Case: 11-31022 Document: 00511898654 Page: 1 Date Filed: 06/25/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 25, 2012
No. 11-31022 Lyle W. Cayce
Clerk
In the Matter of: CAJUN ELECTRIC POWER COOPERATIVE,
INCORPORATED,
Debtor
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SOUTHWESTERN ELECTRIC POWER COMPANY (SWEPCO),
Appellant
v.
COMMITTEE OF CERTAIN MEMBERS OF CAJUN ELECTRIC,
Appellee
Appeal from the United States District Court
for the Middle District of Louisiana
(06-CV-236)
Before JOLLY, DeMOSS, and STEWART, Circuit Judges.
PER CURIAM:*
Southwestern Electric Power Company (“SWEPCO”) and the Committee
of Certain Members (“CCM”) worked together to submit a joint plan of
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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reorganization in the Chapter 11 bankruptcy case of Cajun Electric Power
Cooperative (“Cajun Electric”). SWEPCO appeals the bankruptcy court’s ruling,
affirmed by the district court, that it is liable for legal expenses incurred by the
CCM during the bankruptcy proceedings. For the following reasons, we affirm
in part and reverse in part.
BACKGROUND
In December 1994, Cajun Electric, a Louisiana electrical cooperative
comprised of twelve member cooperatives, filed for bankruptcy protection under
Chapter 11. Shortly thereafter, ten of the twelve member cooperatives formed
an informal committee known as the CCM for purposes of the bankruptcy case.
The CCM worked with SWEPCO to submit a joint plan of reorganization. Under
the proposed plan, SWEPCO would acquire Cajun Electric’s assets and the CCM
members would enter into long-term agreements to purchase electricity from
SWEPCO.
In January 1997, during the plan confirmation process, three of the CCM
members decided to withdraw from the CCM and support another
reorganization plan. The withdrawing members moved the bankruptcy court to
disqualify the CCM’s counsel based on conflicts of interest and the court granted
the members’ motion. Soon after, SWEPCO gave the CCM, then comprising
seven members, $1 million to help with the additional costs necessary to retain
new counsel.
On April 17, 1997, SWEPCO and the CCM signed the Term Sheet of
Members and SWEPCO (the “97 Agreement”) whereby SWEPCO agreed to
reimburse additional expenses incurred by the CCM during the bankruptcy
proceedings. Section V of the 97 Agreement provides as follows:
Cost Reimbursement - SWEPCO and the Members have reached an
agreement on certain transitional cost reimbursement provisions as
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set forth in Mr. Gillian’s letter to Mr. Kleiman dated January 9,
1997; and this agreement is currently being implemented. SWEPCO
will reimburse the Members fifty (50%) of reasonable bankruptcy
counsel litigation expenses (expenses of Altheimer, & Gray and
Dann, Pecar, Newman & Kleiman) and expert expenses incurred in
support of the Joint Plan, on a monthly basis, beginning January 1,
1997. In the event the SWEPCO Plan is confirmed, SWEPCO also
agrees to reimburse the cooperatives for reasonable outstanding
bankruptcy litigation and expert expenses incurred in support of the
Joint Plan up to the total cumulative sum (for all past or future
payments) of $5,000,000, which sum may be increased pursuant to
mutual agreement.
Section VI of the 97 Agreement further provides:
Further, SWEPCO and the Members shall have no obligation or
liability to each other or any other party pursuant to this term sheet
or the Joint Plan in the event that i) prior to confirmation of the
Joint Plan, the Bankruptcy Court enters a favorable contract order;
ii) the Joint Plan is denied confirmation by the Bankruptcy Court;
or iii) the Bankruptcy Court confirms another plan.
By February 1999, two of the four proposed reorganization plans had been
withdrawn, leaving only the SWEPCO/CCM plan and a plan supported by Cajun
Electric’s Chapter 11 trustee still in the running for confirmation. On February
11, 1999, the bankruptcy court denied confirmation of both remaining plans, but
invited the trustee and the SWEPCO/CCM group to submit revised plans, which
they did on April 19, 1999.
On May 14, 1999, SWEPCO and the CCM filed a supplemental disclosure
statement pursuant to 11 U.S.C. § 1125(b) providing information about their
revised plan. The disclosure statement included a section titled “Reimbursement
of Costs and Fees,” which purported to describe the “only agreements as to
reimbursement of fees and expenses” between SWEPCO and the CCM. The
reimbursement agreements in the supplemental disclosure were similar to those
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in the 97 Agreement, but included changes in key language and provisions not
present in the 97 Agreement.
The plan confirmation process continued until August 18, 1999, when the
district court ordered the parties to appear at the federal courthouse in Baton
Rouge, Louisiana, and participate in settlement negotiations. The parties
appeared on August 25, 1999, and reached a settlement that same day. Under
the settlement agreement, SWEPCO and the CCM would withdraw their plan
and the plan supported by Cajun Electric’s Chapter 11 trustee (by then known
as the “Creditors’ Plan”) would be confirmed. The settlement agreement also
provided for partial repayment of the expenses SWEPCO and the CCM incurred
during the bankruptcy proceedings. SWEPCO was to receive a $7.5 million
administrative expense claim to be paid by the bankruptcy estate and the CCM
was to receive $9 million to be paid by proponents of the winning plan. The
settlement agreement made no mention of the reimbursement agreements
described in the 97 Agreement or the supplemental disclosure.
The settlement agreement was approved by the district court and was
incorporated into the winning plan, which was confirmed by the bankruptcy
court on October 14, 1999. On February 20, 2000, the CCM filed an application
for $9 million in expense reimbursement. The application was approved and the
CCM eventually received the $9 million.1
On June 19, 2001, roughly twenty months after the winning plan was
confirmed, the CCM filed suit against SWEPCO in Louisiana state court
asserting a breach of contract claim (the “fee suit”). The CCM alleged that the
97 Agreement required SWEPCO to repay the CCM for legal expenses incurred
during the Cajun Electric bankruptcy case and that SWEPCO had failed to do
so. SWEPCO removed the case to the bankruptcy court pursuant to 28 U.S.C.
1
The CCM asserts that it incurred a total of $12.9 million in expenses during the Cajun
Electric bankruptcy case.
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§ 1452 and filed an answer and counterclaim. In its counterclaim, SWEPCO
alleged that it was entitled to repayment of the $1 million it gave the CCM
under a refund provision set forth in the supplemental disclosure. The parties
filed cross motions for summary judgment.
The bankruptcy court granted the CCM’s motion for summary judgment,
denied SWEPCO’s motion for summary judgment, and dismissed SWEPCO’s
counterclaim. The court ruled that SWEPCO owed the CCM $2,610,778.63
pursuant to the 97 Agreement and entered a judgment for that amount, plus
interest, on February 2, 2006.2 SWEPCO filed a notice of appeal in the district
court on February 10, 2006. On September 26, 2011, the district court entered
an order affirming the bankruptcy court’s judgment for the reasons provided by
the bankruptcy court. SWEPCO timely appealed to this court.
STANDARD OF REVIEW
“This court reviews the bankruptcy court’s grant of summary judgment de
novo, using the same standard employed by the district court.” Shcolnik v. Rapid
Settlements Ltd. (In re Shcolnik), 670 F.3d 624, 627 (5th Cir. 2012). Summary
judgment should be granted when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED.
R. CIV. P. 56(a). “A fact is ‘material’ if its resolution in favor of one party might
affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star
State of Tex., 560 F.3d 316, 326 (5th Cir. 2009) (quoting Hamilton v. Segue
Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000)). “An issue is ‘genuine’ if the
evidence is sufficient for a reasonable jury to return a verdict for the nonmoving
party.” Id. (quoting Hamilton, 232 F.3d at 477). When determining whether a
fact issue exists, the court views “the facts and the inferences to be drawn
2
The bankruptcy court found that $2,610,778.63 represented 50% of the expenses the
CCM incurred while the 97 Agreement was in effect.
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therefrom in the light most favorable to the nonmoving party.” Reaves Brokerage
Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003).
DISCUSSION
SWEPCO argues that the CCM’s fee suit is barred by res judicata, judicial
estoppel, and the limitations period for filing reimbursement claims provided in
the bankruptcy court’s confirmation order. SWEPCO also argues that the 97
Agreement was superseded by the agreements set forth in the supplemental
disclosure, and that those agreements provide no basis for recovery by the CCM.
SWEPCO further argues that even if the 97 Agreement is an enforceable
contract between the parties, as the CCM contends, the plain language of that
agreement makes clear that SWEPCO has no obligation to the CCM.
We agree with the last of SWEPCO’s arguments and therefore need not
address the others. The CCM’s fee suit is premised entirely on the 97
Agreement. Its original state court petition seeks to recover exclusively under
the 97 Agreement and its position on appeal is that the 97 Agreement is the
controlling agreement between the parties. As SWEPCO points out, Section VI
of the 97 Agreement provides as follows:
Further, SWEPCO and the Members shall have no obligation or
liability to each other or any other party pursuant to this term sheet
or the Joint Plan in the event that i) prior to confirmation of the
Joint Plan, the Bankruptcy Court enters a favorable contract order;
ii) the Joint Plan is denied confirmation by the Bankruptcy Court;
or iii) the Bankruptcy Court confirms another plan.
SWEPCO contends that under this termination provision, any obligation by
SWEPCO to reimburse the CCM expired on February 11, 1999, when the
SWEPCO/CCM plan was denied, or October 14, 1999, when the winning plan
was confirmed. The CCM concedes that it did not seek any payment under the
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97 Agreement until after those two occurrences (and it did not file the fee suit
until June 2001).
The CCM’s only argument in response is that the 97 Agreement’s
termination provision and its requirement that SWEPCO repay the CCM on a
monthly basis, taken together, create an obligation to reimburse the CCM based
on a resolutory condition. As defined under Louisiana law, an obligation subject
to a resolutory condition is one that “may be immediately enforced but will come
to an end when [an] uncertain event occurs.” LA. CIV. CODE. ANN. art. 1767
(2012). The CCM argues that while SWEPCO is not required to reimburse the
CCM for fees incurred after the bankruptcy court denied the SWEPCO/CCM
plan, the denial of the plan “did not relieve SWEPCO of the obligation to
reimburse the CCM’s expenses incurred before that date.”
Under Louisiana law, contracts are interpreted based on “the common
intent of the parties with courts giving the contractual words their generally
prevailing meaning unless the words have acquired a technical meaning.”
Campbell v. Melton, 2001-C-2578, (La. 5/14/02); 817 So. 2d 69, 74. “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 intent of the parties.” Id. at
75; see also LA. CIV. CODE. ANN. art. 2046 (2012).
The plain language of the 97 Agreement provides that SWEPCO and the
CCM “shall have no obligation or liability to each other” pursuant to the
agreement if the joint plan is denied or another plan is confirmed. While the
CCM asserts that SWEPCO’s reimbursement obligation was one subject to a
resolutory condition, and therefore immediately enforceable, it fails to explain,
or provide any supporting authority, why that fact would overcome the plain
language extinguishing the parties’ obligations under the agreement when the
joint plan was denied or another plan confirmed. While we agree that SWEPCO’s
reimbursement obligation was immediately enforceable beginning January 1,
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1997, the CCM, for whatever reason, chose not to seek payment until after the
SWEPCO/CCM plan was denied on February 11, 1999, and another plan was
confirmed on October 14, 1999. Both of these events were sufficient to extinguish
SWEPCO’s liability under the plain language of Section VI of the 97 Agreement.
It was the CCM’s own failure to assert its right to reimbursement which
permitted SWEPCO to avoid liability.
SWEPCO also argues that the bankruptcy court erred in dismissing its
counterclaim based on the refund provision in the supplemental disclosure. The
refund provision, which is not present in the 97 Agreement, provides as follows:
(viii) To the extent that the CCM, WST or Claiborne receive legal or
expert expense reimbursement under another confirmed plan, the
CCM, WST and Claiborne agree to refund to SWEPCO any such
reimbursement up to the total of any sums received from SWEPCO.
In the event another plan is confirmed, the CCM, WST and
Claiborne agree to use their best efforts to obtain such legal and
expert reimbursement under such other plan.
According to SWEPCO, this refund obligation was triggered when the CCM
received $9 million pursuant the 1999 settlement agreement and the CCM must
now refund the $1 million payment SWEPCO made to the CCM in 1997. The
CCM argues that it has no obligation to refund the $1 million because it never
received full repayment of the expenses it incurred during the bankruptcy
proceedings. It argues that the term “reimbursement,” as used in the refund
provision, contemplates having received “a sum of money equal to that
expended.” The CCM maintains that because it expended $12.9 million during
the bankruptcy proceedings and only received $9 million pursuant to the
settlement agreement, facts not disputed by SWEPCO, the refund provision was
never triggered. The bankruptcy court agreed with the CCM, interpreting the
plain language of the refund provision to require repayment to SWEPCO only
“in the event the [CCM was] able to obtain full reimbursement elsewhere.”
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We agree with the bankruptcy court. The parties’ arguments turn on the
meaning of the term “reimbursement” as used in the refund provision. As noted
above, Louisiana law requires that words in a contract “be given their generally
prevailing meaning.” LA. CIV. CODE. ANN. art. 2047 (2012). “Reimbursement” is
the noun form of “reimburse,” which is defined as “to pay back (an equivalent for
something taken, lost, or expended)” and “to make restoration or payment of an
equivalent to.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1914 (2002)
(emphasis added). According to these definitions, one has not received a
reimbursement unless he has received repayment in an amount equal to that
expended. SWEPCO’s interpretation essentially rewrites the provision to include
the word “partial” before “legal or expense reimbursement.” The bankruptcy
court correctly dismissed SWEPCO’s counterclaim.
CONCLUSION
For the foregoing reasons, we AFFIRM the bankruptcy court’s dismissal
of SWEPCO’s counterclaim and REVERSE its judgment that the CCM is
entitled to recover under the 97 Agreement.
9