Global Energy Consultants, LLC v. Holtec International, Inc. , 479 F. App'x 432 ( 2012 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 11-3474
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GLOBAL ENERGY CONSULTANTS, LLC,
Appellant
v.
HOLTEC INTERNATIONAL, INC.;
HOLTEC MANUFACTURING DIVISION, INC.,
____________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civ. No. 2:08-05827)
District Judge: Honorable Eduardo C. Robreno
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Submitted Under Third Circuit LAR 34.1(a)
April 10, 2012
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Before: HARDIMAN, GREENAWAY, JR., and GREENBERG, Circuit Judges
(Opinion Filed: May 2, 2012)
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OPINION
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GREENAWAY, JR., Circuit Judge.
Appellant Global Energy Consultants, LLC (“Global”) filed suit against Holtec
International, Inc. and Holtec Manufacturing Division, Inc. (collectively, “Holtec”)
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alleging that Holtec had breached the terms of its agreement with Global. Specifically,
Global alleged that Holtec had “circumvented” it by excluding Global from its dealings
with certain business contracts despite a provision in the agreement prohibiting
circumvention by either party. The parties conducted discovery. Global voluntarily
dismissed its breach of oral contract claim and its breach of confidentiality provision
claim. Both parties sought summary judgment on the remaining claim—breach of the
non-circumvention provision. The District Court granted Holtec‟s motion for partial
summary judgment. Global filed a timely appeal.
Because we agree with the District Court that “circumvent” is an indefinite term
and that the non-circumvention provision is therefore unenforceable, we will affirm the
decision of the District Court.
I. BACKGROUND
We write primarily for the benefit of the parties and therefore recount only the
essential facts.
In September 2001, Global approached Holtec about joining a team that Global
was putting together to pursue European business opportunities related to spent nuclear
fuel storage. Before it would reveal the details of those projects, Global required Holtec
to sign a “Confidentiality and Non-Circumventure Agreement” (the “Agreement”), which
it did. The two-page Agreement acknowledges that the course of business between the
parties will involve the provision of non-public information by both parties and limits the
circumstances in which that information can be disclosed to third parties.
The paragraph at issue in this appeal states:
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Each party acknowledges that Holtec and [Global] may be in similar
businesses, and are not constrained by this Agreement with respect to other
business activities except solely to the extent of the express prohibitions
contained herein. Each party further agrees to not circumvent the other
party, or to circumvent the other party to the other party‟s clients without
prior written authorization.
(the “non-circumvention provision.”) The Agreement also contains an integration clause
and a provision stating that the Agreement is governed by Massachusetts law.
After the Agreement was executed, Global informed Holtec that it was working on
a plan to establish an international spent nuclear fuel storage facility, with particular
interest from Lithuania, Ukraine, and Kazakhstan. This plan did not ultimately
materialize, but Global pursued a number of opportunities with the team it had
assembled.
In 2003, Global coordinated meetings with the governmental authority overseeing
nuclear power in Ukraine, Energoatom, and with a Swiss utility company, now known as
NOK. Holtec was involved in both meetings. In February 2004, Holtec informed Global
that it intended to pursue opportunities with both entities without Global‟s involvement.
Holtec subsequently secured contracts with both entities, and Global received no
commission on those contracts.
Global filed suit in December 2008, alleging that, with these actions, Holtec
circumvented it, thus breaching the terms of the Agreement. Global sought a
constructive trust on proceeds from the contracts as well as damages and a declaration
concerning Global‟s interest in future contracts between Holtec and Energoatom and
NOK.
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Holtec sought partial summary judgment in four separate motions. The District
Court granted Holtec‟s motion for partial summary judgment on the ground that the
Agreement was unenforceable. It found that the term “circumvent” in the non-
circumvention provision was indefinite. Global voluntarily dismissed the remaining
claims. Hence, the District Court entered judgment in favor of Holtec. Global filed a
timely appeal.
II. JURISDICTION AND STANDARD OF REVIEW
The District Court had jurisdiction over this case pursuant to 28 U.S.C. § 2255.
This Court has appellate jurisdiction pursuant to 28 U.S.C. §§ 1291 and 2253.
We review the District Court‟s order granting summary judgment de novo. Azur
v. Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 216 (3d Cir. 2010). Summary judgment
is appropriate “where the pleadings, depositions, answers to interrogatories, admissions,
and affidavits show there is no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law.” Id. at 216 (quoting Nicini v. Morra, 212 F.3d
798, 805-06 (3d Cir. 2000) (en banc) (citing Fed. R. Civ. P. 56(c))).1
1
Fed. R. Civ. P. 56 was revised in 2010. The standard previously set forth in subsection
(c) is now codified as subsection (a). The language of this subsection is unchanged,
except “one word — genuine „issue‟ bec[ame] genuine „dispute.‟” Fed. R. Civ. P. 56
advisory committee‟s note, 2010 amend.
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III. ANALYSIS
Global asks this Court to find that the non-circumvention provision was not
indefinite and that the District Court‟s ruling was therefore in error.
As the District Court noted, “[i]t is axiomatic that to create an enforceable
contract, there must be agreement between the parties on the material terms of that
contract.” Situation Mgmt. Sys., Inc. v. Malouf, Inc., 724 N.E.2d 699, 703 (Mass. 2000).2
Nonetheless, “[i]t is not required that all terms of the agreement be precisely specified.”
Id. In the seminal case on this subject, the Massachusetts Supreme Court stated:
A contract is not to be struck down because one of its material provisions is
stated in broad and general terms if, when applied to the transaction and
construed in the light of the attending circumstances, the meaning to be
attributed to it can be interpreted with reasonable certainty so that the rights
and obligations of the parties can be fixed and determined.
Cygan v. Megathlin, 96 N.E.2d 702, 703 (Mass. 1951). Indeed, Massachusetts courts
“construe the contract with reference to the situation of the parties when they made it and
to the objects sought to be accomplished.” Shea v. Bay State Gas Co., 418 N.E.2d 597,
600 (Mass. 1981) (citation and internal marks omitted). Massachusetts is “slow to turn a
plaintiff out of court for the reason that the promise given and relied on was so vague that
it can be given no effect. To have that result, indefiniteness must reach the point where
construction becomes futile.” Caggiano v. Marchegiano, 99 N.E.2d 861, 864 (Mass.
1951) (citation and internal marks omitted).
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Based on the contract between the parties, we apply Massachusetts law.
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The District Court, considering this case law, found that the term “circumvent”
was so indefinite as to render the Agreement unenforceable. It noted that the Agreement
provided no definition or examples of circumvention. It further found that the term did
not independently have a clear meaning. Finally, it observed that Global itself had,
during the course of the litigation, provided various and conflicting definitions of
“circumvent”: while its discovery responses showed that Global believed
communications with a third party in pursuit of European spent nuclear fuel options to be
circumvention, when Holtec moved for summary judgment on statute of limitations
grounds, Global‟s response asserted that direct contacts and negotiations could not be
considered circumvention.
Global attempts to argue that circumvention has a clear meaning under
Massachusetts law, but it concedes that no Massachusetts contract cases are reported
construing the term. Although Global provides citations to various Masschusetts cases
defining or employing the term, in these cases, a regulation or legal rule provides a
specific requirement that a litigant has allegedly circumvented. See, e.g., Manousos v.
Sarkis, 416 N.E.2d 179, 182 (Mass. 1981) (circumvention of rule of nonappealability);
Little v. Rosenthal, 382 N.E.2d 1037 (Mass. 1978) (circumvention of medical malpractice
screening tribunal); Commonwealth v. Bessette, 187 N.E.2d 810, 811 (Mass. 1963)
(circumvention of regulated contract specifications). No such specificity exists in the
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Agreement,3 and none can be inferred from the context of the parties‟ relationship at the
time that they entered the Agreement.
The indefinite nature of the term, as used in the Agreement, is underscored by
Global‟s changing position during the course of litigation. See Allen & Co. v. Occidental
Petroleum Corp., 382 F. Supp. 1052, 1059 (S.D.N.Y. 1974) (finding that existence of
multiple definitions of contract phrase “underscore[s] that the agreement alleged by
plaintiff, the enforceability of which plaintiff has the burden of proving, is indefinite”).
During most of discovery, Global suggested that any communications with a third party
in pursuit of European spent nuclear fuel options would constitute circumvention and
therefore violate the Agreement. Later, in order to avoid Holtec‟s statute of limitations
defense, it suggested that Holtec‟s initial contacts with third parties did not constitute
circumvention. While Global is correct that the statements of its president during
deposition are not admissible as legal conclusions, its briefing and interrogatory
responses also asserted that discussion and communication with third parties, prior to the
signing of any contracts, constitute circumvention. That changed once the statute of
limitations issue was raised.
3
This absence of specificity distinguishes the non-circumvention provision at issue here
from those that Appellant relies on in Cura Fin. Servs. v. Elec. Payment Exch., Inc., No.
18278, 2001 WL 1334188 (Del. Ch. Oct. 22, 2001) and Eden Hannon & Co. v. Sumitomo
Trust & Banking Co., 914 F.2d 556 (4th Cir. 1990), each of which provided more detail
as to what actions would constitute circumvention. The provision here, devoid of any
specific referent, is more akin to that discussed in Consumer Incentive Servs. v.
Memberworks Inc., No. CV990362655, 2003 WL 23025623 (Conn. Super. Ct. Dec. 8,
2003), which the Connecticut Superior Court found to be too ambiguous to be
enforceable.
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These facts highlight the degree to which no precise definition of circumvention is
obvious from the face of the Agreement or from the course of dealings between the
parties, thereby rendering the non-circumvention provision unenforceable.
IV. CONCLUSION
For the reasons set forth above, we will affirm the orders of the District Court.
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