The opinion
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BMS NATURAL RESOURCES,
INCORPORATED, a West Virginia
Corporation,
Plaintiff-Appellant,
v.
No. 94-2251
KRUPP LONRHO MINING CORPORATION,
a Delaware Corporation, a wholly
owned subsidiary of Krupp
Industries of West Germany,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-94-306)
Argued: October 30, 1995
Decided: January 8, 1996
Before MURNAGHAN, HAMILTON, and MOTZ,
Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Stephen Polan Meyer, MEYER & FORD, Charleston,
West Virginia, for Appellant. Joshua Israel Barrett, DITRAPANO &
JACKSON, Charleston, West Virginia, for Appellee. ON BRIEF:
John Einreinhofer, MEYER & FORD, Charleston, West Virginia, for
Appellant. Rudolph L. DiTrapano, DITRAPANO & JACKSON,
Charleston, West Virginia; Terry Myers, HERZFELD & RUBIN,
P.C., New York, New York, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
BMS Natural Resources, Inc. ("BMS"), the plaintiff-appellant,
entered into a coal sales contract with defendant-appellee Krupp Lon-
rho Mining Corporation ("KLM") in which BMS agreed to sell and
KLM to buy 40,000 tons of coal each month for five years. The con-
tract contained a condition precedent--KLM's Board of Directors had
to approve the contract for it to become operative. The instant appeal
turns on whether the requirements of the condition precedent in the
coal sales contract were met. For the following reasons, we find that
the condition precedent was not met and affirm the district court's
grant of summary judgment in favor of KLM.
I
In 1990, a German company, Krupp Energiehandel GmbH, formed
a wholly owned subsidiary--KLM, a Delaware corporation--in order
to purchase coal in the United States. KLM opened offices in Michi-
gan, and Gerald Berger, a Michigan resident, became President and
a member of the KLM Board of Directors. KLM's By-Laws required
Berger to obtain prior approval from another Board member, Andre
Venter, before entering into any contracts. The By-Laws further
required that all contracts be approved by KLM's Board of Directors
and that certain contracts be approved by Krupp Energiehandel.
2
In 1991, the President of BMS, Roger Ball, and the President of
KLM, Berger, entered into negotiations that ultimately resulted in the
two men executing a coal sales contract in which BMS agreed to sell
and KLM to buy 40,000 tons of coal each month for five years.
Throughout the negotiations Berger made clear that any contract was
subject to the approval of KLM's Board.
Initially, in the early stages of negotiation, the proposed contract
did not include a condition precedent requiring Board approval by
KLM because it was expected that the Board would approve the con-
tract prior to its final execution. A letter Berger attached to a draft
contract prepared in late October 1991 explained the contemplated
schedule. The letter, dated October 29, 1991, states that Berger will
present the contract to the KLM Board before November 15 for
approval, that BMS will secure financing for the deal, and finally, that
Berger will execute the agreement with Board approval at the pro-
posed closing on November 21, 1991. The October draft contract,
therefore, contained no condition precedent requiring the approval of
KLM's Board because the Presidents planned to submit a final draft
to the KLM board prior to execution of the contract.
The October schedule, however, was not met because BMS could
not demonstrate that it had the requisite financing in place for the deal
until mid-December of 1991. Thus, the anticipated sequence of events
changed: KLM's Board, it was understood, would now approve the
contract after execution. As a result, when the final contract was
signed on December 12, 1991, a new and additional provision--a
condition precedent--was included as Article 19 in the final Agree-
ment:
This Agreement is subject to the approval of Buyer's Board
of Directors which approval shall, if granted, be confirmed
to Seller no later than January 15, 1992.
Thus, the December 12, 1991 Agreement anticipated that the KLM
Board's approval or disapproval was to occur after the Agreement
was signed.
The KLM Board did not approve the contract. On January 10,
1992, Berger informed Ball via telephone and confirmed in a letter to
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BMS that the contract had been rejected by the KLM Board. BMS did
not protest the rejection of the contract in writing to anyone at KLM.
Instead, BMS filed a declaratory judgment petition in West Virginia
State Court. On KLM's motion, the action was removed to the United
States District Court for the Southern District of West Virginia. KLM
filed a motion for summary judgment alleging that BMS had no basis
for recovery on the contract because a clear and unambiguous condi-
tion precedent--the approval of KLM's Board--had not been met.
The district court agreed and granted summary judgment. BMS has
appealed that decision.
II
A. Standard of Review
We review the district court's grant of summary judgment under a
de novo standard of review. Henson v. Liggett Group, Inc., 61 F.3d
270, 274 (4th Cir. 1995). Under Rule 56(c) of the Federal Rules of
Civil Procedure, summary judgment is appropriate where there are no
genuine issues of material fact. Therefore, to defeat the district court's
grant of summary judgment, BMS "must set forth specific facts show-
ing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The
court must review the record in the light most favorable to the non-
moving party.
B. The Contract's Condition Precedent
Here, although the parties executed the contract in West Virginia,
the contract provided that Michigan law would govern any contrac-
tual disputes between the parties.1 Under Michigan law, failure to sat-
isfy a condition precedent in a contract precludes a cause of action for
failure to perform the contract. Christman Co. v. Anthony S. Brown
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1 Paragraph 17 of the contract provides:
This Agreement shall be interpreted and construed in accordance
with the laws of Michigan. Section headings have been inserted
as a matter of convenience or reference only. They shall not
affect the meaning or construction of any terms or provisions of
this Agreement.
4
Dev. Co., 533 N.W.2d 838, 840 (Mich. App. 1995); Kachanowski v.
Cohen, 9 N.W.2d 667, 668 (Mich. 1943). The December 12, 1991
contract contained a clear condition precedent--approval by KLM's
board of directors. That condition was not met. Thus, under Michigan
law BMS has no actionable claim.
BMS has contended on appeal, however, that it raised genuine
issues of material fact as to whether the Board's approval was given
as required by the contract. First, BMS has pointed to an October 29,
1991 letter from Berger stating that he would be signing the contract
on behalf of KLM's Board. Second, BMS has argued that Berger rep-
resented orally that he had the Board's approval when he signed the
contract, thus fulfilling the condition precedent. Neither of those
assertions suffices to raise genuine issues of fact for trial.
As for the October 29 letter, it did state that Berger would sign the
contract with the approval of KLM's Board. The October 29 letter,
however, clearly and unambiguously applied to a draft contract that
differed from the one which the parties ultimately signed on Decem-
ber 12, 1991. The letter was attached to a previous draft of the
December 12 coal sales contract actually entered by the parties. The
previous draft did not include the condition precedent, because at that
time it was anticipated that the KLM Board would approve the con-
tract before it was executed. The October 29 letter expressly contem-
plated a November 21 closing date, after the contract had been
submitted to KLM's Board for approval and BMS had obtained
financing for the deal. That sequence of events did not occur because
of BMS's delay in obtaining financing. Thus, Berger's statement that
he would sign the contract with the approval of KLM's board in the
October 29 letter cannot be read to apply to the contract signed on
December 12. Furthermore, the entire course of negotiations made
clear that the approval of KLM's Board was necessary whether it was
obtained prior to or subsequent to the signing of the contract.
BMS has also argued that Berger assured it that the provision con-
taining the condition precedent was merely boiler plate and a mere
formality. Where a contract is clear, unambiguous, and complete as
to its terms, parol evidence, including both prior and contemporane-
ous oral statements, is inadmissible to vary the terms of the contract.
Cardinal State Bank v. Crook, 399 S.E.2d 863, 866 (W. Va. 1990);
5
Kanawha Banking & Trust Co. v. Gilbert, 46 S.E.2d 225, 232-33 (W.
Va. 1948); see also General Aviation, Inc. v. Cessna Aircraft Co., 703
F. Supp. 647, 641 (W.D. Mich. 1988), aff'd in relevant part, modified
in part, 915 F.2d 1038, 1042 (6th Cir. 1990); Johnson v. Michigan
Mut. Ins. Co., 454 N.W.2d 128 (Mich. App. 1989). 2 The extensive
and detailed December 12, 1991 contract represents a complete agree-
ment among the parties and, thus, precludes reliance on Berger's
statements.
Finally and most importantly, the plain and unambiguous meaning
of the contract stated that it must be approved by the Board, and that
approval, if granted, would be confirmed no later than January 15,
1992. Under Michigan law, "[w]here the provisions of a contract are
clear and unambiguous, the contract language is to be construed
according to its plain sense meaning." Ditzik v. Schaffer Lumber Co.,
360 N.W.2d 876, 880 (Mich. App. 1984) (per curiam). The plain and
ordinary meaning of the contract's terms indicates that despite the
Agreement, the KLM Board's approval was still to come. Thus, while
KLM Board approval was perhaps anticipated, it had not already been
granted when the Agreement was executed. BMS has contended that
Berger acted for the KLM Board or had Board approval when he
signed the contract on December 12, 1991. That is not, however, the
equivalent of actual Board approval.3 Board approval did not occur;
therefore, there was no satisfaction of the condition precedent of
KLM Board approval.
BMS has made two further arguments as to why summary judg-
ment should not have been entered against it: (1) that no formal KLM
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2 The question of whether the parol evidence rule is a rule of evidence
or a substantive rule and, thus, whether the Michigan or West Virginia
rule of parol evidence applies is not addressed by the parties. We decline
to address it here, because under both Michigan and West Virginia law,
the contemporaneous statements are inadmissible.
3 Two letters also strongly suggest that Berger and Ball both under-
stood that approval of KLM's Board was necessary. Shortly after the
contract was executed, Berger wrote to the KLM Board to inform it that
it had until mid-January to approve or reject the contract. In a subsequent
letter, written on January 8, 1992, Berger also stated that Ball had called
twice and was "most anxious" to know the Board's decision.
6
Board meeting occurred to reject the contract; and (2) that the con-
tract did not specify how notification of approval or disapproval was
to occur and, therefore, that Berger's representations could constitute
approval. Those arguments merit little discussion. Although infor-
mally, a majority of the KLM Board rejected the contract. The con-
tract did not call for a formal Board meeting. Additionally, the
contract stated that "approval shall, if granted, be confirmed." That
statement clearly required some act of the Board to confirm approval.
No such act occurred. Thus, the condition was not met.
Accordingly, the district judge's grant of summary judgment to
KLM is
AFFIRMED.
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