charles R. Price, Tandum Legal Group, LLC, Washington, D.C. (James J.
Kernell, Erickson, Kernell, Derusseau & Kleypas, LLC, Leawood,
Kansas, with him on the briefs), for Defendant Counterclaimant-
Appellant.
Dean A. Morande (Stacey K. Sutton and James B. Baldinger, with him on
the brief), Carlton Fields Jorden Burt, P.A., West Palm Beach, Florida,
for Plaintiff Counter Defendant-Appellee.
Before T Y M K O V I C H , Chief Judge, L U C E R O , and B A C H A R A C H ,
Circuit Judges.
B A C H A R A C H , Circuit Judge.
This appeal grew out of a conflict between the business models of
Sprint Nextel Corporation and The Middle Man, Inc. Sprint sells mobile
telephones and service plans, intending for the purchasers to use the
telephones on the Sprint network (rather than resell them). Middle Man
buys mobile telephones, including Sprint’s, and tries to resell them at a
profit. The two business models collided, and Sprint brought the present
action for breach of contract. 1 Middle Man counterclaimed, seeking a
declaration that its business model does not violate the contract that
accompanies the purchase of Sprint telephones. On each set of claims,
Sprint and Middle Man filed dispositive motions. 2
1
In district court, Sprint also brought claims of unfair competition,
tortious interference with business relationships and prospective
advantage, civil conspiracy, unjust enrichment, conspiracy to induce
breach of contract, common-law fraud, fraudulent misrepresentation,
trafficking in computer passwords, unauthorized access of protected
computer systems, unauthorized access with intent to defraud, trademark
infringement, false advertising, and contributory trademark
infringement. But these claims are not involved in this appeal.
2
Although Middle Man’s owner, Mr. Brian Vazquez, was a party to
both Sprint’s claim and Middle Man’s counterclaim, Mr. Vazquez is not a
party to this appeal.
2
Both sets of claims and dispositive motions involved interpretation
of the contract. Sprint argued that the contract prohibited Middle Man
from reselling Sprint’s telephones regardless of whether they were active
on the Sprint network. Middle Man argued that the contract
unambiguously allowed resale of Sprint telephones if they were not
active on the Sprint network. In the alternative, Middle Man asserted that
the contract (1) was ambiguous regarding the right to resell Sprint
telephones and (2) should be construed against Sprint as the drafting
party.
In deciding these motions, the district court held as a matter of law
that the contract unambiguously prohibited Middle Man from selling new
mobile telephones purchased from Sprint regardless of whether they were
active on Sprint’s network. In light of this holding, the district court (1)
granted judgment on the pleadings to Sprint on Middle Man’s
counterclaim for a declaratory judgment and (2) granted summary
judgment to Sprint on its breach of contract claim, awarding Sprint
nominal damages of $1.
Middle Man appeals, contending that the entry of judgment on
Sprint’s claim and Middle Man’s counterclaim was erroneous and that the
district court should have awarded judgment to Middle Man on both
claims. In the alternative, Middle Man contends that we should vacate the
3
district court’s ruling that the contract unambiguously prohibits Middle
Man from reselling Sprint telephones. We reverse the entry of judgment
but reject Middle Man’s request for us to order judgment in its favor.
1. This appeal turns on issues involving justiciability, contractual
interpretation, and civil procedure.
The appeal presents three sets of issues.
The first set of issues involves justiciability. In its opening brief,
Middle Man stated that this appeal involves principle rather than money.
Seizing on this language, Sprint argues that
! Middle Man lacks appellate standing and
! the action is prudentially moot.
Notwithstanding Middle Man’s rhetoric in its opening brief, the dispute
is justiciable. Under our precedent, Sprint’s award of nominal damages
constitutes an injury in fact to Middle Man, and the doctrine of
prudential mootness does not apply because Sprint obtained an award of
damages rather than equitable relief.
The second set of issues involves the meaning of contractual
language. The contract stated that Middle Man could not resell Sprint’s
“Services” and that “customer devices” were not for resale. Sprint argues
that these clauses unambiguously prohibited Middle Man from reselling
Sprint telephones; Middle Man argues that the clauses are ambiguous on
4
whether the telephones can be resold if not active on the Sprint network.
We agree with Middle Man. The term “Services” does not necessarily
cover telephones that are not active on the Sprint network, and the
“customer devices are not for resale” clause may simply have referred to
Sprint’s intent.
The third set of issues relates to Middle Man’s motion to alter or
amend the judgment. On appeal, Middle Man argues that the contract
could not restrict resale of Sprint telephones because that restriction
would constitute an impermissible restraint on Middle Man’s title to the
telephones. In district court, Middle Man did not raise this argument
until its motion to alter or amend the judgment. By then, the argument
was too late. The district court rejected the argument on the ground that
it should have been presented earlier. This ruling fell within the district
court’s discretion.
2. The appeal is justiciable.
The threshold issue is whether the appeal is justiciable, for Sprint
argues that Middle Man lacks appellate standing and that the appeal is
prudentially moot. We reject both arguments.
A. Middle Man has appellate standing because it suffered an
“injury in fact.”
5
The U.S. Constitution provides that to appeal, one must have
standing. Arizonans for Official English v. Arizona, 520 U.S. 43, 64
(1997). Constitutional standing entails multiple elements, including an
injury in fact. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992). 3 In addition, prudential limitations restrict standing even when
an appellant satisfies the constitutional elements. Sec’y of State v. Joseph
H. Munson Co., 467 U.S. 947, 955 (1984). These limitations prevent
parties from appealing “to enforce the rights of others.” RMA Ventures
Cal. v. SunAmerica Life Ins. Co., 576 F.3d 1070, 1073 (10th Cir. 2009).
In Sprint’s view, Middle Man has admitted the absence of an injury
in fact to itself and boasted that victory in the appeal would serve only to
benefit others. These arguments are based primarily on four statements in
Middle Man’s opening brief:
! “On its face, this appeal is almost purely academic.”
! Middle Man purports to appear “on principle,” “on behalf of
many.”
! “In the typical sense,” Middle Man “has nothing to gain and
nothing to lose” in the appeal.
! Middle Man’s “goal is to save others from having to suffer.”
3
The other constitutional elements are traceability and
redressability. S. Utah Wilderness All. v. Office of Surface Mining
Reclamation & Enf’t, 620 F.3d 1227, 1233 (10th Cir. 2010).
6
Appellant’s Opening Br. at 2, 23. These rhetorical flourishes do not strip
Middle Man of standing.
Under Article III, Middle Man must show an injury in fact,
consisting of a concrete, particularized invasion of a legally protected
interest. Tennille v. W. Union Co., 809 F.3d 555, 560 (10th Cir. 2015).
Regardless of Middle Man’s characterization of what is at stake, the
district court’s rulings created an injury in fact by subjecting Middle
Man to nominal damages and rejecting Middle Man’s counterclaim for a
declaratory judgment.
First, Middle Man was ordered to pay nominal damages. This award
of nominal damages creates an injury in fact. See Utah Animal Rights
Coal. v. Salt Lake City Corp., 371 F.3d 1248, 1257 (10th Cir. 2004)
(holding that “a complaint for nominal damages could satisfy Article
III’s case or controversy requirements, when a functionally identical
claim for declaratory relief will not”). 4
4
Other circuits have also held that nominal damages are sufficient
for an injury in fact. Advantage Media, L.L.C. v. City of Eden Prairie, 456
F.3d 793, 803 (8th Cir. 2006) (stating that the plaintiff has standing
because it “might be entitled to nominal damages”); Lynch v. Leis, 382
F.3d 642, 646 n.2 (6th Cir. 2004) (“[A] claim for nominal damages . . . is
normally sufficient to establish standing . . . .”); Yniguez v. Arizona, 975
F.2d 646, 647 (9th Cir. 1992) (per curiam) (“A plaintiff’s pursuit of
nominal damages provides a sufficiently concrete interest in the outcome
of the litigation to confer standing . . . .”).
7
Because the nominal damages award was imposed on Middle Man
rather than a third party, we also reject Sprint’s prudential-standing
argument. Middle Man is not appealing solely to protect the rights of
others; having lost in district court, Middle Man bore the burden of
paying the nominal damages award.
Second, the district court’s ruling would interfere with Middle
Man’s alleged business model. In its counterclaim, Middle Man alleged
that its business included the resale of Sprint mobile telephones.
Appellant’s App’x at 210. Because Sprint took the position that these
resales constituted a contractual breach, Middle Man sought a
declaratory judgment to provide “guidance as to how [its] business can
and must operate going forward.” Id. at 215. The district court entered
judgment for Sprint on Middle Man’s counterclaim for a declaratory
judgment. The district court’s ruling allegedly imperiled Middle Man’s
alleged business model by holding that the contract prohibited resale of
Sprint telephones.
For both reasons, the district court’s rulings created an injury in
fact for purposes of appellate standing.
B. The appeal is not prudentially moot.
Sprint argues not only that Middle Man lacks standing but also that
this appeal is prudentially moot. This argument is invalid as a matter of
8
law. Ordinarily an action can become prudentially moot only when the
claim involves prospective equitable or declaratory relief. Bldg. &
Constr. Dep’t v. Rockwell Int’l Corp., 7 F.3d 1487, 1492 (10th Cir.
1993). By definition, an award of nominal damages involves a remedy
that is “legal,” not “equitable.” See Griffith v. Colo., Div. of Youth
Servs., 17 F.3d 1323, 1327 (10th Cir. 1994) (stating that nominal
damages are legal, not equitable). Thus, the doctrine of prudential
mootness would ordinarily not apply.
A limited exception is sometimes recognized, rendering a damage
award prudentially moot when it is uncollectible. 13B Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and
Procedure § 3533.3 (3d ed. 2008). Sprint does not invoke this exception.
As a result, we apply the general rule, declining to consider Sprint’s
claim as prudentially moot.
3. The contract is ambiguous.
Because this dispute is justiciable, we must address the merits. On
the merits, the parties disagree over the meaning of two contractual
provisions.
Under the first provision, Middle Man cannot “resell the services to
another party.” Appellant’s App’x at 57-58. The contract defines the term
“Services” to include “Devices on [Middle Man’s] account with
9
[Sprint].” Id. In turn, the contract defines “Devices” to include a mobile
telephone that Sprint provided or sold to the customer or that “is active
on [Middle Man’s] account with [Sprint].” Id.
The second contract provision states that “customer devices . . . are
not for resale.” Id. at 59.
Sprint argues that these terms unambiguously prohibit Middle Man
from reselling Sprint telephones; Middle Man argues that the provisions
are ambiguous because one can reasonably interpret the provisions to
forbid resale only when the telephone is active on the Sprint network. We
agree with Middle Man, concluding that the contract is ambiguous.
A. Our review is de novo on each ruling.
On Middle Man’s counterclaim, seeking a declaration that the
contract permits the resale of non-active telephones purchased from
Sprint, both parties filed motions for judgment on the pleadings. On
Sprint’s claim for breach of contract, Sprint filed a motion for summary
judgment and Middle Man objected. The district court ultimately granted
both of Sprint’s motions and denied Middle Man’s motion.
For all three of the rulings, our review is de novo, requiring us to
apply the same standard that governed in district court. See Automax
Hyundai S., L.L.C. v. Zurich Am. Ins. Co., 720 F.3d 798, 803 (10th Cir.
2013) (motion for summary judgment); Ramirez v. Dep’t of Corr., 222
10
F.3d 1238, 1240 (10th Cir. 2000) (motion for judgment on the pleadings).
Under the standard governing motions for judgment on the pleadings, we
must credit the non-movant’s factual allegations and construe them
favorably to the non-movant. Casanova v. Ulibarri, 595 F.3d 1120, 1125
(10th Cir. 2010). And in considering Sprint’s motion for summary
judgment, we must credit Middle Man’s evidence and view all reasonable
inferences favorably to Middle Man. Bohn v. Park City Grp., 94 F.3d
1457, 1460 (10th Cir. 1996). In viewing the allegations and evidence in
this manner, we may uphold the rulings for Sprint only if it established a
right to judgment as a matter of law. See Colony Ins. Co. v. Burke, 698
F.3d 1222, 1228 (10th Cir. 2012) (motion for judgment on the pleadings);
Foster v. AlliedSignal, Inc., 293 F.3d 1187, 1192 (10th Cir. 2002)
(motion for summary judgment).
Our resolution of both parties’ motions turns on whether the
contract is ambiguous. If not, Kansas law would have required the
district court to interpret the contract as a matter of law. 5 See Kennedy &
Mitchell, Inc. v. Anadarko Prod. Co., 754 P.2d 803, 805-06 (Kan. 1988)
(“The construction of a written instrument is a question of law, and the
5
The contract states that it is governed by the laws of the state
“encompassing the billing address of the Device.” Appellant’s App’x at
64. The parties agreed that Middle Man’s billing address for its devices
was in Kansas. Id. at 316, 354.
11
instrument may be construed and its legal effect determined by an
appellate court.”). But if the language is ambiguous, interpretation would
be for the trier of fact, not the court. See Royer v. W. Silo Co., 161 P.
654, 654 (Kan. 1916) (Syllabus by the Court) (“Where an ambiguous
expression is used in a written contract, it is proper to show by evidence
what the parties understood and intended by the expression, and to
submit to the jury, with proper instructions, the interpretation of the
expression as used in the contract.”); see also Waste Connections of
Kan., Inc. v. Ritchie Corp., 298 P.3d 250, 265 (Kan. 2013) (“[I]f the
language of a contract is ambiguous and the intent of the parties cannot
be ascertained from undisputed extrinsic or parol evidence, summary
declaratory judgment is inappropriate.”).
B. We determine ambiguity based on the reasonableness of
different interpretations.
To determine whether the contract was ambiguous, we consider
whether the wording is susceptible to different interpretations.
Thoroughbred Assocs., L.L.C. v. Kan. City Royalty Co., 308 P.3d 1238,
1247 (Kan. 2013). Though the district court determined that the contract
was unambiguous, we review that determination de novo. See Stewart v.
Adolph Coors Co., 217 F.3d 1285, 1289 (10th Cir. 2000) (“We review de
novo the question[] of contract ambiguity . . . .”).
12
C. Middle Man did not forfeit or waive its argument on
ambiguity.
In district court, Middle Man argued primarily that the contract
unambiguously allowed customers to resell Sprint telephones if they
were not then active on the Sprint network. In a single sentence, Middle
Man argued that even if the contract had not clearly permitted resale, the
contract did not clearly support Sprint’s interpretation, rendering the
contract ambiguous. In this appeal, Middle Man again contends that the
contract was ambiguous. According to Sprint, however, Middle Man
failed to adequately develop this argument in district court. We disagree.
An appellant can fail to preserve an appeal point through either
forfeiture or waiver. Forfeiture is failure to timely assert a right; waiver
is the intentional relinquishment or abandonment of a known right. See
Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1127-28 (10th Cir. 2011).
Middle Man did not intentionally relinquish an argument that the
contract was ambiguous, for Middle Man specifically urged ambiguity as
an alternative argument in district court. Appellant’s App’x at 251. Thus,
Middle Man did not waive its ambiguity argument.
Nor did Middle Man forfeit the argument. Middle Man argued at
length that its interpretation was unambiguously supported by the
contractual wording. When Sprint disagreed, Middle Man argued in the
13
alternative that if Sprint’s interpretation were considered reasonable, the
contract would be considered ambiguous. Middle Man presented its
alternative argument in only one sentence, but little else needed to be
said because Middle Man was relying on the same textual clues
supporting its primary argument that the contract was unambiguous. As a
result, Middle Man did not forfeit its alternative argument that the
contract was ambiguous. 6
D. The contract is ambiguous regarding Middle Man’s right
to resell inactive telephones purchased from Sprint.
The parties agree that the contract prohibits Middle Man from
reselling mobile telephones that are active on the Sprint network. Sprint
goes further, insisting that the prohibition applies regardless of whether
the telephones are active on the Sprint network. According to Sprint,
Middle Man cannot sell mobile telephones even when they are inactive.
Middle Man disagrees, contending that the prohibition is limited to
telephones active on Sprint’s network.
The disagreement turns on two contract provisions. The first
provision prohibits resale of “Devices” that are on Middle Man’s account
6
Sprint points out that in opposing summary judgment, Middle Man
did not challenge the district court’s interpretation of the contract.
Appellee’s Resp. Br. at 21. But by the time Middle Man opposed
summary judgment, the district court had already adopted Sprint’s
interpretation of the contract.
14
with Sprint. The second provision states that customer devices are not for
resale. In our view, the two provisions could reasonably be interpreted to
support both sides’ interpretations.
1. The prohibition against reselling “Services” is
ambiguous.
The contract prohibits customers from “resell[ing] the Services to
another party.” Id. at 58. The term “Services” is defined to include
“Devices on your [Middle Man’s] account with us [Sprint].” Id. at 57.
The parties disagree over this definition. When a Sprint telephone is
active on the Sprint network, both parties agree that the telephone
constitutes a “Device on [Middle Man’s] account with [Sprint].” As a
result, Middle Man cannot resell that telephone. But what about a
telephone that is not active on the Sprint network? Middle Man argues
that such a telephone is not on anyone’s Sprint account. Thus, in Middle
Man’s view, the contract does not prohibit resale of a telephone unless it
is active on the Sprint network.
Sprint disagrees, arguing that resale is prohibited regardless of
whether the telephone is active on Sprint’s network. But if that is true,
Middle Man rhetorically asks why Sprint included the phrase “on your
account with us.” Sprint’s interpretation would give this phrase no
meaning; resale is prohibited both when the telephone is “on [Middle
15
Man’s] account” and not “on [Middle Man’s] account.” Sprint might just
as well have written “Devices.”
Middle Man argues that the phrase “on your account with us” must
have some meaning. One way to infuse meaning into the phrase is to
prohibit resale of telephones only when they are active on Sprint’s
network. But this reading is not obviously correct, either: the contract
elsewhere mentions Devices “active on your account with us,” suggesting
that “Devices on your account with us” must include more than just
active Devices. See id.
Both interpretations are reasonable. As Sprint argues, one can read
the provisions to prohibit the resale of any devices purchased from
Sprint. But that reading is subject to reasonable debate; it does not
distinguish “Devices on your account with us” from “Devices.” Just as
plausibly, one can read the contract to prohibit the resale of Sprint
telephones only if the telephone is active on Sprint’s network. After all,
the contract purports to prohibit the resale of Sprint’s “Services,” not
Sprint’s “Devices.” The only telephones with service are those that are
active on the Sprint network.
Sprint also contends that the term “Device” is defined so broadly
that it must include at least some inactive telephones. Even if we credit
this contention, however, it is legally immaterial. The contract prohibits
16
the resale of “Services,” not of “Devices.” In turn, the contract defines
“Services” to include only those “Devices” that are “on your [Middle
Man’s] account with us [Sprint].” Id. at 58. Therefore, even if Sprint is
correct that the broad term “Devices” includes inactive telephones, it
does not follow that “Devices on your account with us” — the only
“Devices” that qualify as “Services” under the contract — include
inactive telephones.
Sprint points out that the term “Service” “also includes any other
product or service . . . that references” the contract’s general terms and
conditions. Id. at 57. According to Sprint, this definition includes all
telephones provided or sold by Sprint regardless of whether they are
“active.”
Though this interpretation is reasonable, other interpretations are
also reasonable. For example, one might justifiably wonder whether an
inactive telephone is a product or service that “references” the terms and
conditions. And if it does, how? Sprint does not tell us.
Nonetheless, Sprint’s interpretation is reasonable. The term
“Devices on your account with us” must mean something, but what? A
reader might justifiably infer that this phrase includes inactive
telephones, but another reader might justifiably arrive at the opposite
conclusion. Because both interpretations are plausible, we regard the
17
prohibition on resale as ambiguous with respect to whether it covers
inactive telephones as well as telephones that have already been
activated on the Sprint network.
2. The contract is also ambiguous in stating that customer
devices are not for resale.
Sprint also points to a separate provision, which states that
“customer devices . . . are not for resale.” Id. at 54. As Sprint points out,
one reasonable interpretation is that a customer like Middle Man cannot
resell any Sprint telephone regardless of whether it is active on the Sprint
network. But this is not the only reasonable interpretation.
Middle Man reads the provision simply to reflect Sprint’s intent,
entailing regulatory consequences rather than creating a categorical
prohibition on resale. For this interpretation, Middle Man points to the
phrase “customer devices” and the passivity of the sentence. In the
contract, “Devices” is a defined term, but “customer devices” isn’t. As a
result, one might reasonably infer that the two terms have different
meanings. But if they are different, what is a “customer device”? Sprint
does not tell us in the contract. See Decker v. Marshall-DeKalb Elec.
Coop., 659 So. 2d 926, 930 (Ala. 1995) (“[I]t is the absence of
definitions, under these circumstances, that provides the ambiguity that
requires the factfinder to determine the true meaning of the contract.”).
18
Sprint now suggests that “Devices” mean the same thing as
“customer devices.” But if that is true, why would Sprint add the word
“customer” to qualify “devices” and use the lower-case for “devices”
rather than the capitalized, defined term “Devices”?
And the clause is framed passively, stating that customer devices
“are not for resale.” Some regulations are triggered based on the volume
of sales “for resale.” See, e.g., 29 C.F.R. § 779.411. Thus, Sprint may
have intended the provision to avoid regulations governing sales intended
for resale.
Or, the phrase may simply have reflected Sprint’s intention for the
buyer to keep the telephone. The wording “is not for ” is commonly
used to reflect intention. For example, a seller of board games might put
on the package: “This game is not for children under 8 years of age.”
That wording does not typically constitute a contractual prohibition
against a buyer allowing a 7-year-old child to play the game. Instead,
most would read the statement as an expression of the seller’s intent: the
seller intends for the game to be played by individuals 8 and older. This
reading is particularly intuitive here because the clause appears in a
sentence discussing Sprint’s intent. 7
7
The clause reads, in full: “N a t u r e o f o u r S e r v i c e . Our rate plans,
customer devices, services and features are not for resale and are
19
Perhaps the provision reflected nothing more than Sprint’s intent
for customers to keep the telephones they bought. This is at least a
reasonable interpretation of the contract.
E. Because the contract was ambiguous, Sprint was not
entitled to judgment on the pleadings or summary
judgment.
Because both provisions are susceptible to different interpretations,
we regard the contract as ambiguous. 8 Because of this ambiguity, the
district court could not interpret the contract as a matter of law. Instead,
interpretation was for the trier of fact. As a result, the district court
should not have granted Sprint judgment on the pleadings or summary
judgment. See Waste Connections of Kan., Inc. v. Ritchie Corp., 298 P.3d
250, 265 (Kan. 2013) (“[I]f the language of a contract is ambiguous and
the intent of the parties cannot be ascertained from undisputed extrinsic
intended for reasonable and non-continuous use by a person using a
device on Sprint’s networks.” Appellant’s App’x at 54.
8
The district court initially interpreted the contract to
unambiguously favor Middle Man. The court subsequently granted
Sprint’s motion for reconsideration and adopted Sprint’s interpretation.
Middle Man argues that the district court’s about-face serves as evidence
of ambiguity. We need not consider the district court’s change as
evidence of ambiguity. We find ambiguity based on the wording of the
contract, not the district court’s adoption of different interpretations.
20
or parol evidence, summary declaratory judgment is inappropriate.”);
Mobile Acres, Inc. v. Kurata, 508 P.2d 889, 895 (Kan. 1973) (“Where
there is ambiguity in a written contract and extrinsic evidence is required
to ascertain the intention of the parties, summary judgment should not be
entered in the face of contradictory or conflicting evidence.”).
F. Middle Man was not entitled to judgment as a matter of
law.
Middle Man argues that it should have been awarded judgment on
the pleadings. But because the contract was ambiguous, Middle Man was
entitled to a trial—not a judgment.
Middle Man makes three arguments for judgment as a matter of law
even if the contract is ambiguous. We reject these arguments, concluding
that construction of the ambiguous contract should be left for the trier of
fact.
First, Middle Man argues that we should apply the canon of contra
proferentem. Under this canon, an ambiguous contract is construed
against the drafting party (Sprint). But it would be inappropriate to apply
contra proferentem at this stage of the litigation. In Kansas, contra
proferentem is typically applied by the factfinder as it considers extrinsic
evidence bearing on the contract’s meaning—not by the court as a matter
21
of law. See, e.g., Pattern Instructions Kansas - Civil, Ch. 124.32 (Feb.
2016) (“When the terms of an insurance policy . . . are susceptible of
more than one meaning, the policy provisions must be given the meaning
which is most favorable to the policyholder.”); see also Ethan J. Lieb &
Steve Thel, Contra Proferentem and the Role of the Jury in Contract
Interpretation, 87 Temp. L. Rev. 773, 786 (2015) (“[C]ourts clearly tend
to admit extrinsic evidence on ambiguities first before relying on [contra
proferentem].”). If we were to apply contra proferentem now, the
factfinder could not interpret the contract based on the parties’ intent. At
a minimum, the parties should be allowed to present extrinsic evidence
for the court to consider in a motion for summary judgment or at the trial.
See Waste Connections of Kansas, Inc. v. Ritchie Corp., 298 P.3d 250,
964 (Kan. 2013) (“[I]f the language of a contract is ambiguous and the
intent of the parties cannot be ascertained from undisputed extrinsic or
parol evidence, summary declaratory judgment is inappropriate.”).
Second, Middle Man invokes other canons of construction, arguing
that we must
! apply the plain meaning of “Services” and “Devices,” so that
“Services” includes only those “Devices” that have active
Sprint service and
! interpret “Devices on your account with us” to be narrower
than “Devices” because to do otherwise would be to read the
“on your account with us” language out of the contract.
22
These are simply arguments that Middle Man’s interpretation of the
contract is more reasonable than Sprint’s. But we already rejected that
view, concluding that the contract is ambiguous. And it is not our place
to rewrite the parties’ contract to conform to our own notions of
reasonableness. See Quenzer v. Quenzer, 587 P.2d 880, 882 (Kan. 1978)
(“This court . . . may not rewrite a contract or make a new contract for
the parties under the guise of construction.”).
Finally, Middle Man argues that its interpretation is supported by
the public interest and the need to avoid an absurd result and illegality.
But Middle Man forfeited these arguments by failing to present them to
the district court. Helfrich v. Blue Cross & Blue Shield Ass’n, 804 F.3d
1090, 1110 (10th Cir. 2015). As a result, we decline to consider these
arguments.
In these circumstances, we conclude that the district court correctly
denied Middle Man’s motion for judgment on the pleadings.
4. We decline to consider Middle Man’s impaired-title argument
because Middle Man first raised the argument in a Rule 59(e)
motion.
Finally, Middle Man argues that because Sprint conveys full title to
the telephones, Sprint cannot prevent purchasers from reselling the
telephones. In Middle Man’s view, when a seller transfers full title to
23
goods, the seller cannot restrict the buyer’s resale of those goods. If this
argument is correct, the district court should not have granted summary
judgment to Sprint on its breach-of-contract claim. But Middle Man
waited to raise this argument until moving to alter or amend the
judgment. At that point, the district court reasonably declined to address
the argument. And we do not ordinarily entertain arguments made for the
first time in a motion to alter or amend the judgment.
Middle Man takes conflicting stances over whether or not it is
appealing the district court’s Rule 59(e) order. In its notice of appeal,
Middle Man included the district court’s ruling on its motion to alter or
amend in the list of orders being appealed. See Appellant’s App’x at 744
(listing “the Memorandum and Order (Docket 173, entered April 14,
2015) denying defendant’s Rule 59(e) motion to alter or amend the
judgment.”). But in its reply brief, Middle Man changed course, stating
that it was “appealing the summary judgment ruling, not the Rule 59
ruling [addressing the motion to alter or amend].” Appellant’s Reply Br.
at 13. We may assume, for the sake of argument, that Middle Man has
presented its impaired-title argument to challenge both the summary-
judgment ruling and the ruling on the motion to alter or amend. Even with
this assumption, we could not reverse the summary-judgment ruling
based on Middle Man’s impaired-title argument.
24
The district court rejected Middle Man’s impaired-title argument on
the ground that Middle Man could not raise a new argument in a motion
to alter or amend. In reviewing the denial of that motion, we apply the
abuse-of-discretion standard. Kipling v. State Farm Mut. Auto. Ins. Co.,
774 F.3d 1306, 1309 (10th Cir. 2014). A district court abuses its
discretion when it (1) enters “an arbitrary, capricious, whimsical, or
manifestly unreasonable judgment” or (2) applies the wrong legal
standard. Birch v. Polaris Indus., Inc., 812 F.3d 1238, 1247 (10th Cir.
2015) (quoting Rocky Mountain Christian Church v. Bd. of Cty. Cmm’rs,
613 F.3d 1229, 1239-40 (10th Cir. 2010)); id at 1249 n.2.
The district court did not abuse its discretion in holding that Middle
Man failed to timely raise its impaired-title argument. A motion to alter
or amend the judgment “cannot be used to expand a judgment to
encompass new issues which could have been raised prior to issuance of
the judgment.” Steele v. Young, 11 F.3d 1518, 1520 n.1 (10th Cir. 1993).
Middle Man did not make the impaired-title argument before moving to
alter or amend. 9 Thus, the district court did not abuse its discretion in
9
Middle Man argues that it did raise this issue before its motion to
alter or amend the judgment. We disagree. In opposing Sprint’s motion
for partial summary judgment, Middle Man stated in the fact section that
Middle Man had transferred title to its customers, “as Middle Man was
permitted to do under the law as a result of holding title to the phone[s]
free and clear.” Appellant’s App’x at 355. But in arguing against partial
25
declining to alter or amend the judgment based on the impaired-title
argument.
The same is true of Middle Man’s challenge to the summary-
judgment ruling. Middle Man did not present its impaired-title argument
in the summary-judgment proceedings. Without presentation of this
argument, the district court can hardly be faulted for declining to
consider the impaired-title argument when ruling on summary judgment.
As a result, we decline to consider the merits of Middle Man’s challenge
to the summary-judgment ruling based on an argument not raised until
Middle Man moved to alter or amend the judgment. See Grynberg v. Total
S.A., 538 F.3d 1336, 1354 (10th Cir. 2008) (declining to consider an
appeal point involving an argument that had not been raised until the
filing of a motion to alter or amend the judgment).
In these circumstances, we reject Middle Man’s impaired-title
argument.
summary judgment for Sprint, Middle Man did not (1) explain why it held
title to the telephones free and clear or (2) discuss the property-law
principles relied upon in this appeal.
26
5. Disposition
We reverse and remand with instructions to vacate the entry of
judgment for Sprint and to conduct further proceedings consistent with
this opinion.
27