IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 92-3832

NEWPORT LIMITED, a Partnership

in Commendam,

Plaintiff-Appellant,

versus

SEARS, ROEBUCK & COMPANY,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Louisiana

(October 29, 1993)

Before KING, HIGGINBOTHAM, and DeMOSS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

This case appears before the Fifth Circuit for the second

time. In 1990, the district court granted summary judgment for

Sears, Roebuck and Co., on Newport Limited's civil RICO claim and

dismissed Newport's pendent state law claims. We affirmed the RICO

decision, but instructed the trial court to rule on the pendent

claims given the advanced state of the litigation. On remand, the

court granted summary judgment on Newport's state law claims as

well. We REVERSE the district court order granting summary

judgment and REMAND for further proceedings.2 I

As Newport appeals from summary judgment, we view the evidence

in the light most favorable to Newport. B arrett Computer Services,

Inc. v. PDA, Inc. , 884 F.2d 214, 216 (5th Cir. 1989).

Newport owns approximately 700 acres at the intersection of

the Mississi ppi River-Gulf Outlet and the Gulf Intracoastal

Waterway in Orleans Parish. In the early 1980's, Newport began

efforts to develop the property into an industrial pa rk. In May

1983, Sears' subsidiary Coldwell Banker contacted New port to

discuss locating an import distribution facility at the site.

Sears had several war ehouse and distribution centers scattered

around New Orleans, and was inte rested in consolidating them if

that would result in savings.

Upon Sears' suggestion, Newport retained Goldman, Sachs & Co.

to assist in preparing its proposal. On September 22, 1982,

Newport presented a package outli ning plans for the proposed

distribution center. The proposal's price and terms were based

upon the outlined specifications, but Newport invited "Sears [to]

make whatever changes to the existing design it considers

desirable. If the design changes result in cost differences . . .

the lease rates will be adjusted accordingly." The proposal

specified that the lease rates would be adjusted according to a

formula devised by Goldman Sachs and previously used for a Sears

facility in Texas.

In December 1983, Sears officials met with Newport to examine

the proposal. A member of Sears' site selection committee stated3

that Sears had determined that an import distribution cen ter was

feasible and should be located in New Orleans. A Sears financial

analyst acknowledged the Goldman Sachs formula and noted that Sears

could calculate the rent during development by entering

construction costs into the formula.

Sears then requested design chang es. In February 1984,

Newport submitted a revised proposal incorporating those changes.

Newport calculated the rent to be $2.26 per square foot per year.

Upon receiving the revisions, Sears reviewed the rent calculations

and discovered that Newport had made an error. According to the

formula, Sears confirmed that the correct rent for the revised

proposal would be $2.48 per square foot per year.

Sears' interest in the Newport site depended upon its

designation as a Foreign Trade Zone. Sears also insisted upon

infrastructure improvements including better road access. Newport

sought these prerequisites from the necessary governmental

agencies. By March 1984, Newport found that its negotiations with

go vernment agencies could not proceed without a commitment from

Sears. On March 15, 1984, representatives of Sears and Newport met

to review the proposal. Newport informed Sears that a firm

commitment was necessary to accomplish the desired improvements and

to establish trade zone status. Recognizing this need, Sears

decided to review the project thoroughly and make a final decision.

By August 1984, Se ars completed a detailed study of the

project. This study recommended locating a 650,000 square foot

i mport distribution center at Newport's site. A separate Sears'4

review had previously concluded t hat the annual rent for the

equivalent warehouse space, scattered about New Orl eans, would

total $3.92 per square foot. The review included Newport's

proposed $2.48 rent and noted that fo reseeable construction cost

escalatio ns of $1 million would increase the rent to $2.73. The

review estimated that a consolidated center in a foreign trade zone

at Newport's industrial park would p roduce an annual savings of

over a million dollars.

Sears executives approved the 25-year lease of a 650,000

square foot facility to consolidate New Orleans import distribution

operations. On October 16, 1984, Sears informed Newport of

approval to construct the facility at Newport's site. Sears'

personnel were to define the plans and specifications. Soon after,

Sears formally advised the City of New Orleans of its decision to

locate at Newport. The City then publicized this decision.

In November 1984, Sears in f ormed Newport that new

specifications, upgrading the proposed building, were forthcoming.

Relying upon Sears' good faith and the announced decision, Newport

commenced development. It retained consultants and initiated

detailed disc ussions with City, State, and Federal agencies, to

gain approval for the t rade zone status and infrastructure

improvements Sears requested.

As part of these efforts, Newport pursued an Urban Development

Action Grant from the United States Department of Housing and Urban

Development. This Grant would subsidize the City's infrastructure

improvements. To assist in obtaining the Grant, Newport requested5

evidence of Sears' commitment. On November 30, 1984, Sears'

territorial real estate manag er wrote a letter expressing Sears'

intention to enter into a build-to-suit transaction with Newport.

This letter had been reviewed and revised by Charles Houk, an inhouse attorney working on the transaction for Sears.

The November 30 letter did not satisfy HUD officials because

it left uncer tain Sears' commitment to carry out the project.

Newport requested written evidence of Sears' firm co m mitment.

Newport informed Sears' c ounsel Houk that the necessary document

must demonstrate actual commitment by Sears to the Newport project.

Newport sent Sears a proposed agreement, with a cover letter

stating that it duplicated the November 30 letter of intent "with

the additional items required by HUD."

On January 4, 1985, representatives of Newport and Sears again

conferred regarding the draft document sent by Newport. They

negotiate d and revised its provisions. In particular, they

discussed its reference to rent. Newport's representative believed

that both parties understood tha t this provision implicitly

required use of the Goldman Sachs formula. Thus, although the

draft allowed Sears to propose design changes that would increase

construct ion costs, the rent adjustment referred to in the draft

could be calculated. At the end of this discussion, Sears'

representative stated that he would review the document and present

it to Sears' officials for approval. Ron Stafford and A.H. (Art)

Ruff of Sears reviewed the document and Ruff executed it on January6

9, 1985. Newport accepted the terms of the agreement the following

day.

On January 24, 1985, Sears' counsel spoke to a HUD official

and confirmed Sears' agreement to proceed with the project. Sears'

counsel told the official that no other corporate approval for the

project was required and that Sears would proceed under the terms

of the January 9, 1985 document. Stafford also later testified

that after January 9 the Newport project was a "done deal."

The January 9 document appears on Sears letterhead and reads,

in pertinent part:

We have analyzed the proposal offered by you for the

construction of a new import/export warehousing facility to be

located within the Newport Industri a l Park, New Orleans,

Louisiana, such construction to be on a build-to-suit basis.

Based upon our analysis and subject to the preparation of

mut ually agreeable legal documentation, we are prepared to

enter into the transaction on s ubstantially the following

terms and conditions.

. . . 2. We have revised your proposal to provide that the

facility shall initially be an approximat ely 650,000 square

foot building with related improvements to be constructed by

Newport, and is designed to accommodate additional expansion

of approximately 300,000 square feet. . . .

. . . 4. It is our understanding that Newport Limited is

working with the City of New Orleans in its request for a HUD

Urban Development Action Grant in the amount of $8,000,000 to

fund the public infrastructure described in item 3 above. Our

commitm ent to this transaction is contingent upon the said

infrastructure being provided.

5. The initial lease term shall be 25 years with the

lease containing six five-year renewal options.

. . . 7. During the initial term of the lease, the annual rent

per square foot will be $2.48, to be adjusted to reflect the

value engineeri ng currently in progress, Tenant changes and

increases due to inflation factors.

. . . It is to be understood that the matters contained in this

letter will form the basis of a much more detailed document,

the terms and conditions of which are subject to the mutual7

agreement of the parties. It is therefore not intended to be

a comprehensive statement of our respective rights, duties and

obligations which will be fully set forth in said document.

. . . The undersigned has the authority to execute this letter

agreement with Newport Limited.

/s/ A.H. Ruff

Regional Real Estate Manager

Sears executed this document, w hich provides that the rent

figure of $2.48 per square foot was to be adjusted. In deposition,

four Sears officials--Ruff, Reaves, Hosch, and Tidmarsh--testified

that Sears never intended to pay more than $2.48 as a final rent.

Sears did not inform Newport of this intention.

After the January 9 agreement, Newport c ontinued developing

the project. Actual construction could not begin, however, until

Sears provided more specifications. On June 20, 1985, the parties

met to discuss these matters. Sears agreed to provide building

plans and specifications within two weeks of the June 20 meeting.

The bid package was to be completed by September. In fact, Sears

never delivered the necessary information.

Eleven days later, on July 1, 1985, Charles Reaves became

Sears' Vice President of Distribution. Reaves was chairman of a

task force studying Sears' distribution system. By the summer of

1985, Reaves concluded that Sears had excess warehouse and

distribution space--without the Newport facility. Sears therefore

decided that it n either needed nor wanted to lease more space at

Newport. Subsequently, the company issued a moratorium on all

major warehouses.8

On September 16, 1985, Reaves and other Sears officials met to

develop a str ategy regarding Newport. After the meeting, on

September 18, Ruff circulated a memorandum summarizing the options

that had been considered. According to Ruff, these were (1)

candidly advise Newport that Sears would not proceed and desired to

cancel the project; (2) proceed with the project to avoid legal

consequences and protect Sears' credibility; (3) proceed but take

"an extremely hard nosed position" in negotiations with the

acknowledged possibility that such an approach might cause Newport

to abandon the projec t; and (4) request to stay the project for

several months pending reconsideration by Sears of whether to

proceed, downsize, or cancel the project. Ruff stated that the

consensus of the September 16 meeting was to recommend the fourth

option to senior management.

Six months later, Newport r equested design information from

Sears and suggested a schedule for the construction. On March 14,

1986, Ruff circulated a memorandum discussing this schedu le. It

began by stating, "The officers of the company have decided to

proceed with the leasing and development of the 650,000 square foot

IDC in New Orleans with Newport Enter prises." On a copy of this

memorandum, Vice President Dan Reaves added the handwritten

notation, "there is no way we could work with these dates and even

if we could we would still stay with our original plan, i.e. 'drag

our feet'!"

After the September 1985 Sears meeting, Sears had ceased

providing information to the Newport project developers. Sears'9

supervisor of construction planning was informed that the project

was discontinued. Other Sears employees referred internally to the

project being on hold.

At meetings in October and November 1985, Sears requested that

Newport agree to a six month delay so that Sears could complete a

study of its distribution practices. Newport examined the impact

of this request, particularly upon the HUD Grant. On December 4,

1985, Sear s officials including Reaves, Ruff, and Houk met with

Newport personnel. Newport informed Sears that the requested delay

would endanger the Grant, and so Newport refused. A Sears official

suggested that the project be reduced in size. Newport declined,

citing the January 1985 agreement to 650,000 square feet and noting

that a reduction would also jeopardize the Grant. Finally, Ron

Ruth stated that Sears would honor its commitments.

At this time, Newport proposed a bid package for one design of

the facility. Sears agreed to review the proposal and provide

suggestions or approve it or both. Sears did not do so.

In January 1986, Sears requested that Newport respond in

writing to a proposal to downsize the f acility. On January 15,

1986, Newport declined this proposal. Newport noted that the HUD

Grant had been awarded on the basis of the original proposal, and

would be jeopardized by a reduction. Other government agencies had

made plans and commitments based on the original size as well.

In February 1986, Ruff wrote a le tter for Sears confirming

that Sears' officers had decided "to move forward with the leasing

of the 650,000 square foot facility." This letter stated that the10

rent was "not to exceed $2.48 a square foot." When a Newport

employee called to discuss rent, Sears stated that $2.48 was "nonnegotiable."

Meanwhile, Sears had advised Newport that it would make design

changes, but did not resp ond to Newport's proposed bid package.

Changes proposed by Sears might have increased construction costs.

In March 1986, Sears delivered a draft lease to Newport. Like

the February letter, the draft lease set the "non-negotiable"

annual rent at $2.48 per square foot. The draft lease also allowed

Sears to make changes to the buil ding prior to construction,

without a ffecting the rent. Finally, contrary to previous

negotiations, the leas e provided that Newport would pay for

insurance on the facility.

II

Newport sued Sears in June 1986 alleging breach of contract,

civil RICO, and deceptive trade practices. In 1990, the district

court dismissed the RICO claims on the merits and dismissed the

pendent state law claims without prejudice. N ewport Ltd. v. Sears,

Roebuck & Co.

, 739 F. Supp. 1078 (E.D. La. 1990). Newport

appealed, and we affirmed the dismissal of the RICO claim but

vacated the dismissal of the pendent claims. N ewport Ltd. v.

Sears, Roebuck & Co.

, 941 F.2d 302 (5th Cir. 1991). On remand,

Sears once more sought summary judgment on the state law claims,

which the district court granted. Newport again appeals.

III11 A

We review the district co urt's grant of summary judgment de

novo, applying the same standard as the district court. Hanks v.

Transcontinental Gas Pipe Line Corp. , 953 F.2d 996, 997 (5th Cir.

1992). Summary judgment is proper only if the record discloses

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

moving party is e ntitled to judgment as a matter of law. H arbor

Ins. Co. v. Trammell Crow Co.

, 854 F.2d 94, 98 (5th Cir. 1988)

(quoting Fed. R. Civ. P. 56(c)), cert. denied

, 489 U.S. 1054

(1989). We indulge every reasonable inference from the facts in

favor of the non-movant. Powers v. Nassau Development Corp. , 753

F.2d 457, 462 (5th Cir. 1985).

B

Before reaching the merits, we must determine which documents

in the record should be considered. Specifically, Sears has moved

to strike Newport's references to three documents prepared by Houk,

an in-house attorney at Sears. We have carried that motion with

the case.

On May 18, 1990, the district court entered an order holding

that these documents were subject to the attorney-client privilege.

That order, in effect, struck them from the record. In the prior

appeal, this court affirmed that order. N ewport Ltd. v. Sears,

Roebuck & Co.

, 941 F.2d 302, 308 n.10 (5th Cir. 1991). Our

decision, however, noted that the district court's evidentiary

ruling may have been influenced by its contemporaneous dismissal of

the action, which this court vacated. Our opinion stated that "the1 Sears' request for sanctions against Newport is denied.

Given our remand on the merits, we once more note that the

district court may revisit the issue, if it so chooses.

12 district court is free to revisit that issue, should it choose to

do so, as it may apply to the state-law claims" that we reinstated.

Id.

Newport does not contend that the district court reconsidered

its ruling on this issue. Nor did Newport request reconsideration.

It explains this omission by referring to the district court's

order on remand that "pre-trial motions shall not be filed without

leave of it." This does not explain, however, why Newport did not

seek leave to move for reconsideration. Moreover, Newport's

responses to Sears' m otion for summary judgment did not request

consideration of these documents--indeed, Newport did not mention

the documents. Nonetheless, Newport refers to these documents in

its briefs to this court. It contends that they remained part of

the record that we may consider, or that we may rule on their

admissibility ourselves.

We conclude that we are unable to consider these documents in

our determination. Privileged documents are inadmissible and thus

may not defeat summary judgment. S ee Howell Hydrocarbons, Inc. v.

Adams

, 897 F.2d 183, 192 (5th Cir. 1990). Newport did not seek

reconsideration of the district court 's evidentiary decision and

the court did not choose to revisit the issue sua sponte . Having

once affirmed the district court's ruling, we will not revisit the

issue where the district court has not done so. 113

Sears' motion to strike also refers to documents prepared by

Ruff, Sears' regional real estate manager. The district court held

that these materials were not privileged and they remain part of

the summary judgment record on appeal.

IV

Evidence in the record supports conflicting understandings of

the relationship between Newport and Sears. Giving credence to the

inferences most favorable to Newport, the non-movant, we conclude

that Sears is not entitled to judgment as a matter of law regarding

any of Newport's claims.

A.

1.

Newp ort maintains that a binding agreement came into effect

when both parties executed the letter dated January 9, 1985. The

developer argues that Sears intended to commit to the project and

agreed on all its ess ential terms. Sears denies that the letter

was meant as an enforceable agreement; it claims to have executed

t he letter only to facilitate the HUD grant. To support its

position, Sears points to language referring to terms and

conditions to be agreed upon in the future.

Although there is little authority, Louisiana law appears to

recognize the enforceability of preliminary agreements.

The settled jurisprudence of this State is that an

agreement be tween parties, where their minds have met

upon all essentials, constitutes a contract between them

and binds them at once although they may have agreed that

they would thereafter execute a formal instrument

containing the terms of their present agreement.14

Mermelstein v. Schwab

, 64 So. 2d 37, 38 (La . Ct. App. 1953)

(citations omitted). A so-called preliminary agreement may be

binding, even though it refers to a future written ag reement

finalizing its contents. C hevron U.S .A., Inc. v. Martin

Exploration Co.

, 447 So. 2d 469 (La. 1984). In M artin Exploration

,

the Louisiana Supreme Court noted that use of the word preliminary

"does not pre clude the agreement from being final until later

agreements are reached, or from being the only agreement in the

event no other agreements are confected." Id. at 472. Moreover,

the court found that the reference to a document "finalizing the

points listed above" did not evince an intent to be bound only upon

the execution of a later instrument. Id. Nor did an allusion to

future "negotiations" render the preliminary agreement non-binding.

To the contrary, the Supreme Court of Louisiana held that the

document was binding as tha t interpretation most accurately

reflected the intentions of the parties. Id.

Thus, whether a binding obligation existed upon the execution

of the letter of intent of January 9, 1985, or only u pon the

execution of a later, more comprehensive document, depends upon the

intentions of the parties. C ourtin v. Sharp

, 280 F.2d 345, 349

(5th Cir. 1960), cert. denied , 365 U.S. 814 (1961) (citing

Mermelstein ); cf. La. Civ. Code Art. 1947 (West 1987) (certain form

of contract execution required if contemplated by the parties).

The parties' intent is a question of fact. S ee Trinity Carton Co.

v. Falstaff Brewing Corp.

, 767 F.2d 184, 190 (5th Cir. 1985), cert.

denied

, 475 U.S. 1017 (1986); see also Texaco, Inc. v. Pennzoil,15

Co.

, 729 S.W.2d 768, 788 (Tex. App.--Houston [1st Dist.] 1987, writ

ref'd n.r.e.) (New York law), writ ref'd n.r.e., cert. dismissed

,

485 U.S. 994 (1988).

Newport argues that a reasonable person, examining the summary

judgment evidence, could find that Sears and Newport intended to be

bound by the January 9, 1985 letter agreement. We agree. There is

ample evidence to support this conclusion.

The Supreme Court in Martin Exploration considered the actions

of the parties taken subs equent to the agreement in dispute as a

basis for inferring the parties' intentions. Martin Exploration

,

447 So.2d at 472. That approach proves useful in the present case.

Sears' actions subsequent to the letter of intent indicate that it

considered itself bound. In particular, when Sears officials

became uncertain as to the need for the warehouse which Newport

would provide, they requested to stay the project. The two parties

characterize Sears' actions differently. Newport claims that Sears

attempted to frustrate Newport's efforts to implement the agreement

and that Sears therefore acted in bad faith. Sears responds that

it intended to complete the transaction but disagreed with Newport

on some of the terms. The claims of the two parties support the

same conclusion, that is, that Sears considered the agreement

binding. If Sears were not bound, it would not have required

Newport's permission to suspend the project.

The letter of January 9, 1985 offers some basis for concluding

that Sears bound itself to the project. Thus, for example, Sears

designated the document a "letter agreement" and expressed an16

intent "to enter into the transaction on substantially the... terms

and conditions" contained in the letter. This language indicates

that the parties had settled on the essential terms of the

transaction. Other aspects of the letter, however, are more

ambiguous. The qualification that the letter was not a

"comprehensive statement of [the pa r ties'] rights, duties and

obligations" is representative in this regard. That claim

suggests, on the one hand, that the parties had established in the

letter certain rights, obligations and duties b ut, on the other

hand, that other such terms would follow. It leaves unclear

whether any of the essential elements of the deal had yet to be

resolved.

Other evidence is probative of Sears's intent in signing the

letter. Thus, for example, after Newport signed the letter, Sears

officials stated that the deal was consummated. We need not

conclude with certainty, however, that Sears intended that the

letter serve as a contract. We hold only that based on the record,

a reasonable jury could reach that conclusion.

2.

Sears maintains that, regardless of int ent, the January 9,

1985 letter is legally insufficient as a lease instrument. Under

Louisiana law, the confection of a lease obligation must meet three

requirements. It must indicate: the object of agreement, its

price, and the parties' consent. Trinity Carton , 767 F.2d at 190

(citations omitted). S ee also La. Civ. Code art 2670 (West 1993).17

Sears first notes that the letter of January 9, 1985 is

unclear about the amount of rent to be paid. It provides for

annual rent of $2.48 per square foot "to be adjusted." Sears could

make design changes, giving it control over one adjustment factor.

Sears relies on Louisiana state law suggesting that, for a lease to

be valid, the factors that determine rent mus t not be within the

control of the parties. S ee, e.g., Sealy (Pines Rd.) v. Physicians

& Surgeons Hosp., Inc.

, 480 So.2d 832, 837 (La. App. 2 Cir. 1985),

writ denied , 483 So.2d 1024 (La. 1986) (finding rent determinable

where it was implicitly renewed at a rate agreed upon in the past

because it was "beyond control of the parties"). The law merely

requires, however, that the parties have completed negotiating the

amount of the rent, although the parties' decisions or actions may

influence the rent owed. S ee, e.g., Mouton v. P.A.B., Inc.

, 450

So.2d 410, 412 (La. App. 3 Cir. 1984), write denied, 458 So.2d 118

(La. 1984) (rent made contingent on profit's earned by lessee, over

which lessee had control, was nevertheless determinable). Newport

of fers evidence that the Goldman Sachs formula would govern the

adjustments made to the rent. Indeed, at one point, Sears relied

on the formula to correct an error that Newport had made in a

provisional calculation of the rent. Testimony suggests that the

formula would reflect any changes Sears might require. Thus, if a

jury were to accept that the contract incorporates the Goldman

Sachs formula, the rent is determinable.

Sears al so claims that the premises were not adequately

defined to support a lease. In response, Newport points to the18

letter's description of a 650,000 square foot facilit y and

improvements to be made at the site to establish that the lease was

sufficiently determinate. The Supreme Court of Louisiana has held

that, where the plans and specifications of premises to be leased

have yet to be negotiated, no enforceable lease exists. Sig Hass

& Son v. Bernhardt

, 81 So. 402, 403 (La. 1919) (finding an oral

lease unenforceable where its terms were insufficiently definite).

In reaching that conclusion, however, the court indicated that had

the unresolved aspects of the lease lay within the control of one

of the parties, the lease might have been enforceable. I d.

("Plaintiffs do not allege that they alone were to decide upon the

plans and specifications... "). S ee also Arata v. Lo uisiana

Stadium and Exposition District

, 225 So.2d 362, 366-67 (La. 1969),

cert. denied , 396 U.S. 279 (1970) (finding a sufficiently defined

"thing" where the site of a stadium was subject to possible change

upon mutual agreement). Newport claims that Sears reserved the

right to chan ge the specifications and plans for the storage

fa cility and that the Goldman Sachs formula for determining the

rent would reflect the cost of such changes. If the jury were to

accept this contention, it could find that a sufficiently

determinate lease existed to bind the parties. We are not prepared

to deny the jury that opportunity.

3.

Sears invokes the doctrine of error, arguing that any consent

it gave in January 1985 was ineffective because Newport misled it.

Under the Louisiana Civil Code, a party is not bound by a contract19

which it entered as a result of error, fraud or duress. La. Civ.

Code art. 1948 (West 1993). More precisely, if a party would not

have entered a contract had it not held a mistaken belief, and the

oth er party was or should have been aware of this mistake, the

party is not bound by that contract. La Civ. Code art. 1949 (West

1993). Sears' reliance on this doctrine is misplaced.

Sears maintains that its reason for signing the letter was to

allow Newport to secure a grant. Newport claims that Sears

committed itself to the transaction through the letter. These two

views are not inconsistent. In order for Newport to secure a HUD

grant, it needed a statement from Sears indicating Sears'

commitment to the project. That Sears bound itself when it did, if

it did, in order to enable Newport to pursue the grant does not

preclude the possibility that the letter constituted a contract.

Sears wanted Newport to build a warehouse. Newport desired Sears

as its primary tenant. Thus, Sears and Newport had complementary

interests which could serve as the basis for a contract. That the

desire to secure a grant prompted the formation of the contract

would not make it any less binding. A reasonable jury could find

that a contract existed.

B.

Newport claims that Sears committed fraud on several

occasions. It pursues these claims under Louisiana Civil Code

articles 1953 and 2315.20 1.

To recover under article 1953, Newport must demonstrate the

existence of a contract. See Pedalino v. Pitre , 431 So.2d 20, 21

(La. App. 1 Cir. 1983) (Article 1953 pertains only to parties to a

contract); State Farm Fire & Casualty Co. v. Williams

, 453 So.2d

309, 311 (La. App. 1 Cir. 1984) (same). Assuming Newport meets

this burden, it must then show, first, that Sears misrepresented or

suppressed the truth with the intention of either gaining an unjust

advantage or causing Newport to suffer a loss and, second, that

this misrepresentation or suppression of the truth caused actual or

probable damages to Newport. D utton & Vaughan, Inc. v. Spurney

,

600 S o.2d 693, 698 (La. App. 4 Cir.), w rit denied

, 601 So.2d 663

(La. 1992). Newport predicates its claim under article 1953 on the

letter Sears executed in January 1985. Assuming, without deciding,

that the letter constituted a contract, we find that Newport has

raised a genuine issue of material fact as to whether Sears

intentionally misled Newport in order to gain a strategic

advantage.

In the letter of January 1985, Sears stated that it would pay

rent at an annual rate of $2.48 per square foot to be adjusted to

reflect, among other considerations, "the value [of] engineering"

in pr ogress at the time. In an internal review in 1984, Sears

noted that the then prospective engineering could increase the

monthly rent by as much 10%, up to $2.73. Several Sears officers

testified, however, that Sears never intended to pay more than

$2.48 per square foot per year for the leased space. Newport21

claims that t his contradiction supports the inference that the

January 1985 letter was deliberately misleading. Sears hoped,

according to Newport, to effect engineering changes only later to

refuse to accept a ny increase in the cost of rent. Newport's

investment in reliance on the letter would by then have placed

Sears in an advantageous bargaining position.

Newport's evide nce supports its contention that Sears took

deliberate ly misleading actions in order to secure a bargaining

advantage. If the lease incorporates the Goldman Sachs formula, as

it must to be sufficiently definite, Sears' proposed changes could

have increased the rent to more than $2.48. Sears' apparent intent

from the outset to refuse to pay the augmented amount is curious.

Moreov er, Sears' officers decided to adopt a deliberately "hard

nosed position" in forcing Newport to choose between accepting the

$2.48 in rent or abandoning the project. Thus, Sears gained a

tactical advantage from Newport's reliance on Sears' commitment, if

S ears in fact made one, to abide by the Goldman Sachs formula.

Sears' claim that it never believed that it had committed itself is

plausible. Nevertheless, the inference is fair that Sears

anticipated and even intended the benefit it received by misleading

Newport. We therefore find that Newport has raised a genuine issue

of material fact as to its first allegation of fraud.

2.

Newport also proceeds on a charge of delictual fraud pursuant

to Civil Code article 2315. The elements of this cause of action

are: "(1) a misrepresentation of a material fact, (2) made with22

the intent to deceive, and (3) causing justifiable relian ce with

resultant injury." A bell v. Potomac Ins. Co.

, 858 F.2d 1104, 1131

n .33 (5th Cir. 1988) v acated on other grounds

, 492 U.S. 914, 109

S.Ct. 3236 (1989) (citing La.Civ.Code arts. 1847, 2315; Silver v.

Nelson

, 610 F.supp. 505, 521 (E.D.La. 1985)). To recover under

article 2315, Newport need not prove the existence of a contract.

Id. (citing Restatement (Second) of Torts as referred to in Dousson

v. South Cent. Bell , 429 So.2d 466, 468 (La. App. 4th Cir.), writ

not considered

, 437 So.2d 1135 (La. 1983)). Newport bases this

cause of action on several statements by officers of Sears that it

wished to continue development of the warehouse. These statements

persisted after a meeting in which Sears officers con sidered

several possible courses of action. A memorandum that one of the

officers circulated after the meeting summa rized these options.

They included: (1) candidly informing Newport that Sears would not

proceed with the project; (2) proceeding with the project to avoid

legal cons equences and to protect Sears' credibility; (3)

proceeding but taking "an extremely hard nosed position" with the

a cknowledged possibility that Newport might abandon the project;

and (4) requesting to stay the project pending reconsideration of

whether to proceed with, downsize, or cancel the project. One of

the o fficers, Ruff, later circulated a memorandum expressing a

general agreement to proceed under option four. Six months later,

however, when Newport submitted a request for design specifications

and suggested a schedule to begin construction, Vice President Dan

Reaves wrote on his copy of a memorandum discussing the request23

that "there is no way we could work with [Newport's proposed

schedule] and even if we could we would still stay with our

o riginal plan, i.e. 'drag our feet'!" Sears never submitted to

Newport the requested specifications.

This evidence, and evidence indicating that Sears did not wish

to proceed with the warehouse, together suggest that Sears

deliberately misled Newport as to its intentions. Sears' allegedly

refused to acknowledge its desire to abort the project in the hope

that Newport would despair of its completion. As Sears' memorandum

indicates, if Sears forthrightly abandoned th e project Newport

would likely take legal action, whereas a successful effort at

stalling might leave Newport with the impression that the endeavor

simply failed. This, at any rate, is Newport's argument. Sears'

claim that it negotiated in good faith is plausible. A reasonable

jury could find, however, that Sears misrepresented its intentions

in order to avoid lia bility. As Newport has raised this genuine

issue of material fact, we reverse the district court's grant of

summary judgment to Sears.

C.

Newport also seeks recovery under Louisiana Civil Code article

1967, which provides in pertinent part:

A party may be obligated by a promise when he knew or should

have known that the promise would induce the other party to

rely on it to his detriment and the other party was reasonable

in so relying. Recovery may be limited to expenses incurred

or the damages suffered as a result of the promisee's reliance

on the promise. Reliance on a gratuitous promise made without

required formalities is not reasonable.24

To recover under article 1967, Newport must establish tha t Sears

made a promise on which Newport relied justifiably and to its

detriment. S ee Breaux v. Schlumberger Offshore Services

, 817 F.2d

1226, 1229 (5th Cir. 1987); South Central Bell Telephone Co. v.

Rouse Co.

, 590 So.2d 801, 804 (La. App. 4 Cir. 1991). Newport need

not prove the existence of a contract to establish its claim of

detrimental reliance, even in a context where a contract would

normally govern. S ee Morris v. People's Bank & Trust Co. , 580

So.2d 1029, 1036 (La.App. 3 Cir.), writ denied

, 588 So.2d 101, 102

(La. 1991) (allowing a pl aintiff to proceed to trial under

detrimental reliance) and Morris v. People's Bank & Trust Co.

, 580

So.2d 1037, 1043 (La.App. 3 Cir. 1991) (holding that the statute of

frauds barred the plaintiff from pursuing the same claim in

contract).

Newport predicates this claim on various of Sears' statements.

The most notable of these include two letters of intent, the second

arguably cons tituting a contract, that Sears sent Newport in

November 1984 and January 1985. Sears expressed in the first

letter its "intention to enter into [the] transaction" and stated

in its second letter that it was "prepared to enter into the

transaction." Both letters contained the essential terms under

which Sears would lease a warehou se from Newport. Moreover,

officers of Sears later acknowledged a commitment , both by

recognizing in internal memoranda, as one officer expressed the

matter, that "Sears ha[d] a moral obligation and possibly a legal

obligation ei ther to proceed or to reimburse the developer's25

costs," and, later, by requesting that Newport allow Sears to stay

the project for a period of several months. If Newport had no

reasonable basis for believing that Sears had committed itself to

the project, Sears would not have needed Newport's permission for

this delay.

In Breaux

, this court upheld a plaintiff's recover y under

detrimental reliance on a claim simi lar in nature to Newport's.

Breaux

, 817 F.2d at 1230. The parties in B reaux had agreed on the

terms under which the defendant would lease the plaintiff's office

space. In contrast to the present case, the agent for the

defendant who arrange d the transaction had stated clearly that

commitment would have to await the approval of his su perior.

Nevertheless, on the basis of a letter from the agent expressing

the defendant 's "intention to enter a rental agreement," the

plaintiff ceased making any other efforts to let the space.

Subsequently, when the market changed, the defendant decided not to

abide by the original terms of the transaction. I d. at 1 228-29.

This court affirmed the district court's order allowing the

plaintiff to recover for rent lost in reliance on the defendant's

stated commitment. Id. at 1233.

Sears sent Newport its letter in January 1985 for the specific

purpose of confirming it s commitment to the transaction. Sears

subsequently acknowledged the possible moral and legal obligations

it had incurred as a result of the actions that Newport had taken.

A jury could find that Newport had expended considerable time and

effort, and had foregone other lucrative possibilities, in26

reasonable reliance on the commitment Sears expressed to lease the

warehouse space.

D. Damages

Finally, to recover under any cause of action, N ewport must

establish the damages it suffered as a result of Sears's actions.

To defeat summary judgment, Newport must raise a genuine issue of

material fact in regard to the damages it claims. Toward this end,

Newport offers the testimony of its expert witness.

Newport's offer of summary judgment evidence in support of its

claims for damages is admittedly thin. Ordinarily, it is the

province of the jury to gauge the credibility of an expert witness

and the reliability of the expert's data. S ee Dixon v.

International Harvester Co.

, 754 F.2d 573, 580 (5th Cir. 1985)

(citing Grena da Steel Industries v. Alabama Oxygen Co. , 695 F.2d

883, 889 (5th Cir. 1983)). In particular, Newport offered an

expert's statement as to the amount of damages it suffered in outof-pocket costs, lost public monies, and lost profits. Moreover,

in Newport's submissions to the court, Newport appended the

calculations upon which the estimate of lost profits was based.

Without now deciding on the appropriateness of compensating Newport

for these categories of damages, we hold that Newport's evidence,

which Sears failed to rebut, raised a genuine issue of material

fact.

Conclusion

Newport has raised genuine issues of material fact on its

claims for breach of contract, fraud and detrimental reliance. As27

a result, we REVERSE the decision of the district court and REMAND

for further proceedings.