George A. Koteen Associates, Inc. v. Fulton Industries, Inc., 85

• Citation: 438 F.2d 625
• Decision Date: 23 February 1971
• Docket Number: No. 85,Docket 34782.,85
• Parties: GEORGE A. KOTEEN ASSOCIATES, INC., Plaintiff-Appellant, v. FULTON INDUSTRIES, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

438 F.2d 625 (1971)

GEORGE A. KOTEEN ASSOCIATES, INC., Plaintiff-Appellant, v. FULTON INDUSTRIES, INC., Defendant-Appellee.

No. 85, Docket 34782.

United States Court of Appeals, Second Circuit.

Argued October 8, 1970.

Decided February 23, 1971.

John M. Foley, New York City (Foley, Hickey, Gilbert & Currie, New York City), for plaintiff-appellant.

Peter G. Corbett, New York City (Regan, Goldfarb, Powell & Quinn, New York City, John J. Galgay, New York City, of counsel), for defendant-appellee.

Before MOORE, SMITH and ANDERSON, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge:

This is an appeal from a judgment in favor of defendant-appellee after a trial in the United States District Court for the Southern District of New York before Judge Levet sitting without jury on a contract claim. Plaintiff-appellant, George A. Koteen Associates, Inc., is a utility rate analyst whose business is to review and audit its clients' monthly utility bills to determine whether cost reductions on utility services are possible. On October 25, 1960 the parties entered into a contract whereby Koteen was employed as Fulton's "utility rate consultant" for a period of three years. Koteen obligated itself to analyze the "rates and contracts" under which Fulton purchased its utility services and to advise Fulton how it might "take full advantage of all provisions, clauses, and special riders in force." If Fulton were to adopt any recommendations made by Koteen, it was to pay Koteen 50% of all savings secured through its efforts for a period of 48 months from the date each reduction first appeared on Fulton's monthly bill.

On December 12, 1960 Fulton's comptroller wrote to Koteen asking for its advice on how it should answer a questionnaire from its gas supplier, Atlanta Gas Light Company, as to what its continued future need for "firm gas" would be.¹ Koteen then initiated a series of correspondence and technical studies after which it recommended that Fulton reduce or eliminate its purchases of "firm gas" and switch to "interruptible gas." Koteen calculated that this would result in substantial cost savings without interruption of the plant's operations. After some delay, Fulton did reduce its firm gas contract with its supplier by 50%.

Appellee, however, refused to pay appellant the commission called for by the contract contending that the agreement provided for such payments only for savings which resulted from "rate reductions" (i. e. reductions in the per unit costs charged by utility suppliers), but not for changes in methods of operations. The relevant section of the contract provided:

RATES AND CONTRACTS: Make an analysis of our rates and contracts under which our electric, gas, water, and steam services are being purchased to determine if we are receiving the most favorable rate schedules available. Also advise how we may take full advantage of all provisions, clauses, and special riders in force

* * * * * *

We do agree to pay you 50% of all rate reductions which are secured through your efforts, for a period of 48 months from the date each reduction actually appears on our bills.

* * * * * *

We will pay you within thirty days after bills are paid on which savings are effected.

In order for Koteen to recover under the contract, according to the district court, it would be necessary for it to effect a change in the per unit price of gas charged by the utility. Yet if this were what the parties had contemplated, Koteen's only functions would have been to lobby before the state Public Utility Commission which regulates per unit utility rates, and perhaps to correct billing errors.

In the light of the history of the dealings between the parties as presented in the testimony at trial it would appear logical to interpret the term "rate reduction" as meaning the reduction in the total amount paid by Fulton to the utilities for the...