TORRUELLA, Circuit Judge.
In this appeal, based on diversity jurisdiction, appellant-defendant RNK, Inc., d/b/a RNK Telecom ("RNK") challenges the district court's decision to grant summary judgment on its indemnification claim in favor of appellee-plaintiff Farmers Insurance Exchange ("Farmers") and appellee-defendant Ripple Communications, Inc. ("Ripple") (collectively, "Appellees"). Specifically, RNK avers that Ripple has a duty to indemnify RNK against claims asserted by Jane Doe in a civil action brought by her in the United States District Court for the Southern District of New York (the "Doe Lawsuit").
Ripple and Farmers (Ripple's insurer) jointly moved for summary judgment requesting that the district court summarily dismiss RNK's indemnification claim and enter a declaration stating that they have no duty or obligation to indemnify or otherwise hold harmless RNK against any claim, cost or expense incurred by RNK in its defense of the Doe Lawsuit. The district court granted summary judgment in Appellees' favor and RNK now appeals. After careful consideration, we affirm the district court's judgment.
Facts and Procedural History
Because this appeal is from a grant of summary judgment, we view the record in the light most favorable to the party against whom summary judgment entered
RNK, a Massachusetts corporation, is a telephone company that provides services to the public as a Competitive Local Exchange Carrier ("CLEC"). Ripple is a Nevada corporation that provides conferencing services. One of Ripple's services allows people to meet and confer through live telephone chat lines. Farmers is a California company that issued a general liability insurance policy to Ripple.
In 1999, Ripple and RNK entered into a written agreement (the "Agreement") whereby RNK agreed that Ripple would locate and install at RNK's premises certain electronic equipment necessary for Ripple to provide conferencing services to its customers. In order for Ripple's chat lines to function, a call had to travel over RNK's network and through Ripple's proprietary hardware and software (to which RNK's lines were attached). RNK was obligated under the Agreement to assign telephone numbers to Ripple's conferencing lines and to notify Ripple's customers any time that RNK for some reason decided to block calls.
Paragraphs one, three and ten of the Agreement state as follows:
(Emphasis added). Paragraphs three and ten of the Agreement (quoted above) were
On October 16, 1998, the New York Public Service Commission ("NYPSC"), which has jurisdiction under New York law to regulate CLECs such as RNK, issued an order (the "Regulatory Order") providing that all CLECs that had chat lines on their networks had to immediately either designate existing chat line central office codes as blockable or transfer these chat lines to specific central office codes that were already designated as blockable codes.
In 2005, Jane Doe, a minor acting through her adoptive father, brought the Doe Lawsuit in the United States District Court for the Southern District of New York against RNK alleging that RNK violated the Regulatory Order by not assigning blockable telephone numbers to chat lines and that, as a result, she was improperly able to gain access to a chat line through which she met several individuals who — after convincing her to contact them in person — sexually assaulted her.
Farmers filed the underlying declaratory judgment action against both Ripple and RNK seeking a ruling that it has no duty to defend or indemnify RNK in connection with the Doe Lawsuit. The parties then filed the following claims: (1) RNK filed a cross-claim against Ripple seeking a determination that Ripple owes a duty to indemnify RNK against Doe's claims, (2) Ripple filed a counterclaim against Farmers seeking a declaratory judgment that Farmers has an obligation to defend or indemnify it against RNK, and (3) Ripple filed a cross-claim against RNK seeking a declaratory judgment that Ripple has no contractual, common law or other obligation of indemnity, contribution or other duty toward RNK.
On April 30, 2009, all parties moved for summary judgment on the issue of whether Ripple has a duty to indemnify RNK against the claims asserted by Jane Doe in the Doe Lawsuit. After concluding that Ripple is not contractually obligated under the Agreement to indemnify RNK against
Standard of Review
Summary judgment is appropriate when the record shows that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).
We review de novo the grant of a motion for summary judgment. GTE Wireless, Inc. v. Cellexis Int'l, Inc., 341 F.3d 1, 4 (1st Cir.2003). We will reverse only if, after reviewing the facts and making all inferences in favor of the party against whom summary judgment entered (here, RNK), "the evidence on record is sufficiently open-ended to permit a rational factfinder to resolve the issue in favor of either side." Maymí v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir.2008) (internal quotation marks and citations omitted).
RNK contends, first, that the district court erred in finding that Ripple is not obligated to indemnify RNK against the claims asserted by Jane Doe in the Doe Lawsuit. Specifically, RNK alleges that the district court erred when it failed to conclude that paragraphs three and ten of the Agreement (hereinafter collectively
In opposition to RNK's allegations, Appellees contend that the district court was correct in finding that the Indemnity Provisions are not ambiguous and do not support RNK's indemnification claim. Appellees further contend that assuming arguendo that the Agreement contained an ambiguity regarding the Indemnity Provisions, the same cannot be interpreted against Ripple in the present case given that, first, the parties are of equal sophistication and bargaining power and, second, Ripple cannot be considered the drafter of the Indemnity Provisions. Finally, Appellees allege that even if the Agreement could be deemed to require Ripple to indemnify RNK for Jane Doe's claims — which Appellees deny — enforcement of such a provision would be against public policy, because it would promote a breach of duty to the public by indemnifying RNK from the consequences of its own negligence (i.e., failing to assign blockable numbers to chat lines, as required by the Regulatory Order).
For the reasons stated below, we find that the contract terms at issue here are unambiguous. We conclude that the plain language of the contract, interpreted to ascertain the manifest intent of the parties and to effectuate their purposes, does not require Ripple to indemnify RNK against Jane Doe's claims in the Doe Lawsuit. Accordingly, we affirm the district court's grant of summary judgment and find it unnecessary to address the parties' arguments regarding the application of ambiguous contractual provisions or Appellees' public policy objection.
Applicable State Law
The present appeal requires that we interpret the scope of the Agreement (particularly, the Indemnity Provisions). It is undisputed that interpretation of the Agreement is governed by Massachusetts law. "[U]nder Massachusetts law, interpretation of a contract is ordinarily a question of law for the court, and, as a question of law, is subject to plenary review." Bank v. Int'l Bus. Machs. Corp., 145 F.3d 420, 424 (1st Cir.1998) (internal quotation marks and citation omitted). A court interpreting a contract must first assess whether the contract is ambiguous. See Bank v. Thermo Elemental Inc., 451 Mass. 638, 888 N.E.2d 897, 907 (2008). "To answer the ambiguity question, the court must first examine the language of the contract by itself, independent of extrinsic evidence concerning the drafting history or the intention of the parties." Id. "Ambiguity is not created merely because the litigants disagree about the meaning of a contract." Nicolaci v. Anapol, 387 F.3d 21, 26 (1st Cir.2004). Rather, "a contract is only ambiguous where an agreement's terms are inconsistent on their face or where the phraseology can support reasonable differences of opinion as to the meaning of the words employed and obligations undertaken." Bank v. Int'l Bus. Machs. Corp., 145 F.3d at 424 (internal quotations marks and citation omitted).
The meaning of an unambiguous contract term is a question of law, while the meaning of an ambiguous contract term is a question of fact. Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 761 N.E.2d 946,
Here, the district court interpreted and applied the Agreement, determining that there were no ambiguities for the jury to resolve as to whether the parties thereto intended for Ripple to indemnify RNK against Doe's claims. The district court went on to conclude that Ripple is not obligated under the Agreement to indemnify RNK from Doe's claims. These are "legal" determinations and our review thereof is, thus, plenary. See Bank v. Int'l Bus. Machs. Corp., 145 F.3d at 424; ITT Corp. v. LTX Corp., 926 F.2d 1258, 1261 (1st Cir.1991) ("The determination of whether a contract provision is ambiguous is a question of law subject to plenary review."). With these principles in mind, we now discuss RNK's indemnification claim on appeal.
Interpretation of the Indemnity Provisions
RNK claims that Ripple is obligated, pursuant to the Agreement, to indemnify it from the claims asserted by Jane Doe in the Doe Lawsuit. RNK provides two possible bases for this assertion, namely: paragraph three and/or paragraph ten of the Agreement. We analyze these allegations separately. In doing so, we are mindful that under Massachusetts law, "[c]ontracts of indemnity are to be `fairly and reasonably construed in order to ascertain the intention of the parties and to effectuate the purpose sought to be accomplished.'" Nicolaci, 387 F.3d at 24 (quoting Shea v. Bay State Gas Co., 383 Mass. 218, 418 N.E.2d 597, 600 (1981)); see also Whittle v. Pagani Bros. Constr. Co., 383 Mass. 796, 422 N.E.2d 779, 781 (1981) (noting that some older Massachusetts cases "lay down a rule of strict construction for claims of indemnity covering the negligence of the indemnitee," but that the modern rule under Massachusetts law "is that such contracts are to be fairly and reasonably construed to ascertain the intention of the parties and to effectuate their purpose"). It is "well accepted under Massachusetts law that indemnification provisions are construed in accordance with their ordinary and plain meaning and without any bias in favor of the indemnitor or against the indemnitee." Caldwell Tanks, Inc. v. Haley & Ward, Inc., 471 F.3d 210, 217 (1st Cir.2006).
Paragraph Three of the Agreement
Under paragraph three of the Agreement, Ripple agreed to "indemnify RNK and hold harmless from and against all damage claims associated with any equipment of [Ripple]." (Emphasis added.) Given that only claims "associated" with any of Ripple's "equipment" are subject to the indemnification obligations set forth in
"In interpreting contractual language, we consider the contract as a whole. Its meaning `cannot be delineated by isolating words and interpreting them as though they stood alone.'" Nicolaci, 387 F.3d at 26 (quoting Starr v. Fordham, 420 Mass. 178, 648 N.E.2d 1261, 1269 (1995)). "Not only must due weight be accorded to the immediate context, but no part of the contract is to be disregarded." Starr, 648 N.E.2d at 1269.
Although the Agreement does not expressly define the term "equipment," the same is used in other parts of the Agreement. Specifically, paragraph one, which is titled "Customer Equipment," states that "RNK shall arrange [for Ripple] to co-locate at [Ripple]'s expense certain electronic Equipment" and that "[Ripple] shall use the Equipment installed at RNK's premises to provide information to its customers." (Emphasis added.) Said paragraph further states that "Ripple co-locates any and all of its Equipment at RNK's offices at its sole risk" and, upon termination of the Agreement, shall "remove the Equipment from RNK's premises" at its sole cost. (Emphasis added.) In addition, paragraph three of the Agreement establishes that "RNK shall not have any liability for any loss or damage related to [Ripple]'s equipment," "[RNK]'s casualty and fire insurance policies apply only to RNK's facilities," and "[Ripple] shall be responsible for insuring own equipment." (Emphasis added.)
The aforementioned textual language of the Agreement makes unambiguously clear and the parties do not dispute that the term "equipment" is used therein in its ordinary sense to refer to Ripple's tangible equipment to be located at RNK's premises.
With regards to the term "associated," the Agreement does not define the same and only uses it in paragraph three. Nevertheless, said term is ordinarily and commonly used to indicate that something is "closely connected, joined, or united with another (as in interest, function, activity, or office)." Webster's Third New International Dictionary Unabridged 132 (1971). Therefore, under paragraph three of the Agreement, Ripple undertook the obligation to indemnify RNK against all claims associated (i.e., closely connected, joined or united) with Ripple's tangible equipment located at RNK's premises. With this understanding in mind, below we discuss whether the indemnification obligation set forth in paragraph three applies to Doe's claims.
Jane Doe's claim in the Doe Lawsuit was that RNK's tortious failure (in violation of the Regulatory Order) to assign blockable codes to the chat lines that she used to contact her assailants was the proximate cause of her damages. RNK contends that this claim is covered under paragraph three's indemnification obligation. To this effect, RNK argues that Doe's claim is "associated" with Ripple's "equipment," within the meaning of paragraph three, because the chat line Jane Doe used to meet her assailants would never have operated without Ripple's equipment, and without the chat line the Doe Lawsuit would never have arisen. Thus, RNK urges that this Court interpret paragraph three as requiring indemnification against all claims that can somehow
The plain language of the Agreement shows that its purpose was mainly to allow Ripple to locate its equipment in RNK's premises for the operation of Ripple's chat lines and to require RNK to assign telephone numbers thereto. In light of this purpose and reading the Agreement as a whole, it is evident that the aim of paragraph three was to protect RNK in case Ripple's tangible equipment located at RNK's premises specifically caused damage to adjacent property in RNK's facilities or bodily injury to persons in the vicinity. This interpretation is buttressed by the other provisions of paragraph three, which illustrate that the concern giving rise to this paragraph pertained to damage to property or bodily injury specifically caused by the fact that Ripple's tangible equipment would be located in RNK's premises and not offsite. For example, paragraph three establishes that (1) "[RNK] shall not have any liability for any loss or damage related to [Ripple]'s equipment," (2) "[RNK]'s casualty and fire insurance policies apply only to RNK's facilities," and (3) "[Ripple] will be responsible for insuring own equipment." (Emphasis added).
It is also telling that paragraph three specifically restricts the indemnification obligation set forth therein to claims associated with Ripple's "equipment," as opposed, for example, to claims associated with Ripple's "services" or the "existence of Ripple's chat lines." Thus, the Agreement's language is consistent with the less expansive interpretation of paragraph three at which we arrive.
In light of the above, it would be unreasonable to find that paragraph three requires Ripple to indemnify RNK against all claims that can somehow be traced back to the existence of Ripple's chat lines. RNK's attempts at construing the scope of paragraph three in a broader fashion unreasonably distort the language and context of the Agreement.
In sum, we find that the indemnification obligation set forth in paragraph three unambiguously relates to claims specifically caused by Ripple's tangible equipment located in RNK's premises and does not encompass all claims that can somehow be traced back to the existence of Ripple's chat lines. Accordingly, we conclude that Ripple is not obligated under paragraph three of the Agreement to indemnify RNK against the claims asserted by Jane Doe in the Doe Lawsuit. We affirm the district court's judgment on this issue.
Paragraph Ten of the Agreement
The other contractual provision that RNK asserts as a basis for its indemnification claim against Ripple is paragraph ten of the Agreement. Said paragraph, which is titled "Customer [Ripple] Conduct," states, in relevant part, that "[Ripple] shall be responsible for all marketing and content and will hold RNK harmless from all claims arising from such." In other words, under paragraph ten, Ripple agreed to indemnify RNK from
RNK contends that the term "content" encompasses the third party conversations carried out through RNK's network and Ripple's chat lines, such as Doe's chat line conversations with her future assailants. RNK further alleges that Doe's claims should be deemed to have arisen from such "content." However, RNK's allegations are not supported by the plain language of the Agreement read in its proper context.
The language of paragraph ten illustrates that the indemnification obligation set forth therein was intended to protect RNK against Ripple's conduct. In particular, it is noteworthy that paragraph ten is titled "Customer [Ripple] Conduct" and states in its first sentence that "[Ripple] shall abide by all State and Federal regulations applicable to its operation." It further states, "[i]f [Ripple] do[es] not, RNK may terminate this agreement if the violation continues for over seven days after notice to [Ripple]." These provisions evince that the purpose behind paragraph ten was to protect RNK from possible unlawful conduct by Ripple. When read in proper context, it is clear that this paragraph requires that Ripple indemnify RNK from any claims arising from Ripple's marketing and content. Therefore, we find that the term "content," within the meaning of the Agreement, relates to material generated by Ripple (i.e., the prompts, menus and information publicized by Ripple on the various chats) and does not encompass the traffic (i.e., third party conversations) that went through RNK's network and Ripple's chat lines. We agree with the district court that the textual language of paragraph ten, when read in the context of the Agreement, is not reasonably susceptible to the interpretation that Ripple undertook to indemnify RNK for claims arising from conversations of third party customers that Ripple did not generate and could not monitor.
In light of the above, we find that the conversations carried out by Doe and her assailants through RNK's network and
In sum, we find that the district court correctly found that Ripple is not obligated under paragraph ten of the Agreement to indemnify RNK against Doe's claims. Accordingly, we affirm the district court's order on this issue.
For the reasons stated, we conclude that Ripple is not obligated under the Agreement to indemnify RNK against claims asserted by Jane Doe in the Doe Lawsuit. We, therefore, affirm the district court's grant of summary judgment in favor of Appellees.