Before the Court are Intervenor People First of Tennessee’s (“People First”) motion for partial summary judgment (D.E. # 2400) and Defendants State of Tennessee et al’s (“Defendants” or “State”) motion for summary judgment (D.E. # 2404). On Thursday, July 2, 2009, the Court entered a summary order GRANTING People First’s motion and DENYING Defendants’ motion. This order hereby sets forth the reasons for the Court’s ruling.
I. BACKGROUND 1
This case began in 1992 when the United States of America filed suit against Defendants because of conditions at Arlington Developmental Center (“ADC”), a state-run intermediate care facility for mentally retarded persons (“ICF/MR”).
See United States v. Tennessee,
In 1995, the Court certified a plaintiff class in the related action of People First of Tennessee v. Arlington Development Center, Case No. 92-2213 (WD.Tenn.), allowed People First to join the instant suit, and extended the relief in this case to the plaintiff class in People First. In the process, the Court expanded the scope of this litigation to concern more than merely the specific living conditions at ADC. The parties subsequently began to develop a plan to provide services to members of the Arlington class. 2 Discussions continued from 1999 into 2000, and the parties eventually drafted a plan for the creation of the Community Services Network of West Tennessee, Inc., a nonprofit organization with which the State would contract to provide a host of services. (D.E. # 2400-3 (Ex. J): Prewitt Decl. at 3.) Disagreement among the parties persisted, however, as a result of a dispute over which individuals would bе eligible for CSN services. (Id.) Judge MeCalla, before whom this case was then pending, held a status conference on March 9, 2000 to discuss the parties’ inability to reach an agreement. (Id.) During this conference, counsel for Defendants (Assistant Attorney General Dianne Dycus) unambiguously stated to Judge MeCalla that the residents of ICF/MRs— who then numbered 30 — would have the option of enrolling in CSN, though the State did not concede that certain other class members would likewise be eligible. (See D.E. # 2400-3 (Ex. W): Tr. of March 9, 2000 Hr’g.)
Upon learning of the State’s opposition to covering all persons within the Arlington class, Judge MeCalla found that the
Following execution of the CSN contract in 2000, at least some class members who were residents of ICF/MRs enrolled in CSN. (See Prewitt Decl. at 6; see also D.E. #2400-3 (Ex. N): Hanson Decl. at 2.) In fact, the evidence shows that somewhere from 20% to 25% of the original group of class members who enrolled in CSN resided in ICF/MRs. (See Prewitt Decl. at 6; Hanson Decl. at 2.) The parties dispute whether these individuals have received CSN services continuously since 2000 or if they were instead later removed from CSN enrollment. It is clear, however, that officials acting on behalf of the State have used the term “community” to describe ICF/MRs and have, at least at times, considered ICF/MR residents eligible to participate in CSN. For instance, the State’s Closure Plan for ADC states that all class members, including those who “live in a community-based ICF/MR home,” will have access tо CSN services. (See D.E. # 2400-3 (Ex. P): Closure Plan.) In 2006, the State began efforts to enroll in CSN all class members residing in ICF/ MRs as- part of a process to tailor CSN services to these individuals’ particular needs. (See Hanson Decl. at 3-7.) Additionally, in early 2008 the State issued letters to class members, including those residing at ICF/MRs, informing them of their eligibility to enroll in CSN. (See D.E. # 2400-3 (Ex. Q): Norris Letter.)
In December 2008, the State notified CSN that it was not authorized to provide services to individuals residing in institutions (viz., ICF/MRs), only those residing in home and community-based waiver services. (See Prewitt Deсl. at Ex. A: Letter of D. Dycus of Dec. 17, 2008.) This ignited the controversy that is the subject of the cross-motions before the Court. People First filed a motion seeking a declaration from the Court that CSN services are available to all Arlington class members, regardless of where they reside, so long as they do not reside at ADC. (D.E. # 2332: People First’s Emergency Motion for Declaratory Relief.) Defendants oppose this request for declaratory relief. People First later filed a motion for partial summary judgment on the question of eligibility for CSN services, 3 and Defendants filed a motion for summary judgment raising the same issue.
II. LEGAL STANDARD
Summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Although hearsay evidence may not be considered on a motion for summary judgment,
Jaeklyn v. Schering-Plough Healthcare Prods. Sales Corp.,
Summary judgment is proper “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.”
Celotex,
Once a properly supported motion for summary judgment has been made, “an oppоsing party may not rely merely on allegations or denials in its own pleading; rather, its response must — by affidavits or as otherwise provided in this rule — set out specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e)(2). A genuine issue for trial exists if the evidence would permit a reasonable jury to return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc.,
III. ANALYSIS
The cross-motions filed by People First and Defendants raise the same issue— whether CSN services are available under the grant contract to individuals residing in ICF/MRs. The parties agree that the relevant language of the grant contract reads as follows:
The services that will be provided by the Community Services Network of West Tennessee (CSN) must provide comprehensive and appropriate interdisciplinary care to individuals with developmental disabilities in community ■placements. The benefit package has been designed to support the goal of providing the improved quality of care and quality of life available to individuals with developmental disabilities in well designed community settings.
(D.E. #2400-3 (Ex. M): Grant Contract (emphasis added)). The grant contract does not define what is meant by the term “community.” According to People First, ICF/MR residents are eligible for CSN services because use of the term “community” refers simply to a placement other than at ADC. Defendants contend, however, thаt “community” refers to placement other than at an “institution” and that ICF/MRs are properly considered “institutional” rather than “community” placements. The parties agree that this question is controlled by the language of the grant contract, which is to be interpreted according to Tennessee law,
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and that this
A. Contract Interpretation under Tennessee Law
“The cardinal rule for interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention, consistent -with legal principles.”
Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc.,
When a contract contains ambiguous language, the literal terms of the agreement alone cannot resolve the dispute, and the court is compelled to discover the parties’ intent through examination of other sources.
Planters Gin Co. v. Federal Compress & Warehouse Co., Inc.,
A disagreement between the parties as to the meaning of a contractual term does not itself make the disputed term ambiguous.
Staubach Retail Servs.-Southeast, LLC v. H.G. Hill Realty Co.,
B. “Community” as Used in the Grant Contract
The term “community” is nowhere defined in the grant contract, and after reviewing the grant contract, the Court finds ■ no other language within the four cornеrs of the document itself which would give “community” an obvious meaning. The grant contract does not, for instance, explain or describe CSN services in a way that necessarily excludes ICF/MR residents. Because the parties have offered reasonable but conflicting • interpretations of “community” and the grant contract itself does not indicate which of these alternatives was intended, there is an initial ambiguity in the contract. Nonetheless, the evidence before the Court removes any possible doubt as to the meaning understood by-parties at the time of contracting. Specifically, the Court finds that these parties understood and intended “community” to mean any placement other than at ADC, and thus ICF/MR residents are included within the meaning of that term.
Defendants urge the Court to look to the language of the Medicaid Act. Defendants refer to 42 U.S.C. § 1396d(d), which defines an ICF/MR as an “institution” and 42 U.S.C. § 1396n(c)(l), which draws a distinction between “home or сommunity-based services” on the one hand and ser
Defendants do argue, however, that in the process leading to the creation of CSN, the parties discussed sevеral options involving the use of Medicaid funds, though none of these options would have provided federal moneys for ICF/MR residents. 6 People First responds by citing evidence that the State previously agreed to support its obligations to CSN irrespective of whether it could obtain federal financing for the initiative. (See D.E. # 1199: Notice of Filing of Information Regarding Eligibility Criteria for Waiver by Defendants of Feb. 24, 2000 (“The State is committed to funding this program [i.e., CSN] through the use of state funds, and, when available, federal matching funds.”)). Indeed, the State’s expressions of willingness to fund CSN without federal moneys reveals that federal criteria were not meant to control the scope of CSN eligibility.
Defendants also cite the fact that ADC residents are indisputably ineligible to receive services through CSN. According to Defendants, since ADC is an ICF/MR and nothing in the grant contract specifically excludes ADC from the meaning of “community” as used by the parties, the only principlеd way to read “community” is in contrast to “institution” — a term which includes all ICF/MRs, including ADC. While there is no particular language in the grant contract to exclude ADC residents (but not other ICF/MR residents), substantial evidence before the Court indicates that this is exactly the meaning the parties consistently have ascribed to the term “community” throughout the process of developing and implementing CSN. (See, e.g., Prewitt Decl. at 2.) Accordingly, the Court finds that the lack of a precise prohibition on pаrticipation by ADC residents is far from fatal to People First’s reading.
Finally, Defendants contend that providing CSN services to ICF/MR residents is redundant and creates unnecessary confusion because the individuals’ facilities themselves are already responsible for the care of their residents. People First in turn cites evidence that CSN has successfully aided many individuals residing in ICF/MRs with needed medical care that their resident facilities did not provide.
(See, e.g.,
Hanson Decl. at 7-19.) Additionally, there is evidence that the CSN services for these individuals have been tailored to accommodate the fact that they reside in an ICF/MR.
(Id.
at 3-5.) Therefore, CSN services are not redundant, but are in fact responsive to the genuine needs of class members and intended to supplement the care that ICF/ MRs themselves provide. Whatever the merits of providing CSN coverage to ICF/MR residents, however, they are largely irrelevant in determining what the
People First asks the Court to examine the context in which the grant contract was developed and the manner in which the State has since implemented it. To that end, People First relies upon the rule of practical construction to sustain its position. The rule of practical construction looks to “the interpretation placed upon a contract by the parties thereto, as shown by their acts” and their declarations.
See, e.g., Galleria Assocs., L.P. v. Mogk,
In support of its argument, People First points to a letter Deputy Commissioner Stephen Norris of the Tennessee Division of Mental Retardation Services mailed to Arlington class members, including ICF/MR residents, stating that they were eligible for CSN services.
{See
Norris Letter.) People First further contends that ICF/MR residents have previously enrolled in CSN services and that the State, being fully aware that they were residents of ICF/MRs, acquiesced in these individuals’ enrollments.
{See, e.g.,
Prewitt Decl. at 6.) Defendants clаim that these enrollments were merely mistakes resulting from a misunderstanding of the grant contract, and that the State promptly removed ICF/MR residents from eligibility for CSN benefits shortly thereafter.
{See
Ex. H to Defs.’ Mot. For Summ. J.: Denegrí E-mail.) According to Defendants, from 2003 until 2007, ICF/MR residents were excluded from participation in CSN.
(Id.)
People First challenges the admissibility of the evidence Defendants cite for this contention, as this position relies upon a single e-mail containing inadmissible hearsay. Defendаnts have conceded
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that the e-mail cannot be considered for the truth of the matter asserted, but urge the Court to consider it for its effect upon the listener. In the contested e-mail, CSN’s chief operating officer writes that in 2002 some ICF/MR residents enrolled in CSN, but that they were discharged once a State official deemed them ineligible for CSN participation. Presumably, Defendants offer the e-mail to show that its recipients
Having considered the record and the evidence before it, the Court is left with no doubt that the parties have long used the term “community” to encompass a variety of placements outside of ADC, including residency in an ICF/MR. Before Judge McCalla, Defendants unmistakably described CSN’s intended scope under the grant contract as reaching residents of ICF/MRs. It is unsurprising then that even years after execution of the grant contract Defendants described ICF/MRs as a form оf “community” placement. (See Closure Plan at 22.) Notably, while People First has submitted verified proof— specifically the sworn declaration of CSN’s attorney, who was involved in the creation of CSN — to support its argument that the parties always understood that ICF/MR residents were in “community placements” and thus eligible for CSN services, Defendants have not presented a competing declaration or affidavit from any of their participants to contradict this assеrtion. (See, e.g., Prewitt Decl. at 2 (“The Grant Contract ... was always meant to cover all Class Members regardless of where they chose to live so long as they were residing anywhere other than Arlington Developmental Center.”)).
Therefore, no admissible evidence before the Court indicates that the parties intended to exclude ICF/MR residents from CSN coverage. Rather, the evidence indicates that ICF/MR residents are categorically included in the term “community” and thus arе eligible for CSN coverage. Although the term “community” in the grant contract is initially ambiguous, application of the standard tools of interpretation available under Tennessee law removes that ambiguity, and the record supports no interpretation other than that urged by People First. Accordingly, there remain no triable issues as to interpretation of the grant contract, and partial summary judgment for People First is appropriate.
IV. CONCLUSION
For the reаsons stated above, People First’s motion for partial summary judgment is GRANTED, and Defendants’ motion for summary judgment is DENIED.
Notes
. This case possesses an extensive procedural history. The Court includes in this order only those procedural facts that are directly relevant to the instant motion.
. The precise definition of the Arlington class has been subject to much dispute.
See United States v. Tennessee,
. People First’s motion for declaratory relief further asks for a declaration that the State must provide CSN with “full funding,” but People First does not seek summary judgment on this aspect of its motion for declaratory relief, which is why People First's motion requests only partial summary judgment.
. Properly speaking, there exists a difference between “interpretation” and “construction”
. This rule, however, is to be apрlied only when all other tools have been unavailing.
Piper Indus., Inc.
v.
First Tennessee Bank, N.A.,
. This process involved discussion as to how the State could fund its obligations through Medicaid waivers.
. Defendants and People First disagree as to whether under Tennessee law application of the rule of practical construction requires the court to first find a contractual ambiguity. Authorities recognize that Tennessee case law is unsettled on this point. See 21 Feldman, supra note 4, § 8:59. There is no need for this Court to decide this legal debate in the context of this case.
. Counsel for Defendants made this concession orally at the Court’s conference of June 29, 2009.