Thermice Corporation v. Vistron Corporation, Standard Oil Chemical Company (Formerly Vistron Corporation)

832 F.2d 248, 1987 U.S. App. LEXIS 14343

• Court: Court of Appeals for the Third Circuit
• Decided: October 29, 1987
• Docket: 86-1562
• Status: Published

Opinions

OPINION OF THE COURT

GARTH, Circuit Judge:

This appeal arises from a district court’s order which found appellant Vistron Corporation (Vistron) in civil contempt. The civil contempt order resulted from the district court’s determination that Vistron had violated an earlier order of the court which had required Vistron to specifically perform its contract with appellee Thermice Corporation (Thermice). We affirm.

I.

Vistron manufactures carbon dioxide, which it sells to customers such as Therm-ice. On October 8, 1970, Vistron and Thermice entered into a contract wherein Vistron was to supply Thermice with carbon dioxide commencing in early 1971. The original contract provided that Vistron would supply Thermice with stated quantities of carbon dioxide at a specified price for ten years. The contract also obligated Vistron to provide the carbon dioxide for an additional five years unless either party canceled on six months written notice.

In 1979, Thermice brought an antitrust and contract damage action against Vistron in the district court. One of the issues in that action involved Vistron’s attempt to get a “for cause” cancellation of the 1970 contract because of Thermice’s failure to make timely payments. Thermice sought an injunction to prevent Vistron from canceling the contract. On May 15, 1981, the district court entered an order enjoining Vistron:

to specifically perform its contract with Thermice Corporation dated October 8, 1970, as amended January 1, 1977, to supply liquid and solid carbon dioxide to Thermice Corporation pursuant to the terms of said contract until the termination date set forth in the contract (December 30, 1990), or until said contract has been canceled or otherwise terminated in accordance with its provisions, or until further Order of this Court.

Appendix at 25.

As the district court order indicated, the original agreement between Vistron and Thermice had been amended on January 1, 1977. Among other things, the 1977 amendment changed the period of the contract. The 1977 amendment provided, in relevant part: “The period of the Contract as provided for in paragraph 4 thereof shall be extended for an additional ten (10) years from and after January 1, 1981, so that the period will continue until December 30, 1990, and all contract years commencing with the effective date of this amendment shall commence January 1, 1977.” Appendix at 21. It is the exact nature of that change that is at issue in this appeal.

The instant action arose as a result of a letter dated April 25, 1986, which Vistron sent to Thermice. In its letter, Vistron stated that, pursuant to the contract, it was giving Thermice six months notice of its intent to cancel the contract. Thermice took the position that the period during which the contract permitted either party to unilaterally cancel without cause (after giving six months notice) had been modified by the 1977 amendment, and that this period would not begin until after December 30, 1990. On the other hand, Vistron contended that the 1977 amendment had not changed the period specified in the original contract during which either party could cancel without cause, and that such period therefore began on December 30, 1980. Thermice brought suit in the district court seeking a civil contempt order against Vistron, arguing that Vistron’s attempt to cancel the contract prior to 1990 was a violation of the district court’s in-junctive order of May 15, 1981.

On July 16,1986, the district court held a hearing to determine whether Vistron’s letter, notifying Thermice of its attempt to cancel without cause, was in contempt of the court’s May 15, 1981 injunctive order. Both parties argued their interpretation of the contract to the court. The court stated that it would accept short additional memo-randa on the meaning of the contract, and indicated that it saw no need for testimony on the question. Neither party voiced any objection to this procedure.

In an opinion filed August 7, 1985, the district court concluded that the contract was clear and unambiguous, that Vistron could not cancel without cause prior to December 1990, and that Vistron’s attempt to give Thermice six months notice of cancellation was in civil contempt of the May 15, 1981 order. The district court entered an order to that effect, and this appeal followed.

II.

Before considering the merits of Vistron’s arguments, we must determine whether the judgment issued by the district court constitutes an appealable order. Although not briefed by either party, we cannot ignore matters that bring into question the existence of federal jurisdiction. Fassett v. Delta Kappa Epsilon, 807 F.2d 1150, 1155 (3d Cir.1986), cert. denied, — U.S.-, 107 S.Ct. 2463, 95 L.Ed.2d 872 (1987); Knight v. Brown Transport Corp., 806 F.2d 479, 483 (3d Cir.1986).

In the absence of certain delineated circumstances, civil contempt orders without more are not ordinarily appealable. See generally Halderman v. Pennhurst State School & Hospital, 673 F.2d 628, 636 (3d Cir.1982) (in banc), cert. denied, 465 U.S. 1038, 104 S.Ct. 1315, 79 L.Ed.2d 712 (1984); Latrobe Steel Co. v. United Steelworkers, 545 F.2d 1336, 1340 (3d Cir.1976); Cromaglass Corporation v. Ferm, 500 F.2d 601, 604 (3d Cir.1974) (in banc). However, here it is clear that the district court’s order, although titled as a contempt order, should properly be construed as a declaratory judgment.

The district court’s order entered August 7, 1986 reads, in relevant part: “The plaintiff’s motion for civil contempt is GRANTED, and the court finds that the defendant, Vistron Corporation ... is in civil contempt of this Court’s injunction order of May 15, 1981.” Appendix at 82. Although the district court found that Vistron was in civil contempt of the court’s earlier injunctive order, the court recognized that Thermice had not as of then actually terminated the contract. Appendix at 88-89. Moreover, because the district court noted that Thermice had not sustained any damages, the district court concluded that it could make no award of damages. Id. Thus, it appears that the district court’s order, although styled in terms of civil contempt, was no more than a declaration that, if Vistron were to terminate the contract as it indicated it intended doing, such action would be in violation of the May 15, 1981 injunctive order.

In Interdynamics, Inc. v. Wolf, 698 F.2d 157, 164 (3d Cir.1983) (Becker, J.), this court faced a strikingly similar factual situation. Interdynamics involved a district court’s order which did not actually hold the appellant in contempt, but rather declared that the appellant would be in contempt if he proceeded to take certain actions. We held that the district court’s order, although phrased as a contempt order, was actually a declaratory judgment, and we concluded that appellate jurisdiction was proper under 28 U.S.C. § 2201.¹ The holding of Interdynamics clearly controls the instant situation.

In the instant case, all parties recognized that Vistron had not actually terminated the contract at any time prior to the district court’s contempt finding. Thermice chose not to wait until the termination actually occurred, but instead proceeded immediately to court in an attempt to prevent the termination. The district court recognized that Vistron had not actually terminated the contract, and the court properly refused to order any damages. Therefore, in accordance with the clear factual history of this case, we cannot construe the district court’s order as anything but a declaratory judgment that Vistron would be in violation of the district court’s May 15, 1981 injunc-tive order if it were to terminate the contract without cause prior to December 30, 1990.² We conclude that the order is ap-pealable as a final decision under 28 U.S.C. § 2201. Interdynamics, Inc. v. Wolf, 698 F.2d 157, 164 (3d Cir.1983).

III.

The district court concluded that the contract was unambiguous, and therefore susceptible of only one reasonable construction. The question of whether the contract was ambiguous is subject to plenary review.

Interpretation of a contract is ordinarily a question of law for the courts. But when the contract is ambiguous, extrinsic evidence may be required to discern its meaning, transforming the question into one of fact to be resolved by the fact finder, except where the evidence and resulting inferences are uncontroverted. Whether a contract or consent decree requires extrinsic evidence in aid of interpretation is, of course, itself a question of interpretation subject to plenary review. The first task, therefore, is to determine whether the instrument by its terms unambiguously covers the dispute. The relevant search, as in contract interpretation, is not for the subjective intention of the parties “but what their words would mean in the mouth of a normal speaker of English, using them in the circumstances in which they were used.”

Fox v. U.S. Dept. of Housing, Etc., 680 F.2d 315, 319-20 (3d Cir.1982).

We begin our inquiry, therefore, by looking at the language of the contract and the 1977 amendment. Paragraph four of the contract states:

Period: This contract shall become effective upon its execution and shall remain in force for a period of ten (10) years from the Completion of the Facility plus an additional period of five (5) years thereafter unless and until cancelled by written notice by either party to the other specifying an effective date of cancellation subsequent to the expiration of the aforesaid ten (10) year period, which written notice shall be given at least six (6)months in advance of the cancellation date specified therein.

All parties agree that prior to the 1977 amendment, the terms of the contract were clear and unambiguous. In its unamended version, what we shall call the “binding period” of the contract, lasted for ten years (from January 1, 1971 to December 30, 1980), and what we shall call the “option period” of the contract, commenced at the conclusion of the “binding period” and lasted for five years (from January 1, 1981 to December 30, 1985).

The relevant portion of the 1977 amendment to the contract states:

The period of the Contract as provided for in paragraph 4 thereof shall be extended for an additional ten (10) years from and after January 1, 1981, so that the period will continue until December 30,1990, and all contract years commencing with the effective date of this amendment shall commence January 1, 1977.

Appendix at 21. The 1977 amendment extends “the period of the contract” for an additional ten years, and the amendment explains that, as a result of this extension, “the period” will continue until December 30, 1990.

Vistron argues that the 1977 amendment renders the contract reasonably susceptible to more than one construction. Under the construction proffered by Vistron, the amendment makes no change in the “binding period” of the contract, but instead substitutes a ten year “additional option period” for the original five year “option period.” Under Vistron’s interpretation, the “total period” (consisting of the “binding period” plus the “option period”) is 20 years, and the “total period” will terminate in December 1990.

Our examination of the language of both the original contract and the 1977 amendment, leads us to conclude that Vistron’s construction of the contract is untenable. The 1977 amendment clearly specifies that some period be extended for an additional ten years. Under Vistron’s construction of the contract, the ten year “option period” is substituted for the five year “option period”; nothing is being extended for an additional ten years. Indeed, under Vis-tron’s proffered construction of the contract, the “option period” would have been extended for an additional five years only (i.e., an additional five years beyond the original five years).

We therefore agree with the district court’s conclusion, that the contract as amended is unambiguous. Although the 1977 amendment’s use of “the period” would have been ambiguous if no further elaboration had been given—i.e., “the period” could have referred to the “binding period,” the “option period,” or “the total period” (“binding period” plus “option period”)—this potential ambiguity was eliminated because the amendment also provid-, ed that “the period” would continue until December 30, 1990. Therefore, because “the period” which is being extended for an additional ten years will terminate on December 30, 1990, it is clear that the period being referred to is the “binding period” which was originally scheduled to terminate on December 30, 1980.

We conclude, as did the district court, that the amended contract is unambiguous.³ In its amended version, the “binding period” of the contract is twenty years (from January 1, 1971 to December 30,1990) and the additional “option period” remains unchanged in length, but postponed for ten years (running from January 1, 1990 to December 30, 1995).

IV.

Even if we were to conclude that the contract is ambiguous, there would be no grounds for reversing the judgment of the district court. The district court held, in the alternative, that even if the terms of the contract did not definitively determine the contract period, the contract still should not be construed any differently. On the basis of the limited factual evidence presented to the district court by both parties, we would be forced to conclude that the district court’s construction of any ambiguity in the contract was not clearly erroneous.

Vistron today claims that it was improperly denied the opportunity to produce extrinsic evidence in support of its construction of the statute. However, our review of the record of the district court hearing leads us to conclude that both parties have waived their right to raise that issue on appeal. Vistron asserts that both it and Thermice had numerous witnesses present at the hearing before the district court. Vistron’s Brief at 10. The record of the district court hearing makes it abundantly clear that both parties agreed with the court’s suggestion that testimony from witnesses was unnecessary, and that the case should be decided after submission of short letter memoranda. Appendix at 68-70. Vistron freely elected to follow the procedure suggested by the district court. Id. Vistron, having previously declined to introduce additional evidence when it was before the district court, has waived its right to seek a remand for the purpose of now introducing any such evidence.

V.

We construe the district court’s order entered August 7, 1986 as a declaratory judgment that, if Vistron were to terminate its contact with Thermice prior to December 30, 1990 without cause, such a termination would be in violation of the district court’s injunctive order of May 15, 1981. We affirm the district court’s order, so construed.

1 . 28 U.S.C. § 2201(a) states, in relevant part:

In a case of actual controversy within its jurisdiction ..., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

2 . Because we construe the district court’s order as a declaratory judgment explaining the parties’ obligations under the May 15, 1981 order, we need not consider Vistron’s argument that the district court’s finding of civil contempt was inappropriate because the order of May 15,1981 allegedly failed to meet the specificity requirements peculiar to civil contempt orders. Moreover, the district court’s injunction clearly required Vistron to perform its contract with Thermice with no leeway provided for Vistron to avoid that obligation by devising new and different ways to thwart the court’s order. See In re Arthur Treacher’s Franchise Litigation, 689 F.2d 1150 (3d Cir.1982).

3 . Because we conclude that the contract was clear and unambiguous, the district court did not err in failing to consider extrinsic evidence of the parties' intent. Brokers Title Co. v. St. Paul Fire & Marine Ins. Co., 610 F.2d 1174, 1178 (3d Cir.1979).

Vistron also argues that the district court improperly relied on extrinsic evidence in reaching its conclusion as to the proper construction of the contract. Our review of the district court’s opinion reveals that the district court considered extrinsic evidence for the sole purpose of buttressing its alternative holding, that if the contract were ambiguous then Vistron’s construction of the contract would nevertheless still be untenable. Appendix at 87. Moreover, any such error by the district court would have been harmless in light of our de novo conclusion which does not rely on any extrinsic evidence.