Opinion ID: 35560
Heading Depth: 3
Heading Rank: 2

Heading: Calculation of “Costs”

Text: Next, ConAgra asserts that the district court erred in its conclusion that the “costs” of pension benefits only included actual contribution costs, and not the amount calculated in accordance with FAS 87. The district court agreed with Confish’s argument that “costs” meant “out-of-pocket” costs, which the court determined was consistent with the term’s plain meaning.7 The district court erred. The Lease Agreement provides that: “Lessor shall invoice costs of fringe benefits to Lessee no less frequently than on a monthly basis . . . .” The Lease Agreement failed to define “costs” and the parties agree that the definition cannot be ascertained from the “four corners” of the document. Therefore, we 6 We also affirm the district court’s award of $50,000 to Stevens based upon an oral contract. ConAgra does not dispute this aspect of the judgment. 7 On appeal, Confish refers to “actual contribution costs” as “out-ofpocket costs.” These terms are interchangeable. 10 must look to parol evidence to ascertain the parties’ intent. See Pursue Energy, 558 So. 2d at 351-53. In reaching its conclusion, the district court found that the Restatement (Second) of Contracts § 201 specifically applied to this case.8 We agree. Section 201 states, in relevant part, that “where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.” (emphasis added); see also Kight v. Sheppard Bldg. Supply, Inc., 537 So. 2d 1355, 1358 (Miss. 1989) (“[T]he construction which the parties have placed upon the contract, or what the parties to the contract do thereunder, is relevant extrinsic evidence, and often the best evidence, of what the contract requires them to do.”) (citation omitted). In the present case, there is compelling record evidence that the parties intended “costs” to be calculated in accordance with FAS 87. First, during the course of the informal leasing arrangement, in effect between 1991 and December 18, 1996, Confish reimbursed ConAgra for pension costs for salaried workers according to FAS 87. This fact is undisputed by the parties. Moreover, Confish did not produce any evidence that the formal Lease Agreement altered this particular arrangement or the parties’ understanding of the term “costs.” Second, Stevens testified at 8 As the district court recognized, Mississippi courts often look to the Restatement in resolving contract disputes. See Warwick v. Matheney, 603 So. 2d 330, 335 (Miss. 1995). 11 trial that he was aware that ConAgra’s actuarial estimates of pension costs were based on FAS 87. Third and perhaps most importantly, during the Lease Agreement, Confish reimbursed ConAgra for pension costs in accordance with FAS 87. Taken together, these facts warrant the conclusion that the parties understood “costs” to incorporate the FAS 87 standard. The district court committed clear error in disregarding the parties’ intent as to this contractual provision. Confish was required to reimburse ConAgra for all pension costs incurred during the Lease Agreement in accordance with FAS 87. Moreover, based on our conclusion, Confish was not entitled to a credit for the salaried employee pension benefits, which it had reimbursed ConAgra during this period in accordance with FAS 87. Because we are unable to glean from the record the precise amount owed to Conagra, we remand to the district court for a proper calculation of damages.