Bank One, N.A. v. Echo Acceptance Corporation, 061510 FED6, 09-3125
| Opinion Judge | GRIFFIN, Circuit Judge. |
| Party Name | BANK ONE, N.A., Plaintiff-Appellee, v. ECHO ACCEPTANCE CORPORATION; DISH NETWORK CORPORATION, f/k/a EchoStar Communications Corporation, Defendants-Appellants. |
| Judge Panel | BEFORE: GIBBONS and GRIFFIN, Circuit Judges; and DOWD, District Judge. |
| Case Date | June 15, 2010 |
| Court | United States Courts of Appeals, U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO
In this indemnity action, defendants Dish Network Corporation f/k/a EchoStar Communications Corporation ("ECC") and Echo Acceptance Corporation ("EAC") appeal the district court's (1) adverse judgment following a bench trial, (2) denial of their motion for summary judgment, and (3) award of $1, 202, 847.48 in attorneys' fees and costs to plaintiff Bank One, N.A. ("Bank One"). For the following reasons, we affirm the appealed rulings of the district court.
I.
ECC is a holding company for a group of telecommunications subsidiaries primarily engaged in selling satellite television equipment and programming to consumers. EAC and Dish Network Credit Corporation ("DNCC") are subsidiaries of ECC, which arranged for third-party lenders to provide financing to consumers purchasing satellite dishes. Bank One, a large national bank, was one such lender.
On August 24, 1994, Bank One and EAC entered into a Private Label Revolving Credit Plan Agreement (the "EAC Agreement") through which Bank One provided financing for defendants' satellite dish customers. Under the EAC Agreement, EAC sold home satellite dish equipment and offered its customers a Bank One credit card to help finance the purchase. The credit card bore the name of both Bank One and EAC and involved an open-ended financing plan.
Because EAC's sales force would make all sales exclusively, the EAC Agreement included a covenant by EAC that: "EAC and/or Dealers shall not coerce customers or pursue any deceptive practices in soliciting Accounts." This covenant was incorporated into the EAC Agreement's broad indemnification clause, which provided:
EAC agrees to indemnify Bank One and to hold Bank One harmless from and against any and all actions, lawsuits, complaints, liabilities, losses, claims, damages and expenses (including, without limitation, reasonable fees and disbursements of counsel) suffered, sustained, incurred, paid or required to be paid by Bank One, whether filed or claimed by consumers or instrumentalities of the Federal or state governments, arising out of or resulting from (i) the breach, incorrectness, or incompleteness of any representation, warranty or covenant made by EAC in this Agreement or in any other instrument delivered pursuant hereto . . . .
Importantly, the EAC Agreement also contained a guarantee clause in which ECC, EAC's parent company, indicated it was "willing to act as the guarantor of EAC in order to induce Bank One to enter into [the] Agreement[.]" Furthermore, the EAC Agreement gave EAC a "right to defend with counsel" against any third-party claim.1 "Until [EAC] . . . assumed the defense of any such claim, " it was required to pay for "all legal or other expense reasonably incurred by [Bank One in its defense.]"
In addition, ECC and Bank One entered into a separate Guarantee Contract in which ECC "absolutely and unconditionally" guaranteed EAC's promise of indemnity:
[F]or the purpose of inducing Bank One . . . to make . . . financial accommodation to [EAC] ("Obligor") . . ., [ECC] hereby absolutely and unconditionally guarantees the prompt payment when due . . . of . . . all other sums payable in connection with, and the prompt performance of all promises, covenants and agreements contained in, any and all obligations of Obligor to Bank One, . . . and any and all renewals, modifications, extensions or substitutions thereof ("Obligations")[.]
On November 19, 1996, Bank One entered into a Private Label Revolving Credit Plan Agreement with DNCC (the "DNCC Agreement"), which was nearly identical to the EAC Agreement. As the district court stated in its factual findings:
On paper, [ECC] then transferred the bulk of EAC's personnel, satellite dealers, and operating procedures to [DNCC] and ceased to conduct business through EAC. Although [DNCC] was, and continues to be, a separate legal entity from EAC, the change was nothing more than cosmetic. [ECC] wrote its dealers: "[t]his letter is to inform you that your Dealer Agreement signed with EAC . . . is invalid as of March 1996. EAC has changed its name to Dish Network Credit Corporation (Dish Network) and all paperwork must be signed under the new name."
(Sixth, seventh, and eighth alterations in original.) ECC and Bank One, however, did not execute a separate guarantee explicitly referencing the DNCC Agreement.
On March 3, 1998, plaintiff Martin Hunter filed a class action on behalf of approximately 72, 000 credit card holders, roughly 58, 000 of whom had bought satellite dishes from defendants and their dealers, against Bank One claiming that the dealers had misrepresented the terms and conditions of Bank One's financing plan to facilitate sales. The Hunter plaintiffs did not name ECC or any of its subsidiaries as defendants in the lawsuit. Instead, they proceeded against Bank One under the theory of respondeat superior.
Bank One, believing that the Hunter class action arose out of defendants' actions, including defendants' breach of their credit agreements' covenants prohibiting deceptive sales practices, contacted defendants by letter on the following four dates demanding indemnity and/or indicating that Bank One was pursuing settlement: May 5, 1998, January 31, 2001, February 13, 2001, and March 27, 2001. Although defendants acknowledged at least two of Bank One's letters, they did not oblige Bank One's requests for defense or indemnification. On July 19, 2002, Bank One entered into a settlement agreement, without defendants' written consent, under which it promised to pay up to $26 million in cash and credit to class members, $8.5 million in attorneys' fees, and up to $300, 000 in legal expenses.
Thereafter, Bank One filed the present action demanding indemnification for all costs and fees associated with the Hunter litigation and for attorneys' fees incurred in enforcing its alleged right to indemnification. Defendants moved for summary judgment on the ground that the EAC Agreement did not entitle Bank One to indemnification for the Hunter settlement. The district court denied defendants' motion for summary judgment and, after a bench trial, awarded Bank One $15, 231, 918, plus fees and expenses. In a subsequent order, dated January 12, 2009, the district court granted Bank One's motion for attorneys' fees and costs incurred in the present case and awarded Bank One $1, 202, 847.48. Defendants timely appeal.2
II.
Following a bench trial, we review the district court's conclusions of law de novo and its findings of fact for clear error. Burzynski v. Cohen, 264 F.3d 611, 616 (6th Cir. 2001). "When factual findings rest upon credibility determinations, [we] afford[] great deference to the findings of the district court." Schroyer v. Frankel, 197 F.3d 1170, 1173 (6th Cir. 1999); see also Fed. R. Civ. P. 52(a)(6) ("Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses' credibility."). Ohio law governs this breach-of-contract action.
III.
EAC argues that Bank One failed to obtain its written consent to the Hunter settlement, which, pursuant to the EAC Agreement, was a condition precedent to indemnification. Bank One counters that EAC unlawfully repudiated its obligation to indemnify Bank One for Hunter and consistently ignored Bank One's invitations to participate in settlement talks. Therefore, Bank One contends it was not obligated to obtain EAC's written consent to the settlement agreement. The district court agreed with Bank One and held in its order denying defendants' motion for summary judgment: "By rejecting Bank One's request for indemnification, and consistently ignoring Bank One's invitations to participate in settlement negotiations, EAC forfeited its right to approve the settlement." Defendants challenge this ruling.
A.
As an initial matter, we must decide if the issue of repudiation, as it is presented in this case, poses a question of law or fact. The parties dispute whether the district court addressed the issue as a matter of law at the summary judgment stage, or treated it as an issue of fact that could only be decided after considering all of the evidence at trial. The distinction is critical for two reasons: (1) determining the appropriate standard of review, and (2) deciding whether defendants forfeited review of this issue on appeal by failing to raise it at trial.
1.
Whether a party to a contract has repudiated it, so as to commit an anticipatory breach, must be resolved by the trier of fact to the extent such a determination turns on disputed facts. Farmers Comm'n Co. v. Burks, 719 N.E.2d 980, 990 (Ohio Ct. App. 1998). However, if those facts are undisputed, whether a repudiation occurred is a question of law for the court. Nuco Plastics, Inc. v. Universal Plastics, Inc., 601 N.E.2d 152, 155 (Ohio Ct. App. 1991); see also Gronvall v. Petersen, No. OT-88-55, 1989 WL 103346, at *2 (Ohio Ct. App. Sept. 8, 1989) (unpublished) ("[W]here the facts are undisputed, whether they constitute a . . . repudiation . . . is a question of law to be determined by the court."). Here, the facts purportedly constituting repudiation – a series of letters between Bank One and defendants – are not in dispute. Accordingly, whether EAC repudiated the EAC Agreement is a question of law, which we review de novo. McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004).
2.
Moreover, the repudiation...
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