### UNITED STATES COURT OF APPEALS

Filed 10/1/96 TENTH CIRCUIT

HELEN GREY TRIPPET; HELEN GREY TRIPPET, Custodian for Leslie S. Murphy and Mark Murphy; ROBERT S. TRIPPET, Guardian of Virginia Trippet; MARY SUSAN TRIPPET; CONSTANCE S. TRIPPET; FLO HEDLEY NORVELL; RUSSEL SIMPSON NORVELL, Executors of the Estate of Alberta Simpson Matterson, Plaintiffs-Appellees/ Cross-Appellants,

v.TRI TEXAS, INC., a Florida corporation, now known as EnvirOmint Holdings, Inc.; CHARLES S. CHRISTOPHER, Defendants-Appellants/ Cross-Appellees, and
HOME-STAKE OIL AND GAS COMPANY, HOME-STAKE ROYALTY and JARREL B. ORMAND, Defendants. Nos. 95-5005, 95-5009 (D.C. No. 92-C-192-E) (N.D. Okla.)* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions 10th Cir. R. 36.3.

1 We will address plaintiffs collectively as the Tr ippets.

2 Mr. Ormand, Paine Webber and the Home-Stake companies were dismissed prior to trial. We will address Tri Texa s and Mr. Christopher collectively as Tri Texas. -2-



### ORDER AND JUDGMENT *

Before SEYMOUR , Chief Judge, TACHAand EBEL , Circuit Judges.

I. Helen G. Trippet, on her own behalf and as Custodian for Leslie S. Murphy and Mark Murphy; Robert S. Trippet, as Guardian of Virginia Trippet; Mary S. Trippet; Constance S. Trippet; and Flo H. Norvell and Russell S. Norvell, as Executors of the Estate of Alberta S. Matterson, 1 brought this contract action against EnvirOmint Holdings, Inc., f/k/a Tri Texas, Inc., Charles S. Christopher, Jarrell B. Ormand, Paine Webber, Inc., Home-Stake O il and Gas Co., and HomeStake Royalty Corp. 2In a thorough opinion, the district court recitedthe pertinent facts, which will not be repeated here. In summary, the Trippets alleged breaches of contract, promissory note and guaranty agreement, fraud in the-3-

inducement, and conversion of property. They sought rescission of the contracts and declaratory relief as to the true owners of certain stock and related dividends. Helen Trippet also alleged Tri Texas was indebted t o her as a surety on a related bank loan. Tri Texas counterclaimed alleging breac h of contract and tortious interference with a business relationship. Followi ng a bench trial, the district court found that Tri Texas breached material obligations. Accordingly, the court rescinded the contracts and decreed the Trippets th e rightful owners of all stock at issue. The court also found in favor of Helen Trip pet on the promissory note and surety claims. The court rejected the Trippet’s fr aud claims and Tri Texas’ counterclaim in their entirety. Both parties appea l. Tri Texas contends on appeal the district court err ed in finding that registration was the object of the contract, that f ailure to file a registration statement was a material breach, that the contract was breached regardless of whether there was an enforceable oral agreement, an d that the district court incorrectly relied on the opinion of a Trippet expe rt witness in finding that Tri Texas never intended to file a legitimate registrat ion. We address these issues first.-4- II.
A. “In a contract action, our review of findings regar ding a breach of the contract is controlled by the clearly erroneous standard. Additionally, when extrinsic evidence is introduced to ascertain the m eaning of contract terms, . . . the trial court’s interpretation . . . is factual a nd cannot be set aside unless clearly erroneous.” Chaparral Resources, Inc. v. Monsanto Co. , 849 F.2d 1286, 1289 (10th Cir. 1988) (citations omitted). Under this s tandard, the trial court’s findings “will be deemed clearly erroneous only if [they are ] without support in the record or if the appellate court ‘on the entire evidence i s left with the definite and firm conviction that a mistake has been made.’” Doyle v . Resolution Trust Corp. , 999 F.2d 469, 474 (10th Cir. 1993)(quoting Colon-Sanche z v. Marsh , 733 F.2d 78, 81 (10th Cir.), cert. denied , 469 U.S. 855 (1984)). Moreover, “[i]f a trial is to the court, . . . the resolution of factual issues and c onflicting evidence lies solely within the province of the district court.” RaydonExploration Inc. v. Ladd , 902 F.2d 1496, 1499 (10th Cir. 1990)(citations omitted)

. Breach of contract may serve as grounds for resciss ion in two circumstances. First, rescission may be obtained w here a failure of performance defeats the object of the contract or performance i s an essential part of the bargain. Id. at 1500. Second, rescission is available where th ere is a total failure3 Tri Texas disagreed with the district court’s con clusion that Oklahoma

law determined the remedy available, but did not ch allenge the court’s conclusion that Texas law yielded the same result. -5- of consideration because the promised performance f ails as a result of some supervening cause after an agreement is reached, Ri ver Prod. Co. v. Webb (In re Topco, Inc.) , 894 F.2d 727, 742 (5th Cir. 1990), or a partial f ailure of consideration if the failure defeats the object of the contract, Davis v. Gwaltney , 291 P.2d 820, 823-24 (Okla. 1955). Tri Texas does not argue that the district court incorrectly stated the applicable law; 3 we therefore review the numerous arguments under the clearly erroneous standard.
B. Tri Texas first contends that the object of the con tract was to gain control of the Home-Stake companies and not the registratio n of Tri Texas stock. The district court found that the terms of the contract s required Tri Texas to register shares of stock issued to the Trippets, additional shares to be issued to the Trippets, and shares to enable the purchase of Home -Stake company shares through the exercise of options. There was evidenc e that registration was the object of the contracts. The terms of the contract s reference the above requirements, Aplt. App. at 1472, 1572, and state that the purpose of the registration was “to enable the Shareholders to mak e a public distribution of the Initial Shares and/or Additional Shares at all time s,” id. at 1472, 1588.4 Tri Texas necessarily challenges only the materia lity of the breach,

having conceded that no registration was filed prio r to December 31, 1991, Aplt. App. at 1232, and that the only subsequent attempt was “nothing more than Tri Texas’ effort to finesse Mr. Trippet into withdrawi ng his demand for rescission,” Aplt. Br. at 44. -6- Moreover, the contracts state “[t]here is no certai nty that [Tri Texas] will be successful in connection with” acquiring control of the Home-Stake companies, id. at 1476, and provide that Tri Texas may “elect[] t o satisfy its obligations . . . by making a cash payment” to the Trippets, id. at 1470. The contract thus required Tri Texas to perform by payi ng the Trippets for their stock even if control was not gained. More importantly, one of the defendants testified that registration would facilitate the end result o f “selling stock.” Id. at 1117. We conclude there was ample evidence to support the district court’s conclusion that the object of the contracts was the registrati on of Tri Texas stock. Tri Texas next argues the court erred in finding th at the failure to file the registration was a material breach. 4 We conclude the district court’s finding that registration was the object of the contracts necess arily renders the failure to register a material breach. Our conclusion is stre ngthened by Tri Texas’ numerous requests to extend the registration deadli ne, see Aplt. App. at 611, 2338, 2339, “to avoid being in default,” id. at 2640. The requests also refute Tri Texas’ argument that registration was worthless andirrelevant regardless of5 Tri Texas argues in its brief that registration w as “worthless” unless it

gained control, Aplt. Br. at 39, and also that the “registration statement would be irrelevant if Tri Texas gained control,” id. at 46.

6 Because the verbal agreement was unenforceable, w e need not address Tri Texas’ argument that the Trippet’s rescission l etter, Aplt. App. at 2261-64, constituted the first material breach. -7- whether control was attained. 5 The court’s finding that the failure to register was a material breach was not clearly erroneous. Tri Texas also contends the district court erred wh en it found there was a breach of contract regardless of whether there was an enforceable oral agreement. The terms of the alleged oral agreement were disput ed. The court found that the Trippets conditioned any oral agreement on its redu ction to a writing and that they never approved such a writing. Mr. Trippet testifi ed that during the oral negotiation he stated he would agree to an extensio n if there was a “quid pro quo.” Aplt. App. at 611. The negotiations ended b efore a mutually agreeable writing was executed and Mr. Trippet stated he woul d recommend any future writing be approved if

he “liked it.” Id. at 613. Tri Texas did not produce any evidence that a writing was ever approved. While t he court did not explicitly conclude the oral agreement was unenforceable, thatis the only possible inference from its findings, 6 and therefore the court’s finding is not clearly e rroneous. Finally, Tri Texas contends the court erred in find ing that it never intended to file a legitimate registration because the courtincorrectly relied on the opinions7Tri Texas also argues that to determine the mater iality of a “timing”

breach the court is required to measure the qualityof efforts to perform against the agreed-upon date and circumstances. When the di strict court found that Tri Texas did not intend to file a legitimate registrat ion it necessarily found that Tri Texas did not use its best efforts. -8- of a Trippet expert witness. However, the record c ontains other evidence that Tri Texas never intended to file the registration state ment. Most importantly, Tri Texas conceded that “we didn’t attempt to file the registration statement by the end of 1991,” Aplt. App. at 1232, see also Aplt. Rep. Br. at 10, and that the only subsequent filing was a sham, Aplt. Br. at 44. In addition, the SEC responded with a 10 page summary of the inadequacies of the s ubsequent filing. The court relied upon both the filing and the SEC response. We hold that there was sufficient evidence to support the court’s finding that Tri Texas did not intend to file a legitimate registration. 7 In her cross appeal, Helen Trippet contends the dis trict court erred in failing to grant judgment to her for reimbursement of attorney’s fees are paid to Pavillion Bank, contending she is entitled to the f ees as a surety under Okla. Stat. tit. 15 § 381 (1993). We disagree. When PavillionBank attempted to sell Mrs. Trippet’s collateral on the related bank loan, she initiated suit against the bank to enjoin the sale, alleging she was not a surety beca use of the bank’s participation in fraud and misrepresentation. The court in that c ase entered judgment against Mrs. Trippet and ordered her to pay Pavillion Bank’ s court costs. Thereafter,-9-

Mrs. Trippet agreed to pay Pavillion Bank’s attorne y’s fees in the fraud suit when she purchased the note on the bank loan. The distr ict court did not err in declining to order reimbursement of the attorney’s fees because the fees were not incurred “satisf[ying] the principal obligation,” O kla. Stat. tit. 15, § 381 (1993), but instead in an affirmative attempt to avoid sati sfying the principal obligation. Because we affirm the district court in favor of th e Trippets on Tri Texas’ appeal, we need not address the remaining issues ra ised in Trippet’s cross appeal. The decision of the district court is AFFIRMED

. SUBMITTED FOR THE COURT
Stephanie K. Seymour Chief Judge