Condrey v. Suntrust Bank of Georgia

Decision Date01 November 2005
Docket NumberNo. 04-30765.,04-30765.
Citation429 F.3d 556
PartiesTommy H. CONDREY; Modtrack Corp., Plaintiffs-Appellants, v. SUNTRUST BANK OF GEORGIA; et al., Defendants, SunTrust Bank of Georgia, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Joseph R. Ward, Jr. (argued), Ward & Condrey, Covington, LA, for Plaintiffs-Appellants.

Bernard S. Johnson (argued), Cook, Yancey, King & Galloway, Shreveport, LA, for Defendant-Appellee.

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

Before KING, Chief Judge, and BARKSDALE and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Tommy H. Condrey ("Condrey") appeals from the district court's grant of summary judgment for SunTrust Bank of Georgia ("SunTrust") in an action brought by Condrey against SunTrust for breach of contract, conversion, fraud, alter ego and conspiracy regarding certain drawings and blueprints of Condrey's agricultural invention. For the following reasons, we affirm.


Tommy H. Condrey developed a cotton handling feeder system in the late 1980s; he called this system Modtrack. After receiving his first patent for Modtrack, Condrey entered into a licensing agreement with Harrell Equipment Company, Inc. ("Harrell Equipment"). It is the substance of this licensing agreement that is at issue. The events giving rise to Condrey's claims are as follows:

The Condrey/Harrell Equipment licensing agreement, which states with specificity that Louisiana law governs its terms, gave Harrell Equipment the exclusive and nontransferable right to implement, manufacture and market Modtrack. In return, Harrell Equipment paid Condrey a one-time fee of $20,000, with a promise to pay a five-percent royalty on net sales. Condrey retained exclusive ownership of Modtrack in the patents obtained for the invention and agreed to provide Harrell Equipment all documentation, including the patents and drawings relating to Modtrack, with the understanding that Harrell Equipment would keep these documents confidential.

Throughout the 1990s, the relationship between Condrey and Harrell Equipment flourished. Harrell Equipment, with Condrey's supervision, launched the Modtrack System, which was thereafter purchased by various cotton processors. Condrey also joined Harrell Equipment as an independent contractor to market Modtrack and other Harrell Equipment products.

In 1997, however, Harrell Equipment began to personally realize the slump in the agriculture industry. Pursuant to a 1989 first-in-priority security interest granted to SunTrust Bank, SunTrust told Harrell Equipment that it would need to lower its expenses, reduce its outstanding debt and sell more of its inventory to receive additional financing. Over the following year, Harrell Equipment reduced its outstanding debt by $1 million; SunTrust, nonetheless, still refused to provide additional financing. Therefore, Hugh Harrell, who owned a seventy-percent interest in Harrell Equipment, concluded that filing for Chapter 11 was the company's only hope. Harrell discussed his intentions with Will Sims ("Sims"), the president of the local SunTrust branch, and Sims allegedly offered an alternative to bankruptcy. According to Condrey and Harrell Equipment, Sims proposed that if Harrell Equipment allowed SunTrust to execute its lien by filing a writ of possession over Harrell Equipment's movable assets, SunTrust would agree to fund Harrell Equipment's operations. Additionally, if Harrell Equipment reduced its outstanding debt to below $1 million by the end of the year, SunTrust promised that it would sell the company's assets to a third party of Harrell Equipment's choice. Harrell accepted this offer as a favorable alternative to bankruptcy and in 1999, the Superior Court of Decatur County, Georgia, issued a writ granting SunTrust immediate possession of all movable property subject to its security interest. Thereafter, SunTrust purchased all of the immovable property of Harrell Equipment at public auction for the sum of $904,994.22 pursuant to the powers of sale contained within the Deeds to Secure Debt from Harrell to SunTrust. SunTrust also purchased "all general intangibles of Harrell Equipment Company, Inc., whether now existing or hereafter arising" from Harrell Equipment. These intangibles were located in or associated with the manufacturing plant in Vada, Georgia; SunTrust was granted possession of this manufacturing plant via a lease agreement with Harrell Equipment. As a result, SunTrust controlled Harrell Equipment's operations. The characterization of this control, however, is contested, as SunTrust claims that by assuming the responsibilities and manufacturing operations of Harrell Equipment, it was beginning a liquidation process.

Though the structure of Harrell Equipment changed, Condrey claims he was unaware of these changes. He asserts that he was told that it would be business as usual if Harrell Equipment reduced its debt. Therefore, during this period of uncertainty, Condrey continued to sell Harrell Equipment products in Louisiana. He received partial payment on sales commissions via checks drawn on a SunTrust account in the name of "BWL." Condrey later discovered that BWL was an acronym for "Billy Walker Liquidators" and Billy Walker ("Walker") was Harrell Equipment's former CFO, whom SunTrust hired to continue the business' daily operations.

Near the end of 1999, Harrell Equipment had reduced its debt to under $1 million, but Sims and SunTrust did not sell the Harrell Equipment assets to a third party of Harrell Equipment's choice. Instead, on January 19, 2000, SunTrust sold the Harrell Equipment assets, both moveable and immoveable, to LMC Bainbridge, a Georgia company owned seventy-five percent by Lewis Carter and twenty-five percent by Walker. Condrey, however, was unaware of this agreement, until January 3, 2000, when he called Harrell Equipment's offices and was told he had reached the offices of LMC Bainbridge. Condrey immediately sought out Walker and explained that he wanted his "stuff" returned. The two met face-to-face the next day. Condrey claims that at this meeting, Walker suggested that LMC Bainbridge now owned Harrell Equipment's assets and that Walker was an employee of LMC Bainbridge, even though the acquisition actually was not final for another fifteen days and Walker was still technically a SunTrust employee. Nonetheless, Walker reassured Condrey that he would return Condrey's "stuff" once Carter had an opportunity to inventory the purchased assets. Walker also discussed the possibility of LMC Bainbridge entering a licensing agreement with Condrey and, for these reasons, Condrey explains he agreed to wait for his "stuff."

By late January, however, Condrey became impatient. His attorney and sister, Lisa Condrey, drafted a letter to Walker demanding he return Condrey's "patents, documents, and software related to the Modtrack System which is apparently still housed in your facility." When LMC Bainbridge responded unfavorably to this request, Condrey filed suit to recover his "stuff." To understand the substance of his claim, we return to the initial Condrey/Harrell Equipment agreement.

For purposes of the Modtrack business collaboration, as the parties acknowledge, Condrey lacked the expertise to fully develop his invention for the market and the documents he drafted did not provide a sufficient basis for a marketable product. As a result, Harrell Equipment's engineers created additional documents and drawings to make Condrey's vision a commercial reality. That said, the parties' original agreement stated that if the relationship between Condrey and Harrell Equipment were ever terminated, "all Licenses granted thereunder immediately revert to Modtrack." The parties agree that this provision means that the original materials would revert to Condrey. The fate of these additional drawings and documents, however, is arguably encompassed in Condrey's reference to his "stuff" and is, therefore, the topic of the appeal before us.

Furthermore, this complex contract dispute has two additional twists. First, Condrey and a representative of Harrell Equipment have testified in affidavits and depositions that it was always their intention that all documentation created in the process of marketing and developing Modtrack would revert to Condrey. Second, the contract's integration clause does not support this assertion. It states, "This agreement sets forth the entire agreement and understanding between the parties as to the subject matter of this agreement and acknowledges all prior discussions between them." Thus, according to the face of the contract, the agreement is wholly integrated within its four corners.

Hanging his hat on the implicit rather than explicit understanding of the licensing agreement, Condrey filed suit against SunTrust, LMC Bainbridge and Harrell Equipment in the United States District Court for the Western District of Louisiana to recover his property from the companies. Condrey claimed that SunTrust (1) failed to pay him the proper sales commissions in its role as agent or successor to Harrell Equipment; (2) committed conversion when it oversaw the transfer of Condrey's property to LMC Bainbridge; (3) interfered with Condrey's contractual rights when it prohibited Harrell Equipment from paying appropriate royalties to Condrey; and (4) committed fraud by selling his property under false pretenses. Condrey sought damages and an order compelling the defendants to turn over to him the disputed property.

On April 30, 2002, SunTrust filed a motion for summary judgment and this motion was later referred to United States Magistrate Judge Karen L. Hayes. She determined that the assertion in depositions and affidavits that the parties always contemplated the drawings would revert to Condrey was inadmissible parol evidence. Finding that...

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