Huffmaster v. Exxon Co.

• Citation: 170 F.3d 499
• Decision Date: 17 March 1999
• Docket Number: No. 97-30742,97-30742
• Parties: William J. HUFFMASTER, et al., Plaintiffs, Huffmaster & Associates, Incorporated, Plaintiff-Appellant, v. EXXON COMPANY and CDI Corporation, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 499

170 F.3d 499

William J. HUFFMASTER, et al., Plaintiffs, Huffmaster & Associates, Incorporated, Plaintiff-Appellant, v. EXXON COMPANY and CDI Corporation, Defendants-Appellees.

No. 97-30742.

United States Court of Appeals, Fifth Circuit.

March 17, 1999.

Andy Vickery, Archer, Waldner & Vickery, LLP, Houston, TX, for Plaintiff-Appellant.

Robert Beattie McNeal, Frilot, Partridge, Kohnke & Clements, New Orleans, LA, David Michael Rivet, Exxon Co., Houston, TX, for Exxon Co.

Richard Franklin Zimmerman, Jr., Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, LA, for CDI Corp.

Appeal from the United States District Court from the Middle District of Louisiana.

Before HIGGINBOTHAM, PARKER and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

This appeal calls upon us to interpret a contract between Huffmaster & Associates ("HAI"), a staffing support company, and Exxon Company ("Exxon"). Under the contract HAI performed engineering and related services for Exxon with HAI's permanent and temporary staff support personnel. Exxon terminated HAI's right to perform services under the contract and entered into new contracts with different staffing support companies for performance of the same services. This litigation ensued. The district court granted summary judgment dismissing HAI's breach of contract claim against Exxon and dismissed, under Rule 12(b)(6), HAI's tortious interference with contract claim against a competing staffing support company. We affirm.

I.

HAI provides personnel to perform both permanent and temporary engineering, clerical, and support services for companies in and around Baton Rouge, Louisiana. Beginning in 1975 HAI provided engineering and associated services for Exxon's refinery operations under a series of contracts. By 1995, 80% of HAI's workforce was dedicated to the performance of services for Exxon. The contract at issue in this case was entered into by HAI and Exxon on April 1, 1994. Under that contract HAI agreed to furnish, upon Exxon's request, engineering and associated services as described in Letters of Authorization issued by Exxon. HAI also agreed to provide its own supervision and other personnel necessary to perform such services. Exxon was not required by the contract to request services exclusively from HAI or to request any particular amount of services from HAI. In essence, Exxon agreed only to pay HAI for services performed in accordance with each Letter of Authorization or, in the absence of specific reimbursement terms therein, pursuant to Exhibit D of the contract entitled, "Payment Schedule, Reimbursable/Non Reimbursible Costs."

Prior to 1995, Exxon obtained performance of various services by temporary personnel from several companies, including CDI Corporation ("CDI"). In late 1992 and early 1993, CDI executives approached Bill Huffmaster, the owner of HAI, seeking to purchase HAI. Huffmaster rejected CDI's offer.

Exxon maintains that by early 1995, it decided to reduce the number of companies providing it with staffing services. On January 16, 1995, Exxon informed HAI that after January 30 Exxon would no longer request clerical services from HAI. In a letter to HAI, Exxon stated that Olsten Staffing Services was to become Exxon's sole supplier of staff support and that Exxon anticipated that the bulk of HAI's former employees would be employed by Olsten for this purpose. Thereafter on February 6, 1995, Exxon informed HAI that Spectrum Engineering, Inc. would be providing the technical staffing services to Exxon; therefore, Exxon would no longer require the services of HAI in the technical area either. Exxon stated that Spectrum also would seek to "transition" or employ HAI's former employees. Spectrum Engineering, Inc. is a subsidiary of CDI.

Aggrieved by the termination of HAI's right to perform services for Exxon and the resulting loss of its business and employees, HAI, along with Huffmaster, commenced this litigation.

HAI and Huffmaster originally sued only Exxon in the Southern District of Texas for breach of contract, tortious interference with contract, and breach of the duty of good faith and fair dealing. After the action was transferred to the Middle District of Louisiana HAI and Huffmaster amended their complaint to include actions against CDI for tortious interference with contract.

The district court concluded that Louisiana law applied and dismissed plaintiffs' claims against Exxon for reach of contract via summary judgment and against CDI for tortious interference with contract under Rule 12(b)(6). Only HAI appealed. ¹

II.

Under the Louisiana Civil Code, "[a] contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished." LSA-C.C. Art.1906. "Interpretation of a contract is the determination of the common intent of the parties." Id., Art.2045. "When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." Id., Art.2046. "Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract." Id., Art.2048. "A provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective." Id., Art.2049. "Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contact as a whole." Id., Art.2050. "When the parties intend a contract of general scope but, to eliminate doubt, include a provision that describes a specific situation, interpretation must not restrict the scope of the contract to that situation alone." Id., Art.2052. "A doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and other contracts of a like nature between the same parties." Id., 2053.

Under the contract, Exxon had the right to specify and request the performance of services by HAI. ² Upon receiving such a request from Exxon, HAI had the right to perform and be compensated for the specified services. ³

The contract does not state or imply that Exxon must obtain any service exclusively from HAI or that HAI has the exclusive right to perform any service for Exxon. Accordingly, the contract provides for the creation of rights and obligations of the parties only in the event Exxon specifies and requests the performance of certain services by HAI.

The contract further provides for the modification or extinguishment of the obligations of the parties. Specifically, Sections 25 and 27 of the Contract provide as follows:

25. Assumption of the Services

CONTRACTOR agrees that if, in the opinion of EXXON, CONTRACTOR fails at any time during the performance of this CONTRACT to provide the labor, supervision, tools, equipment, or materials necessary for the prompt performance of the SERVICES herein contracted for, or should CONTRACTOR breach this CONTRACT in whole or in part or fail to use due diligence in the performance thereof, or should CONTRACTOR not be performing this CONTRACT in the manner herein provided, EXXON may, at its election and without prejudice to any other remedies available to it, take over and perform, or obtain another contractor to take over and perform, all or any part of the SERVICES then remaining unperformed. Should EXXON take over completion of the SERVICES, or obtain another contractor to do so, EXXON's sole obligation shall be to pay CONTRACTOR, upon completion of the SERVICES, subject to other provisions of the CONTRACT, either that percentage of any moneys due under the CONTACT which represents the percentage of the SERVICES completed by CONTRACTOR or the full CONTRACT price less all costs and expenses incurred by EXXON in completing the SERVICES, whichever is less.

* * *

27. Termination

A. EXXON may terminate, at any time and for any reason, any part of or all SERVICES by giving at least twenty four (24) hours' written notice to CONTRACTOR specifying the part of or all SERVICES to be terminated and the effective date of termination. CONTRACTOR shall cease work on said part of or all SERVICES on the effective date of termination but shall continue to prosecute any unterminated part of SERVICES.

B. If any part of or all SERVICES are terminated, EXXON with respect to such SERVICES shall pay CONTRACTOR, pursuant to Exhibit B, only for SERVICES performed and obligations incurred prior to the effective date of termination and for such additional amounts directly related to SERVICES performed by CONTRACTOR in terminating, providing said SERVICES were authorized in advance by EXXON.

C. EXXON's sole liability to CONTRACTOR for termination shall be determined in accordance with this Article and EXXON shall not be liable for any other damages including, without limitation, loss of anticipated profits or reimbursement for SERVICES unperformed.

Interpreting each provision of the contract in light of its other provisions so that each is given the effect and meaning suggested by the contract as a whole, we conclude that Section 25 provides Exxon the remedy, for specified causes (viz., breach of contract, lack of diligent performance, lack of means of prompt performance, or improper manner of performance), to extinguish, in whole or in part, HAI's right to perform requested services, and further provides that, in such a case, HAI will be paid either on the basis of the percentage of the services completed by HAI or the full contract price less all costs and expenses incurred by Exxon in completing the services, whichever is less.

Section 27, interpreted in like manner, gives Exxon the right, without cause, to terminate HAI's right to perform any or all specified services by giving HAI at least 24 hours written notice of the services to be terminated and the effective date of termination. In...