Opinion
No. 15–P–1625.
10-17-2016
TRY SWITCH LTD. v. ENDURANCE INTERNATIONAL GROUP.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Following a bench trial in the Superior Court, Try Switch Limited (Try Switch) appeals from a judgment dismissing its claims in contract and quantum meruit against the defendant Endurance International Group (Endurance). We affirm.
On appeal, Try Switch makes no argument in favor of its quantum meruit claim. It also does not argue the award of damages on Endurance's counterclaim for breach of contract. We “need not pass upon questions or issues not argued in the brief.” Mass. R.A.P. 16(a)(4), as amended by 428 Mass. 1603 (1999).
The convoluted contractual business relationships giving rise to this dispute are set forth in their particulars in the judge's findings of fact and conclusions of law. For our purposes they may be summarized as involving an agreement by the defendant to provide commission payments to the plaintiff for referral of on-line customers to the defendant, an Internet Web hosting company. The gravamen of the complaint is that the defendant failed to pay the plaintiff sums due under the contract after the defendant characterized several hundred referrals as ineligible for commissions because the customers originated from the same individuals, entities, or Internet protocol addresses.
Endurance further determined that many of the Web sites purchased by customers referred from Try Switch contained computer-generated spam and repetitive content.
Breach of contract. The judge found that Try Switch materially breached the contract by referring ineligible “existing customers” to Endurance, and ruled that the breach excused Endurance from further performance, in this case payment of the sums in dispute. HRPT Advisors, Inc. v. MacDonald, Levine, Jenkins & Co ., P.C., 43 Mass.App.Ct. 613, 626 n. 16 (1997).
Try Switch asserts that the judge erred in her reading of two contractual provisions: (1) a provision which states: “Affiliates will not earn commission hosting accounts purchased in their own name or to existing customers” and (2) a referral fee provision which provided Endurance would pay $100 per “action referral occurrence” for an “unlimited” amount of such “action referral occurrences.”
An “action referral occurrence” is defined as the number of times an advertiser pays a commission for unique purchases made from the same computer in a specified period of time.
Specifically, Try Switch argues that the provision numbered (1) above refers only to those “existing” customers already hosted by Endurance at the time the parties entered into their agreement for commissions, but does not include parties that became customers of Endurance after the agreement was established. Alternatively, Try Switch asserts that the term “existing” is ambiguous in the context of the entire contract and thus must be interpreted against Endurance, the contract drafter. We conclude that both arguments are unavailing.
We review questions of contractual meaning de novo. See Basis Tech. Corp. v. Amazon.com, Inc., 71 Mass.App.Ct. 29, 36 (2008). In this case the term “existing” is undefined by any further description or limitation. We do not impute additional terms to a contract that were not included by the parties. See Magliozzi v. P & T Container Serv. Co., Inc., 34 Mass.App.Ct. 591, 595 (1993) (court refused “unilaterally to add a term not covered by the preexisting binding contract”). An “existing” customer means an “occurring” or “present” customer. See Webster's New World College Dictionary Fifth Edition (2016). The plain meaning of the contractual language deems a customer “existing” regardless whether it first attained that status before or after the parties executed the contract.
Try Switch's alternative argument is that applying the term “existing” to postcontract formation referrals creates ambiguity in the context of an agreement that also contains an “action referral occurrence” clause providing for “unlimited” commission payments. In other words, Try Switch asserts that because it is entitled to unlimited commission payments from repeated referrals, the rule that “existing” customers will not generate commissions is contradictory. To explain this asserted inconsistency, Try Switch argues that the term “existing” customers only applies to those who had already attained customer status prior to the execution of the contract between Try Switch and Endurance.
Even were we to consider the juxtaposition of “existing” and “unlimited” facially ambiguous, we would defer to the judge's interpretation as fact finder. Browning Ferris Indus., Inc. v. Casella Waste Mgt. of Mass., Inc., 79 Mass.App.Ct. 300, 307–308 (2011)(Browning Ferris). Under either approach, a review of the contract as a whole supplemented by extrinsic evidence, resolves the alleged contradiction and supports the judge's finding. Specifically, the evidence was that the contractual reference to unlimited “action referral occurrences” was necessary because accounts were often created for distinct bona fide customers on the same computer. The origin of these accounts is tracked by an electronic tag, a so-called “cookie,” which identifies the originating computer but is unable to distinguish different customers on the same computer from one transmission to the next. Once an account was created and populated with customer information, Endurance could determine whether that customer was new, and thus would generate the obligation to pay a commission. Accordingly, commission payments were contractually triggered by new customers with accounts originating from the same computer, but not by customers that already had an account with Endurance.
When an agreement is ambiguous “[t]he fact finder may ... consult extrinsic evidence including the circumstances of the formation of the agreement and the intentions and objectives of the parties.” Browning Ferris, supra at 307.
Other extrinsic evidence supports the finding that Endurance specifically sought bona fide customers. In order to participate in the program for earning commissions from referrals, Try Switch entered into a contract with an intermediary that matched it with Web hosting companies looking for referrals. This contract explicitly prohibited referrals that were not in good faith. The contract further provided that Try Switch “must promote [Endurance] such that the [referrals] deliver bona fide [t]ransactions by the [v]isitor to [Endurance] from the [referral].”
We note as well that several provisions in the contract “imposed restrictions on the types of transactions that qualified for commissions.” Testimony at trial indicated that Endurance intended only to pay commissions for bona fide transactions from customers who were likely to renew their accounts while customers who purchased multiple accounts were unlikely to renew. This was not a unilateral concern, as the evidence shows that Try Switch was aware that longevity was an important factor that would affect its revenues; it was only entitled to earn commissions on customers who maintained an account lasting at least twelve months. The judge further noted that the “existing customers” provision also prohibited commission on “accounts purchased in [Try Switch's] own name.” The judge did not err in rejecting the Try Switch's position.