Nilac International Marketing Group v. Ameritech Services, Inc.

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0092P (6th Cir.)
File Name: 04a0092p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
NILAC INTERNATIONAL
MARKETING GROUP,
Plaintiff-Appellant,
v.
AMERITECH SERVICES, INC.,
Defendant-Appellee.
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No. 02-2212
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 01-71116—Arthur J. Tarnow, District Judge.
Argued: February 6, 2004
Decided and Filed: March 30, 2004
Before: NELSON, GILMAN, and ROGERS, Circuit
Judges.
_________________
COUNSEL
ARGUED: Jeffrey B. Morganroth, MORGANROTH &
MORGANROTH, Southfield, Michigan, for Appellant.
Lawrence G. Campbell, DICKINSON WRIGHT, PLLC,
Detroit, Michigan, for Appellee. ON BRIEF: Jeffrey B.
2 NILAC Int’l Mktg. Group v.
Ameritech Serv. Inc.
No. 02-2212
Morganroth, Mayer Morganroth, Daniel E. Harold,
MORGANROTH & MORGANROTH, Southfield, Michigan,
for Appellant. Lawrence G. Campbell, Paul R. Bernard,
Jennifer K. Nowaczok, DICKINSON WRIGHT, PLLC,
Detroit, Michigan, Rawle Andrews, ANDREWS & BOWE,
Washington, D.C., for Appellee.
_________________
OPINION
_________________
ROGERS, Circuit Judge. The question presented in this
breach of contract action is whether there were triable issues
of fact as to whether a contractual agreement between NILAC
International Marketing Group (“NILAC”) and Ameritech
Services, Inc. (“Ameritech”) obligated Ameritech to include
NILAC in Ameritech’s bid for the public pay telephone
concession at Detroit Metropolitan Wayne County Airport.
NILAC maintains that the contract with Ameritech and
Ameritech’s extrinsic manifestations after the execution of the
agreement indicated mutual assent to include NILAC as the
prepaid calling card concessionaire in Ameritech’s bid.
Ameritech counters that the agreement provided only for the
inclusion of NILAC as the concessionaire in a
contemporaneous, separate bid for local-only telephone
services. The district court awarded summary judgment in
favor of Ameritech. Because the contract was at least
ambiguous, and because NILAC raised genuine issues of
material fact as to whether the contract should be read in
NILAC’s favor, we reverse the judgment of the district court
and remand this matter for further proceedings.
NILAC is a general partnership organized under Michigan
law with its principal place of business in Wayne County,
Michigan. NILAC is engaged in the marketing, sale and
distribution of prepaid telephone calling cards. Ameritech is
a corporation organized under Delaware law with its principal

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1AT &T is not a party to this litigation.
place of business in Chicago, Illinois. Ameritech is a major
provider of telecommunications services and owns roughly
250,000 public telephones in the Great Lakes region.
In 1998, Wayne County sought bids from contractors to
provide public pay telephone services in the Detroit
Metropolitan Wayne County Airport, as well as in several
other county facilities. In a document styled “Request for
Proposals, Local Public Payphone Concession, Detroit
Metropolitan Wayne County Airport” (“RFP”), Wayne
County sought bids for three different categories of service.
In the first category (“Category I”), the county sought bids to
provide service for calls within the local calling area. The
second category (“Category II”) sought bids to provide solely
long-distance services. The third category (“Category III” or
“Turnkey”) sought bids to provide both local and long-
distance calling services. The county would either award one
Category III contract to a contractor able to provide both local
and long-distance services, or it would award contracts to one
Category I bidder and one Category II bidder; the two
successful bidders would then team for the provision of all
services.
Ameritech chose to submit bids for both Categories I and
III. Ameritech was legally empowered under its
telecommunications tariff to provide local services, but not to
provide long-distance services. Therefore, submitting a
viable Category III bid necessitated that Ameritech team with
a telecommunications provider able to provide long-distance
services. Ameritech consequently agreed with AT&T to
submit jointly a Category III bid.1
Wayne County’s bid procedure required that Ameritech
seek the inclusion of Disadvantaged Business Enterprises
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No. 02-2212
2W ayne County appears to consider DB E’s to be businesses that are
primarily minority-owned, start-ups or businesses from economically
dep ressed areas. The parties stipulate that NILAC is a DB E.
(“DBE”) in its prospective provision of services.2 Ameritech
sought NILAC’s participation as one of its DBE
subcontractors in its bid. The parties agreed to work together
in providing Ameritech’s response to the RFP. To this end,
the parties entered a teaming agreement that provided, in
relevant part:
The Parties agree to cooperatively prepare a single
response to a certain Request for Proposal for a Local
Public Payphone Concession at Wayne County
Department of Airports and other various Wayne County
Facilities, (“RFP”). The Parties further agree that
Ameritech shall be represented as the primary bidder,
and NILAC shall be represented as one of Ameritech’s
Disadvantaged Business Enterprise (DBE) partner [sic]
. . . In exchange for Ameritech’s invitation to NILAC to
participate in the RFP process as Ameritech’s DBE
partner, NILAC agrees not to participate in the RFP
bidding process with any third party bidder.
In the event Ameritech is awarded the contract for the
Local Public Payphone Concession at Wayne County
Department of Airports and other various Wayne County
Facilities, the Parties shall enter into a subcontract
agreement which shall set forth the terms and conditions
of NILAC’s participation as a subcontractor for
Ameritech.
The contract was executed by Charles Mosley on behalf of
Ameritech, and by Kevin Warrenton for NILAC. On the
same day, the parties entered into a standard form non-
disclosure agreement by which they agreed not to reveal
confidential information exchanged for purposes of

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No. 02-2212 NILAC Int’l Mktg. Group v.
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developing the bid proposal. Both documents were prepared
by Kurt Moser, a paralegal in Ameritech’s legal department.
NILAC alleges that, after the teaming agreement was
executed, NILAC and Ameritech discussed the details of the
calling card concession. NILAC also maintains that it entered
into agreements with third parties to sell calling cards with the
logos, trademarks and likenesses of various Detroit area
professional sports franchises.
When Ameritech submitted its Category I and III bids in
May 1998, however, it included NILAC only in its Category
I bid. The prepaid calling card provision of Ameritech’s
Category III bid instead contained the language that “AT&T
will be utilizing a certified Wayne County DBE for 100% of
this concession.” NILAC did not learn that it had not been
included as the prepaid calling card concessionaire in the
Category III bid until December 1999, well after Ameritech
was awarded the Category III contract.
On September 24, 1998, Ameritech made a presentation to
a Wayne County committee regarding its bid for the Category
III concession. Ameritech included its various bidding
partners, including NILAC and AT&T. At this presentation,
Ameritech held out NILAC to its other bidding partners and
to Wayne County as its prepaid calling card concessionaire.
Warrenton was invited to speak to the committee with regard
to NILAC’s participation in the bid.
Mosley, the Ameritech official who executed the teaming
agreement with NILAC, testified in his deposition that he did
not learn until December 1999 that NILAC had not been
included in the Category III bid. After learning early in 1999
that Ameritech had been awarded the Category III contract,
NILAC attempted on several occasions to contact Ameritech
to discuss a subcontract agreement. Finally, in December
1999, Ameritech’s general manager of sales contacted
Warrenton to notify him that NILAC would not be included
in the Category III contract.
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No. 02-2212
On February 12, 2001, NILAC filed a five-count complaint
against Ameritech in the Circuit Court for Wayne County,
alleging breach of contract, fraud, conversion, breach of
implied contract, and tortious interference with business
relations. On March 21, 2001, Ameritech removed the
lawsuit to the United States District Court on the basis of
diversity jurisdiction. At the close of discovery, Ameritech
filed a Motion to Dismiss, or Alternatively for Summary
Judgment, or for a Declaratory Judgment, arguing that the
teaming agreement and non-disclosure agreement did not
oblige Ameritech to grant NILAC a subcontract for the
prepaid calling card concession.
The district court granted Ameritech’s motion for summary
judgment. The district court first found that the language “In
the event Ameritech is awarded the contract for the Local
Public Payphone Concession” indicated an unambiguous
agreement to include NILAC in the Category I proposal
alone. Second, the district court concluded that, because the
teaming agreement, while prohibiting NILAC from teaming
with other bidders, contains no language restricting Ameritech
from teaming with other parties, Ameritech was free to
contract with other parties in connection with its Category III
bid. This appeal followed.
We review de novo a district court’s decision to grant
summary judgment. Tinker v. Sears, Roebuck & Co., 127
F.3d 519, 521 (6th Cir. 1997). Summary judgment is
appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(c). In determining
whether a factual issue is genuine for the purposes of
summary judgment, a court must decide “whether reasonable
jurors could find by a preponderance of the evidence that the
plaintiff is entitled to a verdict.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 252 (1986).

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No. 02-2212 NILAC Int’l Mktg. Group v.
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3Ameritech suggested, both in its briefs and at oral argument, that we
should treat the teaming agreement and the non-disclosure agreement as
a unified agreement so that the forum-selection and merger clauses
contained in paragraph 16 of the non-disclosure agreement apply to the
teaming agreement. We decline to do so, because under the laws of b oth
Michigan and Illinois, the parties must manifest clearly an intent to
incorporate an outside document into a co ntract. See, e.g., 188 LLC v.
Trinity Indus., Inc., 300 F.3d 730, 736 (7th Cir. 200 2) (ap plying Illino is
law in explaining that a reference to an outside document must show an
intent to incorp orate that document into the contract); Forge v. Sm ith, 580
N.W.2d 876, 881 n.21 (Mich. 1998) (noting that incorporating instrument
NILAC presented sufficient evidence for reasonable jurors
to conclude by a preponderance of the evidence that it is
entitled to prevail on its breach of contract claim. First, the
operative language in the teaming agreement is ambiguous.
Second, NILAC presented sufficient evidence to establish that
its understanding of the operative terms is the agreed-upon
meaning of those terms.
Initially, we note that Michigan law applies to the analysis
of the teaming agreement. As a federal court sitting in
diversity, we apply the choice-of-law provisions of the forum
state. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S.
487, 496 (1941). Where, as here, a contract contains no
express choice-of-law provision, Michigan courts apply the
law of the forum state unless (1) there is no substantial
relationship between the forum state and the contract or (2)
the application of the forum state’s law would conflict with a
policy prerogative of a state with a greater interest in the
contract than the forum state. See Kipin Indus., Inc. v. Van
Deilen Intern., Inc., 182 F.3d 490, 493 (6th Cir. 1999)
(explaining that Michigan courts follow the choice-of-law
rules of the Restatement (Second) of Conflict of Laws).
Neither is the case here; therefore, Michigan law governs the
interpretation of the teaming agreement. The non-disclosure
agreement contains an apparently valid forum-selection
clause which subjects it to Illinois law.3
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Ameritech Serv. Inc.
No. 02-2212
must clearly show intent that outside document be considered part of the
contract). Although paragraph 16 inc orporates an “Attachment A” into
the agreement, Attachment A is merely a handwritten description of the
venture. The non-disclosure agreement contains no reference to the
teaming agreement. The teaming agreement likewise contains no
reference to the non-disclosure agreement or any other attempt to
incorporate it.
Under Michigan law, the question of whether contractual
terms are ambiguous is a question of law. Port Huron Educ.
Assn., MEA/NEA v. Port Huron Area Sch. Dist., 550 N.W.2d
228, 237 (Mich. 1996). If contract language is clear and
unambiguous, the meaning of that language is also a question
of law; the meaning of ambiguous language, however, is a
question of fact. Id.
The teaming agreement is at least ambiguous as to
NILAC’s role in Ameritech’s bid submissions for the public
payphone concession. Contrary to Ameritech’s assertion, the
contract phrases “single response” and “Local Public
Payphone Concession” do not together convey the
unambiguous meaning that NILAC was to be a participant
only in the Category I bid for local public payphone service.
Ameritech argues that the phrase “single response”
indicates that NILAC would be included in just one response
to the RFP—a response to the Category I request. This
reading ignores the possibility that “single response” could
also mean that Ameritech would provide the collective
response of both parties to the bid request. The latter reading
is borne out by the provisions that the parties would
“cooperatively prepare” their response and that Ameritech
would be the primary bidder. Moreover, the contract never
contemplates that NILAC would respond individually to the
RFP; on the contrary, NILAC’s proposal for the provision of
its services would be incorporated within the larger bid
proposals of Ameritech. Even if Ameritech’s understanding
of the phrase were correct, there is no language in the contract

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indicating whether the one response is to the Category I
request or the Category III request—except the term “Local.”
“Local” itself, however, is also ambiguous. The second
paragraph of the teaming agreement states that the parties
agreed to prepare a response to “a certain Request for
Proposal for a Local Public Payphone Concession at Wayne
County Department of Airports.” This particular language
tracks, nearly verbatim, the title of the RFP, which included
requests for Category I, II, and III bids. At oral argument,
NILAC suggested that Wayne County may have meant the
term “Local” to refer to the location of the phones at the
airport and county facilities. Even if this reading is not
compelling, it is at least possible, given that the contract
language tracks so closely the overall RFP language.
Moreover, Ameritech chose this language in drafting the
agreement. Ameritech is a sophisticated party and admits that
this document was drafted by a member of its legal staff,
presumably under the supervision of its in-house counsel. If
Ameritech had intended to limit the scope of the teaming
agreement to include NILAC in only the Category I bid,
Ameritech could have used more specific language in drafting
the document. Ameritech’s understanding of “Local” is not
required as a matter of law in the face of NILAC’s equally
plausible reading.
Moreover, NILAC’s extrinsic evidence raises material
issues of fact as to whether Ameritech breached its
contractual obligations. Although the parol evidence rule
precludes courts from using extrinsic evidence to alter the
terms of a final and unambiguous contract, it does not bar the
introduction of extrinsic evidence “to disclose ambiguity or
to show that there is none, as well as to resolve any ambiguity
proven to exist.” American Anodco, Inc v. Reynolds Metal
Co., 743 F.2d 417, 422 (6th Cir. 1984) (citing Goodwin v.
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No. 02-2212
4In 1976, the Supreme C ourt of M ichigan applied a d ifferent test to
determine whether the parol evidence rule applied—that is, whether the
extrinsic evidence was inconsistent with the written agreement. Un ion O il
v. Newton, 245 N.W .2d 11 (M ich. 1976). “If there is no inconsistency,
the parol evidence is admissible.” Id. at 12. The differently stated
standard does not appear to lead to a different result in this case, where
the extrinsic evidence is consistent with one possible reading of the
written language.
Coe Pontiac, Inc., 220 N.W.2d 664, 671 (Mich. 1974)).4 If
the trial court has determined that the contractual language is
ambiguous, the jury should consider extrinsic evidence in
determining the intended meaning of ambiguous language.
Klapp v. United Ins. Group Agency, Inc., 663 N.W.2d 447,
454 (Mich. 2003). If, after a review of the relevant extrinsic
evidence, the factfinder remains unable to determine the
intent of the parties, the ambiguities are to be construed
against the drafter of the contract. Id. at 454.
NILAC has introduced evidence showing that Ameritech’s
agent believed the contract to include both Category I and III
bids, that Ameritech held NILAC out to Wayne County as its
prepaid calling card provider for its Category III bid, and that
Ameritech executives discussed the particulars of a prepaid
calling card subcontract with NILAC’s Warrenton after the
contract had been signed. This is enough evidence, when
considered in the light most favorable to NILAC, to create
triable issues of fact for a jury.
In addition to its contract claim, NILAC also asserted four
tort claims which were disposed of in the district court’s
summary judgment order. The district court found that these
claims were derivative of NILAC’s contract claim, and
because the contract claim failed, the tort claims failed as
well. In light of our decision to reverse the grant of summary
judgment on the contract claim, we remand these claims for
consideration by the district court.

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CONCLUSION
For the foregoing reasons, the judgment of the district court
is REVERSED, and the matter is REMANDED to the
district court for further proceedings consistent with this
opinion.

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