Massengill v. Guardian Management Co.

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-7345
OUIDA MASSENGILL,
Plaintiff-Counter
Defendant-Appellant,
versus
GUARDIAN MANAGEMENT COMPANY, ET AL.,
Defendants-Counter
Plaintiffs-Appellees.
Appeal from the United States District Court
For the Northern District of Mississippi
( April 8, 1994 )
Before REYNALDO G. GARZA, KING and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
This appeal concerns an agreement for the sale of general
partnership interests, with each side accusing the other of breach.
Both parties were in the business of developing, managing and
investing in federally funded low-income apartment complexes, and
their attempted transaction was a sale of general partnership
interests in a number of such properties. Plaintiff-appellant
Ouida Massengill is appealing the magistrate judge's decision to
grant damages and specific performance to the defendant-appellee
Guardian Management Company ("Guardian") on its counterclaim and to
award Massengill nothing on her suit. We REVERSE and RENDER
because we hold that the agreement between Guardian and Massengill
is so vague and ambiguous as to be legally unenforceable under
Mississippi law.
PROCEDURAL BACKGROUND
Guardian, an Alabama general partnership, filed a complaint in
federal court in Alabama on January 19, 1989, seeking a declaration
of the rights and obligations of the parties under three documents
executed by Guardian and Massengill: (1) the Sales of Interest
Agreement; (2) the Amendment; and (3) the Addendum. Massengill, a
Mississippi resident, filed a motion to dismiss for lack of
personal jurisdiction, which was granted. Several days later, she
filed suit against Guardian in federal court in Mississippi,
seeking a declaration of rights and obligations under the
instruments in question as well as damages for breach of contract.
Guardian answered and asserted a counterclaim, claiming that
Massengill had breached the contract, asking for damages, and
asking the court to require Massengill to sell to Guardian her
general partnership interests that were the subject of the Sales of
Interest Agreement.
The parties consented to have the case tried before a
magistrate judge. See Fed. R. Civ. P. 73. The bench trial was held
on March 24 and 25, 1992. At the end of the trial, the magistrate
judge dictated an oral bench opinion, ruling in favor of Guardian
and ordering Massengill to transfer her general partnership
interests in the properties upon Guardian's tender of the agreed
2
per-unit price.1 The magistrate judge also awarded Guardian
damages of $97,780.80 plus interest for the loss of revenue on
management fees as a result of Massengill's refusal to transfer the
general partnership interests to Guardian by a particular date for
each property as provided in the Sales of Interest Agreement.
Massengill appeals from the decision of the magistrate judge. See
Fed. R. Civ. P. 73(c).
FACTUAL BACKGROUND
In 1984 or 1985 the defendant-appellee, Guardian, wanted to
expand the number of low income housing projects it managed.
Guardian was interested in projects financed by the federal Farmers
Home Administration ("FmHA"). Guardian solicited FmHA project
owners in Alabama and Mississippi, offering to purchase the general
partnership interests in the projects in order to gain management
control. Obtaining management control was important because such
control carried with it the right to receive federally approved
management fees. Massengill, who had developed, managed and
invested in FmHA projects for more than a decade, responded to a
solicitation letter from Guardian. At that time, Massengill
testified, she wanted to get away from the FmHA business and its
numerous federal regulations and concentrate more on regular
1
According to the transcript of the proceedings, the
magistrate judge stated: "The court declares that, pursuant to the
Sales of Interest Agreement, the plaintiff [Massengill] should
transfer her general partnership interest..." (emphasis added).
The written judgment issued on March 26, 1992 provided that
"the court declares that plaintiff shall transfer her general
partnership interest..." (emphasis added).
The magistrate judge's choice of words is unusual, but we will
review this language as a grant of specific performance.
3
commercial real estate. She thus wanted to sell her interests in
more than 20 FmHA projects, which she owned through separate
Mississippi limited partnerships with herself as the general
partner for each project. (Massengill also owned the majority of
the limited partnership interests in each project, but there were
other limited partners in many of the projects.)
Massengill negotiated with representatives from Guardian for
the sale of her general partnership interests. She argues that her
intent was to sell each project only as a complete transaction; she
would sell her general partnership interest in a particular project
only after, or at the same time as, the limited partnership
interests in the same project were also purchased, either by
Guardian or by a syndicator.2 Massengill testified at trial that
she felt a responsibility to her limited partner investors;
therefore she wanted to syndicate the limited partnership interests
first, so her investors could get a good price for their interests.
That way, her investors could get out of the project before
Massengill was required to transfer her managing interest to a new
general partner, who could potentially hurt the investments of the
limited partners who had trusted her.
Charles Martin, a partner in Guardian Management, testified at
trial that Guardian's objective in the negotiations was to acquire
the general partnership interests in all of Massengill's projects;
2
"Syndication," as defined by Guardian in its brief, means
that a newly created entity would purchase the limited partnership
interests in a group of existing partnerships, with the idea that
this newly created entity, the "syndication vehicle," would pay for
the purchase by selling interests in itself to investors.
4
Guardian was not interested in syndicating the limited partnership
interests. Martin testified that Guardian would introduce
Massengill to a syndicator and assist her in the syndication.
Martin said his impression at the beginning was that Massengill
wanted to syndicate all of her projects, but his understanding
later was that she did not want to syndicate all of the projects
"because of tax considerations."
Sales of Interest Agreement
The negotiations between Guardian and Massengill resulted in
the execution by both parties of the November 7, 1985 Sales of
Interest Agreement. The Agreement provided generally that
Massengill would transfer her general partnership interests in the
designated projects to Guardian, for an agreed-upon per-unit price,
upon the completion of certain conditions listed in the Agreement.
One of the conditions that had to occur before Massengill was
required to sell her general partnership interests was that
Massengill had to enter into a contract with a syndicator "binding
the syndicator to syndicate the projects." There was some ambiguity
about whether Guardian was obligated to locate the syndicator. The
sale of the general partnership interests was also expressly made
contingent upon approval of the transaction by the FmHA and by
Massengill's limited partners. These approvals were also required
by federal law and Mississippi law.
The Sales of Interest Agreement also provided that Guardian
would purchase the limited partnership interest in one project,
Oakview Apartments, Ltd., for $130,000 in cash. (Massengill owned
5
100 percent of both the general and limited partnership interests
in the Oakview project.)
Amendment To Sales of Interest Agreement
The second document executed by the parties was titled
"Amendment to Sales of Interest Agreement." The three-page document
states that Massengill and Guardian desire to amend their
agreement, and it goes on to state which numbered paragraphs of the
Sales of Interest Agreement shall be deleted and replaced by new
paragraphs set out in the Amendment. The Amendment was signed by
Massengill on November 25, 1985 and by Charles Martin of Guardian
on December 7, 1985. The Amendment deletes Paragraph 1.2 in the
Sales of Interest Agreement, which provided that Guardian would
purchase the limited partnership interest in Oakview Apartments,
Ltd. for $130,000 in cash. The replacement Paragraph 1.2 states
that instead, Madison Investment Company would purchase the limited
partnership interest in Oakview for a $130,000 secured promissory
note, and that Guardian would purchase Madison's note from
Massengill for $130,000 in cash, "conditional upon Seller
[Massengill] and Madison Investment Company consummating an
agreement between Seller and Madison Investment Company on or
before December 10, 1985."
The Amendment then concludes: "Except as amended, the original
terms of the original Sales of Interest Agreement shall remain in
full force and effect."
6
Addendum to Sales of Interest Agreement
The third document executed by Guardian and Massengill was
titled "Addendum to Sales of Interest Agreement." The Addendum
consists of one paragraph, which states in full:
"The undersigned hereby state, agree and understand that
all conditions of the above referenced contract have been
complied with and no conditions are outstanding thereon;
the contract is now binding without further conditions to
be met."
Massengill testified that she signed the Addendum on December 7,
1985. Martin of Guardian also testified that he signed the Addendum
on December 7, 1985. However the Addendum document has three
different dates on its face. Immediately under the title, "Addendum
to Sales of Interest Agreement," the typed date originally read,
"Dated: November 7th, 1985." Thereafter, "7th" was crossed out, and
"25th" was hand-written above it. (causing the document's date to
be November 25, 1985). But the "25th" is also crossed out, and
"7th" is hand-written below the line, followed by the initials
"C.A.M." and "O.M." (causing the document's date to be November 7,
1985). Then, down at the bottom of the page near the signature
lines, the date "12/7/85" is hand-written (causing the document's
date to be December 7, 1985).
Guardian points to these changes to attack Massengill's
contention that the Addendum was a totally separate transaction
from the Sales of Interest Agreement and the Amendment. The
crossouts and interlineations suggest that the parties were
attempting to date the Addendum back to the time of the earlier
documents. But their attempts did nothing to clarify their
7
intentions; the Addendum was left ambiguously with two dates that
were not crossed out: November 7, 1985, and December 7, 1985.
Circumstances Surrounding Execution of
the Amendment and the Addendum
Guardian introduced Massengill to Thomas S. Ford of Madison
Investment Company. ("Madison"). Ford and Madison were to arrange
for the syndication of the limited partnership interests. The
parties dispute whether Madison was ready and willing to syndicate
all of Massengill's projects in December 1985. Guardian claims that
Madison was ready to syndicate all of the projects, but that
Massengill chose to syndicate only four projects at first, "for tax
reasons." Massengill claims that Madison agreed to purchase the
limited partnership interests in four of the projects, but she says
"Madison had not agreed and never did agree to purchase any of the
other projects." At any rate, Massengill, Ford of Madison, and
Martin of Guardian met on December 6 and 7, 1985 to review
documents and "close" the transaction in which Madison was to
purchase Massengill's limited partnership interests in four
projects. On December 7, 1985, Martin of Guardian signed the
Amendment to Sales of Interest Agreement, which provided that
Madison, instead of Guardian, would purchase the Oakview project
limited partnership interest by giving Massengill promissory notes,
and that Guardian would purchase Madison's notes from Massengill
for $130,000 in cash. The reason for these changes in the deal, and
8
who benefited from the changes, was disputed by the parties.
Massengill had already signed the Amendment on November 25, 1985.
Also on December 7, 1985, both Massengill and Martin of
Guardian signed the Addendum. Massengill claims that she signed the
document "with the understanding and assurance from Guardian that
the Addendum only applied to the four projects syndicated on
December 7, [1985]." Massengill's position, as stated in an
interrogatory answer, was that the Addendum was meant to
acknowledge that, as to the four projects, all conditions called
for in the Sales of Interest Agreement had been met.3 Guardian has
advanced two somewhat inconsistent explanations of the Addendum's
purpose, claiming both that (1) the Addendum acknowledged that all
conditions precedent had in fact been met for the transfer of
Massengill's general partnership interests, and that (2)
Massengill, by signing the Addendum, waived any conditions to be
performed by Guardian and thus obligated herself to sell all of her
general partnership interests. Guardian also argues that the
consideration for the Addendum was the "changes in the deal"
addressed in the Amendment. Massengill claims that the four-project
deal was concluded and she already had Guardian's check for
$130,000 in her hand before she ever saw the Addendum. She claims
that an attorney for Guardian brought the Addendum to her at the
last minute when everyone was preparing to go home, and explained
3
This argument is confusing in that one condition,
syndication, had been met as to the four projects, but another
condition, FmHA approval, had not been obtained, and the record
does not show whether Massengill's limited partners approved of the
transaction.
9
to her that the document was just "something to have on file" until
the instruments on the four-project deal were recorded.
Madison later rescinded its purchase of the limited
partnership interests in the four projects and defaulted on its
promissory notes. Litigation between Madison and Guardian, and
Madison and Massengill, ended in settlement. Guardian did not
locate a syndicator for any of Massengill's other projects, and all
of them are still owned by Massengill and the other limited
partners.
The Magistrate Judge's Opinion
The magistrate judge dictated a bench opinion into the record
on March 25, 1992. After noting the awkwardness a court faces in
trying to interpret and enforce complex business contracts, the
magistrate judge described the general written provisions of the
Agreement, Amendment and Addendum. The magistrate judge then noted
that neither Massengill nor Martin is a novice or inexperienced in
business contracts, and that Mississippi law forbids a court from
writing additional provisions into a contract. The magistrate judge
then stated:
"Absent a mutual mistake, fraud or other illegality, courts
do not have the authority to modify, add to or subtract from
the terms of a contract validly executed between parties.
Moreover, a written instrument must be considered as a whole
and all parts construed together. It is also a statement of
Mississippi law that contracts are not rendered ambiguous by
the mere fact that the parties do not agree upon their proper
construction. Finally, as a statement of the applicable law
in this case, where contractual language is unambiguous, the
contract must be enforced literally." (citations omitted).
The magistrate judge continued:
10
"Looking at the facts as previously found by the court
and applying the law of the state of Mississippi, the court
finds that while certain parts of the contract may have been
subject to interpretation on what the obligations of Guardian
Management Company [were] concerning the obtaining of a
syndicator, any ambiguity in that regard was cleared up by
the Addendum. The Addendum is clear and unambiguous that all
the conditions have been met. That is, an agreement, an
addendum to the contract signed by two parties who are
familiar with these types of transactions, the court could
find no fraud or illegality or mistake of fact, therefore
interpreting the document as a whole with the Addendum in
place. The court finds that as of the date of the Addendum,
December 7, 1985, all conditions of the contract required by
Guardian Management Company had been met.
"Accordingly, with that finding, the court declares that
pursuant to the Sales of Interest Agreement, the plaintiff
should transfer her general partnership interest in the
scheduled properties attached to the Agreement upon the
tendering by the defendant of the agreed-to price of $281.70
per apartment unit. The other conditions of the contract upon
the tender to that still remain in place as far as the
approval required and that's left for another day but the
interest as it stands now shall be transferred upon the
tender of the monies as agreed to."
The magistrate judge then went on to award Guardian damages on
the basis that "by not passing the general partnership agreement
interest to the defendant there has been a loss of revenue on
management fees as clear from the testimony." The magistrate judge
ultimately awarded Guardian $73,516.80 for lost management fees
resulting from Massengill's refusal to transfer the general
partnership interests by a particular date for each property as
provided in the Sales of Interest Agreement.
DISCUSSION
Full appellate review is appropriate in this case, because
contract interpretation is a question of law committed to the court
rather than a question of fact committed to the fact-finder.
Highway Comm'n v. Patterson Enters., 627 So.2d 261, 263 (Miss.
11
1993); Leach v. Tingle, 586 So.2d 799, 801 (Miss. 1991). Therefore,
we apply de novo review, which is appropriate to make a
"determination as to a contract's facial ambiguity." Reid v. State
Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.
1986)(applying Mississippi law). To the extent that the magistrate
judge made a finding of fact that all conditions had been met as of
December 7, 1985, we hold that such finding is clearly erroneous.
We will not disturb the magistrate judge's decision to apply
Mississippi law on general choice-of-law principles and in
accordance with the parties' agreement.
Mississippi law favors a determination that the terms of a
contract are sufficiently definite, so as to carry out the
reasonable intention of the parties. Patterson Enters., 627 So.2d
at 263; Hicks v. Bridges, 580 So.2d 743, 746 (Miss. 1991); Busching
v. Griffin, 542 So.2d 860, 863 (Miss. 1989). However, Mississippi
courts will refuse to enforce a contract that is "vague, indefinite
and ambiguous." Sta-Home Health Agency, Inc. v. Umphers, 562 So.2d
1258, 1260-61 (Miss. 1990)(written non-competition agreement was
found to be confusing and "nonsensical" and thus too ambiguous to
be enforced); Beck v. Goodwin, 456 So.2d 758, 761 (Miss. 1984);
Izard v. Jackson Prod. Credit Corp., 195 So. 331, 333 (Miss. 1940).
Under Mississippi law, "vague, indefinite and uncertain"
agreements, in which the promises and performances to be rendered
by each party are not reasonably certain, are not enforceable as
contracts. First Money, Inc. v. Frisby, 369 So.2d 746, 751 (Miss.
1979); See also Bank of Shaw v. Posey, 573 So.2d 1355, 1358 (Miss.
12
1990)(summary judgment awarded on breach of contract claim because
terms "were so vague and uncertain as to be unenforceable").
When a writing does not show the parties' agreement on a minor
contract term, the reviewing court may supply a reasonable
interpretation. For example, the Mississippi Supreme Court upheld
an option contract in Busching, 542 So.2d at 864, because even
though the contract failed to specifically fix a time for payment,
it did state a purchase price. But essential contract terms may not
be supplied by a court. "If any essential term is left unresolved,
there is simply no contract and no obligation on the parties." Duke
v. Whatley, 580 So.2d 1267, 1274 (Miss. 1991). Guardian and
Massengill's attempted agreement is distinguishable from the
contract in the Busching case in that the Agreement, the Amendment
and the Addendum contain substantial ambiguities on vital contract
provisions, rather than merely failing to state the time of
performance. The Duke opinion stated:
"[W]ithout knowledge of the parties' intent of an
essential term, this Court, and any court, is unable to
determine what performance should be required. The
agreement must be definite and certain in order to be
enforceable."
Duke, 580 So.2d at 1274 (citing 17 AM. JUR. 2D CONTRACTS § 75 (1964).
This Circuit, applying Mississippi contract law, has also
recognized that a writing does not constitute an enforceable
contract unless "the terms are sufficiently definite to be legally
enforced." Knight v. Sharif, 875 F.2d 516, 523 (5th Cir. 1989)
13
(citing Etheridge v. Ramzy, 276 So.2d 451, 454 (Miss. 1973)
(writing dealing with the purchase and sale of corporate stock was
"too indefinite and uncertain" to be enforceable) ).
Even though Mississippi courts strive to find contracts
enforceable, an enforceable contract must contain matter which will
enable the court to construe its terms. Mid-Continent Tel. Corp. v.
Home Tel. Co., 319 F. Supp. 1176, 1192 (N.D. Miss. 1970). An
agreement is sufficiently definite and specific to be enforceable
under Mississippi law if:
"it contains matter which will enable the court under
proper rules of construction to ascertain its terms,
including consideration of the general circumstances of
the parties and if necessary relevant extrinsic
evidence."
E.g., Leach v. Tingle, 586 So.2d 799, 801 (Miss. 1991). If the
agreement is not specific enough for the court to ascertain its
terms, then the contract is not enforceable. In Beck v. Goodwin,
456 So.2d 758, 760 (Miss. 1984), the court found that the agreement
in that case, which purported to assure the continuing availability
of automobile financing arrangements, was too vague and indefinite
to be enforced. Beck, 456 So.2d at 761. The court noted the
uncertainties inherent in the contract, including, among other
details, how much money was to be advanced, when the money was to
be advanced, and when the advances would be repaid. Id. Because of
these uncertainties, the agreement was not enforceable as a
contract.
In the case of the Massengill-Guardian agreement, the promises
and performances to be rendered by each party are likewise not
14
reasonably certain, and the three executed documents are too
contradictory, confusing and vague to constitute an enforceable
contract. Even considering testimony on the circumstances
surrounding the execution of the three documents, (as well as the
magistrate judge's sparse findings of fact on the parties'
intentions), we cannot determine the meaning of vital provisions in
the parties' attempted agreement. The documents contradict one
another on important issues such as Farmer's Home Administration
("FmHA") approval, limited partners' approval and the proper
interpretation of the syndication condition. The magistrate judge
recognized these deficiencies in the agreement, but stated
unhelpfully that the other approvals are to be "left for another
day."
The following is a list of reasons why the attempted contract
between Guardian and Massengill -- as evidenced in the three
documents they executed -- is too confusing, "nonsensical," vague
and ambiguous to be legally enforceable:
(1) First, it remains uncertain whether the parties intended
to enforce the 1.3 "Conditions" clause in the Sales of Interest
Agreement. The Addendum is so vague that it cannot be determined
whether the language -- "all conditions of the above referenced
contract have been complied with" -- extinguishes the original
conditions precedent to the sale of Massengill's general
partnership interests. The Sales of Interest Agreement and the
Addendum are internally inconsistent with regard to conditions.
The Sales of Interest Agreement requires three conditions that had
15
to occur prior to the sale of any of Massengill's general
partnership interests: (1) a "binding" agreement with a syndicator
to syndicate all the properties; (2) the approval of Massengill's
limited partners; and (3) FmHA approval of the transfer. Meanwhile,
the Addendum provides that all conditions have already been met.
Yet, both sides agree, and the evidence shows, that the requisite
approvals, both of which are required by law regardless of the
agreement, were never obtained. The pretrial order lists as one of
the contested issues "whether approval of FmHA and the limited
partners is required before any general partnership interests can
be transferred to [Guardian]." In addition, Massengill entered into
a binding syndication contract for only four of the projects, not
for all of them. The Addendum, however, makes no reference to a
waiver of those pre-conditions. At trial, counsel for Massengill
tried to determine on cross-examination of Guardian's attorney,
Gary Olshan, whether Guardian was claiming that (1) the Addendum
was a waiver of the syndication condition; or that (2) the Addendum
was merely to document that the syndication condition had been
satisfied when Guardian introduced Massengill to Ford. Olshan never
settled on either theory; his testimony gave both theories at
different times. In addition, the other two conditions, FmHA
approval and limited partner approval, were glossed over at trial
and in the magistrate judge's opinion. The unresolved
contradictions and inconsistencies in the documents with regard to
these two required approvals render it impossible for any court to
determine the existing terms of the contract, namely, whether the
16
approval conditions were waived, or if they are still in effect.
The language in the Addendum is too broad to be given the
meaning that the magistrate judge assigned to it. The Addendum
stated that all conditions had been met, while the evidence showed
that "all conditions," had in fact not been met. The magistrate
judge stated that the Addendum was unambiguous and would be
enforced literally, but then found that one condition, syndication,
had been complied with, while two other conditions, FmHA approval
and limited partner approval, had not been met, and would be "left
for another day." This is an inconsistent and illogical
interpretation.
(2) Also inconsistent is the method in which the instruments
were created. The parties submitted drafts of the Sales of
Interest Agreement back and forth before a final agreement was
executed months later. Likewise, the parties took time to
negotiate and draft the Amendment to the Sales of Interest
Agreement. Massengill signed the Amendment first and Guardian's
representative waited to sign it after having looked it over for a
few weeks. The Amendment was detailed and specific. It specified
which exact numbered clause of the Agreement was being amended and
it detailed the formula by which Massengill was to sell her
interests.
The execution of the Addendum was completely different from
the method in which the parties had previously executed agreements.
According to the testimony of Massengill and her witness, the
Addendum was never presented to her for review until the last day
17
of the closing on the four-project deal. The parties disagree on
what was said about the Addendum. Guardian contends that the
Addendum was part of the same transaction as the Amendment, but if
this is true, why didn't the parties include all the terms of the
transaction in one document? As discussed above, the Addendum
itself is sketchy as to its terms and what it purports to
accomplish. It provides that all conditions have been complied
with, when in fact they had not. Guardian alleged in its
counterclaim that on the day she signed the Addendum, "Massengill
waived the occurrence of any further conditions to the Agreement."
But as we have stated, the Addendum does not contain waiver
language indicating the parties' awareness that the conditions had
not been met, but that Massengill intended to waive the conditions
and to consider performance under the Sales of Interest Agreement
final on Guardian's part. Instead, the Addendum's language speaks
in terms of conditions already having been met. Because of these
ambiguities and contradictions, we hold that the parties failed to
sufficiently evidence what they intended in their execution of the
Addendum in relation to the two other instruments.
(3) In addition, the extrinsic evidence considered by the
magistrate court indicates that the parties themselves were not
certain what obligations were meant to be imposed on each party.
A former draft of the Sales of Interest Agreement conditions the
sale of the general partnership on Guardian's contracting with a
syndicator to syndicate the properties listed on Exhibit A attached
to the draft agreement. The Agreement was later changed to make
18
the sale contingent on Massengill contracting with a syndicator to
syndicate the properties. In spite of the change in the agreement,
both parties appeared to have operated under the assumption that it
was Guardian's obligation to find a syndicator, and Guardian
continued to search for a syndicator for Massengill both before the
four properties were syndicated and after the deal for the
syndication for the four properties fell through. Thus, the
parties' course of conduct indicates confusion as to the
responsibilities of the parties under the agreement. Martin
testified that Guardian had a duty to find a syndicator and assist
Massengill with the syndicator for the four properties.
Thereafter, though, Martin claimed that Guardian was not obligated
to find a syndicator, but that it did look for a syndicator for its
own protection against Massengill's breach.
The parties were confused about the syndicator issue even
before the Addendum was executed. The language regarding
syndication in the Sales of Interest Agreement is phrased as a
condition and does not mention Guardian: "The purchase price and
sale [of the general partnership interests in Massengill's
projects] is conditional and contingent upon the Seller
[Massengill] contracting with a syndicator binding the syndicator
to syndicate the projects ... and upon an agreement being
consummated between Seller and Syndicator."
Despite this language, the parties appear to have operated
under the assumption that the original Sales of Interest Agreement
obligated Guardian to find a syndicator for the limited partnership
19
interests. Adding to the confusion, both parties refer to the
syndicator provision interchangeably as a contract promise and a
condition. The pretrial order lists as contested issues both
whether Guardian was required to produce a syndicator and whether
Guardian satisfied all conditions precedent under the Sales of
Interest Agreement. Even Guardian's appellate brief to this Court,
which echoes Guardian's statement of facts in the pretrial order,
describes the agreement as being that Massengill would sell her
general partnership interests "in exchange for Guardian's payment
of $281 per unit and for Guardian's procuring a syndicator willing
to syndicate" the limited partnership interests. (emphasis added).
Massengill, in her original complaint and again in the
pretrial order, claims that the Sales of Interest Agreement "was
contingent upon several conditions being met by the defendant
[Guardian]," and she claims Guardian was in breach for not meeting
these conditions. In an interrogatory answer, she states that "[i]t
was my understanding that Guardian would be required to syndicate
all of my projects prior to having the right to purchase the
general partnership interest in any of them." In another
interrogatory answer she states that Guardian "has failed to
fulfill its obligations pursuant to the Agreement, i.e. failed to
syndicate all of my limited partnerships."
Guardian's position, as stated in an interrogatory answer, was
that "the Sales of Interest Agreement does not require such prior
syndication, and that had any such requirement existed, it would
have been eliminated by the Addendum." (This statement again shows
20
Guardian's equivocal position between the two theories of the
Addendum's purpose). Martin of Guardian testified at trial that his
understanding of Guardian's obligation under the Sales of Interest
Agreement was that "we [would] introduce her to a syndicator and
that's basically it." Guardian's position in response to an
interrogatory was that "bringing a syndicator to Mrs. Massengill
satisfied [Guardian's] obligations under the Agreement."
The magistrate judge recognized the ambiguity but ruled that
the later-executed Addendum clarified the issue. We hold that this
interpretation was conclusory and clearly erroneous.
(4) Also, other ambiguities can be found in the Sales of
Interest Agreement itself. The Agreement refers to an Exhibit B
which purportedly lists all the security deposits. Yet, no Exhibit
B is attached to the Agreement. There is an Exhibit B in the
record but it is unrelated; it is a promissory note between
Massengill and Madison, and has nothing to with security deposits.
Thus, it is not certain what the parties intended by making
reference to an Exhibit B in the Sales of Interest Agreement.
Further, the terms of the Agreement do not make certain what
properties are subject to the transfer of Massengill's general
partnership. Exhibit A merely lists the name of the property, the
number of units for each and the mortgage amount on each; the
contract never provides a more specific or legal real estate
description of the location of the properties. Thus, we cannot
determine even the city in which each project is located. In
addition, some of the project names listed in Exhibit A to the
21
Sales of Interest Agreement are crossed out by hand, and a hand-
written "clarification" signed by Massengill and Martin states that
"the projects lined through are a part of Exhibit A." It is not
clear what the parties meant by this.
Mississippi law recognizes that in the event circumstances
prevent "precise, advance designation of details," less precision
is required in drafting a contract. Mid-Continent, 319 F. Supp. at
1197. In this instance, however, no circumstances existed to
prevent a specific description. Details such as a property
description could have been provided as drafts of the Sales of
Interest Agreement went back and forth prior to execution of the
document.
In sum, we hold that: (1) It remains uncertain whether any
conditions remain to be met before Massengill is obligated to sell
her interests, because the three executed documents are internally
inconsistent and contradict the testimony at trial; (2) the
parties' manner of executing the Addendum was irregular in
comparison with the other documents, making it impossible to
determine their intent; (3) the parties' testimony and behavior
show that they were and still are confused as to the conditions and
obligations imposed by the three documents; and (4) there is a
missing exhibit, and the descriptions are unclear as to where the
properties are located and which properties were meant to be
included in the sale.
Therefore, we hold that the attempted contract between
Massengill and Guardian is not sufficiently definite and complete
22
on material points to be legally enforceable under Mississippi law.
The magistrate judge's enforcement of the contract by the granting
of specific performance and damages was inappropriate.4
CONCLUSION
From our de novo review of this facially ambiguous contract,
we conclude that the magistrate judge clearly erred in awarding
Guardian damages and specific performance. The three documents
executed by Massengill and Guardian are so contradictory and
ambiguous that the agreement as a whole fails. See Umphers, 562
So.2d at 1260-61. It is legally unenforceable, since its terms
cannot be determined by this or any court. See Leach, 586 So.2d at
4
Even if the contract were specific enough to be enforced, we
note that Mississippi law requires even greater certainty and
specificity to support an award of specific performance. Further,
even if a contract is sufficiently clear and definite to make the
granting of specific performance possible, the equitable remedy may
still be inappropriate. Specific performance will generally not be
granted where damages may be recovered and the remedy at law is
adequate to compensate the complaining party. Roberts v. Spence,
209 So.2d 623, 626 (Miss. 1968). In this case, the contract is too
indefinite to permit any enforcement, much less the specific
performance relief given by the magistrate judge. The legal damages
granted by the magistrate judge were speculative, since it is not
certain when or if the necessary approval by the FmHA and
Massengill's partners would have been obtained. Under Mississippi
law, a party must prove that he is entitled to damages "to a
reasonable certainty." Polk v. Sexton, 613 So.2d 841, 844 (Miss.
1993). Also, monetary damages are not proper unless Massengill
breached the contract. As explained in the text, the terms of the
agreement are too uncertain for Massengill to have understood her
duties under the contract to avoid breach, and too uncertain for a
court to determine whether she was in breach or not. In effect, no
contract existed, since it is so vague as to be unenforceable. If
no contract exists, then there can be no breach, and without breach
then there can be no damages. See, e.g., First Money, Inc. v.
Frisby, 369 So.2d 746, 751 (Miss. 1979). For all of these reasons,
the magistrate court erred by enforcing this agreement with damages
and specific performance.
wjl\opin\92-7345.opn
ace 23
801. The promises and performances to be rendered by each party, as
well as the conditions to be met before such performances are due,
cannot be determined with reasonable certainty, as is required
under Mississippi law. See Beck, 456 So.2d at 758-61. We therefore
REVERSE the decision of the magistrate judge enforcing the
contract, and RENDER judgment that both Massengill's claims and
Guardian's counterclaim are dismissed with prejudice because there
is no contract to be interpreted or enforced. See First Money,
Inc., 369 So.2d at 751.
REVERSED and RENDERED.
wjl\opin\92-7345.opn
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