Newport Plaza Associates, L.P., In re

• Citation: 985 F.2d 640
• Decision Date: 07 January 1993
• Docket Number: No. 92-1444,92-1444
• Parties: In re NEWPORT PLAZA ASSOCIATES, L.P., Debtor. NEWPORT PLAZA ASSOCIATES, L.P., Plaintiff, Appellant, v. DURFEE ATTLEBORO BANK, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 640

985 F.2d 640

In re NEWPORT PLAZA ASSOCIATES, L.P., Debtor NEWPORT PLAZA ASSOCIATES, L.P., Plaintiff, Appellant, v. DURFEE ATTLEBORO BANK, Defendant, Appellee.

No. 92-1444.

United States Court of Appeals First Circuit.

Heard Jan. 7, 1993.

Decided Feb. 16, 1993.

Robert S. Bruzzi, with whom James J. Beaulieu was on brief, for plaintiff, appellant.

Michael R. McElroy, with whom Schacht & McElroy was on brief, for defendant, appellee.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and CYR, Circuit Judge.

SELYA, Circuit Judge.

After entering insolvency proceedings, plaintiff-appellant Newport Plaza Associates (Newport), a Rhode Island limited partnership, commenced an adversary proceeding against Durfee Attleboro Bank (the Bank), in which it claimed that the Bank failed to honor an oral agreement concerning the resumption of financing for a stalled construction project. The bankruptcy court and the district court both rejected the claim. The third time is not the charm: because the record shows beyond peradventure that the parties entered into a subsequent written contract, the terms of which directly contradicted, and therefore superseded, the alleged oral agreement, we affirm.

I. BACKGROUND

On February 8, 1988, Newport executed and delivered to the Bank a promissory note, construction mortgage, and construction loan agreement in order to finance the erection of a shopping plaza in Newport, Rhode Island. Construction came to a screeching halt that November due to difficulties between Newport and its general contractor, DRL, Inc. When DRL and a number of subcontractors placed mechanics' liens on the property, Newport defaulted on the loan.

Newport tried repeatedly to work out an agreement under which the Bank would be willing to restart the project. Newport claims that on December 20, 1988, the Bank agreed to resume financing the work pursuant to the terms of the original construction loan agreement if Newport, within a reasonable period of time, resolved the mechanics' liens, brought interest payments current, reaffirmed occupancy commitments from third parties, and replaced DRL with a suitably qualified builder. ¹ Newport also claims that it complied with these conditions no later than March of 1989, but that the Bank reneged on the oral agreement.

On October 13, 1989, with the project still dormant, Newport submitted a written proposal to the Bank anent continued financing. This proposal did not mention the oral agreement. By letter dated November 1, 1989, the Bank notified Newport that it had "decided not to allow restarting of the project." Instead, the Bank offered, "without waiving any ... rights," to accept $881,000 in full satisfaction of the balance due ($1,381,000) on the promissory note. The Bank's terms required Newport, if it accepted the offer, to tender $881,000 in a lump sum within 90 days and, in the interim, to submit weekly progress reports on the status of the project and its efforts to obtain the funds needed to buy out the Bank's position. The letter, the text of which is reproduced in the appendix, gave Newport two weeks in which to accept the offer. It made no reference to the alleged oral agreement.

Newport's partners signed and returned the letter before the appointed deadline. Thereafter, they failed to make the lump-sum payment within the stipulated 90-day period. When the Bank initiated foreclosure proceedings, Newport sought the protection of Chapter 11. ²

In due course, Newport filed suit in the bankruptcy court alleging a breach of the oral agreement. After some procedural skirmishing, not material for our purposes, the bankruptcy court granted the Bank's motion for summary judgment. In re Newport Plaza Assocs., 129 B.R. 326 (Bankr.D.R.I.1991). The court held that the letter exchange constituted an accord between the parties, wherein the Bank agreed to discharge Newport's original obligation in return for Newport's timely payment of a portion of the outstanding balance. Id. at 327. The court ruled that because the Bank explicitly stated in the offering letter that it would not allow restarting of the project, and Newport accepted the terms of that letter, the exchange "created new contractual obligations between the parties and replaced the alleged December 20, 1988 oral agreement...." Id. The bankruptcy court ruled, alternatively, that Newport had neither established the existence of an oral agreement nor shown performance of its obligations thereunder. ³ See id. at 327 n. 1.

Newport appealed. The district court convened a hearing, afforded de novo review, and rendered summary judgment ore tenus. In its bench decision, the district court reasoned that whether an oral agreement existed was of no consequence, as any such agreement was "completely inconsistent" with the subsequent exchange of correspondence. That correspondence, the court ruled, constituted an accord, superseding any prior agreement between the parties. On March 3, 1992, the clerk entered final judgment.

Newport again appeals. The gist of its argument is that the district court erred in holding that, as a matter of law, Newport relinquished the right to resuscitate the original financing arrangement--a right supposedly conferred by the oral agreement--when it signed and returned the November 1 letter. Because we agree with the district court that the letter exchange constituted a valid contract in which the parties unambiguously expressed their mutual intention that the Bank would not supply funds to restart the project, we reject Newport's attempt to enforce the prior oral agreement and affirm the entry of judgment below.

II. THRESHOLD LEGAL MATTERS

We begin by explicating certain legal principles in order to set the stage for a discussion of the merits.

A. The Summary Judgment Standard.

The summary judgment standard is familiar and has been frequently elucidated. Rather than attempting to reinvent so serviceable a wheel, we merely observe that, as the civil rules themselves provide, summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The opponent of a properly focused Rule 56 motion must demonstrate, by competent evidence, the existence of a triable issue which is both genuine and material to its claim. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.1990). "In this context, 'genuine' means that the evidence about the fact is such that a reasonable jury could resolve the point in favor of the nonmoving party." United States v. One Parcel of Real Property, Etc. (Great Harbor Neck), 960 F.2d 200, 204 (1st Cir.1992). "In the same context, 'material' means that the fact is one susceptible of altering the outcome of the litigation." Rivera-Muriente v. Agosto-Alicea, 959 F.2d 349, 352 (1st Cir.1992).

We afford plenary review to the entry of a summary judgment. Garside, 895 F.2d at 48. In so doing, this court, like the courts below, must read the record in the manner most gratifying to the party opposing summary judgment, indulging all reasonable inferences in that party's favor. See Rivera-Muriente, 959 F.2d at 352; Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990).

B. Choice of Law.

In this case, the underlying contract claim depends on state law. The parties briefed and argued the case on the apparent understanding that Rhode Island law governs the significance of their actions and the interpretation of their agreements. Both lower courts adjudicated the controversy on that basis. When opposing parties agree to the source of the substantive law that controls their rights and obligations, and no jurisdictional concerns are present, a court is at liberty to accept such an agreement without independent inquiry. See Moores v. Greenberg, 834 F.2d 1105, 1107 n. 2 (1st Cir.1987); Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d 850, 853 n. 3 (1st Cir.1987). We do so here.

C. What's in a Name?

The parties have expended considerable effort debating whether the November 1 letter agreement should be evaluated as an accord and satisfaction or as a novation. We deem it unnecessary to venture into this Serbonian bog.

The Rhode Island Supreme Court has traditionally manifested a concern with substance rather than form in this fuliginous corner of the law, hesitating to draw fine lines between these two closely allied kinds of contracts where no necessity exists for doing so. See, e.g., Mello v. Coy Real Estate Co., 103 R.I. 74, 234 A.2d 667, 671-72 (1967) (noting that dissimilarities between the two theories are frequently of no concern, as both "operate to discharge all the rights and obligations emanating from a prior agreement"); Salo Landscape & Constr. Co. v. Liberty Elec. Co., 119 R.I. 269, 376 A.2d 1379, 1382 (1977) (holding that, when the parties' subsequent agreement created new contractual rights and obligations which extinguished those arising under the original contract, "it matters not" whether a court refers to the subsequent agreement as an accord and satisfaction or as a rescission followed by the formation of a new contract); see also Masse v. Masse, 112 R.I. 599, 313 A.2d 642, 645 (1974) (stating that either a release or an accord and satisfaction of an alimony judgment "will bind the parties if fully complied with and supported by sufficient consideration"). Federal courts, construing state law, have often exhibited the same disinclination. For example, the Seventh Circuit, confronted with an analogous fact pattern, chose practicality over pettifoggery. See Calder v. Camp Grove State Bank, 892 F.2d 629, 633 (7th Cir.1990) (concluding that a "difference in the characterization of the [agreement]...