* Pursuant to 5TH CIR. R. 47.5, the court has determined that this

opinion should not be published and is not precedent except under the limited

circumstances set forth in 5TH CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

December 27, 2004

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 03-21090

_______________________

CSC CREDIT SERVICES, INC., CREDIT BUREAU OF TULSA, INC.,

CSC ENTERPRISES INC.; CSC ENTERPRISES,

Plaintiffs-Appellants-Cross-Appellees,

versus

EQUIFAX INC.;

THE CREDIT BUREAU, INCORPORATED OF GEORGIA,

Defendants-Appellees-Cross-Appellants.

Appeals from the United States District Court

for the Southern District of Texas,

Houston Division

Civil Action No. H-99-4349

Before JONES, SMITH, and STEWART, Circuit Judges.

EDITH H. JONES, Circuit Judge:*

This case involves a dispute over a sixteen-year-old

contract that, despite the parties’ stipulation that the document

is “unambiguous,” has resulted in two diametrically opposed orders

from judges within the same district court. In this appeal, we

review both summary judgment orders. For the reasons stated below,

we AFFIRM IN PART and REVERSE AND REMAND IN PART, in favor of

Equifax.

I. Background
2

The issue in this case is whether a 1988 contract between

the two parties allowing CSC Credit Services, Inc. (“CSC”) access

to the storage and retrieval system maintained by Equifax, Inc.

(“Equifax”) also required giving CSC access to programs later

developed by Equifax that analyze the data contained therein. CSC

and Equifax are major, repeat players in the market for credit

reporting services. CSC owns millions of credit files on

individuals residing in Arkansas, Indiana, Iowa, Kansas, Nebraska,

Oklahoma, Texas, and Wisconsin. Equifax is a credit reporting

agency; unlike credit bureaus like CSC, Equifax collects and

maintains credit files owned by other entities, and then sells

access to the files. In some situations, the two companies compete

with one another, and in others they collaborate and combine their

respective resources.

In one of the collaborative endeavors, the parties

entered into a contract under which Equifax stores all of CSC’s

credit files in its computer system, Automated Credit Reporting

Online Package (“ACROPAC”). The 1988 Agreement for Computerized

Credit Reporting Services and Options to Purchase and Sell Assets

(“Agreement”) allowed third-party credit-granting customers to

access CSC’s files through ACROPAC. For every file accessed, CSC

agreed to pay Equifax a “billable inquiry” charge. Under the

Agreement’s “cost allocation system,” CSC paid Equifax fifteen
1 The Agreement does not explicitly include this percentage. Instead,

it establishes a general formula subject to change by the parties. This formula,

governed by Paragraph 8 of the Agreement, is discussed below.

3

percent of its revenue from each file.1 ACROPAC stores files owned

by Equifax, CSC, and numerous other credit bureaus (which apparently entered into similar agreements with Equifax).

The contract also requires Equifax to bear the costs

necessary to maintain and upgrade ACROPAC from time to time. Since

1988, Equifax has updated the hardware and the software on numerous

occasions. These upgrades have expanded the number and type of

search functions available to users (for example, allowing

customers to search files by zip code and Social Security number),

and have resulted in improvements to make ACROPAC faster and more

efficient. The contract also permits Equifax to modify the

distribution of revenue from customers accessing credit files.

Equifax has unilateral authority in this regard, but any altered

charges must be applied equally to all customers.

Additionally, Equifax created other products during this

period. One of them, “decisioning services,” is at the center of

this dispute. This product synthesizes data from numerous sources

(some of which are not owned by Equifax), and applies criteria

provided by the customer to create a complete credit decision for

a particular individual. Equifax uses its NextGen computer system

to perform this task. Decisioning services offers a finished

product, as opposed to the “raw material” provided by ACROPAC.
2 Up to sixteen sources may be used. The other potential sources

include Equifax ACIS, Income Predictor, HMC Gemini Verify, Equifax Exchanges,

Equifax Canadian Consumer Credit, National Telecommunications Data Exchange,

Experian Consumer Credit, Experian Small Business Data, Check Services, Check

Authorization, RiskWise, Choice Point, Dun & Bradstreet, MetroNet, and Compliance

Data Center.

4

Decisioning services relies upon numerous data sources, including

but not limited to ACROPAC.2 Decisioning services may need to

access only some of these products to give a customer a complete

report. When CSC files stored on ACROPAC are accessed during this

process, CSC receives revenue and pays a billable inquiry fee as it

would with a usual credit reporting transaction. However, Equifax

also deducts a “platform fee” from CSC’s transaction revenue.

Equifax asserts that this platform fee helps cover the costs

associated with the NextGen system.

Equifax also used its purported authority under the

Agreement to supplement the cost allocation system by assessing

additional charges to CSC. Beginning in 1989, Fair Isaac & Company

(“FICO”) developed a credit scoring model known as the Beacon

Score. A Beacon Score applies numerous factors from a credit

report to assign a numerical grade to a given consumer. This score

allows a creditor to predict the likelihood that a potential

consumer will be a credit risk. When Equifax’s customers purchase

a credit report owned by CSC and also request a Beacon Score, FICO

assesses a royalty. To cover this expense, Equifax modified the

revenue sharing agreement to pass this charge on to CSC. Equifax

continued to charge a separate fee after it developed its own
3 The initial Complaint included other claims against Equifax. The

parties have resolved these other disputes, and only these two outstanding claims

are before this court.

5

credit scoring models. Although CSC did not initially object to

this adjustment of the revenue sharing agreement, it now contests

this “modeling royalty” fee.

In 1999, CSC filed the instant action, claiming that

Equifax breached the 1988 Agreement by assessing the platform fees

and modeling royalties.3 Both parties moved for summary judgment,

and Judge Gilmore found in Equifax’s favor as to the platform fees

on April 11, 2001. While Judge Gilmore was considering the

parties’ summary judgment motions, preparation for trial continued.

On April 12, 2001, the parties, who had not yet received Judge

Gilmore’s Summary Judgment Order filed the previous day, consented

to proceed before magistrate Judge Milloy under 28 U.S.C. § 636(c).

Determining that Judge Gilmore’s Order had not disposed of all

issues in the case, Judge Milloy denied Equifax’s motion for final

judgment based on Judge Gilmore’s conclusions and proceeded to

consider the issue of modeling royalties. Based on a contradictory

contract interpretation, Judge Milloy granted summary judgment to

CSC sua sponte on the issue of modeling royalties on April 9, 2002.

Additionally, on September 10, 2003, Judge Milloy granted CSC’s

motion for attorneys’ fees pursuant to Texas Civil Practice &

Remedies Code § § 38.001 et seq. Judge Milloy denied CSC’s Motion

for Reconsideration on the platform fees issue initially decided by
6

Judge Gilmore, and entered an Amended Final Judgment on September

29, 2003. Both parties appealed to this court.

II. Standard of Review

We review a district court’s grant of summary judgment de

novo, using the same standards as the district court. U.E. Texas

One-Barrington, Ltd. v. Gen. Star Indem. Co., 332 F.3d 274, 276

(5th Cir. 2003); FED. R. CIV. P. 56. We review the district court’s

ruling on the motion for reconsideration only for an abuse of

discretion. Lake Hill Motors, Inc. v. Jim Bennett Yacht Sales,

Inc., 246 F.3d 752, 757 (5th Cir. 2001).

III. Judge Gilmore’s Order Granting Summary Judgment

to Equifax on Platform Fees

Judge Gilmore awarded summary judgment to Equifax on the claim

that the 1988 Agreement required Equifax to provide the decisioning

services to CSC without charging any additional fee. After

reviewing the law and the record, we agree that decisioning

services is a discrete, analytical product that is not covered by

the 1988 Agreement, and, thus, Equifax may assess the platform

fees. We therefore affirm this portion of the judgment.

As this is a diversity suit filed in Texas, Texas law

applies. 28 U.S.C. § 1332; Assicurazioni Generali, S.P.A. v.

Ranger Ins. Co., 64 F.3d 979, 980 (5th Cir. 1995). Under Texas

law, contract interpretation is a matter of law for the court to

decide. Elliott-Williams Co., Inc. v. Diaz, 9 S.W.3d 801, 803

(Tex. 1999). In construing a contract, “the court’s primary
7

concern is to give effect to the written expression of the parties’

intent.” Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.

1994). The starting point of this analysis is the actual language

of the contract. Empire Fire and Marine Ins. Co. v. Brantley

Trucking, Inc., 220 F.3d 679, 681 (5th Cir. 2000) (citing Puckett

v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex. 1984)).

Both parties agree, as do we, that this contract is

unambiguous. When a contract is unambiguous, the court may not

rely upon extrinsic evidence “to contradict or vary the meaning of

the explicit language of the parties’ written agreement.” Nat’l

Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907

S.W.2d 517, 520 (Tex. 1995). The court presumes that every phrase

of the contract has some effect. Coker v. Coker, 650 S.W.2d 391,

393 (Tex. 1983). The effect of each phrase is determined by

looking at the entire contract; “no one phrase, sentence, or

section should be isolated from its setting and considered apart

from the other provisions.” Forbau, 876 S.W.2d at 134. Any

contractual term that is not defined within the contract itself

must be given its “plain, ordinary, and generally accepted

meaning.” Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118,

121 (Tex. 1996).

Looking to the Agreement as a whole, as required under

Texas law, it appears that decisioning services, which is an

analytical tool operated by a completely different computer system,

NextGen, that accesses up to sixteen data bases, sometimes, but not
8

always, including ACROPAC, is not covered by the 1988 Agreement

and, thus, Equifax may charge CSC platform fees for decisioning

services. The ninety-six-page Agreement includes many exhibits,

yet, as the district court noted, no other database or computer

program other than ACROPAC is mentioned. Paragraph 4(a)(i)

requires Equifax to furnish CSC only “ACROPAC online services.” 

The Agreement further defines “online” to mean “direct access to

credit information maintained in the ACROPAC system.” Agreement

¶4(c); R. vol. 8 at 319. Direct access is obtained “by means of

the appropriate inquiry through a terminal maintained by such

Bureau [like CSC] or by a customer of such Bureau.” Id.

Taken as a whole, the above provisions impose three

specific limitations on the services Equifax must provide CSC.

First, the parties’ Agreement covers “online services,” which

implicate “direct access to credit information” maintained by

ACROPAC. Second, the access must be generated via an “inquiry” by

CSC or its customers. Additionally, the inquiry must originate

from a “terminal maintained by [CSC] or by a customer of [CSC].”

By contrast, decisioning services are not “maintained in the

ACROPAC” system, but instead are in the NextGen system, which in

turn directly accesses ACROPAC and up to fifteen other sources of

information. See R. vol. 8 at 351-52. Decisioning services are

not requested by CSC or a CSC customer, but are instead a separate

product sold by Equifax to its own customers. CSC’s response that

“direct access” is not defined in the Agreement does not alter this
4 See Heritage Resources, 939 S.W.2d at 121.

9

analysis. “Direct” usually and customarily4 means “from point to

point without deviation” or “by the shortest way.” Webster’s New

Collegiate Dictionary (9th ed.) at 358. Decisioning services do

not provide the shortest way to the raw credit information stored

in ACROPAC; instead, this product provides a final answer to a

potential creditor by analyzing the raw data. The Agreement covers

only those situations where CSC or its customers enter ACROPAC

directly.

CSC next argues that the district court’s characterization of ACROPAC as only a storage and retrieval system required the

court to read several other provisions out of the contract in

contravention of Texas law. Specifically, CSC points to language

in Exhibit A and the Agreement referencing “different computer

systems,” “all consumer credit reporting and similar or related

services,” and “any other sale of products or services derived from

a consumer credit reporting database.” We disagree. The language

put forward by CSC is taken out of context. The relevant, complete

language states,

System software encompasses the following primary tasks:

. . . Processing of credit grantor automated account

history information to update and create new files on a

periodic basis. ACROPAC II offers various programs to

extract data from a wide range of different computer

systems and record formats in order to process such data

into the online system. . . .
10

Exhibit A; R. vol. 8 at 239. This language, read in the broader

context of the Agreement as a whole, describes ACROPAC’s inherent

function: storing data from many sources, updating the information,

and making it available to credit grantors who access the system

with their “different computer systems and record formats.”

See id.

Finally, CSC argues that decisioning services fall within

the plain meaning of “new product developments” and “system

enhancements” as defined by the Agreement. This reading of the

contract would have the absurd result of requiring Equifax to

provide to CSC, at no cost whatsoever, every new product it

develops. See Tarrant Distributors Inc. v. Heublein Inc., 127 F.3d

375, 379 (5th Cir. 1997) (holding that an agreement “unambiguously

supports one interpretation because the other [interpretation] is

unreasonable”); Columbia Gas Transmission Corp. v. New Ulm Gas,

Ltd., 940 S.W.2d 587, 591 (Tex. 1996). As demonstrated above, the

Agreement pertained only to the ACROPAC system. The provision

cited by CSC reads, in whole, “[Equifax] shall provide, at

[Equifax]’s expense, all new product developments, system

enhancements, advertising and promotion of the ACROPAC system.”

Agreement ¶4(g); R. vol. 8 at 319. This language expressly limits

itself to ACROPAC. Equifax complied with the “system enhancements”

requirement by continuously updating the ACROPAC system hardware

and software. Decisioning services represent a unique product sold

by Equifax; the NextGen computer system runs this program, which
11

uses complex algorithms and decision-tree logic to provide a

complete credit decision to a customer. The mere fact that

decisioning services may utilize ACROPAC (or one of several other

data sources, several of which are not owned by Equifax) does not

make decisioning services part of ACROPAC or covered by the 1988

Agreement. Judge Gilmore’s summary judgment order is affirmed.

IV. Judge Milloy’s Order Granting Summary Judgment

to CSC on Modeling Royalties

After assuming control of the case pursuant to the

parties’ agreement, Magistrate Judge Milloy rejected Equifax’s

motion for final judgment. Although Judge Gilmore had found in

Equifax’s favor on the decisioning services fee issue, Judge

Milloy’s review of the record and Judge Gilmore’s Order led her to

conclude that the modeling royalties issue remained unresolved.

She then determined that CSC should prevail on this issue and

awarded CSC summary judgment sua sponte. Judge Milloy correctly

found the modeling royalties issue in need of adjudication.

However, because our reading of the Agreement, taken in its

entirety, demands the opposite result, we reverse.

CSC asserts that it need pay only a single charge, the

billable inquiry fee, in return for all of Equifax’s services,

including reports that include a credit score. Judge Milloy agreed

with CSC that the “new product developments” and “system

enhancement” language in Paragraph 4(g) included the credit scoring

models. Based on the same reading of the Agreement applied to the
12

decisioning services issue, we disagree. The credit scoring model

provides a number that a customer may analyze, leaving the

application and final decision as to a specific, potential creditor

to the customer. Thus, credit scoring models, in a similar,

although more nuanced, manner as decisioning services, apply

criteria to the data available on ACROPAC.

To conceptualize the difference, a spectrum is helpful:

on one end of the spectrum are pure, raw data; on the other end is

a complete, finalized credit answer like, “Lend Jane Doe $12,000.”

In this view, the scoring model is closer to “raw data” on the

spectrum than decisioning services. Nevertheless, the credit

scoring reports require the application of several analytical steps

to the raw data; this process takes the credit scoring reports

beyond the scope of ACROPAC and, thus, the Agreement. The

affidavit of CSC’s own witness confirms this understanding: the

credit scoring reports involve analysis of the data contained

within ACROPAC. See R. vol. 7 at 725-36. Nothing in Paragraph

4(g) requires Equifax to provide CSC with any “new” or “enhanced”

product beyond the scope of ACROPAC. Therefore, the credit scoring

models, which are separate products from ACROPAC, do not fall under

this provision.

The credit scoring models were thus subject to royalty

charges as provided by Paragraph 8(c) of the Agreement. See R.

vol. 8 at 310. This provision allows Equifax, in its sole

discretion, to impose royalty fees for services provided beyond
5 This discretion is not unfettered. Any alteration in the cost

allocation must be applied equally to all of Equifax’s affiliates and

subsidiaries.

13

access to ACROPAC.5 Equifax has exercised this discretion before.

When a customer seeks Beacon Scores, for example, a royalty is

charged. CSC has not disputed these charges, but now claims that

Equifax cannot impose similar charges for its own scoring models.

CSC’s sole reliance for this distinction is on the “new product

development” and “system enhancement” language, which we have

determined does not apply to this service. We therefore reverse

that part of the judgment that favored CSC on this issue and remand

for further proceedings.

V. Judge Milloy’s Order Denying CSC’s Motion

for Reconsideration

After prevailing on the issue of modeling royalties, CSC

moved for reconsideration of the platform fee issue based on new

evidence. Judge Milloy denied this motion. Because the court did

not abuse its discretion in denying this motion, we affirm. See

Lake Hill Motors, 246 F.3d at 757.

Hoping to persuade Judge Milloy to overturn Judge

Gilmore’s Order, CSC moved for reconsideration based on new

evidence, namely, a contract between Equifax and DealerTrack.Com,

another credit reporting company. See R. vol. 2 at 1753-66. This

contract also referenced ACROPAC. However, the contract is between

Equifax and a third party, uses different terms, and was drafted 14

years after the Agreement at issue here. Even assuming that this
14

contract is probative, it constitutes parol evidence. Because CSC

stipulated (as did Equifax) that the Agreement is unambiguous, this

contract is inadmissible under the Texas parol evidence rule. Sun

Oil Co. v. Madeley, 626 S.W.2d 726, 732 (Tex. 1981). Inadmissible

evidence cannot be used to support a motion for summary judgment,

so Judge Milloy rightly rejected the introduction of this evidence.

See Instone Travel Tech Marine & Offshore v. Int’l Shipping, 334

F.3d 423, 431 (5th Cir. 2003).

VI. Conclusion

For the reasons stated above, we AFFIRM IN PART, and

REVERSE and REMAND IN PART, all in favor of Equifax. Because we

reverse the award of partial summary judgment to CSC by the

district court, the order awarding attorneys’ fees to CSC is

similarly REVERSED.

AFFIRMED IN PART; REVERSED AND REMANDED IN PART.