UNPUBLISHED

UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 

No. 07-1820

In Re: BNX SYSTEMS CORPORATION, 

 Debtor. 

----------------------------------- 

BNX SYSTEMS CORPORATION, 

 Plaintiff – Appellee, 

 v. 

WORLDWIDE INVESTIGATIONS AND RESEARCH, INCORPORATED, 

 Defendant – Appellant, 

 and 

JOHN NARDOLILLI, 

 Defendant. 

Appeal from the United States District Court for the Eastern 

District of Virginia, at Alexandria. Claude M. Hilton, Senior 

District Judge. (1:07-cv-00494-CMH; BK-05-15902-RGM; AP-06-

01141-RGM) 

Argued: December 3, 2008 Decided: February 3, 2009 

Before WILKINSON, DUNCAN, and AGEE, Circuit Judges. 

Affirmed by unpublished per curiam opinion. 
ARGUED: Steven Ellison, BROAD & CASSEL, West Palm Beach, 

Florida, for Appellant. Kevin M. O’Donnell, HENRY, O’DONNELL, 

DAHNKE & WALTHER, P.C., Fairfax, Virginia, for Appellee. ON 

BRIEF: Stephen C. Piepgrass, TROUTMAN & SANDERS, L.L.P., 

Richmond, Virginia, for Appellant. 

Unpublished opinions are not binding precedent in this circuit. 

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PER CURIAM: 

 The issue in this case is whether parol evidence may be 

offered to prove a term not expressly stated in an integrated 

contract. The bankruptcy court and district court declined to 

admit the evidence. We affirm. 

I. 

 The parties in this case, BNX Systems Corporation (“BNX”) 

and Worldwide Investigations and Research, Inc. (“Worldwide”), 

jointly submitted two proposals to provide computer based 

authentication services to Citibank. While Citibank considered 

their proposals, Worldwide and BNX engaged in lengthy 

negotiations over how to distribute the possible Citibank 

revenues amongst themselves. During these discussions, on March 

22, 2002, they signed a written Memorandum of Understanding 

(“MOU”) which provided an intended distribution of estimated 

software, services, training, and maintenance revenues. 

 Months later, on December 10, 2002, Citibank accepted one 

of their proposed projects and agreed to purchase software 

licenses and services from BNX and Worldwide in the “Agreement 

for Citipass.” Soon thereafter, on December 26, 2002, BNX and 

Worldwide executed the contract at issue in this case: the 

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Disbursal of Proceeds Agreement (“DPA”).* The DPA provided a 

detailed “Split Schedule” allocating the estimated revenues from 

the Citipass project, and it expressly superseded BNX’s and 

Worldwide’s prior negotiations. 

 BNX and Worldwide each provided services to Citibank 

pursuant to the Agreement for Citipass. They split the Citipass 

revenues in accordance with the DPA: each party received its 

percentage of software revenues and was paid for the 

professional services that it individually provided to Citibank. 

BNX, however, did not become profitable. On December 8, 2005, 

BNX filed for protection under Chapter 11 of the Bankruptcy Code 

in the U.S. Bankruptcy Court for the Eastern District of 

Virginia. 

 During the course of the bankruptcy proceedings, Worldwide 

filed various proofs of claim against BNX. At issue in this 

appeal is proof of claim #17 where Worldwide claimed it was owed 

$1,625,294.29 pursuant to an agreement between the parties that 

Worldwide would receive 15% of all fees for professional 

services rendered by BNX as a commission (or override) for 

Worldwide’s role in securing the deal –- a sort of finder’s fee. 

Worldwide admitted that the 15% override was not expressly 

 *

 The DPA states that it “is made as of this 13th day of 

December, 2002,” but Worldwide’s CEO testified, and BNX agrees, 

that it was not signed until December 26, 2002. 

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stated in the DPA, but sought to prove that the parties had 

agreed to the override by presenting the following extrinsic 

evidence: statements made by BNX officials, various email 

exchanges between the parties, and the MOU which provided that 

Worldwide’s professional services fees would equal 15% of BNX’s 

fees. 

 The bankruptcy court ruled that this extrinsic evidence was 

inadmissible under the parol evidence rule because the terms of 

the DPA were clear, they did not include a 15% override for 

Worldwide, and the DPA was an integrated agreement. The court 

therefore granted summary judgment to BNX on claim #17. 

Worldwide appealed to the U.S. District Court for the Eastern 

District of Virginia which affirmed “on the sound reasoning” of 

the bankruptcy court. JA 628. Worldwide appeals the district 

court’s decision, and we review the grant of summary judgment de 

novo. See In re French, 499 F.3d 345, 351 (4th Cir. 2007). 

II. 

 Virginia law governs the DPA by express provision in the 

agreement. The Virginia Supreme Court has emphasized that the 

parol evidence rule “has nowhere been more strictly adhered to 

in its integrity than in Virginia.” Jim Carpenter Co. v. Potts, 

495 S.E.2d 828, 832 (Va. 1998) (quoting Pulaski Nat’l Bank v. 

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Harrell, 123 S.E.2d 382, 387 (Va. 1962)). In explaining the 

parol evidence rule the court stated: 

In Virginia, no general rule seems to be better 

settled than that, in controversies between two 

parties to a contract, parol evidence of prior or 

contemporaneous oral negotiations or stipulations is 

inadmissible to vary, contradict, add to, or explain 

the terms of a complete, unambiguous, unconditional, 

written instrument. 

Godwin v. Kerns, 17 S.E.2d 410, 412 (Va. 1941); see also Va. 

Elec. and Power Co. v. N. Va. Reg’l Park Auth., 618 S.E.2d 323, 

326-27 (Va. 2005) (quoting Godwin). 

 This rule prohibits exactly what Worldwide attempts to do 

here. Worldwide seeks to admit evidence of negotiations that 

took place prior to the execution of the DPA to prove that it is 

entitled to 15% of BNX’s professional services fees as an 

override. This evidence is inadmissible. 

 By its own terms, the DPA is a complete and integrated 

written agreement: it “contains the entire agreement among the 

Parties relating to the subject matter herein” and supersedes 

prior negotiations “including without limitation the MOU.” The 

alleged 15% override is nowhere to be found in the DPA. As 

BNX’s counsel put it, “[the DPA] does not make that specific 

statement,” and “the document does not say on its face this 

particular language.” Supplemental JA 24. 

 In fact, the alleged 15% override directly contradicts the 

unambiguous terms of the DPA. With respect to the allocation of 

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professional services fees, the DPA provides that each party 

will receive a “professional services prepayment” due when the 

agreement is executed and states: 

Each Party will then have their professional services 

hours approved by Citibank. [BNX] will be the billing 

party and each Party will be compensated for approved 

hours at the actual amount billed, less a credit for 

their prepayment amount above, as follows: [lists 

daily rates for various professional services] 

Worldwide’s claimed 15% override contradicts the clear statement 

that “each party will be compensated for approved hours at the 

actual amount billed.” 

 Worldwide argues that this allocation of professional 

services fees is ambiguous and therefore the evidence is 

admissible to explain its meaning. See, e.g., Prospect Dev. Co. 

v. Bershader, 515 S.E.2d 291, 296 (Va. 1999) (an integration 

clause does not bar parol evidence to explain ambiguities in a 

contract). This is simply an attempt to create ambiguity where 

none exists. The attempt fails because the provision has a 

plain meaning and “[p]arol evidence cannot be used to first 

create an ambiguity and then remove it.” Cohan v. Thurston, 292 

S.E.2d 45, 46 (Va. 1982). Moreover, Worldwide’s claim that this 

contract term is ambiguous is belied by the fact that Worldwide 

itself performed in accordance with the plain meaning of the 

contract, rather than the meaning it now asserts. Worldwide 

claims the MOU represents the true agreement between the 

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parties, but Worldwide did not share its professional services 

fees with BNX as it would have been required to do under the 

distribution percentages embodied in the MOU. The proffered 

evidence is therefore inadmissible to prove the claimed 15% 

override because it contradicts the unambiguous terms of the 

DPA. 

 Worldwide argues that the evidence is admissible to explain 

various other ambiguities that it identifies in the DPA. These 

arguments fail because even when a contract is ambiguous, parol 

evidence is not admissible to “contradict or vary the terms” of 

the written contract. Prospect Dev. Co., 515 S.E.2d at 296. To 

cover its bases, Worldwide also argues that the evidence is 

admissible under all of the other exceptions to the parol 

evidence rule listed in Shevel’s, Inc. v. Southeastern 

Associates, Inc., 320 S.E.2d 339, 343 (Va. 1984). These claims 

also fail. First, even if the exceptions for partially 

integrated agreements or independent collateral agreements 

applied, the evidence would not be admissible because these 

exceptions do not allow parol evidence that is “inconsistent 

with the written contract” or that would “contradict or vary” 

the terms of the contract. Id. Second, the evidence is not 

admissible under the exceptions for fraud or mistake because 

there is not sufficient evidence to support a finding of fraud 

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or mistake. Moreover, Worldwide did not raise the issue of 

fraud in its original proof of claim. 

 For these reasons, the judgment of the district court is 

AFFIRMED.