Opinion
1:20-cv-01626-CL
03-04-2021
JOSHUA M. SCOTT, Trustee of the Winona Road Trust u/t/d July 24, 2020, Plaintiff, v. MCI COMMUNICATION SERVICES, INC., a Delaware corporation, dba VERIZON BUSINESS SERVICES, Defendant.
REPORT AND RECOMMENDATION
MARK D. CLARKE UNITED STATES MAGISTRATE JUDGE
Plaintiff Joshua M. Scott, Trustee of the Winona Road Trust ("Plaintiff”) brings claims against the defendant, MCI Communication Services, Inc., doing business as Verizon Business Services ("Verizon"). The case comes before the Court on Plaintiffs motion for partial summary judgment (#14), The Court held a telephonic oral argument hearing on March 2, 2021. For the reasons below, the motion should be DENIED.
LEGAL STANDARD
Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material of fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party has the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). The court cannot weigh the evidence or determine the truth but may only determine whether there is a genuine issue of fact. Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir. 2002). An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
When a properly supported motion for summary judgment is made, the burden shifts to the opposing party to set forth specific facts showing that there is a genuine issue for trial. Id., at 250. Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposing party must, by affidavit or as otherwise provided by Rule 56, designate specific facts which show there is a genuine issue for trial. Devereaux, 263 F.3d at 1076. In assessing whether a party has met its burden, the court views the evidence in the light most favorable to the non-moving party, Allen v. City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995).
BACKGROUND
On November 9, 1990, defendant Verizon and the owners of 2602 Winona Road, Grants Pass, Josephine County, Oregon, Plaintiffs predecessors in interest, entered into a lease agreement for an approximately 30' by 90' area for Verizon to install and maintain a telecommunications "regeneration station," as part of Verizon's fiber optic transmission line from Portland to Sacramento. The agreement included an access easement to the leased area, Verizon performed a survey of the approximately 30' by 90' leased area of the Property and attached a legal description of the area to the Lease (hereafter the "Leased Premises").
Jeanette Goodwin (hereafter "Goodwin") later acquired ownership of the Property and, in February of 2018, filed a lawsuit against Verizon for Commercial Eviction, Declaratory Judgment, Unjust Enrichment and Fraudulent Filing Under 26 U.S.C §7434-claims all relating to the Lease. Goodwin v. MCI Commc 'n Servs, Inc., Josephine County Oregon Circuit Court No. 18LT02075. Verizon removed the lawsuit to federal court (hereafter the "Federal Court Case";. Goodwin v. MCI Commc'n Servs, Inc., Civ, No. 1:18-cv-00853-CL.
In May of 2019, Goodwin and Verizon entered into a Settlement Agreement and Mutual Release of Claims resolving their disputes (hereafter the "Settlement Agreement"). Goodwin signed the Settlement Agreement and dated its "Effective Date" on May 6, 2019. Verizon's representative signed the Settlement Agreement and dated its "Effective Date" on May 7, 2019. Counsel for the parties informed the Court that the case had been settled and the Federal Court Case was dismissed with prejudice on May 6, 2019. Goodwin v. MCI Commc'n Servs, Inc. (#30), As part of the settlement, Defendant Verizon agreed to remove its regeneration equipment and restore the Premises to its prior condition no later than October 1, 2019 ("Removal and Restoration Project"). If the Removal and Restoration Project could not be completed by that time, Defendant agreed to pay Goodwin $500 per day starting October 2, 2019, until completion of the Removal and Restoration Project, The accrued amount is due within 30 days after the completion of the Removal and Restoration Project. The parties also agreed Defendant would record a release of lease with the Josephine County Clerk within five business days of the completion of the Removal and Restoration Project.
After the execution of the Settlement Agreement, Richard and Martha Foos purchased the Property from Goodwin. On July 31, 2019, Goodwin conveyed all of her rights and interest in the Settlement Agreement to the Foos. One year later, on July 31, 2020, Richard and Martha Foos transferred the property to Joshua M. Scott, Trustee of the Winona Road Trust u/t/d July 24, 2020. On August 25, 2020, the Foos assigned their interest in the Settlement Agreement to Scott as well. On September 18, 2020, Plaintiff-as successor in interest to Goodwin under the Settlement Agreement-filed the Complaint in this matter against Verizon for claims of Breach of Contract, Trespass, and Injunction under the Settlement Agreement.
DISCUSSION
The relationship between the parties in this case arises out of two related but separate contracts - the Lease Agreement and the Settlement Agreement. In this action, Plaintiff claims that Verizon is in breach of the Settlement Agreement for failure to complete the Removal and Restoration Project. Verizon claims that it has been unable to remove the equipment and restore the property to its prior condition because Plaintiff has denied Verizon access to the Leased Premises. Verizon claims that it is impossible to complete the Removal and Restoration Project as long as Plaintiff refuses to allow passage for Verizon's vehicles to get to the necessary fiber optic pole for splicing and decommissioning, Nevertheless, Plaintiff claims Verizon has no right to enter onto or use any property that is not included in the specific area of the Leased Premises.
Plaintiff contests Defendant's claim that Plaintiff has denied Verizon "access to the Leased Premises." Based on Plaintiffs interpretation of the Settlement Agreement, Defendant would be allowed access to the 30' by 90' footprint of the regeneration station building, but it could not park vehicles on the land adjacent to the footprint, as allowed in the Lease Agreement (discussed below). When asked at oral argument how, practically speaking, Plaintiff expected Verizon to complete the Removal and Restoration Project without access to the adjacent land, Plaintiff counsel suggested helicopters might be a feasible option.
The Lease Agreement explicitly granted Verizon "such rights of way and easements on, over, under, across and through the adjoining lands of Landlord, extending from the Premises to the nearest convenient public road, and of standard vehicular width, as shall be necessary for ingress and egress to and from the premises... and the right to park vehicles on or about the Premises and the lands immediately adjacent thereto during periods of construction, site inspection, and at times of necessary repair and maintenance work." Lease Agmt ¶4. Defendant Verizon claims that this grant of access was incorporated into the Settlement Agreement for purposes of Verizon's obligation to dismantle and remove the regeneration station and equipment. Plaintiff contends that it was not so incorporated, and Plaintiff claims that the Settlement Agreement effectively "extinguished" the terms of the Lease Agreement. Plaintiff now brings this motion for the Court's determination of this issue as a matter of law.
I. Plaintiffs motion for partial summary judgment should be denied.
As discussed above, the Lease Agreement explicitly granted Verizon access to the Leased Premises and use of the adjacent land for vehicles and equipment when necessary. Nothing in the Settlement Agreement indicates this arrangement should cease prior to Verizon's removal of the equipment.
a. The Settlement Agreement does not unambiguously "extinguish" the Lease Agreement.
"In a contract dispute, a party will be entitled to summary judgment only if the governing terms of the contract are unambiguous." Milne v. Milne Const. Co., 207 Or.App. 382, 388, 142 P.3d 475 (2006). An unambiguous term is one whose "meaning is so clear as to preclude doubt by a reasonable person." Deerfield Commodities, Ltd. v. Nerco, Inc., 72 Or.App. 305, 317, 696 P.2d 1096 (1985). "[W]hether the terms of a contract are ambiguous is, in the first instance, a question of law." Pac. First Bank v. New Morgan Park Corp., 319 Or. 342, 347, 876 P.2d 761 (1994). "The threshold to show ambiguity is not high." Milne, 207 Or.App. at 388. "A contract provision is ambiguous if it has no definite significance or if it is capable of more than one sensible and reasonable interpretation[.]" Batzer Const. Inc. v. Boyer, 204 Or.App. 309, 313, 129 P.3d 773 (2006).
Oregon courts follow a three-step analysis to determine whether a contract provision is ambiguous. Yogman v. Parrot, 325 Or. 358, 361, 937 P.2d 1019 (1997). First, the court must look to the text and context of the agreement by examining the words of the disputed provision and considering the contract as a whole. Id. at 361, Second, if that does not resolve the ambiguity, the court will examine extrinsic evidence of the contracting parties' intent. Id. at 363. Third, if the meaning of the provision remains ambiguous after the first two steps, only then will the court turn to appropriate maxims of construction. Id. at 364.
Plaintiff admits there is no express provision extinguishing the Lease prior to the completion of the Removal and Restoration Project and identifies no specific term for the Court to interpret. Lacking any such express provision, Plaintiff asserts that the undefined term "Effective Date" actually means "Lease Termination Date." The Court is unpersuaded by this argument and disagrees that such an interpretation is the "plain meaning" of those words. The plain meaning of "Effective Date" is, unambiguously, the date the Settlement Agreement becomes effective. This is confirmed by the context of the sentence in which the term is used: "Effective Date of this Agreement is May ___, 2019." Selvig Decl. ¶ 4, Ex. A at 5-6. In turn, "Agreement" is defined as the "Settlement Agreement and Mutual Release of Claims[.]" Id. at 1. Nothing in the language of the Settlement Agreement indicates that that the Lease Agreement is extinguished on the Effective Date.
b. The terms of the Settlement Agreement indicate that the Lease Agreement is not fully terminated until after completion of the Removal and Restoration Project.
The plain language of Section 4 of the Settlement Agreement provides for release of the Lease only after the completion of the Removal and Restoration Project:
Verizon agrees to record a document releasing the Lease with the Josephine County Clerk within five (5) business days of the date of completion of the Removal & Restoration Project, The date of the recording of such release shall have no effect on the rights and responsibilities of the parties as described in Section 1 of this Agreement and shall not be deemed a completion of Verizon's performance.Selvig Decl, ¶ 4, Ex. A at 3 ¶ 4. If the Lease were extinguished on the Effective Date of the Settlement Agreement, there would be no reason for Verizon to record a release of the Lease at all. Plaintiffs interpretation would thus negate the plain language of Section 4 of the Settlement Agreement. It is clear from the plain language that the Lease Agreement is not terminated until Verizon completes the Project and records a release.
The plain language of the final sentence here simply means that Verizon cannot fail to complete the project, record a release, and claim that its obligations are satisfied. Plaintiffs attempt to ascribe any other meaning to this clause is entirely without merit.
c. Plaintiffs other arguments fail to establish extinguishment of the Lease Agreement.
Plaintiff argues that the Settlement Agreement "in no way incorporates the Lease nor any of its provisions." However, the Lease is Exhibit 1 to the Settlement Agreement and is used to define the term "Leased Premises." Selvig Decl. ¶ 4, Ex, A at 1. Therefore, the Settlement Agreement does incorporate the Lease Agreement at least in part. Moreover, even if the Settlement Agreement did not incorporate the Lease, that would hardly amount to a clear intention for the Settlement Agreement to extinguish all of the terms of the Lease. Similarly, inconsistencies between the Settlement Agreement and the Lease Agreement, without any express language of an intention to terminate the Lease, do not accomplish such termination.
Finally, Plaintiff concludes that the Settlement Agreement does not indicate that any provisions of the Lease are in effect after the Effective Date. But it also does not indicate that any provisions of the Lease are not in effect after the Effective Date, at least until Verizon records a release. These arguments are unavailing.
d. Conclusion
Plaintiffs arguments fail to show that the plain, unambiguous terms of the Settlement Agreement extinguished the Lease Agreement on the Effective Date. In fact, the terms of the Settlement Agreement do not contemplate termination of the Lease until Verizon completes the Removal and Restoration Projects and records a release. Because this intention is clear and unambiguous based on the plain language of the text and context of the Settlement as a whole, it is not necessary for the Court to look to extrinsic evidence or the maxims of construction to determine the meaning of the contract.
RECOMMENDATION
For the reasons above, Plaintiffs motion for partial summary judgment (#14) should be DENIED. This Report and Recommendation will be referred to a district judge. Objections, if any, are due no later than fourteen (14) days after the date this recommendation is entered. If objections are filed, any response is due within fourteen (14) days after the date the objections are filed. See FED. R. CIV. P. 72, 6. Parties are advised that the failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).