The “Contract Bar” Doctrine and Promissory Estoppel

As busy trial lawyers, sometimes it takes a court opinion to remind us, as I was often reminded as an Army second lieutenant, to keep things simple and to the point. The United States Court of Appeals for the Fifth Circuit drives home that point in the latest of a series of Pilgrim Pride Corporation (“PPC”) opinions in the case entitled Clinton Growers v. Pilgrim’s Pride Corp., Case No. 12-10063 (5th Cir. January 31, 2013).

Various growers from Clinton, Arkansas (the “Clinton Growers”) entered into contracts with PPC to supply PPC’s Clinton plant with chickens. The contracts detailed the compensation to be paid, contained a merger clause, and stated that the agreements were to continue on a “flock to flock basis.” Citing economic stress caused by the increase in the price of chicken feed and the falling prices for chicken, PPC terminated the contracts in 2008 and PPC subsequently filed for bankruptcy. The Clinton Growers brought promissory estoppel claims against PPC when it filed for bankruptcy based on claims that PPC assured the Clinton Growers that PPC was in this for the long haul and that the growers would receive chickens as long as they met PPC’s specifications. PPC also assured the Clinton Growers that they would more than cover the costs of the buildings and raising the chickens which could cost approximately $150,000 per chicken house.

PPC filed for summary judgment on the Clinton Growers’ claims under two theories: 1. the law of the case because the District Court for the Northern District of Texas had rejected similar claims in City of Clinton v. Pilgrims Pride Corp., 654 F. Supp.2d 536, 544-45 (N.D. Tx. 2009); and 2. the contracts barred the promissory estoppel claims because both the contracts and the promises covered the same subject matter. The bankruptcy court granted the summary judgment and the district court affirmed as to the granting of the summary judgment on the contract bar doctrine alone finding that the contracts barred the promissory estoppel claims because they covered the same subject matter as PPC’s oral representations.

The Fifth Circuit affirmed the bankruptcy court’s grant of summary judgment for Pilgrim’s Pride Corporation (“PPC”) on the ground that written contracts between PPC and Clinton Growers barred the alleged oral promises of a contract for the long haul and promissory estoppel claim under the “contract bar” doctrine. The Fifth Circuit held that promissory estoppel applies only when the elements of a contract cannot be shown to exist. Under the “contract bar” doctrine, a party alleging promissory estoppel can succeed only by showing that the written contract does not cover the subject matter underlying the promissory estoppel claim.

The case does not provide new law but serves as a reminder that a contract is a contract and it is there for a reason. It defines the terms of the parties’ obligations to each other. Courts should honor and enforce the contracts as written and when allegations are raised (and truthfully, when are they not raised) about some non-contractual representation, the “contract bar” doctrine can be used as another tool in your tool kit to enforce the contract.

The opinions in this blog are solely those of the author. Any comments, suggestions and replies can be sent to John@jrjoneslaw.com.

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New Motion to Dismiss Exception to Due-Order-of-Pleadings Rule in Texas Effective March 1, 2013.

Like the Federal Rules of Civil Procedure, Texas also has a due-order-of-pleadings rule. Stated simply, the rule requires pleadings to be filed in a certain order and if it is not, the pleading or motion is waived. The order of pleadings in Texas is as follows: 1. Special appearance to challenge personal jurisdiction under Texas Rule of Civil Procedure 120a; 2. Motions to transfer venue under Texas Rule of Civil Procedure 86(1); and 3. all other motions and pleadings.  There are a couple of current exceptions to the due-order-of-pleadings rule. A defendant can file a notice of removal to federal court without waiving its special appearance and a defendant can also file a motion for continuance to continue the special appearance or transfer venue hearings without violating the due-order-of-pleadings rule.

On March 1, 2013, the due-order-of pleadings rule will contain another exception. The Supreme Court of Texas has issued an order creating Texas Rule of Civil Procedure 91a entitled “Dismissal of Baseless Causes of Action.”  Rule 91a allows a defendant to file a motion to dismiss a cause of action that has no basis in law or fact without waiving the special appearance or motion to transfer venue. Public comments have been received and the Supreme Court has issued the final version of Texas Rule of Civil Procedure 91a. A link to the Supreme Court of Texas’ order is provided and you will need to paste it into your browser to review: http://www.supreme.courts.state.tx.us/miscdocket/13/13902200.pdf.

Rule 91a is very specific as to what the new motion to dismiss must contain and when it must be filed. It must be filed within 60 days after the first pleading containing the challenged cause of action is served on the movant; filed a least 21 days before the motion is heard; and granted or denied within 45 days after the motion is filed.  The Rule 91a motion must also state that it is filed pursuant to this rule, must identify each cause of action specifically being addressed and state specifically the reasons the cause of action has no basis in law, no basis in fact or both. Further, each party is entitled to 14 days notice of the hearing on the motion to dismiss under Rule 91a. The hearing itself does not allow for the admission of any evidence and the court must decide the motion solely on the pleading of the cause of action, together with any exhibits permitted by Texas Rule of Civil Procedure Rule 59. More importantly, the Court must award costs and attorneys’ fees to the prevailing party on the motion to dismiss under Rule 91a.7.

The opinions in this blog are solely those of the author’s and any comments, replies and suggestions should be sent to John Jones at John@jrjoneslaw.com.

Expert Qualifications in the 5th Circuit – Methodology and Standards Matter

In a continuing trend to support and enforce the gatekeeper role of trial courts, the United States Court of Appeals for the Fifth Circuit has once again spoken on an expert’s qualifications to testify under Daubert and Federal Rule of Evidence 702. In John L. Brown v. Illinois Central Railroad Company, __F.3d__ (January 28, 2013)(Case No. 11-60654), Brown claimed that Amtrak breached its statutory duty to blow its horn continuously within 900 feet of the crossing and that Illinois Central breached its common law duty to make an extrahazadous railroad crossing reasonably safe by installing active signal devices. In support of its claim, Brown tried to admit the testimony of Dr. Gary Long, who intended to testify that the crossing was extrahazadous and needed active signals. Illinois Central moved for summary judgment and sought to exclude Dr. Long’s testimony under Federal Rule of Evidence 702. The district court granted the motion for summary judgment and motion to exclude and Brown appealed claiming that excluding Dr. Long’s testimony was error and that the district court  made no assessment whatsoever regarding Dr. Long’s qualifications to testify.

The Fifth Circuit reviewed the district court’s decision to exclude under the abuse of discretion standard and held that a district court abuses its discretion when its ruling is based on an erroneous view of the law or a clearly erroneous assessment of the evidence. The Fifth Circuit stated that a district court is further required to ensure the testimony is relevant and reliable and reliablilty is determned by making a preliminary assessment of whether the reasoning or methodology properly can be applied to the facts at issue.  In Brown, Dr. Long was asked and testified as to why the crossing was, in his opinion, ultrahazadous. Counsel for Illinois Central directly asked Long why (paraphrasing) his testimony was reliable.  Dr. Long responded that “it’s based on obviously education and experience.”  As a result, the district court granted Illinios Central’s motion to exclude based on Federal Rule of Evidence 702 as explained under Daubert concluding that Dr. Long had failed to articulate a credible methoology to sustain his conclusions.

On appeal, the Fifth Circuit agreed and held to establish reliability under Daubert, an expert bears the burden of furnishing “some objective, independent validation of [his] methodolgy. The expert’s assurances that he had utilized generally accepted [principles] is insufficient.” The Fifth Circuit acknowledged that Dr. Long’s report professed to be based on the standards and customs of the transportation engineering profession and mentioned a variety of private and public guidelines and publications on roadway design and traffic control devices. However, the report failed to explain how any of the cited authorities supported Dr. Long’s conclusions relating to the narrow pavement, skewed angles, rough surface and steep incline of the crossing. The Fifth Circuit also rejected Dr. Long’s attempt to get around the objective standards available on the subject and his reliance on his own education, experience and opinion that standards to safety do not have to be adopted by an official agency to exist.  In rejecting this and finding Dr. Long’s analysis “transparently subjective,” the Fifth Circuit held that “without more than creditionals and a subjective opinion, an expert’s testimony that it is so, is not admissible” and as a result, the district court did not abuse its discretion by excluding Dr. Long’s testimony.

The opinions in this blog are the author’s and any comments, replies or suggestions should be sent to John Jones at JJONES@bickerstaff.com.