Analect LLC v. Fifth Third Bancorp

09-4068-cv
Analect LLC v. Fifth Third Bancorp
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUM M ARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. W HEN
CITING A SUM M ARY ORDER IN A D O CUM ENT FILED W ITH THIS COURT, A PARTY M UST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (W ITH THE NOTATION
“SUM M ARY ORDER”). A PARTY CITING A SUM M ARY ORDER M UST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
York, on the 7 th day of June, two thousand ten.
PRESENT: JOSEPH M. McLAUGHLIN,
CHESTER J. STRAUB,
REENA RAGGI,
Circuit Judges.
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ANALECT LLC,
Plaintiff-Counter-Defendant-Appellant,
v. No. 09-4068-cv
FIFTH THIRD BANCORP, FIFTH THIRD BANK,
Defendants-Counter-Claimants-Appellees,
THE CINCINNATI LIFE INSURANCE COMPANY,
Defendant.
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APPEARING FOR APPELLANT: THOMAS S. BIEMER (Patrick M. Northen,
D ilw orth Paxson L L P, Philadelphia,
Pennsylvania, Gregory A. Blue, Rachel K.
Marcoccia, Morgenstern & Blue, LLC, New
York, New York, on the brief), Dilworth Paxson
LLP, Philadelphia, Pennsylvania.
APPEARING FOR APPELLEES: PATRICK F. FISCHER (Daniel E. Izenson, Drew
M. Hicks, Keating Muehing & Klekamp PLL,
Cincinnati, Ohio, Adam L. Rosen, Lon J.
Seidman, Silverman Acampora LLP, Jericho,
New York, on the brief), Keating Muehing &
Klekamp PLL, Cincinnati, Ohio.
Appeal from the United States District Court for the Eastern District of New York
(Joseph F. Bianco, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court entered on September 14, 2009, is
AFFIRMED.
Plaintiff Analect LLC appeals from an award of partial summary judgment in favor
of defendants Fifth Third Bancorp (“Bancorp”) and Fifth Third Bank (“Fifth Third”) on its
claims alleging breach of contract. We review a summary judgment award de novo, viewing
the facts in the light most favorable to the non-moving party. See Havey v. Homebound
Mortgage, Inc., 547 F.3d 158, 163 (2d Cir. 2008). While we will not uphold an award of
summary judgment in favor of the defendants if the evidence is sufficient to permit a
reasonable jury to find for the plaintiff, Analect must point to more than a “scintilla” of
evidence in support of its claim to defeat summary judgment. Id. (internal quotation marks
omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In applying
these principles to this appeal, we assume the parties’ familiarity with the facts and the record
of prior proceedings, which we reference only as necessary to explain our decision to affirm.
2
1. Jurisdiction
“[W]e have allowed a plaintiff to appeal an adverse ruling disposing of fewer than all
of its claims following the plaintiff’s voluntary relinquishment of its remaining claims with
prejudice.” Chappelle v. Beacon Commc’ns Corp., 84 F.3d 652, 653 (2d Cir. 1996).
Consistent with this holding, Analect dismissed with prejudice those of its claims that
survived summary judgment before filing this appeal. Defendants, however, dismissed
certain of their counterclaims without prejudice.1 We conclude that defendants’ actions do
not raise a jurisdictional concern because their counterclaims for a declaration that the
contract between the parties is void and/or unenforceable were brought in response to
plaintiff’s claims of breach. In the absence of any imminent attempt to enforce that contract
– which would arise only if we were to reverse the district court’s award of summary
judgment – defendants’ counterclaims present no “actual controversy.” 28 U.S.C. § 2201(a);
see generally Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941) (holding
that “actual controversy” within meaning of Declaratory Judgment Act exists only where
“there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment”); Sheet
Metal Div. of Capitol Dist. Sheet Metal, Roofing & Air Conditioning Contractors Ass’n v.
Local 38 of Sheet Metal Workers Int’l Ass’n, 208 F.3d 18, 23-26 (2d Cir. 2000) (concluding
that entry of declaratory judgment was premature and abuse of discretion because, inter alia,
1
The remaining counterclaims were dismissed as moot.
3
lack of evidence indicating intent to enforce collective bargaining agreement against non-
signatories rendered “[i]t . . . hard to see how the likelihood that the Clause would be directly
enforced against [them] was sufficiently concrete to warrant a declaratory judgment”); cf.
Starter Corp. v. Converse, Inc., 84 F.3d 592, 595 (2d Cir. 1996) (noting in trademark context
that for purposes of declaratory judgment, actual controversy requires, inter alia, that
“defendant’s conduct create[] a real and reasonable apprehension of liability on the part of
the plaintiff”). Defendants’ dismissal is therefore properly understood to rest on mootness
grounds and, as such, is final. See generally Altman v. Bedford Cent. Sch. Dist., 245 F.3d
49, 70 (2d Cir. 2001) (“If a claim has become moot prior to the entry of final judgment, the
district court generally should dismiss the claim for lack of jurisdiction.”); Whisnant v.
United States, 400 F.3d 1177, 1180 (9th Cir. 2005) (noting that “dismissal for lack of subject
matter jurisdiction is a final judgment” within meaning of 28 U.S.C. § 1291); Banks v. Sec’y
of Ind. Family & Soc. Servs. Admin., 997 F.2d 231, 237 (7th Cir. 1993) (same). The
“without prejudice” denomination means simply that defendants’ counterclaims can be
revived only if they cease to be moot, which would occur only if this court reverses the
challenged summary judgment and reinstates plaintiff’s claim. For reasons explained in the
remainder of this order, we do not reverse the challenged award.
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2. Dismissal of Analect’s Claims Against Bancorp
The district court concluded that Bancorp, the ultimate parent company of Fifth Third,
was not a party to the May 29, 2001 letter agreement (“Agreement”) and, therefore, could not
be held liable under its terms. Analect challenges this conclusion, arguing that because
Bancorp conducts business under the registered service mark “Fifth Third Bank,” it is in fact
a party to the contract. We disagree.
Under New York law,2 “a parent corporation and its subsidiary are regarded as legally
distinct entities and a contract under the corporate name of one is not treated as that of both.”
Carte Blanche (Sing.) Pte., Ltd. v. Diners Club Int’l, Inc., 2 F.3d 24, 26 (2d Cir. 1993); see
De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 69-70 (2d Cir. 1996). The Agreement here
at issue expressly pertains to the request by “Fifth Third Bank” for “certain information from
Analect LLC.” May 29, 2001 Letter Agreement. Nowhere does the Agreement mention
Bancorp. Indeed, the only signatories to the Agreement are an officer of Fifth Third
Insurance Services, Inc., a senior vice president of Fifth Third Bank (Chicago), and Analect’s
co-chief executive officers. Under these circumstances, we agree that Bancorp is not a party
to the Agreement.
That Bancorp may own and use the service mark “Fifth Third Bank” does not alter
this conclusion, particularly given that Bancorp has no employees and – by all indications –
2
By its terms, the Agreement is to be construed in accordance with New York law.
5
had absolutely no involvement in the formation of the Agreement. Under well-established
principles of corporate liability, Bancorp may be held liable under the Agreement only upon
“a showing of fraud or . . . complete control” of Fifth Third by Bancorp “lead[ing] to a wrong
against third parties.” Carte Blanche (Sing.) Pte., Ltd. v. Diners Club Int’l, Inc., 2 F.3d at
26. Analect has not alleged, much less proved, fraud or domination. Nor does it point to any
authority establishing that a parent company’s ownership of a service mark used by a
subsidiary is sufficient to overcome the presumption of corporate separateness. The district
court therefore properly awarded summary judgment in favor of Bancorp.
3. Analect’s Claims Against Fifth Third
Because Analect dismissed with prejudice its claims that Fifth Third breached the
Agreement’s confidentiality provisions by using and communicating “Information” during
the course of its 2004 purchase of a financial product called SVSA BOLI (“the Product”),
we here consider only whether the district court properly rejected Analect’s claim that Fifth
Third’s purchase of the Product, standing alone, was a breach of the Agreement.
To support its claim that Fifth Third could not purchase the Product without Analect’s
prior written consent, plaintiff points to the following contractual provision:
We [Fifth Third] agree that, for so long as we retain or
otherwise use any of the Information [provided by Analect], and
for a period of five years after we return or destroy all of the
Information to you in the manner provided for in the preceding
paragraph, except pursuant to a specific written request from the
Company [Analect], neither we, nor any of our affiliates or
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Representatives, will (or will assist others to) develop, market,
underwrite, distribute, coordinate the placement, administer or
offer to any person, the Product or any product similar thereto
without the prior written agreement of the Company.
May 29, 2001 Letter Agreement. Analect asserts that the provision is reasonably interpreted
to preclude Fifth Third from purchasing the Product because doing so “coordinate[s the
Product’s] placement” and constitutes a distribution. We are not persuaded.
“A written contract will be read as a whole, . . . every part will be interpreted with
reference to the whole[,] and if possible it will be so interpreted as to give effect to its general
purpose.” Adams v. Suozzi, 433 F.3d 220, 228 (2d Cir. 2005) (internal quotation marks
omitted). Where the contract is unambiguous, “words and phrases . . . should be given their
plain meaning,” ReliaStar Life Ins. Co. of N.Y. v. EMC Nat’l Life Co., 564 F.3d 81, 88 (2d
Cir. 2009) (ellipsis in original) (internal quotation marks omitted); see also Krumme v.
WestPoint Stevens Inc., 238 F.3d 133, 139 (2d Cir. 2000), and the contract should be
interpreted without the aid of extrinsic evidence, see LaSalle Bank Nat’l Ass’n v. Nomura
Asset Capital Corp., 424 F.3d 195, 205 (2d Cir. 2005). A contract will be deemed
unambiguous where its terms do not “suggest more than one meaning when viewed
objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and terminology
as generally understood in the particular trade or business.” Law Debenture Trust Co. of
7
N.Y. v. Maverick Tube Corp., 595 F.3d 458, 466 (2d Cir. 2010) (internal quotation marks
omitted).
Contrary to Analect’s contention, the plain words used by the parties – particularly
when considered in light of the Agreement’s general purpose – do not manifest an intention
to preclude Fifth Third from purchasing the Product for its own internal use (as opposed to
resale or distribution). See Network Publ’g Corp. v. Shapiro, 895 F.2d 97, 99 (2d Cir. 1990)
(“[T]he words [of a contract] . . . are always the most important evidence of the parties’
intention.” (second alteration in original; internal quotation marks omitted)). The first
sentence in the Agreement states that “Fifth Third . . . has requested certain information from
Analect . . . in connection with our consideration of acting as a potential life insurance
product distributer [sic] . . . and possibly providing other services, in connection with
[Analect’s] distribution, either directly or indirectly through a subsidiary, of the Product.”
May 29, 2001 Letter Agreement. A “distributor” is “one that markets a commodity.”
Webster’s Third New Int’l Dictionary 660 (1986). “Market,” in turn, means “to expose for
sale in a market” or simply to “sell.” Id. at 1383. With this understanding of the
Agreement’s language, we have little difficulty concluding that the Agreement’s purpose is
to limit Fifth Third’s distribution, or sale, of the Product. The Agreement evinces no concern
with Fifth Third’s purchase of the Product.
Viewed in this light, the provisions precluding Fifth Third from “develop[ing], . . .
distribut[ing], coordinat[ing] the placement, [or] administer[ing]” the Product cannot
8
reasonably be interpreted as barring it from purchasing the Product for its internal use. May
29, 2001 Letter Agreement. Indeed, the prohibition on administering the Product is explicitly
limited to situations where the Product is “administer[ed] . . . to any person.” Id. Under the
circumstances, this phrase clearly contemplates the provision of Product-related services to
third parties, not to oneself.3 Because New York law requires that we “enforce [the] plain
meaning [of the parties’ bargain], ‘[r]ather than rewrite an unambiguous agreement,’”
Krumme v. WestPoint Stevens, Inc., 238 F.3d at 139 (third alteration in original) (quoting
American Express Bank Ltd. v. Uniroyal, 164 A.D.2d 275, 277, 562 N.Y.S.2d 613, 614 (1st
Dep’t 1990)), we affirm the award of summary judgment in favor of Fifth Third.
4. Conclusion
We have considered Analect’s remaining arguments on appeal and conclude that they
are without merit. Accordingly, the September 14, 2009 judgment of the district court is
AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
3
For the same reason, Analect’s argument that Fifth Third breached the Agreement
by allowing Clark Consulting to develop, coordinate the placement of, or administer the
Product for Fifth Third is unavailing.
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