Edwards v. Wyatt ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
6-8-2005
Edwards v. Wyatt
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-3325
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"Edwards v. Wyatt" (2005). 2005 Decisions. Paper 1047.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 04-3325
__________
JOHN JOSEPH EDWARDS,
Appellant
v.
A. WESLEY WYATT,
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civil No. 01-1333)
District Judge: Honorable James McGirr Kelly
________
Argued: May 26, 2005
___________
Before: SCIRICA, Chief Judge, ALITO and GARTH, Circuit Judges
(Opinion Filed: June 8, 2005)
__________
OPINION
__________
Mark T. Stancil, Esq. (Argued)
Stephen L. Braga, Esq.
Baker Botts
1299 Pennsylvania Avenue, N.W.
The Warner
Washington, D.C. 20004
Counsel for Appellant
Jeffrey A. Zucker, Esq. (Argued)
Fisher & Zucker
121 South Avenue of the Arts
Suite 1200
Philadelphia, PA 19107
Counsel for Appellee
Garth, Circuit Judge:
This case is before us for the second time on appeal. In this Court’s first opinion,
Edwards v. Wyatt, 335 F.3d 261 (3d Cir. 2003) (“Edwards I”), we reversed the District
Court’s ruling that appellant John Joseph Edwards (“Edwards”) anticipatorily repudiated
an agreement (the “Handshake Agreement”) between Edwards and appellee A. Wesley
Wyatt (“Wyatt”) and we remanded for the District Court to consider all of the material
evidence, including post-July 31, 1998 evidence. Following a second bench trial, the
District Court once again concluded, among other things, that Edwards had anticipatorily
repudiated the Handshake Agreement. Accordingly, the District Court entered judgment
in favor of Wyatt.
On this appeal, Edwards argues that the District Court’s ruling on anticipatory
repudiation was once again erroneous. We agree and so will reverse the ruling of the
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District Court and remand the case for further proceedings consistent with this opinion.
I.
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have
appellate jurisdiction pursuant to 28 U.S.C. §1291. We exercise plenary review over the
District Court’s legal conclusions. See Lansing v. Southeastern Pa. Transp. Authority,
308 F.3d 286, 290 (3d Cir. 2002). We review the District Court’s factual findings for
clear error. Id.II.
We previously set forth the facts of this case in Edwards I.1 Because we write only
for the parties, we will only briefly recount the relevant history here.
In brief summary, as stated in Edwards I, this case involves a dispute between
Edwards and Wyatt concerning control over the Pilot Air Freight Corporation. Control of
Pilot involved Edwards, Wyatt and a third party, Phillips. A number of events (including
Edwards’ bankruptcy) and alignments among the three individuals took place, leading to
an unwritten Handshake Agreement on April 30, 1998. The essence of the Agreement
was that neither Wyatt nor Edwards would align themselves with Phillips without the
participation of the other. Subsequent to this Agreement, Edwards’ attorney, Stephen
1
We refer the reader to our opinion in Edwards I, 335 F.2d 261 (3d Cir. 2003), for
all terms used but not defined herein and for background information.
3
Braga, wrote two letters, one dated July 30 and the other dated July 31.
In its first opinion, the District Court held that the July 30 and July 31letters
together constituted an anticipatory repudiation of the Handshake Agreement by Edwards.
On appeal, we reversed the District Court’s legal conclusion as unsustainable under
Pennsylvania law.
We stated that “to constitute anticipatory breach under Pennsylvania law there
must be an ‘absolute and unequivocal refusal to perform or a distinct and positive
statement of an inability to do so.” Edwards, 335 F.3d at 272 (quoting 2401
Pennsylvania Ave. Corp. v. Federation of Jewish Agencies, 489 A.2d 733, 737 (Pa.
1985)) (internal quotations omitted). We further recognized that “[t]he Pennsylvania
Supreme Court has emphasized that Pennsylvania contract law imposes stricter
requirements than does the Restatement for an anticipatory repudiation defense.” Id. at
272 n.8 (citation omitted).
Based on the foregoing standard, we concluded in Edwards I that “[t]he district
court’s assessment of the July 31 letter, and its rationale in holding that Edwards
repudiated his agreement with Wyatt, does not meet the standard set by Pennsylvania of
an ‘absolute and unequivocal refusal to perform.’” 335 F.3d at 272-73. While we did not
hold that there was no repudiation as a matter of law, we expressed serious doubts that the
July 31 letter constituted an effective repudiation “in light of the lack of findings to the
effect that it was absolute and unequivocal.” Id. at 274.
4
Based on our determination that “the district court failed to comply with the
requirements leading to appropriate factual findings and conclusions of law,” we
remanded the case to the District Court for a new trial. Id. at 276.
On July 14, 2004, the District Court issued a lengthy opinion and order which we
review now, in which it made 119 findings of fact and 17 conclusions of law. Pursuant to
our instructions in Edwards I, it described in detail the various meetings and other events
that followed the circulation of the July 31 letter.2 Its ultimate conclusion, however,
remained the same: the July 30 and 31 letters constituted a repudiation of the Handshake
Agreement. It then went on to find that Edwards never retracted the repudiation and that
the parties never formed a new agreement. Finally, it rejected Edwards’ promissory
estoppel claim.3
Edwards then filed this timely appeal.
III.
On appeal, Edwards argues that the factual findings set forth in the District Court’s
second opinion are still inadequate to sustain its legal conclusion of anticipatory
2
A principal reason for our initial remand was the District Court’s failure to make
any factual findings concerning post-July 31, 1998 events. Thus, we instructed the court
to consider the various meetings and other events that followed the July 31 letter which
we found to be “highly significant and material in determining whether there was an
anticipatory repudiation by Edwards.” Id. at 273.
3
As part of our remand in Edwards I, we directed the District Court to consider
Edwards’ promissory estoppel claim, a claim he raised in his complaint, but which the
District Court failed to consider.
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repudiation. We agree.
On remand, the District Court made two principal, additional findings of fact
concerning the July 30 and July 31 letters. First, it found that Wyatt’s lawyers, Jay
Ochroch and Ira Silverstein, also viewed the Handshake Agreement as terminated.
Findings of Fact ¶¶ 81, 87. Second, it found that “[t]he July 31, 1998 letter meant that,
absent a new settlement agreement with Wyatt, Edwards was going to both negotiate and
conclude a deal with Phillips to the exclusion of Wyatt.” Findings of Fact ¶ 85.
In its conclusions of law, the District Court added several paragraphs to support
its ruling that Edwards had repudiated the Handshake Agreement. The bulk of these
paragraphs are a repetition, in varying forms, of its ultimate conclusion that the July 31
letter objectively manifested an absolute and unequivocal refusal to perform.4
4
The relevant paragraphs are as follows:
3. Under Pennsylvania law, a notice of termination of a
contract that is clear and unambiguous is effective to end a
contractual relationship. Here, the letters of July 30 and 31,
1998, from Braga to Ochroch and Silverstein at the law firm
of Fox Rothschild O'Brien & Frankel, unequivocally stated
Edwards' intention to terminate or repudiate the Handshake
Agreement effective immediately.
4. Moreover, Braga's July 31, 1998 letter on behalf of
Edwards, standing alone, clearly and objectively manifested
Edwards' refusal to perform under the terms of the Handshake
Agreement and constituted an anticipatory repudiation that
terminated this agreement. A repudiation occurs before the
time to perform has arrived. Under Pennsylvania law, an
anticipatory breach of contract requires "an absolute and
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unequivocal refusal to perform or a distinct and positive
statement of an inability to do so." "A statement by a party
that he will not or cannot perform in accordance with
agreement creates such a breach."
In Braga's July 31, 1998 letter, Braga wrote that Wyatt had "a
one-week period within which to conclude a settlement
agreement with John [Edwards]," otherwise Edwards would
then violate the Handshake Agreement by concluding an
independent settlement agreement with Phillips. Not only did
Braga's July 31, 1998 letter on behalf of Edwards affix the
additional requirement of a new settlement agreement
between Edwards and Wyatt to the Handshake Agreement,
but it also required that this agreement be formed within a one
week time frame. By affixing these additional requirements as
conditions to Edwards' performance under the Handshake
Agreement, Edwards expressed an "absolute and
unequivocal" refusal to perform in accordance with the
original terms of the Handshake Agreement, and that refusal
repudiated the Handshake Agreement.
5. Collectively, Braga's July 30 and 31, 1998 letters were an
absolute and unequivocal termination of not only the
Handshake Agreement, but also the entire cooperating
relationship between Edwards and Wyatt, which at that point
in time was an alliance between Edwards and Wyatt against
Phillips.
6. Braga's July 30, 1998 letter on behalf of Edwards gave
clear and unambiguous notice of intent to terminate or
repudiate the Handshake Agreement and the cooperating
relationship by stating that "something fundamental has
changed," that "John [Edwards] has gone over the edge," and
that as a result of this change it is confirmed that, "there really
is no ongoing relationship" between Edwards and Wyatt.
7. Braga's July 31, 1998 letter reaffirms Edwards' intent to
terminate or repudiate the Handshake Agreement and the
7
After carefully reviewing the District Court’s opinion on remand, we conclude
that the District Court’s second opinion suffers from the same ultimate error as its initial
attempt: it erroneously applied the strict Pennsylvania anticipatory repudiation standard
by emphasizing subjective considerations, rather than evaluating whether Edwards
absolutely and unequivocally repudiated the Handshake Agreement in an objective sense.
Specifically, its most significant additional finding was that Wyatt’s attorneys believed
the July 30 and July 31 letters terminated the Handshake Agreement. However, we reject
Wyatt’s contention, unsupported by case law, that the opinion of retained counsel is
somehow less subjective than a party’s own belief such that an alleged repudiation would
be deemed to be apparent in the objective sense. See Restatement (Second) of Contracts
§ 250 cmt. b (1981) (“to constitute a repudiation, a party’s language must be sufficiently
positive to be reasonably interpreted to mean that the party will not or cannot perform”).
Even though it greatly expanded its opinion on remand, the factual findings
underlying the District Court’s legal conclusion of repudiation remain essentially the
cooperating relationship by informing Wyatt that "it is clear
that there is no turning back from what John [Edwards] views
as the breach of his relationship with Wes [Wesley]," and that
negotiating new settlement agreement between Edwards and
Wyatt is the only means by which Wyatt could prevent an
independent settlement agreement between Edwards and
Wyatt's "arch enemy," Phillips, which, prior to the July 30,
1998 termination or the July 31, 1998 repudiation, would have
been a breach of the Handshake Agreement.
District Ct. Mem. and Order, July 14, 2004, at 26-29.
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same – Braga’s written statements contained in the July 30 and July 31 Letters. In
Edwards I, we expressed serious doubts as to whether the District Court’s factual
findings concerning those statements satisfied Pennsylvania’s strict anticipatory
repudiation standard. Here, we once again conclude that the District court’s factual
findings cannot sustain its legal conclusion that Edwards anticipatorily repudiated the
Handshake Agreement. Accordingly, the District Court’s ruling must be reversed.
On this appeal, however, Edwards seeks not only a reversal of the District Court’s
ruling, but also asks us to hold that there was no anticipatory repudiation as a matter of
law. This we cannot do on the basis of the District Court’s opinion. To clarify, we do
not order judgment in favor of Edwards, we simply conclude that the District Court erred
when, based on an improper evaluation of the evidence and its factual findings, it
ordered judgment in favor of Wyatt.
IV.
As a final matter, we must determine the proper course of action following our
reversal of the District Court. We note that the district court judge who sat below is
deceased, and thus this case will have to be assigned to a new district court judge on
remand. Furthermore, the issues in this case are complex and fact intensive. Thus, rather
than burden the new judge with the existing record, we will reverse the District Court
and remand the case for a new trial so that whomever is assigned to this case below will
have the opportunity to consider the evidence afresh, unencumbered by any previous
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factual findings and legal conclusions.5
5
Because we are remanding for a new trial, including a reevaluation of the
threshold anticipatory repudiation question, we do not address the subsequent questions
presented on this appeal of whether Edwards retracted the alleged repudiation, whether a
new agreement was formed by the parties, or whether Edwards successfully made out a
claim of promissory estoppel. In addition, we do not reach Edwards’ claim that the
District Court’s factual finding as to the date of the Coffee Shop Meeting was clearly
erroneous.
In addition, we note that the District Court also considered whether Edwards
would have been able to prove damages. That discussion was clearly dicta in light of the
fact that it ordered judgment in favor of Wyatt.
10