Waco Incorporated v. Geoenergy Intl

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
WACO, INCORPORATED, a Virginia
Corporation,
Plaintiff-Appellee,
v.
GEOENERGY INTERNATIONAL
CORPORATION, a Washington No. 96-1378
Corporation,
Defendant-Appellant,
and
J. M. HUBER CORPORATION,
Party in Interest.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CA-95-472-3)
Argued: May 6, 1997
Decided: July 10, 1997
Before HAMILTON and MOTZ, Circuit Judges, and LEGG,
United States District Judge for the District of Maryland,
sitting by designation.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Thomas William Hayton, TOUSLEY BRAIN, Seattle,
Washington, for Appellant. William Delaney Bayliss, WILLIAMS,
MULLEN, CHRISTIAN & DOBBINS, Richmond, Virginia, for
Appellee. ON BRIEF: Janis Orfe, DUNN, MCCORMACK, MAC-
PHERSON & ORFE, Fairfax, Virginia, for Appellant.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
I.
This appeal was taken from a Final Judgment Order entered by
Senior Judge Richard L. Williams, United States District Court for the
Eastern District of Virginia, Richmond, on March 13, 1996. The suit
arose out of a contractual dispute between Waco, Inc. ("Waco") and
Geoenergy International Co. ("Geoenergy") involving the construc-
tion of a manufacturing plant in Crystal Hill, Virginia. In February
1994, the project owner, J.M. Huber Corporation, hired Geoenergy to
install four industrial air cleaning machines (known as wet electro-
static precipitators ("precipitators")) at the plant. According to
Geoenergy's project schedule, electrical installation for the precipita-
tors was to begin by October 31, 1994 (and be completed by Decem-
ber 6, 1994).
On November 3, 1994, Geoenergy sent Requests for Quotation to
seven electrical contractors, inviting bids to perform the electrical
installation work. Only two of the seven contractors responded. One
contractor, Master Electrical Services, Inc., provided a fixed-price bid
of $338,000. The other contractor, Port City Electrical Co. provided
a time-and-materials quote of $619,000. Geoenergy rejected both of
the bids.
On or about November 11, 1994, Geoenergy approached Waco
(which was already working on the project as an electrical subcon-
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tractor for another company) about the possibility of Waco perform-
ing the electrical installation. Representatives of Geoenergy (Mr.
Darrell Dare) and Waco (Mr. Wilson Brittle) met at the construction
site on November 15, 1997 and discussed the project.
During the two-day bench trial before Judge Williams, the parties
presented conflicting versions of the negotiations between Messrs.
Brittle and Dare. It was undisputed that Mr. Brittle and Mr. Dare, in
light of the urgency of the electrical installation, agreed not to wait
for Waco to prepare a precise, fixed-price quote for the work but to
proceed on a time-and-materials basis.
Waco maintained that Messrs. Brittle and Dare agreed to proceed
with an uncapped time-and-materials quote (with Waco submitting
daily labor reports and material purchase invoices for Geoenergy's
approval). Geoenergy, however, contended that Messrs. Brittle and
Dare agreed to cap Waco's reimbursement at $150,000.00.
Geoenergy argued that the $150,000.00 cap was memorialized in
a November 21, 1994 purchase order issued by Geoenergy (but never
signed by Waco) which contained the notation "Total NTE
150,000.00." Geoenergy claimed that NTE stood for "not to exceed"
and that the parties had agreed that the cap would be raised only if
there was a change in the scope of the work. Waco, however, main-
tained that when Mr. Brittle received the purchase order, he immedi-
ately telephoned Mr. Dare to inquire about the meaning of the "NTE"
and was informed that the purchase order was just "to get you started"
and the amount would be increased as necessary.
Waco proceeded with the electrical work, submitting daily labor
and material reports which were approved by Geoenergy. In mid-
January, Geoenergy issued a new purchase order,"[i]ncreas[ing] the
NTE limit by $50,000 to a total of $200,000 NTE." After Waco sub-
sequently notified Geoenergy that its billings would exceed $200,000,
a dispute arose between Waco and Geoenergy over the costs of the
project.
At trial, Waco contended that Geoenergy stated that it would pay
$260,000 and then work with Waco to reach a fair and equitable reso-
lution of any remaining charges. Geoenergy, however, maintained
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that the parties agreed to a final compromise of $260,000, but that
Waco refused to sign the memorializing letter.
Despite this dispute, Waco completed the project, at which time
Geoenergy refused to pay Waco more than $200,000. Waco subse-
quently filed its action in the Eastern District of Virginia. After a two-
day bench trial, Judge Williams made his findings of fact, essentially
accepting Waco's version of events, and entered judgment in favor of
Waco. In reaching this decision, Judge Williams concluded that "[t]he
contract between Waco and GeoEnergy was not an integrated con-
tract; therefore the parol evidence rule does not apply." (J.A. 426).
In its appeal of the judgment, Geoenergy claims that Judge Wil-
liams erred: (1) in accepting extrinsic evidence to construe the parties'
contract; (2) in his interpretation of that extrinsic evidence (assuming,
arguendo, that the evidence was permissible); and (3) in restricting
Geoenergy's evidence on the reasonableness of Waco's costs.
We have carefully reviewed the record, the parties' briefs, and
heard oral argument in the case. Only one contention requires our
attention: whether Judge Williams erred in concluding that the par-
ties' contract was not integrated (and, thus, that he was permitted to
consider parol evidence in interpreting the contract). We affirm on the
reasoning of the district court.
II.
The parol evidence rule is best understood in light of its pur-
pose: to give legal effect to whatever intention the parties
may have had to make their writing at least a final and per-
haps also a complete expression of their agreement. If the
parties had such an intention, the agreement is said to be
"integrated," and the parol evidence rule bars evidence of
prior negotiations for at least some purposes. If the parties
had no such intention, the agreement is said to be "uninte-
grated," and the parol evidence rules does not apply.
E. ALLEN FARNSWORTH, CONTRACTS § 7.3 (2d ed. 1990). See
also Shevel's, Inc. v. Southeastern Assoc., Inc., 320 S.E.2d 339, 343
4
(Va. 1984) ("Where the entire agreement has not been reduced to
writing, parol evidence is admissible, not to contradict or vary its
terms but to show additional independent facts contemporaneously
agreed upon, in order to establish the entire contract between the par-
ties") (quoting Renner Plumbing v. Renner, 303 S.E.2d 894, 898 (Va.
1983)).
Thus, whether a contract is integrated or not is a question of fact,
turning on the intent of the parties. RESTATEMENT (2d) OF CON-
TRACTS § 209 cmt. c (1981). Here, Judge Williams, after hearing
the conflicting evidence, concluded that the writings exchanged by
the parties (in particular, the two purchase orders containing the
"NTE" notations) were not completely integrated. Judge Williams'
factual finding is entitled to deference and is to be upset only if
clearly erroneous. Fed. R. Civ. P. 52(a). See also Federal Deposit Ins.
Corp. v. Hadid, 947 F.2d 1153, 1156 (4th Cir. 1991). Having
reviewed the record and taken oral argument, this Court concludes
that Judge Williams' finding is not clearly erroneous, but is amply
supported by the record.*
III.
Accordingly, the judgment of the district court is
AFFIRMED.
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*Indeed, at oral argument Geoenergy's counsel conceded that, because
of the urgency of the project, many of the documents normally found in
a construction contract were never drafted.
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