* District Judge of the Eastern District of Louisiana,

sitting by designation.

United States Court of Appeals

Fifth Circuit

FILED

February 28, 2005

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 03-31013

STEPHEN P. MUMBLOW, Plaintiff-Appellant,

VERSUS

MONROE BROADCASTING, INC., Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Louisiana

Before SMITH and GARZA, Circuit Judges, and VANCE,* District

Judge.

VANCE, District Judge:

Stephen P. Mumblow appeals the trial court’s decision to

apply Louisiana law to this case and its dismissal of his claim

as premature. Because the trial court properly chose to apply

Louisiana law to this case but made clearly erroneous findings of

fact, we AFFIRM in part, REVERSE in part, and REMAND the matter

for further proceedings consistent with this opinion.
2

I. FACTS AND PROCEEDINGS BELOW

Appellant Stephen Mumblow, a New York resident, was the

president of Communications Corporation of America, a Louisiana

corporation, from September 1998 until January 2002. Thomas

Galloway is the principal shareholder and Chairman of CCA, and D.

Wayne Elmore is an officer, director and shareholder of CCA. 

Gregory Todd Boulanger is the controller of CCA. Mumblow did not

own stock in CCA. He agreed with CCA that after three years with

CCA, he would be entitled to ten percent of the net proceeds upon

the sale of the company. 

Monroe Broadcasting is a Louisiana corporation that operates

a television station in Monroe, Louisiana. Monroe is owned by

Charles Chatelain and Dr. Paul Azar. None of the principals of

CCA holds a position with Monroe. In late 1997, Galloway, as the

head of CCA, acquired other broadcasting properties from

Chatelain. As part of that deal, Chatelain required Galloway to

indemnify him and Azar against the financial risk of owning and

operating Monroe and to assume financial responsibility for

Monroe. That arrangement was eventually memorialized in a

“put/call” agreement that gave Galloway the right to buy, and

Monroe the right to call upon Galloway to buy, Monroe for a price

that was the sum of Monroe’s debts and liabilities. CCA also

entered a consulting arrangement with Monroe under which it
1 The contract is actually with Communications Corporation

of Monroe, a subsidiary or sister corporation of CCA, which CCA

created for the purpose of providing services to Monroe. For

clarity, we refer to the corporation that manages Monroe as CCA.

2 The trial court determined that the payments constituted a

loan. Although Monroe appears to maintain, as it did at trial,

that the payments were either an investment or a donation, it

concurred with Mumblow’s statement of issues, which does not

appeal the trial court’s determination that the payments

constituted a loan. For that reason, and because Monroe concedes

that it “accept[s] the result of the trial court’s judgment” on

this issue (Appellee’s Brief at 11), we do not review that

judgment. 

3

provided daily operational services to Monroe.1 CCA was never

paid for its services. Rather, Monroe regularly issued notes in

CCA’s favor, reflecting the amount owed for the services.

Chase Manhattan Bank loaned CCA money. In October 2000,

Chase required Galloway to stop drawing his salary from CCA

because of CCA’s weakened financial condition. At the time,

Galloway had contributed over one million dollars to Monroe for

its daily operations. Mumblow suggested to Elmore that they

advance their salaries from CCA to Monroe to ease the burden on

Galloway. On October 31, 2000, Mumblow began advancing his

salary checks, in the amount of $14,000 per month, to Monroe.2

In June 2000, the principals of Monroe, with the assistance

of Galloway, Elmore and Mumblow, arranged a working capital

infusion for Monroe by refinancing its existing indebtedness

through a loan from Whitney Bank. Whitney required an additional

two million dollars in collateral for the loan. Mumblow

originally agreed to put up $500,000, but he withdrew his offer
4

shortly before the loan closed. Galloway made up the difference. 

The $10,000,000 loan agreement, which included an additional

$1,000,000 line of credit, became final in December of 2000. 

Mumblow continued to turn over his salary checks to Monroe until

August 15, 2001. Other than the cancelled checks, no documents

exist to memorialize Mumblow’s loan. Monroe’s financial

statements show the payments as notes payable under the category

of long-term liabilities. Mumblow stopped working for CCA in

January of 2002.

On or about December 21, 2001, Mumblow demanded repayment of

the loan. Monroe refused to repay Mumblow. On January 18, 2002,

Mumblow sued Monroe on the loan in the United States District

Court for the Western District of Louisiana. The parties

consented to a trial by Magistrate Judge C. Michael Hill. After

a bench trial, the court found that (1) Louisiana law governs the

choice of law determination; (2) Louisiana law applies to the

transactions, and the transactions constitute a loan; (3) under

applicable Louisiana law, the loan is subject to an implied

suspensive condition that suspends Mumblow’s right to demand

repayment until Monroe’s assets are either sold or merged; and

(4) Mumblow’s demand for repayment is premature because the

suspensive condition has not matured. The court entered judgment

in favor of Monroe and dismissed the action. Mumblow timely

appeals.

II. STANDARD OF REVIEW
5

We review choice of law questions de novo. Adams v. Unione

Mediterranea Di Sicurta, 220 F.3d 659, 674 (5th Cir. 2000). We

review the trial court’s findings of fact and inferences deduced

therefrom for clear error. Jarvis Christian Coll. v. Nat’l Union

Fire Ins. Co., 197 F.3d 742, 745 (5th Cir. 1999). We review the

legal conclusions the trial court reached based upon factual data

de novo. Id. at 746.

III. DISCUSSION

A. Choice of Law

In diversity cases, we apply the law of the forum state to

determine which state’s law applies. Woodfield v. Bowman, 193

F.3d 354, 359 n.7 (5th Cir. 1999). Here, the forum state is

Louisiana, and we would ordinarily apply its choice of law

provisions.

We have previously held, however, that “[i]f the laws of the

states do not conflict, then no choice-of-law analysis is

necessary,” and we simply apply the law of the forum state. 

Schneider Nat’l Transp. v. Ford Motor Co., 280 F.3d 532, 536 (5th

Cir. 2002); W.R. Grace & Co. v. Cont’l Cas. Co., 896 F.2d 865,

874 (5th Cir. 1990) (when the substantive decisional law of all

relevant jurisdictions is the same, a court need not “go through

the motions” of making a choice of law); see also Travelers Ins.

Co. v. McDermott, Inc., No. CIV.A. 01-3218, 2003 WL 21999354, at

*7 (E.D. La. Aug. 22, 2003) (when the laws of Louisiana and
6

Connecticut are in harmony, no choice-of-law analysis is

necessary). Here, the parties assert that the two states with an

interest in the transaction are New York and Louisiana. Mumblow,

in challenging the trial court’s determination that the loan is

subject to a suspensive condition, argues that New York contract

law, unlike Louisiana contract law, would render the suspensive

condition found by the trial court unenforceable.

We conclude, however, that the controlling issue in this

matter is whether there is substantial evidence to support the

trial court’s determination that Monroe’s repayment obligation is

conditioned on the sale or merger of Monroe’s assets. See

discussion, infra, at Part III.B. Thus, we first consider

whether the substantive contract law of New York and Louisiana

conflicts on the issue of the interpretation of oral contracts

and the evidence used to determine their terms, including terms

that suspend the existence of a party’s obligation until the

occurrence of a condition (known as a condition precedent under

New York law and a suspensive condition under Louisiana law). 

See Southern States Masonry, Inc. v. J.A. Jones Constr. Co., 507

So.2d 198, 204 n.15 (La. 1987) (citing City of New Orleans v.

Tex. and Pac. Ry. Co., 171 U.S. 312, 334 (1898)). Because we

conclude that the substantive contract law of New York and

Louisiana is in harmony on these issues, no choice of law

analysis is necessary, and we apply Louisiana law.
7

The law of New York and Louisiana is in agreement on the

following principles of contract interpretation that are relevant

to the issue under review. First, both states’ laws and

jurisprudence, in the absence of a writing, look to the parties’

intent to determine the terms of an oral agreement, including

whether a condition was part of the agreement. Compare Ferrer v.

Samuel, 746 N.Y.S.2d 242, 243 (N.Y. Dist. Ct. 2002) (noting that

courts, in interpreting an oral agreement, “typically look to the

objective intent manifested by the parties at the time they

contracted”), with LA. CIV. CODE art. 1768 (“Conditions may be

either expressed in a stipulation or implied by the law, the

nature of the contract, or the intent of the parties.”), and LA.

CIV. CODE art. 2045 (“Interpretation of a contract is the

determination of the common intent of the parties.”). Second,

both states’ laws and jurisprudence require the party who relies

on the condition to suspend his obligation to prove that the

condition was part of the agreement. Compare Abacus Real Estate

Fin. Co. v. P.A.R. Constr. and Maint. Corp., 496 N.Y.S.2d 237,

238 (N.Y. App. Div. 1985) (requiring defendants who asserted that

their obligation was subject to an oral condition precedent to

prove the condition was part of the agreement), with Sam’s Style

Shop v. Cosmos Broad. Corp., 694 F.2d 998, 1004 (5th Cir. 1982)

(finding that Louisiana law requires one who relies on a

suspensive condition to prove the existence of the condition). 
8

Third, under both states’ laws and jurisprudence, courts avoid

construing an agreement as subject to a condition suspending the

existence of an obligation, unless there is clear evidence of the

parties’ intent to include such a condition in the agreement. 

Compare Unigard Sec. Ins. Co. v. North River Ins. Co., 79 N.Y.2d

576, 581 (1992), with Southern States Masonry, Inc., 507 So.2d at

201 (stating that Louisiana courts avoid construing contractual

provisions as suspensive conditions whenever possible), and

Hampton v. Hampton, Inc., 713 So.2d 1185, 1190 (La. Ct. App.

1998) (stating that Louisiana courts find a suspensive condition

only when the express language of the contract compels such a

construction) (emphasis added). Because there is no apparent

conflict between the law of New York and Louisiana with respect

to the determinative issue in this case, that is, whether there

is substantial evidence to support the trial court’s

determination that Monroe’s repayment obligation was subject to a

condition, we need not engage in a choice-of-law analysis. 

Instead, we apply the law of the forum state, Louisiana. See

Schneider Nat'l Transp., 280 F.3d at 536.

B. The Implied Condition on Monroe’s Repayment Obligation

Mumblow argues that the trial court erred when it found that

Mumblow’s right to demand repayment was conditioned on the sale

or the merger of Monroe’s assets because there was not enough

evidence to support that determination. Under Louisiana law, “an
9

obligation is conditional if it is dependent on an uncertain

event.” Kaufman v. Corporate Realty, Inc., 759 So.2d 969, 976 

(La. Ct. App. 2000). Conditions on an obligation may be implied

by the law, the nature of the contract, or the intent of the

parties. LA. CIV. CODE art. 1768. A finding that the parties

intended an obligation to be conditional is a finding of fact

that we review for clear error. Gebreyesus v. F.C. Schaffer &

Assoc., Inc., 204 F.3d 639, 642 (5th Cir. 2000); Kaufman, 759

So.2d at 976; Hampton, 713 So.2d at 1189 (“Intent is an issue of

fact which is to be inferred from all of the surrounding

circumstances.”). We conclude that clear error exists when: 

(1) the findings are without substantial evidence to support

them, (2) the court misapprehended the effect of the

evidence, and (3) if, although there is evidence which if

credible would be substantial, the force and effect of the

testimony, considered as a whole, convinces the Court that

the findings are so against the great preponderance of the

credible testimony that they do not reflect or represent the

truth and right of the case. 

Moorhead v. Mitsubishi Aircraft Int’l, Inc., 828 F.2d 278, 283

(5th Cir. 1987). Before we will disturb the trial court’s

factual findings, we must be “left with the definite and firm

conviction that a mistake has been made.” Otto Candies, L.L.C.

v. Nippon Kaiji Kyokai Corp., 346 F.3d 530, 533 (5th Cir. 2003). 

Because we have thoroughly reviewed the record and are left with

such a conviction, we reverse.

As evidence that the parties intended Monroe’s repayment

obligation to be subject to a suspensive condition, the trial
10

court found that Mumblow knew that Monroe’s financial condition

was weak, that Mumblow testified that when he was making the

loan, he did not expect to demand repayment, and that Mumblow and

the others making the loans only hoped to be repaid. (Reasons

for J. at 7). The court inferred that, because “everyone knew

that Monroe was not in a position to immediately repay the loan

extended by Mumblow, . . . it is clear that everyone intended

that repayment would occur only when Monroe was sold at a profit

or if Monroe, or its assets, was merged into CCA.” (Id.). 

Because the record does not contain substantial evidence to

support the trial court’s finding, we conclude that the court

clearly erred in inferring a suspensive condition.

None of the evidence the trial court cited substantially

supports its inference that the parties intended Monroe’s

repayment obligation to be conditioned on the sale or merger of

its assets. The effect of a suspensive condition is that no

obligation to perform arises on the part of Monroe, unless and

until the condition is fulfilled. In other words, if Monroe is

never sold or merged, Mumblow will never have the right to be

repaid his $140,000. Perhaps in recognition of the fact that

suspensive conditions mean that one party intends to assume an

added contractual risk before that party can demand reciprocal

performance, i.e., that the condition be fulfilled, Louisiana

courts do not infer such conditions without very strong proof. 
11

See Southern States Masonry, Inc., 507 So.2d at 205 (finding that

to construe an agreement as requiring one party to wait for

payment until a condition is fulfilled, which might never occur,

would give the agreement “an unreasonable construction which the

parties did not intend”). Indeed, they do so only when the

express language of the contract “compels” such a construction. 

See Hampton, 713 So.2d at 1190. In the context of an oral

agreement such as this one, such a condition should not be

inferred unless there is clear evidence that the parties agreed

on such a condition. Further, the party who relies on a

suspensive condition, in this case Monroe, has the burden of

proving its existence. Sam’s Style Shop, 694 F.2d at 1004. The

trial court neither discussed nor assigned the burden of proof

when it found the suspensive condition. Because suspensive

conditions are disfavored and the burden of proof is on the party

relying on the condition, the trial court should not have

inferred a suspensive condition in the absence of evidence that

would at least substantially support that inference. In this

case, no such evidence exists, and the trial court’s inference is

therefore clearly erroneous.

The trial court first relied on Monroe’s weak financial

condition and Mumblow’s knowledge of that condition to infer that

the parties intended Monroe’s repayment obligation be suspended

until after a sale or merger of its assets. Significantly, no
12

witness actually testified that the parties intended to condition

Monroe’s repayment obligation to Mumblow on a sale or merger of

Monroe’s assets. Mere evidence of Monroe’s weak financial

condition neither requires nor substantially supports the trial

court’s inference that the parties intended Monroe’s repayment

obligation to arise only if Monroe’s assets were sold or merged. 

That Mumblow knew that Monroe was financially weak simply does

not overcome the common sense understanding, mandated by

Louisiana precedent, that the parties to a contract do not intend

a suspensive condition in the absence of strong evidence of such

intent. 

Further, there was evidence that Monroe could in fact repay

the loan. Monroe had an unused one million dollar line of credit

at Whitney National Bank until the end of 2002, against which it

was free to borrow to pay off debts or otherwise use as it saw

fit. (Tr. Transcript at 61). Although there was testimony that

the owners of Monroe were opposed to drawing on this line of

credit (see id. at 80), Galloway was obligated to indemnify the

owners of Monroe as to any amount they might owe on that debt. 

(Id. at 46). But even if the trial court were correct that

Mumblow knew that he realistically would not obtain repayment

until the company’s financial condition improved, it simply does

not follow that the parties intended that Monroe’s repayment

obligation would never arise unless there was a sale or merger of

its assets. The condition the court inferred would mean that
13

Mumblow had no right to demand repayment without a sale or

merger, even if Monroe generated a positive cash flow and could

service its other debts. Not only does evidence of Monroe’s weak

financial condition, without more, not suggest such a restrictive

condition, but the sale or merger condition is also contradicted

by Boulanger’s testimony that if Monroe generated a positive cash

flow, Mumblow would be able to get his money back, even without a

disposition of Monroe’s assets. (Id. at 43). 

The other evidence in the record also does not substantially 

support the trial court’s conclusion that the parties intended

Monroe’s repayment obligation to be conditional. The trial court

characterized Mumblow’s testimony as an acknowledgment that when

he was making the loan, he did not expect to demand repayment. 

(Reasons for J. at 8). Mumblow explained that he told Elmore on

several occasions that, “we could ask for our money any time you

wanted to, but I knew that if I asked for payment, I couldn’t get

payment at that time.” (Id. at 126). This acknowledgment of an

economic reality does not substantially support an inference that

Mumblow also intended Monroe’s repayment obligation to be

conditional, a provision that would only further frustrate his

ability to collect on Monroe’s obligation. This is particularly

true since Mumblow denied that there was any such condition.

There is not much evidence in the record from which to

discern Monroe’s intentions as to its repayment obligation. One

thing is clear, there is no direct evidence that Monroe intended
14

the obligation to be conditional. The owner of Monroe,

Chatelain, testified that he did not know about the loan until

Mumblow instituted the current proceedings by demanding

repayment. (Tr. Transcript at 51). On Elmore’s instructions,

the notes were classified by Boulanger, the CCA controller who

kept Monroe’s books, as notes payable under the category of longterm liabilities. But Boulanger testified that the notes

reflecting Monroe’s obligation to CCA for services under the

consulting agreement were likewise classified as notes payable

under the category of long-term liabilities, when they in fact

were demand notes. (Id. at 37). Boulanger did not testify as to

the proper way to account for a loan subject to a suspensive

condition, or state that Mumblow’s loan was accounted for as a

long-term liability because it was conditional. Indeed,

Boulanger admitted that Mumblow said nothing to him about a

condition on his right to demand repayment, although Mumblow

joked that Monroe would have difficulty repaying the loan. (Id.

at 30). This scanty evidence plainly does not provide

substantial support for the trial court’s finding that Monroe’s

obligation was conditioned on the sale or merger of Monroe’s

assets. 

In contrast, the inference that the parties did not intend

to impose such a condition is substantially supported by the

evidence in the record. Mumblow testified that he expected to

demand repayment eventually (Tr. Transcript at 127), that he was
15

sure it was his “right” to ask for repayment (id.), and that he

asserted to Elmore on several occasions that they could ask for

repayment any time they wanted to (id. at 126), testimony that

neither Elmore nor anyone else contradicted. Mumblow also

testified that Elmore told him that Elmore would have notes

payable drawn up on the advances, though the notes were never

produced. (Id. at 105). Mumblow wrote “payables” on the last

check he sent to Monroe, by which he meant to indicate that the

checks “were the notes payable according to the financial

statements of Monroe Broadcasting that recorded my loan to them.” 

(Id. at 100-101). Elmore admitted that Mumblow never said to him

that Mumblow “was placing a restriction on his right to demand

repayment of the money.” (Id. at 60). All of this testimony

contradicts the trial court’s finding that Mumblow intended

Monroe’s repayment obligation to be subject to a suspensive

condition.

The only evidence that could potentially support an

inference that Monroe’s repayment obligation was conditional is

Elmore’s testimony that neither he nor Mumblow expected to get

his money back unless Monroe’s financial condition improved and

the company was sold. (Tr. Transcript at 78, 81, 86). Elmore

did not testify that either he or Mumblow specifically agreed to

forego any right to repayment unless the company was sold or

merged. His statement was based on his assertion that both he

and Mumblow knew that Monroe was “under water to the tune of
3 We note that the trial court dismissed the complaint but

did not specify that the dismissal was without prejudice. Under

Federal Rule of Civil Procedure 41, a dismissal for prematurity

should have been without prejudice because it does not operate as

16

about $5 million.” (Id. at 81). In fact, Elmore admitted that

Mumblow never told him that Mumblow placed any restriction on his

right to be repaid. Elmore’s weak testimony as to his and

Mumblow’s “expectation” is not of the caliber necessary to

substantially support the finding of a suspensive condition. See

J.C. Frantz v. Vitenas, 347 So.2d 284, 285 (La. Ct. App. 1977)

(finding that defendant failed to show that his verbal payment

obligation was conditioned because the record contained no

evidence that he expressly conditioned his obligation on the

happening of an uncertain event, and the condition could not

reasonably be implied from the nature of the contract or the

presumed intent of the parties). Lacking such evidence, bearing

in mind that the burden of proof is on Monroe, and considering

Mumblow’s ample testimony that his intent was for Monroe’s

repayment obligation to be unconditional, we conclude that the

trial court’s finding that a condition existed lacks substantial

support.

Accordingly, we conclude that the trial court clearly erred

when it inferred that Monroe’s obligation is subject to a

suspensive condition, and we reverse the trial court’s judgment

in favor of Monroe and its dismissal of Mumblow’s complaint as

premature.3
an adjudication on the merits. FED. R. CIV. P. 41(b). 

17

C. Mumblow’s Remaining Arguments

Because we hold that the trial court clearly erred when it

found an implied suspensive condition on Monroe’s repayment

obligation and dismissed Mumblow’s claim as premature, we need

not consider Mumblow’s remaining arguments that the trial court

erred in failing to define the terms of the condition and in

failing to grant judgment in Mumblow’s favor subject to the

satisfaction of the condition.

D. The Remand

There is no evidence in the record that would support a

determination that the parties intended to fix a term for

repayment of the loan. Louisiana law dictates that when an

agreement does not specify a term for repayment of a loan,

repayment is due in a reasonable time. See LA. CIV. CODE art.

1778; Sanders v. Russell, 864 So.2d 219, 222 (La. Ct. App. 2003)

(finding that when parties did not fix a term for repayment of a

loan, term was undeterminable and therefore repayment was due

within a reasonable time); Parquette v. Arceneaux Music Ctr.,

Inc., 425 So.2d 362, 364 (La. Ct. App. 1982) (finding that when

no time limit for repayment of loans had been discussed, parties

intended that loan would be repaid within a reasonable time and

that a reasonable time (six months) had expired by the time suit

was filed); see also LeBlanc v. City of Plaquemine, 448 So.2d
18

699, 703 (La. Ct. App. 1984) (“In the absence of an express

stipulation as to the term of a contract, Louisiana courts will

infer a reasonable term from the nature of the contract and the

circumstances of the case.”); Saul Litvinoff, THE LAW OF

OBLIGATIONS: PUTTING IN DEFAULT AND DAMAGES § 1.9 (2d ed. 1999) (stating

that, although the parties to a “friendly” loan may not name a

time by or at which the money must be paid back, it is clear that

they do not intend repayment to be made immediately after the

borrower receives the money from the lender and, in such a case,

if the time for repayment is not determinable, payment is due in

a reasonable time). We remand this matter to the trial court to

determine whether a reasonable time for repayment of the loan has

expired.

IV. CONCLUSION

For the foregoing reasons, the judgment is AFFIRMED in part,

REVERSED in part, and REMANDED for further proceedings consistent

with this opinion.