Unpublished Disposition, 846 F.2d 1383 (9th Cir. 1988)

MEMORANDUM^* 

Jack and Sally Smith appeal the district court's directed verdict in favor of the defendants in this breach of contract action. Count Two of Mr. Smith's second amended complaint alleged that defendant Transport Carrier, Inc. breached its "District Manager Agreement" with him to manage a semi-truck driver and diesel mechanic school. On appeal we consider whether, under Indiana law, the district court erred in granting the directed verdict based on its finding that the contract presented no ambiguity and thus, that termination upon written notice was proper. We agree that the contract was not ambiguous and affirm.

In determining the propriety of a directed verdict our role is identical to that of the district court. A directed verdict is proper when the evidence permits only one reasonable conclusion. Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1423 (9th Cir. 1986). We examine the evidence in the light most favorable to the non-moving party and draw all possible inferences in favor of that party. Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1506 (9th Cir. 1987). Our review of the district court's interpretation of Indiana state law is also governed by an independent de novo standard. Matter of McLinn, 739 F.2d 1395, 1397 (9th Cir. 1984) (en banc).

The District Manager Agreement (Agreement) entered into between Smith and Transport Carriers, Inc. provided in paragraph 11 that:

[s]ubject to production performance, annual review, and other conditions contained in either the school sales policy manual or this agreement, this agreement shall be for a term of five years from the date hereof.

Later, paragraph 15 of the Agreement provides, in part, " [t]he agreement may be canceled by either party upon written notice." Smith contends the two paragraphs are conflicting and therefore render the entire contract ambiguous. We disagree.

The standard for determining ambiguity under Indiana law, which governs in this diversity suit, is whether reasonably intelligent persons on reading the contract would honestly differ as to its meaning. Indiana-Kentucky Elec. Corp. v. Green, 476 N.E.2d 141, 145 (Ind.App.1985). The instrument is to be construed as a whole, and, it should be so construed, if possible, as to render the agreement valid rather than void. Board of Directors v. Cloverleaf Farms, Inc., 359 N.E.2d 546, 548, 171 Ind.App. 682 (1977); see also, R.R. Donnelley & Sons, Co. v. Henry-Williams, Inc., 422 N.E.2d 353, 356 (Ind.App.1981) (court must accept interpretation of contract which harmonizes its provisions as opposed to one which causes provisions to conflict). If the contract is ambiguous and its meaning is to be determined by extrinsic evidence, such as the intent of the parties, its construction is a matter for the factfinder. Donnelley, 422 N.E.2d at 356. If, however, the ambiguity arises because of the language used in the contract and not because of extrinsic facts, then its construction is purely a question of law to be determined by the court. Id.; Huntington Mut. Ins. Co. v. Walker, 392 N.E.2d 1182, 1184-5, 181 Ind.App. 618 (1979).

We find the Agreement provisions at issue are indeed reconcilable and therefore not ambiguous. Paragraph 11 sets out a five year maximum for the contract subject to the rest of the Agreement's provisions. One such provision, paragraph 15, expressly allows earlier termination by either party upon written notice. A reasonable person could not contest that the unequivocal termination language of paragraph 15 sets forth one of the "other conditions" of the Agreement described in paragraph 11. At oral argument, counsel for plaintiffs conceded that there was no objective documentary or testimonial evidence extrinsic to the Agreement itself. Accordingly, as we are squarely within the four corners of the document, and we find no ambiguity presented by the language used, the district court did not err in directing a verdict against Smith.

AFFIRMED.