Nat'l Data Payment Sys. v. Meridian Bank

Decision Date06 March 2000
Docket NumberNo. 99-1445,99-1445
Citation212 F.3d 849
Parties(3rd Cir. 2000) NATIONAL DATA PAYMENT SYSTEMS, INC, Appellant v. MERIDIAN BANK; CORESTATES FINANCIAL CORPORATION Argued:
CourtU.S. Court of Appeals — Third Circuit

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (Dist. Court No. 97-cv-06724) District Court Judge: J. Curtis Joyner

[Copyrighted Material Omitted]

Counsel for Appellant: ROBERT N. FELTOON (Argued) STEVEN PACHMAN Conrad O'Brien Gellman & Rohn, P.C. 1515 Market Street, 16th Floor Philadelphia, PA 19102

Counsel for Appellees: G. THOMPSON BELL, III (Argued) MATTHEW W. RAPPLEYE Stevens & Lee 111 North Sixth Street, P.O. Box 679 Reading, PA 19603

Before: SCIRICA, ALITO, and ALDISERT, Circuit Judges

OPINION OF THE COURT

ALITO, Circuit Judge:

Appellant National Data Payment Systems, Inc. ("NDPS") entered into a contract to purchase Meridian Bank's ("Meridian") merchant credit card business. The parties failed to close the deal prior to the contractual termination date. After the termination date had passed, Meridian exercised its option to call off the deal. NDPS brought suit against Meridian for breach of contract, alleging that it had failed to exercise its best efforts to bring the deal to a close. NDPS also sued CoreStates Financial Corp. ("CoreStates"), which had announced its planned acquisition of Meridian shortly before the events in dispute, for tortious interference with contractual relations. The District Court granted summary judgment in favor of the defendants, and we affirm.

I.

On September 15, 1995, NDPS entered into a Purchase Agreement (the "Agreement") with Meridian Bank for the purchase of Meridian's merchant credit card business. Three provisions of the Agreement are especially relevant to this case:

Closing/Best Efforts Clause -Section 3.1 provided that a closing was to occur "on the date to be mutually agreed upon by the parties which shall be within thirty (30) days after the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976." (App. 378-79.) The section further provided that "Meridian and NDPS agree to use their best efforts to achieve satisfaction of the conditions to Closing set forth in the Agreement and to consummate the Closing on the terms and subject to the conditions set forth in this Agreement." (App. 379.)

Termination Clause -Section 11.1 provided that the "Agreement may be terminated by either Meridian or NDPS and shall be of no further force and effect . . . (b) in the event the Closing shall not have occurred by October 30, 1995." (App. 399.)

Written Waiver Clause -Section 15.8 provided that "[t]his Agreement . . . shall not be amended, modified or waived in any fashion except by an instrument in writing signed by the parties hereto." (App. 404.)

The Agreement also contained a covenant that Meridian would not compete with NDPS in the merchant credit card business for ten years. (App. 388.) This covenant did not extend, however, to any company that subsequently acquired Meridian. (App. 389.)

On October 10, 1995--before the Agreement had closed--CoreStates announced that it had entered into a merger agreement under which it would acquire Meridian. CoreStates operated its own merchant credit card business and believed that Meridian's merchant portfolio--whose sale to NDPS was then pending--would be a valuable addition to its own business. CoreStates and Meridian thus decided to contact NDPS to see if it was still planning to go forward with the transaction.

On Thursday, October 26, 1995, Meridian arranged a conference call between representatives of NDPS, Meridian and CoreStates to discuss the effect that the CoreStates merger would have on the pending sale. Meridian Senior Vice President Michael Hughes opened the call by stating that "[w]e really have two options at this point in time. To proceed under the terms of the definitive agreement, or to mutually agree to terminate." (Hughes Dep., App. 160.) Meridian explained that the pending merger with CoreStates could change the economics of the NDPS Meridian deal, because the Purchase Agreement's noncompetition covenant would not extend to CoreStates. (Hughes Dep., App. 160.)

CoreStates senior executive Thomas Kaplan then took the floor. In an exchange that various participants characterized as "heated" and "threatening," (Bucolo Dep., App. 67; Shea Dep., App. 215), Kaplan stated that CoreStates was building a network of "business banking centers" which would generate merchant credit leads. (Bucolo Dep., App. 67.) Kaplan claimed that CoreStates would not be required to share these leads with NDPS under the Agreement: "look, you know if you do this agreement, you're not going to get these referrals. . . . you guys just aren't going to get the value out of this deal." (Bucolo Dep., App. 67.) Meridian Vice President Chris Bucolo, who participated in the call, testified that he believed that "Mr. Kaplan's intent was to not allow the conversation to go anywhere other than, you know, if this deal goes through, you're not going to get the value."1 At the end of the call, NDPS told Meridian that it would advise it of whether or not it wanted to proceed with the deal by the next Monday or Tuesday (that is, October 30 or 31).

The next day (Friday, October 27), Bucolo was told by Hughes that Meridian was "going to let the closing date [October 30] go by without responding to [NDPS] and basically try to rely on that part of the contract to not go through with the deal." (Bucolo Dep., App. 69-70.) As Bucolo understood it, "the game plan was to let the date essentially come and go and then rely on it to kill the deal." (Bucolo Dep., App. 69-70).

As of the following Monday--the October 30 termination date--Meridian had not heard back from NDPS. That day, Hughes called NDPS Senior Vice President Kevin Shea to inquire as to the status of the deal. Shea told Hughes that NDPS was meeting on the topic that day, and that they would call Hughes back later that day or the next day. Hughes said that this would be "fine." (Shea Dep., App. 218.) Although Hughes recognized that October 30 was the "drop-dead date" under the Agreement, he consciously did not bring this fact to Shea's attention.2 (Hughes Dep., App. 163.)

NDPS, in fact, did not get back to Meridian that day or the next. On November 2, Hughes had a telephone conversation with NDPS Vice President Eugene Horn, during which Hughes mentioned that the October 30 termination date had passed. (Horn Dep., App. 137.) Horn testified that he conveyed his own belief that NDPS wanted to close, and promised to get back to Hughes the next day. (Horn Dep., App. 137.)

On Friday, November 3, Horn again spoke with Hughes and advised him that NDPS was "prepared to close immediately." (Horn Dep., App. 141.) According to Horn, Hughes stated that Meridian was prepared to go forward with the closing and asked NDPS to set a date. (Horn Dep., App. 141.) Hughes disputes this account; on his telling, he never agreed on behalf of Meridian to close the deal. (Hughes Dep., App. 166-70.) Later that day, Horn faxed a letter to Hughes purporting to memorialize their conversation; the letter stated that its purpose was "to confirm our agreement to close the Purchase Agreement between Meridian Bank and National Data Payment Systems, Inc. on Tuesday, November 7, 1995 at 2:00 p.m. Georgia time at the offices of National Data Corporation in Atlanta." (App. 428-29.) Hughes was out of the office on November 3 and did not personally receive the letter until he returned to work on the following Monday, November 6.

On Monday, November 6, Meridian sent NDPS written notice that it was terminating the Agreement pursuant to S 11.1. NDPS notified Meridian that it considered the termination a breach of the Agreement, and filed suit in federal court.

NDPS raised two primary arguments: first, that Meridian had breached its obligation to use "best efforts" to consummate the transaction during the period before the termination date; and second, that Meridian impliedly waived its right to rely on the termination provisions after October 30, 1995. NDPS also brought a claim against CoreStates for tortious interference with the Purchase Agreement.

After discovery, both sides moved for summary judgment. The District Court granted summary judgment in favor of all defendants. See National Data Payment Sys., Inc. v. Meridian Bank, 18 F. Supp. 2d 543 (1998). NDPS then moved for reconsideration of the District Court's opinion and order, claiming the court had failed to rule on its "best efforts" claim. The District Court denied NDPS's motion, stating that it had considered and rejected the "best efforts" argument in its original opinion. NDPS appeals.

II.

On appeal, NDPS challenges three of the District Court's rulings: (1) the grant of summary judgment in favor of Meridian on NDPS's "best efforts" claim; (2) the grant of summary judgment in favor of Meridian on NDPS's claim that Meridian waived its right to terminate the Purchase Agreement; and (3) the grant of summary judgment in favor of CoreStates on NDPS's tortious interference claim. Pennsylvania law governs all of these claims. We address each in turn.

A.

NDPS first argues that Meridian breached the Purchase Agreement by failing to use its best efforts to effectuate a closing prior to the October 30 termination date. NDPS acknowledges that, once the October 30 date had passed, the termination option contained in S 11.1 superseded the best efforts obligation of S 3.1. Consequently, NDPS does not argue that Meridian's November 6 termination, in itself, breached the contractual best efforts duty. Rather, NDPS claims that Meridian breached the contract by its conduct prior to the October 30 "drop-dead" date. We reject this claim.

NDPS points to several specific actions which it claims breached Meridian's good faith obligation....

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