Farmland Industries, Inc. v. Frazier-Parrott Commodities, FRAZIER-PARROTT

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Before BEAM, HEANEY, and JOHN R. GIBSON; JOHN R. GIBSON
• Citation: 111 F.3d 588
• Parties: FARMLAND INDUSTRIES, INC., Appellant-Cross Appellee, v.COMMODITIES, also known as Parrott Corporation, doing business as Parrott Corporation, Inc.; Heinold Commodities, Inc.; DeKalb Agresearch, Inc.; Christopher R. Parrott; Horace Seixas; John Dunn, Defendants, Heinold Holdings, Inc., Appellee-Cross Appellant.
• Docket Number: FRAZIER-PARROTT,96-1119,Nos. 96-1118,s. 96-1118
• Decision Date: 15 April 1997

Page 588

111 F.3d 588 FARMLAND INDUSTRIES, INC., Appellant-Cross Appellee,
v.
FRAZIER-PARROTT COMMODITIES, also known as Parrott
Corporation, doing business as Parrott Corporation, Inc.;
Heinold Commodities, Inc.; DeKalb Agresearch, Inc.;
Christopher R. Parrott; Horace Seixas; John Dunn, Defendants,
Heinold Holdings, Inc., Appellee-Cross Appellant. Nos. 96-1118, 96-1119. United States Court of Appeals,
Eighth Circuit. Submitted Sept. 13, 1996.
Decided April 15, 1997.

Page 589

Alvin D. Shapiro, Kansas City, MO, argued for Appellant.

William J. Nissen, Chicago, IL, argued for Appellee.

Before BEAM, HEANEY, and JOHN R. GIBSON, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Farmland Industries, Inc. brings before us another, and perhaps the final chapter in its litigation against Frazier-Parrott Commodities, Inc. and others. The district court awarded Heinold Holdings, Inc. attorneys' fees pursuant to Farmland's contract with Heinold Commodities, Inc. Farmland argues that the attorneys' fees provision in the contract is unenforceable under Missouri law and that a party to the contract did not incur the attorneys' fees awarded. Farmland also argues that the district court used the wrong standard to determine the amount of the attorneys' fees award. Heinold Holdings cross-appeals, arguing that the district court should have awarded prejudgment interest on its attorneys' fees award. We reverse the district court's denial of prejudgment interest and affirm in all other respects.

In 1985 Farmland entered into a contract with Heinold Commodities in which Heinold Commodities agreed to facilitate commodities trades for Farmland, and Farmland agreed to pay Heinold Commodities' "costs and attorneys' fees incurred in defending against any claim brought by [Farmland] in any suit, arbitration or reparations proceeding in which Heinold [Commodities] is the substantially prevailing party."

In 1986 Farmland sued Heinold Commodities and others, accusing them of defrauding Farmland by manipulating Farmland's commodities trades. During Farmland's lawsuit, Heinold Holdings, which owned Heinold Commodities, agreed to pay Heinold Commodities' attorneys' fees. Thereafter Heinold Commodities' attorneys directly billed Heinold Holdings for all services rendered on behalf of Heinold Commodities. Heinold Commodities assigned its attorneys' fees claim against Farmland to Heinold Holdings.

Farmland's lawsuit proceeded to trial, and the district court directed a verdict in favor of Heinold Commodities at the close of the evidence. The jury returned a verdict in favor of the other defendants on all of Farmland's claims. We affirmed. Farmland Indus. v. Frazier-Parrott Commodities, Inc., 871 F.2d 1402 (8th Cir.1989).

After prevailing against Farmland, Heinold Commodities moved for summary judgment on its claim for attorneys' fees based on its contract with Farmland. At the same time, it asked the district court to substitute Heinold Holdings for Heinold Commodities in the claim for attorneys' fees because of the assignment. Heinold Holdings asserted that

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it was entitled to recover $748,288.38 for attorneys' fees incurred by Heinold Commodities in defending against Farmland's lawsuit.

The district court substituted Heinold Holdings for Heinold Commodities, but denied the motion for summary judgment. After a hearing, the district court reduced the amount of attorneys' fees requested by Heinold Holdings because it determined that part of the fees were not incurred by Heinold Commodities. Relying on United States ex. rel. C.J.C., Inc. v. Western States Mechanical Contractors, Inc., 834 F.2d 1533 (10th Cir.1987), the court further reduced the attorneys' fees claimed by Heinold Holdings to an amount that it considered to be reasonable. The court awarded Heinold Holdings $516,359.30 in attorneys' fees, but denied Heinold Holdings' request for prejudgment interest on that award.

I.

Farmland argues that the district court erred in awarding attorneys' fees under the contract because no reasonable interpretation of the contract permits an award in this case. It argues that we should use Missouri law to interpret the contract, even though the contract states that Illinois law governs its interpretation. We will assume without deciding that Missouri law governs our interpretation of the contract.

Under Missouri law we must enforce a contract as written and according to the plain meaning of the words in the contract when the contract is clear and unambiguous. See Cross v. Ladue Supply, Inc., 424 S.W.2d 108, 110 (Mo.Ct.App.1967). An ambiguity exists when a contract is susceptible to more than one reasonable interpretation. See Coughenour v. Bates, 785 S.W.2d 291, 297 (Mo.Ct.App.1990). Whether a contract is ambiguous is a question of law which we review de novo. See Jim Carlson Constr., Inc. v. Bailey, 769 S.W.2d 480, 482 (Mo.Ct.App.1989); Slotkin v. Willmering, 464 F.2d 418, 422 (8th Cir.1972).

Farmland acknowledges that the plain language of the contract requires an attorneys' fees award when Farmland brings any claim against Heinold Commodities and Heinold Commodities prevails. Nevertheless, Farmland argues that it is unreasonable to allow attorneys' fees in this case because its claims against Heinold Commodities had nothing to do with its contract with Heinold Commodities.

We conclude that the clear language of the contract rebuts Farmland's argument. The attorneys' fees provision is unambiguous. It gives Heinold Commodities a contractual right to recover its attorneys' fees "incurred in defending against any claim brought by [Farmland] in any suit ... in which Heinold [Commodities] is the substantially prevailing party." (Emphasis added).

This plain language of the contract is broad enough to cover Farmland's claims against Heinold Commodities resulting from its actions facilitating the commodities trades. To hold otherwise would contradict the plain language of the contract. See Slotkin, 464 F.2d at 421-22.

We also reject Farmland's argument that following the plain language of the contract leads to an unreasonable result. Although Farmland's claims were not based on its contract with Heinold Commodities, they arose out of trades facilitated by Heinold Commodities...