Atkinson Warehouse & Distribution, Inc. v. Ecolab, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ATKINSON WAREHOUSE AND 
DISTRIBUTION, INCORPORATED,
Plaintiff-Appellee,
v.  No. 00-2206
ECOLAB, INCORPORATED,
Defendant-Appellant.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Alexander Harvey II, Senior District Judge.
(CA-99-106-H)
Argued: May 8, 2001
Decided: August 9, 2001
Before MICHAEL and GREGORY, Circuit Judges, and
Arthur L. ALARCON, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Robert Martin Buell, BOWMAN & BROOKE, L.L.P.,
Richmond, Virginia, for Appellant. Arnold Steven Albert, ALBERT
& SCHULWOLF, L.L.C., Washington, D.C., for Appellee. ON
BRIEF: Coles M. Warren, BOWMAN & BROOKE, L.L.P., Rich-
2 ATKINSON WAREHOUSE v. ECOLAB, INC.
mond, Virginia; Richard G. Morgan, Ryan L. Nilsen, BOWMAN &
BROOKE, L.L.P., Minneapolis, Minnesota, for Appellant. Andrew B.
Schulwolf, ALBERT & SCHULWOLF, L.L.C., Washington, D.C.,
for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Ecolab, Inc. ("Ecolab") appeals the denial of its motion for judg-
ment as a matter of law following a jury verdict awarding Atkinson
Warehousing and Distribution, Inc. ("AWD") $275,000 in damages
for breach of a contract to provide warehousing and delivery services.
The jury ostensibly calculated damages as profits AWD lost during
a two-year period. Ecolab contends that a reasonable jury could only
conclude that the contract was terminable without cause on sixty days
notice, and that AWD was therefore precluded under Maryland law
from recovering damages incurred after the sixty-day period immedi-
ately following the breach. Concluding that the jury could reasonably
have found that the parties agreed upon a contract with a firm two-
year term, we affirm.
I.
Ecolab utilizes the services of B.E.P., Inc. ("BEP") to store and dis-
tribute its cleaning products. After Ecolab acquired a new line of
products in late 1997, an Ecolab executive named Jack Schafers
("Schafers") contacted William Atkinson ("Mr. Atkinson"), a long-
time BEP warehouse manager, to inquire whether BEP could accom-
modate Ecolab at the existing warehouse where BEP stored Ecolab’s
products. Mr. Atkinson indicated that BEP could not.
In April of 1998, Mr. Atkinson told Schafers that he was consider-
ATKINSON WAREHOUSE v. ECOLAB, INC. 3
ing renting a warehouse in Maryland that could store all of Ecolab’s
inventory, including its new products. In a July 15, 1998 letter, Mr.
Atkinson outlined a proposal indicating that BEP’s drivers, all of
whom were independent contractors, would work at his new facility
should a deal be finalized. At around this time, Schafers sent to Mr.
Atkinson a standard form "warehousing and service agreement"
which expressly permitted either party to terminate the contract with-
out cause upon sixty days written notice.1
Sometime after BEP executives learned of Mr. Atkinson’s plans,
they terminated his employment and attempted to retain Ecolab’s
business. Mr. Atkinson thereupon entered into more extensive discus-
sions with Ecolab. Both Mr. Atkinson and Mary Atkinson ("Mrs.
Atkinson"), AWD’s Vice President, testified that the term of the
agreement was a critical issue throughout the negotiations. More spe-
cifically, they claimed that Ecolab understood that AWD was unwill-
ing to assume substantial financial commitments, including the
signing of a lease, without a firm commitment from Ecolab.
Mr. and Mrs. Atkinson each further testified that in discussing the
term of the agreement, Schafers indicated that Ecolab could only con-
sider committing to a term of two to three years. At trial, AWD intro-
duced an Ecolab "decision tree," describing AWD’s willingness to
enter into a "two to three year agreement" as a favorable element of
a potential agreement, as additional evidence of Ecolab’s knowledge
that a term of years was an essential provision. In accordance with the
parties’ discussions, Mrs. Atkinson crossed out the sixty-day provi-
sion in the standard form agreement, inserted a three-year term in its
place, signed the document on AWD’s behalf, and returned it to Ecolab.2
In late October, David Macrae ("Macrae"), another BEP executive,
informed Mr. Atkinson of Ecolab’s final decision to contract with
1
A blank version of the standard form agreement provides: "The terms
of this agreement will commence on ______ and shall continue in effect
until this Agreement is terminated by either party giving no less than
sixty (60) days prior written noticed [sic] unless otherwise provided
herein." (J.A. at 601.)
2
Ecolab, however, never executed this version of the standard form
agreement.
4 ATKINSON WAREHOUSE v. ECOLAB, INC.
AWD. Macrae asked Mr. Atkinson to sign a lease, purchase necessary
equipment, and handle other essential details. Mr. Atkinson testified
that Macrae at that time stated that Ecolab could offer, at most, a two-
year term. Mr. Atkinson, for his part, informed Macrae that he was
uncomfortable moving forward without a written commitment.
On October 27, 1998, Macrae sent to Mr. Atkinson a letter (the
"October 27 letter") certifying that Ecolab had elected to utilize
AWD’s services. The October 27 letter further stated that Ecolab
could "offer no more than a two year commitment to operate" out of
AWD’s facility. (J.A. at 598.) The letter also requested that Mr.
Atkinson meet with Macrae "to plan the transition . . . and take care
of all related paperwork." Id.
At the parties’ November 3, 1998 meeting, Macrae placed the
October 27 letter and a new copy of the standard form agreement
side-by-side. Mr. Atkinson and Macrae then resolved outstanding deal
points and memorialized them on the October 27 letter. After record-
ing these contractual terms on the October 27 letter, the parties signed
the new copy of the standard form agreement (the "form agreement").
Although the form agreement is now missing, it is undisputed that the
parties properly executed it without altering the sixty-day provision.
After the meeting, Macrae informed BEP’s owner, Michael Nash
("Nash"), of Ecolab’s intent to vacate the BEP warehouse. In
response, Nash presented a letter signed by some of the BEP drivers
stating their intent to continue working for BEP. In addition, Nash
offered Ecolab a twenty-five percent discount to stay with BEP. On
November 5, 1998, Macrae gave Atkinson oral notice that Ecolab
would continue to utilize BEP’s services.
After AWD filed suit for breach of contract in a Maryland state
court, Ecolab removed the action on diversity grounds to the United
States District Court for the District of Maryland. On multiple occa-
sions, Ecolab moved the court below to rule as a matter of law that
AWD could not recover damages sustained beyond the sixty-day
period immediately following any breach of the contract. The district
court denied each of these motions, concluding that the issue of
whether the contract was terminable on sixty days notice was an issue
of fact for the jury to consider. See, e.g., Atkinson Warehousing &
ATKINSON WAREHOUSE v. ECOLAB, INC. 5
Distribution, Inc. v. Ecolab, Inc., 99 F.Supp.2d 665, 670-71 (D. Md.
2000) (denying Ecolab’s motion in limine).
On June 23, 2000, the jury returned a $275,000 verdict. On August
16, 2000, the district court denied Ecolab’s motion for judgment as
a matter of law under Fed. R. Civ. P. 50(b).3 The court concluded that
the jury could reasonably have based its damages award either on a
finding that the agreement contained a firm two-year term, or that
while the contract was terminable upon sixty days notice, Ecolab had
failed to give proper notice. See Atkinson Warehousing & Distribu-
tion, Inc. v. Ecolab, Inc., 115 F.Supp.2d 544, 546-47 (D. Md. 2000).
The court ultimately found, however, that the $275,000 award neces-
sarily indicated that the jury had concluded that the parties’ two-year
agreement was not terminable without cause. See id. at 548-49.
Ecolab now appeals.
II.
Under Fed. R. Civ. P. 50(b), a district court may grant a motion for
judgment as a matter of law "if there is no legally sufficient evidenti-
ary basis for a reasonable jury to find for the [non-moving] party."
Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998). We
will affirm a denial of such a motion if, "giving [the non-movant] the
benefit of every legitimate inference in his favor, there was evidence
upon which a jury could reasonably return a verdict for him." Id.(quoting Abasiekong v. City of Shelby, 744 F.2d 1055, 1059 (4th Cir.
1984)). We now turn to a brief discussion of the merits of Ecolab’s
appeal.
III.
Ecolab argues that a reasonable jury could only find that the agree-
ment between the parties was terminable without cause on sixty days
notice, and that AWD’s damages are therefore limited as a matter of
law to those incurred within the sixty-day period immediately follow-
ing the breach. As we have previously stated in the summary judg-
3
The court also denied Ecolab’s alternative motion for a new trial
under Rule 59, concluding that the jury instructions had not unfairly prej-
udiced Ecolab’s case.
6 ATKINSON WAREHOUSE v. ECOLAB, INC.
ment context, "[o]nly an unambiguous writing justifies summary
judgment without resort to extrinsic evidence, and no writing is
unambiguous if ‘susceptible of two reasonable interpretations.’"
World-Wide Rights Ltd. P’ship v. Combe, Inc., 955 F.2d 242, 245 (4th
Cir. 1992) (citing Am. Fid. & Cas. Co. v. London & Edinburgh Ins.
Co., 354 F.2d 214, 216 (4th Cir. 1965)).4 In determining whether an
agreement is ambiguous, we consider particular provisions in the con-
text of the entire agreement. Atalla v. Abdul-Baki, 976 F.2d 189, 192
(4th Cir. 1992).
Here, the parties agree that the October 27 letter and the form
agreement together constitute the operative agreement. It is also
undisputed that the parties signed the form agreement without altering
the sixty-day provision. In addition, the parties do not dispute that the
portion of the sixty-day provision specifying that the agreement is ter-
minable upon sixty days notice "unless otherwise provided herein"
refers to contractual terms contained in both the form agreement and
the October 27 letter.
AWD simply argues that the "two year commitment" contained in
the October 27 letter modifies and renders inoperative the sixty-day
provision in the form agreement. Notwithstanding the inclusion of the
sixty-day provision, in AWD’s view, the contract is not terminable
upon sixty days notice because the agreement "otherwise provides"
for a firm two-year term.
Ecolab, on the other hand, argues that the inclusion of the sixty-day
provision clearly indicates that the parties intended that the contract
be terminable without cause upon sixty days notice. Ecolab essen-
tially maintains that the parties intended to enter into a two-year con-
tract that was terminable at an earlier date upon notice. Thus,
according to Ecolab, there is no conflict between the two-year "dura-
tion" provision and the sixty-day termination provision. Moreover,
Ecolab contends, in the context of this case, the "unless otherwise
provided herein" language refers to the remaining termination provi-
4
Although World-Wide Rights was decided in the summary judgment
context, its contractual interpretation methodology is fully applicable
here. In each case, the issue is whether the court may interpret particular
contractual provisions as a matter of law.
ATKINSON WAREHOUSE v. ECOLAB, INC. 7
5
sions contained in the form agreement itself, rather than to the "two
year commitment" referenced in the October 27 letter.
Reading the entire agreement in context, we find each interpreta-
tion to be reasonable. While the inclusion of the sixty-day provision
tends to support Ecolab’s view, a reasonable jury could find that this
provision conflicts with the "two year commitment." The "unless oth-
erwise provided herein" language could likewise refer either to the
"two year commitment" or to the remaining termination provisions
contained in the form agreement. We therefore conclude that the
agreement is ambiguous as to the question of whether it is terminable
without cause upon sixty days notice.
As noted above, we resort to extrinsic evidence where the writings
at issue are "susceptible of two reasonable interpretations." World-
Wide Rights, 955 F.2d at 245. Viewing the extrinsic evidence in the
light most favorable to AWD, it is clear that a reasonable jury could
conclude that the contract contained a two-year term and was not ter-
minable without cause. To begin, Mr. Atkinson specifically informed
Schafers of the need for a firm commitment, and Schafers responded
by offering a two- to three-year term. Ecolab’s internal "decision tree"
indicates that Ecolab not only understood AWD’s position, but
viewed it as a positive element of a potential deal.
Following the parties’ initial exchanges, Mrs. Atkinson struck the
sixty-day provision from the first standard form agreement and
inserted a three-year term before sending it to Ecolab. Shortly before
the parties consummated their agreement, Macrae indicated that
Ecolab could offer, at most, a two-year term. Within a matter of days,
Macrae followed up with the October 27 letter, which speaks of a
"two year commitment." Moreover, Mr. Atkinson testified that while
he was aware of the sixty-day provision, he nevertheless signed the
form agreement because he "already had a two year commitment in
the October 27[ ] [letter]." (J.A. at 293.)
5
For example, the form agreement provides for immediate termination
if AWD files for bankruptcy. The form agreement also provides for ter-
mination upon ten days written notice in other specified circumstances.
8 ATKINSON WAREHOUSE v. ECOLAB, INC.
The foregoing evidence strongly suggests that the parties intended
to form a two-year contract not terminable without cause. Although
on these facts it may also be reasonable to conclude that the parties’
agreement was terminable upon sixty days notice, it is clear that there
was sufficient evidence on which the jury could reasonably have con-
cluded that the parties intended to form an agreement that could not
be terminated without cause for a two-year period.6 For this reason,
the district court’s denial of Ecolab’s motion for judgment as a matter
of law is hereby affirmed.7
AFFIRMED
6
In light of this conclusion, it is unnecessary to reach the question of
whether, upon the breach of a contract terminable without cause upon
notice, lost profits damages under Maryland law are limited to those
incurred during a period equivalent to the notice period.
7
It appears that Ecolab does not appeal the district court’s denial of a
new trial under Rule 59. To the extent, however, that Ecolab appeals that
denial, we also conclude that the district court did not abuse its discretion
in doing so. See Cline, 144 F.3d at 301 ("The decision to grant or deny
a new trial is within the sound discretion of the district court, and we
respect that determination absent an abuse of discretion.").