United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 10, 2006 Decided August 18, 2006
No. 04-7167
CONSEIL ALAIN ABOUDARAM, S.A.,
APPELLANT/CROSS-APPELLEE
v.
JACQUES DE GROOTE,
APPELLEE/CROSS-APPELLANT
Consolidated with
04-7168
Appeals from the United States District Court
for the District of Columbia
(No. 01cv00006)
James L. Marketos argued the cause for appellant/cross-
appellee. With him on the briefs was Alexander C. Vincent.
Stephen Sale argued the cause for appellee/cross-appellant.
With him on the briefs was John D. Quinn.
Before: TATEL and GARLAND, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GARLAND.
2
GARLAND, Circuit Judge: Plaintiff Conseil Alain
Aboudaram, S.A. (“CAASA”), a Swiss corporation, sued
Jacques de Groote, a Belgian national, claiming that de Groote
failed to repay CAASA for loans the corporation made to him
under a pair of promissory notes. De Groote asserted that it was
he and not CAASA who was owed money. He filed
counterclaims alleging that CAASA failed to pay him for
consulting work he performed for the corporation. Although a
jury sided with CAASA on both its claim and de Groote’s
counterclaims, the district court overturned the verdict as to the
former. We affirm the district court’s decision in all respects.
I
CAASA is a Swiss corporation owned principally by Alain
Aboudaram and his family. It offers financial advisory services
to a range of commercial and governmental clients. De Groote
is a Belgian national and resident of the District of Columbia,
who once served as an Executive Director at the World Bank.
Aboudaram and de Groote met in 1990 and for several years had
a mutually profitable relationship. De Groote parlayed his
extensive contacts in government and international finance into
business opportunities for Aboudaram, who in return aided de
Groote by helping him meet his personal financial obligations.
Aboudaram’s most important assistance to de Groote was to
loan him money so that he could avoid defaulting on the
mortgage on his Georgetown townhouse. Both parties agree that
Aboudaram extended those loans in his personal capacity, and
that de Groote continues to owe Aboudaram for them.
During the 1990s, De Groote also forged a relationship with
Aboudaram’s corporation, CAASA. Through it, de Groote
gained more than $1 million -- and this lawsuit. Two aspects of
that relationship form the basis of the present dispute.
3
The first, which underlies CAASA’s breach of contract
claim, involves two promissory notes pursuant to which CAASA
loaned money to de Groote. Each note was identical to the other
in all relevant respects, except for its date and “principal sum.”
The first note was dated December 19, 1995, and stated a
principal sum of $400,000; the second was dated October 13,
1998, and stated a principal sum of $100,000. See J.A. 108-09,
111-12. In both, de Groote agreed to pay on demand “to the
order of Conseil Alain Aboudaram S.A. [CAASA] . . . the
principal sum . . . or, if less, the aggregate principal amount of
all advances made hereunder by the Lender to the Borrower
(including advances made prior to the date hereof), outstanding
at the time of such demand, together with interest” at a set rate.
J.A. 108, 111. Both notes defined CAASA as the “Lender,” and
de Groote and his wife, collectively, as the “Borrower.” Id. The
notes were to be “governed by and construed in accordance with
the laws of the State of New York.” Id. at 109, 112. Each note
was secured by a deed of trust on de Groote’s Georgetown
townhouse.
CAASA alleges that de Groote borrowed extensively under
the two notes and that he failed to repay those borrowings.
CAASA -- but not Aboudaram personally -- sued de Groote for
breach of contract on January 3, 2001. When the case went to
trial in early 2004, the two sides offered the jury fundamentally
different views of their dealings under the notes. Aboudaram
testified that he and de Groote understood the promissory notes
to cover not only CAASA’s corporate loans to de Groote, but
Aboudaram’s personal loans as well. For his part, de Groote
testified that the promissory notes covered only loans that
CAASA made to him, and did not include Aboudaram’s
personal advances. If Aboudaram was correct that the
promissory notes held by CAASA applied to Aboudaram’s
personal loans, then CAASA stood to recover more than
$500,000 in unpaid principal and interest. See CAASA v. de
4
Groote, No. 01-0006, Mem. Op. at 7 (D.D.C. June 7, 2004). By
contrast, if de Groote was correct, then CAASA stood to recover
nothing, as CAASA had loaned de Groote only about $25,000
under its own name and de Groote had repaid it all. See id. at 5
n.6.
The other relevant aspect of the parties’ relationship, which
underlies de Groote’s counterclaims, involves consulting work
that de Groote performed for CAASA. Among the transactions
that de Groote alleges he worked on was CAASA’s
representation of SkodaExport, a Czech company that sought
advice on obtaining a contract from the World Bank to construct
an oil pipeline in India. De Groote claims to have completed
several tasks for CAASA on behalf of SkodaExport, among
them exploring the status of the project within the World Bank,
determining how much money the Bank had earmarked for it,
identifying SkodaExport’s potential competitors, and
introducing Aboudaram to the Bank official in charge of the
project.
The parties stipulated that CAASA received nearly $8.9
million for its work on behalf of SkodaExport. See Mem. Op.
at 4 n.3 (June 7, 2004). They disputed, however, the amount of
compensation owed to de Groote. According to de Groote, he
and Aboudaram orally agreed that CAASA would pay de Groote
one-third of the fees CAASA earned from SkodaExport, which
would amount to almost $3 million. CAASA denied that it had
agreed to pay de Groote for his SkodaExport work on a
percentage basis and instead insisted that it had already
compensated him on flat-rate terms for individual services
rendered. The parties agree that CAASA did pay de Groote at
least $1 million. See Appellant’s Br. 12 n.24; Appellee’s Br. 3.
Before the case was submitted to the jury, de Groote moved
for judgment as a matter of law under Federal Rule of Civil
5
Procedure 50(a) against CAASA’s breach of contract claim,
contending that the plain language of the promissory notes did
not encompass loans made by Aboudaram in his personal
capacity. The court reserved judgment on the motion in order
to permit thorough briefing of the issue. The jury then returned
verdicts in favor of CAASA on both its claim and de Groote’s
counterclaims. Thereafter, pursuant to Rule 50(b), de Groote
renewed his motion for judgment as a matter of law against
CAASA’s claim. This time, the district court granted de
Groote’s motion, holding that “the unambiguous language of the
promissory notes between CAASA and de Groote causes them
to extend only to debts” between those two parties, debts “that
have already been repaid.” Mem. Op. at 19 (June 7, 2004).1
CAASA filed a motion for reconsideration, which the
district court denied. See CAASA v. de Groote, No. 01-0006,
Mem. Op. at 6 (D.D.C. Aug. 31, 2004). At the same time, de
Groote filed a motion to sanction CAASA for discovery abuses
under Federal Rule of Civil Procedure 37, which the district
court also denied. See id. The court then entered judgment “for
CAASA as to de Groote’s counterclaims and for de Groote on
CAASA’s claim[] on the promissory notes.” Id. Both parties
filed timely notices of appeal. We consider CAASA’s challenge
in Part II and de Groote’s in Part III.
1
The district court also denied a motion by CAASA to reform the
promissory notes to reflect its assertion that de Groote’s promise was
to pay both CAASA’s and Aboudaram’s advances, and to amend its
complaint to state an additional claim for reformation of the notes.
See Mem. Op. at 9-12 (June 7, 2004). CAASA has made no argument
regarding that motion on appeal.
6
II
CAASA maintains that the district court erred in granting
de Groote judgment as a matter of law against CAASA’s claim
for breach of the promissory notes. We review that ruling de
novo and may affirm “only if we find . . . that no reasonable jury
could [have reached] a verdict in the plaintiff’s favor.”
Holbrook v. Reno, 196 F.3d 255, 259 (D.C. Cir. 1999).
As the district court noted, “[u]nder New York law, the
initial interpretation of a contract is a matter of law for the court
to decide.” Mem. Op. at 9 (June 7, 2004) (quoting Alexander &
Alexander Servs., Inc. v. These Certain Underwriters at Lloyd’s,
136 F.3d 82, 86 (2d Cir. 1998)). “Included in this initial
interpretation is the threshold question of whether the terms of
the contract are ambiguous.” Alexander, 136 F.3d at 86; see
Omni Quartz, Ltd. v. CVS Corp., 287 F.3d 61, 64 (2d Cir. 2002);
Curry Road Ltd. v. K Mart Corp., 893 F.2d 509, 511 (2d Cir.
1990). And “‘where the language and the inferences to be
drawn from it are unambiguous,’” a district court may
“‘construe a contract as a matter of law and grant . . . judgment
accordingly.’” Alexander, 136 F.3d at 86 (emphasis omitted)
(quoting Cable Science Corp. v. Rochdale Vill., Inc., 920 F.2d
147, 151 (2d Cir. 1990)).
We agree with the district court that “[t]he stubborn,
unavoidable fact at the root [of this dispute] is that the
promissory notes, on their faces, cover only ‘advances [made]
hereunder by the Lender to the Borrower,’ and unequivocally
define CAASA as the Lender.” Mem. Op. at 12 (June 7, 2004)
(quoting First. Am. Compl. Exs. A, B (J.A. 108, 111)). The
wording of the promissory notes -- drafted by CAASA’s own
corporate counsel -- leaves no room for anything but a single
interpretation: that CAASA alone is the lender under the notes.
Indeed, even CAASA’s litigation counsel conceded that the
7
phrase “advances made hereunder by the Lender” is not
ambiguous, and can only be read as covering advances made by
the corporation. See Oral Arg. Tr. at 10; see also Trial Tr. at 88-
89 (Feb. 24, 2004).
To circumvent the acknowledged clarity of the contractual
language, CAASA maintains that the district court should have
considered extrinsic evidence, including the parties’ behavior
before and after executing the promissory notes. Such evidence,
the corporation asserts, would have demonstrated the parties’
intent to incorporate Aboudaram’s personal advances within the
ambit of the notes. In New York, however, the well-established
rule is that “[o]nly when the language of the contract is
ambiguous may a court turn to extrinsic evidence of the
contracting parties’ intent.” Curry Road, 893 F.2d at 511; see
In re Silberman’s Will, 242 N.E.2d 736, 740-41 (N.Y. 1968).
Conversely, “a court may not admit extrinsic evidence in order
to determine the meaning of an unambiguous contract.” Omni
Quartz, 287 F.3d at 64; see Namad v. Salomon Inc., 543 N.E.2d
722, 723 (N.Y. 1989). Because the language of the promissory
notes is unambiguous, the district court properly barred
reference to extrinsic evidence.
CAASA nonetheless insists that, if we would just look at
the extrinsic evidence, we would see that the notes are in fact
ambiguous; moreover, once this realization dawned on us,
examination of additional extrinsic evidence would lead
inexorably to the conclusion that the notes are broad enough to
cover Aboudaram’s personal advances. The circularity of this
argument requires little discussion. Under New York law, “the
question of ambiguity . . . must be determined from the face of
the agreement, without reference to extrinsic evidence. Mem.
Op. at 15 (June 7, 2004) (citing Kass v. Kass, 696 N.E.2d 174,
180 (N.Y. 1998)). “[E]xtrinsic or parol evidence is not
admissible to create an ambiguity in a written agreement that is
8
otherwise clear and unambiguous.” Petracca v. Petracca, 756
N.Y.S.2d 587, 587 (N.Y. App. Div. 2003).
CAASA further argues that the district court mistakenly
failed to consider a ledger sheet or “grid” that was attached to a
copy of the December 19, 1995 promissory note that was in turn
appended to the Complaint. The grid is titled “Advances and
Payments of Principal,” and it contains eight dollar figures under
the heading “Amount of Advance.” J.A. 110. CAASA contends
that the grid provides intrinsic evidence of the note’s ambiguity,
which thus warrants resort to extrinsic evidence to divine the
note’s true meaning.
There are two problems with this argument. First, it is not
clear whether the grid was entered into evidence. At trial, de
Groote objected to its admission on the ground that the numbers
on the grid were not on the document he signed. CAASA then
consented to detaching the grid from the promissory note and
excluding it from the record. See Mem. Op. at 10 (June 7,
2004). In any event, the grid -- which contains neither
signatures nor initials -- does not “identify Aboudaram as the
source of the recorded advances or otherwise facially contradict
the language of the note.” Mem. Op. at 4 (Aug. 31, 2004). We
therefore agree with the district court that Aboudaram “cannot
now insist upon confounding what is, on its face, a
straightforward document drafted to CAASA’s specifications.”
Id. at 5.
Finally, CAASA contends that de Groote should have been
estopped from denying his liability to CAASA, principally
because his pretrial pleadings admitted that CAASA made
advances to him under the promissory notes. Indeed, there was
a “stipulated agreement of the parties that CAASA made some
payments [under the notes] to de Groote -- totaling . . .
approximately $25,000.” Mem. Op. at 5 n.6 (June 7, 2004).
9
The issue at trial, however, was not the money that CAASA
advanced to de Groote, but the money that Aboudaram
personally loaned him. CAASA bore the burden of proving that
the promissory notes covered those loans, see Paz v. Singer Co.,
542 N.Y.S.2d 10, 11 (N.Y. App. Div. 1989), and de Groote’s
concession regarding other unspecified advances did not relieve
the corporation of that burden.
In sum, we find no error in the district court’s grant of
judgment as a matter of law in favor of de Groote and against
CAASA on the latter’s claim for breach of contract.2
III
De Groote asserts that the district court erred both in
instructing the jury regarding his counterclaims, and in denying
his motion for discovery sanctions under Federal Rule of Civil
Procedure 37. We review the lawfulness of the district court’s
jury instructions de novo, see Joy v. Bell Helicopter Textron,
Inc., 999 F.2d 549, 556 (D.C. Cir. 1993), and its denial of Rule
37 sanctions for abuse of discretion, see Hull v. Eaton Corp.,
825 F.2d 448, 452 (D.C. Cir. 1987).
2
The district court also rejected CAASA’s motion for
reconsideration. That motion focused primarily on the grid
purportedly attached to the December 19, 1995 promissory note, and
the district court rejected it for the reasons affirmed in the text above.
The court also concluded that “[n]one of the other issues mentioned
by CAASA in its motion for reconsideration approach the ‘clear error
or manifest injustice’ standard” required to grant relief. Mem. Op. at
5 n.5 (Aug. 31, 2004) (referencing the standard discussed in Firestone
v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)). We review the
denial of such a motion for abuse of discretion, see Firestone, 76 F.3d
at 1208, and find no such abuse here.
10
A
The verdict form posed the following question to the jury
regarding de Groote’s counterclaims: “Did CAASA and de
Groote reach an agreement (i.e., a contract) requiring CAASA
to pay de Groote one-third of the fees Skoda[E]xport paid
CAASA in exchange for de Groote’s consulting services to
CAASA?” J.A. 718. De Groote insists that this verdict form
and its associated jury instructions constitute reversible error
and necessitate a new trial, because from them the jury “could
conclude that CAASA and de Groote had no agreement for [de
Groote’s] services” when, in fact, the parties had “always
stipulated an agreement for services between de Groote and
CAASA.” Cross-Appellant’s Reply Br. 20-21. In de Groote’s
view, the court should have instructed the jury that there was a
contract, and then freed the jury to choose any figure it believed
to be the contract’s compensation term.
Under New York law, a binding contract requires
“agreement with respect to all material terms,” Express Indus.
& Terminal Corp. v. N.Y. State Dep’t of Transp., 715 N.E.2d
1050, 1053 (N.Y. 1999), and a price term is certainly material,
see Tufano v. Morris, 728 N.Y.S.2d 835, 837 (N.Y. App. Div.
2001). It is a nice law school exam question whether a contract
is binding when the parties stipulate to its existence but disagree
about a material term. In context, however, it is highly doubtful
that the jury thought it was sitting for such an exam. As de
Groote notes, the witnesses did not dispute that CAASA agreed
to pay him for his work on the SkodaExport project. Indeed,
there was no dispute that CAASA did pay him at least $1
million. See Appellant’s Br. 12 n.24; Appellee’s Br. 3. This left
only one question for the jury: whether the parties had reached
an agreement “requiring CAASA to pay de Groote one-third of
the fees SkodaExport paid CAASA,” exactly the question the
verdict form asked. J.A. 718. The possibility that the jury might
11
have “conclude[d] that CAASA and de Groote had no agreement
for [de Groote’s] services” at all, Cross-Appellant’s Reply Br.
21, is simply too speculative to be of concern. Even if the form
of the question left that possibility open, it was at best a
harmless error. See FED R. CIV. P. 61; Material Supply Int’l,
Inc. v. Sunmatch Indus. Co., Ltd., 146 F.3d 983, 992 (D.C. Cir.
1998).
B
Rule 37 authorizes a district court to sanction a party that
“fails to obey an order to provide or permit discovery.” FED. R.
CIV. P. 37(b)(2). De Groote alleges that he was “repeatedly
ambushed at trial by CAASA’s reliance on evidence it
concealed, [which] in many cases directly contradicted evidence
[it] produced in discovery.” Appellee’s Br. 34. According to de
Groote, these “ambush[es]” had the effect of forcing him “to
spend much of the trial responding to CAASA’s concealed
evidence, tainting [his] case and eliminating his ability to defend
and to prosecute the case coherently.” Id. He therefore sought
“severe sanctions” under Rule 37 in order to ensure that
“CAASA’s pervasive discovery abuses [were] deterred and
punished.” Id. at 35-36.
In denying de Groote’s Rule 37 motion, the district court
observed that “‘[t]he central requirement of Rule 37 is that any
sanction must be just.’” Mem. Op. at 5 (Aug. 31, 2004)
(quoting Bonds v. District of Columbia, 93 F.3d 801, 808 (D.C.
Cir. 1996)). The court concluded that granting the sanctions
requested by de Groote “would not be just” in light of “the
frequent, untimely, and inefficient filings by both sides.” Id. at
6. As the court explained, “CAASA could almost certainly
match the litany of discovery abuses recited by de Groote if it
chose to consume yet more ink and paper than it already has.”
Id. Our review of the record discloses that the district court
12
displayed admirable patience in adjudicating what was
obviously a bitter personal dispute, and we perceive no ground
for second-guessing its decision to deny the motion for
sanctions.
IV
There is, of course, one unexplained mystery in this case.
As the district court noted, “Aboudaram may well have an
action against de Groote for unpaid personal debts, but he is a
stranger both to this case and to the plain language of the
promissory notes.” Mem. Op. at 4 (Aug. 31, 2004). Once the
parties’ relationship broke down, there was nothing Aboudaram
could have done to fix the latter problem. Yet, while he could
have readily cured the former simply by becoming a plaintiff,
Aboudaram never sought to make himself one. See id.
Although this mystery remains unresolved, the district court’s
reasoning and rulings are unimpeachable, and we therefore
affirm the judgment in all respects.
Affirmed.