Opinion ID: 711342
Heading Depth: 2
Heading Rank: 2

Heading: The Contract's Condition Precedent

Text: 10 Here, although the parties executed the contract in West Virginia, the contract provided that Michigan law would govern any contractual disputes between the parties. 1 Under Michigan law, failure to satisfy a condition precedent in a contract precludes a cause of action for failure to perform the contract. Christman Co. v. Anthony S. Brown Dev. Co., 533 N.W.2d 838, 840 (Mich.App.1995); Kachanowski v. Cohen, 9 N.W.2d 667, 668 (Mich.1943). The December 12, 1991 contract contained a clear condition precedent--approval by KLM's board of directors. That condition was not met. Thus, under Michigan law BMS has no actionable claim. 11 BMS has contended on appeal, however, that it raised genuine issues of material fact as to whether the Board's approval was given as required by the contract. First, BMS has pointed to an October 29, 1991 letter from Berger stating that he would be signing the contract on behalf of KLM's Board. Second, BMS has argued that Berger represented orally that he had the Board's approval when he signed the contract, thus fulfilling the condition precedent. Neither of those assertions suffices to raise genuine issues of fact for trial. 12 As for the October 29 letter, it did state that Berger would sign the contract with the approval of KLM's Board. The October 29 letter, however, clearly and unambiguously applied to a draft contract that differed from the one which the parties ultimately signed on December 12, 1991. The letter was attached to a previous draft of the December 12 coal sales contract actually entered by the parties. The previous draft did not include the condition precedent, because at that time it was anticipated that the KLM Board would approve the contract before it was executed. The October 29 letter expressly contemplated a November 21 closing date, after the contract had been submitted to KLM's Board for approval and BMS had obtained financing for the deal. That sequence of events did not occur because of BMS's delay in obtaining financing. Thus, Berger's statement that he would sign the contract with the approval of KLM's board in the October 29 letter cannot be read to apply to the contract signed on December 12. Furthermore, the entire course of negotiations made clear that the approval of KLM's Board was necessary whether it was obtained prior to or subsequent to the signing of the contract. 13 BMS has also argued that Berger assured it that the provision containing the condition precedent was merely boiler plate and a mere formality. Where a contract is clear, unambiguous, and complete as to its terms, parol evidence, including both prior and contemporaneous oral statements, is inadmissible to vary the terms of the contract. Cardinal State Bank v. Crook, 399 S.E.2d 863, 866 (W.Va.1990); Kanawha Banking & Trust Co. v. Gilbert, 46 S.E.2d 225, 232-33 (W.Va.1948); see also General Aviation, Inc. v. Cessna Aircraft Co., 703 F.Supp. 647, 641 (W.D.Mich.1988), aff'd in relevant part, modified in part, 915 F.2d 1038, 1042 (6th Cir.1990); Johnson v. Michigan Mut. Ins. Co., 454 N.W.2d 128 (Mich.App.1989). 2 The extensive and detailed December 12, 1991 contract represents a complete agreement among the parties and, thus, precludes reliance on Berger's statements. 14 Finally and most importantly, the plain and unambiguous meaning of the contract stated that it must be approved by the Board, and that approval, if granted, would be confirmed no later than January 15, 1992. Under Michigan law, [w]here the provisions of a contract are clear and unambiguous, the contract language is to be construed according to its plain sense meaning. Ditzik v. Schaffer Lumber Co., 360 N.W.2d 876, 880 (Mich.App.1984) (per curiam). The plain and ordinary meaning of the contract's terms indicates that despite the Agreement, the KLM Board's approval was still to come. Thus, while KLM Board approval was perhaps anticipated, it had not already been granted when the Agreement was executed. BMS has contended that Berger acted for the KLM Board or had Board approval when he signed the contract on December 12, 1991. That is not, however, the equivalent of actual Board approval. 3 Board approval did not occur; therefore, there was no satisfaction of the condition precedent of KLM Board approval. 15 BMS has made two further arguments as to why summary judgment should not have been entered against it: (1) that no formal KLM Board meeting occurred to reject the contract; and (2) that the contract did not specify how notification of approval or disapproval was to occur and, therefore, that Berger's representations could constitute approval. Those arguments merit little discussion. Although informally, a majority of the KLM Board rejected the contract. The contract did not call for a formal Board meeting. Additionally, the contract stated that approval shall, if granted, be confirmed. That statement clearly required some act of the Board to confirm approval. No such act occurred. Thus, the condition was not met. 16 Accordingly, the district judge's grant of summary judgment to KLM is 17 AFFIRMED.