Community Voice Line, LLC v. Great Lakes Communication Corp

Filing 158

MEMORANDUM OPINION AND ORDER Regarding 109 Community Voice Line's Motion for Summary Judgment as to Great Lakes Communication's First Amended Counterclaim. The Motion for Summary Judgment As To The Third Party Complaint is denied as moot, in light of the dismissal of all claims by GLCC against Blitz and Russell. CVL's Motion For Summary Judgment As To The First Amended Counterclaim is granted as to all of GLCC's counterclaims against CVL, and the counterclaim is dismissed. This matter will proceed to trial only on CVL's claims against GLCC. Signed by Judge Mark W Bennett on 10/11/2013. (src)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
COMMUNITY VOICE LINE, L.L.C., a
Maryland limited liability company,
No. C 12-4048-MWB
Plaintiff and Counterclaim
Defendant,
vs.
MEMORANDUM OPINION AND
ORDER REGARDING COMMUNITY
VOICE LINE’S MOTION FOR
SUMMARY JUDGMENT AS TO
GREAT LAKES COMMUNICATION’S
FIRST AMENDED COUNTERCLAIM

GREAT LAKES COMMUNICATION
CORP., an Iowa corporation,
Defendant and
Counterclaimant.

___________________________
This case originated as a diversity action by Community Voice Line, L.L.C.
(CVL), a Maryland limited liability company, which provides conference call services,
recorded content, audio streams, and other business services, against Great Lakes
Communication Corporation (GLCC), an Iowa competitive local exchange carrier
(CLEC), which provides local telephone services, other related telecommunications
services, and, more specifically, “hosting” of the telephone numbers that CVL’s
customers would call to obtain CVL’s services. CVL asserts claims for breach of
contract and unjust enrichment arising from GLCC’s alleged failure to pay CVL a
marketing fee or commission from revenues that GLCC collected from originating
carriers for calls from CVL’s customers to CVL’s telephone numbers “hosted” by
GLCC. The pleading now at issue, however, is GLCC’s First Amended Counterclaim
(docket no. 42) against CVL, in which GLCC asserts counterclaims for actual or
anticipatory breach of contract, declaratory relief, promissory estoppel, fraudulent
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misrepresentation, fraudulent inducement, negligent misrepresentation, and civil
conspiracy, all premised on GLCC’s contention that CVL contracted, promised, or
represented that it would indemnify GLCC from third-party claims against GLCC
arising from various kinds of misconduct by CVL, but that CVL has now made clear
that it will not do so or has refused to do so.1
On July 22, 2013, CVL filed its Motion For Summary Judgment As To The
First Amended Counterclaim Filed By Great Lakes Communication Corp. (Motion)
(docket no. 109), which is now before me.2 In support of this Motion, CVL contends,
in essence, that there was no agreement, promise, or representation, oral or written, by
CVL to indemnify GLCC at all, but that, if there was, the indemnification language
does not apply to any potential claims by non-party Alpine Audio Now, the only claims
properly identified by GLCC in discovery responses as the basis for a demand for
possible indemnification, that GLCC has never requested that it be indemnified by CVL
as to claims by Alpine Audio Now, and that CVL has never refused to indemnify
GLCC.
1

GLCC originally asserted the same claims as third-party claims against thirdparty defendant Blitz Telecom Services, L.L.C. (Blitz), another Maryland limited
liability company, which describes itself as a reseller of local calling traffic, and thirdparty defendant Robert Russell, allegedly a resident of Maryland, who is the registered
agent and owner of both CVL and Blitz. On August 22, 2013, however, GLCC, Blitz,
and Russell filed a Joint Stipulation For Dismissal With Prejudice As To Blitz Telecom
Services, L.L.C., And Robert Russell (Stipulation) (docket no. 144) stipulating to the
dismissal, with prejudice, of all claims and causes of action by GLCC against Blitz and
Russell.
2

Blitz and Russell also joined in this Motion as to the third-party claims by
GLCC against them, but—as I observed in an Order Regarding Stipulation For
Dismissal Of Blitz And Russell And Regarding Their Parts Of The Pending Motion For
Summary Judgment (docket no. 146), and the remaining parties recognized in their
Resistance and Reply, respectively—the Stipulation renders moot Blitz’s and Russell’s
parts of this motion.
2

In its August 22, 2013, Resistance (docket no. 148), however, GLCC contends
that the indemnity clauses are real, that they are applicable to several “somewhat
related” judicial and administrative proceedings that GLCC belatedly identified in
discovery responses filed after CVL filed its Motion, and that the indemnity clauses
have been triggered. GLCC also argues, in the alternative, that there are triable issues
of fact related to the existence of an indemnity contract, promise, or representation, and
the terms thereof. GLCC also argues that this Motion—like CVL’s prior July 2, 2012,
Motion For Partial Summary Judgment (docket no. 16) on CVL’s own breach-ofcontract claim as to amounts due and owing by GLCC to CVL—is premature, because
discovery has not been completed, the dispositive motion deadline is still months away,
and CVL has not shown that the issues presented are ripe for summary disposition.
GLCC does concede that its “conspiracy” claim should now be dismissed, after the
voluntary dismissal of its third-party claims against the other alleged conspirators.
In its August 29, 2013, Reply (docket no. 150), CVL contends that GLCC’s
entire Resistance is predicated on an entirely new factual scenario first introduced into
these proceedings in discovery responses provided nine days after CVL filed its
Motion. CVL contends that GLCC is barred from proving its new arguments by an
Order (Sanctions Order) (docket no. 106), filed on July 9, 2013, by Magistrate Judge
Leonard T. Strand, imposing sanctions on GLCC for discovery misconduct. CVL also
argues that, even if GLCC is permitted to offer the “new” evidence supporting its
Resistance, that evidence shows that GLCC has only now made a demand for
indemnification, so that there is still no support for an “anticipatory breach” claim
against CVL. Finally, CVL contends that there are no disputes as to material facts
precluding the entry of summary judgment, because GLCC has not shown that the
purported indemnification obligation that GLCC has “cobbled together” from draft

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agreements, which were never executed, covers any of the specific disputes for which
GLCC now claims indemnification.
Although CVL requested oral arguments on its Motion, my crowded schedule
has not permitted the timely scheduling of such oral arguments, and I find that the
parties’ briefs and other written submissions are sufficient for me to determine
dispositive issues as a matter of law. Therefore, I have not held oral arguments on the
present Motion, and I will resolve it on the parties’ written submissions.
Summary judgment is only appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if any, show
that there is no genuine issue of material fact and that the moving party is entitled to a
judgment as a matter of law.” FED. R. CIV. P. 56(c) (emphasis added); see Woods v.
DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (“Summary judgment is
appropriate if viewing the record in the light most favorable to the nonmoving party,
there are no genuine issues of material fact and the moving party is entitled to judgment
as a matter of law.”); see generally Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
(1986). As the Eighth Circuit Court of Appeals has explained,
“On a motion for summary judgment, ‘facts must be viewed
in the light most favorable to the nonmoving party only if
there is a genuine dispute as to those facts.’” Ricci v.
DeStefano, –––U.S. ––––, 129 S. Ct. 2658, 2677, 174 L.
Ed. 2d 490 (2009) quoting Scott v. Harris, 550 U.S. 372,
380, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007) (internal
quotations omitted).
“Credibility determinations, the
weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge.” Reeves v. Sanderson Plumbing Prods., Inc., 530
U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000),
quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The
nonmovant “must do more than simply show that there is
some metaphysical doubt as to the material facts,” and must
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come forward with “specific facts showing that there is a
genuine issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S. Ct.
1348, 89 L. Ed. 2d 538 (1986). “‘Where the record taken
as a whole could not lead a rational trier of fact to find for
the nonmoving party, there is no genuine issue for trial.’”
Ricci, 129 S. Ct. at 2677, quoting Matsushita, 475 U.S. at
587, 106 S. Ct. 1348.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042-43 (8th Cir. 2011) (en banc).
Summary judgment is particularly appropriate when only questions of law are involved,
rather than factual issues that may or may not be subject to genuine dispute. See, e.g.,
Cremona v. R.S. Bacon Veneer Co., 433 F.3d 617, 620 (8th Cir. 2006).
Turning to GLCC’s counterclaims, as the Iowa Supreme Court has explained,
To prevail on a breach of contract claim, [the claimant] [i]s
required to prove: (1) the existence of a contract, (2) the
terms and conditions of the contract, (3) that [the claimant]
has performed all the terms and conditions required under
the contract, (4) the [opposing party’s] breach of the
contract in some particular way, and (5) that [the claimant]
has suffered damages as a result of [the opposing party’s]
breach. Molo Oil Co. v. River City Ford Truck Sales, Inc.,
578 N.W.2d 222, 224 (Iowa 1998).
Royal Indem. Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010); and
compare Whalen v. Connelly, 545 N.W.2d 284, 294 (Iowa 1996) (stating that proof of
a claim of fraudulent misrepresentation requires proof that a misrepresentation was
made); Kolkman v. Roth, 656 N.W.2d 148, 156 (Iowa 2003) (stating that a promissory
estoppel claim requires proof that a clear and definite promise was made).

Here,

contrary to CVL’s contentions, GLCC has succeeded in generating genuine issues of
material fact on a fundamental element of all of its claims, the existence of an
indemnity agreement, promise, or representation, see id.; Whalen, 545 N.W.2d at 294;
Kolkman, 656 N.W.2d at 156, including whether the indemnity agreement, promise, or
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representation was oral or written.3 GLCC has done so by pointing to evidence of what
the parties describe as the “2009 CVL Draft Agreement,” related e-mails, see GLCC’s
Appendix (docket no. 148-3), 1-17, and the parties’ performance as if they had an
agreement, from which a rational juror could conclude that the parties agreed to a
contract including an indemnification clause, at least orally, and attempted to confirm it
with a written agreement. Torgerson, 643 F.3d at 1042-43.
The 2009 CVL Draft Agreement provides the only statement of the terms of any
indemnity agreement that GLCC has ever identified or relied upon in these
proceedings, even if any agreement including an indemnity agreement was, itself, oral.
See, e.g., Hulbert v. Atherton, 12 N.W. 780, 781 (Iowa 1882) (“When a proposition is
in writing, and the acceptance is verbal, the contract is an oral contract.”). Thus, if the
jurors find that an indemnity agreement existed, they would have to find, as a matter of
law, that the agreement had the terms stated in the 2009 CVL Draft Agreement. Royal
Indem. Co., 786 N.W.2d at 846 (explaining that a party asserting breach of contract
must also prove the terms of the contract); Whalen, 545 N.W.2d at 294 (explaining that
proof of a fraudulent misrepresentation requires proof of the content of the
misrepresentation); Kolkman, 656 N.W.2d at 156 (explaining that proof of promissory
estoppel requires proof of a “clear and definite” promise).
The “indemnity” provisions of the 2009 CVL Draft Agreement are the
following:

3

This conclusion is also contrary to my prediction in my February 1, 2013,
Memorandum Opinion And Order Regarding Counterclaim And Third-Party
Defendants’ Motions To Dismiss (docket no. 71)—denying CVL’s motion to dismiss
GLCC’s counterclaim, in which CVL contended that GLCC had not adequately alleged
that there was any agreement, promise, or representation by CVL to indemnify
GLCC—that GLCC’s counterclaims likely could not survive a motion for summary
judgment.
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2.2.2 Compliance with Laws. . . . Customer
[meaning CVL] agrees to defend, indemnify, and hold
Carrier [meaning GLCC] harmless from all claims,
investigations, alleged violations, costs, (including attorney’s
fees), liabilities and damages arising from the content,
advertising, license and/or artwork of Customer’s programs
and/or services, or otherwise relating to any act or omission
of Customer of its agents.
***
9.2 Indemnification. Each Party hereby agrees to
indemnify, defend and hold the other Party harmless from
any and all asserted or threatened liabilities, claims, suits,
judgments, losses, damages, fines, forfeitures, assessments,
costs and expenses, including reasonable attorneys’ fees,
expert fees and costs and expenses of appeal (collectively,
the “Damages”), asserted by third parties as resulting from,
arising out of or in collection [sic] with (i) the Party’s
performance or non performance of any of its obligations
and duties set forth in this Agreement, including but not
limited to any Damages caused by the negligent, intentional
or wrongful acts or omissions to act of a Party, its officers,
directors,
agents,
employees,
representatives,
or
subscribers, (ii) a Party’s breach of any warranty, covenant
or representation made by it herein; (iii) bodily injury or
death or damage to property resulting or claimed to result,
in whole or in part, from any willful, intentional or
negligent act or omission of a Party, its officers, directors,
agents, employees, representatives or its subscribers; or
(iv) violation by a Party, its officers, directors, agents,
employees, representatives, or subscribers of any Tariffs,
law, statute, ordinance, governmental order, rule or
regulation. Notwithstanding anything herein to the contrary,
Customer shall not assert a claim against Carrier for
payment of the marketing fee or other damages as a
consequence of non-payment of the Fees by an Originating
Carrier.

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CVL Draft Agreement, ¶¶ 2.2.2 and 9.2, CVL’s Appendix at 4 and 8-9, GLCC’s
Appendix at 5 and 9-10.
What is fatal to GLCC’s counterclaims is that, as a matter of law, this indemnity
agreement does not apply to the only dispute timely identified by GLCC as the basis for
its indemnity claim. See, e.g., Cremona, 433 F.3d at 620 (explaining that summary
judgment is particularly appropriate when only questions of law are involved, rather
than factual issues that may or may not be subject to genuine dispute). That dispute is
the Alpine Audio Now litigation, Community Voice Line, L.L.C. v. Alpine Audio Now,
L.L.C., Case No. 24-C-12003756, in the Circuit Court for Baltimore City, State of
Maryland, in which GLCC admits that it has not been named as a party, although
Alpine Audio Now has contended that GLCC is an indispensable party.

CVL’s

Appendix at 60-61 (GLCC’s response to interrogatory). CVL contends, and GLCC
does not dispute, that CVL’s claims in that litigation arise from GLCC’s “porting” of
CVL’s program numbers to Alpine Audio Now, upon Alpine Audio Now’s demand,
just before GLCC ended its business relationship with CVL. CVL argues that any
claim that Alpine Audio Now might make against GLCC would be that GLCC did not
own the program numbers and had no right to port them to Alpine Audio Now, but that
such a claim does not arise from CVL’s performance under its agreement with GLCC or
in connection with any violation by CVL of any law.

See CVL Draft Agreement,

¶¶ 2.2.2 and 9.2, CVL’s Appendix at 4 and 8-9, GLCC’s Appendix at 5 and 9-10.
GLCC does not even attempt to explain how the Alpine Audio Now dispute falls within
the scope of the indemnity clauses identified above. I conclude, as a matter of law, that
the indemnity agreement, embodied in ¶¶ 2.2.2 and 9.2 of the 2009 CVL Draft
Agreement, does not relate to the Alpine Audio Now dispute, because that dispute does
not involve any claim against GLCC arising from any alleged misconduct of CVL
identified as a basis for indemnity in those indemnity clauses.
8

GLCC did assert, in its original answers to pertinent interrogatories, that the
disputes to which it alleged that the indemnity agreement applies go well beyond the
Alpine Audio Now dispute, but did not identify any other disputes. It was only in
supplemental responses, not provided until July 31, 2013, nine days after CVL filed the
present Motion, that GLCC identified additional judicial proceedings to which GLCC
contends that the indemnity agreement would apply. See GLCC’s Appendix at 20.
CVL contends—and I conclude—that GLCC has not, and cannot, introduce any
documents in support of this belated assertion of additional disputes to which the
purported indemnity agreement would apply, because Judge Strand’s July 9, 2013,
Sanctions Order prevents GLCC from doing so in yet another strategically-timed
attempt to “move the goalposts.” As CVL points out, prior to the filing of CVL’s
Motion, in response to CVL’s Second Request for Production of Documents, nos. 19,
22, and 23, GLCC stated that it had produced all documents relevant to its claims that
CVL breached its contracts with GLCC and all documents relevant to its claims for
damages.

See CVL’s Reply, Exhibit E, Responses to Requests nos. 19, 22, 23.

GLCC’s attempts to hedge, on the ground that it had produced “all responsive
documents which Great Lakes has located after a reasonable investigation,” id., and
that it “reserves the right to supplement this response,” id. at Response to Request No.
22, are precisely the kinds of hedging that Judge Strand found violated his prior order
compelling discovery and that he foreclosed in his Sanctions Order. Sanctions Order
(docket no. 106) at 7-10.
Because, as a matter of law, GLCC cannot show that the only indemnity terms
that it has identified as part of the purported indemnity agreement—if it existed—apply
to the only dispute that GLCC timely identified, the Alpine Audio Now dispute, CVL is
entitled to summary judgment on all of GLCC’s counterclaims, which are all premised

9

on violations of agreements, promises, or representations in the purported indemnity
agreement.
THEREFORE,
1.

The July 22, 2013, Motion For Summary Judgment As To The Third-

Party Complaint Filed By Great Lakes Communication Corp. (docket no. 109) by thirdparty defendants Blitz and Russell is denied as moot, in light of the dismissal of all
claims by GLCC against Blitz and Russell.
2.

CVL’s July 22, 2013, Motion For Summary Judgment As To The First

Amended Counterclaim Filed By Great Lakes Communication Corp. (docket no. 109)
is granted as to all of GLCC’s counterclaims against CVL, and the counterclaim is
dismissed. This matter will proceed to trial only on CVL’s claims against GLCC.
IT IS SO ORDERED.
DATED this 11th day of October, 2013.

______________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

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