American Lease Insurance Agency v. Balboa Capital Corp.

           United States Court of Appeals
                        For the First Circuit
No. 08-2414

           AMERICAN LEASE INSURANCE AGENCY CORPORATION,
                       Plaintiff, Appellant,

                A.I. CREDIT CONSUMER DISCOUNT COMPANY,
                   Third Party Defendant, Appellant,

                                  v.

                      BALBOA CAPITAL CORPORATION,
              Defendant/Third Party Plaintiff, Appellee,

                    BALBOA LIFE & CASUALTY COMPANY,
                   Third Party Defendant, Appellee.


           APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Michael A. Ponsor, U.S. District Judge]


                                Before

                      Torruella, Circuit Judge,
                   Tashima,* Senior Circuit Judge,
                      and Lipez, Circuit Judge.


     James C. Donnelly, Jr., with whom Michael R. Christy and
Mirick, O'Connell, DeMallie & Lougee, LLP, were on brief for
appellants.
     Alan A. Heller, with whom Heller, Horowitz & Feit, P.C., was
on brief for appellee Balboa Capital Corporation.



                           August 26, 2009




*
    Of the Ninth Circuit, sitting by designation.
            TORRUELLA, Circuit Judge.     This diversity case involves

a set of contracts between four corporations, who all agree that

New York law governs this action.            On one side is defendant-

appellee Balboa Capital Corporation ("BCC"), who provides and

finances equipment leases for small businesses, and third-party

defendant-appellee Balboa Life & Casualty Company ("Balboa Life"),1

the parent company of the insurance provider Balboa Insurance

Company ("Balboa Insurance").2       On the other side are plaintiff-

appellant     American   Lease   Insurance    ("ALI")    and   third-party

defendant-appellant      A.I.    Credit   Consumer      Discount   Company

("AICCDC"), both of whom contracted with BCC to insure BCC's

equipment for lessees who did not have their own insurance.           ALI

and AICCDC are represented by the same counsel and their positions

are united.

            This case comes to us following cross-motions for summary

judgment. The district court agreed with BCC's interpretation of

the agreements at issue in this case and granted summary judgment

in its favor.    After careful consideration, we reverse and remand.




1
    The similarity of this name and BCC's is coincidental.
2
   Neither the insurer nor the parent company submitted a brief in
this appeal.

                                   -2-
                                  I.    Background

           A.       Relevant Documents and Relationship of Parties

           BCC leases commercial equipment and provides commercial

equipment lease financing services to business lessee customers

throughout the United States.             Under its standard equipment lease,

BCC requires its lessees to obtain property and liability insurance

coverage on the leased equipment and designate BCC as the loss

payee and additional insured.               When a lessee fails to obtain or

maintain insurance, BCC protects its property interests as owner

and   lessor    of    the     equipment     by    procuring    insurance     for   the

equipment in BCC's own name and naming BCC as policy owner and sole

insured.       It    then     bills   the    lessee   for     the    insurance   cost,

including premiums and a service fee.

           ALI       is   a    licensed     insurance       agency    that   provides

equipment lease insurance programs to equipment lease financing

companies such as BCC.            On October 2, 2006, ALI and BCC entered

into an initial six-month lease insurance agreement ("Original

Program Agreement") which would cover existing leases and any new

leases begun after October 2, 2006.                Under the agreement, ALI was

appointed to serve as BCC's "Insurance Manager," with duties

including monitoring insurance coverage on leases, communicating

with lessees, processing evidence of lessees who had obtained

alternative coverage, and issuing coverage on leases when lessees

failed to obtain their own coverage.                  ALI also was required in


                                            -3-
certain situations to cancel lease insurance, such as when a lessee

failed to pay its insurance charges or when a lessee obtained other

insurance that satisfied certain agreed-upon criteria.

          In setting up the Original Program Agreement, ALI acted

as agent for Balboa Insurance, a subsidiary of Balboa Life. Balboa

Insurance was the actual issuer of the insurance policy ("Insurance

Policy") to BCC.   BCC agreed to renew its agreement with ALI in

April 2007.   This agreement ("Program Agreement"), effective on

April 2, 2007, is one of the central documents in this dispute.

          In order to avoid the risk and expense of financing this

insurance itself, BCC also entered into a six-month agreement

("Original Finance Agreement") on October 2, 2006 to finance the

Insurance Policy through AICCDC.      Under this agreement, AICCDC

would advance the insurance premiums (owed to Balboa Insurance) and

insurance manager fees (owed to ALI). These funds were gradually

recouped from the insurance charges BCC billed to its individual

lessees and then sent to AICCDC.     AICCDC also received a finance

charge ("FINCO charge") as compensation.    BCC, thus, did not have

to dedicate any capital to maintaining this insurance.     In fact,

BCC earned money on the deal: it is designated as subcontractor in

the Program Agreement, with duties to transfer data on lessees and

bill and collect insurance charges on the covered leases, and it is

compensated for these services.    In April 2007, BCC renewed its




                               -4-
agreement with AICCDC.     This agreement ("Finance Agreement"),

effective on April 2, 2007 as well, is also at issue in this case.

          Both the Finance Agreement and the Program Agreement were

set to renew automatically at one-month intervals. But either side

could terminate without cause by providing written notice at least

ten days prior to the next renewal date.3    In the event of such

termination, however, § 21(b) of the Program Agreement provides

that:

          the Insured Lessor [BCC] agrees that all
          Coverage effective prior to termination shall
          remain in effect with the Insurance Company
          [Balboa Insurance].    The Insurance Manager
          [ALI] shall not thereafter cancel Coverage
          with respect to any Lease of Equipment that is
          subject to Coverage at the time of termination
          of this Agreement, except as provided in this
          Agreement or the Insurance Policy.


          Similarly, § 14 of the Finance Agreement provides that

following termination without cause, "this Agreement shall continue

in full force and effect with respect to Leases which remain

subject to Coverage at the time of termination of this Agreement."

          Section V of the Insurance Policy, which is referred to

in § 21(b), sets forth basic provisions for termination and is

entitled "How Coverage May be Voided or Canceled."     Section V.2

covers "How YOU [BCC] may cancel this Policy," and § V.3 covers



3
  That is, ALI (in § 21(b) of the Program Agreement) or AICCDC (in
§ 14 of the Finance Agreement) could terminate without cause, and
BCC could terminate either agreement without cause.

                               -5-
"How WE [Balboa Insurance] may cancel this Policy."           Both sections

contain near-identical language: first, the cancelling party must,

at least ninety days in advance, send "written notice of when the

cancellation will be effective." Following cancellation, "coverage

on Covered Equipment issued prior [to] the effective date of [the]

cancellation   of    [this]    Policy   will   remain   in    effect   until

individually canceled as provided in Section V, paragraph 1 above

or until termination of each lease agreement of Covered Equipment."

          Sections    V.2     and   V.3,   respectively,     refer   to   the

individual cancellations that are provided by § V.1, entitled "What

happens if YOUR [BCC's] LESSEE has other coverage." Because of the

timeframe of this dispute, the relevant paragraph is § V.1(b),

which covers time "Before a Loss4 [i.e. damage to, or theft of,

leased equipment], and six months or more after the date coverage

commences under this Policy." § V.1(b) provides that "If OUR Agent

[ALI] is notified" timely

          that there is other specific insurance on the
          individual Covered Equipment that meets all
          the requirements in YOUR [BCC's] lease
          agreement, as determined by YOU [BCC], OUR
          [Balboa Insurance's] coverage will be canceled
          as of [one of two date calculations]; and in
          either case all related unearned premiums as
          of such cancellation date will be refunded to
          YOU [BCC].




4
    According to the sixth paragraph of "Definitions" in the
Insurance Policy, "Loss" means "Theft, damage or destruction of
Covered Equipment."

                                     -6-
          Approximately half of BCC's lessees opted to use the

default insurance system provided by the BCC-ALI-AICCDC agreements.

          B.    The Instant Dispute

          The   instant   dispute    was   set   in   motion   because   BCC

eventually found another insurance company willing to handle the

entire insurance operation itself at a lower cost.         On October 15,

2007, BCC sent ninety-day termination notices (the notice required

by the Insurance Policy) to ALI, AICCDC, and Balboa Insurance,

terminating their respective agreements effective January 15, 2008.

Apparently realizing that only ten days' notice was required under

the Program and Finance agreements, BCC then notified ALI (on

November 1) and AICCDC (on November 5) by letter that it wished to

terminate those agreements without cause. Thereafter, BCC sent ALI

1452 separate cancellation notices for each of the leases then

being managed by ALI covered under the Insurance Policy.

          ALI rejected these notices and filed suit in the United

States District Court for the District of Massachusetts in late

November 2007. It later filed an amended complaint on December 10,

2007, asking for a declaratory judgment that the Program Agreement

remain in force.    BCC filed a third-party action against AICCDC,

which joined the litigation and filed counterclaims in May 2008.

By informal agreement, BCC continued the Program and Finance

Agreements until April 9, 2008, when it ceased performing any

obligations under those agreements.        Without BCC's subcontractor


                                    -7-
services, ALI claims that it was unable to continue managing

insurance and canceled insurance on the 1259 remaining covered

leases.

           All three parties sought declaratory relief and claimed

breach of contract and unjust enrichment. Both sides filed summary

judgment motions and stipulated to an undisputed set of material

facts.    The district court denied the summary judgment motions of

ALI and AICCDC as to all claims, and granted summary judgment in

favor of BCC, declaring that BCC had a right to cancel its existing

insurance coverage and that it was entitled to damages.5              ALI and

AICCDC appeal, claiming that the district court erred in its

interpretation of the contractual language at issue here and that

it failed to recognize and apply the implied covenant of good faith

and fair dealing.

                             II.   Discussion

           A.   Standard of Review

           Whether   under   summary      judgment   or    a   case   stated,

determinations of law are reviewed de novo.               See Bunch v. W.R.

Grace & Co., 555 F.3d 1, 3 & n.4 (1st Cir. 2009) (holding that in



5
   There is some confusion about the exact procedure that the
district court used in ruling on the cross-motions for summary
judgment. The transcript of the summary judgment hearing indicates
that both parties may have sought to have the dispute adjudicated
as a "case stated." However, the order below seems to treat the
cross-motions as simply cross-motions for summary judgment, rather
than as a case stated.     The distinction is irrelevant for our
purposes because our result depends only on matters of law.

                                    -8-
reviewing a case stated, "[t]he district court's legal conclusions

are, of course, subject to de novo review") (citation omitted).6

"According to New York law, construction of an agreement presents

a question of law."    Fleet Nat'l Bank v. Gray (In re Bankvest

Capital Corp.), 375 F.3d 51, 63 (1st Cir. 2004).   Thus, we review

the issue of contract interpretation presented here de novo.   See

id.

          B.   New York Contract Law

          Although "[t]he fundamental, neutral precept of contract

interpretation is that agreements are construed in accord with the

parties' intent[,] . . . [t]he best evidence of what parties to a

written agreement intend is what they say in their writing."

Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 170 (N.Y.

2002) (internal citations and quotations omitted). "A familiar and

eminently sensible proposition of law is that, when parties set

down their agreement in a clear, complete document, their writing

should as a rule be enforced according to its terms."       W.W.W.

Assocs., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y. 1990).

Thus, "[e]vidence outside the four corners of the document as to

what was really intended but unstated or misstated is generally




6
   BCC's argues that in reviewing a case stated, we should apply a
clearly erroneous standard of review. This argument is unavailing.
We are reviewing the district court's interpretation of contractual
language, which is a legal conclusion subject to de novo review.

                                -9-
inadmissible to add to or vary the writing."                         Id. (internal

citations omitted).

            In addition, when sophisticated commercial parties such

as those in this litigation include a merger clause in their

contract, its purpose "is to require full application of the parol

evidence    rule    in   order    to   bar    the     introduction   of   extrinsic

evidence to vary or contradict the terms of the writing."                    Primex

Int'l Corp. v. Wal-Mart Stores, Inc., 679 N.E.2d 624, 627 (N.Y.

1997).     Even when a merger clause is present, extrinsic evidence

may still be used to shed light on the meaning of existing terms,

but such evidence is only admissible when the language of the

contract is ambiguous on its face.                  See R/S Assocs. v. N.Y. Job

Dev.    Auth.,     771   N.E.2d   240,       242-43    (N.Y.   2002).      However,

"'[e]xtrinsic and parol evidence is not admissible to create an

ambiguity in a written agreement which is complete and clear and

unambiguous upon its face.'"           Id. at 242 (quoting W.W.W. Assocs.,

566 N.E.2d at 639).        "A contract is unambiguous if the language it

uses has a definite and precise meaning, unattended by danger of

misconception      in    the   purport    of    the    [agreement]      itself,   and

concerning which there is no reasonable basis for a difference of

opinion."    Greenfield, 780 N.E.2d at 170-171 (internal citations

and    quotations    omitted)     (alteration         in   original).      Finally,

"[w]hether a contract is ambiguous is a question of law. . . ."                    S.




                                         -10-
Rd. Assocs. LLC, v. Int'l Bus. Machs. Corp., 826 N.E.2d 806, 809

(N.Y. 2005).7

                  1.   ALI and BCC

           At its core, the dispute between ALI and BCC centers

around the language contained in § 21(b) of the Program Agreement,

which covers termination without cause.     Section 21(b) reads as

follows:

           [1] Either party may terminate this Agreement
           at the end of the initial term or any
           successive one (1) month term without cause
           upon ten (10) days' prior written notice to
           the other party.    [2] In the event of such
           termination, the Insured Lessor [BCC] agrees
           that   all   Coverage   effective   prior   to
           termination shall remain in effect with the
           Insurance Company [Balboa Insurance]. [3] The
           Insurance Manager [ALI] shall not thereafter
           cancel Coverage with respect to any Lease of
           Equipment that is subject to Coverage at the
           time of termination of this Agreement, except
           as provided in this Agreement or the Insurance
           Policy.

           Neither ALI nor BCC disputes that, pursuant to the first

sentence of § 21(b), BCC was allowed to terminate its agreement

with ALI without cause, as it did through its November 1, 2007




7
   BCC also argues that this court should construe the Program and
Finance Agreements against their respective drafters, ALI and
AICCDC.   But this rule is only applied in cases of ambiguity.
Jacobson v. Sassower, 489 N.E.2d 1283, 1284 (N.Y. 1985) ("In cases
of doubt or ambiguity, a contract must be construed most strongly
against the party who prepared it. . . ." (internal citation
omitted)). There is no ambiguity here; thus, we do not apply this
rule.

                                -11-
termination letter.   However, ALI and BCC dispute the legal effect

of the second and third sentences of § 21(b).

          ALI argues that the second and third sentences of § 21(b)

unambiguously establish that any existing coverage would survive

termination of the Program Agreement. According to ALI, the second

sentence is addressed to BCC and prevents BCC from doing exactly

what it has done here -- it is a categorical prohibition on

cancellation   of   any   coverage   managed   by   ALI    prior   to   the

termination of the Program Agreement.8     With respect to the third

sentence, ALI argues that it is addressed to ALI and "reinforces

the protection of BCC's interest by preventing ALI from cancelling

existing coverage and thereby leaving BCC uninsured in the event

the Program Agreement is terminated."     ALI maintains that nothing

in the third sentence, even its references to the Insurance Policy,

alters the plain meaning of the second sentence.          Further, because

the Program Agreement contains a merger clause, ALI states that we

cannot look to the Insurance Policy or other extrinsic evidence to

interpret the second sentence of § 21(b).

          For its part, BCC maintains that the district court

correctly held that the Program Agreement was ambiguous and that



8
   According to ALI, this makes sense: although most of ALI's work
in setting up insurance on leases comes up-front, its payment is a
"straight line" over the life of the lease as insurance premium
payments come in. These sentences, ALI maintains, protect its time
investment and ensure that it gets the benefit of its bargain, even
after BCC terminates without cause.

                                 -12-
the    Insurance   Policy    supplies    requisite   clarification.

Alternatively, BCC argues that even if the Program Agreement is

unambiguous, it is still proper to look to the Insurance Policy

because it was recognized and incorporated by the third sentence.

With respect to the Insurance Policy, BCC argues that § V.1(b)9

allows BCC to cancel coverage for all leases "no matter how this

other coverage came about, who provided the notification or who the

named insured is or will be."   Specifically, it contends that the

1452 individual cancellation notices it sent to ALI are notices

"that there is other specific insurance on the individual Covered

Equipment" which meets BCC's own criteria, as determined by BCC.10


9
   As noted above, § V.1 is entitled "What happens if YOUR LESSEE
has other coverage" and § V.1(b) provides that when ALI is timely
notified

      that there is other specific insurance on the individual
      Covered Equipment that meets all the requirements in YOUR
      [BCC's] lease agreement, as determined by YOU [BCC], OUR
      [Balboa Insurance's] coverage will be canceled as of [one
      of two date calculations]; and in either case all related
      unearned premiums as of such cancellation date will be
      refunded to YOU [BCC].
10
    BCC also argues that its interpretation of § 21(b) should
prevail based on the history of the agreement. The same language
appeared in the Original Program Agreement. According to BCC, both
parties agreed that their initial relationship was a six-month
trial period, with both sides free to walk away after six months.
BCC contends that its view of the language makes more sense in this
case, because it would allow both parties to be free fairly quickly
of obligations on termination. We need not reach this question,
however -- the Original Program Agreement is extrinsic evidence for
the interpretation of the Program Agreement.      As we have noted
above, "extrinsic and parol evidence is not admissible to create an
ambiguity in a written agreement which is complete and clear and
unambiguous upon its face." W.W.W. Assocs., 566 N.E.2d at 642.

                                -13-
          We disagree with BCC and conclude that § 21(b) of the

Program Agreement is unambiguous.       By its plain terms, the second

sentence states that coverage will continue even if BCC cancels

without cause.     The third sentence does not place a limit on BCC's

obligation under the second sentence; rather it is phrased as a

condition on ALI's behavior (and not BCC's) and speaks to ALI's

continuing obligation to BCC if either party were to terminate

without cause.11     Also, while BCC is correct that the Insurance

Policy is expressly incorporated by the Program Agreement, see

CooperVision, Inc. v. Intek Integration Techs., Inc., 794 N.Y.S.2d

812, 819 (N.Y. Sup. 2005) ("The well settled rule is that 'a

reference by the contracting parties to an extraneous writing for

a particular purpose makes it a part of their agreement only for

the purpose specified.'") (quoting Guerini Stone Co. v. P.J. Carlin

Constr. Co., 240 U.S. 264, 277 (1916)), the Insurance Policy's

legal effect is incorporated only to the extent that it details

particular circumstances where ALI is exempt from its obligation to




Because we find no ambiguity in the Program Agreement, we do not
consider the earlier agreement.
11
    Once again, the third sentence of § 21(b) states that the
"Insurance   Manager  [ALI]    shall   not   thereafter cancel
Coverage . . . except as provided in this Agreement or the
Insurance Policy." ALI is the grammatical subject.

                                 -14-
continue coverage post-termination as specified by third sentence

in § 21(b).12

            Even if we were to consider the Insurance Policy more

broadly, BCC's reading would still fail because it contravenes the

intent of the parties as expressed by the Insurance Policy's plain

language.   Specifically, § V.1 is addressed to individual lessees,

not to BCC, ALI, or Balboa Insurance.13   Further, § V contains two

separate provisions that deal with cancellation of the agreement by

BCC (§ V.2 entitled "How YOU may cancel this Policy") and by Balboa

Insurance (§ V.3 entitled "How WE may cancel this Policy").14 Under

both cancellation provisions, leases insured by Balboa Insurance



12
   The Insurance Policy is an agreement between Balboa Insurance
and BCC, but ALI acts as Balboa Insurance's agent, and so has
obligations under the Policy.
13
   Even without the aid of § 21(b) of the Program Agreement, the
parties' intent that § V.1 govern only individual lessees is clear
from the respective section titles of §§ V.1 and V.2.       And as
mentioned above, § V.2 expressly requires that coverage prior to
cancellation will remain in effect until "individually canceled."
The phrase "individually canceled" is inconsistent with an en
masse, wholesale termination of the agreement with respect to the
1452 existing leases. The language "meets all the requirements in
YOUR [BCC] lease agreement, as determined by YOU [BCC]," as set
forth in § V.1(b) of the Insurance Policy, simply allows BCC final
say over its own insurance criteria.
14
    As noted above, §§ V.2 and V.3 of the Insurance Policy both
state that following written notice of cancellation:

     coverage on Covered Equipment issued prior [to] the
     effective date of [the] cancellation of [this] Policy
     will remain in effect until individually canceled as
     provided in Section V, paragraph 1 above or until
     termination of each lease agreement of Covered Equipment.

                                -15-
(with ALI as agent and manager) are to continue after termination

of   the   overall   policy.     Both     provisions    thus    contemplate     a

continuation of the status quo -- just as do the Program and

Finance Agreements.      This is consistent with ALI's claim that the

contracts were structured to fully compensate ALI for its front-

loaded work.15    The parties included two sections clearly designed

to cover each side's cancellation, as indicated by the titles of

each section and their language.

            BCC's interpretation is especially unpersuasive when we

read § V of the Insurance Policy alongside § 21(b) of the Program

Agreement.    BCC's obligations (if any) under § V.1(b) must remain

consistent with the second sentence of § 21(b).                     It would be

inconsistent     with   that   sentence    to   allow   BCC    to   effect   1452

individual terminations under § V.1(b), and it would frustrate the

purpose of that sentence to give BCC an alternative means of

cancellation under the Insurance Policy. Instead, it is clear that

the Insurance Policy is only referenced to ensure that ALI's

existing managerial obligations continue even after a prospective

termination.




15
   BCC argues that this reading cannot be correct because it would
mean that Balboa Insurance would have to continue its coverage on
existing leases in the event that Balboa Insurance canceled the
Insurance Policy. This is a non sequitur -- ALI, as manager, would
have the same interest in being paid in full for its work,
regardless of whether BCC or Balboa Insurance canceled.

                                    -16-
            Thus, we agree with ALI that a proper construction of the

Program Agreement and the Insurance Policy does not allow BCC to

unilaterally cancel individual insurance policies, and any existing

coverage would survive termination of the Program Agreement.

                   2.   AICCDC and BCC

            We turn next to the relationship between AICCDC and BCC.

The Finance Agreement is nominally separate from the Program

Agreement   and   the   Insurance   Policy.    We   construe   the   three

documents together because they were part of the same transaction.16

See This Is Me, Inc. v. Taylor, 157 F.3d 139, 143 (2d Cir. 1998)

(noting that "[u]nder New York law, all writings forming part of a

single transaction are to be read together" and approving jury

instruction that "New York law requires that all writings which

form part of a single transaction and are designed to effectuate

the same purpose be read together, even though they were executed

on different dates and were not all between the same parties").

            The relevant provision of the Finance Agreement is § 14,

entitled "Termination."     Most of the language in § 14 explicitly

covers termination for cause.       It is clear that the first sentence

authorizes termination by either side without cause given ten days

notice, similar to the Program Agreement.           And, similar to the

Program Agreement, § 14 of the Finance Agreement also contains a



16
   Though the logic of the Finance Agreement stands on its own, we
are influenced in our reading by the other agreements.

                                    -17-
continuation proviso: in case of termination without cause, "this

Agreement shall continue in full force and effect with respect to

Leases which remain subject to Coverage at the time of termination

of this Agreement" ("Continuation Proviso").

          The parties disagree about the effect of the lengthy

final sentence of the paragraph which provides as follows:

          Whenever any party notifies the other party of
          the termination of this Agreement, upon the
          effective date of such termination . . . :
          (a) AICCDC shall pay in immediately available
          funds to Insured Lessor the unearned portion
          of the Insurance Charges remitted by Insured
          Lessor to AICCDC for all then existing
          Coverage, and
          (b) Insured Lessor shall pay to the AICCDC in
          immediately available funds to the extent that
          Insurance Charges are earned prior to such
          date:
          (i)   all   such   Insurance   Charges,   less
          Subcontractor Fees, collected from Lessees
          prior to such date and not previously
          remitted, and
          (ii)   all   such  Insurance   Charges,   less
          Subcontractor Fees, collected on or after such
          date, which shall be remitted to AICCDC
          promptly upon such receipt.


That is, each party will return any unearned money and will be

entitled to any money earned up to that point.

          BCC       argues   that,      the      Continuation    Proviso

notwithstanding, the language of the final sentence -- "Whenever

any party notifies the other party of the termination of this

Agreement" -- controls in this case because the Agreement has been

terminated,   and   therefore   both   parties    must   reconcile   their


                                 -18-
finances in accordance with the rest of the final sentence.                   Thus,

BCC      argues,    §   14   clearly   contemplates     a    clean     and   simple

termination of the agreement.

               Arguing against this reading, AICCDC contends that the

Continuation Proviso would be rendered meaningless under BCC's

reading of the final sentence.            However, AICCDC argues that the

Continuation Proviso can be reconciled with the final sentence by

noting that the final sentence has effect only "upon the effective

date of such termination." Because the Continuation Proviso states

that "this Agreement shall continue in full force and effect with

respect to Leases which remain subject to Coverage at the time of

termination of this Agreement," there never is a termination with

respect to leases covered at the time of the overall Agreement's

termination, and the provisions of the final sentence are never

triggered.         That is, AICCDC sees termination without cause under

§   14    as   prospective     only,   covering   new       leases    but    leaving

undisturbed existing leases.

               We agree with AICCDC's reading of § 14.           "In construing

a contract, one of a court's goals is to avoid an interpretation

that would leave contractual clauses meaningless."                   Two Guys from

Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 472 N.E.2d 315, 318

(N.Y. 1984) (internal citations omitted); see also Galli v. Metz,

973 F.2d 145, 149 (2d Cir. 1992) (noting that "[u]nder New York law

an interpretation of a contract that has the effect of rendering at


                                       -19-
least one clause superfluous or meaningless . . . is not preferred

and will be avoided if possible" and that "an interpretation that

gives a reasonable and effective meaning to all terms of a contract

is generally preferred to one that leaves a part unreasonable or of

no effect") (internal citations and quotations omitted); God's

Battalion of Prayer Pentecostal Church, Inc. v. Miele Assocs., LLP,

845 N.E.2d 1265, 1267 (N.Y. 2006) ("A contract should be read to

give effect to all its provisions.") (internal quotations omitted).

BCC's     reading   of   §   14   would    render    the   Continuation   Proviso

meaningless surplusage and would call its inclusion in the document

into serious question.             AICCDC's reading leaves the "Whenever"

clause with meaning: it applies in cases of termination for cause.

AICCDC's reading is also consonant with our interpretation of the

Program Agreement.

             Moreover, when general language, such as the "Whenever"

clause (which on its face covers termination for or without cause)

is   in    conflict      with     more    specific    language,   such    as   the

Continuation Proviso (which on its face applies only in case of

termination without cause), the specific language controls.                    See

Muzak Corp. v. Hotel Taft Corp., 133 N.E.2d 688, 689 (N.Y. 1956);

Bank of Tokyo-Mitsubishi, Ltd., New York Branch v. Kvaerner a.s.,

671 N.Y.S.2d 905, 910 (N.Y. App. Div. 1998) (same); see also

William Higgins & Sons, Inc. v. New York, 231 N.E.2d 285, 286 (N.Y.




                                          -20-
1967) ("A specific provision will not be set aside in favor of a

catchall clause.").

           C.   Good Faith and Fair Dealing

           We   need   not    reach   ALI    and    AICCDC's   claim      that   BCC

breached the implied covenant of good faith and fair dealing

because under New York law it is duplicative of a breach of

contract   claim.      See    Engelhard     Corp.    v.   Research    Corp.,     702

N.Y.S.2d 255, 256 (N.Y. App. Div. 2000) ("The cause of action for

breach of the implied covenant of good faith and fair dealing was

properly   dismissed    as    duplicative     of    the   breach     of   contract

claim."); see also In re Houbigant, Inc., 914 F. Supp. 964, 989

(S.D.N.Y. 1995) ("A duty of good faith and fair dealing is implicit

in every contract.           However, a breach of that duty will be

dismissed as redundant where the conduct allegedly violating the

implied covenant is also the predicate for a claim for breach of

covenant of an express provision of the underlying contract.").

                              III.    Conclusion

           For the foregoing reasons, we hold that, as a matter of

law and without reliance on any facts beyond those stipulated to by

both parties, the district court's grant of summary judgment in

favor of BCC was in error.            Instead, we conclude that ALI and

AICCDC were entitled to summary judgment. We therefore reverse the

district court's ruling and remand for entry of summary judgment

and calculation of damages consistent with this opinion.


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Reversed and Remanded.




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