ACS Const Co Inc v. General Power Corp ( 1999 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________________
No. 98-60491
____________________________
ACS CONSTRUCTION CO., INC. OF MISSISSIPPI,
Plaintiff-Appellee,
V.
GENERAL POWER CORPORATION, ET AL,
Defendants,
VENGROFF, WILLIAMS AND ASSOCIATES, INC.,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
Northern District of Mississippi
Civil Action No. 4:96-CV-35-WB-B
_________________________________________________________________
December 30, 1999
Before DAVIS and JONES, Circuit Judges, and LEMELLE*, District
Judge.
DAVIS, Circuit Judge:**
Appellant Vengroff, Williams and Associates, Inc. ("Vengroff
Williams") appeals the money judgment of the district court entered
on a jury verdict. Appellant contends that the district court
erred in determining it had personal jurisdiction based on the
*
District Judge of the Eastern District of Louisiana, sitting by
designation.
**
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
contract prong of the Mississippi long-arm statute. In particular,
Vengroff Williams argues that the district court's determination
that it had personal jurisdiction was erroneous because the
evidence was insufficient to establish that a contract was
perfected in the meeting between Appellee ACS Construction Company,
Inc. of Mississippi ("ACS") and Vengroff Williams. Appellant
further argues that even if a contract was formed at the Greenwood,
Mississippi meeting, none of the contract was performed in
Mississippi. We conclude that no enforceable contract was entered
into at the Greenwood, Mississippi meeting and that the district
court erred in finding that it had personal jurisdiction under the
"contract prong" of the Mississippi long-arm statute. We therefore
reverse the judgment of the district court.
I.
This case arises from a government contracting job gone
awry. In 1994, ACS sought two government building contracts, one
at Fort Bragg in North Carolina and one at Fort Campbell in
Kentucky. General Power Corporation (“General Power”), a South
Carolina corporation, submitted bids to ACS to perform the
electrical work for both projects. General Power was 50 percent
owned by Albert B. Cialone. Vengroff Williams--whose principals
are Harvey Vengroff and Robert Williams--and Sheldon Electric
Co., Inc (“Sheldon Electric”)--whose principal is Barry J. Beil--
each owned 25 percent shares in General Power. ACS used General
Power’s pricing in its bid to the government for both projects.
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ACS was awarded both contracts and opened discussions with
General Power about awarding General Power the electrical
subcontract. When General Power informed ACS that it was unable
to provide a performance bond, as it had agreed to do, ACS became
concerned with General Power’s stability and began to look
elsewhere for an electrical subcontractor. In an effort to allay
these concerns, General Power invited ACS’s principals to a
meeting in New York. ACS declined the invitation and instead
invited General Power to attend a meeting at ACS’s headquarters
in Greenwood, Mississippi.
General Power was well represented at the meeting with ACS
in Greenwood, Mississippi. The General Power representatives
were Al Cialone, Barry Beil, and critically for purposes of this
appeal, Harvey Vengroff, representing his company Vengroff
Williams. General Power met with ACS for approximately one and a
half hours. The main topics discussed were the technical aspects
of the electrical work that General Power would perform if it
obtained the subcontracts from General Power. The subject turned
briefly to General Power’s financial ability to perform the
subcontracts. Mr. Vengroff assured ACS that his company was an
investor in General Power and that it would provide the necessary
financial support to assure completion of the subcontract.
No contracts were signed at the Greenwood, Mississippi
meeting, but later in North Carolina, ACS and General Power
signed electrical subcontract agreements covering the two
government construction projects.
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In the course of completing the electrical work at the
construction sites, General Power ran into a series of
difficulties. By all accounts, Cialone failed miserably as an
administrator, and Vengroff Williams and Sheldon Electric came to
his assistance. Despite Vengroff Williams’ infusion of
approximately $800,000 into General power and Mr. Williams’
assumption of management duties at the Fort Bragg project,
General Power continued losing money and it eventually filed for
bankruptcy. ACS then commenced the present suit, alleging that,
by allowing General Power to default on the subcontract, Vengroff
Williams failed to perform as it had promised.
ACS initiated this action against General Power, Al Cialone;
Vengroff Williams, Harvey Vengroff and Robert Willams; Sheldon
Electric and Barry Beil. ACS sued the parties under several
theories, including breach of contract against General Power and
breach of implied-in-fact contract against Vengroff Williams and
Mr. Vengroff and Mr. Williams, individually. ACS also sued
Vengroff Williams, Sheldon Electric, and the individual
principals of these firms for the torts of trover, conversion,
and material misrepresentation and fraud.
Shortly before trial ACS’s trover and conversion claims were
dismissed pursuant to summary judgment. At this time, Vengroff
Williams and other parties to the suit filed motions to dismiss
for lack of personal jurisdiction until the close of plaintiff’s
case. The district court postponed ruling on the motions for
lack of personal jurisdiction. At the conclusion of ACS’s case-
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in-chief, the district court (1) dismissed ACS’s fraud and
misrepresentation claims, and (2) determined that it had personal
jurisdiction over Vengroff Williams.
The district court allowed ACS’s breach of contract claim
against Vengroff Williams to go to the jury, which returned a
verdict for $83,000 in favor of ACS and against Vengroff
Williams. This appeal followed.
II.
In a federal diversity action, personal jurisdiction is
determined by a two-step inquiry addressing: (1) the forum
state's long-arm statute, and (2) federal due process. Allred v.
Moore & Peterson, 117 F.3d 278, 281 (5th Cir. 1997). If the
state long-arm statute is not first satisfied, the federal due
process question is never reached and jurisdiction fails. Cycles
v. Digby, 889 F.2d 612, 616 (5th Cir. 1989). The Mississippi
long-arm statute provides in relevant part:
Any nonresident person, firm, general or
limited partnership, or any foreign or other
corporation not qualified under the
Constitution and laws of this state as doing
business herein, who shall make a contract
with a resident of this state to be performed
in whole or in part by any party in this state
... shall by such acts be deemed to be doing
business in Mississippi and shall thereby be
subjected to the jurisdiction of the courts of
this state.
Miss. Code Ann. § 13-3-57 (Supp.1998). Thus, the existence of an
enforceable contract is a prerequisite to a finding of personal
jurisdiction under the "contract prong" of the Mississippi long arm
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statute.
We therefore turn to the principal argument on appeal: whether
the evidence is sufficient to support the jury’s finding that a
contract was perfected. In order to find that a contract exists,
a fact finder must determine that both parties agreed to all of the
essential terms. See Ham Marine, at 459; Knight v. Sharif, 875
F.2d 516, 525 (5th Cir. 1989). Because the alleged contract arose
from the parties’ conversations at the Greenwood meeting,
Mississippi contract law governs.
The district court held that the contract prong of the long-
arm statute was satisfied because ACS produced prima-facie evidence
of an oral agreement by Vengroff Williams to provide funding to
General Power for the subcontracts. The court further found that
administrative functions performed in Mississippi by ACS, pursuant
to the written subcontracts with General Power, satisfied the
requirement that at least part of the contract be performed in
Mississippi.
Vengroff Williams argues that the conversation the trial
court relied on is too vague and indefinite to constitute a
completed contract.
Several cases decided under Mississippi law refuse to
enforce oral contracts where essential terms are too vague and
indefinite. Beck v. Goodwin, 456 So.2d 758, 761 (Miss. 1984);
First Money, Inc. v. Frisby, 369 So.2d 746, 751 (Miss. 1979);
Izard v. Jackson Production Credit Corp., 188 Miss. 447, 195 So.
331, 333 (1940). Beck is particularly analogous to the facts-at-
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hand.
In Beck, the owner of a used car business brought an action
against a bank for breach of contract and alleged that the bank
agreed to finance the used car business but failed to do so. 456
So.2d at 759. The plaintiff asserted that he obtained a Small
Business Administration loan through the bank in order to expand
his business based on the bank’s specific assurances. Id.According to the owner the bank specifically told him that
“financing would never be a problem” and that the bank “would
never arbitrarily cut off financing to him”. Id. About a year
after the owner obtained the loan, the financing agreement was
terminated by the bank. Id. The Supreme Court of Mississippi,
in affirming the trial court's grant of a demurrer in favor of
the bank, held that the agreement was too vague and indefinite to
be enforced. Id. at 761.
In the case-at-hand the parties agree that Mr. Vengroff
never stated how much money he was willing to contribute to
General Power and never stated how long he was willing to
continue funding General Power. Assuming as we must that Vengroff
promised to fund General Power to the extent necessary to assure
General Power's performance, such a vague and indefinite promise
is insufficient as a matter of law to constitute an enforceable
contract. It is undisputed that the parties did not even discuss
terms that would be essential to the formation of a contract. As
the court observed in Beck: “[a]ppellants did not allege how
much money was to be advanced, when it was to be advanced, on
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what security the advances were to be made, when the advances
would be repaid, or what interest would be charged for the
advances.” 456 So.2d at 761.
Because we conclude that no contract was formed in
Mississippi between ACS and Appellants, the district court had no
personal jurisdiction over Vengroff Williams.
III.
For the reasons stated above, we REVERSE the judgment of the
district court and REMAND this case so that the district court
can dismiss this suit without prejudice.
REVERSED and REMANDED.
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