Earthdata Intern. of North Carolina v. Stv, Inc.

• Decision Date: 11 August 2001
• Docket Number: CIV.A. No. 00-6232.
• Citation: 159 F.Supp.2d 844
• Parties: EARTHDATA INTERNATIONAL OF NORTH CAROLINA, L.L.C., plaintiff, v. STV INC. Defendant, STV Inc., third-party plaintiff, v. Universal Communication Network— Pennsylvania L.L.C., third-party defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

Page 844

159 F.Supp.2d 844

EARTHDATA INTERNATIONAL OF NORTH CAROLINA, L.L.C., plaintiff, v. STV INC. Defendant, STV Inc., third-party plaintiff, v. Universal Communication Network— Pennsylvania L.L.C., third-party defendant.

CIV.A. No. 00-6232.

United States District Court, E.D. Pennsylvania.

August 11, 2001.

Kevin M. Toth, Reed Smith Show & McClay, Philadelphia, PA, for plaintiffs.

Douglas G. Worrall, Howard S. Stevens, Baltimore, MD, David L. Allebach, Jr., Peter J. Dolan, Yergly Daylor Allebach Scheffey Picardi, Pottstown, PA, for defendants.

EXPLANATION AND ORDER

ANITA B. BRODY, District Judge.

Plaintiff EarthData International of North Carolina, Inc. ("EarthData"), the subcontractor, and defendant STV, Incorporated ("STV"), the contractor, entered into a subcontract agreement. The parties filed cross motions for summary judgment that require me to interpret the payment provision in their subcontract. Because I conclude that both parties have proffered reasonable interpretations of the disputed terms, I will deny both motions. Background

On April 23, 1999, STV entered into a contract with third-party defendant Universal Communication Networks—Pennsylvania, L.L.C. ("Universal"). STV agreed to provide architectural and engineering services for Universal's Fiber Optic Resource Sharing Project. On April 29, 1999, STV subcontracted with EarthData to provide the aerial mapping services component of the project. Universal concurred in the choice of EarthData to perform the subcontracted services.

STV admits that EarthData supplied the services requested and regularly issued invoices reflecting the work performed. EarthData submitted invoices totaling $215,749. To date STV has paid EarthData a total of $35,000. The dispute concerns STV's obligation to pay the outstanding balance of $180,749 that the parties agree is due EarthData.

Article IV of the subcontract sets forth the relevant terms of compensation:

A. The Consultant [STV] will compensate the Subconsultant [EarthData] for the satisfactory performance of the Scope of Services in Attachment A in accordance with the Prime Agreement and this Subcontract as may be modified in writing from time to time. If the Client [Universal] sets a specific retention rate in the Prime Agreement to be withheld from the Consultant, then the Consultant may retain a corresponding percentage from payments to the Subconsultant, where appropriate....

B. The Subconsultant invoices approved for payment by the Client shall be paid to the Subconsultant when such payment is received by the Consultant. Any item in the Subconsultant's invoice disallowed by the Client will not be paid by the Consultant. Payments made to the Subcontractor on fee and/or costs that are later disallowed by the Client shall either be withheld by the Consultant from subsequent payments to the Subconsultant or refunded promptly by the Subconsultant to the Consultant where such subsequent payments are insufficient to cover such disallowances.

Plaintiff's Complaint, Exhibit A, "Subcontract," Article IV—Compensation [emphasis added].

Universal has paid $25,000 of the $496,460 due STV under the Prime Agreement. On January 16, 2001, STV filed a third-party complaint against Universal, claiming that Universal is liable for all of EarthData's claims against STV.

Discussion

Both plaintiff EarthData and defendant STV have moved for summary judgment,¹ each asking that the court interpret the payment provision as a matter of law. When a party files a cross motion, it claims that it alone is entitled to summary judgment and that, for the limited purpose of the disposition of its own motion, there are no outstanding issues of material fact. See Transportes Ferreos de Venezuela II CA v. NKK Corp., 239 F.3d 555, 560 (3d Cir.2001)(quoting Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir.1968)). By making contradictory claims, the parties neither agree that the rejection of one claim justifies the other nor waive judicial determination of whether material fact issues exist. See id.

Summary judgment is proper where 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 judgment as a matter of law." Fed. R.Civ.P. 56(c). The court should determine whether there are factual issues that merit a trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate if no factual issues exist and the only issues before the court are legal. See Sempier v. Johnson and Higgins, 45 F.3d 724, 727 (3d Cir.1995).

To grant either party summary judgment on an issue of contract interpretation, a court must conclude that the disputed payment provision is subject to only one reasonable interpretation. See Emerson Radio Corp. v. Orion Sales, Inc. et al., 253 F.3d 159, 163-64 (3d Cir.2001)(quoting Arnold M. Diamond, Inc. v. Gulf Coast Trailing Co., 180 F.3d 518, 521 (3d Cir. 1999)). Each party believes that the provision unambiguously supports its position, and therefore suggests that disposition of this matter at summary judgment is appropriate. The question, therefore, is whether EarthData has advanced a reasonable alternative reading of the payment provision to that advanced by STV, and whether STV has advanced a reasonable alternative reading of the payment provision to that advanced by EarthData. See Sanford Inv. Co. v. Ahlstrom Mach. Holdings, Inc., 198 F.3d 415, 421 (3d Cir.1999).

A recent Third Circuit opinion sets forth a detailed analysis of contract interpretation and ambiguity under Pennsylvania law.² Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc. 247 F.3d 79 (3d Cir. 2001).³ In Bohler-Uddeholm, defendant-appellant Ellwood challenged the lower court's ruling that the purchase agreement in question was ambiguous as a matter of law. The parties disputed the meaning of the term "Buyer's Purchases" in the purchase agreement in question. Ellwood, the buyer, argued that the clause unambiguously referred to all of its purchases. Uddeholm, in response, argued that the clause was ambiguous, because it was not clear on its face if "Buyer's Purchases" was limited to purchases for the buyer's own use only. Uddeholm contended that evidence both contained within the agreement and extrinsic to it showed that the disputed language was so limited. The district court supported Uddeholm's position that the disputed clause was ambiguous, and thus sent the issue of interpretation to the jury. See id. at 91-92. In reviewing the district court's determination, the Third Circuit took the opportunity to examine the Pennsylvania law on contract interpretation which guided the district court's threshold legal determination regarding ambiguity. Chief Judge Becker's analysis in Bohler-Uddeholm will guide me through the process of analyzing the case before me.

The provision at the heart of the dispute states that: "The [EarthData] invoices approved by [Universal] shall be paid to [EarthData] when such payment is received by [STV]." Subcontract, Article IV section B (emphasis added). STV argues that the plain language of that clause unambiguously conditions its payment to EarthData on 1) the approval of EarthData invoices by Universal, and 2) its receipt of payment from Universal. This straightforward reading of the clause is reasonable. However, EarthData counters with what essentially is a...