204 F.3d 639 (5th Cir. 2000), 98-30974, Gebreyesus v FC Schaffer & Assoc.

Docket Nº:98-30974
Citation:204 F.3d 639
Party Name:ENDRIAS GEBREYESUS, doing business as ODA Trading Agency, Plaintiff-Appellant, v. FC SCHAFFER & ASSOCIATES, INC., Defendant-Appellee and MESFIN GEBREYES; KIFLE GEBRE., Appellees. FC SCHAFFER & ASSOCIATES INC, Plaintiff-Appellee and MESFIN GEBREYES; KIFLE GEBRE, Appellees v. ENDRIAS GEBREYESUS, doing business as ODA Trading Agency, Defendant-Appella
Case Date:March 06, 2000
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 639

204 F.3d 639 (5th Cir. 2000)

ENDRIAS GEBREYESUS, doing business as ODA Trading Agency, Plaintiff-Appellant,


FC SCHAFFER & ASSOCIATES, INC., Defendant-Appellee







ENDRIAS GEBREYESUS, doing business as ODA Trading Agency, Defendant-Appellant.

No. 98-30974

United States Court of Appeals, Fifth Circuit

March 6, 2000

Rehearing Denied April 11, 2000

Page 640

[Copyrighted Material Omitted]

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Appeals from the United States District Court for the Middle District of Louisiana

Before JOLLY, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Endrias Gebreyesus ("Endrias") appeals the district court's dismissal of his breach of contract claims against F.C. Schaffer & Associates, Inc. ("Schaffer"). 1 Finding that the district court erred in interpreting the agreements at issue, we reverse the judgment of the district court and remand for further findings.


This case arises out of the alleged breach of a series of contracts between Schaffer and ODA Trading Agency ("ODA"). Schaffer is an engineering firm based in Baton Rouge, Louisiana. ODA is an Ethiopian entity that represents international companies, like Schaffer, wishing to do business in Ethiopia. Endrias is the founder and purported owner of ODA. During the relevant time period, Mesfin Gebreyes ("Mesfin") was a full-time employee of ODA. 2 Kifle Gebre ("Kifle") worked as an independent contractor of ODA, receiving one-third of the gross profits from projects that he brought to the business.

In 1989, Endrias left Ethiopia for the United States, where he resided until 1993. Shortly after Endrias' departure, Kifle brought the representation of Schaffer to ODA. After learning that the Ethiopian Sugar Corporation had decided to build a cane sugar mill and ethanol plant in Finchaa, Ethiopia (the "Finchaa Project"), Kifle contacted Schaffer about bidding for the Project. Schaffer expressed interest in the project, and, in 1990, Schaffer and ODA entered into a Representation Agreement (the "1990 Agreement"). Under the terms of the 1990 Agreement, Schaffer was to pay ODA a commission if it was ultimately the successful bidder on the Finchaa Project. The agreement also (1) identified ODA as the agent of Schaffer, (2) designated Mesfin as the ODA personnel assigned to work on the Finchaa Project, and (3) provided that ODA was to inform Schaffer of any changes in ownership of ODA. Kifle signed his own name to the contract on the signature line designated for "ODA Trading Agency."

In 1992, Mesfin informed Schaffer that the ownership in ODA had changed substantially and that it was "being restructured by a new foreign trade licence No. 000375 in the name of ODA Trading with the main shareholder being Mesfin Gebreyes." In response to this purported change in ownership, a new Representation Agreement was executed (the "1992 Agreement"). The terms of the 1992 Agreement were virtually identical to those in the 1990 Agreement and purported to cancel the 1990 Agreement. Significantly, as in the 1990 Agreement, the 1992 Agreement identified the parties to the contract as Schaffer and ODA. 3 Mesfin

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signed his name above the "ODA Trading Agency" signature line.

In May 1993, Schaffer learned that it was the low bidder on the tender for the Finchaa Project. Two months later, Endrias returned to Ethiopia. Upon his return, he contacted Schaffer to "introduce" himself as the owner of ODA. Schaffer, having never before worked with or heard of Endrias, resisted the idea of working with him on the sensitive Finchaa Project. Accordingly, when Mesfin and Kifle left ODA in 1994 to form their own company, Schaffer entered into a new representation agreement with them as individuals (the "1994 Agreement"). The 1994 Agreement purported to "superced[e] and replac[e] all prior contracts, agreements or understandings between the parties, with regard to the subject matter hereof." Shortly thereafter, Schaffer required Mesfin and Kifle to sign an indemnity agreement.

After receiving payments from the Ethiopian government for the Finchaa Project, Schaffer, pursuant to the terms of the 1994 Agreement, paid commissions only to Mesfin and Kifle. When Schaffer refused to pay any commission to ODA, Endrias sued Schaffer, claiming breach of the 1990 and 1992 Agreements and seeking recovery of the commissions and other expenses allegedly due under the contracts. Under the terms of the indemnity agreement, Schaffer interpled Mesfin and Kifle.

On the second day of trial, the district court granted Schaffer's motion for judgment as a matter of law, thereby dismissing Endrias' claims against Schaffer. Relying upon Schaffer's testimony at trial, the court found that at the time Schaffer executed the 1990 and 1992 Agreements, it believed that it was contracting only with Mesfin and Kifle and "did not know, or care, at that time what trade name, or other name, they used." Finding that the 1990 Agreement was a "perfectly valid contract between Schaffer and Kifle and Mesfin, who, at that time, were doing business as ODA Trading Agency" and that "[t]he 1990 Agreement was certainly superseded by the 1992 Agreement, and the 1992 Agreement was superseded by the 1994 Agreement," the court concluded that "Endrias was not a party to any of these agreements." Accordingly, Schaffer could not be liable to Endrias for breach. 4 Endrias filed this timely appeal.

The standard of review for a bench trial is well established: "findings of fact are reviewed for clear error; legal issues de novo." FDIC v. McFarland, 33 F.3d 532, 536 (5th Cir. 1994). Since this case comes to us through diversity jurisdiction, we apply the substantive law of Louisiana. See Erie R.R. v. Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Under Louisiana law, the interpretation of a contract and the determination of ambiguities are questions of law. See Abbott v. Equity Group, Inc., 2 F.3d 613, 626 (5th Cir. 1993) (citing Carter v. BRMAP, 591 So.2d 1184, 1188 (La. Ct. App. 1991)); Patterson v. City of New Orleans, 686 So. 2d 87, 90 (La. Ct. App. 1996). Where a court determines that ambiguity exists and makes factual determinations of intent, we review those factual findings for clear error. See Amoco Prod. Co. v. Fina Oil & Chem. Co., 670 So. 2d 502, 511 (La. Ct. App. 1996).


Prior to dismissing Endrias' claims against Schaffer, the district court determined that the parties to the 1990 and 1992 Agreements were Schaffer, Mesfin and Kifle. On appeal, Endrias argues that the evidence presented at trial demonstrates that ODA-and Endrias as owner of ODA-was a party to the contracts, and that Mesfin and Kifle were acting only as representatives of ODA when they signed

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the agreements. 5 Schaffer agrees with the district court's finding, arguing that, in signing the 1990 and 1992 Agreements, it intended to contract only with Mesfin and Kifle.

In general, under Louisiana law, extrinsic evidence cannot be used to "negate or vary" the unambiguous terms of a written contract. See Patterson, 686 So. 2d at 90. "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...

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