Court Opinion

ID: 627236
Source: CourtListenerOpinion
Date Created: 2012-04-13 17:36:47+00
Date Added: 2024-06-11T17:51:19.076366
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 11-1078

LION ASSOCIATES, LLC, a Virginia Limited Liability Company,

                Plaintiff - Appellant,

           v.

SWIFTSHIPS SHIPBUILDERS, LLC, a Louisiana Limited Liability
Company,

                Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:10-cv-00189-GBL-TRJ)

Argued:   January 26, 2012                 Decided:   April 13, 2012

Before AGEE, DAVIS, and FLOYD, Circuit Judges.

Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.

ARGUED: James Douglas Baldridge, VENABLE LLP, Washington, D.C.,
for Appellant.     Benjamin Gaillard Chew, PATTON BOGGS, LLP,
Washington, D.C., for Appellee. ON BRIEF: A. Wayne Lalle, Jr.,
VENABLE LLP, Vienna, Virginia, for Appellant.       Douglas C.
Proxmire, Andrew Zimmitti, Nigel L. Wilkinson, PATTON BOGGS,
LLP, Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      Lion Associates, LLC (Lion Associates), a global consulting

company      that     provides      assistance      with     defense       procurement,

contracted        with     Swiftships     Shipbuilders,      LLC   (Swiftships),       a

company that specializes in constructing military vessels.                            The

contract stated that Lion Associates would provide marketing and

promotion services, and in exchange, Swiftships would pay Lion

Associates $7,500 per month for twelve months and “3% of each

new contract brought to Swift[ships], which was obtained by Lion

[Associates].”           Lion Associates subsequently rendered services

that assisted Swiftships in securing a contract that Swiftships

had   been    pursuing       with   the    United    States    Navy.         When    Lion

Associates        demanded     3%   of    the     secured    contract,       Swiftships

refused to pay.            Lion Associates therefore brought this action

alleging breach of contract and unjust enrichment.                      The district

court granted summary judgment in Swiftships’ favor as to both

claims,     and     Lion    Associates     now    appeals.     For     the    following

reasons, we affirm in part and reverse in part and remand.

                                            I.

      The    United        States   Navy,       acting   through     its     Naval   Sea

Systems      Command        (NAVSEA),     issued     a   Presolicitation         Notice

(Notice) to the public in November 2008.                       The Notice, which

NAVSEA amended in early February 2009, announced the Navy’s need

                                            2
to   procure      coastal         patrol        boats        for    supply      to    the     Iraqi

government and set forth certain desired specifications for the

boats.      We        hereafter         refer     to     this       potential        procurement

contract    as    the       “Iraqi       Navy    Contract.”               The   Notice      invited

companies to submit “capability summaries” that included, among

other     things,          information        about      the        company’s        experience,

descriptions          of    similar      craft        that    it    had     constructed,        and

estimated prices and delivery schedules.                            Lest companies receive

the wrong impression, the Notice clarified that it was neither

an invitation for bids nor a commitment by the government.

     Swiftships,             a        Louisiana        limited        liability          company,

responded    on        February         25,   2009,      and       provided      a    capability

summary.         It    advised         NAVSEA     of    the        current      craft    that    it

offered, which, with minor modifications, would meet NAVSEA’s

specifications.             Swiftships noted other countries to which it

had supplied similar craft and emphasized its ability to begin

immediate production.                 It concluded by requesting a sole-source

award.

     On    April       13,       2009,    Faisal       Gill,       corporate         counsel    for

Swiftships, met with James A. Lyons Jr., a retired four-star

admiral.    Admiral Lyons is the sole member, President, and Chief

Executive      Officer           of    Lion     Associates,           a     Virginia        limited

liability company.               One service that Lion Associates offers is

assistance with defense and commercial procurement.                                      For that

                                                  3
reason, Gill sought Lion Associates’ aid in securing a number of

contracts      for    Swiftships,     including       the    Iraqi       Navy   Contract,

which,    at   the    time    of   the   meeting,      Swiftships         had    not   been

awarded.

     Gill and Admiral Lyons orally agreed that Lion Associates

would provide its services to Swiftships but that they would

memorialize their agreement in a written contract.                         According to

Admiral    Lyons,      they    discussed       Lion    Associates’         compensation

during the meeting.            Admiral Lyons insists he told Gill that

Lion Associates charged a monthly $7,500 consulting fee and also

demanded 3% of each contract it brought to its clients.                           Admiral

Lyons maintains that Gill acquiesced to these compensation terms

and further agreed that the 3% fee would apply to the Iraqi Navy

Contract.       Gill, however, contends that he specifically told

Admiral Lyons that the 3% fee would not apply to the Iraqi Navy

Contract and that Admiral Lyons recognized as much.

     Admiral         Lyons    drafted      a     proposed          written      agreement

immediately      following      the   meeting     and       sent    it    to    Gill   that

afternoon.           Lion    Associates,       referred      to     in    the    proposed

agreement as “Consultant,” constituted one party.                          And pursuant

to Gill’s instructions, Admiral Lyons included The Gill Law Firm

as the other party, which the proposed agreement referred to as

the “Company.”          The proposed agreement’s main clauses outline

the rights and obligations of the parties as follows:

                                           4
      2.   Purpose.      Consultant will provide marketing
      services and promote the Company by interfacing with
      the   U.S.   Government    and    various   national   and
      international companies who are known to have a
      requirement   for    Company    product    and   services.
      Specifically, the Consultant will identify marketing
      opportunities   in   U.S.    Government   and   commercial
      organizations    and    will    explain   the    Company’s
      capabilities; and represent that the Company . . . can
      achieve the objectives established by the appropriate
      enterprise better than any known competitor.

      3.   Compensation.   Consultant will be reimbursed for
      this effort at a rate of $7,500.00 per month for a
      period of twelve (12) months with $7,500.00 paid upon
      signing and on the 15th of each month thereafter until
      termination. Also, Consultant will be paid 3% of each
      new contract obtained by Lion.

We   hereafter   refer   to   these       respective     provisions    as   the

“Purpose Clause” and the “Compensation Clause.”                  The proposed

agreement also specified that the laws of Virginia would govern

all aspects of the contract.

      Weeks passed without Swiftships executing and returning the

proposed agreement.      Admiral Lyons inquired as to its status.

On May 8, 2009, Gill sent Admiral Lyons an e-mail requesting

that he substitute Swiftships for The Gill Law Firm as a party

in   the   agreement.    Admiral   Lyons      promptly    made   the   change,

signed the revised proposed agreement, and sent it to Gill.

      Swiftships did not sign and return the proposed agreement

until June 4, 2009.      When it did, it had added new language to

the last sentence of the Compensation Clause.                Whereas before

the Compensation Clause provided that “Consultant will be paid

                                      5
3%    of   each   new       contract       obtained    by    Lion,”     Swiftships     added

language so it stated that “Consultant will be paid 3% of each

new   contract     brought       to    Swift,       which     was    obtained    by    Lion.”

Aside from this addition, the executed agreement mirrored the

proposed agreement sent by Admiral Lyons.                           According to Admiral

Lyons, he did not protest the added language because he did not

think it altered the original terms of the proposed agreement.

        Meanwhile,      even     before       Swiftships       returned    the     executed

agreement, Admiral Lyons began directing his efforts to securing

the Iraqi Navy Contract for Swiftships.                         Before he intervened,

Swiftships was experiencing problems with NAVSEA.                          Admiral Lyons

maintains     that      a    preexisting       adversarial          relationship      existed

between NAVSEA and Swiftships and that NAVSEA had concerns about

Swiftships’       financial         strength.          Moreover,       Swiftships       faced

serious competition from other companies.                           Swiftships therefore

enlisted     Admiral        Lyons     to    break     its    impasse    with    NAVSEA    and

provided him with information to assist him in doing so.

        Admiral   Lyons       rendered       assistance       that     eventually      helped

Swiftships overcome these obstacles and secure the Iraqi Navy

Contract.      He reached out to a high-ranking admiral in NAVSEA to

correct any misinformation NAVSEA had about Swiftships and to

provide     positive         information       about        Swiftships’    capabilities.

Using the information that he received from Swiftships, Admiral

Lyons      conveyed     to     the     NAVSEA       admiral     that     Swiftships      was

                                               6
financially strong.        He also stressed the importance of granting

a sole-source award rather than splitting the procurement among

various companies.       These conversations began before Swiftships

returned the executed agreement and continued afterward.

       On   September   25,    2009,     NAVSEA     awarded         the    Iraqi     Navy

Contract to Swiftships on a sole-source basis.                            The contract

amounted to $180,998,189.          Swiftships also obtained a contract

to provide training services for an additional $23,000,000.

       After   Swiftships     received       the   Iraqi      Navy    Contract,       the

parties’ attention turned to the effect, if any, that the award

had on Lion Associates’ compensation.                   It is undisputed that

Swiftships paid the monthly $7,500 to Lion Associates from May

2009 until April 2010.        But it did not pay Lion Associates 3% of

the Iraqi Navy Contract.         And when Lion Associates attempted to

collect 3% of the contract, Swiftships rebuffed it.

       Lion Associates therefore filed a complaint in the Eastern

District of Virginia on March 2, 2010.                  It invoked the district

court’s     diversity   jurisdiction         pursuant    to    28    U.S.C.     § 1332.

Lion    Associates      asserted       two     causes      of        action     against

Swiftships: breach of contract and unjust enrichment.                          It based

both theories on Swiftships’ failure to pay the 3% fee from the

Iraqi   Navy   Contract.      Lion     Associates       sought       damages    in    the

amount of $6,119,946.

                                         7
      Swiftships filed a motion for summary judgment on September

27, 2010, which the district court granted.                      As to the breach of

contract    claim,     the    district       court      reasoned      that     the    3%    fee

provision    was     unambiguous       and       that    Lion    Associates          was    not

entitled to a 3% fee because Swiftships had identified and begun

pursuing    the    Iraqi     Navy    Contract         before    the    agreement.           The

district     court     granted       summary       judgment      as       to   the     unjust

enrichment claim on the basis that the existence of the written

contract defining the parties’ rights and obligations precluded

such a claim.

      Lion Associates filed this timely appeal.                        It contends that

the   district     court     erred    in     granting      Swiftships’         motion       for

summary judgment as to both its breach of contract claim and its

unjust enrichment claim.            We address each in turn.

                                           II.

      We   review     the     district       court’s      order       granting       summary

judgment de novo.            Wash. Metro. Area Transit Auth. v. Potomac

Inv. Props., Inc., 476 F.3d 231, 234 (4th Cir. 2007).                                “Summary

judgment is       appropriate       only     if   taking       the    evidence       and    all

reasonable     inferences        drawn       therefrom          in    the      light       most

favorable    to      the     nonmoving     party,        ‘no     material       facts       are

disputed    and    the     moving    party       is   entitled       to   judgment         as   a

matter of law.’”           Henry v. Purnell, 652 F.3d 524, 531 (4th Cir.

                                             8
2011) (en banc) (quoting Ausherman v. Bank of Am. Corp., 352

F.3d 896, 899 (4th Cir. 2003)).                       Because jurisdiction in this

case rests on diversity jurisdiction, we apply the substantive

law of Virginia.         See Moore Bros. Co. v. Brown & Root, Inc., 207

F.3d 717, 722 (4th Cir. 2000).

                                           III.

     We    first      address         whether       the     district      court       erred    in

granting    summary       judgment       as     to    Lion       Associates’       breach       of

contract    claim.         At    the     outset,       we    note    that       neither       Lion

Associates      nor      Swiftships        challenges            whether    the        executed

agreement    with      Swiftships’         added          language     controls.              Both

parties    assume     that       it     does;       therefore,       so    do     we.         Lion

Associates contends that the language of the 3% fee provision is

ambiguous and that the district court therefore erred in failing

to   consider      parol        evidence      concerning          whether       the     parties

intended    for    the     fee    to     apply       to    the    Iraqi    Navy       Contract.

Swiftships, however, maintains that the district court did not

err because the language of the 3% fee provision is unambiguous

and it does not apply to the Iraqi Navy Contract.

     In construing a contract, our overriding objective is to

determine and effectuate the parties’ intention.                                Va. Elec. &

Power Co. v. Norfolk S. Ry. Co., 683 S.E.2d 517, 525 (Va. 2009).

The starting point for ascertaining the parties’ intention is

                                                9
the language of the contract.                      Id.      Only if the language of the

contract       is   ambiguous          do    we    consider       parol    evidence       that    is

probative       of     the        parties’         intention.              Eure    v.     Norfolk

Shipbuilding & Drydock Corp., 561 S.E.2d 663, 667-68 (Va. 2002).

If the terms of the contract are clear and unambiguous, we must

construe them according to their plain meaning without resort to

parol    evidence.           TM    Delmarva         Power,        L.L.C.    v.    NCP     of    Va.,

L.L.C., 557 S.E.2d 199, 200 (Va. 2002).

       Ambiguity arises only when a contract “may be understood in

more than one way or when it refers to two or more things at the

same time.”         Eure, 561 S.E.2d at 668 (quoting Granite State Ins.

Co.    v.    Bottoms,    415        S.E.2d         131,     134    (Va.     1992))      (internal

quotation marks omitted).                    Stated differently, a contract’s term

is ambiguous if it is susceptible to “more than one reasonable

construction.”          Clinch Valley Physicians, Inc. v. Garcia, 414

S.E.2d 599, 601 (Va. 1992).                        Such ambiguity may be patent or

latent.      Va. Elec. & Power, 683 S.E.2d at 526.                          Patent ambiguity

exists when “the language of the contract itself reveals that it

can    be    interpreted          in     more      than     one     way.”         Id.      Latent

ambiguity, although less common than patent ambiguity, arises

“where      language    ‘[although]               appearing       perfectly       clear    at    the

time     the    contract[]          [is]          formed,     because       of     subsequently

discovered or developed facts, may reasonably be interpreted in

either of two ways.’”                       Id. (second and third alterations in

                                                   10
original) (quoting Galloway Corp. v. S.B. Ballard Constr. Co.,

464 S.E.2d 349, 355 (Va. 1995)).

      Before        addressing           whether         the    3%     fee   provision     is

ambiguous, we recognize a number of guiding principles under

Virginia law for ascertaining ambiguity in a contract.                                   When

determining        whether      a     contract           is     ambiguous,    courts     must

consider     the    contract        as    a   whole       and    not   emphasize   isolated

terms.      TM Delmarva Power, 557 S.E.2d at 200.                       They must ascribe

meaning to every word or clause to which a reasonable meaning

may   be    given    and    not     presume     the       parties      “included   needless

words in the contract.”               Id.     Yet courts must remain careful not

to add terms that the parties did not include.                               Id.   Finally,

the fact that the parties disagree as to the meaning of a term

does not alone render it ambiguous.                       Id.

      The    Compensation           Clause’s        3%    fee    provision    is   patently

ambiguous.      In reaching this conclusion, we begin as we must by

examining the language of the disputed provision: “Consultant

will be paid 3% of each new contract brought to Swift, which was

obtained by Lion.”              In interpreting this provision, we assume

that the “new contract” is a contract to which Swiftships is a

party, for that is the only reasonable interpretation of the

provision in light of the contract as a whole.

      Reading       the    3%   fee      provision        literally      demonstrates     its

patent ambiguity.           Contracts are, of course, binding agreements

                                               11
formed    by     offer    and     acceptance          and     supported    by     valuable

consideration.          Montagna v. Holiday Inns, Inc., 269 S.E.2d 838,

844 (Va. 1980).          A literal, plain meaning construction of the 3%

fee    provision      would     mean    that    Lion    Associates     would      have    to

obtain such an enforceable agreement and bring it to Swiftships,

even    though    for    such     an   agreement       to   exist    Swiftships         would

already have to be a party to it.                     We simply fail to understand

how Lion Associates can obtain and bring a “new contract” to

Swiftships when for such a contract even to exist Swiftships

must have already entered into it.                     This literal, plain meaning

interpretation makes little, if any, sense.

       A reasonable construction of this provision would entitle

Lion Associates to the 3% fee when it obtains an opportunity for

Swiftships       to     enter     into    a     new    contract      and       brings     the

opportunity to Swiftships.                     In fact, the parties’ competing

interpretations both rest on the assumption that the provision

applies     when      Lion      Associates          obtains     an   opportunity          for

Swiftships to enter into a new contract, not that it applies

when    Lion     Associates       brings       an    already     formed,       enforceable

contract to Swiftships.                But this construction is also fraught

with    ambiguity       and     begs    the    further      question      of    what    Lion

Associates must do to obtain a contracting opportunity and bring

it to Swiftships.             It is unclear whether Lion Associates must

initially      identify       a   potential         contracting      opportunity         for

                                              12
Swiftships, only render assistance that provides Swiftships the

opportunity to enter into a new contract that Swiftships would

have    been   otherwise    unable       to    enter     into,      or     both.        Lion

Associates     and     Swiftships        offer        differing      but        reasonable

interpretations of what the term requires.

       Swiftships’     interpretation,           in    essence,          is     that    Lion

Associates must initially identify the contracting opportunity

and bring it to Swiftships.              That interpretation is consistent

with one of Lion Associates’ stated obligations in the Purpose

Clause to “identify marketing opportunities in U.S. Government

and    commercial    organizations.”            According      to    Swiftships,         the

Compensation Clause’s 3% fee provision therefore applies only to

contracting      opportunities          that     Lion        Associates          initially

identifies     for   Swiftships,     not       contracting      opportunities           that

Swiftships     identifies      and      Lion     Associates         only      assists     in

securing.       This    interpretation,              which    the    district          court

adopted, is a reasonable one.

       Lion    Associates’        interpretation,             however,           is     also

reasonable.          According     to     Lion        Associates,         the     disputed

provision entitles it to a 3% fee whenever its efforts provide

Swiftships the opportunity to enter into a new contract that it

would have been unable to enter into without Lion Associates’

assistance.      In    other     words,       when    Lion    Associates’         services

obtain the ability for Swiftships to enter into a new contract,

                                          13
it is entitled to the 3% fee, regardless of whether it initially

discovered the opportunity.             This interpretation coincides with

the thrust of the Purpose Clause, which essentially obligates

Lion   Associates      to    convince    companies       and   the   government     to

employ Swiftships.

       Because the disputed provision is patently ambiguous and

open to more than one reasonable interpretation, parol evidence

is necessary to ascertain the intention of the parties.                       At the

district court, both parties marshaled evidence in support of

their interpretations, thus creating a genuine issue of material

fact as to their intention.             The district court did not consider

such evidence, instead granting summary judgment on the basis

that the provision was unambiguous in requiring Lion Associates

to identify the Iraqi Navy Contract initially and bring it to

Swiftships.        We therefore reverse the district court’s grant of

summary judgment on the breach of contract claim and remand for

the trier of fact to determine what the parties intended.

                                         IV.

       We   next    address     whether      the    district      court    erred    in

granting     summary        judgment    as     to   Lion       Associates’    unjust

enrichment claim.           Lion Associates insists that genuine issues

of   material      fact   exist   as    to     whether   the    services     that   it

rendered in connection with the Iraqi Navy Contract fall within

                                          14
the     scope    of     the    parties’      agreement.           According      to     Lion

Associates, because such genuine issues of material fact exist,

it was inappropriate for the district court to grant summary

judgment as to its alternative claim for unjust enrichment.

       Unjust enrichment is an equitable theory of recovery “based

upon an implied contract to pay the reasonable value of services

rendered.”        Mongold v. Woods, 677 S.E.2d 288, 292 (Va. 2009).

To recover under a theory of unjust enrichment, a plaintiff must

prove    that     (1)    “he    conferred     a     benefit       on”   the    defendant,

(2) the defendant “knew of the benefit and should reasonably

have    expected       to     repay”   the   plaintiff       for    it,    and    (3) the

defendant “accepted or retained the benefit without paying for

its value.”           Schmidt v. Household Fin. Corp., II, 661 S.E.2d

834, 838 (Va. 2008).              If the plaintiff makes such a showing,

“the court will imply a contract between the parties to prevent

inequity.”       Mongold, 677 S.E.2d at 292.

       A cause of action for unjust enrichment is unavailable,

however, when an express contract exists that governs payment

for the services rendered.                See id.          As the Supreme Court of

Virginia        has     explained,      “when       such     an     express      contract

exists, . . . there is no need to imply one because the parties

have already negotiated an agreement.”                      Id.    “The law will not

impose    an     implied       contractual        relationship      upon      parties    in

contravention of an express contract.”                       Nedrich v. Jones, 429

                                             15
S.E.2d 201, 207 (Va. 1993).                    But this “rule, according to its

terms,     applies     only       when     there     is   an     express,        enforceable

contract between the parties covering the services for which

quantum meruit recovery is claimed.”                         Mongold, 677 S.E.2d at

292.     If an express contract exists but does not cover the

services      rendered,       a    cause    of      action     for    unjust      enrichment

remains available.        See id.

       We agree with the district court that a cause of action for

unjust enrichment is unavailable to Lion Associates because an

express contract exists that covers the services it rendered in

connection with the Iraqi Navy Contract.                             The Purpose Clause

provides       that    Lion       Associates        would,       among     other    things,

“interfac[e] with the U.S. Government and various national and

international companies who are known to have a requirement for

[Swiftships’]         product      and     services,”        “explain       [Swiftships’]

capabilities,” and “represent that [Swiftships] can achieve the

objectives established by the appropriate enterprise better than

any    known    competitor.”             The     services      that       Lion   Associates

rendered    with      respect      to    the     Iraqi    Navy    Contract—interfacing

with   Navy     officers,         explaining        Swiftships’       capabilities,      and

convincing      NAVSEA    to       award    the      contract        to   Swiftships    over

competitors—fall squarely within the obligations imposed in the

express agreement between Lion Associates and Swiftships.

                                               16
       The   express     agreement       provided      for    compensation       to   Lion

Associates in exchange for these services.                         As promised in the

agreement,      Swiftships        paid    Lion      Associates        twelve     monthly

installments of $7,500 in return for its performance of these

services.      Although a dispute remains about whether the 3% fee

provision also applies, it does not change the fact that an

express      agreement    exists     that    covers       the      services    rendered.

Depending on the resolution of the breach of contract dispute,

Lion   Associates      may   be    entitled       to   only     the    monthly    $7,500

payments for those services or it may also be entitled to 3% of

the Iraqi      Navy    Contract.         Either    way,      the    express    agreement

governs      Lion   Associates’      compensation            for    the   services     it

rendered with respect to the Iraqi Navy Contract, making a cause

of action for unjust enrichment unavailable.

                                           V.

       For these reasons, we affirm the district court’s grant of

summary judgment as to Lion Associates’ unjust enrichment claim

but reverse its grant of summary judgment as to the breach of

contract claim and remand for further proceedings.

                                                                    AFFIRMED IN PART,
                                                                    REVERSED IN PART,
                                                                         AND REMANDED

                                           17