C & W, Inc. of Blacksburg v. Bellsouth Telecommunications, Inc.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

C & W, INCORPORATED OF 
BLACKSBURG,
Plaintiff-Appellant,
v.  No. 00-1782
BELLSOUTH TELECOMMUNICATIONS,
INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the District of South Carolina, at Greenville.
Margaret B. Seymour, District Judge.
(CA-98-2462-6)

Argued: April 4, 2001

Decided: May 15, 2001

Before WIDENER and NIEMEYER, Circuit Judges, and
Lacy H. THORNBURG, United States District Judge for the
Western District of North Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.

COUNSEL

ARGUED: Robert Wilkinson Hassold, Jr., NEXSEN, PRUET,
JACOBS & POLLARD, L.L.P., Greenville, South Carolina, for
Appellant. Thomas S. Tisdale, Jr., YOUNG, CLEMENT, RIVERS &
TISDALE, L.L.P., Charleston, South Carolina, for Appellee. ON
2 C & W, INC. v. BELLSOUTH TELECOM.
BRIEF: Stephen P. Groves, Sr., Stephen L. Brown, YOUNG,
CLEMENT, RIVERS & TISDALE, L.L.P., Charleston, South Caro-
lina, for Appellee.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

OPINION

PER CURIAM:

C & W, Inc. of Blacksburg ("C&W") commenced this diversity
action against BellSouth Telecommunications, Inc. ("BellSouth") for
a breach of contract under South Carolina law after BellSouth termi-
nated its contractual relationship with C&W. The district court
granted BellSouth’s motion for summary judgment, and we affirm.

Following BellSouth’s invitation to submit bids for placing buried
service wire in the Greenville, South Carolina, area, BellSouth and
C&W entered into a three-year master contract, beginning December
1, 1993. The contract, which only established rates and terms of per-
formance that would become applicable for particular installations as
called upon, provided that BellSouth "shall have the right to terminate
this Contract upon ninety (90) days written notice to [C&W]."
C&W’s cancellation rights were more limited; it could only terminate
the contract if BellSouth defaulted under any of its "material obliga-
tions" and C&W provided it with ninety (90) days written notice.

On November 28, 1995, BellSouth sent C&W a letter, providing
C&W a notice of its intent to terminate the contract as of March 1,
1996, pursuant to its cancellation powers granted by the contract. The
letter explained to C&W that BellSouth would thereafter be perform-
ing the work in-house. This was the result of BellSouth’s collective
bargaining agreement with the Communication Workers of America,
negotiated in August 1995. During the course of the years that C&W
had performed under the master contract, BellSouth was happy with
 C & W, INC. v. BELLSOUTH TELECOM. 3
C&W’s performance, and C&W profited handsomely, earning
approximately $700,000 in profits per year.

C&W commenced this diversity action in August 1998, alleging
that BellSouth, by canceling the contract prior to the expiration of its
term without cause, breached the master contract. Despite the express
provision in the contract authorizing the very conduct challenged by
C&W, C&W argued that under South Carolina law, a party such as
BellSouth who enjoys a unilateral cancellation privilege under a con-
tract, may not exercise that privilege unless it is in a manner consis-
tent with "equity and good conscience." C&W’s theory was that
BellSouth’s decision to terminate the contract prior to the expiration
of its term, despite C&W’s outstanding performance, was inconsistent
with "equity and good conscience." C&W also argued that BellSouth
had represented that the contract would not be terminated as long as
C&W’s performance was adequate, that it reasonably relied on that
representation, and that it suffered an injury as a result of BellSouth’s
breach of the representation. The district court rejected C&W’s argu-
ments as a matter of law and entered summary judgment for Bell-
South.

At oral argument on appeal, C&W abandoned its promissory estop-
pel argument, conceding that it had not suffered any injury from its
reliance on BellSouth’s promise. Accordingly, it presses only the
question of whether the district court erred in dismissing C&W’s
breach of contract claim.

While it is true that South Carolina law, as a general matter, pro-
hibits the exercise of a contractually-provided, unilateral power to ter-
minate a contract in a manner inconsistent with "equity and good
conscience," no South Carolina authority has been cited for the propo-
sition that the "equity and good conscience" requirement converts
contracts that are otherwise terminable at will into contracts termina-
ble only for cause. Indeed, authority exists to the contrary. In Glaes-
ner v. Beck/Arnley Corp., 790 F.2d 384 (4th Cir. 1986), we
interpreted South Carolina’s "equity and good conscience" limitation
on the exercise of a unilateral termination provision as being inappli-
cable to terminations in furtherance of legitimate business purposes.
Moreover, in a recent decision interpreting this standard, the South
Carolina Supreme Court expressly relied on our interpretations of
4 C & W, INC. v. BELLSOUTH TELECOM.
South Carolina law, including Glaesner. See Carolina Cable Network
v. Alert Cable TV, Inc., 447 S.E.2d 199, 202 (S.C. 1994).

In the case before us, it was undisputed that BellSouth terminated
its contract with C&W as a consequence of the new collective bar-
gaining agreement it reached with its union, an agreement that offered
the possibility of reducing BellSouth’s operating costs and enhancing
its overall labor relations. Thus, BellSouth exercised its power to can-
cel the contract in furtherance of legitimate business purposes. More-
over, it was undisputed that C&W profited handsomely from its
relationship with BellSouth, in spite of what it deemed to be a prema-
ture termination. In these circumstances, we conclude that the termi-
nation cannot be reasonably described as having been malicious nor
as being inconsistent with equity and good conscience.

For the reasons given, we affirm the judgment of the district court.

AFFIRMED