IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

No. 99-30294

Summary Calendar

_______________

VAULTING AND CASH SERVICES, INC.,

Plaintiff-Appellant,

VERSUS

DIEBOLD, INC.,

Defendant-Appellee.

_________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

(97-CV-3686-N)

_________________________

October 22, 1999

Before SMITH, BARKSDALE, and 

STEWART, Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

Vaulting & Cash Services, Inc. (“V&C”),

appeals a summary judgment in favor of

Diebold, Inc. (“Diebold”), in V&C’s suit

against Diebold for breach of contract. V&C

contendsthat the district court erred in holding

that the contract barred V&C from recovering

lost profits on showing breach of contract.

Finding no error, we affirm.

I.

The suit arose from the termination of the

ATM Transit and Service Agreement (the

“Agreement”) between V&C and Diebold.

Diebold is a major manufacturer of automated

teller machines (ATM’s); V&C is an armored

car company that provides cash-handling and

first-line services for ATM owners.1 In

August 1995, Diebold signed a contract with

First National Bank of Commerce to provide

all-inclusive servicing of its ATM’s. The

contract required Diebold to provide the cashhandling as well as first- and second-line

services on the bank’s ATM’s. Because

Diebold lacked the capability to provide cashhandling services, it subcontracted them to

V&C. 

 

*

 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.

 

1 There are three types of services performed on

ATM’s: cash-handling services; first-line services;

and second-line services. Cash-handling services

consist of picking up deposits and replenishing the

cash supply at the ATM’s. First-line servicing

deals with paper shortages, paper jams, currency

jams, ribbon shortages, and the like. Second-line

servicing is generally provided by themanufacturer

and consists of providing technical assistance and

performing repairs that are beyond the capabilities

of the cash handlers or first-line servicers.
2

The Agreement specified a term of three

years but provided that either party might

terminate the contract for non-performance

after thirty days’ notice. The Agreement

contained a “rider,” clause three of which

(“Clause Three”) stated:

Notwithstanding anything to the

contrary, in no event shall Diebold be

liable to Subcontractor for indirect,

incidental, consequential or similar

damages, lost profits, [sic] lost business

opportunities, whether arising under

contract, tort, strict liability or other

form of action, even if Diebold has been

apprized of the possibility of such

damages. 

Diebold alleged that, from the beginning of

the Agreement, V&C had failed to perform

satisfactorily, and it claimed further that, from

the first year of the Agreement, it had

informed V&C of its displeasure with V&C’s

quality of service without V&C’s acting to

remedy the situation. Finally, in October

1997, Diebold gave notice to V&C ofitsintent

to terminate the Agreement for nonperformance. V&C responded by suing for

breach of contract, “bad-faith breach,” and for

violations of the Louisiana Unfair Trade

Practices Act (“LUTPA”).

Diebold moved for summary judgment on

all claims, or in the alternative on V&C’s

claims for lost profits and attorneys’ fees and

its claims under LUTPA. The court granted

this motion in part, ruling that Clause Three

unambiguously denied V&C the opportunity

to recover lost profits for breach of contract.2

The court clarified that the denial of a lostprofits measure of recovery applied to all lost

profits, whether “direct” or “indirect.” 

II.

V&C claims the court erred in holding

(1) that Clause Three unambiguously denied

any form of lost-profits measure of remedy;

(2) that the Agreement remained an

enforceable contract, given the decision that

Clause Three unambiguously denied a lostprofits measure of remedy; and (3) that the

unambiguous Clause Three should be honored

without regard to parol evidence of the

conditions surrounding its adoption. We

consider each contention in turn.

A.

V&C argues that Clause Three does not

unambiguouslydenyalllost-profit measures of

remedy for breach of contract, and thus that

parol evidence should be admitted to

determine the clause’s meaning. We agree

with the district court that this clause is not

ambiguous. 

The contract is not artfully drafted.

Nonetheless, the words “in no event shall

Diebold be liable to Subcontractor for . . . lost

profits” establish that at least some form of

lost profits are denied in a suit on contract.

The only ambiguity that could possibly remain

is whether the words “indirect, incidental,

consequential or similar” modify only

“damages,” or also “damages, lost profits, [or]

lost business opportunities.”

Mere complexity of construction does not

justify a finding of ambiguity. See Ellsworth v.

West, 668 So. 2d 402 (La. App. 4th Cir), writ

denied, 669 So. 2d 1212 (La. 1996). Neither

is a contractual provision ambiguous when

two interpretations are technically possible,

but only one is reasonable. See Texas E.

Transmission Corp. v. Amerada Hess Corp.,

145 F.3d 737 (5th Cir. 1998). Rather, a

provision is considered ambiguous if

susceptible to more than one reasonable

meaning under the circumstance after

applicationofestablished rules of construction.

See id.; see also Lloyds of London v.

Transcontinental Gas Pipe Line Corp., 101

F.3d 425 (5th Cir. 1996). These established

rules of construction include the “ordinary

meaning of words” and of the English

language. See Slocum-Stevens Ins. Agency,

 

2 The court denied summary judgment on the

LUTPA claim and on V&C’s “bad-faith breach”

claim. By the terms of a partial settlement,

however, V&C agreed to dismissthese claims with

prejudice, and Diebold agreed similarly to dismiss

its counterclaims. Thus, we consider only the

breach of contract claim. 
3

Inc. v. International Risk Consultants, Inc.,

666 So. 2d 352 (La. App. 2d Cir. 1995), writ

denied, 669 So. 2d 399 (La. 1996).

The common usages of the English

language render Clause Three susceptible to

one primary interpretation. As a rule, a

nominative adjective modifies the noun that

most closely follows it; the lack of a comma

between the final adjective of a series and the

noun following that series indicates that the

series mo difies the noun immediately

following.3 When a writer intends an

adjectiveSSand especially an adjectival

seriesSSto modify a series of nouns following

the adjective(s), he so signals by insertion of a

colon or otherseparator betweenthe adjectival

and nominative series to indicate the unusual

usage.4 Lacking such a signal, the Third

Clause should be subjected to the primary,

common-usage reading: that the adjectival

series “indirect, incidental, consequential or

similar” modifies “damages” merely, and not

the entire series of nouns following the

adjectives.

Largely because the clause is poorly

drafted, however, we do not rest our decision

merely on a grammatical parsing.5 Rather, we

look also to the reasonableness of the

interpretation advanced by each party. If the

reading posited by Diebold and endorsed by

the district court is applied, then Clause Three

excludes as possible items of recovery for

claims on the contract all indirect, incidental,

and consequential(“indirect”) damages and all

lost profits and all damages arising fromclaims

of lost business opportunity. Under this

interpretation, each ofthe phrasesin the clause

carries independent meaning. 

If, on the other hand, V&C’sinterpretation

is followed, then the phrases “lost profits” and

“lost business opportunities” become

surplusage, because, if modified by “indirect”

to mean “indirect lost profits” and “indirect

business opportunities,” then each is wholly

subsumed in the already stated universe of

“indirect damages.” Moreover, by V&C’s

own admission, the phrase “indirect lost

profits” is doubly meaningless because, as a

matter of law, lost profits are always

considered direct damages in breach-ofcontract actions; thus a contract provision

forbidding recovery of “indirect lost profits”

would forbid recovery of, by legal definition,

a null set.6 Reason thus seconds better

grammar,supportingDiebold’s and the district

court’s reading of Clause Three: “[I]ndirect,

incidental, consequential or similar” modifies

“damages” alone, and thus the Clause denies

recovery of all lost profits.

B.

V&C contends, in the alternative to its

interpretation of Clause Three, that should the

district court’sinterpretation be adopted, then

the Agreement cannot be considered an

enforceable contract against Diebold, because

it allows V&C no remedy should Diebold

breach its obligations. We find no merit in this

contention. 

As noted above, the district court’s

interpretation of Clause Three effectively

denies V&C recovery of all indirect damages,

 

3

See BRYAN A. GARNER, THE ELEMENTS OF

LEGAL STYLE 22 (1991); RUTH PARLE CRAIG &

VINCENT F. HOPPER, 1001 PITFALLS IN ENGLISH

GRAMMAR 1 (3d ed. 1986); cf. THEODORE M.

BERNSTEIN, THE CAREFUL WRITER: A MODERN

GUIDE TO ENGLISH USAGE 20 (1965) (stating that

“intimate . . . is the relationship of an adjective to

the noun it modifies”).

 

4 EUGENE EHRLICH, THE BANTAM CONCISE

HANDBOOK OF ENGLISH 166-67 (1986).

 

5 Had the drafters of Clause Three followed the

conventions of the English language with

exactitude, they not only would have included an

“or” after “lost profits” but also would have

separated “damages, lost profits, [or] lost business

opportunities” with semi-colons rather than

commas. See id. at 166; BERNSTEIN, supra n.3, at

362, 373.

 

6

See Moore v. Boating Indus. Ass’ns, 754 F.2d

698, 717 (7th Cir. 1985), vacated on other

grounds, 474 U.S. 895 (holding that “[l]ost profits

are considered to be general or direct damages in a

breach of contract case”).
4

lost profits, and damages for lost business

opportunities. Conceptually, these denials

leave, as a remedy, all direct damages that are

not characterized as lost-profits damages or

lost-business-opportunity damages, e.g.,

restitutory and recissionary measures of

damages. By the language of Clause Three,

then, breach-of-contract damages are merely

limited, not wholly denied.

V&C nevertheless argues that Louisiana

law permits, as breach-of-contract recovery,

only the damage remedies that Clause Three

eliminates, thereby rendering its retained

damage remedies nugatory. V&C contends

that LA. CIV. CODE art. 1995 indicates that

“the only damage for breach of this contract is

lost profits.” This, however, represents an

unrealistic misreading of a one-sentence code

provision that reads in full: “Damages are

measured by the loss sustained by the obligee

and the profit of which he has been deprived.”

Id. (emphasis added). Thus, the code did not

deny V&C the restitutory and recissionary

remedies permitted by Clause Three and did

not leave V&C without remedy.7

The Civil Code defines a contract as “an

agreement between two or more parties

whereby obligations are created, modified, or

extinguished,” LA. CIV. CODE art. 1906, and

an onerous contract (as opposed to a

gratuitous one) as one by which “each of the

parties obtains an advantage in exchange for

his obligation,” id. art. 1909. The Agreement,

then, Clause Three inclusive, does remain a

contract. Duties applied to both parties under

the Agreement, and remedies for breach of

duty remained to each party. If V&C chose to

characterize its damages claims in a manner

denied by the terms of the contract, or if it had

no damages claims other than those it agreed

to forego under the terms of the contract, it

shall not complain of its error in pleading or of

its miscalculation of contractual risk

obligation.

C.

V&C contendsthat the summary judgment

on the breach-of-contract question is error

because a material dispute arises with regard

to the parol evidence surrounding the

circumstances of the interpretation and

adoption of the contract, particularly Clause

Three. The parol evidence is inadmissible,

however.

Louisiana law bars parol evidence to

evaluate contractual intent “[w]hen the words

of a contract are clear and explicit and lead to

no absurd consequences.”8 LA. CIV. CODE

art. 2046. Because, as we have noted, Clause

Three is not ambiguous, parol evidence is not

admissible to determine intent.9

V&C contends, however, that in Louisiana,

parol evidence must be considered because, in

V&C’s words, “[f]or a waiver of recoverable

damages to be effective it must be (1) written

in clear and unambiguousterms; (2) contained

in the contract; and (3) brought to the

attention of and explained to the parties

against whom it is to be enforced” (citing

Fontenot v. F. Hollier & Sons, 478 So. 2d

1379, 1386 (La. App. 3d Cir. 1985), affirmed

as amended, 491 So. 2d 624 (La. 1986); Gulf

 

7

See, e.g., Southwestern Eng’g Co. v. Cajun

Elec. Power Co-op, Inc., 915 F.2d 972 (5th Cir.

1990) (allowing recovery of “unabsorbed

overhead” by a company following breach of

contract by the other contracting party thatresulted

in the idling of the company’s plant).

 

8

 V&C contends that an “absurd consequence”

as per the terms of this article would be reached by

a contract in which one party was left by the terms

of the contract with no damage remedy in the case

of the other party’s breach. Because, as we have

discussed above, the Agreement does not foreclose

all damage measures, we need not address this

contention.

 

9

 V&C correctly notes that Louisiana does

allow parol evidence to determine a claim of fraud

against a partner in contract. See LA. CIV. CODE

ANN. art. 1848;see also Harnischfeger SaleCorp.

v. Sternberg Co., 154 So. 10 (1934); Broussard v.

Sudrique, 4 La. 347 (1832). V&C overlooks,

however, that it has, by consent, dismissed all its

claims against Diebold except the breach-ofcontract claim, so it is not availed by this exception

to the parol evidence rule.
5

Am. Indus. v. Airco Indus. Gases, 573 So. 2d

481, 573 (La. App. 5th Cir. 1990)). We first

note that Fontenot deals not with a contractual

waiver of remedies, but with a waiver of

warranties by a “poorly educated” farmer. See

Fontenot, 478 So. 2d at 1386. The holding of

Fontenot was partially adopted by the Gulf

American court and applied, as modified, to

cases of waiver of breach-of-contract

remedies, but was not adopted and applied as

V&C indicates. 

The Gulf American court held that “[f]or a

waiver of recoverable damages to be effective

. . . it must be 1) written in clear and

unambiguous terms; 2) contained in the

contract; 3) brought to the attention of the

parties against whom it is to be enforced.”

Gulf American, 573 So. 2d at 489 (emphasis

added). The immediately preceding sentence,

however, explains that when a contract

contemplates merely “a limitation on

recoverable damages, . . . such an agreement

must clearly indicate the intentions of the

parties.” Id. (emphasis added). As we have

said, Clause Three limits, rather than waives

entirely, available damage remedies. Thus, the

latter “clarity” standard, not the former

“brought to the attention” standard, isrelevant

to this case. 

AFFIRMED.