Barrett Computer Services, Inc. v. PDA, Inc.

• Decision Date: 25 September 1989
• Docket Number: No. 89-1181,89-1181
• Citation: 884 F.2d 214
• Parties: BARRETT COMPUTER SERVICES, INC., Plaintiff-Appellant, v. PDA, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 214

884 F.2d 214

BARRETT COMPUTER SERVICES, INC., Plaintiff-Appellant, v. PDA, INC., Defendant-Appellee.

No. 89-1181

Summary Calendar.

United States Court of Appeals,

Fifth Circuit.

Sept. 25, 1989.

Rehearing Denied Oct. 25, 1989.

Michael R. Cooper, Dallas, Tex., for plaintiff-appellant.

James F. Adams, Jerry C. Alexander, Passman & Jones and Peter S. Vogel, Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, KING and SMITH, Circuit Judges.

KING, Circuit Judge:

The plaintiff-appellant, Barrett Computer Services, Inc. ("BCS"), appeals from the district court's grant of summary judgment to the defendant-appellee, PDA, Inc. ("PDA"). The district court found that BCS failed to demonstrate that a genuine issue of material fact existed as to whether BCS had standing to bring suit against PDA in the instant case. We now reverse the district court's grant of summary judgment to PDA and remand for an evidentiary hearing on BCS' standing to bring suit.

I. FACTS AND PROCEDURAL BACKGROUND

In April or May 1983, PDA entered into a contract with American Excel Corporation ("American Excel") providing for the design, creation, and implementation of certain computer software programs by PDA for American Excel. At that time, American Excel was a closely held corporation, owned and operated by Gene M. Barrett ("Barrett"). In October 1983, to gain tax advantages related to PDA's programming services, Barrett created BCS. Subsequently, Barrett informed PDA of BCS' formation and made the following two requests: (1) that in the future PDA send all bills for its programming services to BCS and (2) that PDA resubmit all past invoices addressed to American Excel to BCS. PDA substantially complied with both requests. PDA claims, however, that its invoices continued to be paid out of an American Excel account. PDA also continued to have contact with American Excel employees.

Approximately ten months later, in August 1984, Barrett sold most, or all, of his interest in American Excel to Frontier Insurance Holding Corporation ("Frontier"). The stock purchase agreement controlling this sale specified that, at the closing of the sale of American Excel, Barrett would repurchase certain items from Frontier, including the computer programs written by PDA. In his affidavit opposing PDA's summary judgment motion, Barrett claims that at the time he purchased the programs, he also received all rights related to them--including all causes of action. Barrett's affidavit also states that he subsequently "conveyed" the computer programs to BCS.

On February 3, 1987, BCS filed the complaint in the instant case, in the United States District Court for the Northern District of Texas, asserting diversity as the ground for federal jurisdiction. BCS' complaint alleged the following four causes of action against PDA: (1) breach of contract, (2) Texas Deceptive Trade Practices Act violations, (3) fraud, and (4) common law negligence.

PDA denied BCS' claims and filed a summary judgment motion in relation to BCS' claims against it. ¹ PDA based this motion on the grounds that BCS did not have standing to bring the instant suit because it lacked privity to the contract, negotiations, and services upon which its complaints were based. In the alternative, PDA claimed that even if BCS were found to have standing, PDA was entitled to a partial summary judgment because the two year statute of limitations had run on BCS' Deceptive Trade Practices Act, fraud, and negligence claims.

The district court granted PDA's summary judgment motion, holding that even after an opportunity for discovery, BCS did not present adequate evidence to create a genuine issue of material fact about whether it possessed the privity of contract necessary for standing. The district court found that BCS relied on an affidavit by Barrett to establish that the contractual rights, necessary for standing to bring the suit, were assigned to BCS. The district court found Barrett's affidavit inadequate for this purpose, however, because it determined that the affidavit made a "conclusory" assertion that all claims related to the computer programs had been transferred to him at the time he sold American Excel. The district court held that this assertion constituted a "legal conclusion" not clearly supported by other documents presented. In addition, the district court noted the failure of BCS to produce evidence--beyond the "conclusory" statement in Barrett's affidavit--that Barrett had, subsequent to the sale of American Excel, conveyed the computer programs to BCS. Thus, the district court found that BCS lacked the privity of contract requisite to establish standing to bring its suit against PDA. Because the district court found that BCS failed to provide sufficient proof at the summary judgment stage as to its standing to bring any of its claims, the district court did not reach PDA's alternative grounds for partial summary judgment--the statute of limitations issue.

BCS appeals the district court's grant of PDA's motion for summary judgment. It alleges that a genuine issue of material fact exists as to whether BCS has standing to bring suit against PDA in relation to the PDA-American Excel contract.

II. STANDARD OF REVIEW

On appeal, we assess a district court's decision to grant summary judgment by reviewing the record under the same standards as the district court. Brooks, Tarlton, Gilbert, Douglas & Kressler v. United States Fire Ins. Co., 832 F.2d 1358, 1364 (5th Cir.1987); Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). Therefore, we will not affirm a summary judgment ruling unless "we are convinced, after an independent review of the record, that 'there is no genuine issue as to any material fact' and that the movant is 'entitled to a judgment as a matter of law.' " Brooks, 832 F.2d at 1364 (quoting Fed.R.Civ.P. 56(c)). Following this standard, we must consider fact questions with deference to the nonmovant. As a consequence, when a fact question controls the disposition of a summary judgment motion, we must "review the evidence and any inferences to be drawn therefrom in the light most favorable to the non-moving party." Baton Rouge Bldg. Constr. v. Jacobs Constructors, 804 F.2d 879, 881 (5th Cir.1986) (per curiam); see also Reid, 784 F.2d at 578. Questions of law, in contrast, we will decide in the same manner as we decide questions of law outside the summary judgment context--by de novo review. Brooks, 832 F.2d at 1364.

III. DISCUSSION

We now turn to the specifics of the instant case. As we noted above, after considering the evidence before it, the district court found that BCS failed to provide evidence sufficient to create a genuine issue of material fact about whether BCS had standing to bring claims relating to the PDA-American Excel contract regarding the design, creation, and implementation of certain computer programs. BCS appeals the district court's finding against it, arguing that the evidence presented against summary judgment in the affidavit of Barrett and deposition testimony of PDA demonstrate the existence of fact issues as to the following: (1) whether BCS had been assigned the rights to causes of action arising from the PDA-American Excel contract and (2) whether BCS was a donee beneficiary of the PDA-American Excel contract with the right to bring such suit. We consider these claims in turn.

A. BCS' Claim to Standing Based on an Assignment of Rights in Relation to the PDA-American Excel Contract.

At the summary judgment proceedings, BCS claimed standing to bring the causes of action alleged in its original complaint by virtue of having been conveyed the computer programs resulting from the PDA-American Excel contract. In deciding whether or not BCS succeeded in establishing that a fact issue exists in relation to its standing to bring the claims, BCS' evidence of assignment of claims must be considered in relation to the well-established standards for summary judgment.

Though the purpose of this inquiry is solely to determine whether a genuine fact issue exists, "the judge must view the evidence presented through the prism of the substantive evidentiary burden." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986). Thus, in a civil case--like the one at hand--although PDA does not need to support its summary judgment motion with evidence "negating" BCS' claims to succeed, an assessment must be made as to whether BCS has made a "sufficient showing" on each "essential element of [its] case with respect to which [it] has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The establishment of standing--whether a "litigant is entitled to have the court decide the merits of the dispute or of a particular issue," Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975)--is, by and large, a "preliminary matter." Lewis v. Knutson, 699 F.2d 230, 237 (5th Cir.1983). Therefore, BCS needs to have demonstrated that a " 'case or controversy' between [itself] and the defendant within the meaning of Art. III" of the Constitution exists. Warth, 422 U.S. at 498, 95 S.Ct. at 2204. To have accomplished this, BCS must have shown that it suffered an actual injury as a result of PDA's actions and that such injury is redressable by judicial decree. See 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3531 (2d ed. 1984). In a suit based upon contractual theory ² this means that privity of contract must have been shown. Republic Nat'l Bank v. National Bankers Life Ins. Co., 427 S.W.2d 76 (Tex.Civ.App.--Dallas 1968, writ n.r.e.). ³

BCS claims that a fact issue exists as to whether such privity arose through an assignment to BCS of all rights related to the programs. To support its claim, BCS presented evidence showing...