Bowater North America Corp. v. Murray Machinery, Inc.

• Decision Date: 16 September 1985
• Docket Number: No. 84-5418,84-5418
• Citation: 773 F.2d 71
• Parties: BOWATER NORTH AMERICA CORPORATION, Plaintiff-Appellant, v. MURRAY MACHINERY, INC., Murray Southern, Inc., Alabama Industrial Fabricators, Inc., Logan R. Ritchie, Jr., and Edgardo Manual Diaz, Defendants-Appellees, and MURRAY MACHINERY, INC., and Murray Southern, Inc., Third-Party Plaintiffs, v. J.M. FOSTER, INC., and Harry Tobey and Hoff Associates, Third-Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 71

773 F.2d 71

BOWATER NORTH AMERICA CORPORATION, Plaintiff-Appellant, v. MURRAY MACHINERY, INC., Murray Southern, Inc., Alabama

Industrial Fabricators, Inc., Logan R. Ritchie,

Jr., and Edgardo Manual Diaz, Defendants-Appellees, and MURRAY MACHINERY, INC., and Murray Southern, Inc., Third-Party Plaintiffs, v. J.M. FOSTER, INC., and Harry Tobey and Hoff Associates,

Third-Party Defendants-Appellees.

No. 84-5418.

United States Court of Appeals,

Sixth Circuit.

Argued March 6, 1985.

Decided Sept. 16, 1985.

James R. Buckner, Miller & Martin, Raymond R. Murphy (argued), Chattanooga, Tenn., for plaintiff-appellant.

Carl Ricciardi, Ruder, Ware, Michler & Forester, Wausau, Wis., Ferber W. Tracy, (argued), Spears, Moore, Rebman & Williams, Joe E. Manuel (argued), Leitner, Warner, Owens, Moffitt, Williams & Dooley, Don W. Poole, Bean, Poole, Lawrence & Thornbury, Chattanooga, Tenn., Logan R. Ritchie, Jr., Edgardo M. Diaz, Birmingham, Ala., W. Neil Thomas, Thomas, Mann & Gossett, George L. Foster, Hall, Haynes, Lusk & Foster, Richard R. Ruth, Jr., Luther, Anderson, Cleary & Ruth, James Milam (argued), Chattanooga, Tenn., for defendants-appellees.

Before KEITH and MARTIN, Circuit Judges, and TAYLOR, ^* District Judge.

KEITH, Circuit Judge:

The plaintiff Bowater North American Corporation (Bowater) appeals from an order of dismissal entered on May 4, 1984 by the United States District Court for the Eastern District of Tennessee, 604 F.Supp. 821, then District Judge H. Theodore Milburn presiding.

In the action below, Bowater had filed suit, alleging negligent breach of contract and breach of warranty, for defects in a long log crane. The crane was designed by defendants Logan Ritchie (Ritchie) and Edgardo Diaz (Diaz); fabricated, in part, by defendant Alabama Industrial Fabricators, Inc. (AIF); and sold by defendant Murray Machinery, Inc. and/or Murray Southern, Inc. (Murray). The district court dismissed the action with prejudice based upon a settlement agreement between the parties. On appeal, plaintiff seeks reversal of the dismissal order and remand to the district court for a jury trial on the factual issues, including the alleged defense of accord and satisfaction. For the reasons stated below we affirm the order of the district court.

FACTS

Bowater is a manufacturer of newsprint with an office and mill located in Calhoun, Tennessee. In 1980, Bowater ordered a long log crane from Murray. During installation, Bowater experienced various failures of the crane, which culminated with a suit being filed on November 29, 1982, against Murray, Ritchie and AIF. Subsequently, defendant Diaz was brought in by way of an amended complaint. The suit demanded a jury trial and sought damages for the expenses incurred in repairing the crane and for profits lost during the period the crane was inoperable.

After various proceedings, discussions were held between Bowater and the defendants (chiefly Murray) in an attempt to settle the case. Counsel for Bowater and Murray exchanged several draft agreements and had numerous conversations concerning a settlement. As a result of a meeting held on December 9, 1983, a document styled Settlement Agreement was drafted and executed by Murray, Bowater, AIF, and Harry Toby (third-party defendant) In pertinent part, the settlement agreement provided:

at various times thereafter. See Jt.App. at 90-129.

WHEREAS, Murray has agreed to pay to Bowater the sum of Two Hundred Fourteen Thousand and No/100 Dollars ($214,000) in cash; ¹ has agreed to sell to Bowater such of its products and replacement parts from Murray's product line as Bowater shall, from time to time, select and has agreed to provide Bowater credit of Two Hundred Eighty-Six Thousand and No/100 Dollars ($286,000) as against said future purchases which are to be credited at 10% off Murray's standard sales price for like products; and

WHEREAS, Bowater has agreed to make said purchases as soon as possible and in no event more than thirty-six (36) months of the date of signing.

WHEREAS, Alabama and Foster have agreed to pay Twenty-Five Thousand and No/100 Dollars ($25,000) each to Bowater; and

WHEREAS, Bowater and Murray agree that any dispute regarding the credits to be provided under this agreement shall be resolved in accordance with and pursuant to the construction industry arbitration rules of the American Arbitration Association and that any such determination shall be binding;

NOW, THEREFORE, for and in consideration of the mutual promises and releases given by the parties to this Agreement and in consideration of the payment by Murray, Alabama and Foster to Bowater of the total amount of Two Hundred Sixty-Four Thousand Dollars ($264,000) in cash and the agreement by Murray to sell its products to Bowater and to provide future credits against such sales in the amount of Two Hundred Eighty-Six Thousand Dollars ($286,000) as set forth above, the parties to this agreement hereby agree as follows:

1. (a) All parties hereto mutually release and discharge all other parties hereto and their respective officers, employees, members of their Board of Directors, their heirs, successors and assigns, from all claims of any kind and character, all actions, causes of action, liens, debts and demands which arise out of, in connection with, or result from or relate in any manner to, the above referenced litigation and/or the design, purchase, fabrication, construction, erection, operation and repair of the forty-five (45) ton, one hundred forty (140) foot radius long long boom crane which is the subject matter of the above-referenced litigation and as set forth in the various pleadings including ...

Jt.App. at 118-20 (Settlement Agreement at 2-4).

As called for in the agreement, Murray began making the cash payments to plaintiff. The first cash payment of $107,000 was made on December 28, 1983, together with a bank letter of credit to plaintiff guaranteeing payment of the second and final $107,000 installment, together with interest, on or before March 31, 1984. The initial cash payment was accepted and negotiated by plaintiff. Likewise, both Foster and AIF each performed their obligation to pay $25,000 to Bowater under the settlement agreement. Bowater also accepted those payments.

In February 1984, Murray was advised by Bowater that its interpretation of the credits provision of the agreement differed from Murray's interpretation of that provision. Murray contended that the agreement provided for a ten percent credit against the price of the equipment Bowater purchased until the accumulated credit totaled $286,000. Under this interpretation Bowater would be required to spend over $2.5 Million [$2,860,000 - 10% (286,000) = $2,574,000] in order to accumulate a $286,000 credit. However, Bowater contends The trial court had entered an order of dismissal on February 21, 1984, based upon the parties having advised it in December of 1983 that they had reached a settlement. Plaintiff filed a motion to set aside the order of dismissal and to amend the judgment and a motion to set the case for trial. After a hearing on March 5, 1984, the court suspended its previous order of dismissal to allow the parties time to file anything else they felt germane for the court's consideration. Thereafter, on May 4, 1984, the trial court entered its order, with supporting memorandum, ruling that the February 21, 1984 order of dismissal stood and that the cause remained dismissed. Bowater v. Murray Machinery, 604 F.Supp. 821 (E.D.Tenn.1984). Plaintiff Bowater then appealed to this Court claiming two issues for review. First, Bowater asserts that the district court erred by dismissing the case without a jury trial on the merits of the factual issues, thus denying plaintiff its constitutional right to a trial by jury. Second, Bowater contends that the district court violated Rule 52 of the Federal Rules of Civil Procedure by failing to find the facts specially and taking action which was "clearly erroneous" in light of the uncontroverted evidence.

that the agreement entitles it to receive the next $286,000 of merchandise purchased from Murray free of charge and that the price charged for the merchandise would be ten percent off the standard price. Under this interpretation, Bowater would spend no cash and would receive over $317,000 worth of merchandise free at a reduced price of $286,000 [$317,777.77 - 10% = $286,000]. Bowater rescinded the agreement based on the differing interpretations of the credits clause.

DISCUSSION

I.

In general, the right to jury trial only attaches when there is a question of fact. Bowater asserts that there was a mutual mistake of fact by the parties during the negotiation of the settlement agreement which justifies the need for a jury trial. Bowater asserts five errors identified in the law of contracts as a basis for its claim that there is a mutual mistake of fact which requires a jury trial. Bowater contends that there is a factual question concerning whether the settlement agreement resulted from a definite offer and acceptance or meeting of the minds. Bowater also asserts that there is a question of whether there was a mutual mistake, a mistake induced by fraud, or a mistake that Murray had reason to know of. Finally, Bowater contends that whether the contract was repudiated and the parties intended the settlement agreement to be an executory accord or an accord and satisfaction also presents a question of fact. Initially, we will consider the question of offer and acceptance.

It is very clear that there was a proper offer and acceptance of the settlement agreement herein. The negotiations over the settlement agreement occurred over a period of several months. All parties were represented by capable counsel and had sufficient time to familiarize themselves with the terms of the agreement. The agreement contained all necessary elements including valuable consideration. Under the terms of the agreement, Bowater gave up...