breached Paragraph 16 of the Affiliation Agreement by
communicating with municipalities within Jones' service areas.
USA cross-moved for summary judgment on the issue of liability
in its breach of contract, contractual indemnification, and
tortious interference claims, and on Jones' counterclaim. On
October 10, 1989, we held oral argument on these motions.
For the reasons given below, we grant USA's motion for leave
to amend the complaint, and treat Jones' opposition to that
motion as a motion to dismiss, for failure to state a claim
upon which relief can be granted, Counts Four (Common Law
Fraud), Five (RICO), and Six (Tortious Interference with
Contract) of the Second Amended Complaint. We deny Jones'
motion to dismiss Counts Four and Six, but grant it with
respect to the RICO claim, Count Five. On the cross-motions
for summary judgment, we grant USA's motion in part and deny
it in part, and Jones' motion for summary judgment is on the
I. BREACH OF CONTRACT CLAIMS
Both parties have moved for summary judgment on their
respective breach of contract claims.*fn2 Summary judgment
may be granted only when the moving party can establish, based
on "the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits . . .
that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of
law." Fed.R.Civ.P. 56(c). The Court must first look to the
substantive law of the case to determine which facts are
material. Only disputes over material facts will preclude the
entry of summary judgment. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The
moving party bears the initial burden of establishing that no
genuine dispute as to material facts exists. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d
265 (1986). The burden then shifts to the opposing party to
show that a genuine issue of fact exists. See Matsushita
Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574,
585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986).
Ultimately, "[i]n considering the motion, the court's
responsibility is not to resolve disputed issues of fact but to
assess whether there are any factual issues to be tried, while
resolving ambiguities and drawing reasonable inferences against
the moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11
(2d Cir. 1986) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247-50, 106 S.Ct. 2505, 2509-511, 91 L.Ed.2d 202
(1986)), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d
USA alleges that Jones breached its contract with USA by
terminating USA from two-thirds of its systems on October 3,
1988, and from the remainder of its systems by the beginning
of 1989. Whether Jones breached the contract by cancelling USA
from cable systems constituting two-thirds (65%) of Jones'
subscribers on October 3, 1988, the first day of the fall
television season, depends on the meaning of the letter
amendment to the Affiliation Agreement, dated September 1,
1986 ("Side Letter"),*fn3 which was signed contemporaneously
with the Affiliation Agreement.
The question of interpretation is one of law to be answered
by the court, and summary judgment is appropriate "`[w]here
the language of the contract is unambiguous, and reasonable
persons could not differ as to its meaning.'" Hunt Ltd. v.
Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir.
1989) (quoting Rothenberg v. Lincoln Farm Camp, Inc.,
755 F.2d 1017, 1019 (2d Cir. 1985)); see United States v. 0.35 of an
Acre of Land, More or Less, Situated in Westchester County,
State of New York, 706 F. Supp. 1064, 1070 (S.D.N.Y. 1988);
West, Weir & Bartel, Inc.
v. Mary Carter Paint Co., 25 N.Y.2d 535, 540, 307 N.Y.S.2d 449,
452, 255 N.E.2d 709, 711 (1969); 3 A. Corbin, Corbin on
Contracts § 554, at 222 (1960).*fn4 The determination of
whether a contract or contract term is ambiguous is a threshold
question of law for the court. See Tokio Marine & Fire Ins. Co.
v. McDonnell Douglas Corp., 617 F.2d 936, 940 (2d Cir. 1980);
0.35 of an Acre of Land, 706 F. Supp. at 1070. "It is axiomatic
that if the language of an agreement is explicit and
unambiguous the courts must give it its plain meaning." 0.35 of
an Acre of Land, 706 F. Supp. at 1071 (citing Omaha Indem. Co.
v. Johnson & Towers, Inc., 599 F. Supp. 215, 218 (E.D.N Y
1984)). "Contract language is not ambiguous if it has `a
definite and precise meaning, unattended by danger of
misconception in the purport of the [contract] itself, and
concerning which there is no reasonable basis for a difference
of opinion.'" Hunt, Ltd. v. Lifschultz Fast Freight, Inc., 889
F.2d at 1277 (quoting Breed v. Insurance Company of North
America, 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 355,
385 N.E.2d 1280, 1282 (1978)). "Language whose meaning is otherwise plain
does not become ambiguous merely because the parties urge
different interpretations in the litigation." Hunt, Ltd. v.
Lifschultz Fast Freight, Inc., 889 F.2d at 1277. "[O]ur goal
must be to accord the words of the contract their `fair and
reasonable meaning.'" Sutton v. East River Sav. Bank, 55 N.Y.2d
550, 555, 450 N.Y.S.2d 460, 463, 435 N.E.2d 1075, 1078 (1982)
(quoting Heller v. Pope, 250 N.Y. 132, 135, 164 N.E. 881
Turning to the present case, the first question to be
determined is whether the meaning of the Side Letter, i.e.,
its effect on the Affiliation Agreement, is ambiguous. We must
determine "whether the agreement is so beset by ambiguity that
the determination of the intent of the parties requires a
trial at which a jury or other fact finder could clear up the
ambiguity by passing on the credibility of the extrinsic
evidence and whatever inferences reasonably could be drawn
therefrom." 0.35 of an Acre of Land, 706 F. Supp. at 1071.
Applying the foregoing principles, we find as a matter of law
that the Side Letter is unambiguous in its effect on Paragraph
4(d) of the Affiliation Agreement: the Side Letter does not
alter Jones' obligation, outlined in Paragraph 4(d), to provide
the USA Network to at least 75% of its aggregate subscribers.
Paragraph 1 of the Side Letter provides:
With respect to subscribers receiving the USA
program service as either a basic or tiered cable
service in [Jones'] CATV [Cable Television]
Systems . . . [Jones] shall make payments to USA
in accordance with the USA Network Basic Service
Schedule . . . then in effect. Such rate is
contingent upon the delivery of the USA program
service as a basic cable service*fn5 to at least
75 percent of the total number of subscribers to
those CATV Systems owned or controlled by [Jones]
as of September 1, 1986. In the event that
[Jones] fails at any time during the term hereof
to deliver the USA program service as a basic
cable service to at least 75 percent of such
total number of subscribers, [Jones] shall
thereafter make payments to USA, with respect to
its tiered USA subscribers only, in accordance
USA Network Tiered Service Schedule . . . then in
USA argues that this Side Letter deals only with when Jones
had to pay the higher tier rate, as opposed to the basic rate,
and not with market penetration, or the percentage of Jones'
aggregate subscribers who, under the Affiliation Agreement,
were to receive USA Network programming.