Court Opinion

ID: 1035315
Source: CourtListenerOpinion
Date Created: 2013-07-25 20:06:22.669319+00
Date Added: 2024-06-11T12:45:25.496465
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                 JUL 25 2013

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

SOUTHERN CALIFORNIA GAS                          No. 11-56822
COMPANY, a California corporation,
                                                 D.C. No. 3:08-cv-00941-BEN-
              Plaintiff-counter-defendant -      MDD
Appellee,

  v.                                             MEMORANDUM*

SYNTELLECT, INC., a Delaware
corporation,

              Defendant-counter-claimant -
Appellant.

                   Appeal from the United States District Court
                      for the Southern District of California
                    Roger T. Benitez, District Judge, Presiding

                        Argued and Submitted July 9, 2013
                              Pasadena, California

Before: GRABER, RAWLINSON, and WATFORD, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Syntellect, Inc. (Syntellect), appeals the district court’s grant of partial

summary judgment requiring it to indemnify Southern California Gas Company

(SoCal) for damages arising from third-party allegations of patent infringement.

Syntellect also challenges the district court’s grant of a motion in limine excluding

evidence related to the allocation of damages between responsible parties. We

vacate the judgment and remand for further proceedings.

      1.     “The question whether an indemnity agreement covers a given case

turns primarily on contractual interpretation, and it is the intent of the parties as

expressed in the agreement that should control. . . .” St. Paul Fire & Marine Ins.

Co. v. Am. Dynasty Surplus Lines Ins. Co., 101 Cal. App. 4th 1038, 1049 (2002)

(citation and alteration omitted). The intent of the parties is “ascertained from the

clear and explicit language of the contract.” Cont’l Heller Corp. v. Amtech Mech.

Servs., Inc., 53 Cal. App. 4th 500, 504 (1997) (citation and internal quotation

marks omitted).

      In this case, the indemnity provision covers “any and all claims . . . of any

kind whatsoever arising from actual or alleged infringement or misappropriation

by [Syntellect] . . . of any patent . . . in connection with the System . . .” California

courts have rendered “consistently broad” interpretations of “phrases such as

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‘arising out of’ or ‘arising from’ and ‘resulting from.’” St. Paul Fire, 101 Cal.

App. 4th at 1050. Liability will attach if the indemnitor’s performance under the

contract is “causally related in some manner to the injury for which indemnity is

claimed.” Id. at 1053.

      The contract broadly defined the “System” to include the Vista Interactive

Voice Response System (IVR), “Services,” and all specifications and requirements

included in the Request for Proposal (RFP). “Services” include “Custom

Application Programs,” which are “software application programs that [Syntellect]

develops specifically to [SoCal’s] written application specifications and provides

to [SoCal] pursuant to this Agreement.” Under these contract provisions, the

“System” cannot logically be considered separate and apart from the customized

services described in the contract and RFP.

      Each of the “accused services” from the Katz copyright infringement

complaint were enabled by Syntellect’s performance of its contractual duties. In

its Motion for Summary Judgment, Syntellect admitted as much, comparing each

of the accused services to the requirements and specifications of the RFP.

      For these reasons, it is apparent that the allegations of patent infringement

were causally related to Syntellect’s provision of the “System.” Syntellect is

therefore liable for damages stemming from utilization of the “System.” We

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affirm the district court’s grant of summary judgment in favor of SoCal on the

liability issue.

       2.     Syntellect forfeited its argument that the magistrate judge erred by

barring discovery of information related to the technical operation of the call

center, the nature of the Katz claims, and the nature of the settlement because it

failed to timely request review of the order by the district court judge. See

Glenbrook Homeowners Ass’n v. Tahoe Reg’l Planning Agency, 425 F.3d 611, 619

(9th Cir. 2005).

       3.     When an indemnitee settles without trial, “the indemnitee must show

the liability is covered by the contract, that liability existed, and the extent thereof.

The settlement is presumptive evidence of liability of the indemnitee and the

amount of liability, but it may be overcome by proof from the indemnitor that the

settlement was unreasonable . . .” Peter Culley & Assocs. v. Superior Court, 10

Cal. App. 4th 1484, 1497 (1992), as modified.

       The “presumptively reasonable” liability of the indemnitee (SoCal) does not

necessarily mirror the liability of the indemnitor (Syntellect). See Mel Clayton

Ford v. Ford Motor Co., 104 Cal. App. 4th 46, 56 (2002) (noting in the context of

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insurance contracts that “[t]he settlement . . . becomes presumptive evidence only

of the liability of the insured and the amount thereof”) (citation omitted) (emphasis

in original). Where a party’s indemnity obligation is limited under the contract, an

allocation of liability between culpable parties is appropriate. See Culley, 10 Cal.

App. 4th at 1497 (noting that where multiple parties are liable, the “allocation of

the settlement is at least as important as the total amount of the settlement”).

      Here, SoCal adequately demonstrated that: (1) Syntellect was liable under

the contract to indemnify it against the Katz claims, and (2) its own liability was

reflected in the “presumptively reasonable” amount of the settlement. However,

SoCal must still demonstrate that the entire liability should be allocated to

Syntellect. See id. at 1497-98. Where there is a dispute, “Plaintiff should be

required to prove the reasonableness of its proposed allocation by ordinary means.”

Id. at 1498.

      Because the indemnitor disputed the allocation of liability, the district court

abused its discretion in excluding all evidence relevant to the allocation of

damages. See id.; see also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405

(1990) (“A district court would necessarily abuse its discretion if it based its ruling

on an erroneous view of the law . . .”).

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      This is not to say that Syntellect is not or cannot be, liable for the entirety of

the settlement under the contract. However, the district court must consider the

nature of the Katz claims as they apply to the indemnity provision and to other

potentially liable parties. Apportionment is appropriate if some portion of the

liability for the alleged infringement is not embraced by Syntellect’s indemnity

obligation. We express no opinion on whether apportionment is required or on the

amount of the appropriate allocation if apportionment is required. Rather, we

remand for the district court to undertake this inquiry in the first instance.

      VACATED and REMANDED for further proceedings consistent with

this disposition. Each party shall bear its costs on appeal.

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                                                                                FILED
Flores v. Cate, No. 10-55788                                                     JUL 25 2013

                                                                             MOLLY C. DWYER, CLERK
WATFORD, Circuit Judge, dissenting:                                           U.S. COURT OF APPEALS

         I disagree with the majority that the California Supreme Court’s citation to

Swain indicates that it considered Flores’s state habeas petitions untimely. A

Swain citation does not generally indicate untimeliness. See Cross v. Sisto, 676

F.3d 1172, 1178 (9th Cir. 2012). California courts instead “cit[e] the controlling

decisions, i.e., Clark and Robbins” to signal untimeliness. Walker v. Martin, 131

S. Ct. 1120, 1124 (2011). When California courts cite Swain and Duvall together,

as the California Supreme Court did here, that suggests a different procedural bar

applies: failure to allege facts with sufficient particularity. See Stancle v. Clay, 692

F.3d 948, 958 (9th Cir. 2012); Cross, 676 F.3d at 1176–77; Gaston v. Palmer, 417

F.3d 1030, 1038–39 (9th Cir. 2005), as amended by order, 447 F.3d 1165 (9th Cir.

2006).

         Our decision in Trigueros v. Adams, 658 F.3d 983 (9th Cir. 2011), controls

the outcome of this case. There, we inferred that the California Supreme Court had

overruled a lower court’s untimeliness finding based on a request for informal

briefing on the merits and a subsequent summary denial without citations. Id. at

990. Here, the same inference is at least as strong. The superior court dismissed

Flores’s petition on the basis of untimeliness (citing Clark) as well as two other

procedural bars. The California Supreme Court did not simply deny Flores’s
petition without citations, which would have required us to infer that the petition

was denied on the same grounds relied on by the superior court. See Bonner v.

Carey, 425 F.3d 1145, 1148 & n.13 (9th Cir. 2005), as amended by order, 439

F.3d 993 (9th Cir. 2006). Instead, the California Supreme Court went out of its

way, through the use of citations, to adopt the two procedural bars cited by the

superior court that did not involve untimeliness, added a third procedural bar of its

own, and then conspicuously omitted any citation to Clark or Robbins. Under

these circumstances, I would infer that the California Supreme Court impliedly

overruled the superior court’s untimeliness finding.

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