* Pursuant to 5 TH C IR

. R. 47.5, the court has determined that this opinion

should n ot be published and is not precedent except under the limited circumstances

set forth in 5 TH C IR

. R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

No. 97-40010

Summary Calendar

_______________

W.G. PETTIGREW COMPANY

and

PETTIGREW DISTRIBUTING COMPANY, INCORPORATED,

Plaintiffs-Appellants,

VERSUS

BORDEN, INC.,

Defendant-Appellee.

_________________________

Appeal from the United States District Court

for the Southern District of Texas

(G-95-CV-147)

_________________________

September 8, 1997

Before JONES, SMITH, and STEWART, Circuit Judges.

JERRY E. SMITH, Circuit Judge: *

W.G. Pettigrew Distributing Company (“WG”) and Pettigrew

Distributing Com pany, Inc. (“PDI”), appeal a summary judgment in

their lawsuit asserting breach of contract, predatory pricing, and

vari ous state law tort claims against Borden, Inc. (“Borden”).2

Finding no error, we affirm.

I.

Beginning in 1941 and continuing until 1995, WG worked as an

independent distributor of milk products fo r Borden, serving

customers in Braz oria, Matagorda, and Galveston Counties, Texas.

Sometime during the mid-1940's, W.G. Pettigrew hired his brother,

Delmar, to service some of his delivery routes and, in 1988, Delmar

incorporated his business as PDI. Although Borden does not dispute

that it was aware of Delmar’s servicing some of WG’s routes, it

denies that any contractual relationship existed between Borden and

either Delmar or PDI. Rather, Borden contends that at all times

Delmar (or PDI) was an employee or independent contractor of WG’s

and that Borden’s distributorship relationship was with WG only.

Although, prior to 1973, no written documents governed the

relationship between WG and Borden, the parties do not dispute the

general terms of the engagement. WG, as did the other independent

distributors, purchased milk products from Bord en at the “dock”

prices set by Borden and wo uld sell and deliver the products to

customers in areas outlying Houston. Each distributor was free to

set its own resale prices. Borden maintained records designating

routes by number, but it did not permit exclusive territorial

assignments. In addition to purchasing at dock prices, WG and the

other distributors made deliveries to customers who dealt directly

with Borden and received appropriate “hauling charges” therefor.1 PDI was not provided a copy because, according to Borden, Delmar was an

employee of WG’s.

3 From time to time, the dock prices fluctuated depending upon

the cost of raw milk and other economic factors, and WG’s accounts

were credited varying amounts for “returns” (e.g., broken bottles,

leakages, and spoiled milk). Borden offered WG and the other

d istributors periodic rebates and allowances to keep Borden

products competitive.

In May 1973, Borden s ent a memorandum to WG and the other

distributors 1 outlining new Borden policies effected in the wake of

the Texas Railroad Commission’s promul gation of rules on intercounty sales and transactions. Among other things, the memorandum

states that Borden would (1) eliminate hauling charges associated

with its dire ct-deal customers and instead have the distributors

themselves conduct business directly with such cust omers and

(2) continue to accept returns for defective merchandise, spoils,

and leakers and to pay an advertising and display allowance to

participating distributo rs. The memorandum was never signed or

executed in any manner by WG, nor does it contain any contract

terms governing its duration, modification, or enforcement.

Following the distribution of the memorandum, Borden and WG

continued to operate much as they had in the previous thirty-two

years. Dock prices continued to vary, as did the amount of

financial assistance an d credits provided WG and the other

distributors. Nonetheless, WG (and Delmar) continued to distribute4

Borden products pursuant to the promulgated dock prices and other

financial policies.

Beginning in 1988, Borden began to re-institute its practice

of dealing directly with certain customers and paying hauling fees

to distributors who delivered to such customers. As a result, in

1991 Borden began competing against WG and PDI for retail and

grocery store accounts and began reducing the various credits and

adjustments provided previously.

WG and PDI continued to operate under this arrangement until

late 1994, when Borden advised them that it intended to terminate

virtually all of the financial assistance. Borden also announced

that hauling fees would be standardized at $.50 per case for “drop

shipments” and $1.60 per case for full service shipments. These

new arrangements did not affect t he distributors’ abilities to

negotiate resale prices with any customers to whom they sold

directly.

WG objected to these proposed changes and asked Borden to

purchase its entire distributorship business or its haul accounts

only. Borden declined this offer but agreed to provide financial

assistance to WG in the form of a flat payment of $3,800 per week

plus an allowance of one percent of gross sales for returned

merchandise. The flat payment was made retroactive to July 1994,

whereas th e returned merchandise credit was made retroactive to

October 1994. WG accepted this offer, which was memorialized in a1 WG in fact proposed on November 15, 1994, an amendment to the returned

merchandise credit, but Borden refused this amendment. The parties continued

operating pursuant to the terms of the November 11 letter.

5 November 11, 1994, letter agreement from Borden to WG. 1

WG operated under this letter agreement until notifying Borden

in December 1994 of its intention to terminate the distributorship

effective January 15, 1995. According to WG, as a result of the

direct competition with Borden and the various financial changes

made by Borden, the distribut orship had become unprofitable.

Subsequent to WG’s notice of termination, Delmar contacted Borden

and asked that PDI be designated an independent distributor of

Borden’s. Borden declined, and PDI became a distributor for

Land O’ Pines, a Borden competitor, within days of WG’s effective

date of termination.

II.

WG and PDI filed the instant action in March 1995 alleging

breach of contract, predatory pricing, and various state law torts.

Upon motion from Borden, the district court gr anted summary

judgment on all claims presented to it and not dismissed

voluntarily by WG and PDI. On appeal, the plaintiffs present only

the breach of contract issue.

III.

We review a grant of summary judgment de novo

. See Hanks v.3 The parties dispute whether PDI (or Delmar) was a distributor of Borden’s

or merely an employee or independent contractor of WG’s. Although there is

conflicting evidence on this point, we need not resolve this conflict to dispose

of this case. Rather, because it does not affect our ultimate disposition, we

assume arguendo that PDI was a distributors of Bo rden’s, subject to the same

contractual agreement that governed the WG-Borden relationship.

4 Farah v. Mafrige & Kormanik, P.C.

, 927 S.W.2d 663, 678 (Tex. App. SS Houston

1996, no writ) (citing Clear Lake City Water Auth. v. Clear Lake Util. Co.

, 549

(continued...)

6 Transcontinental Gas Pipe Line Corp. , 953 F.2d 996, 997 (5th Cir.

1992). Summary judgment is appropriate “if the pleadings,

depositions, answers to i nterrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law.” F ED

. R. C IV

. P. 56(c).

WG and PDI allege that the 1973 memo created a contractual

distributorship relationship with Borden and that the memo’s terms

governed the relationship. According to the plaintiffs, Borden

breached this contract by, among other things, discontinuing

certain payments to the distributors, reinstituting its practice of

negotiating directly with certain customers and paying hauling fees

only to distributors who se rviced these customers, and reducing

credits for returned merchandise and spoilage.

Assuming arguendo that the 1973 memo created some type of

c ontractual relationship between Borden and WG and PDI, we agree

with Borden that any such contract was terminable at will. 3 “A

contract that contemplates continuing performance and is indefinite

in duration can be terminated at the will of either party.” 44 (...continued)

S.W.2d 385, 390 (Tex. 1977)); T EX

. B US

. & C OMM

. C ODE A NN . § 2.309(b) (West 1994).

5 See, e.g.

, Morgan v. Jack Brown Cleaners, Inc.

, 764 S.W.2d 825, 826 (Tex.

App. SS Austin 1989, writ denied) (noting that the parties to an at-will contract may

modify the contract period by orally vitiating its at-will nature.

7 It is undisputed that the 1973 memo contains no term of

duration, nor do WG and PDI allege that anyone at Borden ever

indicated to them o rally that their distributorships would exist

for any specified period of time. 5 WG and PDI aver in their

affidavits, however, that it was their belief that a Borden

distributor could not be terminated unless Borden had a good reason

to do so. According to the plaintiffs, this belief was based upon

their observations SS gleaned during their tenure as Borden

distributors SS that the only distributors who were termina ted were

those with drinking or financial problems. WG and PDI also proffer

the testimony of Darrell Joslin, the former com ptroller for

Borden’s Houston and Conroe facilities, who indicates that he was

not aware of any distributorships’ having been terminated without

reason. Joslin also testified that he was not aware of any

restriction s on Borden’s ability to terminate a distributorship,

but believed that it was Borden’s practice not to do so without

cause.

This evidence is insufficient to create a fact issue

concerning the at-will nature of the distributorship contract. WG

and PDI do not point to any oral or written communications that

alter t he presumptive at-will nature of a contract of indefinite8

duration contemplating continuing performance. Rather, they rely

solely upon their subjective b eliefs, informed by their

observations of the course of dealing b etween the parties.

Subjective manifestations of intent alone are not suitable indicia

of contract interpretation. S ee, e.g.

, Stern v. Wonzer

, 846 S.W.2d

939, 944 (Tex. App. SS Houston [1st Dist.] 1993, no writ.)

As an at-will contract, the distributorship could be modified

by either party as a condition to the continuation of the

relationship. S ee Hathaway v. General Mills, Inc.

, 711 S.W.2d 227,

229 (Tex. 1986). In general, when a party to an at-will contract

notifies the other of changes in the contract terms, the other must

either accept the terms or terminate the contract. S ee id. If the

party continues to perform under the contract with knowledge of the

changes made by the other party, the former is deemed, as a matter

of law, to have accepted the changes. See id.

It is uncontested that during the course of their entire,

longstanding relationship with Borden, WG and PDI had notice of all

chang es to the distributorship. An various times during the

relationship, Borden changed, among other things, the dock prices,

the return policies, and its hauling fee policies. Each time, WG

and PDI had notice of such changes and continued to deliver Borden

products pursuant to the modifications.

The same is true of each of the post-1973 changes that WG and

PDI allege constitute contract breaches: The plaintiffs were aware9

of each change and continued their employment consistent with the

changes. Given notice of the changes, the continued performance of

WG and PDI constitu ted acceptance of the new contract terms as a

matter of law. These accepted changes to the at-will

distributorship agreement thereby became incorporated into the

contract and thus do not give rise to any breach.

AFFIRMED.