Opinion ID: 561287
Heading Depth: 1
Heading Rank: 1

Heading: Reassignment Clause

Text: 9 The instrument assigning Avatar's interest in the Kimball property to Gulf contained the following reassignment clause: 10 Assignor herein reserves the right to a re-assignment of the leases assigned herein if Assignee elects not to pay any delay rentals coming due. Such re-assignment shall be made within sixty (60) days of the rental payment or expiration date. 11 Avatar claims that Gulf had an obligation pursuant to this provision to reassign the lease to Avatar prior to the expiration of the primary term. Gulf maintained the lease for the duration of the primary term by paying delay rentals, and then allowed the lease to lapse. Avatar allegedly suffered damages as a result of Gulf's failure to reassign the lease prior to the expiration of the primary term. Moyers and Jenkins claim similar damages as third party beneficiaries of the agreement. 12 The district court granted Chevron's motion for summary judgment on this issue. The court found that the language in the clause obligated Gulf to reassign the lease only if Gulf elected to forego making the delay rental payments when they became due. Since Gulf complied with its duty to make delay rental payments, the condition requiring Gulf to reassign the lease never occurred. The language of the clause was found to be unambiguous and no construction of the facts of the case would allow Avatar to recover based on a claimed violation of the provision. 13 This court reviews the granting of a summary judgment using the same criteria as the district court. Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.1988). Summary judgment is proper if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A dispute about a material fact is genuine if a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). 14 Avatar relies on the language in the reassignment clause providing that [s]uch reassignment shall be made within sixty (60) days of the rental payment or expiration date. Avatar argues that inclusion of the or expiration date language in the clause evidences an intent by the parties for Gulf to reassign the lease if it chose not to pay delay rentals, and prior to the end of the primary term. Contending that the main purpose of the clause was to prevent expiration of the lease, Avatar claims that the district court erred in its limited interpretation of the scope of the clause. Because it has offered an alternate interpretation of the clause, Avatar argues that the clause was ambiguous and that summary judgment was inappropriate. 15 Chevron's response follows the same reasoning as the district court: Avatar was entitled to reassignment of the lease only if Gulf elected not to pay delay rentals. We agree with that interpretation of the reassignment provision. The first sentence of the clause reserved a right of reassignment if Gulf elected not to pay delay rentals coming due. The second sentence of the clause began with the words such reassignment and described the time limits for reassigning the lease. By using the words such reassignment, the second sentence was limited in application to reassignment caused by the failure to pay delay rentals described in the first sentence. Nothing in the clause indicated an intent of the parties to expand the right to reassignment beyond the occurrence of that one event. 16 Avatar makes much of the inclusion of the words or expiration date in the clause. Its primary argument is that if we limit reassignment to an election by Gulf not to pay delay rentals, then the expiration language has no purpose. Even if we assume that the expiration language created an ambiguity in the contract, that ambiguity related only to Gulf's time frame for reassigning the lease after it failed to pay delay rentals. We do not reach the timing instructions of the second sentence unless Gulf decided not to pay delay rentals. An ambiguity in the second sentence cannot prevent summary judgment here since the precondition for its application never occurred. 3 17 Undertaking the creation in hindsight of a dispute about the meaning of a contractual provision does not render the provision ambiguous. Esplanade Oil & Gas, Inc. v. Templeton Energy Income Corp., 889 F.2d 621, 624 (5th Cir.1989). Avatar is attempting to create an ambiguity where none exists. The condition required for a right to reassignment never occurred. Since the terms of the reassignment clause were clear and subject to only one reasonable construction, the district court properly granted summary judgment on this issue. This was a straightforward business document between persons skilled in dealing with such matters in a business in which the need for precision in the wording of documents is understood. Ambiguous documents do occur in this industry, but this is not one of them. 18 The district court also held that Moyers and Jenkins were not third party beneficiaries of the assignment from Avatar to Gulf. Moyers and Jenkins were not parties to the agreement between Avatar and Gulf. Without third party beneficiary status, they have no standing to seek damages for the breach of any provision in the contract. See New Orleans Public Service, Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 467 (5th Cir.1984); Crowley v. Hermitage Health and Life Ins. Co., 391 So.2d 53, 55 (La.Ct.App.1980). 19 The finding of lack of third party beneficiary status of Moyers and Jenkins under Louisiana law was not even necessary. Their claims under the reassignment clause in any event fail for the same reason as the claims of Avatar. As third party beneficiaries, their rights under the contract could not exceed Avatar's rights. We have already decided that Gulf had no duty to reassign the lease prior to the end of the primary term. Since Gulf did not breach its contractual duty under the reassignment clause, Moyers and Jenkins do not have a claim. The district court properly granted summary judgment against Moyers and Jenkins.