Consolidated Grain and Barge Co. v. Madgett, 90-5342
| Decision Date | 13 May 1991 |
| Docket Number | No. 90-5342,90-5342 |
| Citation | 928 F.2d 816 |
| Parties | CONSOLIDATED GRAIN AND BARGE COMPANY, a Missouri corporation, Appellee, v. John P. MADGETT, III; Appellant, Wellspring Financial Services Corporation, a Minnesota corporation; Wellspring Energy Corporation, a Minnesota corporation; Appellant. Wellspring Corporation, a Minnesota corporation; Wellspring Offshore Services Corporation, a Louisiana corporation. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Curtis Forslund, Minneapolis, Minn., for appellant.
Mark G. Arnold, St. Louis, Mo., for appellee.
Before LAY, Chief Judge, McMILLIAN and ARNOLD, Circuit Judges.
John Madgett appeals from the district court's 1 order granting summary judgment for Consolidated Grain and Barge Co. (Consolidated) on his counterclaim for enforcement of a contract clause requiring the parties to "negotiate in good faith." The district court held the clause too indefinite to be enforceable, citing Ohio Calculating, Inc. v. CPT Corp., 846 F.2d 497, 501 (8th Cir.1988). We affirm.
Madgett and Consolidated each owned 50% of several companies involved in barge shipping on inland waterways. In 1982, Consolidated and Madgett were co-defendants in a class action suit brought by dissatisfied limited partners of one of the companies. In settlement of this suit, Consolidated and Madgett bought out the limited partners and reorganized the companies. As part of the reorganization, Consolidated obtained the right to profits from operation of the barges. The parties agreed that Madgett might be entitled to a share of those profits by virtue of his one-half interest in Wellspring Energy Corporation, the entity that procured the barge contracts that would be fulfilled by Consolidated after the reorganization. However, the parties could not agree on the amount of Madgett's share. Rather than hold up settlement of the class action, Madgett and Consolidated included the following stipulation in a letter agreement that resolved their other concerns:
Consolidated has agreed that it will negotiate in good faith with Madgett concerning Madgett's share of any monies which Consolidated may be entitled to receive under the barge charter arrangement between Hutton and Consolidated which is part of the proposed settlement of the [class action].
Madgett claims that Consolidated refused to negotiate or discuss the matter except in the context of an overall severance of its contractual relations with Madgett. Consolidated has committed itself to paying Madgett $20,000 per year during the term of the present barge charter, apparently reflecting Consolidated's determination of Madgett's share of the charter commission earned by Wellspring Energy Corporation.
Consolidated sued Madgett for, among other things, dissolution of the businesses the parties jointly owned. Madgett counterclaimed for enforcement of the negotiation stipulation. The district court decided only the counterclaim, as all other issues were settled. The district court found the clause unenforceable because "it is impossible to determine what Madgett's share ... should be, and it is likewise impossible to determine whether Consolidated negotiated in good faith." Mem.Op. and Order at 5.
In Ohio Calculating, a diversity case, we determined that a similar clause would be held unenforceable under Minnesota law...
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