Court Opinion

ID: 32797
Source: CourtListenerOpinion
Date Created: 2010-04-25 18:57:42+00
Date Added: 2024-06-11T12:15:41.259105
License: Public Domain

UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit

                          No. 96-11046

           ITT COMMERCIAL FINANCE CORPORATION, Et Al,

                                                        Plaintiffs,

              BROKERAGE SERVICES OF AMERICA, INC.,

                                              Plaintiff-Appellant,

                             VERSUS

                      SAM’S WHOLESALE CLUB,

                                              Defendant-Appellee.

               -----------------------------------

              BROKERAGE SERVICES OF AMERICA, INC.,

                                              Plaintiff-Appellant,

                             VERSUS

            WAL-MART STORES, INC., doing business as
                    Sam’s Club-Members only,

                                              Defendant-Appellee.

          Appeal from the United States District Court
               For the Northern District of Texas
                        (3:93-CV-2297-H)
                          March 6, 1998

Before GARWOOD, DUHÉ, and DeMOSS, Circuit Judges.
DeMoss, Circuit Judge:*
     Brokerage Services of America (BSA) appeals from the district

court’s final judgment after bench trial, which denied BSA relief

on its many claims against Sam’s Wholesale, an operating division

of Wal-Mart Stores, Inc. (Wal-Mart).1       BSA asks this Court to

reverse the judgment in Wal-Mart’s favor and render a judgment in

BSA’s favor for the hefty sum of $21,000,000.     We decline BSA’s

request and affirm the district court.

                             BACKGROUND

I.   The BSA/Wal-Mart Purchasing Contract

     In 1990 and 1991, BSA sold computers and computer-related

equipment in the retail and wholesale market.    In late 1990, BSA

began selling to Sam’s Wholesale Club, an operating division of

Wal-Mart.    When Wal-Mart initiated a business relationship with a

vendor, it required the new vendor to execute a master vendor

agreement.   The master vendor agreement defined the material terms

of the vendor’s ongoing relationship with Wal-Mart, including

payment and shipping terms. Additional vendor agreement forms were

     *
          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that this opinion should not be published and is not precedent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.
     1
          BSA initially sued Sam’s Wholesale Club. BSA named the
parent Wal-Mart Stores, Inc. in its amended complaint. Both sides
most commonly refer to the defendant as “Wal-Mart” and this opinion
will adopt that convention.

                                  2
sometimes   executed   to   update   or    change   information   about   a

particular vendor or transaction.         Any further terms material to a

particular transaction were typically recorded in a purchase order,

which included, on the back of the form, Wal-Mart’s standard

purchase order terms and conditions.          Taken together, the vendor

agreement and the purchase order terms and conditions formed the

“purchasing contract” between the parties and defined the parties’

relative rights and obligations.

     Wal-Mart’s vendor agreement form contained an integration

clause, which provided:

            ALL PURCHASES MADE BY PURCHASER SHALL BE CONTROLLED
            BY THE PURCHASER’S PURCHASE ORDER “TERMS AND
            CONDITIONS” WHICH IS ATTACHED AS A PART OF THIS
            AGREEMENT   AND   INCLUDED   WITH   EACH   MANUALLY
            TRANSMITTED ORDER.

One of the purchase order terms and conditions integrated by the

integration clause provided:

            Set-off: Purchaser may set off against amounts
            payable under this order all present and future
            indebtedness of the Seller to Purchaser arising
            from this or any other transaction whether or not
            related thereto.

     Taken together, the vendor agreement and purchase order terms

and conditions purported to grant Wal-Mart a contractual right to

adjust payments to the vendor by deducting therefrom any debit

balance or indebtedness owed by the vendor to Wal-Mart.

     BSA executed the required forms when it began doing business

with Wal-Mart in October 1990.       Thereafter, BSA executed several

                                     3
additional vendor agreements.        The district court held that the

BSA/Wal-Mart purchasing contract vested Wal-Mart with the right to

continually set off any debt BSA owed to Wal-Mart against debt Wal-

Mart owed to BSA, without regard to whether the transactions were

related.     BSA challenges this holding on appeal.

II.   BSA’s Assignment of a Security Interest

      In January 1991, BSA obtained financing for its inventory and

other     aspects   of   its   business   from   ITT   Commercial   Finance

Corporation (ITT).2       In exchange for the financing, BSA assigned

ITT a security interest in BSA’s accounts and other intangibles.

      BSA and ITT sent notice of the assignment to Wal-Mart.           The

top portion of the notice defines the interest assigned.               The

bottom portion of the notice is titled “Customer Acknowledgment,”

and contains the following language:

             The undersigned, referred to in the above Notice of
             Assignment, hereby acknowledges receipt of the
             above Notice of Assignment . . . and agrees to make
             all current and future payments owed to Assigner
             directly to ITT at the above mailing address,
             notwithstanding any terms in any agreement,
             contract, invoice or purchase order to the
             contrary.

After Wal-Mart received notice of the assignment, Wal-Mart paid

sums owed on BSA invoices directly to ITT.         Wal-Mart also reduced

some of its payments to BSA by taking certain set-offs against the

      2
          ITT recovered $355,072.12 from Wal-Mart for improper
adjustments at trial and subsequently settled with Wal-Mart. ITT
is not a party to this appeal.

                                      4
BSA/ITT account.3

III. Wal-Mart’s Sales to BSA

     During the course of business, both before and after ITT

obtained a security interest in BSA’s accounts, Wal-Mart customers

would return to Wal-Mart merchandise which had been originally sold

by BSA to Wal-Mart.      Wal-Mart would accept the merchandise and

deduct the price of the returned product from BSA’s invoice.           This

transaction   was   referred   to   as   an   “original   vendor   return.”

Original vendor returns for BSA merchandise were routinely set off

against the BSA/ITT account.

     Similarly, Wal-Mart occasionally decided to liquidate certain

merchandise from its inventory.          In such a case, the inventory

might be liquidated by sale to the original vendor or                 to a

different vendor. When Wal-Mart’s inventory was liquidated by sale

to a vendor other than the original vendor, the transaction was

referred to as a “third party return.”        In the Spring and Summer of

1991, BSA and Wal-mart entered into a series of transactions

involving the sale of merchandise to BSA pursuant to a third-party

return.   With respect to each transaction, Wal-Mart’s invoice for

the merchandise sold to BSA was set off against the BSA/ITT

     3
          The parties designate Wal-Mart’s balance with BSA after
the assignment as the “BSA/ITT” account.

                                     5
account.    In addition to original vendor returns and third party

returns, Wal-Mart occasionally adjusted the BSA/ITT account by

various sums for shipping, handling, shipping discrepancies or for

a contractual amount referred to as “price protection.”

     When ITT became aware of the various Wal-Mart set-offs posted

to the BSA/ITT account, it voiced objection and wanted to prevent

further compromise of its security interest in BSA accounts.                  To

satisfy    ITT’s   concerns,   BSA   and   ITT    executed    a    Supplemental

Financing Agreement in September 1991.           The Supplemental Financing

Agreement acknowledged and was intended to accommodate Wal-Mart’s

contractual right to set off its payments to the BSA/ITT account.

     In    October   1991,     Wal-Mart    again    desired       to   liquidate

merchandise by selling a substantial number of computers and

computer-related     equipment    manufactured      by   several       different

companies, including Premier, KLH and Goldstar.                   BSA agreed to

purchase the merchandise, and the resulting transaction became

known as the “Goldstar agreement.”

     BSA and Wal-Mart memorialized the Goldstar transaction with a

separate vendor agreement dated October 25, 1991.4            The parties did

     4
          The October 1991 vendor agreement form lists “BSA
Computer Corporation” (BSACC) as the vendor, rather than just “BSA”
or “BSA, Inc.” At trial, BSA attempted to defeat Wal-Mart’s right
to set off the BSA/ITT account for the Goldstar transaction by
arguing that BSACC was an entity distinct from BSA, against which
Wal-Mart had no pre-existing contractual set off right. The
district court rejected that argument, finding that the Goldstar
transaction occurred between Wal-Mart and BSA.       BSA expressly
declines to challenge that fact finding on appeal.

                                      6
not, however, reduce the operative terms of the Goldstar agreement

to writing by executing a companion purchase order.           The operative

terms of the Goldstar transaction were thus established by the pre-

existing contract rights of the parties pursuant to the master and

subsequent   vendor   agreements     and    the   parties’   oral   agreement

concerning   price    and   other   terms   applicable   to   the   Goldstar

agreement.   BSA claims in this suit that Wal-Mart made an oral

agreement not to set off the BSA/ITT account for the Goldstar

transaction, notwithstanding the terms of the pre-existing vendor

agreements and the parties’ prior course of dealings.

     Wal-Mart shipped the Goldstar merchandise directly from its

various retail outlets to BSA.        Beginning in November 1991, Wal-

Mart set off the BSA/ITT account for all of the units shipped, and

for various other expenses. Wal-Mart’s set-offs eventually totaled

$882,752.12.5    Wal-Mart’s posting of the Goldstar transaction

resulted in a credit balance owed to Wal-Mart, and Wal-Mart made no

further payments to the BSA/ITT account.

     Financial pressures caused in part by the fact that BSA was

severely undercapitalized forced BSA to liquidate the Goldstar

merchandise at a “fire sale” for far less than BSA anticipated when

     5
          Some of these set-offs were later determined to be
unjustified.   The district court determined that Wal-Mart was
entitled to set off the BSA/ITT account $527,680 for the Goldstar
transaction, but disallowed $355,072.12 as improperly set off
against the BSA/ITT account. A substantial portion of the amount
disallowed was not directly related to the Goldstar transaction.
Wal-Mart has not challenged these findings on appeal.

                                      7
it purchased the goods from Wal-Mart.                Within thirty days of

receiving the Goldstar merchandise, BSA resold most of the Goldstar

merchandise for $519,739.82, less than BSA would have owed Wal-Mart

for all of the Goldstar merchandise.         BSA’s next business decision

proved to be even more imprudent.           Notwithstanding the fact that

ITT financed the transaction by way of Wal-Mart’s set off, BSA did

not pay down on the BSA/ITT account.              Rather, BSA deposited the

proceeds from its resale of the Goldstar merchandise directly into

the BSA bank account, and then diverted the money to run the

company and to finance a new Wal-Mart transaction.

      In December 1991, ITT informed BSA that it would not provide

further financing to BSA until the BSA/ITT account was reimbursed

for   the   Goldstar    transaction.       Nonetheless,      ITT    subsequently

provided BSA     with   an   additional    $1.4    million    for    a   Wal-Mart

transaction in January 1992.

      BSA was unable to resolve its financial difficulties with ITT

and did not obtain alternative financing for pending purchase

orders.     BSA ceased operations and litigation ensued.

                             PROCEDURAL HISTORY

      BSA sued Wal-Mart in Texas state court, alleging that Wal-

Mart’s Goldstar set-offs caused ITT to stop financing BSA, which

caused BSA to incur $21,000,000 in lost profits and business.                BSA

stated various grounds for liability, including breach of contract,

                                       8
breach    of    implied   and   express       warranty,   promissory   estoppel,

tortious interference, violations of the Texas Deceptive Trade

Practices Act, negligent misrepresentation and fraud.

     Shortly thereafter, ITT brought a separate state court suit

against Wal-Mart to recover monies set off against the BSA/ITT

account.       After Wal-Mart removed the BSA action to federal court,

the parties agreed to consolidate the BSA action and the ITT

action.

     BSA, ITT and Wal-Mart all filed motions for summary judgment.

On June 2 and again on June 20, 1995, the district court entered

lengthy orders disposing of many of the issues raised by those

motions.       The remaining issues were tried to the court without a

jury from September 11 through September 19, and October 11, 1995

through October 12, 1995.         On January 2, 1996, the district court

entered findings of fact and conclusions of law.                  The district

court’s January 2 Order reaffirmed its earlier holdings and made

the following additional findings relevant to this appeal:

     1.        that Wal-Mart enjoyed a contractual right to
               set off the BSA/ITT account for returns and
               other monies owed to Wal-Mart by BSA;

     2.        that Wal-Mart’s pre-existing right to set off
               the BSA/ITT account was not extinguished by
               BSA’s subsequent assignment of a security
               interest in its accounts to ITT because ITT
               obtained the security interest subject to Wal-
               Mart’s set-off right;

     3.        that    Wal-Mart’s    execution    of    the
               acknowledgment portion of the BSA/ITT notice
               of assignment did not constitute a waiver of
               defenses under Texas law;

                                          9
     4.   that Wal-Mart properly set off $527,680
          against the BSA/ITT account for the Goldstar
          transaction;

     5.   that Wal-Mart breached an express warranty by
          shipping some non-conforming goods, but that
          BSA failed to offer evidence supporting an
          award of damages for that breach;

     6.   that regardless of whether Wal-Mart orally
          agreed not to set off the BSA/ITT account for
          the Goldstar transaction, the express terms of
          the BSA/Wal-Mart contract giving Wal-Mart a
          set-off right prevented BSA from enforcing an
          alleged oral modification of that contract;
          and

     7.   that the relationship between Wal-Mart’s
          breach of an alleged and unenforceable oral
          modification to the BSA/Wal-Mart purchase
          contract and the substantial damages alleged
          by BSA was too remote to justify recovery.

     BSA makes four basic arguments on appeal.      First, BSA argues

that Wal-Mart had no contractual right to set off the BSA/ITT

account for monies BSA owed to Wal-Mart.     Second, BSA argues that

Wal-Mart’s set-off right, if any, was terminated by Wal-Mart’s

acknowledgment of ITT’s interest in the BSA/ITT account.           Third,

BSA maintains that Wal-Mart made and breached a binding oral

agreement not to set off the BSA/ITT account for the Goldstar

transaction.    Fourth,   BSA   contends   that   the   district    court

erroneously concluded that BSA failed to prove damages with respect

to its breach of warranty claim.    Wal-Mart has not cross-appealed.

                                   10
                            DISCUSSION

I.   Wal-Mart’s Right to Set Off the BSA/ITT Account

     BSA argues that the BSA/Wal-Mart purchasing contract does not

provide Wal-Mart with a right to set off the BSA/ITT account for

BSA’s purchase of the Goldstar merchandise. We review the district

court’s construction of an unambiguous contract de novo.   Tarrant

Distributors Inc. v. Heublein Inc., 127 F.3d 375, 377 (5th Cir.

1997) (“[B]ut while interpretation of an unambiguous contract is a

question of law, clear error is the standard of review when a

district court uses extrinsic evidence to interpret an ambiguous

contract.”) (internal quotations omitted).

     BSA first argues that the rights and duties of the parties are

governed exclusively by the October 1991 vendor agreement executed

with the Goldstar transaction.    BSA uses this premise to launch

several contract interpretation arguments, all of which reach the

same conclusion -- that both the integration clause in the vendor

agreement and the set-off clause in the purchase order terms and

conditions are inapplicable to the Goldstar transaction because

Wal-Mart was acting as a “seller” or “vendor,” rather than a

“purchaser.”

     BSA is correct that Wal-Mart’s right to set off BSA debts

cannot be derived from the October 1991 vendor agreement.      The

October 1991 vendor agreement was not accompanied by a companion

                                 11
purchase order.          There is, therefore, no set-off clause to be

integrated by the integration clause.                    Of equal importance, the

integration clause, and therefore the set-off clause, is facially

inapplicable when Wal-Mart is acting as a “seller” or “vendor,”

rather than in its traditional role of “purchaser.”6

       BSA’s argument is flawed, however, because it is blind to the

reality that the BSA/Wal-Mart relationship and the purchasing

contract        are   defined     by   more    than   the    October        1991   vendor

agreement. The material terms of the BSA/Wal-Mart relationship are

defined in the master vendor agreement executed in October 1990, as

well       as   the    standard    purchase        order    terms     and    conditions

incorporated          therein.         With    respect     to   the    October       1990

transaction, as well as many others that followed, Wal-Mart was

acting in its defined role as “purchaser.”                      Moreover, each of

those contracts granted Wal-Mart an ongoing right to set off Wal-

Mart debt incurred as a result of the subject transaction by BSA

debt incurred as a result of either the subject transaction or

future unrelated transactions.                The record contains ample evidence

that BSA sold Wal-Mart a large volume of product, that both the

integration clause and the set-off clause were part and parcel of

the vendor agreements and purchase orders executed by BSA and Wal-

       6
          The integration clause applies only to “purchases made by
purchaser.”

                                              12
Mart,7 that the parties comported themselves in accordance with

those provisions, and that the Goldstar transaction was set off

against Wal-Mart’s pre-existing debt to BSA for product sold

pursuant to those agreements.     We therefore hold that Wal-Mart’s

right to set off the BSA/ITT account does not depend upon, and is

not derived, from the October 1991 vendor agreement.      Rather, Wal-

Mart’s right arises from the terms of earlier vendor agreements in

which Wal-Mart   was   the   purchaser.   For   those   purchases,   the

integration clause, and the set-off clause integrated by the

integration clause, allowed Wal-Mart to deduct the sums BSA owed

Wal-Mart for the Goldstar transaction from the balance Wal-Mart

owed BSA for earlier purchases.    The district court’s construction

     7
           BSA argues that there is no competent evidence of the
relevant contract terms in the record. BSA does not argue that the
relevant terms do not appear in the purchasing contract or that
better copies would disclose different language.          BSA simply
asserts that it should recover because Wal-Mart failed to produce
completely legible copies of the executed vendor agreements. We
disagree.    The Court spent considerable time pouring over this
exceptionally contentious record. Having completed that review, we
are convinced that the record contains sufficient testimonial and
documentary evidence to establish the relevant terms of the
purchasing contract. BSA itself introduced a form vendor agreement
illustrating the relevant terms at trial.     While it is true that
Wal-Mart’s copies of the original contracts are copied from
microfilm and partially blurred, BSA’s objection that Wal-Mart’s
proof fails for failure to offer better copies is in the nature of
a best evidence objection, which should have been pressed at trial.
The best evidence rule, as the parties must realize, is subject to
a number of exceptions when original documents are, as in this
case, unavailable. See FED. R. EVID. 1002; FED. R. EVID. 1003; FED. R.
EVID. 1004. Moreover, we would in any event decline to allow BSA,
who bears the burden of proof, to base a $21,000,000 recovery upon
Wal-Mart’s failure to tender unavailable documents when neither
party disputes the content of the controlling terms.

                                  13
of the contract is affirmed.

II.   Wal-Mart’s Acknowledgment of ITT’s Security Interest

      BSA argues that Wal-Mart’s acknowledgment of ITT’s security

interest barred Wal-Mart from setting off the BSA/ITT account for

the Goldstar transaction.          BSA first reiterates its argument that

Wal-Mart’s set-off right, if any, must be derived from the October

1991 vendor agreement.       BSA thus concludes that Wal-Mart’s set-off

right post-dated and was limited by the January 1991 notice of

assignment.   See TEX. BUS. & COM. CODE § 9.318(a)(2) (assignee is

subject to those defenses “which accrue[] before the account debtor

receives   notification      of    the     assignment”).    We    have   already

concluded that Wal-Mart’s contractual set-off right does not depend

upon the October 1991 vendor agreement, but is derived instead from

the master and subsequent vendor agreements and the parties’ course

of dealing. Therefore, BSA’s argument that Wal-Mart’s execution of

the notice of assignment preempted accrual of that right must fail.

      Alternatively,    BSA       argues    that   Wal-Mart’s    acknowledgment

effected a waiver of Wal-Mart’s pre-existing right to set off the

BSA/ITT account. See TEX. BUS. & COM. CODE § 9.206(a) (providing that

an agreement to enforce claims or defenses is enforceable).                  The

relevant provision of the notice provides that Wal-Mart “agrees to

make all   current     and   future      payments   owed   to   Assigner   [BSA]

directly to ITT at the above mailing address notwithstanding any

terms in any agreement, contract, invoice or purchase order to the

                                         14
contrary.”     The notice does not contain the word “waiver,” or

“defenses,” and does not purport to limit Wal-Mart’s defenses to

payment against either ITT or BSA.               The notice simply does not

contain the clear and unambiguous type of language that Texas

courts have required to support a finding of intentional waiver.

See, e.g., Jonwilco, Inc. v. C.I.T. Financial Servs., 662 S.W.2d

664, 666 (Tex. App.--Houston [14th Dist.] 1983, no writ) (finding

waiver where note included statement that “debtor will settle all

claims, defenses, set offs and counterclaims it may have against

the secured party directly with the secured party, and not set up

any thereof against secured party's assignee"); see also Conoco,

Inc. v. Amarillo Nat’l Bank, 950 S.W.2d 790, 795 (Tex.App.-Amarillo

1997, pet. filed) (“Waiver occurs when a person, who has full

knowledge of the    material facts, acts or fails to act upon a right

which   he   legally     holds,    and    such   act   or    failure   to    act   is

inconsistent with that right or the intention to rely upon that

right”).     Wal-Mart’s execution of the acknowledgment simply bound

Wal-Mart, notwithstanding any agreement to the contrary, to make

payment directly to ITT.            Wal-Mart abided by that agreement by

tendering more than $20,000,000 in payments directly to ITT after

receiving notice of the assignment.              Wal-Mart’s execution of the

acknowledgment     did    not     waive   Wal-Mart’s        contractual     defenses

against BSA.

     When there has been no express waiver of defenses, Texas law

                                          15
provides that the rights of an assignee are subject to the terms of

the contract between the account debtor and the assignor. TEX. BUS.

& COM. CODE § 9.318(a)(1).     Thus, ITT accepted the security interest

subject to Wal-Mart’s pre-existing contractual right to set off the

BSA/ITT account. Conoco, 950 S.W.2d at 796-97 (applying the first-

in-time rule to an analogous dispute).              ITT could not obtain any

rights greater than those possessed by BSA and BSA cannot now

assert that the assignment to ITT effectively expanded its own

rights against Wal-Mart by modifying the contract between BSA and

Wal-Mart.       The district court’s determination that Wal-Mart’s

acknowledgment of ITT’s security interest did not extinguish Wal-

Mart’s contractual set-off right is affirmed.

III. Oral Modification of           the    Vendor    Agreement   for     the
     Goldstar Transaction

      BSA claims that Wal-Mart’s decision to breach the Goldstar

agreement by setting off the cost of the Goldstar merchandise

caused ITT to cease financing BSA business, with the result that

BSA lost profits and business in the amount of $21,000,000.                    The

district court rejected BSA’s theory of the case, finding that the

alleged oral agreement not to set off the BSA/ITT account, if any,

was   legally    ineffective   to    modify    the    express    terms    of   the

purchasing contract, which contained a clause prohibiting oral

modification.

      Neither the summary judgment record nor the record of trial

                                          16
support the conclusion that Wal-Mart agreed not to set off the

BSA/ITT account for the Goldstar transaction.       There is evidence

suggesting that BSA’s President and Wal-Mart’s purchasing agent

were concerned that ITT would be unhappy if and when the Goldstar

transaction was set off against the BSA/ITT account.          There is

evidence that BSA wanted to sell the Goldstar merchandise quickly

and pay Wal-Mart back directly so that ITT would not become

involved.   There is even evidence that Wal-Mart’s buyer hoped to

purchase additional product from BSA, or to set off the Goldstar

transaction in small increments, to avoid triggering a negative

reaction from ITT.    Conspicuously absent, however, is any evidence

that the parties took the appropriate steps to insure that Wal-Mart

would abandon its contract rights and deviate from the parties’

prior course of dealing by foregoing payment until BSA was in a

position to pay directly.

     BSA sold the material quickly at a loss or reduced profit and

then failed to use the proceeds to pay either Wal-Mart or ITT.

Trial   testimony    established   that   a   Wal-Mart   representative

contacted BSA President James Crocco for the express purpose of

asking whether ITT was to remain as the payor or factor for

purposes of the October 1991 Goldstar vendor agreement.         Crocco

advised the Wal-Mart representative that ITT should remain part of

the deal.

     The record does not support the conclusion that Wal-Mart

agreed not to exercise its contractual rights by setting off the

                                   17
Goldstar      transaction     against      the    BSA/ITT     account.        It    is,

therefore, unnecessary to consider whether the parties’ failure to

record the      alleged     agreement      in    writing    would   have    made    the

agreement unenforceable.8          The district court’s refusal to give

effect to the alleged oral agreement not to set off the BSA/ITT

account is affirmed.

IV.   Wal-Mart’s Breach of Warranty Claim

      The district court held that Wal-Mart breached its warranty to

provide the Goldstar merchandise new, undamaged and in original

boxes.     The district court nonetheless declined to award damages

for that breach because it also found that BSA had not produced

sufficient evidence to establish the damages caused by that breach.

      BSA contends that the district court erred because BSA’s

former Chief Financial Officer Peter Streit offered sufficient

testimony     to   support    a   damage    award.         Streit   testified      that

$151,000 was a “fair price reduction” for the non-conforming

character of some of the Goldstar merchandise.                   Streit’s testimony

was based generally on his familiarity with the market and the

condition of the Goldstar merchandise when received.                       Streit did

not   offer     any   detailed     accounting       of     how   that    figure     was

      8
          Although the district court purported to find the alleged
oral agreement unenforceable as a matter of law prior to trial, BSA
concedes that the district court received and considered
substantial evidence concerning the existence of the agreement at
trial.

                                        18
determined.     Wal-Mart offered evidence tending to establish that

some set-offs had already been credited to the BSA/ITT account.

     We review the district court’s fact finding that BSA failed to

prove ascertainable damages for clear error.                Nichols v. Petroleum

Helicopters, Inc., 17 F.3d 119, 121 (5th Cir. 1994).                The district

court expressly rejected Streit’s testimony as less than credible.

The district court’s credibility determination is deserving of

great deference. Burma Navigation Corp. v. Reliant Seahorse MV, 99

F.3d 652, 657 (5th Cir. 1996).         When the district court decides to

credit the testimony of one witness over another, the resulting

decision “can virtually never be clear error."                     Id. (internal

quotations omitted).     Having reviewed the record and the arguments

offered by the parties, we are not persuaded that the district

court’s refusal to award damages for breach of warranty was error.

                                    CONCLUSION

     The BSA/Wal-Mart relationship was defined by the master vendor

agreement     executed   in    October       1990,    and    subsequent     vendor

agreements    containing      the   same     terms,   as    well   as   Wal-Mart’s

standard purchase order terms and conditions, which were integrated

into the vendor agreement. Taken together, those documents granted

Wal-Mart a continuing right to set off the BSA/ITT account for sums

BSA owed to Wal-Mart, without regard to whether the BSA debt arose

from the same or a different transaction.              Wal-Mart’s contractual

                                        19
set-off right was unaffected by its acknowledgment that BSA had

assigned a security interest to ITT.       Although the issue was tried

to the district court, the record contains insufficient evidence to

establish that Wal-Mart made any oral agreement not to set off the

BSA/ITT account for the Goldstar transaction.         For all of these

reasons, Wal-Mart was acting within its rights when it set off the

BSA/ITT   account   for   the   Goldstar   transaction.   Further,   the

district court’s finding that BSA failed to offer sufficient

evidence to support a damage award for Wal-Mart’s breach of express

warranty to deliver only new goods and to refrain from billing

shipping and handling charges is supported by the record and is

without error.

     Accordingly, the district court is AFFIRMED.

                                    20