UNITED STATES COURT OF APPEALS
For the Fifth Circuit
97-30742
WILLIAM J. HUFFMASTER, ET AL
Plaintiffs,
HUFFMASTER & ASSOCIATES, INCORPORATED
Plaintiff/Appellant,
versus
EXXON COMPANY and CDI CORPORATION
Defendants/Appellees.
Appeal from the United States District Court
from the Middle District of Louisiana
March 17, 1999
Before HIGGINBOTHAM, PARKER, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
This appeal calls upon us to interpret a contract between
Huffmaster & Associates (“HAI”), a staffing support company, and
Exxon Company (“Exxon”). Under the contract HAI performed
engineering and related services for Exxon with HAI’s permanent and
temporary staff support personnel. Exxon terminated HAI’s right to
perform services under the contract and entered into new contracts
with different staffing support companies for performance of the
same services. This litigation ensued. The district court granted
summary judgment dismissing HAI’s breach of contract claim against
Exxon and dismissed, under Rule 12(b)(6), HAI’s tortious
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interference with contract claim against a competing staffing
support company. We affirm.
I.
HAI provides personnel to perform both permanent and temporary
engineering, clerical, and support services for companies in and
around Baton Rouge, Louisiana. Beginning in 1975 HAI provided
engineering and associated services for Exxon’s refinery operations
under a series of contracts. By 1995, 80% of HAI’s workforce was
dedicated to the performance of services for Exxon. The contract
at issue in this case was entered into by HAI and Exxon on April 1,
1994. Under that contract HAI agreed to furnish, upon Exxon’s
request, engineering and associated services as described in
Letters of Authorization issued by Exxon. HAI also agreed to
provide its own supervision and other personnel necessary to
perform such services. Exxon was not required by the contract to
request services exclusively from HAI or to request any particular
amount of services from HAI. In essence, Exxon agreed only to pay
HAI for services performed in accordance with each Letter of
Authorization or, in the absence of specific reimbursement terms
therein, pursuant to Exhibit D of the contract entitled, “Payment
Schedule, Reimbursable/Non Reimbursible Costs.”
Prior to 1995, Exxon obtained performance of various services
by temporary personnel from several companies, including CDI
Corporation (“CDI”). In late 1992 and early 1993, CDI executives
approached Bill Huffmaster, the owner of HAI, seeking to purchase
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HAI. Huffmaster rejected CDI’s offer.
Exxon maintains that by early 1995, it decided to reduce the
number of companies providing it with staffing services. On
January 16, 1995, Exxon informed HAI that after January 30 Exxon
would no longer request clerical services from HAI. In a letter
to HAI, Exxon stated that Olsten Staffing Services was to become
Exxon’s sole supplier of staff support and that Exxon anticipated
that the bulk of HAI’s former employees would be employed by Olsten
for this purpose. Thereafter on February 6, 1995, Exxon informed
HAI that Spectrum Engineering, Inc. would be providing the
technical staffing services to Exxon; therefore, Exxon would no
longer require the services of HAI in the technical area either.
Exxon stated that Spectrum also would seek to “transition” or
employ HAI’s former employees. Spectrum Engineering, Inc. is a
subsidiary of CDI.
Aggrieved by the termination of HAI’s right to perform
services for Exxon and the resulting loss of its business and
employees, HAI, along with Huffmaster, commenced this litigation.
HAI and Huffmaster originally sued only Exxon in the Southern
District of Texas for breach of contract, tortious interference
with contract, and breach of the duty of good faith and fair
dealing. After the action was transferred to the Middle District
of Louisiana HAI and Huffmaster amended their complaint to include
actions against CDI for tortious interference with contract.
The district court concluded that Louisiana law applied and
dismissed plaintiffs’ claims against Exxon for reach of contract
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via summary judgment and against CDI for tortious interference with
contract under Rule 12(b)(6). Only HAI appealed.1
II.
Under the Louisiana Civil Code, “[a] contract is an agreement
by two or more parties whereby obligations are created, modified,
or extinguished.” LSA-C.C. Art. 1906. “Interpretation of a
contract is the determination of the common intent of the parties.”
Id., Art. 2045. “When the words of a contract are clear and
explicit and lead to no absurd consequences, no further
interpretation may be made in search of the parties’ intent.” Id.,
Art. 2046. “Words susceptible of different meanings must be
interpreted as having the meaning that best conforms to the object
of the contract.” Id., Art. 2048. “A provision susceptible of
different meanings must be interpreted with a meaning that renders
it effective and not with one that renders it ineffective.” Id.,
Art. 2049. “Each provision in a contract must be interpreted in
light of the other provisions so that each is given the meaning
suggested by the contact as a whole.” Id., Art. 2050. “When the
parties intend a contract of general scope but, to eliminate doubt,
include a provision that describes a specific situation,
interpretation must not restrict the scope of the contract to that
1
An appellate court reviews an order granting summary judgment
de novo. Montgomery v. Brookshire, 34 F.3d 291, 294 (5th Cir.
1994). A dismissal of a complaint for a failure to state a claim
for which relief can be granted under Rule 12(b)(6) is also
reviewed by an appellate court de novo. Khurana v. Innovative
Health Care Systems, Inc., 130 F.3d 143, 147 (5th Cir. 1997).
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situation alone.” Id., Art. 2052. “A doubtful provision must be
interpreted in light of the nature of the contract, equity, usages,
the conduct of the parties before and after the formation of the
contract, and other contracts of a like nature between the same
parties.” Id., 2053.
Under the contract, Exxon had the right to specify and request
the performance of services by HAI.2 Upon receiving such a request
from Exxon, HAI had the right to perform and be compensated for the
specified services.3
The contract does not state or imply that Exxon must obtain
any service exclusively from HAI or that HAI has the exclusive
right to perform any service for Exxon. Accordingly, the contract
provides for the creation of rights and obligations of the parties
only in the event Exxon specifies and requests the performance of
certain services by HAI.
The contract further provides for the modification or
extinguishment of the obligations of the parties. Specifically,
2
See Contract, Sec. 4. [”Scope”] A. “Whenever Exxon desires
to have Contractor perform Services hereunder, Exxon shall furnish
Contractor with a Letter of Authorization, which Letter shall
describe the Services to be performed and authorize Contractor to
proceed therewith.***”(Capitalizations omitted).
3
See Contract, Sec. 5. [”Payment and Invoicing”] A.
[”Payment”]“As consideration for the timely and satisfactory
performance and completion of Services by Contractor in accordance
with the terms of this Contract, Exxon agrees to pay Contractor the
Contract Price in accordance with (1) specific reimbursement terms
as identified in each Letter of Authorization or (2) if no such
reimbursement terms are contained in the applicable Letter(s) of
Authorization, the attached Exhibit D attached hereto and made a
part hereof shall constitute the payment basis.***”
(Capitalizations omitted).
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Sections 25 and 27 of the Contract provide as follows:
25. Assumption of the Services
CONTRACTOR agrees that if, in the opinion of EXXON,
CONTRACTOR fails at any time during the performance of
this CONTRACT to provide the labor, supervision, tools,
equipment, or materials necessary for the prompt
performance of the SERVICES herein contracted for, or
should CONTRACTOR breach this CONTRACT in whole or in
part or fail to use due diligence in the performance
thereof, or should CONTRACTOR not be performing this
CONTRACT in the manner herein provided, EXXON may, at its
election and without prejudice to any other remedies
available to it, take over and perform, or obtain another
contractor to take over and perform, all or any part of
the SERVICES then remaining unperformed. Should EXXON
take over completion of the SERVICES, or obtain another
contractor to do so, EXXON’s sole obligation shall be to
pay CONTRACTOR, upon completion of the SERVICES, subject
to other provisions of the CONTRACT, either that
percentage of any moneys due under the CONTACT which
represents the percentage of the SERVICES completed by
CONTRACTOR or the full CONTRACT price less all costs and
expenses incurred by EXXON in completing the SERVICES,
whichever is less.
* * *
27. Termination
A. EXXON may terminate, at any time and for any
reason, any part of or all SERVICES by giving
at least twenty four (24) hours’ written
notice to CONTRACTOR specifying the part of or
all SERVICES to be terminated and the
effective date of termination. CONTRACTOR
shall cease work on said part of or all
SERVICES on the effective date of termination
but shall continue to prosecute any
unterminated part of SERVICES.
B. If any part of or all SERVICES are terminated,
EXXON with respect to such SERVICES shall pay
CONTRACTOR, pursuant to Exhibit B, only for
SERVICES performed and obligations incurred
prior to the effective date of termination and
for such additional amounts directly related
to SERVICES performed by CONTRACTOR in
terminating, providing said SERVICES were
authorized in advance by EXXON.
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C. EXXON’s sole liability to CONTRACTOR for
termination shall be determined in accordance
with this Article and EXXON shall not be
liable for any other damages including,
without limitation, loss of anticipated
profits or reimbursement for SERVICES
unperformed.
Interpreting each provision of the contract in light of its
other provisions so that each is given the effect and meaning
suggested by the contract as a whole, we conclude that Section 25
provides Exxon the remedy, for specified causes (viz., breach of
contract, lack of diligent performance, lack of means of prompt
performance, or improper manner of performance), to extinguish, in
whole or in part, HAI’s right to perform requested services, and
further provides that, in such a case, HAI will be paid either on
the basis of the percentage of the services completed by HAI or the
full contract price less all costs and expenses incurred by Exxon
in completing the services, whichever is less.
Section 27, interpreted in like manner, gives Exxon the right,
without cause, to terminate HAI’s right to perform any or all
specified services by giving HAI at least 24 hours written notice
of the services to be terminated and the effective date of
termination. In the event of termination under Section 27, Exxon
must compensate HAI for services performed and for certain
obligations incurred prior to the effective date of termination.
In essence, the contract calls for more favorable compensation of
HAI in the event of termination without cause under Section 27 than
in the case of extinguishment of obligations for cause under
Section 25.
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Consequently we disagree with HAI’s contentions that the
common intent of the parties was that Exxon could not terminate
HAI’s right to perform past and future requests for services under
the contract except for cause as stated in Section 25, and that
Exxon could not terminate, at will or without cause, HAI’s right to
perform past or future requests for specified services under
Section 27 unless Exxon no longer had a need for the particular
services designated. HAI disregards the clear and unambiguous
words of the contract and reads into it provisions that the parties
did not agree upon. Section 27 unquestionably authorizes Exxon to
“terminate, at any time and for any reason,” i.e., at will or
without cause, “any part of or all SERVICES [].” That section
plainly says Exxon may terminate performance of services by HAI
“for any reason” and does not require that Exxon’s right to so
terminate shall depend on whether or not Exxon needs the services.
Further, Section 25 lucidly provides that Exxon may elect to
extinguish HAI’s right to perform services for the causes stated in
that section “without prejudice to any other remedies available to
it.” This clause, the co-existence of Section 27 that permits
termination of services by Exxon at will, and the absence of any
statement contradictory thereto in Section 25, clearly demonstrate
the parties’ common intent that Exxon should be able to extinguish
HAI’s right to perform services “for any reason” under Section 27.
HAI’s proffered interpretation, moreover, adds to and bends the
meaning of the words of the contract so as to provide itself the
exclusive right to perform certain services for Exxon
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extinguishable only for the causes stated in the contract.
However, a reading of the contract as a whole which renders each of
its provisions effective plainly demonstrates that HAI was merely
granted the right to perform services as specified and demanded by
Exxon, and that HAI’s right was subject to extinguishment by Exxon
either at will or for the causes stated by the contract.
III.
Beginning with Kline v. Eubanks, 109 La. 241, 33 So. 211
(1902), the Louisiana courts refused to recognize the tort of
intentional interference with contractual relations. In 9 to 5
Fashions, Inc. v. Spurney, 538 So.2d 228, 234 (La. 1989), however,
the Louisiana Supreme Court overruled Kline v. Eubanks, and held
that all “previous expressions barring absolutely any action based
on a tortious interference with contract are annulled insofar as
they conflict with this opinion.” The 9 to 5 Fashions Court gave
many reasons for its decision to overrule its previous cases:(1)
“[A] delictual rule such as Kline v. Eubanks that flatly and
without good reason deprives an innocent person of any remedy for
damage to his contract right caused intentionally and improperly by
a corporate official is discordant with the fundamental civil law
principle that obliges a person to repair damage caused another by
his fault. La.Civ.Code art. 2315." Id., at 233-234; (2) Louisiana
stood alone among American states and in opposition to the weight
of opinion in other civil law jurisdictions in refusing to
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recognize the tort; (3) The common law authorities relied upon by
Kline v. Eubanks had been abandoned by all Anglo-American
jurisdictions; (4) The expression of the Kline court that article
2315 must be limited to dangers which were known to the drafters of
the Code at the time it was drafted was incorrect; (5) Kline and
its progeny had been thoroughly criticized by doctrinal
commentators.
The 9 to 5 Fashions Court specifically recognized only a
corporate officer’s duty to refrain from intentional and
unjustified interference with the contractual relation between his
employer and a third person and disavowed any intention to adopt
whole and undigested the fully expanded common law doctrine of
interference with contract.
Because the Louisiana Supreme Court has not revisited the tort
of intentional interference with contract since 9 to 5, and the
Louisiana courts of appeal opinions fail to provide consistent
guidance, HAI urges us to either make an Erie-guess as to whether
the Louisiana Supreme Court would decide that HAI has stated a
tortious interference with contract cause of action or to certify
that question to the Louisiana Supreme Court. We need not obtain
a definitive answer to that question, however, to dispose of the
present case.
Assuming arguendo that the Louisiana Supreme Court would, as
HAI argues, adopt the majority or contemporary American view, HAI
still would not succeed in the present case. Under that view,
“interference with employment or other contracts terminable at will
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is actionable, since until it is terminated the contract is a
subsisting relation, of value to the plaintiff, and presumably to
continue in effect.” Prosser and Keeton on Torts, §129, at 995-996
(5th Ed. 1984); See also, 2 Harper, James and Gray, The Law of
Torts, § 6.7, at 311 (2nd Ed. 1986). The majority view, however,
also includes a privilege of interference within the bounds of
proper and legitimate business competition. Section 768 of the
Restatement (Second) of Torts (1979) sets forth the terms and
conditions of the privilege with precision as follows4:
§ 768. Competition as Proper or Improper Interference
(1) One who intentionally causes a third person not to
enter into a prospective contractual relation with
another who is his competitor or not to continue an
existing contract terminable at will does not interfere
improperly with the other’s relation if
(a) the relation concerns a matter
involved in the competition between
the actor and the other and
(b) the actor does not employ wrongful
means and
(c) his action does not create or
continue an unlawful restraint of
trade and
(d) his purpose is at least in part to
advance his interest in competing
4
Cases adopting § 768 or some version of the privilege include
Ocean State Physicians Health Plan v. Blue Cross & Blue Shield of
Rhode Island, 883 F.2d 1101, 1113 (1st Cir. 1989), cert. denied 494
U.S. 1027 (1990); Waldrep Brothers Beauty Supply, Incorporated. v.
Wynn Beauty Supply Company, Incorporated, 992 F.2d 59, 63 (4th Cir.
1993); C.E. Services, Inc. v. Control Data Corp., 759 F.2d 1241,
1248, 1249 (5th Cir.), cert. denied 474 U.S. 1037 (1985); Tata
Consultancy Services v. Systems International, Inc., 31 F.3d 416,
424-25 (6th Cir. 1994); A-Abart Electric Supply, Incorporated v.
Emerson Electric Company, 956 F.2d 1399, 1405 (7th Cir.), cert.
denied 506 U.S. 867 (1992); Sawheny v. Pioneer Hi-Bred
International, Inc., 93 F.3d 1401, 1409 (8th Cir. 1996); Los Angeles
Land Co. v. Brunswick Corporation, 6 F.3d 1422, 1430 (9th Cir.
1993), cert. denied 510 U.S. 1197 (1994); Occusafe, Inc. v. EG&G
Rocky Flats, Inc., 54 F.3d 618, 619, 622 (10th Cir. 1995).
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with the other.
(2) The fact that one is a competitor of another for the
business of a third person does not prevent his causing
a breach of an existing contract with the other from
being an improper interference if the contract is not
terminable at will.
See also, Prosser and Keeton, supra, at 996 (“Thus a contract at
will is usually not protected when the defendant’s interference
with it is based on any legitimate business purpose and no improper
means is used, as where one employer hires away employees of
another whose contract rights are terminable at will.”); Harper,
James and Gray, supra, at 312.
We do not believe that the Louisiana Supreme Court would
recognize the contemporary or majority version of the intentional
interference with contractual relations action without also
recognizing and applying the privilege of legitimate and proper
business competition that accompanies that action. Accordingly,
under the facts alleged in HAI’s petition, CDI is protected by the
privilege from liability for interference with contract. Exxon
had the right to terminate its contract with HAI at will: HAI’s
employees had the right to terminate their employment at will;
CDI’s interference with the contracts at will was based on
legitimate business purposes; and there was no allegation of
restraint of trade or wrongful means.
IV.
For the foregoing reasons, the judgment of the district court
is AFFIRMED.
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