Instone Travel Tech Marine v. Intern. Shipping, 02-20344.

• Citation: 334 F.3d 423
• Decision Date: 12 June 2003
• Docket Number: No. 02-20344.,02-20344.
• Parties: INSTONE TRAVEL TECH MARINE & OFFSHORE, Plaintiff-Appellee-Cross-Appellant, v. INTERNATIONAL SHIPPING PARTNERS, INC., Defendant-Appellant-Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

334 F.3d 423

INSTONE TRAVEL TECH MARINE & OFFSHORE, Plaintiff-Appellee-Cross-Appellant, v. INTERNATIONAL SHIPPING PARTNERS, INC., Defendant-Appellant-Cross-Appellee.

No. 02-20344.

United States Court of Appeals, Fifth Circuit.

June 12, 2003.

COPYRIGHT MATERIAL OMITTED

Harry Arthur Herzog (argued), Wesley & Herzog, Houston, TX, for Plaintiff-Appellee-Cross-Appellant.

Harold K. Watson (argued), Amy Lynn Nilsen, Locke, Liddell & Sapp, Houston, TX, for Defendant-Appellant-Cross-Appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before WIENER, BENAVIDES and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:

I.

International Shipping Partners, Inc. ("ISP") is a Florida corporation that provides passenger ship management services for vessel owners. As part of its services, ISP provides crews and makes travel arrangements to get the crew members to and from the vessels. ISP contracted with Instone Travel Tech Marine & Offshore ("Instone"), a Texas corporation, in a "Credit Agreement", whereby Instone would supply ISP with airline tickets and related travel products and services.

Between June 23, 2000, and October, 2000, Instone provided ISP with approximately $52,000 worth of airline tickets that were never paid. ISP does not dispute that Instone is owed $52,000. ISP purchased the airline tickets, for which it was never reimbursed, on behalf of a now-defunct client, Premier Cruise Lines ("Premier"). ISP asserts that because it purchased the tickets from Instone in its capacity as an agent of Premier, Premier, and not Instone, is liable for the cost of the tickets. Instone, in turn, contends that the express terms of the Agreement between itself and ISP¹ require ISP to reimburse Instone even for those services that it purchased for the benefit of its clients in its capacity as an agent.

On October 19, 2000, Instone filed a breach of contract suit against ISP in the 11th Judicial District Court of Harris County, Texas. ISP removed the case to federal court on the basis of diversity jurisdiction. The district court granted summary judgment in favor of Instone, finding that the plain terms of the Agreement obligated ISP to reimburse Instone for the tickets. ISP appeals the district court's grant of summary judgment, and Instone cross-appeals the district court's refusal to grant attorneys' fees to fund a defense of this appeal.

II.

A district court's grant of summary judgment is reviewed de novo. Quorum Health Res., L.L.C. v. Maverick County Hosp. Dist., 308 F.3d 451, 458 (5th Cir. 2002); Rivers v. Central and South West Corporation, 186 F.3d 681, 682 (5th Cir. 1999). Summary judgment is appropriate, when, viewing the evidence in the light most favorable to the nonmoving party, the record reflects that no genuine issue of any material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 322-324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). See also Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir.2003). A material fact is one that "might affect the outcome of the suit under the governing law" and a "dispute about a material fact is `genuine'... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Sulzer Carbomedics, Inc. v. Oregon Cardio-Devices, Inc., 257 F.3d 449, 456 (5th Cir.2001) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Summary judgment is improper if the evidence would permit a reasonable jury to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Quorum Health Res., 308 F.3d at 458.

Because the court's jurisdiction is premised upon diversity, and the contract provides that "[i]n the event of a dispute, this Agreement shall be construed and enforced according to the laws of the State of Texas," the substantive law of Texas applies. Gen. Acc. Ins. Co. v. Unity/Waterford-Fair Oaks, Ltd., 288 F.3d 651, 653 (5th Cir.2002); See Erie R. Co. v. Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

III.

Instone is entitled to summary judgment if there is no genuine dispute of material fact regarding any of the elements of its breach of contract claim. See Celotex Corp., 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265. A successful breach of contract claim consists of: (1) a valid contract, (2) performed by the plaintiff, and (3) breached by the defendant, (4) resulting in damage to the plaintiff. Bridgmon, 325 F.3d at 577; Goss v. Bobby D. Assoc., 94 S.W.3d 65, 68 (Tex.App.2002).

ISP acknowledges the existence of a contract, and that Instone has incurred damages in the amount of $52,000. ISP contends, however, that its status as an agent, acknowledged in the Agreement, precludes it from being held financially responsible for the services that it purchased on behalf of its principals. ISP asserts that there was a genuine dispute of fact regarding its liability, and thus whether it's failure to reimburse Instone constituted a breach of the Agreement. In the alternative, ISP contends that the Agreement is ambiguous regarding its liability for products and services that it purchased on behalf of vessel owners. Thus, ISP concludes that summary judgment was improper.

A. Agency Immunity

It is well established that an agent acting for a disclosed principal² is not liable for claims arising out of contracts executed by the agent on behalf of its principal.³ It is equally evident, however, that the parties to a contract may alter this general rule by agreement so that the agent will be liable on the contract.⁴ "The mere fact that an agency relationship exists does not preclude the imposition of personal liability on an express contract with a third party, even though the contract is primarily for the benefit of the principal." United States v. Gissel, 353 F.Supp. 768, 779 (S.D.Texas, 1973), aff'd, 493 F.2d 27 (5th Cir.1974). "Where upon a construction of the contract it is determined that the agent has substituted his own responsibility for that of his principal, or has pledged his own responsibility in addition to that of his principal, he will be bound accordingly. His liability is not predicated upon his agency, but upon his contract obligations." Vincent Murphy Chevrolet Co. v. Auto Auction, Inc., 413 S.W.2d 474, 477-478 (Tex.Civ.App.1967) (quoting American Nat'l Bank v. American Loan & Mortgage Co., 228 S.W. 169 (Tex. Comm'n App.1921), and citing numerous Texas Court of Civil Appeals cases). See Eppler, Guerin & Turner, Inc. v. Kasmir, 685 S.W.2d 737, 738 (Tex. App.1985); Richards Group, Inc. v. Stone Container Corp., 1997 WL 78916 *3 (Tex. App.1997)(not designated for publication); 3 Tex. Jur.3d § 186.

B. The Agreement

Contract interpretation, including the question of whether the contract is ambiguous, is a legal question, subject to de novo review. Quorum Health Resources, 308 F.3d at 458; Fina, Inc. v. ARCO, 200 F.3d 266, 268 (5th Cir.2000). In construing the Agreement, we are guided by general principles of contract interpretation under Texas law. The court's primary concern is to give effect to the written expression of the parties' intent. General Acc. Ins. Co. v. Unity/Waterford-Fair Oaks, Ltd., 288 F.3d 651, 653 (5th Cir.2002); Nat'l Union Fire Ins. Co. v. Care Flight Air Ambulance Serv., Inc., 18 F.3d 323, 328-29 (5th Cir.1994). In doing so, the court should read all parts of the contract together to ascertain the agreement of the parties, ensuring that each provision of the contract is given effect and none are rendered meaningless. Int'l Turbine Serv., Inc. v. VASP Brazilian Airlines, 278 F.3d 494, 497 (5th Cir.2002); Petula Associates, Ltd. v. Dolcon Packaging Corp., 240 F.3d 499, 502 (5th Cir.2001); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). "Texas law requires us to `peruse the complete document to understand, harmonize, and effectuate all its provisions.'" Kona Tech. Corp. v. S. Pac. Trans. Co., 225 F.3d 595, 610 (5th Cir.2000).

1. Do the terms of the Agreement obligate ISP to reimburse Instone for purchases it made on behalf of vessel owners?

Instone maintains that the district court correctly concluded that the express terms of the contract unambiguously obligate ISP to pay for the purchases that it made on behalf of vessel owners. ISP, in response, maintains that such an interpretation fails to give effect to Provision X, where Instone acknowledged that ISP is acting as an agent for vessel owners. Provision X, it maintains, unambiguously releases ISP from liability.

From within the four corners of the contract, it appears that ISP did indeed agree to be held liable for the goods and services it ordered from Instone. The contract is entitled "Credit Agreement," and the entire agreement is concerned with establishing the parameters by which an account, in the name of ISP, is to be managed. The Agreement makes reference to the Client's [ISP's] Credit Application, the establishment of the Client's credit limit, the requirement that the Client remit payment within fourteen days of each statement date, and the method by which refunds and service charges are to be added and deducted from the Client's account. The first provision of the contract contains a blank for the name of the Client. International Shipping Partners, Inc. is written in the blank. There is no language regarding credit applications, credit limits, or the management of accounts for ISP's principals. Furthermore, Provision VI.A., labeled "Representations and Warranties of Client," states, "Client acknowledges that it is unconditionally obligated to pay Contractor for each ticket or document issued to Client hereunder."⁵ It is thus evident from the Agreement that Instone intended ISP to be obligated to pay for the goods and services that it ordered.⁶

a. Provision VI.A.

ISP contends that despite its acceptance of liability in Provision VI.A., the fact that it does so in the midst of a...