Fischbach and Moore, Inc. v. Cajun Elec. Power Co-op., Inc.

• Decision Date: 10 September 1986
• Docket Number: No. 85-3514,85-3514
• Citation: 799 F.2d 194
• Parties: 2 UCC Rep.Serv.2d 48 FISCHBACH AND MOORE, INC., Plaintiff-Appellant, v. CAJUN ELECTRIC POWER COOPERATIVE, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 194

799 F.2d 194

2 UCC Rep.Serv.2d 48

FISCHBACH AND MOORE, INC., Plaintiff-Appellant, v. CAJUN ELECTRIC POWER COOPERATIVE, INC., et al., Defendants-Appellees.

No. 85-3514.

United States Court of Appeals, Fifth Circuit.

Sept. 10, 1986.

Wickwire, Gavin & Gibbs, Jon M. Wickwire, David M. Latzko, Daniel E. Toomey, Vienna, Va., McCollister, McCleary, Fazio & Holliday, William C. Shockey, Baton Rouge, La., for plaintiff-appellant.

Michael R. Allweiss, Alan D. Ezkovich, New Orleans, La., for amicus.

Schwab & Walter, John W. Schwab, Baton Rouge, La., for defendants-appellees.

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

Before GEE, POLITZ and GARWOOD, Circuit Judges.

OPINION

POLITZ, Circuit Judge:

In this Louisiana diversity jurisdiction case, Fischbach and Moore, Inc. appeals an adverse summary judgment dismissing its claims against Cajun Electric Power Cooperative, Inc. and Burns & Roe, Inc. For the reasons assigned, we reverse and remand.

Facts

In 1981, Fischbach undertook to furnish the labor, material, and equipment required for certain electrical work on a coal-fired electrical generating plant being constructed for Cajun, pursuant to drawings and specifications prepared by Burns & Roe. The contract, denominated G3-82, consisted of two agreements, one for the equipment and the other for the construction work. Fischbach's work was substantially complete on April 11, 1983 when Cajun terminated the contract.

During the summer and fall of 1983 Cajun and Fischbach discussed the sum each believed due under the contract. At that time they were about $5.5 million apart. Negotiations intensified over the next nine months. Fischbach advanced eight claims. By May 1984 three were settled and paid. Cajun rejected the remaining five, Fischbach's claims for: (1) acceleration costs, $2,035,643.67; (2) premium time, $513,709.06; (3) vendor support and start-up, $314,531.01; (4) termination costs, $130,419.10; and (5) interest, $166,128.44. These claims totalled in excess of $3 million. In addition to the three claims which were paid and the five which were rejected, the parties agreed on three items which were not part of the eight claims, namely, Fischbach's demand for the remaining retention sum under the contract, and its demand for the value of certain conduit and scrap cable.

The retention sum was undisputed, $1,052,951.45, and at a meeting on May 10, 1984, the parties agreed to payment of $39,320.25 for the cable and conduit. In accordance with their agreement, on July 12, 1984, Fischbach submitted two invoices, number 35132 for "remaining retention on Contract G3-82," in the amount of $1,052,951.45, and invoice number 35130 for "conduit," $30,320.25, and "scrap cable," $9,000. These two invoices totalled $1,092,271.70.

By letter dated July 31, 1984, Cajun sent a check to Fischbach for $1,092,271.71, one penny more than the total of the two invoices. The stub attached to the check described the two July 12, 1984 invoices by date, number, and the exact agreed amount. These references appeared immediately below the notation: "The attached check is in payment of items described below." Nothing other than the two invoices was listed.

The transmittal letter contained two different statements about the enclosed check. As they appear in the letter, these stated:

The attached check includes the final retention and the agreed upon amount for conduit remaining in bank and F & M [Fischbach] scrap sold by Cajun.

The check constitutes full and final settlement of any obligation or claims which F & M has asserted or may assert in the future concerning Contract G3-82.

Fischbach received the letter and enclosed check, which it deposited on August 6, 1984. On that same day Fischbach wrote Cajun stating:

We have received your check No. 34529 dated July 27, 1984 in the amount of $1,092,271.71.

As stated on the stub attached to the check, this amount represents only the total amounts due for retention on Contract G3-82 and for the cable scrap and the conduit remaining in the bank. Since this amount is currently due and payable from CEPCO [Cajun] to Fischbach and Moore, Inc., we are accepting the check in satisfaction of these obligations. We do not, however, accept this check in satisfaction of any other claims by Fischbach and Moore, Inc. against CEPCO.

* * *

* * *

Since CEPCO's check includes only the correct amount due for retention, scrap and conduit, the check cannot possibly constitute "full and final settlement" of the other previously submitted but as yet unpaid claims.

Fischbach and Moore, Inc. accepts CEPCO's check as payment only of the amounts and invoices stated on the check stub, and with a full reservation of Fischbach and Moore, Inc. rights to payment of the other, previously submitted claims.

Thereafter, Fischbach pressed its remaining five claims. Cajun denied liability and the instant suit was filed. Ultimately, after answering, Cajun and Burns & Roe moved for summary judgment, asserting that there were no genuinely disputed material facts and that as a matter of law Fischbach's acceptance of the check foreclosed its claims.

Following a hearing, the district court granted defendants' motion and dismissed the complaint. Concluding that there is a genuine issue as to the intent of the parties, circumscribing the use of the summary judgment procedure, we reverse and remand for trial.

Analysis

Standard of Review

The party seeking summary judgment must establish: (1) that no genuine dispute hovers over any material fact, and (2) entitlement to judgment as a matter of law. Fed.R.Civ.P. 56(c); Galindo v. Precision American Corp., 754 F.2d 1212 (5th Cir.1985); Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir.1983). In applying these standards, the trial court is to draw the inferences most favorable to the party opposing the motion. Harrison v. Byrd, 765 F.2d 501 (5th Cir.1985). The appellate court does likewise. John v. State of Louisiana, 757 F.2d 698 (5th Cir.1985); McCrae v. Hankins 720 F.2d 863 (5th Cir.1983). Of particular consequence herein, summary judgment is inappropriate where there is a genuine disagreement as to the reasonable inferences to be drawn from undisputed facts. In Winters v. Highlands Ins. Co., 569 F.2d 297, 299 (5th Cir.1978) (citations omitted), we observed: "A summary judgment may be improper even though the basic facts are undisputed if the parties disagree regarding the material factual inferences that properly may be drawn from these facts."

The non-moving party cannot establish a genuine issue of material fact merely with allegations contained in pleadings. Fontenot v. Upjohn Co., 780 F.2d 1190 (5th Cir.1986); Parsons v. Ford Motor Co., 669 F.2d 308 (5th Cir), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 72 (1982). In the case at bar, we find more. For example, there are the variances between the two sentences in the letter of transmittal, the variance between one sentence in that letter and the recitation on the check stub, and the attestations in the affidavits of Paul Murphy, president of Fischbach's southern division, and Ted Walston, Jr., Fischbach's senior contract administrator. These provide "significant probative evidence demonstrating the existence of a genuine fact issue," Parsons, 669 F.2d at 313.

The intent of the parties is an essential issue in the resolution of the present contractual dispute. In deciding whether the use of the summary judgment vehicle is appropriate we must consider not only those principles relating to summary judgments, but those relating to contract formation. See generally Charbonnages De France v. Smith, 597 F.2d 406, 414-16 (4th Cir.1979). Summary judgment is not appropriate "when a contract is ambiguous and the parties' intent presents a genuine issue of material fact." Southern Natural Gas Co. v. Pursue Energy, 781 F.2d 1079, 1081 (5th Cir.1986). See also Impossible Elec. Tech., Inc. v. Wackenhut Protective Systems, 669 F.2d 1026 (5th Cir.1982) (holding that summary judgment was not the proper vehicle for arriving at the conclusion of whether or not an oral contract had been confected); NRM Corp. v. Hercules, Inc., 758 F.2d 676, 682 (D.C.Cir.1985) ("[W]hen the parties' intent is 'wholly unambiguous' on the face of the agreement, disposition on a motion for summary judgment may be appropriate.... When, however, the language is unclear and the search for intent extends beyond the four corners of the agreement, the intended meaning of the contract is a disputed and, necessarily, material question of fact and summary judgment is improper").

Accord and Satisfaction

The common law doctrine of accord and satisfaction embraces the discharge of an obligation by a debtor rendering, and a creditor accepting, performance different from that the creditor claims due. This concept, at least as it relates to the situation where a debtor tenders a lesser undisputed amount in payment of a greater disputed claim, was incorporated into the law of Louisiana by the Supreme Court of Louisiana in Berger v. Quintero, 170 La. 37, 127 So. 356 (1930). ¹ An accord and satisfaction is a contract, albeit a special kind, terminating a dispute between the parties over obligations claimed due under a previous contract. ² It is subject to the rules governing contracts. As Professor Saul Litvinoff, a leading commentator on Louisiana civil law has observed: "An accord is entered into through the same process as any other contract. Thus, the words and acts of the parties ... have to be interpreted in order to ascertain whether there was sufficient offer and acceptance." S. Litvinoff, 6 Louisiana Civil Law Treatise: Obligations I (1969), Sec. 384, at 648. Professor Litvinoff's observations are fully supported by Louisiana precedents. See, e.g., RTL Corp. v. Manufacturers Enterprises, Inc., 429 So.2d 855, 857 (La.1983) ("whether the parties altered their original contract or entered a transaction or compromise...