Court Opinion

ID: 993468
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:08:15.415845+00
Date Added: 2024-06-11T15:24:59.673457
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NEWCO, INCORPORATED,
Plaintiff-Appellant,

v.                                                               No. 97-1208

CESSNA AIRCRAFT COMPANY,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-96-2896-AW)

Argued: September 29, 1997

Decided: November 12, 1997

Before WILKINS, Circuit Judge, PHILLIPS, Senior Circuit Judge,
and THORNBURG, United States District Judge for the
Western District of North Carolina, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Joseph Michael Mott, MILES & STOCKBRIDGE, P.C.,
Rockville, Maryland, for Appellant. David Neil Ventker, HUFF,
POOLE & MAHONEY, P.C., Virginia Beach, Virginia, for Appellee.
ON BRIEF: John C. Lynch, HUFF, POOLE & MAHONEY, P.C.,
Virginia Beach, Virginia, for Appellee.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

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OPINION

PER CURIAM:

Newco, Incorporated appeals an order of the district court dismiss-
ing its action against Cessna Aircraft Company for failure to state a
claim upon which relief could be granted. See Fed. R. Civ. P.
12(b)(6). Finding no error, we affirm.

I.

The relevant allegations in Newco's complaint are as follows.1
Cessna and Newco entered into a written contract for Cessna to sell
to "Purchaser" an airplane for $6,295,000, payable in several install-
ments. J.A. 8 (internal quotation marks omitted). Newco's president,
Thomas L. Blair, advised Cessna's sales representative, Michael
Dwyer, that Newco wanted the unlimited right to assign the contract
to a third party. Dwyer represented that such an assignment would be
permitted and demonstrated this understanding by handwriting the
definition of "Purchaser" in the contract as"Newco, Inc. or assignee."
Id. (emphasis added; internal quotation marks omitted). The contract
also stated, however, that the "Agreement, including the rights of Pur-
chaser hereunder, may not be assigned by Purchaser except to a
wholly-owned subsidiary or successor in interest by name change or
otherwise and then only upon the prior written consent of Seller." J.A.
9 (emphasis and internal quotation marks omitted).

When Newco's second installment payment became due, Newco
informed Cessna that the payment would not be made until Cessna
verified that Newco had an unrestricted right to assign the contract
_________________________________________________________________
1 In reviewing a motion to dismiss for failure to state a claim, we con-
sider well-pled allegations in the complaint as true and construe those
allegations in favor of the plaintiff. See Martin Marietta Corp. v. Interna-
tional Telecomms. Satellite Org., 991 F.2d 94, 97 (4th Cir. 1992).

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and that until such verification Newco was placing the scheduled
installment payments in a segregated account. Cessna refused to
accede to Newco's position and ultimately declared Newco to be in
default.

Newco subsequently filed this action, alleging that Cessna had
repudiated the contract by failing to respond to Newco's request for
adequate assurances made in accordance with the provisions of the
Kansas Commercial Code. Newco also alleged that Cessna had negli-
gently misrepresented that Newco had an unrestricted right to assign
the contract.

The district court held that Newco had failed to state a claim for
anticipatory repudiation, reasoning that because the contract unam-
biguously provided that Newco's assignability rights were not unre-
stricted, Newco had no reasonable grounds for insecurity and Cessna
had no duty to provide Newco with adequate assurance that it would
perform.2 With regard to the negligent misrepresentation claim, the
district court held that Newco had failed to state a claim because it
had not alleged facts that would give rise to a duty on the part of
Cessna not to make negligent misrepresentations.

II.

Newco argues that the district court erred in concluding that the
contract was unambiguous, in failing to apply several rules of contract
construction, and in refusing to consider extrinsic evidence. We dis-
agree.

In Kansas, "[t]he intent of the parties is determined from the four
corners of an unambiguous instrument, harmonizing the language
_________________________________________________________________
2 The parties agree that Kansas law governs the contract issues in this
case and that Maryland law applies to the negligent misrepresentation
issue. Under Kansas law, "When reasonable grounds for insecurity arise
with respect to the performance of either party the other may in writing
demand adequate assurance of due performance and until he receives
such assurance may if commercially reasonable suspend any perfor-
mance for which he has not already received the agreed return." Kan.
Stat. Ann. § 84-2-609(1) (1996).

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therein if possible." Hall v. JFW, Inc., 893 P.2d 837, 840 (Kan. Ct.
App. 1995). When "the provisions of a written instrument are clear
and unambiguous, there is no occasion for applying rules of construc-
tion." Desbien v. Penokee Farmers Union Coop. Ass'n, 552 P.2d 917,
922 (Kan. 1976). Similarly, extrinsic evidence cannot be used to con-
tradict or to construe an unambiguous agreement. See TMG Life Ins.
Co. v. Ashner, 898 P.2d 1145, 1154 (Kan. Ct. App. 1995). "Ambigu-
ity in a written contract does not appear until the application of perti-
nent rules of interpretation to the face of the instrument leaves it
generally uncertain which one of two or more meanings is the proper
meaning." Simon v. National Farmers Org., Inc., 829 P.2d 884, 888
(Kan. 1992). We review the dismissal of a complaint for failure to
state a claim de novo. See Mylan Lab., Inc. v. Matkari, 7 F.3d 1130,
1134 (4th Cir. 1993).

Here, although the definition of "Purchaser" as "Newco, Inc. or
assignee" clearly reflects that the parties contemplated that Newco
might assign its rights, nothing in that definition indicates an intention
to grant Newco an unrestricted right of assignment. Therefore, in light
of the specific contractual language restricting Newco's assignment
rights, the district court was correct not to employ rules of construc-
tion or consider extrinsic evidence to resolve an ambiguity that did
not exist.

Because Newco's insecurity was based on an unreasonable inter-
pretation of the contract, Newco had no right to suspend its own per-
formance. Accordingly, Cessna's declaration of default was within its
rights, and the district court correctly dismissed Newco's claim for
anticipatory repudiation.

III.

Newco next argues that the district court erred in dismissing the
negligent misrepresentation claim on the basis that Newco had failed
to allege facts that would give rise to a duty on the part of Cessna not
to make negligent misrepresentations to Newco. We affirm, but on a
basis different from the one offered by the district court. See United
States v. Dorsey, 45 F.3d 809, 814 (4th Cir. 1995) (holding that "an
appellate court can affirm a trial court's opinion on different grounds
than those employed by the trial court").

Under Maryland law, an action for negligent misrepresentation will
lie only when the following five criteria are met:

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          (1) the defendant, owing a duty of care to the plaintiff,
          negligently asserts a false statement;

          (2) the defendant intends that his statement will be acted
          upon by the plaintiff;

          (3) the defendant has knowledge that the plaintiff will
          probably rely on the statement, which, if erroneous, will
          cause loss or injury;

          (4) the plaintiff, justifiably, takes action in reliance on the
          statement; and

          (5) the plaintiff suffers damage proximately caused by the
          defendant's negligence.

Martens Chevrolet, Inc. v. Seney, 439 A.2d 534, 539 (Md. 1982).

Here, because Cessna's representation that Newco had an unre-
stricted right to assign the contract was directly contradicted by spe-
cific language in the contract itself, Newco's reliance on Cessna's
representation was unjustifiable as a matter of law. See Foremost
Guar. Corp. v. Meritor Sav. Bank, 910 F.2d 118, 126 (4th Cir. 1990)
(holding that under Maryland law, "one may not reasonably rely upon
an oral statement when he has in his possession a contrary statement
in writing"); Call Carl, Inc. v. BP Oil Corp. , 554 F.2d 623, 631 (4th
Cir. 1977) (explaining that under Maryland law, a person cannot "rea-
sonably [rely] upon ... statements made in the face of plainly contra-
dictory contractual language"); James v. Goldberg, 261 A.2d 753, 758
(Md. 1970) (ruling that a plaintiff had no right to rely upon allegedly
false oral statements that contradicted a written agreement between
the parties). The district court therefore correctly dismissed Newco's
claim for negligent misrepresentation.

IV.

For the foregoing reasons, we affirm the dismissal by the district
court of Newco's complaint for failure to state a claim.

AFFIRMED

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