2005 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-4-2005

Pro Spice Inc v. Omni Trade Grp Inc

Precedential or Non-Precedential: Non-Precedential

Docket No. 03-4556

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Recommended Citation

"Pro Spice Inc v. Omni Trade Grp Inc" (2005). 2005 Decisions. Paper 1586.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 03-4556 / 04-1450 / 04-1609

 

PRO SPICE, INC.,

Appellants (03-4556 and 04-1450)

v.

OMNI TRADE GROUP, INC.;

SHANK’S EXTRACTS, INC.;

YORK IMPORT & EXPORT, INC.;

ANDYAN RAHARDJA,

Appellants (04-1609)

 

Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil Action No. 01-cv-01661)

District Judge: Honorable Ronald L. Buckwalter

 

Argued December 6, 2004

Before: AMBRO, and VAN ANTWERPEN, Circuit Judges

SHADUR*, District Judge

(Opinion filed: January 4, 2005)

 

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

of Illinois, sitting by designation.
2

Jonathan L. Swichar, Esquire

Duane Morris

1650 Market Street

One Liberty Place, 37th Floor

Philadelphia, PA 19103-7396

Steven M. Richman, Esquire (Argued)

Duane Morris

100 College Road West, Suite 100

Princeton, NJ 08540

Attorneys for Appellant/

Cross Appellee

Eric A. Savage, Esquire (Argued)

Gary S. Prish, Esquire

Littler Mendelson

One Gateway Center

Third Floor

Newark, NJ 07102

Attorneys for Appellee/

Cross Appellant

 

OPINION

 

AMBRO, Circuit Judge

Because we write solely for the benefit of the parties, we do not recount the

voluminous facts giving rise to this appeal. We note merely that the underlying dispute

involves an alleged agreement for the sale of vanilla beans to Pro Spice, Inc. (“Pro

Spice”) by Omni Trade Group, Inc. (“Omni”). On appeal, Pro Spice argues that the

District Court erred i) by concluding that no enforceable contract existed and ii) by
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entering judgment against Pro Spice on its related fraud claim. A third issue lies in both

parties’ challenge of the District Court’s award of discovery sanctions against Omni. For

the reasons set forth below, we reject the parties’ arguments and affirm all appealed

orders of the District Court.

The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1332. We review

its final orders pursuant to 28 U.S.C. § 1291.

I. Breach of Contract Claim.

The District Court rejected the breach of contract claim of Pro Spice because it

failed to demonstrate that an enforceable contract existed. We assess this conclusion

under a mixed standard of review.

The district court’s factual findings, especially with respect to the parties’

intentions, will not be reversed unless the record demonstrates that they

are clearly erroneous. Similarly, the interpretation of contractual language

to discern contractual intent is a factual question, which we will

accordingly review under a clearly erroneous standard. Conclusions

drawn with respect to the legal effect of any agreement, however, are

questions of law and therefore subject to plenary review.

ATACS Corp. v. Trans World Communications, Inc., 155 F.3d 659, 665 (3d Cir. 1998)

(citations omitted). The relevant portions of the District Court’s opinion assess the

parties’ contractual intent, including an interpretation of the documentary evidence in

order to discern that intent and an evaluation of witness testimony. For this reason, the

pertinent aspects of the District Court’s opinion are entitled to the deference accorded a

fact finder, reversible only if clearly erroneous.
4

Under this deferential standard, we find no reason to disturb the District Court’s

conclusion that the critical December 3, 1999 letter from Omni was not an offer, but

merely “a quotation of prices for beans based upon availability.” Pro Spice, Inc. v. Omni

Trade Group, Inc., 2003 WL 22477862, *4 (E.D. Pa. Oct 31, 2003). The District Court

properly based this conclusion on its assessment of the parties’ intent after a detailed

review of the evidence and testimony presented. Though it vigorously disputes the

conclusion reached, Pro Spice fails to offer a compelling argument that the conclusion

was clearly erroneous, and we discern no such error upon our own review.

Even assuming that the December 3 letter was an offer susceptible to a binding

acceptance, Omni’s subsequent December 6, 1999 letter revoked that offer by replacing it

with a new offer. At oral argument, counsel for Pro Spice argued that Omni’s December

6 letter had no legal effect on its December 3 “offer” because it did not alter any of the

material terms of the proposed bargain. This argument underwhelms, as the December 6

letter presented new terms of delivery and, most notably, a higher price for the vanilla

beans listed. Thus, even if Omni’s December 3 letter was an offer, it was revoked before

it was accepted, and no contract existed between the parties.

Lastly, we note that Pro Spice’s reliance on 13 Pa. C.S.A. § 2201(b) is both

misplaced and misleading. Part of Pennsylvania’s codification of the Uniform

Commercial Code, that provision provides an exception to the statute of frauds’ writing

requirement for agreements between merchants when the merchant alleging breach has
 

1

 To construe the statute as Pro Spice proposes produces absurd results. If the statute

provided a basis for the formation of a contract, a merchant could, for example, simply

send written “confirmations” of highly advantageous agreements to other merchants and

sue those failing to object timely to the “confirmations” for enforcement of the contracts

“deemed to exist” under the statute.

5

provided a written confirmation of a prior agreement to its counterpart, and the other

merchant in turn fails to object to the written confirmation in a timely fashion. This

exception to the statute of frauds does not halt the complaining party’s duty to show that

an agreement was formed—that is, that there was a “meeting of the minds.” It simply

enables the party alleging breach of an existing contract to overcome the statute of frauds’

writing requirement. Pro Spice’s contention that under this provision “a contract will be

deemed to exist unless the merchant provides a written objection,” Appellant Br. at 28

(emphasis added), presupposes a conclusion (a contract) that is instead a precondition to

applying § 2201(b).1 Accord U.C.C. § 2-201 cmt. 3 (1995) (explaining that “[t]he only

effect [of § 2-202] . . . is to take away from the party who fails to answer [the

confirmation] the defense of the Statute of Frauds; the burden of persuading . . . that a

contract was in fact made orally prior to the written confirmation is unaffected”)

(emphasis added).

Because no contract existed, Pro Spice’s breach claim must fail.

II. Fraud Claim.

Accepting the District Court’s factual findings dooms Pro Spice’s fraud claim as

well. Most significantly, the District Court concluded that Pro Spice, through its agent
6

Pallone, “knew well that there was not mutual meeting of the minds.” Pro Spice, 2003

WL at *5. Because Pro Spice knew there was no contract, by definition it cannot

establish that it was fraudulently induced to agree. Moreover, the District Court found

that Omni’s representations about beans for sale were all “based on availability,”

undermining Pro Spice’s contention that actionable misrepresentations were made. Id.

Lastly, the District Court’s finding that Omni lacked intent to extend an offer undermines

Pro Spice’s argument that Omni acted in bad faith or with an intent to defraud. As we

know of no reason to disturb those findings, they stand, leaving Pro Spice’s claim of

fraud bereft of support.

III. Propriety of Sanctions.

Both parties argue that the District Court abused its discretion in imposing $1,500

in sanctions against Omni for its discovery abuses. Pro Spice argues that the District

Court should have imposed a greater sanction award, while Omni argues that no award of

sanctions was legally authorized. We quickly dispense with these cross-claims.

Both parties argue, inter alia, that the District Court awarded sanctions under

Federal Rule of Civil Procedure 37(b)(2), which provides that “[i]f a party . . . fails to

obey an order to provide or permit discovery, . . . the court in which the action is pending

may make such orders in regard to the failure as are just.” The Rule further provides that

“the court shall require the party failing to obey the order or the attorney advising that

party or both to pay the reasonable expenses, including attorney’s fees, caused by the
7

failure, unless the court finds that . . . award of expenses unjust.” Id. (emphasis added). 

After describing a “history of [Omni's] not responding timely [to discovery

requests] requiring court intervention,” the District Court concluded that this lack of

diligence was “precisely what happened again in the motion [for sanctions] before the

court.” Pro Spice, Inc. v. Omni Trade Group, Inc., 2003 WL 23018786, *2 (E.D. Pa.,

Dec 16, 2003). After subsequently reviewing evidence submitted by the parties, the

District Court concluded that $1,500 represented the reasonable expenses caused by

Omni’s (in)action. Pro Spice, Inc. v. Omni Trade Group, Inc., 2004 WL 286869, *1

(E.D. Pa., Feb 11, 2004). It appears that the Court determined that Omni’s discovery

abuses ran afoul of Rule 37(b)(2), a sanction was required, but the minimum was

assessed. This falls well within the expansive discretion accorded the Court by Rule 37.

IV. Conclusion.

For the reasons described above, we reject all of the arguments presented in Pro

Spice’s appeal and Omni’s cross-appeal and affirm the judgments of the District Court.