UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1078
LION ASSOCIATES, LLC, a Virginia Limited Liability Company,
Plaintiff - Appellant,
v.
SWIFTSHIPS SHIPBUILDERS, LLC, a Louisiana Limited Liability
Company,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:10-cv-00189-GBL-TRJ)
Argued: January 26, 2012 Decided: April 13, 2012
Before AGEE, DAVIS, and FLOYD, Circuit Judges.
Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.
ARGUED: James Douglas Baldridge, VENABLE LLP, Washington, D.C.,
for Appellant. Benjamin Gaillard Chew, PATTON BOGGS, LLP,
Washington, D.C., for Appellee. ON BRIEF: A. Wayne Lalle, Jr.,
VENABLE LLP, Vienna, Virginia, for Appellant. Douglas C.
Proxmire, Andrew Zimmitti, Nigel L. Wilkinson, PATTON BOGGS,
LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Lion Associates, LLC (Lion Associates), a global consulting
company that provides assistance with defense procurement,
contracted with Swiftships Shipbuilders, LLC (Swiftships), a
company that specializes in constructing military vessels. The
contract stated that Lion Associates would provide marketing and
promotion services, and in exchange, Swiftships would pay Lion
Associates $7,500 per month for twelve months and “3% of each
new contract brought to Swift[ships], which was obtained by Lion
[Associates].” Lion Associates subsequently rendered services
that assisted Swiftships in securing a contract that Swiftships
had been pursuing with the United States Navy. When Lion
Associates demanded 3% of the secured contract, Swiftships
refused to pay. Lion Associates therefore brought this action
alleging breach of contract and unjust enrichment. The district
court granted summary judgment in Swiftships’ favor as to both
claims, and Lion Associates now appeals. For the following
reasons, we affirm in part and reverse in part and remand.
I.
The United States Navy, acting through its Naval Sea
Systems Command (NAVSEA), issued a Presolicitation Notice
(Notice) to the public in November 2008. The Notice, which
NAVSEA amended in early February 2009, announced the Navy’s need
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to procure coastal patrol boats for supply to the Iraqi
government and set forth certain desired specifications for the
boats. We hereafter refer to this potential procurement
contract as the “Iraqi Navy Contract.” The Notice invited
companies to submit “capability summaries” that included, among
other things, information about the company’s experience,
descriptions of similar craft that it had constructed, and
estimated prices and delivery schedules. Lest companies receive
the wrong impression, the Notice clarified that it was neither
an invitation for bids nor a commitment by the government.
Swiftships, a Louisiana limited liability company,
responded on February 25, 2009, and provided a capability
summary. It advised NAVSEA of the current craft that it
offered, which, with minor modifications, would meet NAVSEA’s
specifications. Swiftships noted other countries to which it
had supplied similar craft and emphasized its ability to begin
immediate production. It concluded by requesting a sole-source
award.
On April 13, 2009, Faisal Gill, corporate counsel for
Swiftships, met with James A. Lyons Jr., a retired four-star
admiral. Admiral Lyons is the sole member, President, and Chief
Executive Officer of Lion Associates, a Virginia limited
liability company. One service that Lion Associates offers is
assistance with defense and commercial procurement. For that
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reason, Gill sought Lion Associates’ aid in securing a number of
contracts for Swiftships, including the Iraqi Navy Contract,
which, at the time of the meeting, Swiftships had not been
awarded.
Gill and Admiral Lyons orally agreed that Lion Associates
would provide its services to Swiftships but that they would
memorialize their agreement in a written contract. According to
Admiral Lyons, they discussed Lion Associates’ compensation
during the meeting. Admiral Lyons insists he told Gill that
Lion Associates charged a monthly $7,500 consulting fee and also
demanded 3% of each contract it brought to its clients. Admiral
Lyons maintains that Gill acquiesced to these compensation terms
and further agreed that the 3% fee would apply to the Iraqi Navy
Contract. Gill, however, contends that he specifically told
Admiral Lyons that the 3% fee would not apply to the Iraqi Navy
Contract and that Admiral Lyons recognized as much.
Admiral Lyons drafted a proposed written agreement
immediately following the meeting and sent it to Gill that
afternoon. Lion Associates, referred to in the proposed
agreement as “Consultant,” constituted one party. And pursuant
to Gill’s instructions, Admiral Lyons included The Gill Law Firm
as the other party, which the proposed agreement referred to as
the “Company.” The proposed agreement’s main clauses outline
the rights and obligations of the parties as follows:
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2. Purpose. Consultant will provide marketing
services and promote the Company by interfacing with
the U.S. Government and various national and
international companies who are known to have a
requirement for Company product and services.
Specifically, the Consultant will identify marketing
opportunities in U.S. Government and commercial
organizations and will explain the Company’s
capabilities; and represent that the Company . . . can
achieve the objectives established by the appropriate
enterprise better than any known competitor.
3. Compensation. Consultant will be reimbursed for
this effort at a rate of $7,500.00 per month for a
period of twelve (12) months with $7,500.00 paid upon
signing and on the 15th of each month thereafter until
termination. Also, Consultant will be paid 3% of each
new contract obtained by Lion.
We hereafter refer to these respective provisions as the
“Purpose Clause” and the “Compensation Clause.” The proposed
agreement also specified that the laws of Virginia would govern
all aspects of the contract.
Weeks passed without Swiftships executing and returning the
proposed agreement. Admiral Lyons inquired as to its status.
On May 8, 2009, Gill sent Admiral Lyons an e-mail requesting
that he substitute Swiftships for The Gill Law Firm as a party
in the agreement. Admiral Lyons promptly made the change,
signed the revised proposed agreement, and sent it to Gill.
Swiftships did not sign and return the proposed agreement
until June 4, 2009. When it did, it had added new language to
the last sentence of the Compensation Clause. Whereas before
the Compensation Clause provided that “Consultant will be paid
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3% of each new contract obtained by Lion,” Swiftships added
language so it stated that “Consultant will be paid 3% of each
new contract brought to Swift, which was obtained by Lion.”
Aside from this addition, the executed agreement mirrored the
proposed agreement sent by Admiral Lyons. According to Admiral
Lyons, he did not protest the added language because he did not
think it altered the original terms of the proposed agreement.
Meanwhile, even before Swiftships returned the executed
agreement, Admiral Lyons began directing his efforts to securing
the Iraqi Navy Contract for Swiftships. Before he intervened,
Swiftships was experiencing problems with NAVSEA. Admiral Lyons
maintains that a preexisting adversarial relationship existed
between NAVSEA and Swiftships and that NAVSEA had concerns about
Swiftships’ financial strength. Moreover, Swiftships faced
serious competition from other companies. Swiftships therefore
enlisted Admiral Lyons to break its impasse with NAVSEA and
provided him with information to assist him in doing so.
Admiral Lyons rendered assistance that eventually helped
Swiftships overcome these obstacles and secure the Iraqi Navy
Contract. He reached out to a high-ranking admiral in NAVSEA to
correct any misinformation NAVSEA had about Swiftships and to
provide positive information about Swiftships’ capabilities.
Using the information that he received from Swiftships, Admiral
Lyons conveyed to the NAVSEA admiral that Swiftships was
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financially strong. He also stressed the importance of granting
a sole-source award rather than splitting the procurement among
various companies. These conversations began before Swiftships
returned the executed agreement and continued afterward.
On September 25, 2009, NAVSEA awarded the Iraqi Navy
Contract to Swiftships on a sole-source basis. The contract
amounted to $180,998,189. Swiftships also obtained a contract
to provide training services for an additional $23,000,000.
After Swiftships received the Iraqi Navy Contract, the
parties’ attention turned to the effect, if any, that the award
had on Lion Associates’ compensation. It is undisputed that
Swiftships paid the monthly $7,500 to Lion Associates from May
2009 until April 2010. But it did not pay Lion Associates 3% of
the Iraqi Navy Contract. And when Lion Associates attempted to
collect 3% of the contract, Swiftships rebuffed it.
Lion Associates therefore filed a complaint in the Eastern
District of Virginia on March 2, 2010. It invoked the district
court’s diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Lion Associates asserted two causes of action against
Swiftships: breach of contract and unjust enrichment. It based
both theories on Swiftships’ failure to pay the 3% fee from the
Iraqi Navy Contract. Lion Associates sought damages in the
amount of $6,119,946.
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Swiftships filed a motion for summary judgment on September
27, 2010, which the district court granted. As to the breach of
contract claim, the district court reasoned that the 3% fee
provision was unambiguous and that Lion Associates was not
entitled to a 3% fee because Swiftships had identified and begun
pursuing the Iraqi Navy Contract before the agreement. The
district court granted summary judgment as to the unjust
enrichment claim on the basis that the existence of the written
contract defining the parties’ rights and obligations precluded
such a claim.
Lion Associates filed this timely appeal. It contends that
the district court erred in granting Swiftships’ motion for
summary judgment as to both its breach of contract claim and its
unjust enrichment claim. We address each in turn.
II.
We review the district court’s order granting summary
judgment de novo. Wash. Metro. Area Transit Auth. v. Potomac
Inv. Props., Inc., 476 F.3d 231, 234 (4th Cir. 2007). “Summary
judgment is appropriate only if taking the evidence and all
reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party, ‘no material facts are
disputed and the moving party is entitled to judgment as a
matter of law.’” Henry v. Purnell, 652 F.3d 524, 531 (4th Cir.
8
2011) (en banc) (quoting Ausherman v. Bank of Am. Corp., 352
F.3d 896, 899 (4th Cir. 2003)). Because jurisdiction in this
case rests on diversity jurisdiction, we apply the substantive
law of Virginia. See Moore Bros. Co. v. Brown & Root, Inc., 207
F.3d 717, 722 (4th Cir. 2000).
III.
We first address whether the district court erred in
granting summary judgment as to Lion Associates’ breach of
contract claim. At the outset, we note that neither Lion
Associates nor Swiftships challenges whether the executed
agreement with Swiftships’ added language controls. Both
parties assume that it does; therefore, so do we. Lion
Associates contends that the language of the 3% fee provision is
ambiguous and that the district court therefore erred in failing
to consider parol evidence concerning whether the parties
intended for the fee to apply to the Iraqi Navy Contract.
Swiftships, however, maintains that the district court did not
err because the language of the 3% fee provision is unambiguous
and it does not apply to the Iraqi Navy Contract.
In construing a contract, our overriding objective is to
determine and effectuate the parties’ intention. Va. Elec. &
Power Co. v. Norfolk S. Ry. Co., 683 S.E.2d 517, 525 (Va. 2009).
The starting point for ascertaining the parties’ intention is
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the language of the contract. Id. Only if the language of the
contract is ambiguous do we consider parol evidence that is
probative of the parties’ intention. Eure v. Norfolk
Shipbuilding & Drydock Corp., 561 S.E.2d 663, 667-68 (Va. 2002).
If the terms of the contract are clear and unambiguous, we must
construe them according to their plain meaning without resort to
parol evidence. TM Delmarva Power, L.L.C. v. NCP of Va.,
L.L.C., 557 S.E.2d 199, 200 (Va. 2002).
Ambiguity arises only when a contract “may be understood in
more than one way or when it refers to two or more things at the
same time.” Eure, 561 S.E.2d at 668 (quoting Granite State Ins.
Co. v. Bottoms, 415 S.E.2d 131, 134 (Va. 1992)) (internal
quotation marks omitted). Stated differently, a contract’s term
is ambiguous if it is susceptible to “more than one reasonable
construction.” Clinch Valley Physicians, Inc. v. Garcia, 414
S.E.2d 599, 601 (Va. 1992). Such ambiguity may be patent or
latent. Va. Elec. & Power, 683 S.E.2d at 526. Patent ambiguity
exists when “the language of the contract itself reveals that it
can be interpreted in more than one way.” Id. Latent
ambiguity, although less common than patent ambiguity, arises
“where language ‘[although] appearing perfectly clear at the
time the contract[] [is] formed, because of subsequently
discovered or developed facts, may reasonably be interpreted in
either of two ways.’” Id. (second and third alterations in
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original) (quoting Galloway Corp. v. S.B. Ballard Constr. Co.,
464 S.E.2d 349, 355 (Va. 1995)).
Before addressing whether the 3% fee provision is
ambiguous, we recognize a number of guiding principles under
Virginia law for ascertaining ambiguity in a contract. When
determining whether a contract is ambiguous, courts must
consider the contract as a whole and not emphasize isolated
terms. TM Delmarva Power, 557 S.E.2d at 200. They must ascribe
meaning to every word or clause to which a reasonable meaning
may be given and not presume the parties “included needless
words in the contract.” Id. Yet courts must remain careful not
to add terms that the parties did not include. Id. Finally,
the fact that the parties disagree as to the meaning of a term
does not alone render it ambiguous. Id.
The Compensation Clause’s 3% fee provision is patently
ambiguous. In reaching this conclusion, we begin as we must by
examining the language of the disputed provision: “Consultant
will be paid 3% of each new contract brought to Swift, which was
obtained by Lion.” In interpreting this provision, we assume
that the “new contract” is a contract to which Swiftships is a
party, for that is the only reasonable interpretation of the
provision in light of the contract as a whole.
Reading the 3% fee provision literally demonstrates its
patent ambiguity. Contracts are, of course, binding agreements
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formed by offer and acceptance and supported by valuable
consideration. Montagna v. Holiday Inns, Inc., 269 S.E.2d 838,
844 (Va. 1980). A literal, plain meaning construction of the 3%
fee provision would mean that Lion Associates would have to
obtain such an enforceable agreement and bring it to Swiftships,
even though for such an agreement to exist Swiftships would
already have to be a party to it. We simply fail to understand
how Lion Associates can obtain and bring a “new contract” to
Swiftships when for such a contract even to exist Swiftships
must have already entered into it. This literal, plain meaning
interpretation makes little, if any, sense.
A reasonable construction of this provision would entitle
Lion Associates to the 3% fee when it obtains an opportunity for
Swiftships to enter into a new contract and brings the
opportunity to Swiftships. In fact, the parties’ competing
interpretations both rest on the assumption that the provision
applies when Lion Associates obtains an opportunity for
Swiftships to enter into a new contract, not that it applies
when Lion Associates brings an already formed, enforceable
contract to Swiftships. But this construction is also fraught
with ambiguity and begs the further question of what Lion
Associates must do to obtain a contracting opportunity and bring
it to Swiftships. It is unclear whether Lion Associates must
initially identify a potential contracting opportunity for
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Swiftships, only render assistance that provides Swiftships the
opportunity to enter into a new contract that Swiftships would
have been otherwise unable to enter into, or both. Lion
Associates and Swiftships offer differing but reasonable
interpretations of what the term requires.
Swiftships’ interpretation, in essence, is that Lion
Associates must initially identify the contracting opportunity
and bring it to Swiftships. That interpretation is consistent
with one of Lion Associates’ stated obligations in the Purpose
Clause to “identify marketing opportunities in U.S. Government
and commercial organizations.” According to Swiftships, the
Compensation Clause’s 3% fee provision therefore applies only to
contracting opportunities that Lion Associates initially
identifies for Swiftships, not contracting opportunities that
Swiftships identifies and Lion Associates only assists in
securing. This interpretation, which the district court
adopted, is a reasonable one.
Lion Associates’ interpretation, however, is also
reasonable. According to Lion Associates, the disputed
provision entitles it to a 3% fee whenever its efforts provide
Swiftships the opportunity to enter into a new contract that it
would have been unable to enter into without Lion Associates’
assistance. In other words, when Lion Associates’ services
obtain the ability for Swiftships to enter into a new contract,
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it is entitled to the 3% fee, regardless of whether it initially
discovered the opportunity. This interpretation coincides with
the thrust of the Purpose Clause, which essentially obligates
Lion Associates to convince companies and the government to
employ Swiftships.
Because the disputed provision is patently ambiguous and
open to more than one reasonable interpretation, parol evidence
is necessary to ascertain the intention of the parties. At the
district court, both parties marshaled evidence in support of
their interpretations, thus creating a genuine issue of material
fact as to their intention. The district court did not consider
such evidence, instead granting summary judgment on the basis
that the provision was unambiguous in requiring Lion Associates
to identify the Iraqi Navy Contract initially and bring it to
Swiftships. We therefore reverse the district court’s grant of
summary judgment on the breach of contract claim and remand for
the trier of fact to determine what the parties intended.
IV.
We next address whether the district court erred in
granting summary judgment as to Lion Associates’ unjust
enrichment claim. Lion Associates insists that genuine issues
of material fact exist as to whether the services that it
rendered in connection with the Iraqi Navy Contract fall within
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the scope of the parties’ agreement. According to Lion
Associates, because such genuine issues of material fact exist,
it was inappropriate for the district court to grant summary
judgment as to its alternative claim for unjust enrichment.
Unjust enrichment is an equitable theory of recovery “based
upon an implied contract to pay the reasonable value of services
rendered.” Mongold v. Woods, 677 S.E.2d 288, 292 (Va. 2009).
To recover under a theory of unjust enrichment, a plaintiff must
prove that (1) “he conferred a benefit on” the defendant,
(2) the defendant “knew of the benefit and should reasonably
have expected to repay” the plaintiff for it, and (3) the
defendant “accepted or retained the benefit without paying for
its value.” Schmidt v. Household Fin. Corp., II, 661 S.E.2d
834, 838 (Va. 2008). If the plaintiff makes such a showing,
“the court will imply a contract between the parties to prevent
inequity.” Mongold, 677 S.E.2d at 292.
A cause of action for unjust enrichment is unavailable,
however, when an express contract exists that governs payment
for the services rendered. See id. As the Supreme Court of
Virginia has explained, “when such an express contract
exists, . . . there is no need to imply one because the parties
have already negotiated an agreement.” Id. “The law will not
impose an implied contractual relationship upon parties in
contravention of an express contract.” Nedrich v. Jones, 429
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S.E.2d 201, 207 (Va. 1993). But this “rule, according to its
terms, applies only when there is an express, enforceable
contract between the parties covering the services for which
quantum meruit recovery is claimed.” Mongold, 677 S.E.2d at
292. If an express contract exists but does not cover the
services rendered, a cause of action for unjust enrichment
remains available. See id.
We agree with the district court that a cause of action for
unjust enrichment is unavailable to Lion Associates because an
express contract exists that covers the services it rendered in
connection with the Iraqi Navy Contract. The Purpose Clause
provides that Lion Associates would, among other things,
“interfac[e] with the U.S. Government and various national and
international companies who are known to have a requirement for
[Swiftships’] product and services,” “explain [Swiftships’]
capabilities,” and “represent that [Swiftships] can achieve the
objectives established by the appropriate enterprise better than
any known competitor.” The services that Lion Associates
rendered with respect to the Iraqi Navy Contract—interfacing
with Navy officers, explaining Swiftships’ capabilities, and
convincing NAVSEA to award the contract to Swiftships over
competitors—fall squarely within the obligations imposed in the
express agreement between Lion Associates and Swiftships.
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The express agreement provided for compensation to Lion
Associates in exchange for these services. As promised in the
agreement, Swiftships paid Lion Associates twelve monthly
installments of $7,500 in return for its performance of these
services. Although a dispute remains about whether the 3% fee
provision also applies, it does not change the fact that an
express agreement exists that covers the services rendered.
Depending on the resolution of the breach of contract dispute,
Lion Associates may be entitled to only the monthly $7,500
payments for those services or it may also be entitled to 3% of
the Iraqi Navy Contract. Either way, the express agreement
governs Lion Associates’ compensation for the services it
rendered with respect to the Iraqi Navy Contract, making a cause
of action for unjust enrichment unavailable.
V.
For these reasons, we affirm the district court’s grant of
summary judgment as to Lion Associates’ unjust enrichment claim
but reverse its grant of summary judgment as to the breach of
contract claim and remand for further proceedings.
AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED
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