Opinion ID: 6189
Heading Depth: 4
Heading Rank: 1

Heading: Obligations under the written agreements

Text: 36 Omnitech introduced testimony that its principals believed the letter of intent and non-disclosure agreement bestowed upon Clorox the following duties, all of which were allegedly breached: (i) to negotiate in good faith for the purchase either of Omnitech or of the Dr. X product line; (ii) to complete the STM and other marketing analyses for the Dr. X product as contemplated in the attachment to the parties' non-disclosure agreement; and (iii) not to enter the insecticide category if the joint venture with Omnitech failed to be consummated. The district court directed a verdict on each of these theories, finding that the unambiguous terms of the written contracts did not convey any such duties upon Clorox: 37 [i] A reading of the letter of intent makes it clear that Clorox was purchasing an option to the right of first refusal to purchase Omnitech's business on mutually acceptable terms to be agreed upon in the future. There was no contract for the purchase of the business in any way ...[;] 38 [ii] [T]he contracts provided, when read in their entirety, ... that Clorox was to furnish the results of all testing of the Dr. X product to Omnitech, but assumed no obligation to do the specific testing, and that includes the STM ...[;] and 39 [iii] [T]here is absolutely nothing in either the letter of intent or the non-disclosure agreement that could be construed as a non-compete agreement by Clorox.... 40 The district court necessarily determined that the written contracts were not ambiguous, and, under Louisiana law, when the words of the contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. LA.CIV.CODE ANN. art. 2046; see also Fontenot v. Waste Management of Lake Charles, Inc., 493 So.2d 904, 907 (La.Ct.App.1986). This established rule of strict construction does not allow the parties to create an ambiguity where none exists and does not authorize courts to create new contractual obligations where the language of the written document clearly expresses the intent of the parties. Kennedy v. Sanco Louisiana, Inc., 573 So.2d 505, 507 (La.Ct.App.1990), writ denied, 578 So.2d 138 (La.1991). Where, as here, the contract can be interpreted from the four corners of the document, without resort to extrinsic evidence, the interpretation of the contract is a matter of law, reviewed by this court de novo. Rutgers v. Martin Woodlands Gas Co., 974 F.2d 659, 661 (5th Cir.1992) (applying Louisiana law). With these principles in mind, we turn to the language of the contracts in the instant case. 41 As noted above, the letter of intent expressly grants Clorox an exclusive option and the right of first refusal to purchase all trademarks relating to the Doctor X product and/or to purchase the business and all of the assets of Omnitech.... It additionally provides that Omnitech further agrees that it shall begin to negotiate in good faith within sixty (60) days of the execution of this Agreement to come to mutually-agreed to terms and conditions of this option. (emphasis added). We find these terms to be unambiguous and cannot read them to create any contractual obligation on Clorox' part to negotiate further for the purchase either of Dr. X or of Omnitech. 42 With respect to the STM, we also agree with the district court that Clorox was under no obligation to perform the test. The letter of intent's reference to mutually-agreed-to marketing information merely defines this term as constituting the information more fully described in Addendum # 1 to the Non-Disclosure Agreement and states that Omnitech shall receive this information. The non-disclosure agreement similarly provides that Omnitech will be allowed to use all mutually agreed to marketing information as defined and described in Addendum 1 in the event that Clorox decides not to continue to participate in the development and marketing of [the Dr. X and/or Seabright] products. Addendum # 1 lists data that may be generated from [the] Market Test. (emphasis added). To read the agreements as does Omnitech--i.e., requiring Clorox to perform the STM--would violate Louisiana's rule that contracts are to be interpreted in light of all of their provisions, so that each provision is given the meaning suggested by the contract as a whole. Fontenot, 493 So.2d at 907. If we read the written agreements between Omnitech and Clorox as a whole, we come to the inescapable conclusion that Clorox was not obligated to generate any marketing data, but that, if the information described in Addendum # 1 were developed, Clorox would be duty-bound to give it to Omnitech. 15 Certainly nothing absurd results from reading the contract as if the parties intended the plain meaning of the words they used. Rutgers, 974 F.2d at 662. 43 Concerning the third alleged duty, we find that the unambiguous terms of the written contracts do not evidence any agreement between the parties not to compete. Omnitech's president conceded as much when he agreed at trial that there was no agreement between Omnitech and Clorox which prevented Clorox from investigating the purchase of another brand of insecticide and that he was not aware of any agreements that prevented Clorox from actually purchasing another brand of insecticide. Since the district court was correct in concluding that none of the duties described above was created by the executed contracts, it properly granted judgment as a matter of law with respect to these claims. 44 Omnitech additionally contends that Clorox breached its express contractual agreement not to disclose or make any unwarranted use of its confidential information. For the reasons discussed above in section II-A-2, we agree with the district court's disposal of this claim, holding that Clorox did not make unwarranted use of any of Omnitech's proprietary information as a matter of law. 45 Finally, Omnitech argues that Clorox is liable under the written agreements for its failure to return all of Omnitech's confidential information without retaining any copies or extracts thereof and to destroy all of its own documents prepared by its own employees or agents in whole or in part from any Confidential Information of Omnitech. This claim is also wholly without merit in light of the fact that this lawsuit was filed almost immediately after Clorox notified Omnitech in writing--as required by the non-disclosure agreement--that it would not pursue Dr. X or Omnitech further. Moreover, Omnitech concedes that it received all of the information at issue during the course of this litigation and cannot show that it suffered any damages as a result of failing to receive the materials earlier. 46