Federal Paper Bd. Co. v. Harbert-Yeargin

• Decision Date: 05 June 1998
• Docket Number: No. 1:97-CV-0449A-JEC.,1:97-CV-0449A-JEC.
• Citation: 92 F.Supp.2d 1342
• Parties: FEDERAL PAPER BOARD COMPANY, INC., Plaintiff, v. HARBERT-YEARGIN, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

92 F.Supp.2d 1342

FEDERAL PAPER BOARD COMPANY, INC., Plaintiff, v. HARBERT-YEARGIN, INC., Defendant.

No. 1:97-CV-0449A-JEC.

United States District Court, N.D. Georgia, Atlanta Division.

June 5, 1998.

COPYRIGHT MATERIAL OMITTED

Christopher D. Balch, James T. McDonald, Jr., Swift, Currie, McGhee & Hiers, Atlanta, GA, for Plaintiff.

Trammel C. Gilliland, Gray & Gilliland, Perimeter Ridge, Atlanta, GA, for Defendant.

ORDER

CARNES, District Judge.

This case is before the Court on plaintiff Federal Paper Board Company, Inc.'s Motion for Summary Judgment [17] and defendant Harbert-Yeargin, Inc.'s Motion for Summary Judgment [16] and Objection to Evidence for Consideration in connection with Competing Motions for Summary Judgment [25]. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that plaintiff's Motion for Summary Judgment [17] should be DENIED and defendant's Motion for Summary Judgment [16] should be DENIED and its Objection to Evidence for Consideration in connection with Competing Motions for Summary Judgment [25] should be GRANTED.

BACKGROUND

Both plaintiff and defendant move for summary judgment on the issue of whether they entered into a valid and enforceable contract, and if they did, whether the contract requires defendant to partially indemnify plaintiff for its cost in settling a wrongful death suit for the death of Timothy Paul Powell, an employee of defendant, at plaintiff's Augusta paper mill on April 18, 1996. Plaintiff contends that the parties entered into a contract containing an indemnification provision. Defendant maintains that the parties never contracted, and even if they did, they did not agree to an indemnification provision. If defendant is not able to demonstrate that it is entitled to summary judgment on either of these contractual issues, then the Court must also determine whether plaintiff waived its right to seek indemnification from defendant by settling the underlying suit.

Plaintiff owns and operates a paper mill in Augusta, Georgia. (See Def.'s Statement of Material Facts [16] at ¶ 1.) Early in 1994, plaintiff began preparing "for a production line shutdown to perform routine maintenance on its dryer for the Number 2 paper machine." (See Compl. [1] at ¶ 5.) At plaintiff's soliciting, contractors submitted bids to perform this work. (See Def.'s Statement of Material Facts [1] at ¶ 1.)

On February 23, 1994, defendant submitted a bid to perform the required tasks for $59,750. (Id. at ¶ 3.) On March 28, after engaging in negotiations with Jim Michau, a senior plant engineer and project manager for plaintiff at the Augusta mill, concerning the cost, scope, and contractual provisions of the maintenance work to be performed, defendant lowered its bid to $54,750. (Id. at ¶ 4.)

During the course of these negotiations, Michau delivered to defendant plaintiff's general terms and conditions to its purchase orders. (Id. at ¶ 5.) Michau instructed defendant to put in writing any objections it had to the proposed terms and conditions. (Id. at ¶ 6.) Thereafter, Marv Fischer, defendant's contracts manager, wrote an internal memorandum to Chuck Farris, the director of defendant's pulp and paper group, and Dave Massie, another employee of defendant, detailing a number of conditions that defendant did not wish to accept. (Id. at ¶ 7.) On March 30, Farris conveyed defendant's concerns regarding eight of the conditions dealt with in Fischer's memorandum to plaintiff via a letter to Michau. (See Fischer Dep. at Exs. 3, 4.)¹

One of the eight conditions defendant objected to was Article 26.2 of the proposed contract. As initially drafted, Article 26.2 would have required defendant to indemnify plaintiff for virtually any form of loss "directly or indirectly" related to activities arising out of the work to be performed under the contract. (See Def.'s Mot. for Summ. J. [16] at Ex. 16, Art. 26.2.) Farris's letter proposed that Article 26.2 be changed so that defendant would only have to indemnify plaintiff for claims arising directly from defendant's own negligence. (See Def.'s Statement of Material Facts [16] at ¶ 10.)

On April 4, Farris again wrote Michau.² In this letter, defendant reduced its bid price to $48,750, requested that the contract be issued based on the clarifications previously sent to plaintiff, and stated that it would begin to mobilize at plaintiff's mill on April 11 in preparation for the anticipated shutdown of the mill on April 18. (Id. at ¶ 11.) On April 5, defendant's construction manager, Tony Ross, had a conversation with Fred Chase, a representative of plaintiff's procurement department. This conversation led Ross to believe that plaintiff, through Chase, had accepted defendant's proposed revisions to plaintiff's general terms and conditions. (Id. at ¶ 12.) Following this conversation, Ross prepared to incorporate a few minor changes proposed by Chase into the alterations defendant had proposed in Farris's March 30 letter to Michau. (See Ross Dep. at 32.)

As soon as Ross finished, and signed the letter that he was preparing, he received a conference call from Farris and Michau.³ (Id. at ¶ 14.) Michau told Ross that plaintiff would not accept most of defendant's proposed alterations to the contract, including defendant's proposed changes to the indemnification agreement set out in Article 26.2. (Id. at ¶ 16; see also Michau Dep. at 88-89.) Ross then suggested that Michau propose alternative language and forward his proposal to defendant. Michau committed to doing this by the sixth or seventh of April. (Id. at ¶ 15.) Neither Michau nor any other representative of plaintiff ever forwarded a proposal for alternative language to defendant.⁴ (Id. at ¶ 17.)

The only remaining material fact pertaining to the existence of a contract containing an indemnity provision upon which the parties are in agreement is that at some point after the April 5 teleconference, the dates set for defendant to mobilize at the mill and begin work were pushed back a week. Most significantly, the parties disagree on the status of negotiations at the conclusion of the April 5 teleconference, and the meaning that should be attributed to a letter from Fischer to Michau on April 11, in light of that status.

On April 11, Fischer sent Michau a letter requesting that Michau incorporate three agreed upon changes into the contract language.⁵ This letter began, "The following is wording agreed to for the contract covering the referenced project. Please include in the contract and forward a copy for our review as agreed in your recent telephone conversation with Chuck Farris and Tony Ross." (See Michau Dep. at Ex. 25.) The letter concluded by stating, "We hope this meets with your approval and look forward to hearing from you and receiving your contract." (Id.) Defendant contends that this letter merely memorialized three provisions upon which the parties had reached agreement, and that the remaining issues raised in Farris's March 30 letter were still unresolved. (See Def.'s Statement of Material Facts [16] at ¶ 19.) Plaintiff, however, contends that these three issues were all that were left to be resolved, and at this point the parties had reached an agreement.⁶ (See Pl.'s Resp. to Def.'s Statement of Material Facts [20] at ¶ 19.)

A number of memoranda internal to defendant were also issued around this time. Though these memoranda are dated after April 11, plaintiff contends that they predate the April 11 letter from Fischer to Michau and that the dates are out of sequence for the events as they actually occurred. (See Pl.'s Resp. to Def.'s Statement of Material Facts [20] at ¶ 21, citing Farris Dep. at 111.) These memoranda imply that negotiations with plaintiff were still ongoing and a final agreement had not been reached. (See Def.'s Statement of Material Facts [16] at ¶ 21.)

Defendant also took two further actions relevant to the issue of whether a contract existed between the parties to which the parties provide different meanings. First, on April 11, defendant provided plaintiff with certificates of insurance in the amount required by the contract. (See Pl.'s Statement of Material Facts [17] at ¶ 7.) Plaintiff contends this action demonstrates the existence of an agreement between the parties (id.), while defendant states that it took this action in anticipation of contracting. (See Def.'s Resp. to Pl.'s Statement of Material Facts [18] at ¶ 7.) Second, on April 18, defendant mobilized workers and equipment at plaintiff's mill and began "preliminary pre-shutdown work." (Id. at ¶ 8.) Defendant claims it did this merely as a show of good faith in recognition of the fact that a shutdown at a paper mill results in the loss of significant revenue.⁷ Thus, defendant sought to demonstrate that it was ready to do the work. (Id.) Plaintiff, however, states that defendant does not allow its employees to begin to mobilize at a job site until a contract has been agreed to, and, therefore, this action demonstrates the existence of a contract. (See Pl.'s Statement of Material Facts [17] at ¶¶ 8-9, citing Ross Dep. at 53.)

On April 18, Paul Timothy Powell, defendant's employee, was performing preliminary activities in plaintiff's Augusta mill in preparation for the shutdown scheduled for April 25. (See Def.'s Statement of Material Facts [34] ¶ 34.) Prior to beginning work, Powell and other employees of defendant held a "tool box" meeting in which they discussed the jobs to be performed that day and the safety hazards presented, specifically: that the machines they would be working around would be operating, that the machines possessed rotating shafts, and that tools, clothing and bodies could be caught in the machines.⁸ (Id. at ¶¶ 36-38.)

Part of Powell's duties on the eighteenth included erecting scaffolding around portions of plaintiff's number two paper machine. (Id. at ¶ 35.) From his attendance at the tool box meeting, he should have...