Court Opinion

ID: 814294
Source: CourtListenerOpinion
Date Created: 2012-12-26 18:07:13+00
Date Added: 2024-06-11T18:00:51.530713
License: Public Domain

Case: 12-20157       Document: 00512093979         Page: 1     Date Filed: 12/26/2012

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                        December 26, 2012

                                       No. 12-20157                        Lyle W. Cayce
                                                                                Clerk

DARTAMERICA, INCORPORATED

                                                  Plaintiff
v.

MEMC PASADENA, INCORPORATED,

                                                  Defendant–Third Party Plaintiff –
                                                  Appellee
v.

C.H. ROBINSON WORLDWIDE, INCORPORATED,

                                                  Third Party Defendant – Appellant

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:09-CV-3128

Before JOLLY, BENAVIDES, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       DartAmerica, Inc. (“Dart”) sued MEMC Pasadena, Inc. (“MEMC”) for
breach of contract damages. The two parties settled their dispute, and the
district court dismissed their claims against one another with prejudice. MEMC,

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                  No. 12-20157

however, had filed a third-party complaint in the action against C.H. Robinson
Worldwide, Inc. (“Robinson”), alleging Robinson was liable for the amount
MEMC had paid to settle with Dart. After a three-day bench trial, the district
court ruled that Robinson had breached its agreement with MEMC and awarded
MEMC $445,000 in actual damages plus attorney’s fees and pre-judgment
interest. We AFFIRM.
                                        I.
      After a bench trial, we review a district court’s conclusions of law de novo
and its findings of fact for clear error. See Preston Exploration Co., L.P. v. GSF,
L.L.C., 669 F.3d 518, 522 (5th Cir. 2012). The interpretation of a contract is a
question of law, not fact, except for when extrinsic evidence has been used in
interpreting an ambiguous contract. Hidden Oaks Ltd. v. City of Austin, 138
F.3d 1036, 1048 (5th Cir. 1998) (inset quotation marks and citations omitted).
Whether a contract is ambiguous is a question of law, but once we determine
legal ambiguity, the fact finder’s interpretation deserves traditional deference.
Id. As the case was brought to the district court on diversity jurisdiction, the
substantive law of Texas applies. See Erie R.R. Co. v. Tompkins, 304 U.S. 64,
78-79 (1938).
                                        II.
      MEMC manufactures silicon wafers used in computer chips and solar
panels.   As part of its manufacturing process, it requires shipments of a
hazardous gas called silicon tetrafluoride (“STF”). MEMC cannot store STF at
its main plant in Pasadena, Texas, so it it contracts with private “haulers” to
transport gas-filled containers to Pasadena.
      In 2008, MEMC expanded its manufacturing capacity and contracted with
Robinson for management consulting services. MEMC contracted with Robinson
as a “one-stop” shop that could manage all of the private carriers delivering STF
to the plant. Pursuant to its obligations under a Transportation Management

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                                      No. 12-20157

Agreement (“Management Agreement”) it signed with MEMC, Robinson
identified Dart, a new trucking company that began transporting STF to the
Pasadena facility. MEMC signed a separate Transportation Service Agreement
(“Transportation Agreement”) with Dart; however, MEMC never paid Dart
directly. All money flowed through Robinson.
       The Transportation Agreement contemplated a three-month “Trial
Period,” the purpose of which was to allow MEMC an opportunity to evaluate
Dart’s performance and determine whether the parties’ business relationship
should continue into the future. From the beginning of the relationship, Dart
had difficulty meeting its requirements under the agreement. Despite Dart’s
difficulties, MEMC did not terminate the agreement per its option to do so.
Instead, one day before the trial period ended, MEMC made the decision to
extend the trial period to give Dart a second chance. MEMC sent such an email
(the “Email”) to notify Robinson, but, because it was initially addressed to an
incorrect email address, the Email was not received by Robinson until two days
after the end of the trial period.1
       The subsequent mixup, which forms the basis of this lawsuit, was this:
Robinson did not forward the Email and did not tell Dart that MEMC was
proposing an extension of the original trial period; neither Dart nor Robinson,
in turn, ever informed MEMC whether the extended trial period had been
accepted. The parties went about their business, each operating on its own
assumptions about the contractual relationship.             Several months later, in
February 2009, MEMC terminated the Management Agreement with Robinson
and the Transportation Agreement with Dart, during what it believed to be the

      1
        The email, sent on October 31, 2008, was sent by Doug Rice, MEMC’s representative
in charge of the Dart project, to Andrew Pacini, MEMC’s primary contact at Robinson and the
Account Manager for the MEMC/Dart relationship.

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                                  No. 12-20157

extended trial period. Dart, apparently in the dark about the Email, was thus
incredulous that the contract had been breached by MEMC.
      Consequently, in September 2009, Dart sued MEMC, based on the theory
that Dart had never agreed to the extended trial period.      As we have noted,
MEMC filed an answer and a third-party complaint against Robinson. MEMC
settled with Dart for $445,000, but the dispute with Robinson proceeded to trial,
where the court, after a three-day bench trial, issued findings of fact and ruled
that Robinson had breached its agreement with MEMC. On this appeal, we
review whether the district court erred in finding breach on the part of Robinson.
The primary question focuses on the Email and the parties’ duties with respect
thereto.
                                       III.
      This court reviews the lower court’s interpretation of unambiguous
contractual language de novo but defers to the court’s interpretation of
ambiguous provisions unless they are clearly erroneous. Paragon Res., Inc. v.
National Fuel Gas Distrib. Corp., 695 F.2d 991, 995 (5th Cir. 1983). We
therefore begin by considering the unambiguous language of the Management
Agreement between MEMC and Robinson. It provided that Robinson was to
supply services “related to the capture, tracking[,] archiving and reporting of
various transportation related information for entities interested in such
information to assist with and fully manage their day-to-day business
operations.” The Agreement also provided: “[T]he parties expressly agree that
[Robinson] has no responsibility for the terms of the contracts between [MEMC]
and its motor carriers.”       A plain language reading of the Management
Agreement provisions would not impose a duty on Robinson to relay
communications relating to the extension of a trial period because the proposed
extension related to the terms of the Transportation Agreement between MEMC
and its motor carrier, Dart.

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      The Management Agreement, however, goes on to provide: “To the extent
that any term or condition of Appendix A may conflict with or differ from the
provisions of this Agreement, the terms and conditions of Appendix A shall
control and take precedence.” Appendix A states that Robinson will provide: “a
turn key management service for the transportation of [MEMC’s] tankers”; a
“[s]ingle point of contact and a dedicated customer service team for [MEMC] . . .
responsible for the management of all day to day Freight transportation
operations”; “[p]roblem resolution”; and “[e]nforcement of SOP’s and contract
agreement between [MEMC] and carrier, and enforcement to any penalties for
non performance.” A plain language reading of these provisions, in the light of
the unambiguous primacy the parties gave to the Appendix, supports the district
court’s interpretation and conclusion that Robinson’s duties to provide
“[p]roblem resolution” and be a “[s]ingle point of contact and a dedicated
customer service team for [MEMC] . . . responsible for the management of all day
to day Freight transportation operations” encompassed relaying communications
between MEMC and Dart, duties Robinson was found to have breached.
      Alternatively, disregarding the Appendix’s primacy, these apparently
competing provisions—the terms of the Management Agreement and the
Appendix A provisions—would establish only ambiguity, which would lead the
court to consider extrinsic evidence, see Thornton v. Bean Contracting Co., Inc.,
592 F.2d 1287, 1290 (5th Cir. 1979); whereupon, on appeal, we would consider
the district court’s relevant findings of fact under the “clearly erroneous”
standard. See Paragon Res., Inc., 695 F.2d at 995. Although the parties did not
address this issue in the express terms we have set forth, we, nevertheless, will
give it our attention because the argument is embedded in, and underlies, their
overall arguments.
      In this respect, the district court, in a conclusory fashion, held that
Robinson breached its Management Agreement with MEMC “by failing to fully

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                                  No. 12-20157

inform Dart of MEMC’s desires and communications, including but not limited
to MEMC’s desires to extend the Trial Period” and “by failing to inform MEMC
of Dart’s intentions, and by failing to accurately communicate Dart’s desires to
MEMC.” However, the district court did make findings regarding the course of
performance between MEMC and Robinson. Specifically, the district court found
that Robinson employees “understood that it was their job to enforce the contract
agreement between MEMC and Dart,” that a “majority of the communications
between Dart and MEMC went through C.H. Robinson,” that “C.H. Robinson
never instructed MEMC to speak with Dart directly, as opposed to going through
Robinson,” and that Robinson did not “inform [MEMC] that MEMC should not
use C.H. Robinson as a single point or contact, but instead, C.H. Robinson
encouraged MEMC to use C.H. Robinson as a single point of contact.”
      The district court’s findings regarding course of performance support the
imposition of a duty on Robinson to convey information from MEMC to Dart
relating to the Transportation Agreement.          The district court’s findings
concerning course of performance were not clearly erroneous because they were
a “plausible account of the evidence considered against the entirety of the
record.” N.A.A.C.P. v. Fordice, 252 F.3d 361, 365 (5th Cir. 2001).
      We acknowledge that this is a close case presenting a close issue: whether
Robinson, as the “single point of contact” responsible for management of all day-
to-day transportation operations, had an obligation to forward an email that was
already late. We have, however, reviewed the record, read the briefs, and heard
well-presented oral argument in the case, from which we conclude the following:
Because of the contractual provisions that gave primacy to comprehensive duties
accepted by Robinson under Appendix A of the Management Agreement, we
cannot say the district court erred in finding Robinson was obliged to forward
the Email. Alternatively, even if we were to admit to contractual ambiguity, the
district court’s findings of fact clearly suggest Robinson was at fault; because, in

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                                  No. 12-20157

the event of contractual ambiguity, we only review those factual findings for
clear error, we again cannot say that the district court erred in holding Robinson
breached the Management Agreement and that its breach caused MEMC’s
damages in the amount of its settlement agreement with Dart. Nor can we say
the district court erred in awarding MEMC attorneys’ fees and costs. The
judgment of the district court is therefore
                                                                    AFFIRMED.

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