Chesapeake Paper Products Co. v. Stone & Webster Engineering Corp.
| Decision Date | 19 April 1995 |
| Docket Number | No. 94-1617,94-1617 |
| Citation | 51 F.3d 1229 |
| Parties | CHESAPEAKE PAPER PRODUCTS COMPANY, Successor in Interest to Chesapeake Corporation, Plaintiff-Appellee, v. STONE & WEBSTER ENGINEERING CORPORATION, Defendant & Third Party Plaintiff-Appellant, v. TIDEWATER CONSTRUCTION CORPORATION, Third Party Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Robert Joseph Kaler, Jr., Gadsby & Hannah, Boston, MA, for appellant. Edward Joseph Fuhr, Hunton & Williams, Richmond, VA, for appellee. ON BRIEF: James E. Farnham, Donald P. Boyle, Jr., Hunton & Williams, Richmond, VA, for appellee.
Before RUSSELL and MOTZ, Circuit Judges, and CURRIE, United States District Judge for the District of South Carolina, sitting by designation.
Affirmed by published opinion. Judge RUSSELL wrote the opinion, in which Judge MOTZ and Judge CURRIE joined.
Stone & Webster Engineering Corp. (S & W) appeals from the district court's denial of S & W's motion for partial summary judgment and motion for a new trial. We decline to review the district court's order denying S & W's summary judgment motion, and we affirm the district court's order denying S & W's motion for a new trial.
On March 2, 1993, Chesapeake Paper Products Co. (Chesapeake) filed a complaint in the Eastern District of Virginia alleging breach of contract on the part of S & W. The claim centered on an agreement under which Chesapeake retained S & W to supply engineering services in connection with a $105 million expansion of Chesapeake's West Point, Virginia, paper mill during the period of 1989 through 1992 (the Project). Chesapeake contended that S & W had breached its contract with Chesapeake by supplying Chesapeake's contractor and construction manager with engineering drawings containing errors and omissions that S & W subsequently had to correct as the Project progressed. These errors resulted in delays in scheduled work and increased costs and expenditures. Chesapeake based its claims on the allegation that the preprinted terms and conditions on the back of the Chesapeake Purchase Order No. C006097 (the P.O.) it had sent to S & W during the Project constituted the parties' contract.
S & W agreed that its engineering drawings had contained some inconsistencies but denied that those errors constituted a breach of contract, particularly when it was undisputed that the Project had been a "fast track" job where design changes were made throughout the construction process. Importantly, S & W also claimed that the parties' contract consisted not of the P.O. terms, but of the terms in its proposed "Engineering Contract" it had delivered to Chesapeake at the outset of the Project. This dispute was significant because the P.O. and the Engineering Contract differed substantially in their provisions controlling standard of care and indemnification. The P.O. provided a high standard of care in which S & W warranted that "all the materials and articles covered by this order" will be "free from defects in material and/or workmanship, and merchantable." In contrast, the Engineering Contract provided that the "Engineer shall provide detail engineering services ... conforming with good engineering practice." Similarly, the P.O. provided that S & W agreed to indemnify "all" expenses, "including reasonable counsel fees," Chesapeake might incur as a result of the agreement whereas the Engineering Contract contained no attorneys' fees provision and precluded the recovery of "consequential or special damages."
After the close of discovery, S & W moved the district court for partial summary judgment on October 22, 1993. In its motion, S & W asked the court to rule as a matter of law that the rights and liabilities of the parties were governed by the Engineering Contract, as amended on January 16-17, 1992, by "Amendment No. 1 to Contract for Engineering and Consulting Services Chesapeake Corporation" (Amendment 1). The following evidence was undisputed and was before the district court at summary judgment.
On August 8, 1989, S & W Vice-President Frank Tenore met with G. Stephen Boynton, who at the time was Project Manager for Chesapeake and had the authority to represent Chesapeake on contract issues concerning the Project. At the meeting, Tenore delivered to Boynton S & W's proposed Engineering Contract. The contract contained seventeen pages of substantive terms but included numerous blank spaces allowing for signatures and other additional terms, such as a description of the project and the name of the owner, here Chesapeake. At the meeting, Tenore also delivered to Boynton a letter, dated August 8, 1989, affirming S & W's commitment to Chesapeake and including an attachment identifying the percentage mark-ups S & W proposed to charge for compensation. On August 15, 1989, Boynton gave S & W oral notification that S & W should proceed with providing engineering services for the Project.
On August 18, 1989, Richard Bauer, S & W Project Manager, sent a letter (Project Confirmation Letter) to Chesapeake which read, in pertinent part, "Pending execution of a mutually acceptable agreement, S & W will perform our services pursuant to the terms and conditions stated in our proposed 'Engineering Contract' presented by Mr. F.M. Tenore on August 8, 1989." Boynton received the letter in August 1989 and he countersigned it on September 21, 1989. In August and September 1989, S & W began providing engineering services for the Project on a cost-plus basis. 1
On October 18, 1989, at Boynton's request, Chesapeake sent the P.O. to S & W with the following typewritten request in the "Description" block:
PROVIDE ENGINEERING SERVICES FOR OUR WEST POINT KRAFT PRODUCTS MILL IN ACCORDANCE WITH THE TERMS AND CONDITIONS STATED IN YOUR PROPOSED "ENGINEERING CONTRACT" DATED AUGUST 8, 1989.
TERMS OF COMPENSATION TO BE IN ACCORDANCE WITH THE AUGUST 8, 1989 LETTER.
The pre-printed portion of the P.O. also contained language in smaller print on the lower left portion of the front side stating:
THIS ORDER MAY BE ACCEPTED ONLY UPON THE TERMS AND CONDITIONS SPECIFIED ABOVE AND ON THE REVERSE SIDE. SHIPMENT OF GOODS DESCRIBED HEREIN SHALL BE DEEMED TO BE AN ACCEPTANCE BY SELLER OF SUCH TERMS AND CONDITIONS.
The P.O. included, on the back, seventeen paragraphs of preprinted "terms and conditions." In deposition, Boynton testified that he intended the P.O.'s reference to the "Engineering Contract" to pertain to S & W's August 8 commitment letter and the attached schedule of billing rates. In deposition, Tenore stated that he did not notice or pay attention to the preprinted language on the P.O. S & W did not countersign the P.O., but S & W continued to work on the Project and it admitted that it did not send any writing to Chesapeake expressly rejecting the terms and conditions of the P.O.
In December 1989, Tenore's assistant received an internal memorandum from one of S & W's contract staff suggesting that Tenore forward to Chesapeake a signed copy of the Engineering Contract for execution. Tenore followed this suggestion and in December 1989 sent Boynton two copies of the Engineering Contract, which were backdated to August 22, 1989, and were signed by S & W. S & W also filled in the blanks of these copies of the Engineering Contract with the names of the parties and other important information, including a one million dollar limitation on S & W's liability. Tenore attached a cover letter, which stated, in part:
Based on our current understandings and project efforts, [S & W] is pleased to submit the attached Engineering Contract under which our present activities are being performed. We have completed the draft contract previously presented to you by filling in the blank spaces contained in the draft with what we believe to be the appropriate or correct information. For administrative reasons, we request that you review this contract, and sign and return a copy for our files.
Chesapeake did not respond to this letter and did not execute the completed version of the Engineering Contract. 2
Beginning on July 12, 1990, Chesapeake sent a series of additional purchase orders to S & W for additional work. Three of these orders contained the same language as the original P.O.:
TERMS & CONDITIONS TO BE IN ACCORDANCE WITH YOUR PROPOSED "ENGINEERING CONTRACT" DATED AUGUST 8, 1989.
A fourth purchase order stated only that "All other terms and conditions to remain the same." All of these additional purchase orders contained the same preprinted language and terms and conditions that were on the original P.O., but none of these additional orders was countersigned by S & W.
On September 20, 1990, Bauer demonstrated his familiarity with the P.O. terms and conditions by writing a letter to Boynton suggesting revisions to the P.O. warranty and indemnification provisions in dealing with future vendors on the Project. On September 24, 1991, Bauer, who was still Project Manager at the time, 3 also sent an internal memorandum to Jean McCluskey, an S & W Vice-President, in which he acknowledged that Chesapeake had not responded to S & W's sending of the completed Engineering Contract in December 1989. Bauer wrote:
The only scope of work document we had is attached. This was forwarded for Chesapeake review in December 1989. It was never returned even though we inquired several times about it....
Chesapeake preferred to work with consultants based upon purchase order terms and conditions. You have a copy of this and the proposed basis of compensation. The basis is also attached to the sample contract here as exhibit I.
On January 16 and 17, 1992, the parties executed Amendment 1. On its face, Amendment 1 modified "the Agreement for Engineering and Consulting Services as referenced in Owner's Purchase Order C006097." Although the "Engineering and Consulting Services" terminology was included on the unexecuted December...
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