Opinion
ACTION NO. 4:01-CV-367-Y
July 31, 2003
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Pending before the Court is the Motion for Summary Judgment filed by third-party defendant and cross-claim plaintiff DoubleClick Inc. ("DoubleClick") on November 8, 2002. Plaintiff and cross-claim defendant Travelocity.com, LP ("Travelocity") filed a response to the motion on December 9, and defendant and third-party plaintiff CGU Insurance Company ("CGU") filed a response to the motion on December 23. DoubleClick filed separate replies to these responses on December 30, 2002, and January 3, 2003, respectively. After consideration of the foregoing documents and the applicable law, the Court concludes that DoubleClick's motion should be granted.
I. Facts
On March 22, 1999, Travelocity's predecessor-in-interest, The SABRE Group, Inc. ("Sabre"), and DoubleClick entered into a Procurement and Trafficking Agreement, under which DoubleClick agreed to act as Sabre's agent to sell advertising on the Travelocity web site. Included within the Procurement and Trafficking Agreement is an indemnification clause that reads, in pertinent part, as follows:
[Sabre] agrees to indemnify and hold DoubleClick harmless from and against any and all claims, actions, losses, damages, liability, costs and expenses (including reasonable attorneys' fees) arising out of or in connection with . . . the Web Site, House Ads or Pages, including, without limitation, claims for infringement of copyright or other intellectual property rights and violation of rights of privacy or publicity.
(DoubleClick's App. at 60, ¶ 3(a).)
On December 10, DoubleClick entered into a Sponsorship Agreement with CGU, under which Travelocity's web site would display advertisements for CGU's travel-protection insurance and provide links to a CGU-affiliated web site where customers could purchase that insurance. In return, CGU agreed to pay fixed monthly fees under a formula established in the agreement.
In March 2000, Sabre spun-off a portion of its business into a new company, Travelocity. Apparently in conjunction with the spin-off, Sabre assigned to Travelocity the Procurement and Trafficking Agreement with DoubleClick.
In April 2000, Travelocity and DoubleClick ended their relationship under the Procurement and Trafficking Agreement, and Travelocity began to handle its advertising accounts in-house. On April 4, representatives from Travelocity and DoubleClick met with representatives from CGU to discuss the transfer of the CGU account from DoubleClick directly to Travelocity.
After this meeting, DoubleClick and Travelocity entered into an agreement to resolve the outstanding issues remaining between them following termination of the Procurement and Trafficking Agreement. Additionally, Travelocity and CGU began to deal directly with each other regarding advertising on Travelocity's web site. CGU paid Travelocity directly for Travelocity's services until September 2000 and continued to accept advertisements on and links from the Travelocity web site through March 2001. CGU indicated its desire to terminate the parties' relationship, however, by letter dated January 15, 2001. (DoubleClick's App. at 213.)
The record actually contains two letters from CGU purporting to terminate the Sponsorship Agreement. One letter is from Robert c. Gowdy, CGU's president, dated January 15, 2001, purporting to be effective February 14, 2001. (Doubleclick's App. at 213-14.) The other termination letter is from John F. Doyle, Jr., CGU's Senior Vice-President, dated February 1, 2001, purporting to be effective April 2, 2001. (Doubleclick's App. at 215.)
Travelocity filed this suit for breach of contract and unjust enrichment, seeking to recover damages as a result of CGU's failure to pay the amounts required under the Sponsorship Agreement. CGU filed an answer and counterclaim against Travelocity and a separate third-party complaint against DoubleClick, asserting that both had breached the Sponsorship Agreement, committed negligence, and engaged in several fraud-based causes of action. DoubleClick filed a cross-complaint against Travelocity, contending that Travelocity is required to indemnify DoubleClick for any liability it incurs on CGU's claims and for its costs and expenses, including attorneys' fees, in defending those claims. DoubleClick now seeks summary judgment as to CGU's claims against DoubleClick and as to DoubleClick's claims against Travelocity.
All of CGU's claims against Doubleclick except the breach-of-contract claim were dismissed on February 24, 2003, as a result of Doubleclick's Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6).
II. Summary Judgment Standard
Summary judgment is appropriate when the record establishes "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. Civ. P. 56(c). The party moving for summary judgment has the initial burden of demonstrating that it is entitled to a summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party need not produce evidence showing the absence of a genuine issue of material fact with respect to an issue on which the nonmovant bears the burden of proof. Rather, in that situation, the moving party need only point out that the evidentiary documents in the record contain insufficient proof concerning an essential element of the nonmovant's claim. See id. at 323-35. Where, however, the moving party bears the burden of proof on the claim upon which it seeks summary judgment, it must present evidence that establishes "beyond peradventure all the essential elements of the claim or defense." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986).
When the moving party has carried its summary-judgment burden, the nonmovant must go beyond the pleadings and by its own affidavits or by the depositions, answers to interrogatories, or admissions on file set forth specific facts showing that there is a genuine issue for trial. FED. R. Civ. P. 56(e). This burden is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). If the evidence is merely colorable or is not significantly probative, summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).
In making its determination on the motion, the Court must look at the full record in the case. FED. R. Civ. P. 56(c); see Williams v. Adams, 836 F.2d 958, 961 (5th Cir. 1988) Nevertheless, Rule 56 "does not impose on the district court a duty to sift through the record in search of evidence to support a party's [motion for or] opposition to summary judgment." Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 825 (1992). Instead, parties should "identify specific evidence in the record, and . . . articulate the `precise manner' in which that evidence support[s] their claim." Forsyth v. Barr, 19 F.3d 1527, 1536 (5th Cir.), cert. denied, 513 U.S. 871 (1994).
III. Analysis
A. CGU's Breach-of-Contract Claim against DoubleClick
CGU's third-party complaint charges DoubleClick with breaching the Sponsorship Agreement by "fail[ing] to ensure" that Travelocity properly advertised CGU's services on its website. DoubleClick seeks summary judgment on this claim, contending that it was not obligated to ensure Travelocity's performance under the agreement. Specifically, DoubleClick contends that it entered into the Sponsorship Agreement as an agent for Travelocity and, after it was terminated by Travelocity, "the Sponsorship Agreement was assigned to Travelocity, with CGU's consent or ratification." (DoubleClick's Br. in Supp. of Mot. for Summ. J. at 11.) DoubleClick contends that "CGU now falsely purports that DoubleClick breached the agreement because it failed to ensure Travelocity's performance after Travelocity assumed full responsibility of the contract." (DoubleClick's Br. in Supp. of Mot. for Summ. J. at 10.)
CGU's response contends that its "third-party complaint does not assert that DoubleClick continued to have obligations after it was dismissed by Travelocity." (CGU's Resp. Br. at 3.) Rather, although less than pellucid, it appears that CGU contends that as Travelocity's agent, "DoubleClick had an obligation during the contract period to ensure Travelocity's performance o[f] various duties, which it failed to do." (CGU's Resp. Br. at 3.) CGU cites no authority in support of this novel proposition. Nor can it, for "[i]t is well settled that when an agent acts on behalf of a disclosed principal on a contract, the agent will not be personally bound unless there is clear and explicit evidence of the agent's intention to be so bound." Spain v. Howard Holmes, Inc., 485 N.Y.S.2d 87, 89 (N.Y.App.Div. 1985); see also Dietrich v. U.S. Shipping Bd. Emergency Fleet Corp., 9 F.2d 733, 739 (2d Cir. 1925), cert. denied, 278 U.S. 647 (1928).
As noted by Doubleclick, the Sponsorship Agreement contains a provision stating that "this Agreement shall be governed by and construed in accordance with the substantive laws of the State of New York." (Doubleclick's App. at 27.)
CGU admits that "DoubleClick was acting as the agent for Travelocity." (CGU's Resp. Br. at 3; CGU's First Am. Third-Party Compl. at ¶ 8.) Indeed, the face of the Sponsorship Agreement disclosed that DoubleClick was acting as Travelocity's agent regarding advertising on the Travelocity web site. CGU wholly fails to present any evidence tending to demonstrate that despite the fact that the agreement itself disclosed that DoubleClick was acting as Travelocity's agent, DoubleClick nevertheless intended to bind itself to the agreement. As a result, the Court concludes that DoubleClick is entitled to summary judgment as to CGU's claims against it. B. DoubleClick's Claim for Indemnification from Travelocity
The Sponsorship Agreement actually provides that "Doubleclick is the agent for Sabre with respect to all advertising on the Travelocity Web Site." (Doubleclick's App. at 21.) As previously indicated, however, Sabre spun Travelocity off after the Sponsorship Agreement was executed.
The Sponsorship Agreement provides that Doubleclick would service CGU's advertising on the website, and CGU would pay DoubleClick for the advertising. Nevertheless, to the extent CGU complains about Doubleclick's performance, that complaint is properly directed to the principal, Travelocity, rather than the agent, Doubleclick. See Dietrich, 9 F.2d at 739 ("It is a general principal of the law that, if an agent acts within the scope of his actual or apparent authority and enters into a contract on behalf of his principal, the contract is that of the latter. All rights and obligations which arise under it are those of the principal, and the agent cannot enforce the contract, neither is he bound by it.")
In seeming contradiction to CGU's contention in its response to DoubleClick's motion that its "third-party complaint does not assert that Doubleclick continued to have obligations after it was dismissed by Travelocity," (CGU's Resp. Br. at 3), CGU argues later in its response brief that the Sponsorship Agreement was never assigned from DoubleClick to Travelocity. The court has already concluded in its order partially granting Travelocity's summary-judgment motion that even though a formal, written assignment of the Sponsorship Agreement was never entered between Doubleclick and Travelocity, CGU remained bound to the agreement due to its conduct after the transfer. After reviewing DoubleClick's motion, however, and noting that the face of the Sponsorship Agreement reflects that DoubleClick acted as Sabre/Travelocity's agent regarding advertising on the Travelocity web site, the court questions whether an assignment of the contract from DoubleClick to Travelocity was necessary or, for that matter, possible, inasmuch as it appears that the Sponsorship Agreement was Sabre/Travelocity's (as opposed to Doubleclick's) to begin with (albeit with Doubleclick performing certain of Sabre/Travelocity's obligations thereunder). In any event, the court's holding in the prior summary-judgment opinion — that CGU remained bound to the Sponsorship Agreement after Doubleclick's termination by Travelocity — remains correct.
DoubleClick also seeks summary judgment on its claim for indemnification against Travelocity. DoubleClick asserts that it is entitled to indemnification under the Procurement and Trafficking Agreement for any liability it may have to CGU and for its costs and expenses in defending CGU's claims. Alternatively, DoubleClick contends that Travelocity is obligated under common law to indemnify DoubleClick. Because the Court has concluded that DoubleClick is entitled to summary judgment against CGU, DoubleClick's claim for indemnification against Travelocity is reduced to a claim for reimbursement of DoubleClick's costs in defending CGU's claims.
After review of the Procurement and Trafficking Agreement's language, the Court agrees with DoubleClick that Travelocity, as Sabre's successor-in-interest, is contractually obligated to indemnify DoubleClick for the costs and expenses, including reasonable attorney's fees, DoubleClick incurred in defending CGU's claims. The contract specifically provides that Sabre/Travelocity would indemnify DoubleClick
Because the Court concludes that DoubleClick is entitled to indemnification under the contract, the Court has not addressed DoubleClick's alternative request for indemnification under common law.
from any and all claims, actions, losses, damages, liability, costs and expenses (including reasonable attorneys' fees) arising out of or in connection with . . . the Web Site, House Ads or Pages, including, without limitation, claims for infringement or copyright or other intellectual property rights and violation of rights of privacy or publicity."
(DoubleClick's App. at 60, ¶ 3(a).) CGU's claims unquestionably arise out of or are connected with Travelocity's web site. As a result, the Court concludes that Travelocity is required by the Procurement and Trafficking Agreement to indemnify DoubleClick for the costs and expenses, including reasonable attorneys' fees, DoubleClick incurred in defending CGU's claims.
Travelocity disputes that the contract requires it to indemnify DoubleClick, contending that the indemnification clause only "protect[s] DoubleClick from claims arising out of the materials actually displayed on the Travelocity website." (Travelocity's Resp. Br. at 6.) The indemnification clause certainly does that, given that it specifically protects DoubleClick from "claims for infringement or copyright or other intellectual property rights and violation of rights of privacy or publicity." The problem for Travelocity, however, is that it did not limit the clause to solely that type of protection. Rather, the clause indemnifies DoubleClick for " all claims . . . arising from or in connection with . . . the Web Site, including, without limitation, claims for infringement or copyright or other intellectual property rights and violation of rights of privacy or publicity." (DoubleClick's App. at 60, ¶ 3(a) (emphasis added).)
Travelocity also contends that the agreement does not entitle DoubleClick to indemnification against the consequences of its own conduct. Travelocity focuses on the fact that, in addition to the breach-of-contract claim, CGU alleges that DoubleClick acted negligently and engaged in fraud. Travelocity urges that under Texas's "express-negligence" test, it is not required to indemnify DoubleClick for DoubleClick's negligence because the contract does not expressly provide for such indemnification. See Fina, Inc. v. ARCO, 200 F.3d 266, 273 (5th Cir. 2000) (noting that under the express-negligence test, "parties seeking to indemnify the indemnitee from the consequences of its own negligence must express that intent in specific terms."); see also Ethyl v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex. 1987) (adopting the express-negligence test). Texas's express-negligence test requires that a contract for indemnification state in clear, express, and specific terms that the indemnitee's negligence is covered by the indemnification clause. See Quorom Health Res. L.L.C. v. Maverick County Hosp. Dist., 308 F.3d 451, 462-64 (5th Cir. 2002).
As noted in DoubleClick's brief in support of its motion, however, the Procurement and Trafficking Agreement specifically provides that it "shall be governed by and construed in accordance with the substantive laws of the State of New York." (DoubleClick's Br. in Supp. of Mot. for Summ. J. at 6, n. 6 (citing DoubleClick's App. at 61).) Travelocity does not specifically dispute that New York law applies to the interpretation of the Procurement and Trafficking Agreement, but instead suggests that New York law also "imposes a heightened requirement that allows a party to be indemnified against the consequences of its own conduct by contract only if the `intention to indemnify can be clearly implied from the language and purposes of the entire agreement, and the surrounding facts and circumstances.'" (Travelocity's Resp. Br. at 5 (quoting New York Tel. Co. v. Gulf Oil Corp., 609 N.Y.S.2d 244, 246 (N.Y. A.D. 1994)). The very case Travelocity cites in support of that proposition, however, demonstrates that New York does not follow Texas's express-negligence test:
A contract of indemnity need not explicitly state an intent that the undertaking extend to the indemnitees' own negligent acts. Thus, in Levine v. Shell Oil Co., 28 N.Y.2d 205, 210, 321 N.Y.S.2d 81, 269 N.E.2d 799, the Court of Appeals held that a contract whereby the third-party defendant agreed to indemnify the defendant oil company against "any and all claims, suits, loss, cost and liability on account of injury or death of persons caused by or happening in connection with the premises," evinced an unmistakable intent that the indemnitee be indemnified against its own active negligence. The Court held that specific reference to the active negligence of the indemnitee was unnecessary as were talismanic phrases such as `of whatsover kind or nature' and `or otherwise.'Gulf Oil, 609 N.Y.S.2d at 246 (pinpoint citations omitted). The Procurement and Trafficking Agreement between Sabre/Travelocity and DoubleClick contains language very similar to the language in the indemnification provision at issue in the Levine case quoted above. As a result, the Court concludes that New York law would construe the indemnification provision in the Procurement and Trafficking Agreement to cover any liability, costs, and expenses DoubleClick incurred as a result of CGU's negligence claim.
CGU's fraud claims are another matter, however, given that they involve allegedly intentional conduct. Under New York law, "[i]ndemnification contracts are unenforceable as violative of public policy to the extent that they purport to indemnify a party for damages flowing from the intentional causation of injury." Austro v. Niagra Mohawk Power Corp., 487 N.E.2d 267, 267 (N.Y. 1985).
In any event, DoubleClick has not incurred liability on CGU's fraud claims; indeed, the Court has granted DoubleClick summary judgment regarding all of CGU's claims. In the absence of a determination that DoubleClick was negligent or engaged in fraud, the Court concludes that the indemnification provision in the Procurement and Trafficking Agreement requires that Travelocity indemnify DoubleClick for all its costs and expenses, including reasonable attorneys' fees, in defending CGU's claims. Cf. Gibbs-Alfano v. Burton, 281 F.3d 12, 21 (2d Cir. 2002) (reversing district court's refusal to enforce indemnification clause where parties settled claims alleging intentional conduct; concluding that "in the absence of a judgment of intentional conduct on the part of the [indemnitees], we do not find any reason under New York public policy to hold the Indemnification Clause unenforceable").
Finally, Travelocity urges that other language in the Procurement and Trafficking Agreement reflects that DoubleClick is not entitled to indemnification on those portions of CGU's claims that involve technical malfunctions and computer errors. Specifically, Travelocity points to paragraph four of the agreement, which provides, in part, that "neither party shall be liable to the other party for any technical malfunction, computer error or loss of data or other injury, damage or disruption to [Sabre/Travelocity's] pages or web site or the service beyond its reasonable control." (DoubleClick's App. at 61.) That language is in a paragraph entitled "No Warranties/Liabilities" dealing with Sabre/Travelocity's and DoubleClick's representations and liabilities to each other, as opposed to their liabilities for the claims of third parties. Furthermore, even assuming that this clause applies to DoubleClick's claim for indemnification, Travelocity has failed to point to any evidence demonstrating that CGU's claims regarding technical malfunctions and computer errors were beyond Travelocity's reasonable control.
IV. Conclusion
For the foregoing reasons, DoubleClick's Motion for Summary Judgment (document number 65] is hereby GRANTED. DoubleClick is entitled to summary judgment as to CGU's remaining breach-of-contract claim, and CGU shall take nothing by way of that claim. Additionally, DoubleClick is entitled to summary judgment on its claim for contractual indemnity against Travelocity. Travelocity is obligated under the Procurement and Trafficking Agreement to indemnify DoubleClick for its costs and expenses, including reasonable attorneys' fees, in defending CGU's claims, which amounts will be determined at trial.