Unpublished Disposition, 855 F.2d 862 (9th Cir. 1984)

Charles P. STETSON, Jr., Plaintiff-Appellant,v.SAVENET, a corporation; American Network, Inc., acorporation; Pacific Telecom, Inc., acorporation; John S. Loewen; E.B.Galligan; and A.M. Gleason,Defendants-Appellees.

No. 87-3653.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 6, 1988.Decided Aug. 10, 1988.

Before WALLACE and REINHARDT, Circuit Judges, and STEPHENS^*  District Court Judge.

MEMORANDUM^** 

Charles P. Stetson appeals the district court's grant of summary judgment in favor of the defendants on his claim for an investment banker broker's commission. Specifically, Stetson appeals the district court's holdings that (1) the parties' agreement did not cover the eventual transaction, (2) Stetson was not the procuring cause, (3) Loewen could not be sued for quantum meruit in his individual capacity, and (4) a quantum meruit theory cannot be pursued when an express contract exists. The district court had diversity jurisdiction under 28 U.S.C. § 1332 and we have jurisdiction under 28 U.S.C. § 1291. We reverse and remand.

FACTS

Stetson, an investment banker, was employed as president of Davis Skaggs Capital (DSC), an investment banking and venture capital company. On July 20, 1983, DSC entered into a contract with SaveNet, Inc.,¹  a company that furnished long distance telephone service. The contract provided that DSC would receive a commission of four percent of the financing received by SaveNet due to DSC's efforts. Around this time, Stetson arranged meetings between Loewen, president of SaveNet, and representatives of CP National Corp. (CP) regarding potential investment by CP into SaveNet. No investment was made at that time.

In March of 1984, Stetson ceased being an employee of DSC but became a consultant to it. Stetson alleges that DSC's contract with SaveNet was orally assigned to him at that time. In July of 1984, CP showed a renewed interest in investing in SaveNet.

Evidently as a result of confusion over Stetson's compensation rate, Loewen wrote a letter to Stetson on August 30, 1984, proposing a sliding scale compensation rate if the CP financing went through. On September 14, 1984, Stetson responded to Loewen's letter and expressed his belief the July 20, 1983 letter agreement controlled the economics of their relationship, but if it did not, he would accept the proposed figures.

On September 19, 1984, CP and SaveNet reached an agreement in principle; however, a SaveNet boardmember objected to the proposed transaction. In an attempt to save the transaction, Loewen requested Stetson to prepare a fairness opinion for the SaveNet Board of Directors. Stetson agreed to do so on the condition that Loewen confirm that Stetson would receive a four percent commission if the transaction with CP was consummated. Loewen signed a letter dated September 25, 1984 addressed to Stetson in which SaveNet agreed to pay a four percent commission "if, and when, the proposed investment by CP National is made."

After Stetson presented the fairness opinion, a SaveNet director proposed an alternative arrangement with American Network, Inc. (AmNet). When CP learned of this proposal, it threatened to sue AmNet if AmNet continued to interfere with CP's potential relationship with SaveNet. Eventually, CP, SaveNet, and AmNet entered into a three-way transaction that closed in March 1985.

Stetson requested payment of his commission. Payment was refused so he brought suit in district court for breach of contract, conspiracy to induce breach of contract, intentional interference with contractual relations, and quantum meruit. The district court granted summary judgment against Stetson on all of his claims. Stetson filed a motion for reconsideration and submitted affidavits in support of his motion. The district court struck the affidavits and denied the motion. Stetson timely appealed.

ANALYSIS

* Standard of Review and Legal Standard

This court reviews a district court's grant of summary judgment de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir. 1986). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact. Fed. R. Civ. P. 56(c). We also review the district court's interpretation of state law de novo. Matter of McLinn, 739 F.2d 1395, 1397 (9th Cir. 1984) (en banc).

II

Breach of Contract

Stetson contends the district court erred by holding as a matter of law that (1) the September 25, 1984 contract did not apply to the eventual merger between CP, AmNet, and SaveNet, and (2) Stetson was not the procuring cause. His contentions have merit.

Generally, the construction of a contract is a question of law. Timberline Equip. Co., Inc. v. St. Paul Fire and Marine Ins. Co., 281 Or. 639, 576 P.2d 1244, 1246 (1978) (citing May v. Chicago Ins. Co., 260 Or. 285, 292-94, 490 P.2d 150, 153 (1971)). However, if the language of the contract is ambiguous, the meaning of the contract is a question of fact. Id. (citing Libby Creek Logging, Inc. v. Johnson, 255 Or. 336, 339, 358 P.2d 491, 493, (1960)). A contract is ambiguous if it is amenable to more than one reasonable interpretation. Ross Bros. Const. Co., Inc. v. Oregon, 59 Or.App. 374, 650 P.2d 1080, 1082 (1982). Whether a contract is ambiguous is a question of law. Id. Once the court determines a contract is ambiguous, resolution of the meaning of the contract is a function for the finder of fact. Id.

Here, the September 25 letter provided that Stetson would be entitled to a commission "if, and when, the proposed investment by CP National is made." Stetson introduced evidence indicating that the eventual investment made by CP during the three-way transaction was substantially similar to the one proposed by the agreement in principle. SaveNet contends the letter agreement was applicable only if CP's investment was made pursuant to the agreement in principle. Because the language of the letter is reasonably susceptible to the interpretation suggested by Stetson, and only a brief time interval separated CP's initial proposal and the eventual transaction, questions of fact remain whether the CP investment was within the terms of the contract. We do not mean to suggest that the September 25th letter necessarily constitutes the entire agreement between the parties. At the time of trial the finder of fact must decide what the contract consists of and what its terms are.

Furthermore, the determination whether a broker was the procuring cause to a resulting transaction is one of fact. Sherwood v. Gerking, 209 Or. 386, 306 P.2d 386, 391 (1957). A genuine dispute exists as to that issue, making summary judgment inappropriate for that reason as well.² 

With regard to the granting of summary judgment on Stetson's quantum meruit claim, we note that recovery in quantum meruit is inappropriate when there is a valid contract covering the subject matter in dispute. See Kashmir Corp. v. Patterson, 289 Or. 589, 616 P.2d 468, 469-70 (1980); see also Hahn v. Oregon Physicians' Service, 786 F.2d 1353, 1355 (9th Cir. 1985). However, because the terms of the contract remain to be determined at trial, it was premature to grant summary judgment against Stetson on this claim before determining whether the contract covers the transaction at issue. Accordingly, we also reverse on that claim.

Because the district court erred by granting summary judgment on the above issues, the cause is REVERSED AND REMANDED.