Opinion
Civil Action No. 01-2524-CM
June 17, 2002
MEMORANDUM AND ORDER
Plaintiff in this case sued defendant for breach of contract. Plaintiff moved to enjoin defendant from terminating the parties' contract while the lawsuit was pending. Prior to the hearing on plaintiff's preliminary injunction, defendant filed a motion for summary judgment. Plaintiff timely responded, and the summary judgment motion was fully briefed at the time the preliminary injunction hearing was held. At the hearing, the court denied plaintiff's motion for preliminary injunction and granted summary judgment to defendant. This matter is before the court on plaintiff's Motion to Alter or Amend Judgment and for New Trial (Doc. 36).
I. Background
Plaintiff and defendant entered into a contract, referred to as the Master Services Agreement, wherein plaintiff agreed to provide internet services to various military bases on which defendant was providing telephone services. Also at issue is the initial Contract Order, identified as the Schedule 1.1 Contract Order to the Master Services Agreement. The Contract Order accompanied the Master Services Agreement as part of the same contract documents.
Under the terms of the Contract Order, the parties agreed to a method by which the work performed under the Contract Order would be evaluated, and further agreed on a procedure to formulate a "cure plan." Specifically, the Contract Order provides in the section entitled "Acceptance Procedures" that, at the conclusion of the three month trial period, the parties would meet to review program performance statistics and that if, upon review of the program, the parties determined that the program had not achieved its stated goals, the parties would work together to develop a written cure plan. The Contract Order further provides that, "[i]f there is a conflict between this Contract Order and the Agreement, this Contract Order will control."
The Master Services Agreement contains a provision entitled "Termination for Convenience." That provision states, "Sprint may terminate this Agreement or any Contract Order(s) or both at any time without any liability by providing a termination notice to Supplier (plaintiff)."
In this case, defendant provided notice of termination for convenience by letter dated October 23, 2001. Plaintiff argued at the hearing that the Contract Order imposed specific requirements which must be met by defendant prior to the time defendant can terminate for convenience and that defendant did not comply with these requirements. Specifically, plaintiff contended that defendant was obligated to satisfy the requirements set forth in the "Acceptance Procedures" section of the Contract Order prior to exercising any right to terminate.
The court first notes that plaintiff's motion is styled "Motion to Alter or Amend Judgment and for New Trial." Federal Rule of Civil Procedure 59(a) governs motions for new trial, while Rule 59(e) governs motions to alter or amend judgment. Thus, by its terms, Rule 59(a) applies to cases in which there has been a trial. In this case, there was no trial; rather, the court entered summary judgment in favor of defendant. Thus, plaintiff's motion for new trial is inapplicable. Accordingly, the court will treat plaintiff's motion as one to alter or amend judgment pursuant to Rule 59(e).
A motion to alter or amend judgment pursuant to Federal Rule of Civil Procedure 59(e) may be granted only if the moving party can establish: (1) an intervening change in controlling law; (2) the availability of new evidence that could not have been obtained previously through the exercise of due diligence; or (3) the need to correct clear error or prevent manifest injustice. Brumark Corp. v. Samson Res. Corp., 57 F.3d 941, 948 (10th Cir. 1995). Such a motion does not permit a losing party to rehash arguments previously addressed or to present new legal theories or facts that could have been raised earlier. Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324, 1332 (10th Cir. 1996).
In the instant case, plaintiff does not base its motion upon new evidence that was not previously available or an intervening change in controlling law. Instead, plaintiff requests the court to alter or amend its judgment to correct or prevent clear error or manifest injustice.
Plaintiff first argues that the court erred in construing the contract to permit defendant to utilize the termination for convenience provision as written and to provide defendant the absolute right to terminate the agreement for convenience without liability and at any time subject to the notice requirement. At the hearing, the court found as a matter of law that the Master Services Agreement as written gave defendant the absolute right to terminate the agreement "without liability" and "at any time," subject only to the notice requirement which was fulfilled here. The court recognized that, pursuant to the language contained in the Contract Order, the Contract Order must prevail in the event of a conflict with the Master Services Agreement. However, the court found that the language of the Master Services Agreement was not in conflict with the Acceptance Procedures of the Contract Order. The Acceptance Procedures set forth the parties' obligations at the conclusion of the contractual "trial period" concerning the "future direction of the program" in the event that the parties made a determination about whether the goals had been met. The court therefore viewed the Acceptance Procedure provision as an alternative because the provision did not expressly purport to remove or revoke the termination for convenience provision.
The court finds that plaintiff has failed to establish the need to correct clear error or prevent manifest injustice. Plaintiff simply disagrees with the court's interpretation of the Master Services Agreement and Contract Order. As such, the court will not allow plaintiff an opportunity to relitigate old issues without a showing of clear error, a burden which plaintiff has failed to meet.
Plaintiff next contends that the contract at issue is illusory because defendant's discretion to terminate is not limited by such concepts as bad faith and abuse of discretion. For support, plaintiff relies on CIT Group/Sales Financing, Inc. v. E-Z Pay Used Cars, Inc., 32 P.3d 1197, 1200-01 (Kan.Ct.App. 2001), in which the court held that a contract providing one party the sole discretion to determine whether to perform is not enforceable. Plaintiff did not, however, previously cite CIT Group/Sales, nor has it explained why it failed to do so. Furthermore, the court in CIT Group/Sales applied New Jersey law pursuant to the contract's choice of law provision.
More importantly, the court in CIT Group/Sales cited Flight Concepts Ltd. Partnership v. Boeing Co., 38 F.3d 1152 (10th Cir. 1994) in support of its holding. In its ruling on summary judgment, this court cited Flight Concepts Ltd. Partnership for the proposition that, where a contract is drawn to leave a decision to the uncontrolled discretion of one of the parties, an implied duty of good faith becomes irrelevant. Flight Concepts Ltd. P'hip, 38 F.3d at 1553. The court further explained that Flight Concepts affirmed the proposition set forth in EDO Corp. v. Beech Aircraft Corp., 911 F.2d 1447, 1453 (10th Cir. 1990), wherein the court stated that, "[a]bsent the concern . . . that the obligations of the party possessing the unilateral right of termination are illusory due to want of consideration-we will enforce a contract freely entered into by two competent parties." The court finds plaintiff's belated attempt to rely on CIT Group/Sales unpersuasive. There is nothing in CIT Group/Sales that leads the court to believe it committed clear error in holding that the defendant was granted uncontrolled discretion to terminate the contract at any time without liability and that such discretion did not render the contract unenforceable.
Finally, plaintiff asserts that the termination for convenience provision is a limitation of liability and that such a provision is enforceable only where the limitation is fairly and honestly negotiated and understandingly entered into. The court agrees with plaintiff's proposition of law. However, the court disagrees that an issue of fact exists regarding whether there was bad faith or an abuse of contracting discretion on the part of defendant.
Plaintiff relies on evidence that was previously before the court. Plaintiff claims that he was "given the impression" that the termination clause was ameliorated by the inclusion of the Acceptance Procedures in the Contract Order. Plaintiff also points to the affidavit of Robert Bevill, wherein Mr. Bevill testified that defendant assured him it would not terminate the contract unless defendant's primary contract with another party terminated. However, plaintiff cannot survive summary judgment by relying on such evidence, in light of the following: (1) the unmistakable language of the termination for convenience clause, which contains no ambiguity requiring or permitting parol evidence; (2) the language of the contract by which Mr. Bevill represented that there were no such oral representations or agreements; (3) Mr. Bevill's own deposition testimony wherein he testified that he knew that oral representations or agreements that were not set forth in the contract would not "count." Accordingly, the court concludes that it did not commit clear error or manifest injustice.
IT IS THEREFORE ORDERED that plaintiff's Motion to Alter or Amend Judgment and for New Trial (Doc. 36) is denied.