Jhaver v. Zapata Off-Shore Co.
Decision Date | 18 June 1990 |
Docket Number | OFF-SHORE,No. 89-2426,89-2426 |
Citation | 903 F.2d 381 |
Parties | Pralhad S. JHAVER, Plaintiff-Appellee, v. ZAPATACO., Defendant-Appellant. |
Court | U.S. Court of Appeals — Fifth Circuit |
Robert J. Malone, Chris A. Lorenzen, Crain, Caton & James, Houston, Tex., for defendant-appellant.
John M. Zukowski, Bernard B. Athey, Jr., Campbell, Athey & Zukowski, Houston, Tex., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Texas.
Before GOLDBERG, GARWOOD and DAVIS, Circuit Judges.
Pralhad S. Jhaver ("Jhaver"), the plaintiff, sued Zapata Off-Shore Company ("Zapata"), the defendant, for commissions owed. The district court granted Jhaver summary judgment. We reverse and remand.
During Fall 1982, Zapata asked Jhaver to help Zapata obtain drilling contracts with the Oil & Natural Gas Commission of India (the "ONGC"). Jhaver and Zapata formalized their relationship, in part, by signing letters of commission (the "Letters"). The Letters awarded Jhaver commissions if Zapata obtained an ONGC contract with Jhaver's assistance.
Each Letter referred to an ONGC bid tender number which identified ONGC bid tenders. A bid tender is the ONGC's offer to use drilling rigs. The ONGC publishes bid tenders to announce its need for drilling rigs at specific times and locations. Time and location condition ONGC drilling contracts and thus the Letters.
With Jhaver's assistance, in 1983, Zapata and the ONGC contracted for one year for Zapata's Bonito I (the "B-1") drilling rig's services. Jhaver and Zapata signed a letter of commission which stated that Jhaver would receive commissions from this contract. Then from 1984 to 1986, Zapata contracted with the ONGC for the B-I's services through a joint venturer, Asia Foundation and Construction, Ltd., without Jhaver's assistance.
In 1984 and 1985, however, Zapata acknowledged to Jhaver a commitment to remunerate him for his efforts towards the B-I contract. Zapata paid B-I contract commissions to Jhaver until May 1986. Explaining the discontinuation of commissions, in September 1986, Zapata stated to Jhaver that: (a) Zapata and Jhaver agreed regarding Jhaver's B-I services; (b) Jhaver breached this agreement; and therefore, (c) Zapata could rightfully terminate it.
Jhaver sued Zapata in federal district court and claimed that Zapata promised to pay him commissions as long as the B-I continued to serve the ONGC. Jhaver sued under five theories: (1) breach of contract; (2) declaratory judgment 1; (3) promissory estoppel; (4) quantum meruit; and, (5) breach of the implied covenant of good faith and fair dealing. Zapata argued that it limited any promise to Jhaver to the 1983 B-I bid.
Jhaver moved for summary judgment. The district court granted the motion. The court concluded that:
Zapata is under a continuing obligation to pay commissions to Jhaver on the ... [B-I]. Jhaver's employment termination is irrelevant.... As to Jhaver's suit for commissions due regarding the ... [B-I] rig, the Court ... [concludes] that Zapata is estopped to deny that the obligation exists.
Zapata appeals.
Although Zapata and Jhaver acknowledge that a contract for Jhaver's services exists, they dispute its terms. Jhaver claims the contract entitles him to commissions commensurate with the B-I's service in India while Zapata claims the contract limits Jhaver's commissions to the Letters' bid-specific terms. This contract is ambiguous.
Under Texas law, if a court may interpret a contract more than one way, it is ambiguous. 2 Ambiguity presents a question of law. 3 We review questions of law de novo. 4
The Letters, numerous telexes, and other communications in the record comprise the contract between Zapata and Jhaver. Deposition testimony suggests that the Letter's bid-specific terms limits Jhaver's commissions. The depositions, however, in addition to the telexes and the other communications, are contradictory because they also reveal that Zapata would compensate Jhaver for his B-I services as long as the B-I operated in India. We may interpret the contract in more than one way. The contract is therefore ambiguous. 5
Interpreting an ambiguous contract raises factual questions, specifically, deciding the contract's terms. 6 Relevant extrinsic or parol evidence establish these terms, 7 which reflect the parties' intent. Ascertaining the parties' intent may, however, present a genuine issue of material fact. 8 If so, a district court should not grant summary judgment.
In this case, the relevant record evidence, the Letters, the depositions, the telexes, and the other communications, raises a genuine issue of material fact. Does the contract limit Jhaver to the Letter's bid-specific terms? A jury must answer. Clearly, the district court erred by granting Jhaver summary judgment on this issue. 9
Under Texas law, quantum meruit awards service provider's the reasonable value of services rendered unless the parties already contracted for the services. 10 Zapata and Jhaver acknowledge that they contracted for Jhaver's services. Although ambiguous, this contract includes Jhaver's compensation term. Jhaver may not, therefore, recover under quantum meruit.
Under Texas law, a contract comprising the disputed promise precludes recovery under promissory estoppel. 11 Zapata and Jhaver contracted for Jhaver's services. Jhaver may not, therefore, recover under promissory estoppel.
Under Texas law, the duty of good faith and fair dealing arises in two circumstances. The parties can create the duty with express contractual language. 12 Or, a special relationship of trust and confidence may exist between the parties. 13 This case presents neither circumstance. The Letters, telexes and other communications demonstrate that Zapata and Jhaver did not create the duty with express language. In addition, a special relationship of trust and confidence between Zapata and Jhaver does not exist.
Texas courts classify contractual relationships with imbalanced bargaining power as special. 14 The relationship between Zapata and Jhaver is balanced and thus not special. 15 In addition, Texas courts classify contractual relationships special if the parties require trust and confidence to execute the contract. 16 Fiduciary or formal relationships require trust and confidence. 17 Formal relationships may arise from long standing dealings, personal, social, or domestic, that justify the injured party's reliance. 18
The dealings between Zapata and Jhaver were not long standing. The relationship is not formal. In addition, Texas courts would not classify the relationship as fiduciary. 19 Consequently, a special relationship between Zapata and Jhaver does not exist.
Jhaver did not establish a breach of the duty of fair dealing and good faith nor a cause of action under quantum meruit or promissory estoppel. The contract between Zapata and Jhaver is, however, ambiguous. A jury must ascertain its terms. We thus REVERSE and REMAND.
1 Jhaver sought a declaratory judgment under Texas Civil Practice and Remedies Code Annotated section 37.001 et seq. (Vernon 1986). This statute allows courts to declare parties' contract rights. As the opinion states, however, because the contract is ambiguous, a jury must determine its terms.
2 Richland Plantation Co. v. Justiss-Mears Oil, 671 F.2d 154, 156 (5th Cir.1982) (); R & P Enterprises v. LaGuarta, Gavrel & Kirk Inc., 596 S.W.2d 517, 519 (Tex.1980) () .
3 Southern Natural Gas Co. v. Pursue Energy, 781 F.2d 1079, 1081 (5th Cir.1986) (); Richland Plantation Co., 671 F.2d at 156 (); Steuber Co. v. Hercules Inc., 646 F.2d 1093, 1098 (5th Cir.1981) ().
5 See supra note 2.
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