* Circuit Judge of the Eighth Circuit, sitting by designation. IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 98-10838

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JOSE MENDOZA; MARALI CORP,

Plaintiffs - Appellees-Cross-Appellants,

VERSUS

COMSAT CORPORATION,

formerly known as Communications Satellite Corporation,

Defendant - Appellant-Cross-Appellee.

_________________________

Appeals from the United States District Court

for the Northern District of Texas

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February 3, 2000

Before DAVIS, JONES, and MAGILL, * Circuit Judges.

MAGILL, Circuit Judge:

The principal issue in this appeal is whether a broker can

recover an ex contractu commission on a procuring cause theory

under the prevention doctrine in the a bsence of bad faith on the

part of the seller. In this case, a written agreement between Jose

Mendoza (Mendoza) and COMSAT Corporation (COMSAT) expressly

conditioned Mendoza's right to a commission upon a sale being made

either before or within ninety days after his termination. When2

COMSAT refused to pay Mendoza a commission for a sale made nearly

one year after Mendoza's termination, Mendoza commenced the present

action against COMSAT. Despite finding that COMSAT did not breach

the covenant of good faith and fair dealing, the jury looked beyond

the written agreement and awarded Mendoza $1,000,000 be cause he

procured a ready, willing and able buyer for COMSAT's domestic

satellite system. The district court reformed the jury award to

$3,054,454.66, the amount to which Mendoza would have been entitled

to under his representative agreement had the sale occurred either

before or within ninety days after his termination.

We believe that the jury's finding that COMSAT did not breach

the covenant of good faith and fair dealing precludes recovery on

a procuring cause claim under the prevention doctrine. Thus, we

reverse and vacate the district court's order insofar as it awards

Mendoza judgment.

I.

COMSAT builds and operates satellite-based communications

systems. In its effort to recruit foreign buyers, COMSAT assigns

sales repre sentatives to territories in different parts of the

world. On April 16, 1986, COMSAT and Mendoza entered into a

representative agreement (Representative Agreement)in which Mendoza

agreed to market COMSAT's products to the Côte d'Ivoire. The

Representative Agreement expressly conditioned Mendoza's right to

a commission upon a sale being made either before or within ninety1 In relevant part, the Representative Agreement reads:

If either party terminates this Agreement in accordance

with this Article and within ninety (90) days of the termination

date sales are made in the Territory as a result of a quote made by

the Representative or [COMSAT] prior to the termination date, such

sales shall count for a commission which shall be negotiated

between the Parties involved; provided, however, that no commission

shall be due regarding sales in violation of the represent ations

set forth in Article III.

3 days after his termination. 1 On January 6, 1989, the parties

amended Mendoza's commission rate, but did not expressly abrogate

or alter the ninety-day extension period during which Mendoza would

be eligible for commissions on post-termination sales. As amended,

the Representative Agreement provided Mendoza with the right to an

8% commission for any contract awarded to COMSAT as a "direct

result" of his efforts.

Mendoza initi ated his marketing efforts by contacting the

Ivorian Minister of Post and Telegraph , Aka Bonny (Aka)in 1985.

Aka immediately ex pressed interest in acquiring a new telephone

system to enhance the prestige of his office. In October 1986, Aka

received approval to purchase two satellite earth-stations for his

department from COMSAT in the amount of $3,000,000. For his part

in these sales, Mendoza received commissions totaling $500,000.

Following these sales, Mendoza an d COMSAT focused their

efforts towards securing a contract for the sale of a domestic

satellite sys t em (Domsat system) to the Côte d'Ivoire.

Specifica lly, Mendoza and Aka orchestrated an $80,000,000 Domsat4

package with five components, including: 1) a phone system for

Aka's department, 2) a radio-based se curity network for the

Minister of Defense, 3) a national radio-television network for the

Minister of Communications, 4) a telecommunications network linking

the Côte d'Ivoire to its embassies in other West African countries,

and 5) a distribution system for foreign television in the Côte

d 'Ivoire. Much to Mendoza's chagrin, Ivorian politics and

e conomics hampered his ability to sell the Domsat project to

Ivorian officials. Despite approximately five years of effort,

Mendoza failed to persuade Ivorian officials to purchase COMSAT's

$80,000,000 Domsat package.

In June 1990, COMSAT alerted Mendoza that he was going to be

terminated for lack of progress. Upon hearing this news, Mendoza

promised progress and asked for an additional thirty days to close

the deal. COMSAT gave Mendoza an additional six months, a time

during which Mendoza admits nothing positive occurred. On October

23, 1991, COMSAT notified Mendoza by letter that the Representative

Agreement would be terminated in ninety days on January 21, 1992.

Following Mendoza's termination, COMSAT took several actions

designed to secure a sale to the Côte d'Ivoire. In May 1992,

COMSAT hired a new sales representative, Loum Diagne, an Ivorian

businessman and professor with substantial government contacts.

Next, COMSAT attempted to mute French resistance to the project by

ent ering into a strategic partnership with the French2 The Côte d'Ivoire has historically maintained very close

relations with France, having been a French colony until recently

in this century. The Côte d'Ivoire's first president, Félix

Houphouët-Boigny, negotiated independence from France on August 7,

1960, yet maintained a pro-French authoritarian regime until he

died in 1993. One office always controlled by French interests is

the Grand Traveaux, or Minister of Large Public Works. Mendoza

testified at trial that "all of Mr. Aka's work comes under the

auspices of the Grand Traveaux." In his brief, Mendoza admits that

the Grand Traveaux was an "enemy

. . . who would have preferred to

see [the] contra ct go to the French." (Appellee's Br. at 14-15)

Mendoza's concedes that Alcatel and the Grand Traveaux were closely

aligned an d determined to prevent the contract from going to

COMSAT. (Appellee's Br. at 15)

5 telecommunications giant, Alcatel. 2 In May 1992, COMSAT made a new

bid on the television distribution system, which invited the Côte

d'Ivoire to select from a radio-television "shopping list."

COMSAT's efforts succeeded in securing a sale for a much less

ambitious project than the one Mendoza marketed to Côte d'Ivoire

officials. Approximately one year after Mendoza's termination

became effective, COMSAT made a sale to the Côte d'Ivoire valued at

approximately $38,180,683.31. Mendoza was not paid a commission on

this sale.

On July 21, 1993, Mendoza brought suit against COMSAT for a

commission allegedly earned as the result of having procured a

contract for the sale of COMSAT's Domsat system. Mendoza's

complaint alleged the following causes of action: 1)breach of

c ontract, 2) breach of the implied contractual covenant of good

faith and fair dealing, 3) conspiracy to tortiously interfere with

contract, 4) procuring cause, and 5) breach of good faith and fair

dealing. The district court granted COMSAT's motion for summary6

judgment on Mendoza's claims for breach of contract and breach of

good faith and fair dealing, and submitted the remaining three

claims to the jury. The jury found that COMSAT neither breached

the implied covenant of good faith and fair dealing nor conspired

to tortiously interfere with Mendoza's contract. However, the jury

found Mendoza entitled to a commission on his procuring cause claim

and awarded him $1,000,000. The district court reformed the jury's

award to $3,054,454.66 to reflect the 8 % c ommission specified in

the Representative Agreement.

On appeal, COMSAT argues that 1) the jury's finding of

procuring cause was not s upported by sufficient evidence, 2)

recovery under the prevention doctrine is barre d by the express

terms of the parties' Representative Agreement because COMSAT did

not breach the covenant of good faith a nd fair dealing, and 3)

Mendoza's failure to move for a directed verdict on the issue of

damages prohibited the distric t court's reformation of the jury

award. Mendoza cross-appeals, arguing that the district court

erred in 1) granting COMSAT summary judgment on Mendoza's breach of

contract claim, 2) granting COMSAT summary judgment on Me ndoza's

reme dy under the Texas Sales Representative Act (TSRA), and

3)ref using to deem undenied averments contained in Mendoza's

amended complaint as admissions and grant Mendoza judgment as a

matter of law.

Because we find that the jury's finding that COMSAT did not3 The parties agreed at oral argument that the issues of

procuring cause and breach of contract are controlled by District

of Columbia law. Mendoza contends that his claims for damages

under the TSRA is controlled by Texas law.

7 breach the covenant of good faith and f air dealing precludes

recovery on a procuring cause claim under the prevention doctrine,

we reverse the decision of the district court insofar as it awards

Mendoza judgment. We do not reach the other issues COMSAT raises

on appeal. We affirm all orders and rulings from which Mendoza

cross-appeals.

II.

COMSAT's primary claim i s that the Representative Agreement

expressly precludes recovery under the common law procuring cause

principle. In short, COMSAT contends that the parties contracted

around procuring ca use by substituting a fixed ninety-day time

period during which Mendoza could receive a commission for any

post-termination sale made as a direct result of his efforts.

COMSAT argues that this condition c ontrols unless it somehow

wrongfully prevented the sale from being made within the ninety-day

time period. This case requires us to analyze the relationship

between the prevention doctrine and the procuring cause principle

under District of Columbia law. 3

Under District of Columbia law, in the absence of a

conditional contract, a broker of a sale is entitled to receive a4 District of Columbia courts have demonstrated a considerable

reluctance to interpret the terms "sell" or "sold" so as to empower

a seller with the right to defeat a broker's right to a commission

(continued...)

8 commission when the broker procures a buyer who is ready, willing

a nd able to effect the purchase on the terms stipulated by the

seller. See Dale Denton Real Estate, Inc. v. Fitzgerald , 635 A.2d

9 25, 928 (D.C. 1993) (noting that "application of the 'procur ing

cause' principle 'p resupposes the existence of a valid and

unconditional contract.'")(quoting Krebs v. Morgan , 143 A.2d 518,

519 (D.C. 1958)). Moreover, the parties' failure to consummate the

sale does not defeat the broker's right to commission "'where such

failure is attributable to the fault or misconduct of the seller .'"

Mike Palm, Inc. v. Interdonato

, 547 A.2d 1016, 1020 (D.C. 1988)

(quoting Gill v. American Security Corp. , 209 A.2d 629, 631 (D.C.

1965)) (emphasis added). The seller is entitled, however, to make

the broker's employment con tingent upon any lawful condition to

which the parties consent. S ee Fitzgerald

, 635 A.2d at 928. Thus,

in determining whether a broker is entitled to a commission for

procuring a ready, willing and able buyer, District of Columbia

courts first look to the parties' agreement for any conditions

imposed on the broker's right to a commission. S ee i d. If the

agreement contains such a condition, District of Columbia courts

look to see whether the condition was fulfilled. See id.

Parties may condition a broker's right to a commiss ion upon

consummation of sale 4

, rather than merely procuring a ready,(...continued)

because a sale was not consummated. S ee, e.g.

, Mike Palm, Inc. v.

Interdonato

, 54 7 A.2d 1016 (D.C. 1988). In I nterdonato

, for

example, the relevant provisions of the agreement provided that the

broker would "undertak[e] to find a purchaser for [the seller's

restaurant], whereupon a commission of ten percent would be paid to

the broker if the restaurant was sold ." 547 A.2d at 1018 (emphasis

added). Although the broker found a buyer who was willing to

purchase the restaurant on the seller's terms, the seller refused

to complete the sale because an unrelated prior agreement prevented

the seller from making the sale until a later date. Id. The

broker's agreement contained no mention of this alleged timeconstraint. The broker brought suit under the procuring cause

principle. The District of Columbia Court held that in the context

of listing agreements, "sell" means something less than full

consummation of transaction because the owner retains the right to

reject any offer even though it meets the terms of the agreement.

Id. at 1021.

Interdonato is distinguishable from the present case for

several reasons. First, as opposed to I nterdonato

, the parties in

this case expr essly conditioned Mendoza's right to a commission

upon a sale being made either before or within ninety-days after of

his termination. Thus, the issue is when, not if, a sale was made

to the Côte d'Ivoire. In this case, the sale was not consummated

until approximately one year after Mendoza's ninety-day extension

period expired. Second, in this case, Mendoza's testimony

indicates that he clearly understood that his right to a commission

was contingent upon a sale being consummated within the ninety-day

period. In I nterdonato

, however, the broker apparently had no idea

that a prior agreement restricted the restaurant owner's ability to

sell the restaurant before a certain time. In other words, in this

case, interpreting the term "sale" to mean ultima te consummation

does not frustrate the parties' intentions. Finally, Interdonato

was decided under a straight-forward procuring cause analysis with

no reference to the prevention doctrine. In this case, the

critical issue is whether procuring cause can come into play under

the prevention doctrine in the absence of bad faith on the part of

the seller.

9 willing and able buyer. S ee Reiman v. International Hospitalit y

Group

, 558 A.2d 1128, 1132 (D.C. 1989). In this case, the

Representative Agreement expressly conditioned Mendoza's right to

post-termination commissions upon a sale being made either before5 The parties disagree on the effe ctive date of termination.

COMSAT contends January 21, 1992 was the effective date, while

Mendoza's brief suggests that the effective date was February 15,

1992. Because the parties did not consummate the sale until nearly

one year after either alleged effective date, we find this issue

immaterial to the present appeal.

10 or within ninety days following his termination. This condition

never occurred.

On October 23, 1991, COMS AT notified Mendoza by letter that

the Representative Agreement would be terminated in ninety days on

January 21, 1992. 5 Mendoza's testimony indicates that he clearly

understood that a sale had to be made before January 21, 1992, for

him to be paid a commission. Because COMSAT did not make a sale

until approximately one year after Mendoza's ninety-day extension

period expired, Mendoza was not entitled to a commission under the

terms of the Representative Agreement.

III.

A.

The district court allowed the jury to go beyond the four

corners of the Repr esentative Agreement by submitting Mendoza's

procuring cause issue to the jury. The District of Columbia Court

of Appe als has specifically noted that "[t]he application of the

'procuring cause' principle ' presupposes the existence of a valid

an d unconditional contract

. '" D ale Denton Real Estate, Inc. v.

Fitzgerald

, 635 A.2d 925, 928 (D.C. 1993) (quoting Krebs v. Morgan

,

143 A.2d 518, 519 (D.C. 1958)) (emphasis added). This case,6 In Facchina v. Sullivan

, 109 A.2d 581 (D.C. 1954), a case

heavily relied upon by Mendoza, the District of Columbia Court of

Appeals held that the issue of good faith was immaterial to whether

a broker was entitled to a commission under the procuring cause

doctrine. Mendoza's reliance is misplaced because F acchina did not

involve an agreement where the parties consented to impose a

condition upon the broker's right to a commission.

11 however, involves a written agreement wherein the parties expressly

conditioned Mendoza's right to a commission upon a sale being made

either before or within ninety-days following his termination. In

other words, the parties replaced common law procuring cause with

a fixed time period during which Mendoza could receive a commission

for any sale made as a "direct resu lt" of his efforts. We must

decide whether this condition should control unless COMSAT acted

wrongfully to prevent its occurrence. 6

As a general rule, if a contract expressly conditions the duty

to perform upon the occurrence of a specified event, the duty to

perform does not arise until that condition occurs. The doctrine

of prevention is a well-recognized exception to this rule. This

doctrine provides that when a promisor wrongfully p revents a

condition from occurring that condition is excused. According to

the Restatement of Contracts, the prevention doctrine is subsumed

under the duty of good faith and fair dealing.

The obligor's duty [of performance] is not discharged if

occurrence of the event (a) is the result of a breach by

the obligor of his duty of good faith and fair dealing

,

or (b) could not have been prevented because of

impracticability and continuance of the duty do es not

subject the obligor to a materially increased burden.

Restatement (Second) Contracts § 230 (1979) (emphasis added). The12

Restatement view is consistent with District of Columbia law. S ee

R eiman v. International Hospitality Group , 558 A.2d 1128, 1132

(D.C. 1989). In R eiman

, the District of Columbia Court of Appeals

suggested that wrongful conduct, as opposed to some less culpable

form of fault, is a prerequisite to application of the prevention

doctrine:

Although the party who promises to pay the broker's

commission can make its performance contingent upon the

consummation of the sale between the seller and the

buyer, or any other lawful condition to which the parties

agree if the promisor wrongfully prevents the occurrence

of that condition, then the condition is excused.

Id. (emphasis added). Using slightly different language, District

of Columbia courts have similarly observed that "if the failure to

fulfill a condition is attributable to the fault or misconduct of

the seller, then the broker may be entitled to a commission

provided he can show that he was the procuring cause of the sale."

Fitzgerald , 635 A.2d at 928 (emphasis added).

Mendoza argues that a showing of bad faith is not required to

trigger application of the prevention doctrine under District of

Columbia law. We are not persuaded. Before a broker can escape

the express conditions of a contract, the broker must prove that

the seller acted wrongfully to prevent the broker from receiving a

commission under the terms of a contract

. See id. ; Reiman

, 558

A.2d at 1132. In other words, the jury should not have been

allowed to consider common law procuring cause unless it first

fou nd that COMSAT wrongfully denied Mendoza a commission by7 Mendoza appeals the district court's grant ing of summary

judgment on his breach of contract clai m. We find this appeal

m eritless and affirm the district court's grant of summa r y

judgment.

13 preventing a contractual condition from occurring.

B.

Af ter dismissing Mendoza's breach of contract claim, 7 the

district court sub mitted Mendoza's procuring cause claim to the

jury. The district court first instructed the jury as follows:

The law implies a duty of good faith and fair

dealing in the contract between the defendant COMSAT and

plaintiffs Jose Mendoza and MarAli Corporation. . . .

This duty of good faith and fair dealing prevents a party

from evading the spirit of the contra ct, willfully

rendering imperfect performance, or interfering with the

other party's performance.

You may find a breach of the duty of good faith and

fair dealing under the above definition if you find that

either of the following occurred:

1. if COMSAT terminated Plaintiffs' representative

contract for the purpose of depriving Plaintiffs of

commissions for work already done; or

2. if COMSAT intentionally delayed in making a sale

to the Ivory Coast or agreed to a lapse in negotiations

with the Ivory Coast with the intent that the sale occur

after Plaintiffs' right to a commission under the terms

of the contract had expired.

The district court bundled this instruction with a definition

of "procuring cause" and instructed the jury that it could consider

the procuring cause issue only if it found that Mendoza breached

the duty of good faith and fair dealing. The jury found that

COMSAT did not breach this duty.

In a completely separate instruction, the district court8 W e reject Mendoza's argument that the terms "hinder ed or

prevented" should be interpreted to mean some form of "wrongful

conduct." The terms "hindered or prevented" can also encompass

completely innocent behavior insufficient to trigger application of

the prevention doctrine.

14 instructed the jury that it could find in favor of Mendoza under

the procuring cause doctrine regardless of whether COMSAT acted in

bad faith to prevent Mendoza from receiving a commission under the

terms of the Representative Agreement: 8

Under the doctrine of procuring cause, sales

representatives are entitled to commissions even after

their representative co ntracts expire if they were the

procuring cause of a sale that was ultimately consummated

and if the seller hindered or prevented the consummation

of the sale prior to the termination of the

representative contract.

COMSAT argues that the district court erred in giving this

instruction. We agree. In this case, the jury specifically found

that COMSAT did not violate its duty of good fa ith and fair

dealing. Under both the Restatement and District of Columbia law,

an opposite finding is necessary before a broker can disregard

conditions clearly expressed in t he representative agreement and

recover an ex contractu commission.

III.

For the foregoing reasons, we reverse and vacate the judgment

below insofar as it awards Mendoza judgment on his procuring cause

claim. Based on our decision, we need not reach the other issues

COMSAT raises on appeal. After careful consideration of the issues

Mendoza raises in his cross-appeal, we affirm the district court's15

rulings in their entirety without further comment.