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FRANK BRISCOE COMPANY, INC. v. TRAVELERS INDEMNITY COMPANY

August 23, 2005.

Frank Briscoe Company, Inc., Plaintiff,
v.
The Travelers Indemnity Company and The Travelers Companies, Defendants, Gabriel R. Calafati, Additional Defendant on Counterclaim.



The opinion of the court was delivered by: JOSEPH GREENAWAY, District Judge

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] OPINION

This matter comes before the Court on a motion for partial summary judgment, pursuant to FED. R. CIV. P. 56(c), by Defendants The Travelers Indemnity Company and The Travelers Companies (collectively "Travelers" or "Defendants"). This is an on-going contractual dispute between Plaintiff, Frank Briscoe Company ("Briscoe" or "Plaintiff") and Travelers. The Court has issued several Opinions and Orders in this matter including, Frank Briscoe Co., Inc. v. Travelers Indem. Co., 899 F.Supp. 1304 (D.N.J. 1995) (hereinafter "Agency Opinion") and Frank Briscoe Co., Inc. v. Travelers Indem. Co., 65 F.Supp.2d 285 (hereinafter "Summary Judgment Opinion").

Defendants now move for partial summary judgment on Briscoe's Calculation Claims, seeking to identify and confirm the elements of the formulate to be used to calculate amounts and estimates of amounts, if any, that would be payable to Frank Briscoe Company, Inc. ("Briscoe"), pursuant to the Agreement for Disposition of Collateral entered into by the parties on August 2, 1982 ("ADC"). (Defs.' Memo. of Law in Supp. of Their Renewed Mot. for Partial Summ. J. on Pl.'s Calculation Claims, at 1 (hereinafter "Defs.' Memo. Partial Summ. J.").) The Calculation Formulae at issue in the instant motion include: 1) the formula for determining the Final Contingent Fee ("Final Contingent Fee Formula") that would be payable to Briscoe at the end of the Program and 2) the formula for determining whether Briscoe was eligible to receive advance payments against its Final Contingent Fee or a credit for such an advance ("Estimation Formula").

  For the reasons set forth below, this Court grants Defendants' motion for partial summary judgment on the Calculation Claims presented here.

  BACKGROUND

  This matter involves a contract dispute between Briscoe and Travelers. Briscoe was a renowned construction company. Among its many major projects were two of the Gateway office buildings in Newark, New Jersey, and Giants Stadium and Meadowlands Race Track in East Rutherford, New Jersey. Since the early 1970s, Travelers provided Briscoe with payment and performance bonds for Briscoe's construction contracts. Due to severe financial troubles in late 1979, Briscoe became unable to meet its obligations. At the time, Travelers estimated its potential exposure at approximately $100 million if Briscoe should default on its various construction projects. To avoid this possibility, Travelers chose to assist Briscoe through a series of loans totaling approximately $24 million. In exchange for the loan, Travelers obtained a security interest in all of Briscoe's assets. The parties memorialized their agreement in the Loan and Security Agreement or "LSA."

  The Loan and Security Agreement provided that Briscoe would make monthly interest payments on the loans. Briscoe eventually defaulted when it failed to make the scheduled monthly payments. At the time of default, Briscoe owed Travelers $22 million in loan principal and $6 million in accrued interest. Travelers, as a secured creditor, chose to take possession of all of Briscoe's assets (the collateral for the loans) and to liquidate them.

  AGENCY OPINION

  After a two day trial, Judge Wolin wrote the Agency Opinion. In that Opinion, he considered a claim by Briscoe that it was entitled to accumulated interest on all of the funds deposited with Travelers, pursuant to the ADC. Briscoe, 899 F. Supp. at 1307. Briscoe asserted that it and Travelers were partners in the ADC and, therefore, Travelers was required to accrue interest for Briscoe on the Program proceeds. Id. By 1995, Briscoe had collected and deposited over $84 million with Travelers, and Briscoe claimed that it was entitled to $400 million in interest on those gross proceeds. Id.

  In order to make a decision on Briscoe's claim, the Court first sought to determine whether the ADC was a clear, unambiguous, and enforceable contract. Id. at 1308. The Court examined (1) the contract itself, (2) the parties' pre-execution conduct and (3) the parties' post-execution conduct. Id. at 1309. The Court noted that the negotiation of the ADC took well over a year, and that both sides were represented by counsel during the negotiations. Id.

  Construing the express language of the ADC, the Court concluded that "Travelers owns the money deposited under the ADC as a secured creditor. . . . Any interest earned on the money . . . is the sole and exclusive property of Travelers." Id. at 1316. This conclusion did not end the Court's inquiry. Noting that the U.C.C. did not alter the Court's interpretation of the ADC, the Court next examined the parties' conduct. Id. at 1317. The Court found that the parties' pre-execution conduct evidenced that Travelers had rejected several attempts by Briscoe to include an interest component into the ADC. Id. at 1323. Further, the Court found that in late 1989, William F. Kelly distributed a Briscoe internal memorandum in which he proposed several ways to interpret the ADC that would allow Briscoe to increase its recovery. Id. That memorandum, coupled with Briscoe's silence with respect to interest until 1989, led the Court to conclude that Briscoe was making "an after-the-fact attempt . . . to earn more money under the ADC." Id. The Court found that "the post-execution conduct of the parties demonstrates that after the Program dragged on far longer than anyone anticipated, Briscoe began to search for ways to maximize its share." Id. at 1325.

  The Court also analyzed the trial testimony of the parties. Id. at 1325-32. The Court found the testimony of Briscoe's two witnesses, Howard Loeffler, former Travelers employee, and Gabriel Calafati, Briscoe President, not credible. Id. at 1325-30. In contrast, the Court found the testimony of Travelers' witness, Mark Larner, the ADC's scrivener, "highly convincing." Id. at 1332. Larner testified, among other things, that the ADC follows the Uniform Commercial Code and was designed to articulate Travelers' rights after Briscoe's default under the Loan and Security Agreement. Id. at 1330. The Court held that Briscoe could not imply terms into the ADC based on the unsupported contention that the driving force behind the ADC was Travelers' fear of third-party claimants. Id. at 1332.

  The Court held that Travelers, as the exclusive owner of all money deposited under the ADC, had no duty to accrue interest on Briscoe's behalf. Id. at 1334. The Court based its holding on, among other things, the following factual and legal conclusions: (1) the ADC language and meaning was clear and unambiguous; (2) the ADC created an agency relationship whereby Briscoe was Travelers' agent; and (3) Travelers was the owner of all of the collateral under the ADC. Id. at 1344.

  STANDARD

  Summary judgment is appropriate under FED. R. CIV. P. 56(c) when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996). In making this determination, the Court must draw all reasonable inferences in favor of the nonmovant. Hullett v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994); Nat'l State Bank v. Fed. Reserve Bank of N.Y., 979 F.2d 1579, 1581 (3d Cir. 1992).

  Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). "[U]nsupported allegations . . . and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also FED. R. CIV. P. 56(e) (requiring nonmoving party to "set forth specific facts showing that there is a genuine issue for trial"). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, . . . there can be `no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex, 477 U.S. ...


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