In 2012, I drafted a cert petition to the Supreme Court on behalf of Daewoo Electronics of America, Inc., which had not been paid $5 million for DVD players that another company was going to sell to retailers. The underlying question involved state law regarding contracts—in particular, whether extrinsic evidence regarding the contract's "date of execution" could be considered. The Third Circuit ruled against Daewoo, which sought Supreme Court review. Typically, the Supreme Court reviews only questions of federal law, but there is an exception.
Here is the Petition's introductory paragraph for "Reasons for Granting the Petition":
In rare cases, a federal court’s view of state law on a basic and recurring issue is so plainly wrong that this Court’s review is warranted. This is such a case, as the court below held that determination of a contract’s “date of execution” could not be informed by extrinsic evidence of when the agreement was actually executed. This approach conflicts with longstanding contract principles that have guided this Court and courts of all types for more than a century. The phrase “date of execution of the contract” means the date that the contract “was in fact made, executed, and delivered,” including “at a date subsequent to that stated on its face.” Columbia v. Camden Iron Works, 181 U.S. 453, 461 (1901). The court below was plainly wrong to hold that such evidence is precluded. Certiorari should be granted.
Excerpts of the full petition appear below.
QUESTION PRESENTED
When determining a contract’s “date of execution,” are courts precluded from considering extrinsic evidence regarding the actual date of execution simply because the contract itself is dated?
STATEMENT OF THE CASE
This case addresses how courts establish one of the most fundamental provisions of any contract: the date of execution. Here, the Third Circuit concluded that when there is a date on the contract, extrinsic evidence of the actual date of execution simply cannot be considered. The issue is whether that approach contradicts long-established contract law of the various States and is therefore worthy of this Court’s review.
Daewoo Electronics America Inc. makes electronic equipment such as DVD players. In 2003, the company GoVideo entered negotiations for Daewoo to supply to it DVD players that GoVideo could then sell to retailers. Because GoVideo was interested in buying such a large number of DVD players (and ultimately failed to pay for approximately $8,000,000 worth), the parties arranged for GoVideo’s parent company and a minority shareholder in the parent company to guarantee payment to Daewoo of up to $5,000,000.
Those entities that guaranteed payment are the Respondents here. GoVideo’s parent company, Lotus Pacific, is now known as OPTA Corporation (one Respondent). The minority shareholder in OPTA Corporation is T.C.L. Industries (H.K.) Holdings (the other Respondent).
Negotiations to establish the Guaranty Agreement began in November 2003. During the back and forth regarding the terms, the date “December 4, 2003” was placed on the top right of a working draft of the agreement. The agreement was further modified into January 2004, when it then became a final version.
Daewoo received the executed agreement from Respondents on February 5, 2004. There is no dispute that the agreement was modified and delivered after the date listed on the top of the contract.
Under the agreement, Respondents agreed to guarantee full payment to Daewoo of up to $5,000,000 in invoices GoVideo would incur during the 12-month term of the agreement from the date of execution: “This guarantee . . . shall remain in force for the 12 month period from the date of execution of this Guaranty . . . .” Pet. App. 30a. New Jersey law governed the agreement.
With the guaranty in place, Daewoo shipped DVD players to GoVideo later that year—between December 23, 2004 and January 5, 2005—worth $5,376,096.80. But GoVideo did not pay for them. GoVideo also had not paid another $2.5 million it owed to Daewoo. Thus, Daewoo filed suit against GoVideo, and obtained a default judgment of approximately $7.75 million, which included the $5.376 million at issue for the DVD players. GoVideo did not pay the default judgment, as it had no assets. Daewoo requested that Respondents honor the $5 million guaranty obligation, but they refused. Thus, to recover on its default judgment, Daewoo brought the underlying suit here in the district court against Respondents, invoking diversity jurisdiction under 28 U.S.C. § 1332.
The case turned on the “date of execution” of the guaranty agreement. If the execution date was simply the date listed at the top of the agreement (“December 4, 2003”), then Respondents’ obligation ended 12 months later on December 3, 2004—and they would not be liable for the $5 million in DVD shipments
GoVideo received beginning at the end of December 2004. But, if the execution date was later, such as when the final signed agreement was received by Daewoo (February 5, 2004), Respondents would be liable for the $5 million worth of shipments made during the 12 month period ending on February 4, 2005.
The district court granted summary judgment to Respondents, concluding that the date on the contract ended the inquiry: “The guaranty expired by its terms on December 3, 2004.” Pet. App. 19a. The district court explained that the date on the top of the contract “demonstrated [the parties’] intent that the guaranty take effect on December 4, 2003.” Id at 18a. The court stated that it “rejects” Daewoo’s extrinsic evidence to establish that the agreement was actually executed at a later date, noting that “the guaranty is clear on its face . . . .” Id.
The Third Circuit had jurisdiction under 28 U.S.C. § 1291 and affirmed, reciting a quote from its precedent that “a contract is unambiguous if it is reasonably capable of only one construction,” and concluding that “[t]hat is the case here.” Pet. App. 7a (quoting Inter Med. Supplies, Ltd. v. EBI Med. Sys., Inc., 181 F.3d 446, 457 (3d Cir. 1999)). The court thus agreed with the district court that the date on the agreement was also the date of execution and that no other evidence of the true “date of execution” was to be considered.
Daewoo now respectfully petitions for a writ of certiorari.
REASONS FOR GRANTING THE PETITION
In rare cases, a federal court’s view of state law on a basic and recurring issue is so plainly wrong that this Court’s review is warranted. This is such a case, as the court below held that determination of a contract’s “date of execution” could not be informed by extrinsic evidence of when the agreement was actually executed. This approach conflicts with longstanding contract principles that have guided this Court and courts of all types for more than a century. The phrase “date of execution of the contract” means the date that the contract “was in fact made, executed, and delivered,” including “at a date subsequent to that stated on its face.” Columbia v. Camden Iron Works, 181 U.S. 453, 461 (1901). The court below was plainly wrong to hold that such evidence is precluded. Certiorari should be granted.
I. This Court Reviews Federal Courts’ State-Law Rulings That Are Plainly Wrong.
This Court does not normally grant petitions for certiorari to review an application of state law. Leavitt v. Jane L., 518 U.S. 137, 144–45 (1996). But the “general presumption that circuit courts correctly decide questions of state law reflects a judgment as to the utility of reviewing them in most cases, not a belief that the courts of appeals have some natural advantage in this domain.” Id. at 145 (citations omitted). “That general presumption is obviously inapplicable where the court of appeals’ state-law ruling is plainly wrong . . . .” Id.; see also Town of Castle Rock v. Gonzales, 545 U.S. 748, 757, 2804 (2005) (“That presumption can be overcome, however.”). The Court has granted such petitions “and undoubtedly should do so where the alternative is allowing blatant federal-court nullification of state law.” Leavitt, 518 U.S. at 145 (citing Steele v. General Mills, Inc., 329 U.S. 433 (1947); Wichita Royalty Co. v. City Nat. Bank of Wichita Falls, 306 U.S. 103 (1939)).
II. The Decision Below Barring Extrinsic Evidence Regarding the “Date of Execution” Is Plainly Wrong.
Throughout recent history, courts of all types have recognized that extrinsic evidence can be considered to establish the actual date of execution of a contract, regardless whether another date appears on the document. The decision below, which barred consideration of such evidence, is plainly wrong.
As early as 1868, this Court recognized that extrinsic evidence may be particularly critical to establishing a date that contradicts a date shown on the agreement itself: “[T]he general rule of law that parol evidence cannot be received to contradict a written contract[] does not apply to the date, which, though forming a part of the written instrument, may be contradicted whenever it is material to the issue to do so.” Gardner v. Collector, 73 U.S. 499, 508 (1868).
Similarly, the Court has explained that the phrase “date of execution of the contract” means the date that the contract “was in fact made, executed, and delivered,” including “at a date subsequent to that stated on its face.” Columbia v. Camden Iron Works, 181 U.S. 453, 461 (1901); see also Chuy v. Philadelphia Eagles Football Club, 595 F.3d 1265 (3d Cir. 1978) (date of execution is date contract is actually executed).
Put simply, courts cannot bar extrinsic evidence to establish the true date of execution simply because there is a date shown on the contract. This approach has been accepted by every type of court—federal, state, bankruptcy, tax, and international trade—as shown by the following examples:
• Federal: Mobil Oil Corp. v. Federal Power Comm., 405 F.2d 11, 13 (10th Cir. 1969) (rejecting Federal Power Commission’s conclusion that date on contract is the date of execution where Commission said “that it would not receive extrinsic evidence that the contract date was not the execution date”); New Line Cinema Corp. v. Atl. Releasing Corp., 1985 U.S. Dist. LEXIS 18982, at *15–18 (S.D.N.Y. June 12, 1985) (though agreement was dated May 26, 1982, evidence and testimony raised doubt as to the “actual date of the final agreement”); see also Volk v. X-Rite, Inc., 599 F. Supp. 2d 118, 1131–32 (S.D. Iowa 2009) (approving arbitrator’s consideration of extrinsic evidence to determine date of execution of agreement signed months after the date recited in the opening paragraph).
• State: 958 Sixth Ave. Bake, LLC v. SCG Realty I, LLC, 2012 N.Y. Misc. LEXIS 1431 (N.Y. Sup. Ct. Mar. 1, 2012) (holding that there was “ample extrinsic evidence to make a prima facie showing that the note in fact was executed” on a date different than that written in the agreement); Champagne v. Clarendon Nat’l Ins. Co., 774 So. 2d 1286, 1288–89 (La. App. 2000) (affirming decision to allow “extrinsic evidence to establish the correct date of execution” even though agreement recited a date).
• Bankruptcy: Birdsell v. Fort McDowell Sand& Gravel, 218 B.R. 941, 945 (Bankr. D. Ariz. 1998) (allowing party to rely on extrinsic evidence to establish that date recited in contract was not the date it was “made and entered into” because it was signed later).
• Tax: Hallmark Mktg. v. Dep’t of Rev., 16 OTR 69, 75 (Or. T.C. 2002) (“Taxpayer cites no Oregon authority preventing the department from proving the date of execution by extrinsic evidence where the date written on the document is clearly a mistake.”).
• International Trade: United States v. Leonard Guldman & L&M Firing Line, 28 C.I.T. 597, 603 (Ct. Int’l Trade 2004) (“The waiver ‘commencing with the date of execution’ is ambiguous, and the extrinsic evidence submitted with the briefs supports the Government’s argument . . . .”).
As the Tenth Circuit has explained, “The date of execution is a question of fact for determination by the finder of the facts. The need for such determination may not be avoided by a refusal to hear and consider the facts.” Mobil Oil, 405 F.2d at 14.
The Third Circuit had previously respected this accepted view that extrinsic evidence is to be considered when deciding whether a contract is ambiguous:
A contract is unambiguous if it is reasonably capable of only one construction. Our case law sets forth the steps to be taken in establishing whether or not contract language is ambiguous. To decide whether a contract is ambiguous, we do not simply determine whether, from our point of view, the language is clear . . . . Before making a finding concerning the existence or absence of ambiguity, we consider the contract language, the meanings suggested by counsel, and the extrinsic evidence offered in support of each interpretation.
Inter Med. Supplies, Ltd. v. Ebi Med. Sys., 181 F.3d 446, 457 (3d Cir. 1999) (New Jersey law) (emphases added, internal citations and quotation marks omitted).
So how did the Third Circuit reach such a wrong decision here? The court quoted only the first sentence of the above passage from Inter Medical and then refused to consider extrinsic evidence, ignoring the basic and settled point that extrinsic evidence is to be considered to determine whether the contract is ambiguous. The court was plainly wrong to bar such evidence. This would be a mistaken view of any State’s law, and New Jersey law (governing here) is no exception. See State Troopers Fraternal Ass’n of New Jersey, Inc., v. State, 149 N.J. 38, 49 (1997) (“The determination of which date controls the application of the contract must be derived from the intent of the parties, and if no subjective intent is apparent or ascertainable, that intent must be based on the objective language of the contract.”).
Worse, the district court found—and neither party disputed—that the final guaranty agreement here was signed by all parties after the date of December 4, 2003 listed on the agreement, that is, “sometime between January 20, 2004 and February 5, 2004.” Pet. App. 13a. The date of execution therefore was a question for the jury to decide, based on all the relevant evidence. The courts here improperly eliminated that standardprocess, atalikelycosttoDaewoo of $5,000,000.
Certiorari is warranted to ensure that disputes regarding the “date of execution”—a provision fundamental to contracts arising in all of the States all the time—are properly handled in the federal courts.
CONCLUSION
The petition for a writ of certiorari should be granted.