IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-60753
_____________________
HAM MARINE, INC.,
Plaintiff-Appellee,
v.
DRESSER INDUSTRIES, INC. and
INGERSOLL-RAND COMPANY, d/b/a
Dresser-Rand Company,
Defendants-Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
_________________________________________________________________
Before KING, HIGGINBOTHAM, and PARKER, Circuit Judges.
PER CURIAM:
Dresser-Rand Company ("Dresser") appeals from a jury
verdict awarding Ham Marine, Inc. ("Ham") in excess of $3.7
million for breach of contract and tortious interference with
existing or anticipated contracts between Ham and Cliffs Drilling
Company ("Cliffs"). We affirm in part, reverse in part, and
remand.
I. BACKGROUND
A. Facts
Dresser, a New York partnership, entered into a contract
with Maraven S.A. to compress and reinject natural gas into
Maraven's oil wells at Lake Maricaibo, Venezuela in order to
increase oil production. In April 1991, Cliffs signed on to the
project as a subcontractor of Dresser. Cliffs entered into a
series of agreements to charter to Dresser three jackup rigs--Rig
53, Rig 60, and Rig 59--and to initiate the work necessary to
convert the rigs to mobile gas pumping units. Each rig needed to
be stripped of drilling equipment, refurbished, and fitted with
compressor machinery. Rig 53 was to be fitted with ten
reciprocating compressors; it had to be on-site in Venezuela and
pumping by May 8, 1992. Rigs 60 and 59 were to be fitted with
turbine compressors--a new and complex undertaking; they were to
be complete and operating by September 26, 1992--six to eight
months sooner than usual for a job of this magnitude. Cliffs was
responsible for removal of the drilling equipment, refurbishment
of the rigs, and installation of the ten reciprocating
compressors. Dresser was responsible for the manufacture,
installation, and hookup of the turbine compressors, and the
testing of all three units.
To expedite delivery, Dresser was contemplating dry towing
the two turbine rigs together to Lake Maricaibo because it faced
substantial monetary penalties if the project was not delivered
on time. Ham's shipyard, located in Pascagoula, Mississippi, is
near the only sheltered deep hole in the Gulf of Mexico that can
accommodate a ship capable of loading two rigs at one time.
Consequently, in August 1991, Cliffs began negotiations with Ham
for partial modification of Rigs 53 and 60. On September 5,
2
1991, Dresser's Project Director, David Palfreyman, visited Ham's
facilities. Ham submitted to Cliffs written lump sum proposals
for specific refurbishment work on all three rigs. In a series
of phone conversations over the course of the next two months,
Palfreyman discussed the work to be performed on all three rigs
with various representatives of Ham. On November 11, 1991,
Cliffs and Ham executed a contract covering work on Rig 53, and
on December 20, 1991, they executed a contract covering Rig 60.
Both contracts included clauses allowing for termination by
either party at their convenience and specific limitations on
consequential damages and prospective profits.1 Ham submitted
contracts containing these terms to Dresser as well, but Dresser
never responded. On December 13, 1991, Dresser and Cliffs
1
Ham's standard terms included the following provisions:
Indemnification.
. . . .
(f) In no event, except as otherwise provided herein,
shall Owner and Contractor, their affiliates or the rig be
liable to each other . . . or to any third parties, for any
incidental, punitive, consequential, or special damages
(including, without limitation, loss of profits and loss of
business opportunities), arising out of, resulting from or
relating in any way to this Agreement or activities or
omissions or delays in connection therewith.
Termination by Owner.
. . . .
(b) If at any time Owner should consider it necessary
or desirable for its convenience to terminate the Work to be
performed hereunder, Owner may terminate this Agreement by
giving Contractor five day's written notice. . . . It is
specifically understood that Owner shall have such rights
even though Contractor shall not in any way have failed to
comply with the provisions of this Agreement. . . .
Contractor shall not be entitled to any prospective profits
or reimbursement of prospective overhead expenses in the
event of such termination.
3
executed formal bareboat charter agreements in which Ham was
named as Cliffs's designated shipyard for all three rigs. No
written contract was executed by Ham and Dresser.
Palfreyman visited the Ham marine yard again on November 25,
1991. Shortly thereafter, by letter, Palfreyman directed Ham to
lease warehouse space for storage of materials for all three rigs
and he confirmed that Dresser would reimburse Ham for putting in
a gas line to test the compressor equipment on all of the rigs.
Additionally, Dresser notified Ham that Dresser's suppliers had
been directed to ship materials and equipment for all three rigs
directly to Ham.
For reasons unrelated to Ham's work on the project, Dresser
decided in December 1991, that towing the two turbine rigs
together to Lake Maricaibo would no longer be advantageous. Once
it was no longer important to work with a shipyard close to the
deep hole, Dresser informed Ham that it was seeking competitive
bids for the remaining work on Rigs 60 and 59. Ham submitted
bids. Dresser paid Ham for the work Ham had done on Rig 53 and
Rig 60, and, in January 1992, Dresser awarded the remaining work
to Aker-Gulf Marine ("Aker").
B. Procedural History
On August 5, 1992, contending that Dresser had contracted
with Ham for all of the shipyard work on all three rigs, Ham
filed suit against Dresser for breach of contract in state court
4
in Jackson County, Mississippi.2 Additionally, in case it was
determined that no legally enforceable contract existed, Ham
alternatively claimed tortious interference with existing and
prospective contractual relations between Ham and Cliffs.
Dresser counterclaimed for allegedly defective work on Rig 53.
The action was removed to the United States District Court for
the Southern District of Mississippi based on diversity of
citizenship. During the eight-day jury trial, numerous writings
were introduced that established a nexus between Ham and Dresser
and all three rigs. Representatives of Ham testified that
Dresser led them to believe that Ham and Dresser had entered into
a contract for all the shipyard work needed on all three rigs.
At the close of Ham's case in chief, Dresser moved for judgment
as a matter of law. With the caveat that it had reservations
concerning the tortious interference allegation, the district
court denied the motion as to all claims. During the
presentation of Dresser's evidence, representatives of Dresser
testified that no such agreement was ever made.
The jury found that Dresser had formed a contract with Ham
to perform all the repairs to the main decks of Rig 60 and Rig
59, that Dresser breached this contract, and that this breach was
the proximate cause of Ham's monetary damages. The jury awarded
Ham $3,517,283.94 in damages, based on the net profit that Aker
realized for the work that Ham had been authorized to perform
2
Ham characterized the contract as an oral agreement or,
alternatively, as an implied-in-fact contract.
5
under the contract. In addition, the jury found Dresser liable
for tortious interference with Ham's existing or reasonably
anticipated contracts with Cliffs, for which Ham was awarded
$200,400.45. The jury denied Dresser's counterclaim for
unsatisfactory work.
Dresser filed posttrial motions, seeking judgment as a
matter of law, a new trial, and/or remittitur. The district
court denied the motions, concluding that the jury finding of a
contract between Dresser and Ham was not against the great weight
of the evidence, that there was sufficient evidence to support a
finding of tortious interference, and that the jury award of
compensatory damages was not arbitrary.
II. ANALYSIS
A. The Contract
The first issue Dresser raises on appeal is whether the
evidence adduced at trial was sufficient to support a finding
that Dresser had contracted with Ham to perform all the shipyard
work on all three rigs. Dresser contends that there was no
contract between Dresser and Ham dealing with Rigs 60 and 59, and
that even if such a contract had existed it was too indefinite to
be enforceable.
Whether a contract exists involves both questions of fact
and questions of law. The district court's interpretation of a
contract is a conclusion of law reviewable de novo on appeal.
American Totalisator Co., Inc. v. Fair Grounds Corp., 3 F.3d 810,
6
813 (5th Cir. 1993). The initial determination of whether the
contract is ambiguous is also reviewed de novo. Thrift v.
Hubbard, 44 F.3d 348, 357 (5th Cir. 1995). However, "once the
contract is found to be ambiguous, the determination of the
parties' intent through the extrinsic evidence is a question of
fact." Watkins v. Petro-Search, Inc., 689 F.2d 537, 538 (5th
Cir. 1982). A jury's findings of fact are examined on appeal for
sufficiency of the evidence. Granberry v. O'Barr, 866 F.2d 112,
113 (5th Cir. 1988).3 The standard of review for a challenge to
the sufficiency of the evidence is well-settled. Unless the
evidence is of such quality and weight that reasonable and
impartial jurors could not arrive at such a verdict, the findings
of the jury must be upheld. Chemical Distribs., Inc. v. Exxon
Corp., 1 F.3d 1478, 1483 (5th Cir. 1993).
3
Findings of fact that are required to resolve contract
ambiguities at a bench trial are reviewed for clear error. FED.
R. CIV. P. 52(a); Chapman & Cole v. ITEL Container Int'l B.V.,
865 F.2d 676, 680 n.5 (5th Cir.), cert. denied, 493 U.S. 872
(1989); Carpenters Amended & Restated Health Ben. Fund v.
Holleman Constr. Co., Inc., 751 F.2d 763, 766-67 (5th Cir. 1985).
Where a jury verdict is involved, however, the common law
standard of review applies because of the requirements of the
Seventh Amendment to the United States Constitution. Granberry
v. O'Barr, 866 F.2d 112, 113 (5th Cir. 1988).
"The common law standard of review is not the 'clearly
erroneous' standard in a trial before the court as provided
in FED. R. CIV. P. 52(a). Instead it is the same common law
standard which is applied in awarding a directed verdict or
a judgment notwithstanding the verdict. The standard of
review is usually referred to as a 'sufficiency of the
evidence' standard."
Id.
7
We conduct our review of the jury findings according to
Mississippi contract law. Concededly, admiralty principles
govern contracts for vessel repair and conversion. Todd
Shipyards Corp. v. Turbine Serv. Inc., 674 F.2d 401, 412 (5th
Cir.), cert denied, 459 U.S. 1036 (1982). To the extent that it
is not inconsistent with admiralty principles, however, state
contract law may be applicable to maritime contracts. Koninklyke
Nederlandsche Stoomboot Maalschappy, N.V. v. Strachan Shipping
Co., 301 F.2d 741, 743 (5th Cir.), cert. denied, 371 U.S. 921
(1962).4
In order to find that a contract existed between Ham and
Dresser, the jury must determine that both parties agreed to all
of the essential terms. See, Knight v. Sharif, 875 F.2d 516, 525
(5th Cir. 1989) (noting that, under Mississippi law, agreement to
contract "must be expressed on all essential terms"); Andrew
Jackson Life Ins. Co. v. Williams, 566 So. 2d 1172, 1178 (Miss.
1990) (finding that mutual assent on essential terms was
manifested by insured's payment of premiums and completion of
insurance application); 1 FARNSWORTH ON CONTRACTS § 3.1 (1990); 1
WILLISTON ON CONTRACTS § 1.3 (1990). The essential terms on which
agreement was required in this case were (1) the scope of the
service to be performed, (2) the price, and (3) the date by which
the work was to be completed. See, Leach v. Tingle, 586 So. 2d
4
Both parties concede that the entire dispute is
governed by maritime law and that, with regard to every issue
raised on appeal, applicable Mississippi law does not conflict
with maritime contractual law.
8
799, 803 (Miss. 1991) (noting that "price is an essential term");
Short v. Columbus Rubber & Gasket Co., 535 So. 2d 61, 64 (Miss.
1988) (stating that the party claiming under an oral employment
contract must prove, at a minimum, the length of the contract and
the amount of salary for the term). "Agreement" does not mean,
however, that the terms must be set out in the plainest language.
For example, "where, from the terms of the contract, one familiar
with elementary principles of mathematical reasoning may deduce
with certainty the sales price, the contract will not fail."
Leach, 586 So. 2d at 803.
At trial, Ham presented ample evidence from which the jury
could find that there had been mutual assent on all three
essential terms and that, therefore, a contract existed.
Witnesses called by Ham testified that Dresser and Ham agreed
that:5 (1) regarding the scope of the work--Ham would complete
all of the shipyard work on all three of the rigs, including
removing the drilling equipment, repositioning the cranes, taking
the legs down, painting the rigs, installing all of the equipment
and interconnecting piping, and testing the compressors; (2)
regarding the price--for certain tasks, Dresser would be billed
lump sum costs, and for the rest, it would be charged time and
material basis rates, "a set dollar amount per man hour for the
utilization of the labor, for any overtime, or for any specialty
5
Among the witnesses that testified for Ham as to the
scope of the service to be performed, the price, and the
completion date agreed to by Dresser and Ham were Carl Crawford,
William Roy, and William Canfield.
9
costs;"6 and (3) regarding the completion date--Ham would
complete the work in time for Dresser to timely deliver the rigs
to Lake Maricaibo, May 1992 for Rig 53, and September 1992 for
Rigs 60 and 59. Moreover, the trial record provides documentary
evidence from which the jury could have inferred that Dresser
agreed to all of the essential terms of the contract. For
example: in its bareboat charter agreements with Cliffs, Dresser
acknowledged that Ham had been engaged to complete the marine
work on all of the rigs; in correspondence, Dresser indicated
that, at its instigation, Ham procured warehouse space and Ham
installed gas lines to accommodate all three rigs.
Dresser argues that, if it existed, the contract between Ham
and Dresser necessarily included terms allowing termination for
convenience and limiting consequential damages--terms included in
the standard contract form that Ham sent to Dresser and in the
Cliffs-Ham agreements. Dresser argues that Ham never repudiated
these terms. Ham responds that the standard contract was sent to
Dresser at the request of Palfreyman, Dresser's Project Manager,
6
Crawford testified that, often, due to the rushed
nature of the project, Dresser and Cliffs committed work to Ham
before all of the engineering details had been worked out.
Speaking of Cliffs, he explained the reason for billing on a time
and material basis as follows:
[They] had not been able to do a tremendous amount of
engineering up front. And without proper engineering, it is
almost impossible to price certain items. So we knew that a
great deal of the work was going to have to be done on a
time and material basis.
. . . .
Probably about 85 percent of that work was done on time and
material and 15 percent was done on fixed pricing.
10
to provide a starting place for negotiations. Both parties
presented evidence on this issue. At trial, Palfreyman conceded
that he took no action based on Ham's standard contract; he
testified that he "put it in [his] drawer and never looked at it
again." Clauses introducing unusual terms--such as termination
for convenience or limitations on the standard damage remedies
available at common law--must be explicitly introduced into a
contract by mutual assent of the parties. "[I]n the absence of
some provision in the contract authorizing termination or
cancellation, every contract is presumed irrevocable." Warwick v
Matheney, 603 So. 2d 330, 336 (Miss. 1992). Therefore, we find
that there was sufficient evidence for the jury to determine that
the termination and damages clauses were not among the terms
included in the contract between Dresser and Ham.
Finally, Dresser argues that, even if it existed, whatever
terms it contained, the contract alleged by Ham was too
indefinite to be enforceable. In order to carry out the
reasonable intention of the parties, "Mississippi law favors a
determination that the terms of a contract are sufficiently
definite." Massengill v. Guardian Management Co., 19 F.3d 196,
201 (5th Cir. 1994). Nonetheless, "Mississippi courts will
refuse to enforce a contract that is vague, indefinite, and
ambiguous." Id. (quotation marks and citations omitted).
Dresser asserts that interpretation of the contract is not a
question of fact for the jury but a matter of law, and that
therefore, it is reviewable de novo and not subject to the more
11
deferential sufficiency of the evidence standard. By way of
support, Dresser cites Massengill, 19 F.3d at 201 (holding that
contract was not sufficiently definite on material points to be
enforceable under Mississippi law), and Neeley v. Bankers Trust
Co., 757 F.2d 621 (5th Cir. 1985).
In so arguing Dresser misconstrues the rule. "The
interpretation of a contract is a question of law and the
appellate court is not bound by the . . . standard of review [for
fact findings] unless ambiguities require the court to consult
extrinsic evidence." Tri-State Petroleum Corp. v. Saber Energy,
Inc., 845 F.2d 575, 581-82 (5th Cir. 1988) (emphasis added and
citation omitted). In Neeley, we pointed out that addressing the
issue of indefiniteness "entails both factual and legal
determinations, and the intensity of [appellate] review varies
accordingly." Neeley, 757 F.2d at 626. Moreover, Massengill and
Neeley are distinguishable from the instant case in that both of
them involved written agreements manifesting some clear intent to
contract. In a case such as the one at bar, where the very
existence of a contract is at issue and where interpretation
turns on jury consideration of extrinsic evidence, review for
sufficiency of the evidence is appropriate. The existence of the
contract itself, and what terms it embodied, were questions of
fact properly presented to, and determined by, the jury.
Consequently, unless there was no credible evidence presented
which might authorize the verdict, the jury's findings must
stand. Dobson v. Masonite Corp., 359 F.2d 921, 923 (5th Cir.
12
1966). We conclude that there was ample evidence to support the
jury's finding that the terms of the contract were not so
indefinite as to be unenforceable.
Once a contract has been found, and its essential terms have
been identified and determined to be enforceable, the issue of
breach is properly addressed. This is another question of fact.
Chapman & Cole v. ITEL Container Int'l B.V., 865 F.2d 676, 680
(5th Cir.), cert. denied, 493 U.S. 872 (1989). As with other
findings of fact, the jury is in the best position to evaluate
the evidence and to assess the credibility of witnesses. On
appellate review, therefore, we defer strongly to the jury's
findings. Id. The jury concluded that Dresser breached its
contract with Ham. There was sufficient evidence adduced at
trial to support this conclusion.
B. Tortious Interference
Mississippi has long recognized the tort of interference
with the performance of a contract. See, e.g., Bailey v.
Richards, 111 So. 2d 402 (1959). A person is subject to
liability for tortious interference with an existing contract if
he "intentionally and improperly interferes with the performance
of a contract between another and a third person by inducing or
otherwise causing the third person not to perform the contract."
Liston v. Home Ins. Co., 659 F. Supp. 276, 280 (S.D. Miss 1986).
Ham claimed that Dresser interfered with both existing and
prospective contracts between Ham and Cliffs. To prevail on its
13
claim of tortious interference with a prospective contract, Ham
was required to establish that (1) it was reasonably probable
that Ham would have entered into a contract with Cliffs, (2)
Dresser acted maliciously by intentionally preventing the
relationship from occurring, (3) Dresser acted without right or
justifiable cause, and (4) actual damage and loss resulted as a
result of Dresser's conduct. Cockerham v. Kerr-McGee Chem.
Corp., 23 F.3d 101, 105 (5th Cir. 1994).
Like contract interpretation, tortious interference with
contract is a mixed question of law and fact. Conclusions of law
are reviewed de novo. In contrast, whether the elements of
contractual interference have been satisfied is a factual
question and the findings of the jury on this issue are reviewed
for sufficiency of the evidence. Likewise, the issue of
justification is a factual issue to be decided by the jury.
Personal Preference Video, Inc. v. Home Box Office, Inc., 986
F.2d 110, 112 (5th Cir. 1993). Dresser asserts the privilege of
legal justification as an affirmative defense to Ham's tortious
interference claims. Dresser contends that its conduct was
justified because it was motivated by a proper business interest
rather than a wrongful motive.7 Because we conclude, on other
grounds, that Dresser did not tortiously interfere with any
7
In addition, Dresser maintains that it is not liable
for tortious interference because a party cannot be held to have
interfered with a contract that is terminable at will. We need
not address this argument because it is clear that, in finding
that Dresser breached its contract with Ham, the jury found that
the contract did not include a termination at will provision.
14
contract between Ham and Cliffs, we need not address the issue of
privilege.
Notwithstanding the finding of the jury to the contrary, we
conclude that, as a matter of law, Dresser did not tortiously
interfere with the contractual relationship between Ham and
Cliffs. All of the work that Ham could have performed on the
three Maraven project rigs was encompassed within the contract
that Dresser was found to have breached. Cliffs, as
subcontractor to Dresser, was not in a position to offer Ham any
Maraven work not covered by this contract. Furthermore, we can
find no evidence in the record that Ham and Cliffs enjoyed any
contractual relationship outside the bounds of the Maraven
project. Unless Ham and Cliffs had contracted with each other
for work unrelated to Dresser's Maraven project, or they were
likely to, the contract that Dresser breached covered the same
work that would have been covered in any existing or prospective
contract between Ham and Cliffs. Ham all but concedes this in
its original complaint by proffering tortious interference as an
alternative allegation only in the event that its breach of
contract claim failed.
Therefore, to the extent that Ham did contract, or would
have contracted, with Cliffs for work on the Maraven project,
Dresser was a party to the contract. As a matter of elementary
legal logic, "a party to a contract cannot be charged with
interfering with his own contract." Knight v. Sharif, 875 F.2d
516, 526 (5th Cir. 1989). Only where the person interfering with
15
performance is a stranger to the contract does a party to the
contract have a tortious interference cause of action against
him. Cenac v. Murry, 609 So. 2d 1257, 1269 (Miss. 1992).
Moreover, allowing Ham to retain an award of damages for
tortious interference would result in a double recovery. Even
though recovery is premised on two different theories, a
plaintiff cannot recover the same damages twice. Atkinson v.
Anadarko Bank & Trust Co., 808 F.2d 438, 441 (5th Cir.) (citation
omitted), cert. denied, 483 U.S. 1032 (1987). "Mississippi law
is clear that an injured party should not recognize a profit from
the damages he has sustained." Hunnicutt v. Wright, 986 F.2d
119, 124 (5th Cir. 1993) (holding that patient in medical
malpractice action should not have been allowed to present
evidence of medical expenses which were paid by the Mississippi
Dept. of Corrections). We find that tortious interference with
contract is unavailable to Ham as a theory of relief.
C. Damages
The jury calculated that Ham suffered damages in the amount
of $3,517,283.94 as a result of Dresser's breach of contract. An
assessment of damages is not reversed unless it is clearly
erroneous. Caldarera v. Eastern Airlines, Inc., 705 F.2d 778,
783 (5th Cir. 1983). Only where it is "so large as to shock the
judicial conscience, so gross or inordinately large as to be
contrary to right reason, so exaggerated as to indicate bias,
16
passion, prejudice, corruption, or other improper motive" will we
reverse a jury verdict for excessiveness. Id. (quotation marks,
brackets, and citations omitted). Moreover, review and approval
of the verdict by the trial judge tips the scale even more
heavily against appellate reconsideration. Haley v. Pan American
World Airways, Inc., 746 F.2d 311, 317 (5th Cir. 1984).
Both Ham and Dresser presented damage evidence. Ham based
its damage assessment on the total amount that Dresser paid to
Aker, arguing that the work performed by Aker was work that would
have been performed by Ham under its contract with Dresser.
Dresser contests the comparison between Ham and Aker, and also
argues that Ham presented no factual evidence from which the jury
could accurately calculate reasonable net profits. Dresser
contends that, consequently, Ham failed to prove its damages with
legal certainty. The right to recover is not precluded by
uncertainty regarding the exact amount of damages. Harrison v.
Prather, 435 F.2d 1168, 1174-75 (5th Cir. 1970) (citing Koehring
Co. v. Hyde Constr. Co., 178 So. 2d 838, 853 (Miss. 1965)), cert.
denied, 404 U.S. 829 (1971). The evidence need only lay a
foundation upon which the trier of fact can form a fair and
reasonable assessment of the amount of Ham's damage. Mutual Life
Ins. Co. v. Estate of Wesson, 517 So. 2d 521, 536 (Miss. 1987)
(citation omitted), cert. denied, 486 U.S. 1043 (1988). Ham is
entitled to no damages on the tortious interference claim because
that claim fails as a matter of law. As to Dresser's breach of
contract, however, we find that there was sufficient evidence to
17
allow the jury to make a reasonable determination of Ham's
damages, and we conclude that the jury award is not clearly
erroneous.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court as to the breach of contract claim and the award
of consequential damages, but we REVERSE the judgment of the
district court as to the claim of tortious interference with
contract, and we REMAND with instructions to amend the judgment
so as to delete the award of tortious interference damages.
Costs shall be borne by Dresser.
18