1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-13-1995

Compass Tech., INC. v. Tseng Lab., INC.

Precedential or Non-Precedential:

Docket 95-1060

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Recommended Citation

"Compass Tech., INC. v. Tseng Lab., INC." (1995). 1995 Decisions. Paper 306.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

______________________________ 

NO. 95-1060 

______________________________ 

COMPASS TECHNOLOGY, INC., 

 Appellant 

v. 

TSENG LABORATORIES, INC. 

 WANG LABORATORIES, INC. 

_________________ 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Civil Action No. 93-cv-1934) 

_________________ 

Argued October 16, 1995 

Before: BECKER, ROTH, Circuit Judges, and 

SHADUR,1 District Judge. 

(Opinion filed December 13, l995) 

_________________ 

F. Anthony Mooney, Esquire (Argued) 

F. Anthony Mooney and Associates 

20 Williams Street, Suite 110 

Wellesley, MA 02181 

 Attorney for Appellant 

Lisa D. Stern, Esquire (Argued) 

Miller, Turetsky, Rule, McLennan & Stern 

300 Courthouse Plaza 

18 West Airy Street 

Norristown, PA 19401-4717 

 Attorney for Appellee 

 

1

Milton I. Shadur, United States District Judge for the Northern 

District of Illinois, sitting by designation. 
2 

______________________ 

OPINION OF THE COURT 

______________________ 

SHADUR, District Judge. 

 Compass Technology, Inc. ("Compass") appeals the district 

court judgment, following a bench trial, that accepted the 

position of defendant Tseng Laboratories, Inc. ("Tseng") in this 

contract dispute. Compass contends that the district court erred 

(1) by admitting extrinsic evidence to interpret the contract 

between Compass and Tseng and (2) by refusing to reopen the 

evidence after a key witness had first been located within a few 

days after the close of the 1-1/2 day bench trial. 

 Jurisdiction in the district court was invoked on diversityof-citizenship grounds under 28 U.S.C. §1332 (originally-named 

codefendant Wang Laboratories, Inc. ("Wang") was dismissed by the 

district court for lack of jurisdiction). We have jurisdiction 

over this appeal from the district court's final judgment under 

28 U.S.C. §1291. 

 We hold that under any view of the evidentiary issues the 

district court erred in refusing to hear the newly-located 

witness. And because that alone requires us to reverse the 

district court's judgment and remand for a new trial, we then 

address the related evidentiary issues as a guide to the handling 

of that second trial. 

Factual Background
3 

 This dispute arises out of a "Manufacturer's Rep Agreement" 

(the "Agreement") entered into between Tseng and Compass 

effective February 19, 1988. Under the Agreement Compass was to 

serve as the exclusive selling representative for Tseng, a 

manufacturer of computer graphics chips, in six New England 

states. In return Compass was to receive a commission on the 

Tseng products sold by Compass within the six-state region. 

 Tseng's then Director of Sales and Marketing John Ciarlante 

("Ciarlante") prepared the form of Manufacturer's Rep Agreement 

based on his experience with a previous employer (Tseng not 

having previously used such agreements). It took the form of a 

standard printed document, with blanks left to be filled in as 

appropriate. While the Agreement is quite straightforward in 

most respects, its Paragraphs 3 and 4 give rise to the present 

controversy: 

3. PRODUCTS -- The Representative shall sell the 

"products" of the manufacturer set forth herein which 

may be changed by the Manufacturer upon sixty (60) days 

prior notice, subject further to Addendum #1, attached 

hereto: 

4. AMOUNT OF COMPENSATION -- Representative's 

compensation for services performed hereunder shall be 

5%2

 of the "net invoice price" defined herein below, of 

the Manufacturer's product for which an order is taken 

by Representative. However, when engineering, 

execution of the order, or shipment involve different 

territories the Manufacturer will split the full 

commission among the Representatives whose territories 

are involved. The Manufacturer will make this 

determination and advise the interested Representatives 

at the time the order is submitted to the Manufacturer. 

 

2

This typed figure fills in a blank space in the printed form 

Agreement. 
4 

 No Addendum #1 is in the record, and that has proved to be 

the focal point of the dispute between the parties. Even though 

Tseng was unable to produce a copy of any such addendum or to 

provide any witness who could testify to its claimed contents or 

could even recall seeing one, it nonetheless says that there was 

such an animal and that the addendum specified that Compass was 

to receive no commission whatever on any sales of Tseng products 

to Wang. For its part, Compass claims that no Addendum #1 ever 

existed and that the Agreement is clear that Compass was to 

receive a 5% commission on all sales within its territory, 

including sales to Wang. What is at stake, if Compass is indeed 

entitled to such a commission on sales to Wang during the time 

that the Agreement was in effect, is an amount close to $200,000 

exclusive of prejudgment interest. 

 Like most such catch phrases, the Chinese proverb that "One 

picture is worth ten thousand words" is obviously not intended to 

be taken literally as a universal rule. In this instance, 

however, the relevant picture is of the words themselves--the 

Agreement's pages showing its standardized form, the placement of 

the blanks and the filling in of the blanks (or perhaps more 

importantly, the failure to fill in the blanks)--and that picture 

is worth a good many words in the context of this case. We have 

therefore annexed a photocopy of the Agreement's most relevant 

and most illustrative page, its page 1. 
5 

 Ciarlante had been Tseng's sole participant in negotiating 

and signing the Agreement on its behalf, while Compass was 

represented by its President Donald Rheault ("Rheault"). At 

trial Rheault testified that he could not recall whether or not 

there was an Addendum #1 attached to the Agreement when he signed 

it. Because Ciarlante could not be located by either party 

before the trial, Tseng's only witness who spoke to the issue at 

all was John Gibbons, a founder, director and business consultant 

for Tseng, who testified that he had instructed Ciarlante to 

exclude sales to Wang from the Agreement. But Gibbons admitted 

on cross-examination that he did not actually see the Agreement 

until March 1989--more than a year after it was executed and 

delivered--and that he has never seen any Addendum #1. 

 Early in the trial the district court determined as a matter 

of law that the Agreement's reference to the missing Addendum #1 

created an ambiguity (1994 WL 446853, at *1). Over Compass' 

objections the district court then allowed testimony about the 

parties' intent as to what commission was to be paid on sales to 

Wang. 

 Although the district court's comments during the short 

bench trial had reflected a healthy skepticism as to whether 

there had ever been an Addendum #1 (let alone what its terms were 

if it actually existed), the court ultimately reached the 

following conclusion (id. at *2): 

On the basis of the credible evidence presented by the 

parties the Court finds that Addendum #1 provided that 

Compass would receive no commission on the sale of 

Tseng Products to house accounts and that, at the time 

the Agreement was executed, Tseng's only house account 
6 

was Wang. Compass knew and was aware that no 

commission was to be paid on house accounts and that 

Wang was Tseng's most substantial account and its only 

house account. Compass knew and was aware of the fact 

that a commission would not be paid on the Wang 

account. 

That holding was based, according to the district court, on three 

strands of evidence presented at trial (id. at *2-3): 

 1. In addition to the stated awareness on Compass' part 

reflected in the last two quoted sentences, Compass was 

also aware that Tseng's previous manufacturer's 

representative had been dismissed for requesting 

commissions on the Wang account.3

 2. Compass received two small commission statements for 

periods during which substantial sales were made to 

Wang, yet did not question Tseng or complain when those 

statements did not cover those sales to Wang. 

 3. In November 1988 (six months after the contract became 

effective) representatives of Compass and Tseng met to 

discuss a commission for servicing the Wang account and 

agreed that Compass would receive a 1% commission on 

sales to Wang after December 1, 1988. 

Based on those findings the district court included in the total 

damages it awarded to Compass only 1% of the sales to Wang 

 

3

Our examination of the record has disclosed no evidence whatever 

to support this finding. As for the other findings by the 

district court, both those quoted above and those summarized in 

the text of this opinion, we make no effort to review either the 

evidence tendered by Tseng or Compass' submission of point-bypoint evidence to the contrary, matters that we anticipate will 

be re-evaluated by the district court in light of the Ciarlante 

testimony and of what is said in this opinion. 
7 

between December 1, 1988 and May 24, 1989 (that figure came to 

$18,402) plus prejudgment interest (id. at *3).4

 On August 16, 1994--after the trial had ended on August 11 

but before the judge's August 15 decision was docketed and sent 

to the parties on August 18--Compass' efforts to locate 

Ciarlante, launched some months earlier, bore fruit. Its counsel 

immediately filed a Motion To Stay Issuance of Decision, or 

Vacate Decision, and Re-Open Evidence to Permit the Testimony of 

Previously Missing Witness.5 Then on August 22, after it had 

received the district court's decision, Compass filed a second 

motion--its Motion To Alter or Amend Judgment, or, Alternatively 

for New Trial, or Re-Opening of the Evidence--under Fed.R.Civ.P 

("Rule") 59(a). Compass then supported that motion with an 

affidavit from Ciarlante in which he stated what his testimony, 

if it were credited at all, would be if the Court reopened the 

evidence and allowed him to testify. 

 Suffice it to say at this point that Ciarlante's testimony, 

if it were credited at all, would have been devastating to 

Tseng's position. Among other sworn assertions that supported 

Compass' position in its entirety, Ciarlante flatly controverted 

Gibbons' testimony as to any discussions having taken place about 

Wang sales being noncommissionable (or being commissionable at a 

 

4

As reflected in the text, December 1, 1988 was the date on which 

the district court found that Tseng agreed to begin paying 

Compass a 1% commission on Wang sales. As for the May 24, 1989 

date, that came from the fact that Tseng notified Compass of the 

Agreement's termination on April 24, 1989, and Agreement ¶9 

called for any such termination to be effective 30 days later. 

5

Because of a mix-up in filing, that motion was not docketed 

until September 12, 1994. 
8 

reduced rate) and just as flatly negated the existence of the 

mysterious Addendum #1: 

29. It was in this context that the manufacturers 

representative agreement with Compass Technology, Inc., 

a copy of which is attached hereto as Exhibit C, was 

entered into in February of 1989. 

30. I prepared that contract and I dealt exclusively 

with Mr. Rheault in connection with its execution. 

31. There was never an Addendum #1 attached to the 

contract, nor was it ever intended that there would be 

an Addendum #1 attached to the contract. 

32. It was never the intent on the part of either 

Tseng or Compass that commissions on sales to Wang 

would be excluded from the contract or would be treated 

as subject to a reduced commission. 

33. One of Compass' responsibilities was to salvage 

the Wang account and develop the Wang business. Under 

those circumstances, it would have made no sense for 

Tseng to require that there be no commission paid on 

Wang sales through Compass Technology, Inc. or that 

there be a reduction of any commission earned on those 

sales. 

34. There were never any discussions within Tseng 

Laboratories, Inc. that there would be no commissions 

paid to Compass with respect to Wang sales and I was 

not instructed to include such a provision, or a 

provision calling for reduced commissions, in any 

contract, addendum or other arrangement entered into 

with Compass Technology, Inc. on behalf of Wang. 

35. I was never told that any manufacturers rep 

agreement I entered into on behalf of Tseng would have 

to be approved, initialed or countersigned by anyone, 

including John Gibbons or Jack Tseng. 

36. The form of agreement used in connection with the 

Compass Technology, Inc. contract was one I used while 

employed at Princeton Graphics and that form of 

agreement provided for an Addendum #1, which was 

occasionally used by Princeton Graphics to exclude 

certain products, not to list house accounts. 
9 

37. I have never seen an Addendum #1 in connection 

with the Compass agreement or any other manufacturers 

rep agreement entered into during my tenure at Tseng. 

 38. I was present at the breakfast meeting which took place 

on November 2, 1988 at which John Gibbons and Donald Rheault 

were present. 

39. I did not meet with Donald Rheault the night before 

that meeting to advise him that Compass Technology, Inc. 

would now be receiving a 1% commission on Wang sales, and I 

was not instructed by anyone at Tseng to have any such 

conversation with Mr. Rheault. 

40. Had such an instruction been given to me, I would 

remember it, because it would have been directly contrary to 

the arrangement which Tseng had with Compass Technology, 

Inc. for the payment of a 5% commission on sales in Compass' 

New England territory, and it would have represented a 

drastic change in what had been agreed upon, namely, that 

Compass would receive a full commission on all sales in its 

territory. 

41. There was no conversation at the breakfast meeting on 

November 2 in which Donald Rheault thanked John Gibbons for 

allowing Compass Technology, Inc. a 1% commission. Again, I 

would have a definite recollection of any such comment 

because it would have been inconsistent with what I knew to 

be the arrangement between Compass Technology, Inc. and 

Tseng, namely, that Compass was to receive a 5% commission 

on all sales in its territory, including sales to Wang. The 

breakfast meeting was to discuss protocol and the agenda of 

a meeting scheduled to take place at Wang immediately 

following breakfast. 

 On December 20, 1994 the district court denied both of 

Compass' motions, finding that Ciarlante could have been located 

earlier had Compass exercised "reasonable diligence," that 

Ciarlante's testimony about Addendum #1 would be "merely 

cumulative" and that at any rate his testimony would not change 

the outcome (1994 WL 719616). That decision tied up the last 

loose ends before the district court and set the stage for this 

appeal. 
10 

Refusal To Reopen Judgment

 We begin where the factual account has just ended--with the 

district court's rejection of Compass' motion, brought under this 

portion of Rule 59(a): 

A new trial may be granted to all or any of the parties 

and on all or part of the issues . . . in an action 

tried without a jury, for any of the reasons for which 

rehearings have heretofore been granted in suits in 

equity in the courts of the United States. 

Although that provision does not in terms speak of such relief 

being based on new evidence, Rule 60(b)(2) provides that "newly 

discovered evidence which by due diligence could not have been 

discovered in time to move for a new trial" can give rise to 

relief from a judgment or order. Rule 59 and Rule 60(b)(2) share 

the same standard for granting relief on the basis of newly 

discovered evidence (11 Charles Wright, Arthur Miller and Mary 

Kay Kane, Federal Practice and Procedure: Civil 2d § 2808, at 86 

(2d ed. 1995). 

 That standard requires that the new evidence (1) be material 

and not merely cumulative, (2) could not have been discovered 

before trial through the exercise of reasonable diligence and (3) 

would probably have changed the outcome of the trial (Bohus v. 

Beloff, 950 F.2d 919, 930 (3d Cir. 1991)). Any party requesting 

such relief "bears a heavy burden" (id., quoting Pilsco v. Union 

R. Co., 379 F.2d 15, 17 (3d Cir. 1967)). Though we consequently 

review a district court's decision in that respect for an abuse 

of discretion (cf. Olefins Trading, Inc. v. Han Yang Chem Corp., 

9 F.3d 282, 290 (3d Cir. 1993), dealing with the other side of 
11 

the coin--the erroneous admission of evidence), in this instance 

we hold that the district court did indeed abuse its discretion 

by refusing to reopen the evidence to allow Ciarlante to testify. 

 First, the district court held that Compass could have 

located Ciarlante had it exercised "reasonable diligence." But 

that determination gives insufficient credence to the affidavit 

of Compass' counsel F. Anthony Mooney ("Mooney") that accompanied 

its motion. Mooney there chronicled Compass' continuing efforts 

to locate Ciarlante, which began as soon as Mooney learned 

through discovery in the case about the vital position of 

Ciarlante as Tseng's only participant in the negotiations with 

Compass that resulted in the Agreement (as well as Ciarlante's 

having been Tseng's signatory to the Agreement). 

 Indeed, it is plain that both sides were searching for 

Ciarlante as a possible witness: When Tseng's counsel was asked 

by the district court about his whereabouts, she replied, "Heaven 

only knows. Neither party has found him." Based on Compass' 

counsel's pursuit of several possible avenues to trace 

Ciarlante's whereabouts, on counsel's ultimate success in 

locating him through the lawyer who represented Ciarlante in his 

lawsuit against Tseng (with whom Ciarlante had a falling out), 

and on counsel's immediate request to the district court to 

reopen proofs (before counsel knew that the judge had issued his 

written ruling a day earlier), it must be concluded that Compass 

made the appropriate showing of diligence.6

 

6

One matter that the district judge mentioned in ruling otherwise 

was that Compass had twice (on July 27 and August 5, 1994) 
12 

 More critically for Rule 59 purposes, the district court's 

characterization of Ciarlante's proposed testimony as "merely 

cumulative" is unacceptable. That surprising label was ascribed 

to Ciarlante's affidavit because Rheault had testified that there 

was no Addendum #1 that excluded products sold to Wang. But it 

is plainly different in both degree and kind to have such 

testimony emanating from the sole representative of Tseng in the 

negotiation and signing of the Agreement. Moreover, Ciarlante's 

affidavit expressly contradicts the testimony of Tseng's witness 

(Gibbons), who had said that such an exclusion of Wang sales had 

been intended, and other previously-quoted portions of the 

affidavit (its Paragraphs 38-41) are also wholly at odds with 

Gibbons' testimony as to the asserted post-contract negotiation 

of a lower commission rate on Wang sales. 

 We do not of course rule on which witness or witnesses are 

ultimately to be credited--that is a matter for the district 

court to decide on remand. But the point at this stage of the 

proceedings is that if Ciarlante's testimony were to be believed 

in any material respect, it could not fairly be viewed as "merely 

cumulative." One thing should be added in that regard, 

occasioned by the district court's comment (just after another 

use of the term "merely cumulative") that Tseng would challenge 

Ciarlante's credibility because he had been terminated by Tseng 

 

opposed Tseng's requests to continue the trial date because 

Tseng's key witness was scheduled to be out of the country. 

Whatever else might be said on that score, of course it would be 

inappropriate to turn down Compass' motion as some sort of 

penalty for its not having consented to Tseng's request for a 

continuance. 
13 

and had later sued it for wrongful discharge. Just as this court 

does not make credibility determinations as to witnesses whom we 

have not seen and heard (else we might review district court 

credibility findings de novo, rather than according them the 

respect that we do), so it would be improper for the district 

court to consider discrediting Ciarlante sight unseen. 

 Lastly in Rule 59(a) terms, the district court ruled that 

Ciarlante's testimony would not change the outcome of the trial. 

But that is closely linked to the point we have just made. At a 

minimum such a determination cannot be made without the prior--

and impermissible--determination that Ciarlante would be 

disbelieved without ever seeing and hearing him testify. Indeed, 

even on that premise it cannot safely be said that the prior 

trial outcome should stand in any event--and that is so for other 

reasons to be discussed in the next section. 

 Our conclusion is additionally fortified by the posture of 

the case before the district court. What we have said would call 

for the granting even of a conventional Rule 59(a) (or Rule 

60(b)(2)) motion for a new trial. But that result obtains a 

fortiori where what had taken place here was a short bench trial, 

with the district court facing only the need to reassemble 

counsel (and their clients, if they desired) to hear Ciarlante 

out through direct and cross-examination, and with no need to 

recall the other witnesses to testify anew (except perhaps to 

amplify their testimony in light of Ciarlante's)--let alone any 

need to reconvene with a new jury for a full-blown rerun, as a 

new trial most often requires. 
14 

 In sum, a new trial must be ordered because of the district 

court's erroneous ruling on Compass' Rule 59(a) motion. That 

conclusion logically leads to a brief discussion of some of the 

evidentiary ground rules for that new trial, as called into 

question by this appeal. 

Evidence and Burden of Proof

 Both before the district court and before us, the litigants 

have focused their principal fire on issues of parol evidence: 

whether under Pennsylvania law (which is specified by Agreement 

¶12 to provide the rules of decision, a designation that both 

parties to this diversity-of-citizenship action have honored) it 

is proper to resort to matters outside of the Agreement itself 

that assertedly bear on the intent of the contracting parties. 

Analysis demonstrates that another aspect of Pennsylvania law 

calls for those issues to be scrutinized in conjunction with 

considering what constitutes the appropriate level of proof on 

the evidentiary issues. 

 It is of course familiar and noncontroversial doctrine that 

the fundamental object in interpreting a contract is to ascertain 

the intent of the parties (Z&L Lumber Co. of Atlasburg v. 

Nordquist, 348 Pa. Super. 580, 585, 502 A.2d 697, 699 (1985). And 

if their intent can be cleanly extracted from the clear and 

unambiguous words that the parties have used, it is equally 

conventional wisdom that they are held to those words contained 

in the contract (Mellon Bank, N.A. v. Aetna Business Credit, 619 

F.2d 1001, 1013 (3d Cir. 1980)). Those clear waters become 

murkier when an issue is raised as to a lack of clarity or a 
15 

claimed ambiguity in the contractual language--in that event the 

court "should hear the evidence presented by both parties and 

then decide whether `there is objective indicia that, from the 

linguistic reference point of the parties, the terms of the 

contract are susceptible of different meanings'" (Z&L Lumber, 348 

Pa. Super. at 586, 502 A.D. at 700, quoting Mellon Bank, 619 F.2d 

at 1011). In doing so the court must consider the words of the 

contract, the alternative meaning proffered by the challenging 

party, and the nature of the evidence that party could provide 

(Mellon Bank, 619 F.2d at 1011). It is up to the party claiming 

that an ambiguity exists to show that a contract (Metzger v. 

Clifford Realty Corp., 327 Pa. Super. 377, 388, 476 A.2d 1 

(1984): 

is reasonably or fairly susceptible of different 

constructions and is capable of being understood in 

more senses than one and is obscure in meaning through 

indefiniteness of expression or has a double meaning. 

 In this instance, Agreement ¶11 contains the conventional 

integration clause prohibiting resort to other discussions and 

agreements between the parties: 

GENERAL -- This Agreement contains the entire 

understanding of the parties, shall supersede any other 

oral or written agreements, and shall be binding upon 

and inure to the benefit of the parties' successors and 

assigns. It may not be modified in any way without the 

written consent of both parties. 

Nonetheless the Agreement itself poses an obvious question on its 

face: Does the reference in Paragraph 3 of the standard form 

Agreement to "Addendum #1, attached hereto" match up with an 

actual document, or is it simply a part of that standard form 
16 

that has no real significance (in somewhat the same way that, for 

example, a printed standard form of real estate contract may 

often contain a boilerplate reference "See also rider(s) 

attached" whether or not a particular contract has any riders at 

all)? And that basic question subsumes a whole set of such 

subsidiary questions as: 

 Is it likely that if an Addendum #1--containing a special 

 provision as to Tseng's single largest account 

(Wang)--had in fact existed and had been 

"attached," neither contracting party would have 

anywhere in its possession any Agreement other than 

the version that was wholly lacking in any Addendum 

#1 or any other attachment? 

 Is it likely that if an Addendum #1 had in fact existed, it 

 would have contained a provision dealing, not 

with some exception to Tseng's "products" that were 

to be sold by Compass ("products" are, after all, 

the subject to which the reference to any such 

addendum in Agreement ¶3 relates), but rather with 

a claimed exception to the totality of Tseng's 

customers to whom commissionable sales were to be 

made? 

 In the same respect, is it likely that if an Addendum #1 had 

 in fact existed, no further explanatory 

reference to the subject matter of that addendum 

would have been inserted in the space following the 
17 

colon in Agreement #3, rather than the parties 

having left that space totally blank? 

 As a variant on those last two questions, is it likely 

 that if an Addendum #1 had in fact existed, and 

had dealt with an exception to the flat 5% 

commission rate prescribed in Agreement ¶4, no 

exception to that rate (or at least no crossreference to Addendum #1) would have been referred 

to in the Agreement's blank space that immediately 

followed that printed Agreement ¶4? 

 There may be other questions that bear on the issue, and we 

do not suggest the answers to any of them (again that is 

something for the trier of fact)--but clearly all of those 

matters call for the district court to do more than to limit 

itself in terms of the sometime arcane questions of what 

separates "patent" from "latent" ambiguities (see Metzger, 327 

Penn. Super. at 386, 476 A.2d at 5) or of what constitutes an 

"internal" as contrasted with an "external" ambiguity. Certainly 

the potential tyranny of such labels made it appropriate for the 

district court to have considered the testimony of Gibbons as to 

the alleged content of a meeting between the parties that took 

place well after the Agreement was entered into. And with that 

testimony before the trier of fact, it was just as plainly 

necessary for the district court to consider the testimony of 

Ciarlante that directly challenged Gibbons' statement as to the 

holding of any meeting having the content to which Gibbons 

testified. 
18 

 But to return to the point of beginning, the central focus 

of the parties' dispute is clearly on the question whether or not 

Addendum #1 truly existed--a question that bears not only on the 

meaning of the Agreement to begin with but also on whether the 

testimony of Gibbons or Ciarlante as to the claimed postAgreement negotiation is to be credited. Because Tseng bears the 

burden of proving the existence of an ambiguity (under Metzger

and like cases), and because it hangs its ambiguity argument on 

an addendum that the parties do not agree even exists and that 

Tseng cannot produce, this case bears a substantial resemblance 

to the "lost instrument" issue that arises from time to time in 

contract cases. And in that context the Pennsylvania courts have 

imposed a stringent standard of proof on the party that seeks to 

rely on a document that it cannot produce. 

 Thus the plaintiff in Hacker v. Price, 166 Pa. Super. 404, 

407, 71 A.2d 851, 853 (1950) claimed that a written agreement 

gave him the right to purchase three shares of stock. Although 

the original Agreement was lost, plaintiff was allowed to 

introduce secondary evidence to show the content of the agreement 

and was ultimately successful in forcing specific performance. In 

affirming that decision, the Pennsylvania Superior Court set out 

the following requirements for recovering on a lost instrument 

(id., citations omitted): 

To recover on an instrument, the original of which has 

been lost, the burden of proving the loss of the 

original and that a diligent, bona fide and thorough 

search was made without success is upon the one 

offering secondary evidence. He is also required to 

prove its former existence, execution, delivery and 

contents. The evidence to sustain these averments must 
19 

be clear and convincing. Whether the party offering 

secondary evidence has met this burden of proof 

successfully is a matter to be determined by the trial 

Court and rests largely in the Court's discretion which 

will not be disturbed on appeal unless there is a 

manifest abuse thereof. 

That "clear and convincing evidence" requirement echoes 

established Pennsylvania doctrine. See, e.g., Mahoney v. 

Collman, 293 Pa. 478, 482, 143 A. 186, 187 (1928) (imposing a 

"very heavy burden" on the party seeking to rely on a lost 

instrument, as well as announcing the "clear and convincing" 

evidentiary standard); In re Greggerson's Estate 344 Pa. Super. 

498, 500-01, 25 A.2d 711, 713 (1942) (following Mahoney). 

 We recognize of course that those Pennsylvania cases have 

dealt with the "lost instrument" approach in a somewhat different 

context, applying it to plaintiffs who attempt to recover on such 

a missing document, rather than to a defendant who needs to prove 

such a document to satisfy its burden of establishing an 

ambiguity (in that respect only Haagen v. Patton, 193 Pa. Super. 

186, 190, 164 A.2d 33, 34-35 (1960) is factually parallel to this 

case, and that opinion had no occasion to discuss the required 

standard of proof). Accordingly we do not opine on the level of 

proof to be applied by the district court on remand. Instead we 

leave it to that court to determine in the first instance whether 

the same considerations that have called for the higher "clear 

and convincing" standard of proof in the Pennsylvania "lost 

document" cases apply with like force to the situation involved 

in this case. 

Conclusion
20 

 On remand, then, the district court is required to hear and 

consider the testimony of Ciarlante as to all of the matters 

dealt with in his affidavit. And in the district court's 

reconsideration of all of the evidence in light of that 

testimony, it should give consideration to whether Tseng's burden 

of proving: 

 1. that Addendum #1 existed; 

 2. that the claimed addendum could not be found after 

a bona fide search; and 

 3. that Addendum #1 excluded sales to Wang from the 

across-the-board 5% commission provision set out in 

Agreement ¶4; 

should be scrutinized through a more demanding "clear and 

convincing evidence" lens. We reverse and remand the case for 

proceedings consistent with this opinion. 

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