1 Phillip and John Cockerham are partners in Hamilton Gravel

Company. Phillip and John's father, John Cockerham, Sr., was to

supply financial assistance to his sons. The district court

concluded that a joint venture existed and ordered that John Sr.

be made a party.

1 United States Court of Appeals,

Fifth Circuit.

No. 93-7661.

Phillip COCKERHAM, John A. Cockerham, Jr. and John Cockerham,

Sr., Plaintiffs-Appellants,

v.

KERR-McGEE CHEMICAL CORPORATION, Defendant-Appellee.

June 16, 1994.

Appeal from the United States District Co urt for the Northern

District of Mississippi.

Before WISDOM, DAVIS, and DUHÉ, Circuit Judges.

DUHÉ, Circuit Judge:

Appellants, Phillip Cockerham, John A. Cockerham, Jr. and John

Cockerham, Sr., appeal from the district court's grant of summary

judgment for Appellee, Kerr-McGee Chemical Corporation. Appellants

sued Kerr-McGee for fraudulent and negligent misrepresentation;

tortious interference with a prospective contract; quantum meruit

and unjust enrichment. The district court held that Appellants had

failed to establish a genuine issue of material fact on any of the

claims and dismissed all claims with prejudice. We affirm.

BACKGROUND

T h e following facts are undisputed. Kerr-McGee Chemical

Corporation wanted to raise a levee on a sedimentation pond at its

manufacturing plant in Hamilton, Mississipp i. The Cockerhams 12

contacted James Hargis ("Hargis"), Kerr-McGee's manager of

operations and planning, to determine if Kerr-McGee required fill

dirt. Hargis told the Cockerhams that they could attend the

pre-bid meeting as a potential supplier of fill dirt. The proposed

prime contract distributed during the pre-bid meeting provided that

the prime contractor would purchase and supply the fill dirt. The

proposed contract also specified the type of dirt, but did not note

the source or location of the dirt to be used.

The Cockerhams found approximately 170 acres of land north of

and adjacent to Kerr-McGee's plant site known as the Keaton Estate.

According to Phillip Cockerham, he had a verbal agreement to

purchase the Keaton Estate and had made financing arrangements for

that purchase. Hauling dirt from this site rather than other sites

south of the plant was preferable.

On June 3, 1990, Kerr-McGee received bids from potential prime

contractors. Yates Construction Company (Yates) and Phillips

Contracting Company (Phillips) were the lowest bidders, but KerrMcGee rejected both bids.

Thereafter, th e Cockerhams reported to Hargis that they had

located a potential fill dirt site on the Keaton Estate. Hargis

disclosed this information to Yates and Phillips. The Cockerhams,

Hargis, Henry Seawell, Kerr-McGee's consulting engineer, and

representatives from Yates and Phillips met at the Keaton Estate to

examine the fill dirt. Upon Hargis's request, the Cockerhams dug

a test hole on the Keaton Estate, approximately a hundred feet from

Kerr-McGee's property.3

Yates and Phillips resubmitted their bids using the fill dirt

from the Keaton Estate, but their second bids were also rejected.

After digging test holes on its own property, Kerr-McGee decided to

use fill dirt from its property and requested that Yates resubmit

its bid using Kerr-McGee's fill dirt. Yates's bid was accepted

resulting in a substantial savings to Kerr-McGee. Kerr-McGee had

used its own fill dirt for other projects in the past.

DISCUSSION

I. Standard of Review

Summary judgment is appropriate if the record discloses "that

there is no genuine i ssue as to any material fact and that the

moving party is entitl ed to a judgment as a matter of law."

Fed.R.Civ.P. 56(c). In reviewing the summary judgment, we apply

the same standard of review as did the district court. W altman v.

International Paper Co., 875 F.2d 468, 474 (5th Cir.1989). The

pleadings, depositions, admissions, and answers to interrogatories,

together with affidavits, must demonstrate that no genuine issue of

material fact remains. C elotex Corp. v. Catrett, 477 U.S. 317, 106

S.Ct. 2548, 91 L.Ed.2d 265 (1986). To that end we must "review the

facts drawing all inferences most favorable to the party opposing

the motion." R eid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577,

578 (5th Cir.1986). If the record taken as a whole could not lead

a rational trier of fact to find for the nonmoving party, there is

no genuine issue for trial. M atsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574 , 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d

538 (1986).4

II. Misrepresentation

The Cockerhams allege tha t Hargis induced Phillip Cockerham

into revealing the location of the Cockerhams' intended supply of

dirt by promising them that he would keep this information

confidential. The Cockerhams allege both fraudulent and negligent

misrepresent ation. The Cockerhams have failed, however, to

establish a genuine issue of material fact as to either claim.

The first element of the tort of negligent misrepresentation

is "a misrepresentation o r omission of a fact." B ank of Shaw v.

Posey, 573 So.2d 1355, 1360 (Miss.1990). The representation must

be based on past or presently existing facts rather than merely

consisting of a promise. Id. Because the Cockerhams only allege

repr esentations of a future promise, they cannot succeed in

bringing a claim of negligent misrepresentation.

To establish fraudulent misrepresentation, the Cockerhams

must prov e, by clear and convincing evidence, the following

elements: (1) a representation; (2) its falsity; (3) its

materiality; (2) the speaker's knowledge of its falsity, or

ignorance of the truth; (4) the speaker's intent that it should be

acted on by the hearer and in a manner reasonably contemplated;

(5) the hearer's ignorance of its falsity; (6) the hearer's

reliance on its truth and his right to rely thereon; and (7) the

hearer's consequent and proximate injury. S pragins v. Sunbur s t

Bank, 605 So.2d 777 , 780 (Miss.1992). In cases where fraud is

alleged, a representation based on a promise is actionable if it is

a contractual promise made with the present intent of not5

performing it. Bank of Shaw, 573 So.2d at 1360.

The Cockerhams complain that Hargis misrepresented to them

that he would keep the location of the dirt supply confidential

from other Kerr-McGee officials. There is no dispute that Hargis

was Kerr-McGee's agent wh en he was dealing with the Cockerhams.

Under Mississippi general agency law, " "knowledge acquired by an

agent when transacting his principal's business will be imputed to

his principal although not communicated to him.' " P ittman v. Home

Indemnity Co., 411 So.2d 87, 89 (Miss.1982) (quoting Home Ins. Co.

v. Thorn hill, 165 Miss. 787, 144 So. 861, 863 (1932)). Thus,

Hargis could not promise to the Cockerhams to keep information

confidential from other Kerr-McGee officials because as a matter of

law they were deemed to know it the moment it was told to Hargis.

As for disclosure to third parties, Kerr-McGee informed only

Yates and Phillips of the potential dirt supply. The Cockerhams

neither allege nor of fer summary judgment evidence of any injury

suffered from the disclosure of the fill dirt location to these

third parties.

Alternatively, the Cockerhams argue that when Hargis told

them he would keep the information "in confidence," he was

promising that Kerr-McGee would not misappropriate the information

about the location of the dirt supply. Misappropriation of a trade

secret is an actionable wrong.

A trade secret is defined as a " "formula, pattern, device or

compilation of information which is used in one's business and

w hich gives him an opportunity to obtain an advantage over6

competitors w ho do not know or use it.' " A CI Chems., Inc. v.

Metaplex, Inc., 615 So.2d 1192, 1195 (Miss.1993) (quoting Cataphote

Corp. v. Hudso n, 422 F.2d 1290, 1293 (5th Cir.1970)). "Where a

process or idea is so common, well known or readily ascertainable

that it lacks all novelty, uniqueness and originality, it

necessarily lacks the element of pr ivacy necessary to make it

legally cognizable as a trade secret." C ataphote Corp. v. Hudson,

444 F.2d 1313, 1315 (5th Cir.1971).

Assuming that the location of the dirt supply on Keaton

Estate was a trade se cret to the Cockerhams, Kerr-McGee neither

used the dirt from th at property nor gave the information to a

competitor of the Cockerhams. Therefore, the Cockerhams have

failed to demonstrate that Kerr-McGee misappropriated the

Cockerhams' knowledge in this respect.

As for the argument that Kerr-McGee misappropriated the idea

of using dirt north of the plant, we conclude that this was not a

trade secret as a matter of law for the Cockerhams. The Cockerhams

do not dispute that Kerr-McGee had used dirt from its own land in

other projects. In fact, Phillip Cockerham testified that prior to

beginning his search, he voluntarily asked Hargis why Kerr-McGee

did not use the dirt on their land and informed Hargis that KerrMcGee probably had suitable dirt. Kerr-McGee found the suitable

dirt on its land through in dependent testing performed by its

employees. The Cockerhams cannot now argue that the location of

the fill dirt site was it s trade secret when they had previously

volunteered the information and Kerr-McGee could readily ascertain2 The Cockerhams do not argue on appeal that Kerr-McGee

interfered with an existing contract and, thus, have abandoned

this claim. See Marple v. Kurzweg, 902 F.2d 397, 399 n. 2 (5th

Cir.1990).

7 whether suitable dirt existed.

III. Interference with a Prospective Contract

The Co ckerhams argue that Kerr-McGee tortiously interfered

with its potential contract with the prime contractor, Yates. 2 To

prevail on a claim for to rtious interference with a prospective

contract, the Cockerhams must establish that (1) ther e was a

reasonable prob ability that they would have entered into a

contractual relationship; (2) Kerr-McGee acted maliciously by

intentionally preventing the relationship from occurring for the

purpose of harming the Cockerhams; (3) the acts were done without

right or justifiable cause; and (4) harm or damage occurred as a

result of Kerr-McGee's conduct. Hubbard Chevrolet Co. v. General

Motors Corp., 682 F.Supp. 873, 877 (S.D.Miss.1987), aff'd, 873 F.2d

873 (5th Ci r.), c ert. denied, 493 U.S. 978, 110 S.Ct. 506, 107

L.Ed.2d 508 (1989).

The parties' disagreement focuses on the malice element and

whether Kerr- McGee acted without right or justifiable cause.

Malice is the " "intentional doing of a wrongful act without legal

or social justification.' " C ranford v. Shelton, 378 So.2d 652,

655 (Miss.198 0) (quoting R amondo v. Pure Oil Co., 156 Pa.Super.

217, 48 A.2d 156 (1946)). Kerr-McGee argues that it had the right

to change the specifications in its prime contract before a bid was

awarded and a legitimate business interest in reducing its costs by8

using its own fill dirt. The Cockerhams respond that financial

self-interest should not be an absolute defense because most

interference claims relate somehow to a company's profit motive.

Kerr-McGee's interest extended, however, beyond mere

financial interest; it had a potential contractual relationship

with the prime contractor. In M artin v. Texaco, Inc., 304 F.Supp.

498, 502 (S.D.Miss.1969), the plaintiff had a verbal agreement with

a third party to sell its service stations and its consignment

business with the defendant, a petroleum supplier. The consignment

agreement required the defendant's approval o f the plaintiff's

successor. I d. at 499. When defendant advised the potential

successor that it would exercise its contractual right to sell in

the consignee's area if it were profitable to do so, the plaintiff

sued for tortious interference. I d. at 500. The court found that

the defendant's actions constituted a "privileged interference":

The alleged offer and agreement on which plaintiff's suit is

based was strictly conditional upon the future occurrence of

certain events as to which the defendant not only had a

financial or b usiness interest, but also the undisputed and

admitted right of determination and control....

Id. at 502; s ee also Davenport v. St. Paul Fire & Marine Ins. Co.,

978 F.2d 927, 933 (5th Cir.1992) (" "Absolute rights, including

...

the right to enter or refuse to enter into contractual relations,

may be exercised wi thout liability for interference without

reference to one's motive a s to any injury directly resulting

therefrom.' ") (quoting 45 Am.Jur.2d Interference § 23).

The parties do not dispute that the Cockerhams' agreement with

Yates was conditional on Yates's being awarded the prime contract.9

Ker r-McGee's bid proposal allowed it to reject the original bid

terms and amend the contract terms. Kerr-McGee exercised that

right and its actions were within the scope of its legitimate

interest.

IV. Quantum meruit

If their actions at law fail, the Cockerhams assert that they

are entitled to recover under the doctrine of quantum meruit. They

assert that a genuine issue of material fact exists as to whether

Kerr-McGee knew that acceptable fill dirt was located on its

property.

A person may recover for services rendered on a quantum

meruit basis if the "circumstances are such as to warrant an

inference of an understanding by the pers on performing the work,

that the person receiving the services, intends to pay for it."

Kalavros v. Deposit Guaranty Bank & Trust Co., 158 So.2d 740, 744

(Miss.1963). Recovery in quantum meruit is measured by the

reasonable value of materials or services rendered. E state of

Johnson v. Adkins, 513 So.2d 922, 926 (Miss.1987).

Even assuming a genuine issue remains as to whether KerrMcGee knew that suitable dirt existed o n its property, the

Cockerhams have failed to dem onstrate that their services were

rende red under the reasonable expectation that Kerr-McGee knew

about and would pay for the services being performed. The

Cockerhams initially contacted Kerr-McGee, inquiring whether the

levee project would need fill dirt. Phillip Cockerham testified

that he begun an investigation of possible sites even before the10

pre-bid meeting. The Cockerhams knew that the prime contractor,

not Kerr-McGe e, would supply and pay for the fill dirt. The

Cockerhams hav e adduced no summary judgment evidence that would

lea d a rational trier of fact to find that it had a reasonable

expectation of being compensated by Kerr-McGee for their search of

the fill dirt prior to a final contract with the prime contractor.

V. Unjust Enrichment

The Cockerhams also seek to recover the extent to which KerrMcGee was unjustly enriched by its savings in using its own dirt.

"[A]n action for "unjust enrichment' lies in a promise, which is

implied in law, that one will pay to the person entitled thereto

which in equity and good conscience is his." M agnolia Federal

Savings & Loan Ass'n v. Randal Craft Real ty Co., 342 So.2d 1308,

1311 (Miss.1977). A person is enriched when he receives a benefit

whether it is a profit or a loss avoided. O mniba nk of Mantee v.

United S. Bank, 607 So.2d 76, 92 (Miss.1992). "What is important

... to remember is our law accepts no value condemning pursuit of

wealth, so long as it be done within legal parameters. There is

nothing inherently unjust about enrichment." Id.

Whether Kerr-McGee benefitted from the Cockerhams discovery

of the adjacent dirt site is not a material fact; the issue is

whether that benefit was unjust. We find that it was not. KerrMcGee had the legal right to use its own dirt. It was not

obligated either to purchase dirt from the Cockerhams or require

the prime contractor to purchase dirt from t hem. In sum, the

Cockerhams have no entitlement to the savings of Kerr-McGee.11 CONCLUSION

For the foregoing reasons, the district court's grant of

summary judgment for Kerr-McGee is AFFIRMED.