Petition for Writ of Certiorari — Galin Corp. v. MCI Telecommunications Corp.

Supreme Court brief1994

Ask Donna

What actually matters in this document.

Text

an Supreme Court, U.8, :

(\ FILED

+ 28 178 64PR 25 190

CASE NO.

OFFICE GF THE Cicn.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1993

GALIN CORPORATION AND PETROPAK, INC.

PETITIONERS,

MCI TELECOMMUNICATIONS CORP.,

RESPONDENT.

Petition for Writ of Certiorari

to the United States Court of Appeals

For the Fifth Circuit

PETITION FOR WRIT OF CERTIORARI :

Cynthia T. Sheppard

HOUSTON, MAREK & GRIFFIN

120 Main Place, Suite 600

P. O. Box 2329

Victoria, Texas 77902

512-573-5500 [telephone]

512-573-5040 [facsimile]

Counsel of Record for

Petitioners

ASE TS I *

QUESTIONS PRESENTED FOR REVIEW

Whether a Court of Appeals May Ex Post Facto Treat a Trial

Court’s Rule 50(a) Judgment as a Summary Judgment When

the Tnal Court Failed to Give the Plaintiff any Notice or

Opportunity to be Heard on any Reconsideration of the

Defendant’s Motion for Summary Judgment.

II.

Whether a Trial Court May Enter Judgment as a Matter of

Law Under Rule 50(a) at a Time Before the Jury is

Empaneled or any Evidence is Heard.

LIST OF PARTIES

Galin Corporation, Petitioner

13431 Cullen Boulevard

Houston, Texas 77047

Petropak, Inc., Petitioner

P.O. Box 87517

Houston, Texas 77287

Presidio Engineers & Contractors,

Subsidiary of Petropak, Inc.

P.O. Box 87517

Houston, Texas 77287

Cynthia T. Sheppard

HOUSTON, MAREK & GRIFFIN

120 Main Place, Suite 600

P.O. Box 2329

Victoria, Texas 77901

Attomeys for Petitioners

MCI Telecommunications Corporation,

Respondent

400 International Parkway

Richardson, Texas 75081

C. Charles Dippel

Charles Huber

55 Waugh Drive, Suite 603

Houston, Texas 77007-5836

Attomeys for Respondent

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW .... i

8 a Ge | Pe ee a ee ae © |

eo OF Bs AP a) | Re me o /

ge ps 0 a ee 2 |

oy! 0 oR a ee ee 2 > |

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED ....... + « « Xi

STATEMENT OF THE CASE Le AY Be sar eee ee ee a

pS Se a a ee a ee a ee ee

The Court of Appeals’ Ex Post Facto Treatment of the Trial

Court’s Rule 50(a) Judgment as a Summary Judgment Denies

Petitioners Their Right to Due Process and Violates Rule 56(c)

by the Trial Court’s Failure to Give Petitioners any Notice or

Opportunity to be Heard on Reconsideration v Respondent’s

Motion for Summary Judgment... . ow 5

II.

The Trial Court’s judgment as a Matter of Law Violates

Petitioners’ Right to a Jury Trial and Violates Rule 50(a) by

Granting Judgment Before Allowing the Petitioners to be Fully

Heard and Before the Jury was Empaneled . .. . 24

ee | ef

i s+ © fr es © oe eer ec eveee BF

TABLE OF AUTHORITIES

CASES:

Allstate Finance Corp. v. Zimmerman,

296 F.2d 797 (5th Cir.1961)

Angerosa v. The White Co., 290 N.Y.S.

204 (N.Y.App.Div. 1936)

Arkwright-Boston Mfrs. Mut. v. Aries Maine Corp.,

932 F.2d 442 (5th Cir. 1991)

Bon Air Hotel Inc. v. Time, Inc. ,

426 F.2d 858 (5th Cir. 1970)

Bradley v. Pittsburgh Board of Education,

913 F.2d 1064 (3rd Cir. 1990)

Celotex Corp. v. Catrett, 477 U.S. 317,

106 S.Ct.2548, 91 L.Ed.2d 265 (1986) 8

Fernandez-Montez v. Allied Pilots Assoc. ,

987 F.2d 278 (5th Cir. 1993)

Hadden v. Consolidated Edison Co. ,

45 N.Y.2d 466 (N.Y.1978)

Joint Anti-Fascist Refugee Committee v. McGrath,

341 U.S. 123, 71 S.Ct. 624,

95 L.Ed. 817 (1951).

Herman v. Malamed, 487 N.Y.S.2d 791

(N.¥Y.Aapp. Div. 1965) ..<« -«

Metz v. Metz, 572 N.Y.S.2da 813

(W.¥. App. Dav. 1991) . - «

Seneca v. Phillips Petroleum Co. ,

963 F.2d 762 (5th Cir. 1992)

TABLE OF AUTHORITIES CONTINUED

STATUTES:

FED.R.CIV. PRO. 50(a)

FED.R.CIV. PRO. 56(c)

SUP.CT.R.10.1 .

28 U.S.C.S. sec. 1254(1)

CONSTITUTIONAL PROVISIONS

U.S.CONST. amend. VII .

U.S.CONST. amend. XIV, sec.l

xii

CASE NO.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1993

GALIN CORPORATION AND PETROPAK, INC.

PETITIONERS,

MCI TELECOMMUNICATIONS CORP.,

RESPONDENT.

Petition for Writ of Certiorari

to the United States Court of Appeals

For the Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

OPINIONS BELOW

The decision of the United States Court

of Appeals for the Fifth Circuit, dated

January 14, 1994, from which this appeal is

taken, is reported at 12 F.3d 465 (5th Cir.

1994) (Patrick E. Higginbotham, J.). The

Fifth Circuit decision affirmed the

judgment of the United States District

Court of the Southern District of Texas,

granting a Rule 50(a) judgment in favor of

Respondent. The opinion announcing that

judgment, dated July 21, 1992, can be found

at 1992 WL 560909 (Melinda Harmon, J.).

JURISDICTION

Petitioners Galin Corporation and

Petropak, Inc. ("Galin/Petropak") brought

this action against MCI Telecommunications

Opps ("MCI") for breach of contract,

fraud, misrepresentation and quantum meruit

in state district court of Harris County,

Texas. MCI removed the case to federal

district court in the Houston division of

the Southern District of Texas on the basis

ef diversity jurisdiction. At the onset of

trial, the district court entered a Rule

50(a) judgment as a matter of law against

Petitioners on all of their claims.

On appeal, the United States Court of

Appeals for the Fifth Circuit affirmed,

holding that the trial court's decision was

effectively a grant of Respondent's

previously filed and denied Motion for

Summary Judgment. Petitioner's Motion for

rehearing was Denied on February 16, 1994.

viii

Jurisdiction to review this judgment

is conferred on this Court by 28 U.S.C.S.

sec. 1254(1) and by Rule 10.1(a) of the

Supreme Court Rules, as this decision is in

conflict with decisions of this Court and

with Courts of Appeals. Additionally, this

decision has so far departed from the

accepted and usual course of judicial

proceedings, or sanctioned such a departure

by the lower court, as to call for an

exercise of this Court's power of

supervision.

Specifically, this decision is in

conflict with this Court's decision in

Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct.

2548, 91 L.Ed.2d 265 and other Circuit

Court decisions holding that a court may

not sua sponte consider a motion for

summary judgment without the notice and

hearing requirements of Rule 56(c) being

met.

Jurisdiction is also conferred by Rule

10.1(c) as the Court of Appeals' decision

has decided an important question of federal

law which has not been, but should be,

settled by this Court, and has decided a

federal question in a way that conflicts

with applicable decisions of this Court.

Specifically, this decision has made a

significant ruling on the application of

Rule 50(a), Judgments as a Matter of Law,

and the case law interpreting the proper use

of this rule.

STATUTORY AND CONSTITUTIONAL

STATUTES

PROVISIONS INVOLVED

1. FED.R.CIV.PRO.50(a) (1) JUDGMENTS AS A

MATTER OF LAW

(1)

If during a trial by jury a party

has been fully heard with respect to

an issue and there is no 1 gally

sufficient evidentiary basis for

a reasonable jury to have found

for that party with respect to

that issue, the court may grant a

motion for judgment as a matter

of law against that party on any

claim, counterclaim, cross-claim,

or third party claim that cannot

under the controlling law be

maintained without a favorable

finding on that issue.

(Emphasis added).

2. FED.R.CIV.PRO.56(c) SUMMARY JUDGMENTS

(Cc)

The motion shall be served at

least 10 days before the time fixed

for the hearing. The adverse party

prior to the day of hearing may

serve opposing affidavits. The

judgment sought shall be rendered

forthwith if the pleadings,

depositions, answers to

interrogatories, and admissions

on file, together with the

affidavits, if any, show that

there is no genuine issue as to

any material fact and that the

moving party is entitled to a

judgment as a matter of law. A

summary judgment, interlocutory

in character, may be rendered on

the issue of liability alone

although there is a genuine issue

as to the amount of damages.

(Emphasis added).

CONSTITUTIONAL PROVISIONS

U.S. CONST. amend. VII.

In Suits at common law, where the

value in controversy shall exceed

twenty dollars, the night of tal by jury

shall be preserved, and no fact tried

by a jury, shall be otherwise

reexamined in any Court of the United

States, than according to the rules of

the common law.

(Emphasis added).

U.S. CONST. amend. XIV, sec.1l.

All persons born or naturalized in the

United States, and subject to the

jurisdiction thereof, are citizens of

the United States and of the State

wherein they reside. No State shall

make or enforce any law which shall

abridge the privileges or immunities

of citizens of the United States; nor

shall any State deprive any person of

life, liberty, or property, without due

process of law; nor deny to any person

within \its jurisdiction the equal

protection of the laws.

(Emphasis added).

xii

STATEMENT OF THE CASE

The central issue in this case is

whether a court may deprive a party of its

day in court by entering judgment against

it without any notice that dispositive

action is going to be taken, and without

any opportunity to present its case,

whether the judgment be by Summary Judgment

under Rule 56, or by Judgment as a Matter

of Law under Rule 50(a).

1. The lawsuit.

This case arises from a two million

dollar construction contract in which

Galin/Petropak agreed to install fiber

optic cable on one of MCI's routes in

Alabama. R.2236. After encountering

numerous problems and delays on the job,

many of which were caused by the presence

of rock in areas in which MCI had expressly

represented there was none, Galin/Petropak

sued MCI for breach of contract, fraud,

misrepresentation, and quantum wmeruit.

R.2231-35.

MCI pled in defense that

Galin/Petropak's claims were barred by

certain contract provisions. Specifically,

MCI claimed that Galin/Petropak had signed

a progress payment release that barred all

of Galin/Petropak's claims. MCI also

claimed that Petitioners' claims were barred

as untimely under a notice of claim

provision in the contract.

In response, Galin/Petropak asserted

that MCI had waived its right to rely upon

the release and the notice provisions, that

such contract provisions were vitiated by

MCI's fraud in the inducement of the

contract, and that their claims were for

work outside of the terms of the contract

and therefore not governed by its terms.

2. The Motion for Summary Judgment.

Early in this case, MCI filed a Motion

for Summary Judgment based upon its

defenses in bar. Galin/Petropak filed

their response and upon proper notice and

hearing, the trial court denied MCI's

motion, specifically finding that fact

issues were raised on all of

Galin/Petropak's causes of action. R1J1655.

Approximately one year after the trial

court's denial, the case was called for

trial on the court's jury docket as the

number one, preferentially set case.

3. The Trial.

Before the jury was empaneled and

without any motion before it, the trial

court announced that the case could be

disposed of based upon the pretrial order

and the exhibits cf the parties. The court

then proceeded to rule upon the documentary

evidence offered by the parties, and

excluded most of Galin/Petropak's documents

upon its finding that Petitioners' claims

were barred by the release and notice

provisions in the contract.

After the exhibits had been ruled upon,

Galin/Petropak asked the court to empanel

the jury and to allow them to put on their

live witnesses on these issues, which

requests the court’ refused. At the

suggestion of the trial court, MCT ade an

oral motion under Rule 50(a) t° £4enter

judgment against Petitioners as a matter of

law, and the court granted the motion. The

trial court then refused to allow

Petitioners to make a bill of exceptions as

to the testimony to be offered by their live

witnesses.

4. The Summary Judgment Again.

On appeal to the Fifth Circuit Court of

Appeals, the appellate court acknowledged

that the trial court's granting of judgment

at the outset of trial was "unusual", but

concluded nevertheless that the trial

court's action was effectively a grant of

MCI's summary judgment that had been denied

earlier. The Court of Appeals affirmed the

judgment of the trial court, agreeing with

it that the partial release and the

contract's notice provisions served as a

bar to all of Petitioners’ claims,

notwithstanding Petitioners' claims and

evidence of waiver, fraud and

extracontractual work. The Court of

Appeals' opinion does not address the

merits of Petitioners' claims concerning

the trial court's improper use of Rule

50(a), or its refusal to allow them to make

a bill of exceptions.

ARGUMENTS

The Court of Appeals’ Ex Post Facto Treatment of the Trial

Court’s Rule 50(a) Judgment as a Summary Judgment

Effectively Denies Petitioners’ Their Right to Due Process and

Violates Rule 56(c) by the Trial Court’s Failure to Give

Petitioners any Notice or Opportunity to be Heard on any

Reconsideration of Respondent’s Motion for Summary

Judgment. \

The Court of Appeals' after-the-fact

recharacterization of the trial court's

judgment in this case sets dangerous

precedent for the federal adversarial

system; one that is repugnant to citizens’

constitutional rights of due process and

jury trial.

On February 24, 1992, Petropak, Inc.

and Galin Corporation appeared in federal

district court prepared to try the court's

number one jury case. No motions were

pending before the court. MCI's motion for

summary judgment had been denied a year

earlier and the parties had spent that year

preparing for a lengthy, expensive trial in

a four million dollar lawsuit. Instead,

they were blind-sided with the trial

court's decision that the case could be

decided solely upon the parties' p)eadings

and their contract. The trial ccurt then

proceeded to exclude the majority of

Petitioners' exhibits based upon its

opinion that all of their claims were

barred, refused to empanel the jury for

Petitioners to call their live witnesses,

and in a final coup, refused to allow

Petitioners to make a bill of exceptions

showing the testimony of their live

witnesses. The trial court then entered

judgment for MCI as a matter of law under

Rule 50(a) of the Federal Rules of Civil

Procedure.

On appeal, the Fifth Circuit decided

that the “effect" of the trial court's

"unusual" ruling was to grant MCI's summary

judgment that the trial court had denied a

ea aS ee eee ee

year earlier. The Court of Appeals also

agreed with the trial court that

Petitioners' claims were all barred by

Respondent's contract defenses,

notwithstanding Petitioners' claims for

fraud, waiver, and extra work.

1. Rule 56’s requirement of notice and hearing.

The Court of Appeals' decision in this

case violates Rule 56 of the Federal Rules

of Civil Procedure as well as Petitioners’

constitutional right to due process embodied

by that rule. Under Rule 56, a trial court

is required to give ten days notice of a

hearing on any consideration of a summary

judgment, even when the motion is sua

sponte. See FED.R.CIV.PRO.56(c); Celotex Corp.

v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 931

L.Ed.2d 265 (1986); Arkwright-Boston Mfrs. Mut. v.

Aries Marine Corp., 932 F.2a 442 (5th Cir.

1991).

At the time of the trial and the

court's judgment, Petitioners had no notice

that any kind of dispositive action would

be taken by the court, much less that the

court was reconsidering its earlier summary

judgment ruling. In fact, the trial court

specifically stated during the "trial" that

it was not reconsidering its earlier

decision on summary judgment. As a result,

Galin/Petropak was not afforded the

required due process of advance notice and

opportunity to prepare for a dispositive

hearing.

As a result of having no notice of the

court's reconsideration, Petitioners had no

reason or opportunity to supplement their

summary judgment evidence with affidavits

containing information and evidence

accumulated during their one year of trial

preparation since the time they had

successfully defeated summary judgment.

In the akwence of any prior notice of

a dispositive hearing, Petitioners had

absolutely no reason to believe that they

needed to marshal their summary judgment

evidence in order to prevent dispositive

action by the court. See Bradley v. Pittsburgh Board

of Education, 913 F.2d 1064, 1069 (3rd Cir.

1990) {entry of summary judgment following

hearing on motion in limine that requested

exclusion of all of plaintiff's evidence was

improper because it bypassed Rule 56's

notice to allow the non-movant to marshal

his or her evidence to show issues of fact).

Although the appellate courts have the power

to recharacterize a trial court's action and

convert another motion to a summary judgment

motion, they can do so only when the notice

and hearing provisions of Rule 56 are

complied with. See Fernandez-Monitez v. Allied Pilots

Assoc., 987 F.2d 278, 283, n.7 (5th Cir.

1993).

Similarly, a trial court cannot sua

sponte reconsider its earlier ruling on a

motion for summary judgment without

specific procedural safeguards being

present. In Bon Air Hotel, Inc. v. Time, Inc., 426

F.2a 858 (5th Cir. 1970), the trial court

on its own motion reconsidered its earlier

denial of a motion for summary judgment

after notice to the parties. In finding

that the trial court had complied with Rule

56's provisions for notice and hearing, the

Fifth Circuit specifically relied upon the

fact that the opposing party was given ten

days notice and the opportunity to argue

against the motion for reconsideration by

letter. See BonAir, 426 F.2d at 863. The

Court concluded, "the combination of these

facts [notice and hearing] convinces us

that Bon Air was heard, within the meaning

of Rule 56(c), on the reconsideration of

[the] motion for summary judgment." /d.

In the case at hand, no procedural

protection at all was allowed to

Galin/Petropak. Consequently, Petitioners

were deprived of the safeguards guaranteed

by Rule 56 and by due process. The trial

court, in fact, went to great pains to

inform the parties that it was. not

reconsidering the Respondent's motion for

summary judgment. For the Court of Appeals

to then decide that it was, totally deprives

Petitioners of any due process.

The Fifth Circuit nevertheless states

that there is no impediment to its treating

the trial court's Rule 50(a) judgment as a

summary judgment because Galin/Petropak had

a full opportunity to respond to the

original motion for summary judgment. This.

reasoning fails to consider the nature and

requirements of our adversarial system and

the important policy reasons behind the

rule's notice requirements. The effect of

the Court of Appeal's decision is to allow

a party to indirectly appeal from a trial

court's denial of a summary judgment

without giving the opposing party any

opportunity to prepare for and argue

against the trial court's decision. If the

trial court had originally granted the

summary judgment, or even if it had told

the parties at the "trial" that it was

reconsidering its prior decision,

Petitioners would have had an opportunity

to at least ask the trial court to

reconsider its ruling and to offer to

present more evidence. This fundamental

right to due process was completely

frustrated by the Court of Appeals’

decision.

2. The effect of the Fifth Circuit’s decision in this case on

summary judgment practice in the federal courts.

The practical effect of this decision

is problematic for both parties and the

courts. Now a party defending against a

motion for summary judgment can never be

secure in a trial court's denial of a motion

and will be compelled, for fear of a court's

reconsideration without notice, to

continually supplement its summary judgment

evidence each time discovery uncovers

further evidence in support of its claims.

Besides being fundamentally unfair, such a

system would be completely unmanageable,

wasteful, and inefficient. See Allstate Finance

Corp. v. Zimmerman, 296 F.2d 797,799 (5th Cir.

1961) (disapproving a system that would

result in piecemeal consideration of

successive motions for summary judgment).

Even if we were to consider the trial

court's procedure a reconsideration of its

summary judgment ruling, that process is

equally flawed because the trial court

refused to allow Petitioners to offer all

their evidence. In a proper summary

judgment proceeding, each party is allowed

to put on all of its evidence, unless

properly excluded. Here, the trial court

refused to allow Petitioners to offer its

witnesses or to make a bill of exceptions

for that evidence. This ruling alone

constitutes harmful and reversible error,

an issue not addressed by the Court of

Appeals' decision.

As a result of this refusal, neither

the trial court, the Court of Appeals, nor

this Court knows what evidence

Galin/Petropak was prepared to offer in

support of waiver and fraud. The lower

courts nevertheless reviewed the evidence

that was admitted into evidence and decided

that Petitioners' evidence was insufficient

to overcome Respondents’ defenses. If

Petitioners had known that the trial court

was considering summary judgment, they

could have reduced the evidence they had to

offer to affidavit form so that the trial

court could have considered it, and so that

the appellate courts would have a record to

review. Since Petitioners were specifically

told by the trial judge that she was not

reconsidering her ruling on Respondent's

motion for summary judgment, Petitioners had

no reason to offer their evidence in summary

judgment form. Petitioners naturally

attempted to present their evidence in the

form appropriate to a trial.

For all this record shows,

Galin/Petropak could have had a witness

ready to testify in support of their claim

of waiver that MCI's president told them

expressly that MCI would not enforce the

release or the notice provisions against the

claims subject of this lawsuit. Almost a

full year had gone by between the time of

the motion for summary judgment and the time

the case was called to trial. Most likely

Galin/Petropak had discovered more evidence

in support of its claims since that time,

but never had any reason to think they

needed to supplement their summary judgment

evidence. Then, when they tried to present

the evidence at trial, the trial court

refused to let then.

The trial court's and the Court of

Appeals' decisions are based upon an

erroneous assumption of what evidence

Galin/Petropak had to offer in support of

their claims. Whether characterized as a

summary judgment or a judgment as a matter

of law under Rule 50(a), the trial court's

judgment resulted in extreme harm to the

Petitioners and must be reversed.

The only case cited by the Fifth

Circuit in support of its decision that no

notice or hearing was required in this case

is Seneca v. Phillips Petroleum Co., 963 F.2d ‘762

(5th Cir. 1992). That case, however, holds

only that the Court of Appeals may affirm a

summary judgment upon grounds not relied

upon by the trial court. /d,at765. It does

not address at all the issue of a court's

sua sponte reconsideration of a summary

judgment without notice or hearing.

See id.

> The Court of Appeals misconstrues the evidence that is

in the record.

The Court of Appeals' decision is also

erroneous for misconstruing the evidence

that is in the record and holding that

Petitioners' claims are barred by the

contract defenses asserted by Respondent.

(1) The Partial Release.

The Fifth Circuit upholds the trial

court's ruling that the release signed by

the parties was effective to release all of

the claims brought by Galin/Petropak in this

lawsuit because of the general release

language contained therein. The courts’

reasoning is flawed for the reason that,

even if the general release language did

apply to claims beyond the work invoiced

for, it could not under any circumstances

release Galin/Petropak's claim for fraud

that was not known at the time the release

was signed.

Although Galin/Petropak were fully

aware of their claims for breach of

contract at the time of the release, it was

not until the lawsuit was filed and

discovery was ongoing that they found that

MCI had intentionally misrepresented the

amount of the rock in the soil. Under

established New York law, even a general

release does not release a cause of action

for fraud in its inducement or execution.

See Metz v. Metz, 572 N.Y.S.2da 81

(N.Y.App.Div.1991).

The Fifth Circuit attempts to

circumvent this rule by reasoning that

Petitioners do not claim that the release

itself, as opposed to the contract whose

terms required the release, was induced by

fraud. New York law is clear, however, that

if the contract was induced by fraud, then

the release executed pursuant to its terms

would be vitiated by such fraud. See Angerosa

v. The White Co., 290 N.Y.S. 204 (N.Y.App.Div.

1936). Fraud vitiates everything it

touches. Id. Surely the Fifth Circuit

Court would not hoid that a party can be

excused from its fraud in inducing a

contract by the later execution of a

standard progress payment release that is

signed pursuant to that contract, at a time

when the defrauded party was unaware of such

fraua.+

Moreover, this release was limited in

its terms to the work that was invoiced

+ The Fifth Circuit misstates

Petitioners' position concerning when they

discovered evidence of Respondent's fraud.

It has been Petitioners' consistent position

that they did not discover that MCI's

misrepresentations concerning the presence

of rock were intentional until the lawsuit

was filed and discovery revealed such

evidence.

thereon. New York law holds that limiting

language such as was present here controls

over a general omnibus clause of release.

See Herman v. Malamed, 487 N.Y.S.2d 791

(N.Y.App.Div. 1985).

(2) Waiver.

Even if the Court of Appeals was

correct on the issues of the scope of the

release and the effect of fraud on that

release, Galin/Petropak would still be was

entitled to a jury trial on the issue of

waiver. In its opinion, the Court reviews

some of the evidence of waiver that is in

the record and comes to the conclusion that

MCI's "willingness to consider"

Galin/Petropak's claims is insufficient as

a matter of law to constitute a showing of

waiver. The problem with this analysis is

two-fold. First, it misstates Petitioners'

position and the evidence admitted on the

issue of waiver, and second, the Court of

Appeals cannot properly make this

determination because the trial court

refused to allow Galin/Petropak to put on

all of its evidence of waiver.

The evidence contained in

Galin/Petropak's response to MCI's Motion

for Summary Judgment contains the affidavit

of Mr. Sandy Gaido of Galin Corporation, who

was the project manager on this job,

concerning the actions and representations

of MCI with regard to both the notice of

claim procedure, and the release. He states

therein that MCI's principals told him

specifically that the notice provision in

question applied only to MCI-initiated

changes in unit prices. Mr. Gaido also

states in his affidavit that he was told by

MCI to proceed with Petitioners' work,

notwithstanding their claims for extra work,

and that they would “settle up later". If

this is not at least some evidence of

waiver, then there is no such thing.

Waiver may be accomplished by express

agreement or by such conduct or failure to

act as to evince an intent not to claim the

purported advantage. See Hadden v. Consolidated

Edison Co., 45 N.Y¥.2d 466 (N.Y.1978).

Mr. Gaido also testifies in his

summary judgment affidavit that on many of

the progress payments made by MCI prior to

the release in question, MCI had paid for

work that had been completed prior to the

last release, but was not invoiced until

the next progress payment, without any

objection from MCI that it was paying for

work that had already been released. This,

also, is clear, specific evidence of waiver

that was ignored by the Fifth Circuit in

finding no evidence of waiver. In fact, it

is possible that Galin/Petropak had even

stronger evidence of waiver, but was

improperly prevented from presenting it by

the trial judge. Therefore, the Court of

Appeals was in error both in assuming that

Petitioners had presented all of their

evidence on the issue of waiver, and in

finding that the evidence that was admitted

was insufficient to create a material fact

issue for the jury.

The Trial Court’s Judgment as a Matter of Law Violates

Petitioners’ Right to a Jury Trial and Violates Rule 50(a) by

Granting Judgment Before Allowing Petitioners to be Fully

Heard Before the Jury was Empaneled.

If this Court finds that the Court of

Appeals was in error in treating the trial

court's judgment as a summary judgment, then

the issue arises of whether the trial

court's judgment is proper under Rule 50(a)

of the Federal Rules of Civil Procedure.

The Court of Appeals' opinion implies that

it would not be, by calling it "unusual",

and by treating it as something other than

a Rule 50(a) judgment.

1. Rule 50(a) of the Federal Rules of Civil Procedure.

The trial court's judgment in this

case illustrates the use of a good rule

applied in the worst possible way. The

district judge used Rule 50(a) to grant MCI

judgment as a matter of law prematurely,

before the jury was empaneled, and before

Galin/Petropak, Inc. had a chance to be

"fully heard" as required by the rule. The

trial court also violated the rule by

granting judgment when the Respondent had

not articulated the grounds for its motion

in order for Petitioners to cure whatever

deficiencies existed. The judge refused to

allow the Petitioners their request to go

forward with their evidence to the jury,

and even went so far as to deny Petitioners

their request to make a bill of exceptions.

The district court's opinion itself

illustrates the problem in this case by

purporting to grant judgment as a matter of

law but being replete with factual findings

and references to Petitioners' failure to

come forth with sufficient evidence.

2. Petitioners’ position at trial.

At the heart of the parties' contract

was excavation through soil and the amount

of rock that was within that soil. When MCI

first bid the contract, there were no

estimates of the rock contained within the

soil, and MCI rejected all the bids that

came in, including Galin/Petropak's.

Specifically in order to obtain lower bids,

MCI represented to all potential bidders

that they had obtained an independent

engineering firm to do certain rock probes

and included in their bid package those

results. Relying upon those

representations, Galin/Petropak submitted a

bid and was awarded the contract.

It has been Petitioners' contention,

among others, that these test results were

completely inaccurate and caused them to do

work outside of the terms of the contact,

costing them twice the amount of their bid.

Petitioners were prepared to offer evidence

that MCI knew, or should have known, that

the rock probes in question were never

done, or were, in fact, fabricated.

On the day this case was called to

trial as the number one, specially set jury

case, the trial court ruled, without any

motion before it and before hearing any

evidence, that there were no fact issues to

present to the jury, based upon its

construction of the parties' contract and

exhibits. The court then proceeded to rule

on the admissibility of the parties’

documentary evidence, excluding most of

Petitioners' exhibits. At the suggestion

of the trial court, Respondent moved for

judgment under Rule 50(a), and the court

granted same.

kA Rule 50(a) applied to this case.

Rule 50(a) allows a trial court to

grant judgment at any time during a jury

trial, after a party has been fully heard on

the dispositive issues, when the evidence

shows that a reasonable jury could not find

for that party on that issue. See

FED.R.CIV.PRO.50(A). (Emphasis added).

Here, the trial court violated the rule,

first by not allowing Petitioners to be

fully heard, second by not allowing

Petitioners an opportunity to cure any

deficiencies with their evidence, and third

by granting judgment before the jury was

even empaneled.

The Advisory Committee Notes discussing

the 1991 amendments to Rule 50, as well as

the case law interpreting this rule, make it

clear that the rule does not change the

standard for granting judgment from the

previous motion for directed verdict or

motion for judgment notwithstanding the

verdict:

The revision authorizes the court to

perform its duty to enter judgment as

a matter of law at any time during the

trial, as soon as it is apparent that

either party is unable to carry a

burden of proof that is essential to

that party's case.... In no event,

however, should the court’ enter

judgment against a party who has not

been apprised of the materiality of

the dispositive fact and been afforded

an opportunity to present any

available evidence bearing on that

fact.

FED.R.CIV.PRO. 50(a), Advisory Committee

Note.

In this case, none of the requirements

of Rule 50(a) were met. Judgment was

granted without a jury trial, without

Petitioners being fully heard, without any

motion articulating its grounds, and

without any opportunity for Petitioners to

present its evidence bearing on

Respondent's defensive issues. The

district court then compounded this error by

misconstruing what evidence was allowed into

the record by finding that all of

Petitioners' claims were barred, as shown

above. This case demonstrates a complete

failure of the system to afford its

participants due process of law, and must be

reversed.

CONCLUSION

The treatment Petitioners have received

by the court system in this’ case

demonstrates a litigant's worst nightmare

and our system of justice at its worst.

After spending years and untold amounts of

money in preparing for a four million dollar

lawsuit, Petitioners were blind-sided at the

outset of trial by a completely groundless

Rule 50(a) judgment, pouring them out before

they had a chance to begin offering their

evidence.

The Court of Appeals then compounds

this error by calling the trial court's

judgment something it clearly is not and

again depriving Petitioners of any

opportunity to present evidence in their

favor. This is not how our system should

work, and is not what due process requires.

By this appeal, this Court is afforded the

opportunity to right this wrong and to

recapture litigants' faith in our system of

justice, bearing in mind the words of Mr.

Justice Frankfurter that "fairness of

procedure is due process in the primary

sense." See Joint Anti-Fascist Refugee Committee v.

McGrath, 341 U.S. 123, 161, 71 S.Ct. 624, 95

L.Ed. 817 (1951) (concurring opinion).

Petitioners respectfully pray that

their petition for writ of certiorari be

granted and that upon submission to this

Court, the judgments of the Court of

Appeals and trial courts be reversed and

remanded for trial.

Respectfully submitted,

HOUSTON, MAREK & GRIFFIN

120 Main Place, Suite 600

P. O. Box 2329

Victoria, Texas 77902

512-573-5500 [telephone]

512-573-5040 (facsimile)

By: TL ery 2

CYNTHIA T. SHEPPARD J |)

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 92-2649

GALIN CORPORATION and PETROPAK, INC.,

Plaintiffs-Appellants,

versus

MCI TELECOMMUNICATIONS CORPORATION,

Defendant~-Appellee.

Appeal from the United States District

Court for the Southern District of Texas

Before WISDOM, HIGGINBOTHAM, and SMITH,

Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

This is a diversity suit for breach of

a construction contract. The district

court granted judgment denying relief to

plaintiffs at the outset of trial, but

without allowing the parties to present

evidence to the jury. We agree with the

district court that plaintiffs' claims are

barred by the terms of the release and

notice of claim provisions of the

construction contract. We also conclude

that the district court's unusual grant of

judgment at the outset of trial was

effectively a grant of summary judgment

that had been argued earlier. We affirm.

In March 1987, MCI Telecommunications

Corporation invited bids on a fiber optic

cable installation route comprising eight

sections to extend through Georgia, Alabama

and Tennessee. Galin Corporation and

Petropak, Inc., met with MCI personnel, made

extensive visits to various future work

sites, and analyzed MCI's plans,

specifications, and bid instructions. Galin

and Petropak then submitted bids on six of

the eight sections. MCI accepted no bids on

the project. In late August of the same

year, MCI issued new instructions for the

installation of a shorter version of the

same fiber optic cable route. Before

requesting a second set of bids, MCI

released to the prospective contractors an

estimate of the amount of subsurface rock

that lay along the cable route. Galin and

Petropak again submitted a bid, this time

at a lower price, which MCI accepted. The

parties executed a written contract.

Galin and Petropak commenced work in

early November. During the project, MCI

complained to Galin and Petropak of their

lack of timely progress and, on December

18, MCI gave Galin and Petropak notice of

termination by default for failure to meet

the contract schedule. On December 30, MCI

eliminated the last seven miles of the

cable route from the contract.

Galin and Petropak say that they

completed the installation of the cable on

or about February 21, 1988, “except for

ee ee

areas where MCI had failed to obtain

necessary permits or easements and where MCI

had misrepresented the existence of rocks";

and that they then commenced cleaning up

their work sites.

On April 22, 1988, MCI issued a

proposed Final Modification of Contract,

which Galin and Petropak did not sign. As

the project had progressed, however, Galin

and Petropak had signed a series of releases

in exchange for incremental payments from

MCI. They signed the last of these releases

on May 13, 1988. Finally, in July of 1988,

MCI terminated the contract for non-

performance.

Settlement negotiations failed and

Galin and Petropak filed this suit in a

Texas court seeking compensation from MCI

for breach of contract, in quantum meruit,

and in tort. MCI removed to federal

district court invoking the court's

diversity jurisdiction. MCI and Galin and

Petropak then both moved for summary

judgment. The district court granted

judgment to MCI on Galin and Petropak's

Claim for breach of a covenant of good

faith and fair dealing, but left the

remaining issues for trial.

When the case was called for trial,

MCI asserted that the district court should

render judgment. The district court

granted the requested relief treating it as

a motion for judgment as a matter of law

under Federal Rule of Civil Procedure

50(a). Applying New York law, the court

Cismissed the case before the first witness

was called. Galin and Petropak appeal.

Galin and Petropak pursue several

Claims. Galin and Petropak allege that MCI

deliberately underestimated the amount of

subsurface rock that lay along the route to

decrease the cost of construction. The

Ot ty tt Eee eee

subcontractor who performed the rock probes,

Galin and Petropak assert, did not work long

enough to produce the results that MCI

released. Galin and Petropak argue that MCI

must have fabricated either some or all of

the site information. They claim to have

relied on this falsely optimistic

information in their bid.

According to Galin and Petropak, MCI

engaged in other questionable business

practices. They allege that MCI's designs

for installing the cable were faulty, that

MCI failed to obtain timely permission for

them work on several stretches of the route,

that MCI interfered in their operations,

that MCI forced them to meet more exacting

standards during the clean up process than

the contract required, and that MCI

otherwise failed to support then.

Galin and Petropak sue for recovery on

the contract, in quantum meruit for extra-

contractual work performed, for compensation

for MCI's wrongful interference with their

contract performance, and for compensation

for MCI's breach of its duty of good faith

and fair dealing.? The district court

decided the case based on provisions in the

contract that protect MCI from liability

and on the releases that Galin and Petropak

signed. Galin and Petropak argue that the

protective provisions and releases are

inapplicable to their claims and, further,

that MCI waived application of the

provisions. The parties agree that New

York law controls.

At the outset, Galin and Petropak

1 Galin and Petropak wish to recover

the balance owed on their contract with

MCI, compensation for the work they

performed outside the scope of their

contract with MCI, and damages which they

incurred as a result of delays, acts of

interference, improper administration of

the contract, misrepresentations, and other

reckless, grossly negligent, arbitrary and

capricious acts by MCI.

argue that the district court improperly

invoked Federal Rule of Civil Procedure

50(a) in dismissing their case. First, they

argue that Rule 50(a) required that MCI move

for judgment as a matter of law and that

when the court ruled MCI had not done so.

Second, they argue that they had not been

fully heard by the court, as required by

Rule 50(a), before it rendered judgment. We

need not address these contentions as we

construe the court's order as a grant of

summary judgment and affirm on that basis.

The district court early in the case

denied MCI's motion for summary judgment, to

which Galin and Petropak had _ fully

responded. On reconsidering, the court

concluded that the case did turn on the

notice and release provisions of the

contract. This interpretation presented no

issues of fact and protected MCI from

liability. The court therefore ruled in

MCI's favor, albeit under Federal Rule of

Civil Procedure 50(a).

Where a case does not require the

resolution of material facts, summary

judgment is appropriate. See Seneca v.

Phillips Petroleum Co., 963 F.2d 762, 765

(Sth Cir. 1992). We have in the past

affirmed summary judgment on_ grounds

different than those adopted by the trial

court. Id. at 765; Church of Scientology

Vv. Cazares, 638 F.2d 1272, 1281 (5th Cir.

1981). Since both parties had adequate

opportunity to address the issues involved

in summary judgment prior to the district

court's ruling, we see no impediment to

treating the judgment below as a grant of

summary judgement. Having so concluded, we

consider the propriety of that judgment.

B. The Releases

Galin and Petropak signed several

partial releases in exchange for

incremental payments from MCI, the last on

May 13, 1988, after installation of the

os —

7 ie a cl —

Me Re RN. AS

cable route. They performed no work after

execution of this release other’ than

cleaning the work sites.

The releases read in pertinent part:

Partial-Release and Indemnity

In consideration of payments made

heretofore, or to be made based upon

this invoice for labor, material,

equipment, subcontract work, and any

and all costs incurred for. the

performance of the contract work

invoiced thus far, the Contractor

hereby unconditionally and without

reservation releases and indemnifies

MCI and their officers, agents,

employees, assignees and heirs from

any and all liens, claims, demands,

penalties, losses, costs, damages and

liability in any matter whatsoever.

Galin and Petropak interpret the

releases narrowly in two ways: first, as

applying only to the work specified in the

invoices they submitted; and, second, as

applying only to the contract work, as

opposed to the extra work, which they

performed. The language of the releases

precludes this interpretation.

Under New York law, where the language

of a release admits of only one

interpretation, the proper interpretation

of the release is a question of law. Janos

Vs Peck, 251 N.Y.S.2d 254, 258 (N.Y. App.

Div.), aff'd, 254 N.Y.S.2d 15 (N.Y. 1964)

("Where... there is a question as to the

construction of a written contract between

the parties and the determination of that

question may be reached by reference to and

a consideration of the plain and

unambiguous wording of the contract, the

question, as one of law, should be then

and there resolved.") See also Metz v.

Metz, 572 N.Y.S.2ada 813, 815 (N.Y. App. Div.

1991). The releases that Galin and Petropak

signed list as____ consideration all

compensation that MCI paid Galin and

Petropak in the past as well as the

compensation the invoice required MCI to

pay Galin and Petropak in the future. The

terms of the release, however, are broader.

The form releases MCI from "all liens,

claims, demands, penalties, losses, costs,

damages and liability in any matter

whatsoever." As Galin and Petropak signed

nine releases in exchange for incremental

payments, the court interpreted the language

of each release to reach all claims of Galin -

and Petropak against MCI that existed at the

time Galin and Petropak signed each one.

This interpretation is appropriate as, under

New York law, a general release "will bar

suit on any cause of action arising prior to

the date of its execution and delivery, in

the absence of fraud or other vitiating

circumstances in its inducement or

execution." Metz, 572 N.Y.S.2d at 815

(citation and internal quotation marks

omitted). See also Troy News Co. v. Troy,

563 N.Y.S.2d 301, 303 (N.Y. App. Div. 1990)

(holding a release that so. specifies

applies to future claims but in the absence

of specification applies to all claims in

existence when it is given). But see Herman

v. Malamed, 4B7 N.Y.S.2d 791, 793-94 (N.Y.

App. Div. 1985) (holding that a specific

release followed by an omnibus clause may

be limited to the specified terms). Galin

and Petropak do not claim that MCI

fraudulently induced them to sign the

releases. With the exception of their

Claim for cleaning the work sites. neither

do Galin and Petropak deny that the claims

which they now pursue existed when they

signed the various partial releases. Thus,

they offer no basis for refusing

enforcement of the releases.

Galin and Petropak fail in their

attempt to "marshal" case law for the

proposition that we may modify or void

these releases. In De Costa v. Williams,

462 N.Y.S.2d 799 (Sup. Ct. 1983), a New

York court looked to the actual

understandings of the parties in limiting

the scope of a release. In doing so,

however, the court noted, "A mistaken

belief as to the nonexistence of presently

existing injury is a prerequisite to

avoidance of a release." Id. at 802

(citation omitted). Galin and Petropak do

not claim that they were unaware at the time

they signed the releases of the claims they

now pursue. They insist instead that they

were aware of them but had a different

intent. They argue that they would have

offered evidence to this effect at trial.

Where a written agreement is

unambiguous, as in the present case, New

York law does not allow consideration of

extrinsic evidence of the parties'

intentions. "It has long been the rule that

when a contract is clear in and of itself,

circumstances extrinsic to the document may

not be considered and that where the

intention of the parties may be gathered

from the four corners of the instrument,

interpretation of the contract is a question

of law and no trial is necessary to

a et

SOR aero

te Ne ee al i a al ye ——

{

: |

determine the legal effect of the

contract." Janos, 251 N.Y.S.2d at 259

(citations and internal quotation marks

omitted). See also Rice v. Cohen, 555

N.Y¥.S.2d 800, 801 (N.Y. App. . Div.

1990) (holding that clear and unambiguous

language in a document precludes

consideration of extrinsic evidence to

interpret its meaning). The releases are

unambiguous. They bar Galin and Petropak's

Claims except those arising from cleaning

the work sites. The cleaning, as we

explained, occurred after May 13, 1988, so

the last release did not reach claims from

that work. Nevertheless, a provision in

the construction contract precludes then.

C. The Notice of Claims Provision

Paragraph 18 of the construction

contract set a time frame for claims

arising from unexpected circumstances. The

paragraph required Galin and Petropak to

notify MCI within five days of an event

;

that could give rise to a claim on their

part or that might extend the period of time

in which they would complete the contract.

It then provided that Galin and Petropak

should submit to MCI within fourteen days a

statement substantiating the change in

circumstances and estimating its impact.

Upon request, Galin and Petropak would have

to document. any claims submitted for extra

compensation or for an extension of time.

Galin and Petropak do not deny that

they failed to meet the terms of this

provision in submitting their claims to MCI.

They argue instead that the provision

applies to events that occurred during the

completion of the contract, not to work that

Galin and Petropak undertook on MCI's behalf

that was unanticipated and, therefore,

beyond the scope of the contract. They

describe the latter as "extra" work.

The seminal case in New York defining

"extra" work is Savin Brothers, Inc. v.

Spite a

State, 405 N.Y.S.2d 516 (N.Y. App. Div.

1978), aff'd, 393 N.E.2d 1041 (N.Y. 1979).

In Savin Brothers, the court held that a

contractor who allegedly performed extra

work could not recover for that work. [d.

at 521. In reaching that conclusion, the

court defined extra work as "something

necessarily required in the performance of

the contract which arises from conditions

which could not be anticipated." Id. at

519 (citation omitted). The contract

determines which party assumes the costs of

extra work. ld.

Galin and Petropak note that paragraph

15 of the contract addresses changes in the

arrangement made at MCI's behest. These

changes would not seem to encompass extra

work. Paragraph 18, however, sets the time

frame for reporting "the happening of any

event" which Galin and Petropak believed

might give rise to a claim "for an increase

in contract price” or "the period of

performance." Paragraph 18 addresses

precisely the sort of unanticipated event

that results in extra work and requires that

Galin and Petropak report such events in a

timely fashion.

Galin and Petropak submitted none of

their claims within the period of time

prescribed by paragraph 18. They submitted

their first claim for recovery in excess of

the contract on May 16, 1988. They had

ceased performing any work on the

installation of the capable in February of

1988, three months earlier. Similarly, they

did not submit their claim for cleaning the

construction sites until August 8, 1988.

They had completed cleaning the sites on May

1, 1988. Galin and Petropak did not comply

with the provision in paragraph 18 requiring

written notice of the event within five days

and an estimate of its impact within

fourteen days. Without such notice MCI

could not respond to Galin and Petropak's

concerns ina timely manner. Because Galin

and Petropak delayed in making their

Claims, paragraph 18 precludes them from

recovering for any extra work they

performed.

D. Waiver

Galin and Petropak argue, in the

alternative, that MCI waived its various

defenses. They base this argument on MCI's

willingness to consider their claims.

"Waiver is an intentional

relinquishment of a known right and should

not be lightly presumed." Gilbert Frank

Corp. v. Federal Ins. Co., 520 N.E.2da 512,

514 (N.Y. 1988) (citations omitted). a

decision by MCI not to enforce its rights

immediately, and instead to pursue

completion of a contract, does not amount

to such waiver. See Seven-Up Bottling Co.

v. Pepsico, Inc., 686 F. Supp. 1015, 1023

(S.D.N.Y¥. 1988).

The New York Court of Appeals’

? a

, wel

treatment of waiver in a summary judgment

context in Gilbert is instructive. 520

N.E.2d at 513-14. First, of course, a

defendant must produce evidence which,

if uncontroverted, would establish a

defense. The unambiguous language of the

releases and the notice of claims provision

satisfies this requirement. See id. at 514

(finding that a contractual limitation on

the period of time in which a claim may be

asserted carries defendant's burden in

moving for summary judgment). Second, the

plaintiff must have the opportunity to offer

evidence of waiver of defense. Id.

Applying this standard, the lower appellate

court in Gilbert had held "that since

defendant had not offered satisfactory

explanations regarding the necessity for the

intensive activity which was undertaken with

regard to plaintiff's claim after the

expiration of the limitations period, there

were questions of fact . . . requiring

Tee REE eC - e a -

en nee

further development." 514 N.Y.S.2d 215,

218 (N.Y. App. Div. 1987). Unwilling to

draw an inference from the defendant's

conciliatory posture, the Court of Appeals

reversed. 520 N.E.2d at 514. The Court of

Appeals explained that a plaintiff must

offer "evidence from which a _ clear

manifestation of intent by defendant to

relinquish the protection of the

contractual limitations period could be

reasonably inferred." Id. Thus, as a

matter of law, a defendant's apparent

willingness to honor a plaintiff's claim is

insufficient to prove waiver. See also

Silverstein Properties, Inc. v. Webber,

Jackson & Curtis, Inc., 480 N.Y.S.2d 724,

726 (N.Y. App. Div. 1984), aff'd, 482 N.E.

2d 906 (N.Y. 1985) (holding that evidence of

landlord's willingness to address merits of

tenant's claim, after time allowed for

Claim by contract had expired, is

insufficient to support reasonable

a ene ts

inference of waiver).

Galin and Petropak allege only that

they had reason to believe that MCI would

entertain their claims. The letters from

MCI on which Galin and Petropak rely are

representative. In one of these letters,

MCI's agent, Richard Yeats, reminded Galin

and Petropak, "Timely submittal of claims

and back-up will facilitate the contract

close out." Yeats noted in another letter

that "MCI has stressed making... changes [in

the terms of the contract] as they occur,

not at the end of the contract which makes

negotiations and contract close laborious."

While these letters suggest lenience in

enforcing the notice requirement, they offer

no basis for inferring that MCI deliberately

waived that requirement. Because Galin and

Petropak offered nothing to support a

finding of waiver, invoking waiver was

insufficient to defeat summary judgment.

E. Evidence of Settlement

Galin and Petropak also contest the

ruling of the district court that evidence

of the settlement process was inadmissible.

Galin and Petropak wished to use MCI's

attempt to settle as proof of the limited

scope of the releases Galin and Petropak

signed and as evidence that MCI waived the

notice provision of the contract. As we

hold that the releases are unambiguous on

their face, evidence of any attempts by MCI

to settle are not relevant. See Gilbert

Frank Corp., 520 N.E.2d at 514. We need

not address the issue of admissibility.

AFFIRMED.

Pre 3

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

GALIN CORPORATION and

PETROPAK, INC.,

Plaintiffs,

vs. CIVIL ACTION

NO.H-88-4131

MCI TELECOMMUNICATIONS

CORPORATION,

Defendant.

MORANDUM

The above styled and numbered cause of

action came on for trial on February 24,

1992. Before the empaneling of a jury the

defendant argued its Motion to Construe the

Contract. The Court informed the parties

that it had reviewed the pretrial order and

that despite the fact that it had previously

denied summary judgment in the case, it was

convinced that the case could be determined

on the exhibits inasmuch as, pursuant to the

stipulation of the parties, New York law

governed, and there were no disputes of

material fact. Consequently, the only

determination to be made was one of

construction of the clear and unambiguous

contract in issue and of a release.

Accordingly, the Court granted the

defendant's motion in limine, admitted

certain of plaintiffs' exhibits and all of

defendant's exhibits, +

and after further

argument, granted the defendant's motion

for judgment. The instant memorandum sets

forth the Court's reasons for granting

same.

I. STATEMENT OF FACTS

This lawsuit stems from a construction

project (hereinafter "the project") for the

installation of fiber optic cable along

a portion of an eighty-five mile route in

late 1987 and early 1988. This project was

designed to be a connecting link in MCI's

Defendant's Trial Exhibits Nos.

1-102 were admitted without objection.

telecommunications network in the southeast.

In early 1987, Galin Corporation and

Petropak, Inc. (hereinafter

"Galin/Petropak"), the plaintiffs in this

case, formed a joint venture to bid on and

perform construction in connection with the

fiber optic cable installation. In March

1987, Galin/Petropak was invited by MCI, the

defendant in this case, to bid on one

installation section of the route which ran

from Austell, Georgia to Memphis, Tennessee

and was comprised of eight sections of

individual projects. After meeting with MCI

personnel, Galin/Petropak submitted bids on

six of the eight sections which comprised

this overall route. All of the bids for

that overall route were subsequently

rejected.

In late August, 1987, MCI issued new

bid instructions for the re-bidding of a

shorter fiber optic cable route from

Austell, Georgia to Cullman, Alabama

comprised of three sections, of which this

project was one. Galin/Petropak submitted

a second bid to MCI.

Galin/Petropak argue that they relied

on the engineering and design schematics

provided by MCI for the second bid, not

only as to the constructibility of the

project, but also as to the accuracy and

adequacy of the design and plans. The

bidding information and the contract

itself, however, contained language

indicating that the bidders and their

contractors were not to rely on MCI's

evaluations, but were to make an

independent analysis of every aspect of the

contract. MCI repeatedly advised the

contractors before they bid on the job to

beware of all conditions affecting the bid

and work, admonished the contractors to

inspect and investigate the site, warned

the contractors that they were required to

assess factors affecting the work, and

plainly informed the contractors that no

claims for financial adjustment would be

permitted based on lack of prior information

or its effect on the cost of work.

Galin/Petropak signed the construction

contract.

Galin/Petropak now assert that under

New York law MCI made affirmative

misrepresentations that negate the

enforceability of those contract

provisions. In oral argument before the

Court, plaintiffs' counsel suggested that

the engineering firm hired by MCI took

inaccurate bore samples of rock formations

and confused the location of those rock

formations. Plaintiffs hold MCI directly

responsible for the misrepresentations

contained in the drawings because MCI was

ultimately responsible and should have known

that accurate studies could not be done

given the fact that the engineering firm was

retained at a late stage. Substantially,

this forms the basis of plaintiffs' fraud

and misrepresentation claims.

Plaintiffs also contend that (1) their

ability as independent contractors was

usurped by MCI, and (2) that the most

profitable portion of the construction

contract was subtracted from the contract

making the overall unit cost rise and

diminishing the profitability of the

contract. Finally, Galin/Petropak assert

that MCI failed to obtain permits,

easements and rights-of-way timely, so as

to facilitate Galin/Petropak's progress of

work in a coherent and sequential manner.

On October 7, 1987, MCI signed the

construction contract. The contract, as

originally drafted, had a commencement date

of October 5, 1987. However, it was not

until sonetime around October 18, that the

contract was forwarded to Petropak in

Houston, Texas for execution, although MCI

had specified that Galin, on behalf of

Galin/Petropak, would be the party executing

the contract. Hence, it was not until

October 20, 197 that 'the contract was

received by Galin for execution. Despite

the fact that MCI had dictated an extremely

tight schedule for completion,

Galin/Petropak alleges that MCI delayed

delivery of the signed contract for more

than ten days. At first MCI only agreed to

extend the completion date by seven days,

but Galin acknowledged that ultimately it

was informed by MCI that the time of

completion was no longer critical and that

the date of completion was extended.

Plaintiffs' Trial Ex. 87 (Letter to MCI

dated February 15, 1988).

Plaintiffs immediately commenced

performance under the contract, but were

delayed in early November, just after

commencing the work, because of design

errors in the engineering plans of the route

and because MCI had not obtained a Southern

8 lk lem

“ ee ,

ee ae

Railway permit. In late November, after a

two week delay, Galin/Petropak began

installing cable at Piedmont, Alabama, en

route to Birmingham, Alabama.

Galin contends that from late-November

1987, through July 1988, MCI undertook a

course of conduct which amounted to

malicious interference with

Galin/Petropak's contract. To illustrate,

Galin cites that MCI's field supervisor,

Phil Davis, and some project inspectors,

most notably David Crozier, allegedly

attempted to seize direct control over the

performance of the work and created a

constant atmosphere of intimidation and

duress. Davis and Crozier, among others,

allegedly denied Galin/Petropak the

opportunity to perform work in an efficient

and cost-effective manner and threatened

the contractors’ employees with

termination.

Galin/Petropak's requests for

extensions of time and additional

engineering were rejected. Galin/Petropak's

expressions of concern over the discovery of

discrepancies between MCI's representations

and actual site conditions and defects in

MCI's designs were wholly ignored.

On December 3, 1987, less than six

working days after the plow operation had

started, MCI threatened Galin/Petropak with

termination of the contract for failure to

comply with the project's schedule, despite

the fact, as alleged by Galin, that MCI had

itself caused delays in such schedule by

failing to obtain one or more permits and by

failing to identify and remedy design and/or

engineering errors.

Galin/Petropak began to uncover rock in

areas where MCI's plans indicated an absence

of rock. MCI refused to allow

Galin/Petropak additional compensation for

extra work, grant extensions of time to

complete the work, or modify drawings or

_ a

Oe Ee el. ea

+ Stee

46. _ ————a _-

~ -

Mi A ln tom may

specifications in accordance with the new

found conditions.

By letter dated December 30, 1987, MCI

terminated work on the westerly-most seven

miles of the cable at the Birmingham end of

the project. This segment of the route had

a lower per unit cost for Galin/Petropak,

and as such, its removal from

Galin/Petropak's scope of work deprived the

contractors of a profitable section of the

route and increased their average per unit

cost on the balance of the work on the

project.

Galin/Petropak argues that in the same

letter, MCI directed that a second plow be

started, without consideration of the cost

factors involved in this second plow and

without recognition of the fact that the

work to be performed by such a second plow

was outside the critical path for

completion of the work.

In mid-January 1988, MCI directed that

Galin/Petropak cease work on _ Sunday,

although Sunday work had been previously

acceptable to MCI. During that same time

period, MCI rescinded its directive to start

a second plow. Finally, MCI directed that

Bob Burnette, one of the principals of

Galin/Petropak, be removed from the job site

and that James Bradley, one of

Galin/Petropak's onsite superintendents, be

reassigned.

Galin/Petropak's crews completed cable

installation to Commerce Street in

Birmingham, Alabama on or about February 21,

1988. Galin contends that the cable laying

operation was substantially complete at that

time except for areas where MCI had failed

to obtain the necessary permits or easements

and where MCI had allegedly misrepresented

the existence of rock. Galin/Petropak then

pursued the "clean-up" operations required

by its contract with MCI. Galin further

alleges that MCI forced the contractor to

;

perform "clean-up" work not called for by

the contract and forced the contractor to

do whatever the railroad, the Alabama

Department of Transportation, and various

county road authorities demanded in the way

of "clean-up" along the route. Plaintiffs

submitted claims for the additional work

they performed.

MCI responded that Galin/Petropak did

not honor the parties' agreement to file

written claims within a definite time

period after the occurrence of an event

plausibly giving rise to a claim for

additional compensation. By this failure,

the contractor is precluded from suing on

those claims. Defendant maintains that

plaintiffs' claims, as reflected in the

change in plan (CIP) provision of the

contract, should have been concluded by a

written, signed agreement settling the

amount due plaintiffs for the extra or

different work specified. Defendant's

Trial Ex. No. 3 at Contract §15.1-15.5

(henceforth referred to as "Contract").

Plaintiffs have attempted to discredit this

argument in their allegations that this

provision of the contract was orally waived

by MCI.

Since the completion of its work,

Galin/Petropak contends that MCI has

continued to withhold the retainage on the

project in an amount over $191,000.00 in

addition to ten percent (10%) of the

mobilization fee. MCI replies arguing that

the only amounts due the contractor from MCI

are the agreed upon "retainer" which MCI had

tendered but which the contractor has

refused.

Plaintiffs prepared and submitted late

claims numbered 1 through 19 and claim

number 35 for the total the sum of

$1,943,816.56. These claims are for

additional compensation for work performed,

delays incurred, inefficiencies created, and

See Se een he

ee Se Cn ee eee,

Cry ida d

loss of overhead and profit pertaining to

this project. MCI asserts that Plaintiffs’

Claims were waived and are barred as

untimely under the parties' contract. It

is plaintiffs' burden to show claims sued

upon were timely made. Contract §18.0.

MCI alleges that Galin/Petropak never

complied with Contract §18.0 of the General

Provisions by submitting any written

statement of a claim giving notice within

five (5) days and submitting supporting

documents within fourteen (14) days of the

occurrence of an event giving rise to a

claim.

MCI contends that the contractor

released MCI from any claims in this matter

based upon any work done up to and

including May 13, 1988. On April 22, 1988,

MCI issued its modification of contract to

Galin/Petropak. On July 14, 1988, MCI

formally terminated Galin/Petropak's

contract.

MCI submitted an offer to settle on

October 11, 1988, that Galin/Petropak

rejected. Thereafter the instant action was

brought. Galin/Petropak seeks to recover

the contract balance, the actual and

reasonable value of work which was performed

outside the scope of the contract, damages

which were incurred as a result of the

delays and acts of interference by MCI,

damages which were incurred as a result of

the improper administration of the contract

by MCI, damages which were incurred as a

result of inadequacies in ithe plans,

specifications, design and engineering of

the route, damages which were incurred as a

result of misrepresentations concerning the

existence and location of rock, damages

which were incurred as a result of the

"arbitrary and capricious" acts of MCI which

amounted to reckless disregard and/or gross

negligence, quantum meruit, and to recover

all pre-judgment interest entitled under

law, the reasonable and actual attorneys’

fees incurred-in bringing this suit, and

all costs of court.

Defendant contends that because a

specific written contract exists between

the parties, covering all aspects of

determination of compensation due or claims

thereon, plaintiffs cannot maintain an

action in quantum meruit.

Defendant MCI previously filed a

motion for summary judgment. Applying the

laws of Texas, the motion was granted in

part, disposing of Galin/Petropak's claim

for breach of covenant of good faith and

fair dealing.

The parties stipulated that the

summary judgment would be governed by Texas

law. This Court has ruled that the trial

would be governed by the choice of laws

provision in the contract which dictated

that the law of the State of New York would

control this matter. The Court is not now

revisiting its prior ruling denying the

summary judgment, but is merely construing

the contract under the laws of the State of

New York.

II DISCUSSION

A. Standard of Review

1. Judgments as a Matter of Law

The Supreme Court has observed the

"'standard for a directed verdict’ .

{mirrors the standard for summary judgment

inasmuch as] ... the trial judge must direct

a verdict if, under the governing law, there

can be but one reasonable conclusion as

verdict.'" International Shortstop. Inc. v.

Rally's Inc., 939 F.2d 1257, 1264 n.6 (5th

Cir. 1991) (quoting Anderson v. Liberty

Lobby Inc., 477 U.S. 242 (1986)).

¢ Rule 50 now encompasses judgments as

a matter of law in actions tried by a jury.

Rule 52 now controls judgments on findings

of the Court. Fed.R.Civ.P. 50 and 52.

Rule 56(c) provides that "[{summary]

judgment shall be rendered forthwith if the

pleading, depositions, answers to

interrogatories, and admissions on file,

together with the affidavits, if any, show

that there is no genuine issue as to any

material fact and that the moving party is

entitled to judgment as a matter of law."

Fed.R.Civ.P. 56(c). A party seeking

summary judgment bears the initial burden

of informing the district court of the

basis for its motion, and identifying

those portions of the pleading,

depositions, answers to interrogatories,

and admissions on file, together with the

affidavits, if any, which it believes

demonstrate the absence of a genuine issue

of material fact. Celotex Corp. v. Catret

477 U.S. 317, 325 (1986). The moving party

has the burden of showing that there is no

genuine issue of material fact and that the

moving party is entitled to judgment as a

matter of law. Williams v. Adams, 836 F.2d

958, 960 (5th Cir. 1988). The burden is not

on the movant to produce evidence showing

the absence of a genuine issue of material

fact. See International Ass'n of Machinists

& Aerospace Workers. Lodge No. 2504 v.

Intercontinental Mfg. Co., 812 F.2d 219, 222

(Sth Cir. 1987). A defendant who moves for

summary judgment may rely on the absence of

evidence to support an essential element of

the plaintiff's case. Id.

Once the movant carries this burden,

the burden shifts to the nonmovant to show

that summary judgment should not be granted.

See Celotex, 477 U.S. at 324-25. A party

opposing a properly supported motion for

summary judgment may not rest upon mere

allegations or denials of his pleading, but

must set forth specific facts showing the

existence of a genuine issue for trial.

Anderson vy. Liberty Lobby. Inc., 477 U.S.

242, 256-57 (1986). Assertions

unsupported by facts are insufficient to

oppose a motion for summary judgment.

Williams v,. Weber Management Serv,, #839

F.2d 1039, 1041 (Sth Cir. 1987). There

must be evidence giving rise to reasonable

inferences that support the nonmoving

party's position. St. Amant v. Benoit, 806

F.2d 1294, 1297 (5th Cir. 1987). Bare or

mere allegations are insufficient. Lodge

Hall Music. Inc. v. Waco Wrangler Club

inc., 831 F.2d 77, 79 (5th Cir. 1987).

In considering a motion for summary

judgment, the district court must view the

evidence through the prism of the

substantive evidentiary burden. Anderson,

477 U.S. at 254. The evidence of the

nonmovant is to be believed, and all

justifiable inferences are to be drawn in

his favor. Jd. at 254. The inferences to

be drawn from the underlying facts must be

viewed in the light most favorable to the

party opposing the motion. Matsushita

Electric Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587 (1986). Summary judgment

is inappropriate if the evidence before the

court, viewed as a whole, could lead to

different factual findings and conclusions.

Honore _v. Douglas, 833 F.2d 565, 567 (5th

Cir. 1987).

2. The Verdict Under the Governing

Law

Defendant has moved for a construction

of the contract. Both New York and Texas

Law agree that such a construction is a

matter for the court.

Texas law is clear. "The courts will

enforce an unambiguous instrument’ as

written; and in an ordinary case, the

writing alone will be deemed to express the

intention of the parties." Sun Oi] Co.

(Delaware) v. Madeley, 626 S.W.2d 726, 728

(Tex. 1981). See also Cherokee Water Co.

Vv. Forderhause, 641 S.W.2d 522 (Tex.

1982); Aetna Life & Casualty Co. v. Gunn,

628 S.W.2d 758 (Tex. 1982).

If a contract has certain and definite

meaning then it is not ambiguous and the

Court must construe the contract according

to its terms. Coker v. Coker, 650 S.W.2d

391 (Tex. 1983). It is the Court's duty to

ascertain the true intentions of the

parties as expressed in the instrument.

Id.

The interpretation of a contract

becomes a fact issue for the jury only when

the application of pertinent rules of

construction leave genuine uncertainty as

to which of two meanings is proper. Harris

v. Rowe, 593 S.W.2d 303, 306 (Tex. 1979).

This is so as Texas courts have repeatedly

declared that the question of whether a

contract is ambiguous is one of law for

determination by the court. See, e.g., R&

ers. v ’

596 S.W.2d 517, 518-19 (Tex. 1980); Coker v.

Coker, 650 S.W.2d at 394.

Employing New York law the same

conclusion is reached. Under New York law

whether a contract is clear or ambiguous is

a question of law to be resolved by the

courts. See W.W.W. Assocs. v. Giancontieri,

77 N.Y.2ad 157, 162, 559 N.E.2d 677, 565

N.Y¥.S.2d 440 (1990); see also Hudson-Port

Ewen Assocs. v. Chien Kuo, 165 A.D.2d 301,

303, 566 N.Y.S.2d 774 (N.Y. App. Div. 3rd

Dept.), aff'd 78 N.Y.2d 944, 578 N.E.2d 435,

573 N.Y.S.2da 637 (1991). Only when a writing

is found to be ambiguous may extrinsic

evidence of the intention of the parties be

accepted. New York State Elec. & Gas Corp.

v. Aasen, 157 A.D.2d 965, 967, 550 N.Y.S.2d

223 (N.Y. App. Div. 3rd Dept. 1990).

B. The Applicable Law

It is the Court's obligation to

determine whether the terms of a contract

are clear and unambiguous or so equivocal

as to require further interpretation by a

jury.

The release issue will be dealt with

first. Although the release is

dispositive, other rationales for its

decision will be

discussed in order to demonstrate that,

based on the terms of the contract, this

ruling is judicious, exacting, and

inescapable.

1. Release

Construction contracts may be framed as

to make them suitable for release. In Board

of Educ. of the City of New York v. Mars

Assoc. Inc., 568 N.Y.S.2d 68 (N.Y. App.

Div. lst Dept. 1991), a release executed by

the Board with a supplier pertaining to "any

and all claims related to or in connection

with" the materials installed by the

subcontractor barred claims asserted by the

contractor. Jd. In the case at hand, the

contractor “unconditionally and without

reservation release[d) ... MCI ... from any

and all ... claims, demands, ... and

liability in any matter whatsoever."

Defendant's Trial Ex. 6 (Partial Release

executed May 13, 1988). Inasmuch as the

wording of the instant release is

substantially similar to the release in

fe) (e) j WwW Vv

Mars Assoc. Inc., this Court will afford it

the same scope, given the analysis

discussed below.

A party who enters into a plain and

unambiguous contract cannot avoid it by

stating that he erred in understanding its

terms. Relief from a release may not be

granted on the basis of vague and

conclusory allegations. Touloumis v.

Chalem, 548 N.Y.S.2d 493 (N.Y. App. Div.

lst Dept. 1989). According to New York

Law, a court can modify or void a release

as to a particular claim only when there

is evidence that the written release does

not represent the intent of the parties,

such as, there is, for example, a mistake

as to the extent of the damages sustained,

Decosta_ v. Williams, 119 Misc.2d 314, 462

N.Y.S.2d 799 (N.Y. Sup. Ct. 1983), or where

there are specific exclusions or

limitations in the release demonstrating an

intent to limit its effect. Herman v.

Malamed, 487 N.Y.S.2d 791 (N.Y. App. Div.

lst Dept. 1985). In the case at hand there

has been no adequate showing that the

release was to be limited in any way. The

Defendant's evidence clearly shows that

Galin entered into partial releases

approximately eight times before entering

into the release signed on May 13, 1988.

The certificate of partial release

reads:

The undersigned Contractor Certifies

that the work covered by this invoice

has been actually completed in

accordance with the Contract

Documents. ...

In Consideration of payments made

heretofore, or to be made based on

this invoice for labor, material,

equipment, subcontract work, and any

and all costs incurred for’ the

performance of contract work invoiced

thus-far, the Contractor hereby

unconditionally and without

reservation releases and indemnifies

MCI and their officers, agents,

employees, assignees and heirs from

any and all liens, claims, demands,

penalties, losses, costs, damages and

liability in any matter whatsoever.

Defendant's Trial Ex 6 (release signed May

13, 1988).

The release is unequivocal in that it

bars any claims for the performance of

contract work "invoiced thus far." When

read in light of the contract's terms this

would include all claims for work and for

additional work that were submitted or

required to be submitted at that time. See

Contract §18.

Plaintiffs argue that the verbiage

"invoiced thus far" denotes that those

items that were not then invoiced are

actionable; Galin/Petropak maintain that

the invoices they now submit are effective.

The evidence positively illustrates,

however, that Galin submitted claims on or

after May 13, 1988, the date of the

release, for work done prior to May 1,

lia a

1988. Under the contract's terms plaintiffs

were to give notice of additional claims

within five days of the occurrence giving

rise to the claim and to submit the

additional claims with supporting documents

within fourteen days. These procedures were

not followed. Plaintiffs attempt to avoid

the release by arguing that they could

submit invoices for prior work after they

Signed the release because there was a

waiver of the notice requirement; this Court

rejects that assertion.”

In construing a release, it is appropriate

to look to the controversy being

settled and the purpose for which the

release was executed. Metz v. Metz, 572

N.¥.S.24 813 (N.¥. App. Div. 3rd Dept.

1991). The plaintiffs' argument is

3 For a more thorough discussion of

waiver see the discussion below,

specifically, the notice section of this

decision.

unconvincing; if this Court were to give

credence to Galin's interpretation of the

document, the release would be vitiated, a

development the parties could not have

envisioned.

Where, as here, the plaintiffs' claims

are based on the subject matter covered in

the release, and the language of the May

13, 1988 release is clear and unambiguous,

the release will bar those claims. See Toy

News Co. v. City of Troy, 563 N.Y.S.2d 301

(N.Y. App. Div. 3rd Dept. 1990). The

record in this case reveals that all of

the claims for work, absent Claim No. 7 for

additional cleanup, were performed and

known by the plaintiffs prior to May 1,

1988.

Plaintiffs are bound by the terms of

the release because an action cannot be

sustained where the party to the action

knew or should have known of the facts

giving rise to a claim at the time the party

executed the release. Absent fraud the

plaintiffs are bound by the terms of the

release. Morey v. Sings, 570 N.Y.S.2d 864,

868 (N.Y. App. Div. 3rd Dept. 1991) (in

action for specific performance release

provision governed where claimant knew or

should have known of facts giving rise to

the claim at the time of execution) (citing

Kirchner v. New Home Sewing Mach. Co., 135

N.Y. 182, 188-189, 31 N.E. 1104 (1892)). The

plaintiffs' showing, has not been supported

by adequate evidence tending to show fraud

with respect to this release or in its

inducement. Plaintiffs' claim that it was

fraudulently induced into entering the

contract by MCI's furnishing inaccurate

information is insufficient to void the

release in this instance. Phillips. Inc.

vy. Monroe County Water Auth., 504 N.Y.S.2d

947, 948 (N.Y. App. Div. 4th Dept. 1986)

(risk of loss provision prevails).

Moreover, inequitable conduct that

would void a release must be supported by

Clear and convincing evidence of fraud

coupled with unilateral mistake.

Oadensburq Building Supply Co. Inc. v.

Lumber Mutual Ins. Co., 477 N.Y.S.2d 825

(N.Y. App. Div. 3rd Dept. 1984). The fact

that the agreement contains only a "one-

way" release does not create any ambiguity.

Adler & Shaykin v. Wachner, 721 F. Supp

472, 479 (S.D.N.Y. 1988).

A general release can be deemed to be

the product of a reasonable business

decision negotiated in good faith between

the parties when demonstrated by

plaintiffs' repeated failure to seek before

executing the release. David Grossman v.

Auer's Van & Express Co. Inc., 569 N.Y.S.2d

429, 429-30 (N.Y. App. Div. ist Dept.

1991) (owner of artwork's release valid

although carrier refused to tender art until

receipt of payment seemingly denoting

economic duress) (citing Austin Instrument

Ce aoe 29 H.¥.8G@ 23244, 133,

276 N.E.2d 238 (1971)). Although the

contract is on a standard pre-printed forn,

it seems that the release was clearly the

product of careful bargaining, parties

entered into eight similar releases. See

generally Mar Co. ExPort. Inc. v. Banco De

Santander-Puerto Rico, 470 N.Y.S.2d 4 (N.Y.

App. Div. 1984). Additionally, plaintiffs

are now barred from claiming that lease was

induced by duress. A release, the execution

of which is induced by duress, is voidable,

not void, and the entity claiming duress

must act promptly to repudiate the release

or he will be deemed to have waived that

right. See DiRose v. PK Management Corp.,

691 F.2d 628, 633-34 (2nd Cir. 1982);

Joseph F. Egan. Inc. v. City of New York,

215 N.E.2d 490 (N.Y. 1966).°

2. Submission of Claims - Notice and Waiver

An additional basis for this Court's

‘ The same result is obtained under

Texas law. The United States Supreme Court

has noted that the duress defense must be

raised soon after the coercion is applied;

in a case involving a negotiated agreement

between parties represented by counsel the

delay is itself compelling evidence that

there was in fact no duress. See

Louisiana-Pacific Corp. v. United States,

656 F.2d 650, 653 (Ct. Cl. 1981) (citing

Silliman _v. United States, 101 U.S.(11

Otto) 465 (1879)). This Court concludes,

therefore, that Galin failed to carry its

burden in establishing economic duress.

Plaintiffs also raise the cloud of

economic duress claiming that under MCI's

threats to terminate the contract they were

forced to add men and do additional work.

decision exists in that the claims on which

This cause of action cannot stand. Black

Lake Pipe Line Co. v. Union Const. Co., 538

decision exists in that the claims on which

this action is based are time barred

according to the contract's terms.

Plaintiffs' strive to bypass the notice

guideline of the contract by alleging that

there has been a waiver of that requirement.

It is uncontested that all the Change In

Plan ("CIP") claims, excluding CIP NO. 7,

involved work done prior to May 1, 1988.

The appropriate inquiry now is whether the

plaintiffs' filed timely notice of their

claims.

In regard to CIP No. 7, plaintiffs

the parties to this action. This work was

not extra-contractual; it was a mere

S.W.2d 80, 91 (Tex. 1976).

Plaintiffs' claim for interference with

its status is also unjustified inasmuch as

"([ijnterference with contractual relations

is privileged where it results from the

exercise of a party's own rights or where

the party possesses an equal or superior

interest to that of the plaintiff in the

subject matter." Id. (citations omitted).

addition to the contract pursuant to clause

§15.1, as it was clearly within the scope

of the contract for construction services.

See Contract § 9, "CLEANUP." Since CIP

NO. 7 was an addition to the contract,

plaintiffs were required to submit a timely

notice of a clain.

The record reveals that they did not

timely file any of their claims.

The relevant portion of the contract

reads:

Subject to the provisions of Clause

15, CHANGES, hereof, Contractor shall

give MCI Contract Administrator

written notice within five (5) working

days after the happening of any event

which Contractor believes may give

rise to claim by Contractor for an

increase in the Contract Price or the

period of performance.

Within fourteen (14) working days

after the happening of such event

Contractor shall supply MCI Contract

Administrator with a statement

supporting Contractor's claim, which

statement shall include Contractor's

detailed estimate of any change in

Contract Price and period of

performance occasioned thereby. ...

MCI shall not be liable for, and

Contractor hereby waives, any claim or

potential claim of Contractor of which

Contractor knew or should have known

and which was not’ reported . by

Contractor in accordance with the

provisions of this Clause. ...MCI

shall not be bound to any adjustments

in the Contract Price or scheduled

time for Contractor's claim unless

by contract modification. ...

Contract Clause § 18.0 (emphasis supplied).

Plaintiffs contend that the work they

did in connection with the instant contract

was “extra work" not covered under the terms

of the contract, making the notice

provisions inapplicable for the "extra work"

performed. Alternatively, plaintiffs

maintain that the "change" and "notice"

provisions of the contract were waived.

Alternatively, they assert that, assuming

the notice provision was not waived, they

effectively gave notice as MCI was informed

orally that Galin/Petropak would be

submitting claims.

This Court finds as a matter of law

that the changes MCI required were

contractual and as such were dictated by

the terms of the contract. Contract Clause

§15.1 specifically states that "[(t)his

Contract shall be subject to changes by

additicns, deletions or revisions..." The

Claims eventually presented were for work

falling within the scope of the contract.

See Savin Brothers Inc. v. State, 405

N.Y.S.2d 516 (N.Y. App. Div. 4th Dept.

1978), aff'd, 393 N.E.2d 1041 (N.Y. 1979).

As a result submission of these claims were

dictated by the notice provisions in the

contract.

a thorough review of the record

indicates that the parties did have

discourse as to whether specific terms of

the contract were waived. It is clear that

the notice provision was never waived,

inasmuch as the evidence presented by the

plaintiffs does not demonstrate that a

genuine issue of material fact exists as to

the existence of a waiver.

In a letter to MCI, S.J. Gaido III,

noted that "[(Galin/Petropak] acknowledge

that many of the formalities of the contract

have been waived by MCI when directing or

administering various work" with respect to

field changes. Plaintiffs' Trial Ex. 87

(Letter to MCI dated February 15, 1988)

(emphasis supplied). Clearly this letter

dealt with changes to be administered in the

field. No reference was made as to a waiver

of the notice provisions. Even so, in

response to that letter, Richard Yeats,

Senior Contract Administrator for MCI,

replied that while negotiations may be

performed in the field, when a "reasonahle

settlement cannot be reached ... Galin is to

submit a proposal in writing... ." Yeats

continued by noting that the proposals

would be negotiated and then added to the

contract by "change order just as the CIP's

are added by change order." The letter

then goes on to relate that "MCI has

stressed making these changes as they

occur, not at the end of the contract which

makes negotiations and contract close out

laborious." Plaintiffs' Trial Ex. 89

(Letter to Galin Corporation dated February

16, 1988) (emphasis supplied).

Plaintiffs cite to the internal

memorarida, correspondence, and a settlement

offer to support the proposition that a

waiver was executed. However, the letters

cited, by their unambiguous language,

manifest a clear intent by MCI to avoid a

waiver of the contract terms; MCI

reiterated that all proposals for changes

must be in writing and submitted as they

occur. Furthermore, the letter that Galin

argues constitutes a waiver or an admission

of liability is in reality a settlement

offer. This offer to settle contains no

admissions of fact and may be properly

excluded as evidence if used in that

context, inasmuch as offers, made under the

specter of imminent suit, may not be used

against a party to prove liability. Romano

v. Subaru of America Inc., 568 N.Y.S.2d 883

(N.Y. App. Div. 3rd Dept. 1991). Public

policy dictates this course of action;

settlement offers are not on their face

admissions of fact. See Smith v. Satterlee,

130 N.Y. 677 £=(1891). The record is

substantially lacking adequate evidence that

tends to demonstrate a waiver of the notice

requirement.

Moreover, plaintiffs' contention that

oral notice was all that was required after

MCI allegedly gave an oral waiver, is

defective inasmuch as Mr. Lingle of Galin

Corporation affirmatively acknowledged in a

letter to Petropak, dated May 2, 1988, that

"([wje have met several times regarding

Claims ... [wjhile we need our claims to be

accurate and complete, I feel that the

timeliness of filing is also important."

Defendant's Trial Ex 78. Galin recognized

the need to file timely claims. In another

letter to Petropak, dated May 19, 1988,

Galin wrote under the heading "Completion

and Submission of Claims" that was the

"area of or greatest 'fear.'" Defendant's

Trial Ex. 83. Galin went on to note that

"(ojur 'fears' are that ... the claims will

not be completed timely ...." Id.

Clearly, Galin was apprehensive about the

timely submission of claims in accordance

with the notice and filing provisions of

ee ee ee

<j ‘

the contract. Such concern is at odds with

their contention that a waiver existed. A

valid waiver “requires ... the voluntary and

intentional abandonment of a known right

which, but for the waiver, would have been

enforceable." Naussau Trust Co. v. Montrose

Concrete Prods. Corp., 56 N.Y¥.2d 175, 184,

436 N.E.2d 1265, 451 N.Y.S.2d 663, reh'g

denied, 57 N.Y.2d 674, 439 N.E.2d 1247, 454

N.Y.S.2d 1632 (1982). Under the law there

has been no demonstration that a valid

waiver was granted.

Aside from the fact that plaintiffs

have not substantiated their claim that

there was a waiver of the notice provision,

another independent rationale exists to

defeat the notion of a waiver. The

rationale stems from the terms of a contract

replete with language forbidding oral

modifications except in specific

circumstances. The contractor was warned

that a waiver of all rights to claims would

be the result of a contractor's compliance

with mere oral changes. Contract §15.5.

A waiver, however, may arise by

“express agreement or by such conduct or

failure to act as to evince an intent not

to claim the purported advantage." Hadden

v. Consolidated Edison Co. of N.Y., 45

N.Y.2d 466, 469, 382 N.E.2d 1136, 410

N.Y.S.2d 274 (1978). The waiver need not

be in writing to be enforceable but may be

the result of conduct and other

representations. See Naussau Trust Co.,

56 N.Y.2d at 175.

New York law is fraught with decisions

that have allowed oral waivers to contracts

whose very terms mandate written

modification. See Rose _v. Spa _ Realty

Assoc., 366 N.E.2d 1279 (N.Y. 1977);

Ackerman v. Landes, 493 N.Y.S.2d 59 (N.Y.

App. Div. 2nd Dept. 1985). Recent New York

cases, however, have held valid a factoring

agreement's provision that any claim of

mistake be made within thirty days of the

monthly accounting and that "no waiver

whatsoever [of this time period] shall be

valid unless in writing signed by you anc

then only to the extent therein set forth."

I. Appell Corp. v. Crocker Commercial

Services Inc., 536 N.Y¥.S.2d 440, 441, rev'd

on other grounds, 564 N.Y.S.2d 358, 359

(N.Y. App. Div. lst Dept 1991). Plaintiff

in that case asserted that it made oral

objections to the monthly = accounting

statements. The Court granted summary

judgment to the defendant, on the ground

that:

{[S])pecific written objections to the

claims made in this lawsuit are

lacking and no written waivers by the

defendant have been produced.

100

Id.

Additionally, any contention that

notice was given orally when the contract

specifically mandates claims to be in

writing is precluded. See Chase Manhatten

Bank v. Ungarten, 742 F. Supp. 167, 168-69

(S.D.N.¥. 1990). Equivalent, although not

verbatim, converse terminology was used in

the case at hand. The instant contract

noted that "Contractor hereby waives any

and all rights to claim from MCI such costs

or additional time to perform the work as a

result of compliance by Contractor with

such oral changes." Contract §15.5.

Therefore, in accordance with New York law

this "court cannot rewrite the agreement of

the parties." I. Appell Corp., 536

N.Y.S.2d at 441.

Having concluded that plaintiffs have

failed to show the existence of a waiver,

101

this Court finds that all of

Galin/Petropak's claims were not in

compliance with the notice and filing

provisions of the contract and were properly

rejected.

Statutory and private notice of claims

provisions, establishing "windows" or

limitations periods in which to file claims,

have long been upheld under New York law.

See Accen Constr. Corp. v. Port Washington

Union Free School Dist., “76 N.Y.S.2d 628

(N.Y. App. Div. 2nd Dept. 1991); Heydt

Contracti Vv S

Co., 536 N.Y.S.2d 770, 771-72 (N.Y. App.

Div. lst Dept. 1989); Brink's. Inc. v. City

° ew , 528 F. Supp. 1084, 1087

(S.D.N.Y 1981). Contractual notice of claim

requirements are generally valid if not

unreasonably short. Security Mutual Ins.

Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d

102

436, 293 N.E.2d 76, 340 N.Y.S.2a 902

(1972) (insurance contract). "Absent a

valid excuse, a failure to satisfy the

notice requirement vitiates the {contract}

+--+ and the [party] need not show prejudice

before it asserts the defense of

noncompliance." Jd. at 440. In the case

at hand, the defendant had a legitimate

reason for the fourteen day window.

Notice after that time would, among other

things, deprive MCI of the opportunity to

investigate properly the claims in order to

prevent fraud. Under the circumstances

this time period can be said to be

reasonable.

Therefore, where, as here, a "window"

to file has been established for the

orderly consideration of claims and to

protect the verification procedure, this

"court cannot rewrite the agreement of the

103

parties" to open that window. I. Appell

Corp., 536 N.Y.S.2d at 441.

3. Assumption of Risk Under Contract

This action is predicated on

affirmative misrepresentations~

by MCI that

rock probes were performed. This allegation

falls under the assumption of risk provision

of the contract and may be properly dealt

with in this motion.

. "New York recognizes a cause of

action for negligent misrepresentation as

set forth in section 552 of the Restatement

(Second) of Torts." Becker v. Painewebber.

Inc., No. 91-2568, -F.2d--,slip op. 4 (5th

Cir. June 10, 1992) (citing

, 615 F.2d 68, 81-82 (2d

Bankers Trust Co.

Cir. 1980), cert. denied, 449 U.S. 1123

(1981); Ultramares Corp. v. Touche, Nevin,

& Co., 255 N.Y. 170, 174 N.E. 441 (1931);

International Products Co. v. Erie R.R., 244

N.Y. 331, 155 N.E. 662 (1927), cert. denied,

275 U.S. 527 (1927); Glanzer v. Shepard,

233 N.Y. 236, 135 N.E. 275 (1922)). “The

elements of negligent misrepresentation

are: (1) a careless statement containing

false information made by someone, such as

an employer, with a special relationship

with the recipient; (2) the recipient's

justifiable reliance on the information; (3)

injury proximately caused by the recipient's

104

ee ee eS ee ae we Pe

The risk of loss provision governs

this claim. See Contract § 7. The very

inclusion of these terms in the contract

precludes Galin from burdening MCI with the

responsibility for "unanticipated"

subsurface conditions. See Wrecking Corp.

v. Memorial Hosp. for Cancer and Allied

Diseases, 495 N.Y.S.2d 83 (N.Y. App. Div.

2nd Dept. 1985); Depot Constr. v. State of

New York, 278 N.Y.S.2d 363, 224 N.E.2d 866

(1967). The bidding specifications also

contained similar language. Defendant's

Trial Ex. 1 at pp. 1-2 ("Instructions to

Bidder"). Additionally, Petropak stated in

its bid proposal that it had "become

thoroughly familiar with the .. . local

reliance on the information. Mallis, 615

F.2d at 82." inew P

No. 912568,--F.2d--, slip op. 4. (broker

could notestablish that he suffered losses

in reliance nor could he establish any link

between the amounts he desired to recover

and the alleged negligent

misrepresentation).

105

oe :

conditions . . . and fully inspected the

site in all particulars." Defendant's

Trial Ex. 2 at p. 1. Where the contractor

was allowed to make independent borings to

verify MCI's data, the assumption of risk

provision may be applied. Cf. Foundation

Co. v. State of New York, 233 N.Y. 177,

184-85, 135 N.E. 236 (1922).

Primarily plaintiffs premise their

claim on, among other things, the fact that

MCI hired an independent engineering firm to

take bore samples and provide certain

measurements of the proposed route

immediately before the bidding was to

commence, knowing full well that accurate

samples and measurements could not be taken

in such a short period of time of the area

inspected. Plaintiffs further contend that

an air of fraud existed in that the only

change in the second bidding proposal was

106

the incorporation of measurements.

Plaintiffs argue that where an owner

makes false representations as to

subsurface conditions it may not rely on

contractual provisions that provide that

the contractor assumes the risk of

subsurface conditions, citing Young

Fehlhaber Pile Co. v. State, 177 Misc. 204,

30 N.Y.S.2d 192, 19S (Ct. c1. 1941),

aff'd, 37 N.Y.S.2d 928 (N.Y. App. Div. 3rd

Dept. 1942).

New York Courts have held, however,

that where, as here,

plaintiff[s]} contend as the basis for

[their] Claim of willful

misrepresentation that test holes were

never dug, that the information as to

the depth of the rock furnished by

defendant was inaccurate, and that

defendant withheld information as to

its method of excavation[, ] (their)

claim of inaccurate measurement, even

if true, is insufficient to support a

claim of misrepresentation.

conten Witting 2 . erate tnt

107

Auth., 504 N.Y.S.2d 947, 948 (N.Y. App. Div.

4th Dept.1986) (emphasis supplied) (citations

omitted).

Moreover, in light of the disclaimers

in the contract, the additional rock did

not constitute a "cardinal change" which

altered the very essence of the contract.

Additionally, the job drawings do not make

MCI liable inasmuch as the language of the

contract obligates the contractor to satisfy

itself as to site conditions. Costanza

N.Y.S.2d 394, 395-96 (N.Y. App. Div. 4th

Dept. 1989).

New York's highest court held that

while fraud in the inducement-= might

otherwise constitute a defense, it is

effectively rebutted when the clear

language of a disclaimer forecloses reliance

on the alleged misrepresentation. See

108

Citibank. N.A. v. Plapinger, 495 N.Y¥.S.2d

309, 311, 485 N.E.2d 974 (1985) (action on

a promissory note where defense asserted

reliance on separate oral agreement).

Furthermore, one elects either to

continue with a _ contract "fraudulently

induced" or rescind it. Plaintiffs

encountered more rock than they allegedly

anticipated well before they signed the

ninth partial release. If one elects to

continue with the contract, one accepts all

the burdens contained in it as well as its

benefits. Angerosa v. White Co., 290

N.Y.S. 204 (N.Y. App. Div. 4th Dept. 1936),

aff'd, 275 N.Y. 524, 11 N.E.2d 325 (1937).

4. Deletion of Work

Plaintiffs further maintain that MCI

terminated work on the westerly-most seven

miles of the cable at the Birmingham end of

the project in violation of the contract

109

and seek lost profits as a result. This

segment of the route had a lower per unit

cost for Galin/Petropak and, as such, its

removal from Galin/Petropak's scope of work

deprived the contractors of a profitable

section of the route and increased their

average per unit cost on the balance of the

work on the project.

The contract specifically stated that

it "shall be subject to- revisions,

deletions, or revisions thereto by MCI."

Contract § 15.1. The Contract went on to

note, under the termination at MCI's option

provision, ° that:

MCI shall have the right at any time,

with or without cause, to terminate

further performance of the Work by

written or telegraphic notice to

Contractor specifying the date of

termination. ...

All requests for compensation under

any of the foregoing provisions of

Clause 17.3 shall be submitted to MCI

6 Contract § 16.

110

in accordance with the provisions of

Clause 15, CHANGES, hereof. In no

event shall Contractor be entitled to

any prospective profits or any damages

because of such termination.

Contract §§ 17.1 & 17.4.

The profits plaintiffs seek are barred

by the contract.

Any changes as to the rise in unit

price should have been raised instantly in

accordance with the terms of the changes

provision. If MCI and the Contractor were

unable to reach an agreement for an upward

departure in the pricing of the contract as

it stood after the termination of the

Birmingham portion, then the Contractor

should have complied with the Claims

provision, Clause 18. See Contract §

15.4. As noted above, plaintiffs failed to

submit timely any of their claims.

Plaintiffs are not entitled to recover

lost profits and overhead expenses

111

allegedly incurred prior to the effective

date of termination where the parties

explicitly provided that the contract could

be canceled by the defendants at any time

and that, if it were so canceled, the

defendants would make adjustments to reflect

the price of percentage of completion plus

actual costs. iv i Vv.

Ci ° ew , 553 N.¥.8.24 324, 325

(N.Y. App. Div. lst Dept. 1990).

[T]o interpret the parties' agreement

to provide for payment, upon

termination, of lost profits and

overhead expenses incurred, would be

improperly rewriting the contract

under the guise of contract

construction in contravention of the

intention of the parties to limit

recovery to services actually

performed, as clearly and

unambiguously set forth in the

contract language. Slatt v. Slatt, 64

N.Y.2d 966, 968, 488 N.Y.S.2d 645, 477

N.E.2d 1099; West Weir and Bartel Inc.

v. Mary Carter Paint Co., 25 N.Y.2d

535, 307 N.Y.S.2da 449, 255 N.E.2d 709.

Plaintiffs contend that MCI's decision

112

to delete the portion of the work for

Galin\Petropak's failure to adhere to a

time table was unreasonable inasmuch as the

defendant undermined the schedule by

"holdups." Furthermore, Plaintiffs

contend that the delay in the hook-up of

the cable system rendered the schedule

moot.

Regardless of that fact, the contract

clearly stated that termination could be

obtained with or without cause. Plaintiffs

have failed to come forward with any

evidence to convince this Court to construe

the Contract in any other manner than by

its express terms.

Under firmly established precedent,

where .. . the opposing party fails

to submit extrinsic evidence in

support of its interpretation of a

contract or other instrument, the

resolution of any ambiguity in terms

is a matter of law for the court ...

the motion should be granted[.] W.A.

Vv Vv a, SS N.Y.20

659, 661, 446 N.Y.S.2d 928, 431 N.E.2a

113

289 (1981); Schuler-Haas Elec. Co. vy.

Aetna Cas. & Sur. Co., 40 N.Y.2d 883,

885, 389 N.Y.S.2d 348, 357 N.E.2d 1003

(1976;_Mallad Constr. Corp. v. County

Fed, Sav. & Loan Assn., 32 N.Y¥.2d 285,

290, 344 N.Y.S.2d 925, 298 N.E.2d 96

(1973).

552 N.Y.S.2d 185, 186 (summary judgment

context).

5. Quasi Contract & Quantum Meruit

The Court's decision on these issues

turns on whether or not it concludes as a

matter of law that the Contract defined

fully the relationship between the parties.

The laws of the State of New York and the

State of Texas mandate similar outcomes.

Because the Court has found that the

contract fully defines the parties'

relationships, a New York Court of Appeals

case controls the present dispute. In

lark-FitzDatrick I v. I Island Rai}

Road Co., 70 N.Y.2d 382, 516 N.E.2d 190, 521

N.Y.S.2d 653 (1987), a unanimous court

explained that "the existence of a valid and

114

enforceable written contract governing a

particular subject matter ordinarily

precludes recovery in quasi contract for

events arising out of the same subject

matter". Jd. at 388. The court continued:

A ‘quasi contract' only applies in the

absence of an express agreement, and

is not really a contract at all, but

rather a legal obligation imposed in

order to prevent a party's unjust

enrichment . . ." Briefly stated, a

quasi contractual relationship is one

imposed by law where there has been no

agreement or expression of assent by

word or act, on the part of either

party involved. It is impermissible,

however, to seek damages in an action

sounding in quasi contract where the

suing party has fully performed on a

valid written agreement, the existence

of which is undisputed, and the scope

of which clearly covers the dispute

between the parties.

Id. at 388-89 (citations omitted; emphasis

in original).

Under the laws of the State of Texas,

if the work in question is covered by an

express contract, as it is in the instant

suit, there can be no recovery in quantum

115

meruit. Catton v. Leach Corp., 896 F.2d

939, 947 (5th Cir. 1990) (citations omitted).

6. Miscellaneous Issues

The amount of retainage remains

uncontested and totals approximately

$191,039.55. Plaintiffs contend that in

addition to that amount they are owed: (1)

approximately eighty thousand dollars fora

final quantities invoice; (2) approximately

fourteen thousand dollars for change-in-plan

No. 41; and (3) approximately ten percent of

the mobilization fee. Inasmuch as the first

two factors were not timely filed, recovery

is barred. Therefore, plaintiffs will

recover only the retainage amount totalling

$191,039.55 upon their presentment to MCI a

final release and lien

affidavit.

III . CONCLUSION

This Court, having considered the other

116

contentions presented concludes, for the

reason set forth above, that MCI's motion

for directed verdict should be granted.

All other motions before the Court are now

MOOT.

SIGNED at Houston, Texas, this 20th day of

July, 1992.

MELINDA HARMON

UNITED STATES DISTRICT JUDGE

117

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 92-2649

GALIN CORPORATION and PETROPAK, INC.,

Plaintiffs-Appellants,

versus

MCI TELECOMMUNICATIONS CORPORATION,

Defendant-Appellee.

Appeal from the United States District

Court for the Southern District of Texas

ON 0

(Opinion 1-14-94, 5 Cir., F.3d( )

(FEBRUARY 16, 1994)

Before WISDOM, HIGGINBOTHAM and SMITH,

Circuit Judges.

PER CURIAM:

(X) The Petition for Rehearing is DENIED

and no member of this panel nor Judge in

regular active service on the Court having

requested that the Court be polled on

118

;

rehearing en banc, (Federal Rules of

Appellate Procedure and Local Rule 35) the

Suggestion for Rehearing En Banc is DENIED.

( ) The Petition for Rehearing is DENIED

‘ and the Court having been polled at the

request of one of the members of the Court

and a majority of the Circuit Judges who

are in regular active service not having

voted in favor of it, (Federal Rules of

Appellate Procedure and Local Rule 35) the

Suggestion for Rehearing En Banc is also

DENIED.

( ) A member of the Court in active

service having requested a poll on the

reconsideration of this cause en banc, and

a majority of the judges in active service

not having voted in favor of it, rehearing

en banc is DENIED.

ENTERED FOR THE COURT:

Patrick E. Higginbotham

United States Circuit Judge

REHG~-6

119

IN THE UNITED DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

GALIN CORPORATION and

PETROPAK, INC.

vs. CIVIL ACTION

NO.H-88-4131

MCI TELECOMMUNICATIONS

CORPORATION

ORDER

This action came on for trial, and the

issues having been duly heard and a decision

having been duly rendered by the Court after

the close of evidence, pursuant to Rule

50(a) of the Federal Rules of Civil

Procedure,

It is ORDERED and ADJUDGED that the

defendant's motion for a judgment as a

matter of law against the plaintiffs is

hereby GRANTED, that plaintiffs Galin

Corporation and Petropak Inc., take nothing,

120

te a

Spl LW f

Save the retainage amount of $191,039.55 to

be tendered by the defendant upon

plaintiffs presentment to MCI of a final

release and lien affidavit, that this

action be dismissed on the merits, and that

the defendant MCI Telecommunications

Corporation recover of the plaintiffs Galin

Corporation and Petropak Inc., its costs of

action.

SIGNED at Houston, Texas, this 20th day of

July, 1992.

MELINDA HARMON

UNITED STATES DISTRICT JUDGE

121

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.