                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 12a0710n.06

                                           No. 11-5169

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT
                                                                                        FILED
                                                                                   Jul 03, 2012
FRED H. GILLHAM, SR., as Trustee for the                 )
                                                                             LEONARD GREEN, Clerk
TIMCO Employee Profit Sharing Plan & Trust,              )
FBO Fred H. Gillham, Sr.                                 )
                                                         )       ON APPEAL FROM THE
       Plaintiff-Appellee,                               )       UNITED STATES DISTRICT
                                                         )       COURT FOR THE WESTERN
v.                                                       )       DISTRICT OF TENNESSEE
                                                         )
TENNESSEE VALLEY AUTHORITY,                              )                OPINION
                                                         )
       Defendant-Appellant.                              )



BEFORE:        BATCHELDER, Chief Judge; MCKEAGUE, Circuit Judge; and QUIST,
               Senior District Judge.*

       QUIST, District Judge.

       Defendant-Appellant Tennessee Valley Authority (TVA) appeals the district court’s order

granting summary judgment to Plaintiff-Appellee Fred H. Gillham Sr., as Trustee for the TIMCO

Employee Profit Sharing Plan & Trust, FBO Fred H. Gillham, Sr. (Gillham or TIMCO), on

TIMCO’s breach of contract claim. The district court held that the TVA breached a commitment

letter with TIMCO for the public auction of real property by allowing a second bidder to bid at the

auction. Because the district court failed to apply the plain language of the commitment letter and




       *
       Honorable Gordon J. Quist, Senior United States District Judge for the Western District of
Michigan, sitting by designation.
No. 11-5169
Gillham v. TVA


instead improperly read additional terms into the parties’ agreement, we reverse and remand with

instructions to enter summary judgment for the TVA.

                                                 I.

        The TVA is a “wholly-owned corporate agency and instrumentality of the United States,”

Hill v. United States Dep’t of Labor, 65 F.3d 1331, 1333 (6th Cir. 1995). It is responsible for

managing and developing lands and natural resources in the Tennessee Valley region. See United

States ex rel. TVA v. Welch, 327 U.S. 546, 553, 66 S. Ct. 715, 718 (1946). In 1997, the TVA granted

TIMCO an exclusive easement (the “Easement”) on certain property (the “Property”) located in

Yellow Creek Port Industrial Park in Tishomingo, Mississippi, for a term of forty years. Among

other things, the Easement required TIMCO to invest at least $500,000 to improve the Property and

to use it solely for “constructing, operating, and maintaining facilities to manufacture large water

craft and appurtenances thereto.” TIMCO made the required improvements but was unable to attract

a tenant that met the use restrictions.

        In July 2005, TIMCO submitted a land use application to the TVA requesting that the TVA

eliminate the Property’s use restrictions. The TVA denied the request, but eventually suggested that

it sell the Property outright to TIMCO through a public auction. TIMCO agreed to the proposal, and

the TVA’s board of directors approved the proposal. On February 2, 2007, the parties entered into

a commitment letter (First Commitment Letter) containing the terms and conditions for a public

auction of the Property. The First Commitment Letter set a minimum bid of $625,000 and required

TIMCO to attend the auction and bid the minimum amount. The First Commitment letter also


                                                 2
No. 11-5169
Gillham v. TVA


provided that TIMCO would receive a credit of $425,000 for the improvements to the Property if

TIMCO was the high bidder. The parties set a mutually-acceptable auction date of July 17, 2007.

The TVA, however, cancelled the first auction and attempted to reschedule the auction for August

17, 2007. TIMCO objected to this date, and the sale was not rescheduled.

       On November 26, 2007, the parties entered into another commitment letter for an auction sale

of the Property (Second Commitment Letter). The terms of the Second Commitment Letter were

very similar to those of the First Commitment Letter, with the exception that the minimum bid price

was increased to $907,300 and the credit to TIMCO was increased to $653,000. Like the First

Commitment Letter, the Second Commitment Letter contained requirements for TIMCO and other

interested bidders to qualify to participate in the auction. Paragraph 1.D. provides:

               D. Financial Ability. TIMCO must qualify to bid at the auction by
               submitting evidence, satisfactory to TVA, in its sole discretion, of its
               financial ability to close the sale.

Paragraph 4 provides:

       4.      Auction. The proposed auction shall be held on a mutually acceptable date.
               Potential bidders other than TIMCO must qualify at least two (2) days prior
               to the date of the auction.

       TVA and TIMCO set a mutually-acceptable date of December 21, 2007, for the auction, and

TVA issued a Notice of Public Auction for that date at 8:30 a.m. CST at the Tishomingo County

Courthouse. The Notice provided that “[i]n order to qualify to bid, TVA must receive, no later than

12:00 Noon CST on December 19, 2007, a letter of intent to bid and credentials, satisfactory to TVA,

in its sole discretion, evidencing the financial ability to close the sale.” Gillham, on behalf of


                                                 3
No. 11-5169
Gillham v. TVA


TIMCO, sent a letter of intent to bid and letter of credit to the TVA on December 12, 2007. On

December 13, 2007, Will Wasdin (“Wasdin”), the TVA Realty Services paralegal assigned to handle

the auction, sent Gillham an email notifying him that TIMCO had qualified to bid. On December

19, 2007, two days prior to the scheduled auction, Wasdin sent Gillham an email stating that TIMCO

was the only qualified bidder, along with a copy of a Special Warranty Deed that the TVA would

deliver upon the close of the auction on December 21, 2007.

       On December 20, 2007, at approximately 10:00 a.m., as Wasdin was preparing to leave his

office to travel to Tishomingo County, Mississippi, for the auction, he retrieved from the TVA mail

cart a package from Dynasteel Corporation. Wasdin opened the package and saw that it contained

bid documents for the auction. The package was postmarked December 12, 2007. Although Wasdin

did not receive the package until December 20, 2007, it had been received at least a day earlier in

the TVA’s Chattanooga Mail Services Office. Delivery had been delayed, however, because the

address did not contain a mail-stop number, i.e., an internal TVA address. Wasdin immediately

called Rebecca Tolene, an attorney in TVA’s Office of the General Counsel, who in turn notified

Gillham’s attorney of the situation. After investigating the matter, Tolene determined that the

package was timely submitted and that Dynasteel should be permitted to bid at the auction. Through

counsel, Gillham protested the TVA’s decision to allow Dynasteel to bid.

       The auction went forward as scheduled on December 21, 2007. Gillham attended the action

and made the winning bid on behalf of TIMCO in the amount of $1.5 million.




                                                4
No. 11-5169
Gillham v. TVA


       Following the sale, TIMCO sued the TVA, alleging that it breached the Second Commitment

Letter by allowing Dynasteel to bid at the December 21, 2007, auction.1 Following discovery, the

parties filed cross motions for summary judgment. The district court granted TIMCO’s motion and

denied the TVA’s motion, concluding that the TVA improperly allowed Dynasteel to bid at the

auction because Dynasteel failed to qualify before the deadline expired.2

                                                II.

       “Questions of contract interpretation, including those that form the basis for the grant of

summary judgment, are subject to de novo review.” Royal Ins. Co. of Am. v. Orient Overseas

Container Line Ltd., 525 F.3d 409, 421 (6th Cir. 2008) (citation omitted). Summary judgment is

proper “if the movant shows that there is no genuine dispute as to any material fact and the movant

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).




       1
          TIMCO’s breach of contract claim alleged that the TVA breached the First and Second
Commitment Letters. TIMCO also alleged that Wasdin’s December 19, 2007, email was a separate
contract that the TVA breached. In addition to breach of contract, TIMCO alleged claims for unjust
enrichment and violation the Freedom of Information Act. TIMCO subsequently withdrew its
Freedom of Information Act claim.
       2
         Because TIMCO failed to address the First Commitment Letter in its summary judgment
papers, the district court deemed that aspect of its claim abandoned. In light of its ruling on
TIMCO’s claim for breach of the Second Commitment Letter, the district court declined to address
TIMCO’s breach of contract claim based on Wasdin’s email. Finally, the district court dismissed
the unjust enrichment claim because the Second Commitment Letter was a valid contract covering
the subject of the unjust enrichment claim. The only claim at issue on appeal, therefore, is TIMCO’s
claim for breach of the Second Commitment Letter.

                                                 5
No. 11-5169
Gillham v. TVA


                                                 III.

                                                  A.

       Because the contract at issue involves the United States and was entered into pursuant to a

federal statute, federal common law applies. United States v. Seckinger, 397 U.S. 203, 209-10, 90

S. Ct. 880, 884 (1970); King v. United States, 301 F.3d 1270, 1275-77 (10th Cir. 2002). The general

rules of contract law require that courts interpret contracts according to their “‘plain meaning, in an

ordinary and popular sense.’” Univ. Hosps. of Cleveland v. S. Lorain Merchants Ass’n Health &

Welfare Benefit Plan & Trust, 441 F.3d 430, 437 (6th Cir. 2006) (quoting Perez v. Aetna Life Ins.

Co., 150 F.3d 550, 556 (6th Cir. 1998)). “When clear contract language itself reveals the intent of

the parties, it is unnecessary to turn to rules of construction.” TVA v. Exxon Nuclear Co., 753 F.2d

493, 496 (6th Cir. 1985); see also Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542,

1549 (9th Cir. 1989) (noting that the parties’ intent must be ascertained from the contract itself when

its terms are clear). Furthermore, the contract must be construed to give meaning to every word or

phrase. United States v. Brye, 146 F.3d 1207, 1211 (10th Cir. 1998).

       The dispositive issue in this appeal is what must occur for interested bidders, other than

TIMCO, to qualify to bid. Two provisions of the Second Commitment Letter are relevant. First,

under paragraph 4., potential bidders “must qualify at least two (2) days prior to the date of the

auction.” Second, paragraph 1.D. specifies that a potential bidder qualifies “by submitting evidence,

satisfactory to TVA, in its sole discretion, of its financial ability to close the sale.” Giving these

provisions their plain meaning, an interested party qualifies to bid by submitting to the TVA, two


                                                  6
No. 11-5169
Gillham v. TVA


days prior to the date of the auction, satisfactory evidence of its ability to close the sale. Applying

this plain language, Dynasteel qualified to bid when it submitted, and the TVA received, its

documents two days before the auction, by 12:00 Noon on December 19, 2007.

       The district court held that the TVA’s receipt of Dynasteel’s documents, alone, was

insufficient for Dynasteel to qualify because the TVA must, at a minimum, “open[] the envelope and

glanc[e] at its contents to determine whether it includes documents in proper form.” It reasoned that

because the bidder’s evidence must be “satisfactory to TVA,” a TVA representative must review the

evidence of financial ability to confirm that the bidder qualifies. In reaching this conclusion,

however, the district court ignored the plain language of the agreement and instead read additional

language into paragraph 1.D. conditioning qualification upon the TVA’s review of the bidder’s

evidence. The qualification requirements, however, speak not in terms of what the TVA must do

or determine, but instead address what the bidder must do–submit the satisfactory evidence two days

prior to the sale. Moreover, the requirement that the evidence be “satisfactory to TVA” defines the

quality of the interested bidder’s evidence; it does not require that the TVA review the documents

prior to the deadline. The district court’s interpretation appears to have been influenced by its

consideration of extrinsic evidence concerning the TVA’s auction process. Because the language

is unambiguous, however, the district court erred in considering extrinsic evidence to glean the

parties’ intent. “[A] court should not use extrinsic evidence to attempt to discern the intent of the

parties, but rather should determine their intent from the plain language of the contract.” Royal Ins.

Co. of Am., 525 F.3d at 421 (internal quotation marks omitted).


                                                  7
No. 11-5169
Gillham v. TVA


        The district court also found that limiting paragraph 1.D. to the bidder’s submission and the

TVA’s receipt would render the phrase “satisfactory to TVA, in its sole discretion” superfluous. We

disagree. The character of the bidder’s evidence does not change between the time of receipt and

review. If Dynasteel’s evidence was satisfactory to Wasdin when he opened the package and

reviewed it–even after the deadline for submissions had expired–it was satisfactory at the time it was

received in the TVA’s mail room. For example, suppose that in order to qualify the TVA had

required interested bidders to submit their bid documents on paper in a color satisfactory to the TVA.

If the TVA determined that it would accept bid documents only on blue or red paper, a bidder who

timely submitted bid documents on yellow paper would never qualify, but a bidder who submitted

bid documents on a blue piece of paper would qualify upon the TVA’s receipt of the bid package,

regardless of when it was reviewed, because the color of the paper would be satisfactory to the TVA.

Thus, the TVA’s receipt of Dynasteel’s package qualified Dynasteel to bid.

                                                  B.

        TIMCO argues that a dispute of fact remains as to whether the TVA received Dynasteel’s bid

package before the qualifying deadline, thus precluding summary judgment for the TVA. We

disagree.

        According to the TVA’s evidence, the mail arrives in the TVA’s mailroom one time each day

at 7:00 a.m. (Fichera Decl. ¶ 9.b.) Mail that contains a mail-stop number, or an internal delivery

address, is sorted into pigeonholes and delivered at approximately 10:00 a.m. the same morning. (Id.

¶¶ 9c. and e.) Mail that lacks a mail-stop designation is placed into a bin to be looked up later in the


                                                   8
No. 11-5169
Gillham v. TVA


day, usually after lunch. (¶¶ 9.d. and g.; Stinson Dep. at 2.) Most of the lookup mail is delivered

on the 10:00 a.m. mail run the day after it is received. (Fichera Decl. ¶ 9.g.) It is undisputed that

Dynasteel’s package did not contain a mail-stop number. The handwritten mail-stop number “SP3L”

on the Dynasteel package indicates that the package was put in the lookup bin and that a mailroom

employee wrote the mail-stop number on the envelope. (Id. ¶ 15.a.) The facts that the Dynasteel

package contained a hand-written mail-stop number and was delivered to Wasdin between 10:00

a.m. and 11:00 a.m. on December 20 indicate that the package was received in the TVA’s mailroom

no later than approximately 7:00 a.m. the previous morning, when the mail was delivered.

(¶¶ 15.c.- e.)

        TIMCO cites two bases for an issue of fact. First, it contends that the Dynasteel package

lacked a special TVA sticker that should have been attached pursuant to a recently-adopted junk-

mail-reduction policy. The policy applied to mail that did not include a mail-stop number and

required mailroom employees to place a sticker on the parcel instructing the recipient to advise the

sender of the proper mail-stop number. TIMCO contends that the lack of such a sticker on the

Dynasteel package creates a genuine issue of fact as to whether the sorting and delivering of the

Dynasteel package was consistent with the TVA’s other mailroom policies and procedures that

would have delayed the delivery of the Dynasteel package to Wasdin. TIMCO also notes that TVA

mail courier Charles Stinson testified that depending on his mailroom workload, he might lookup

mail-stop numbers for lookup mail prior to the 10:00 a.m. mail run and include those pieces of mail

in that morning’s mail run. (Stinson Dep. at 22-23.) Thus, TIMCO argues, a trier of fact could


                                                 9
No. 11-5169
Gillham v. TVA


conclude that the TVA received the Dynasteel package on December 20 and delivered it to Wasdin

the same day.

       TIMCO’s evidence fails to create an issue of fact. To survive summary judgment, a party

must present more than a “mere . . . scintilla” of evidence. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 252, 106 S. Ct. 2505, 2512 (1986). A party may not rest on speculation or a “mere possibility”

of a factual dispute. Mitchell v. Toledo Hosp., 964 F.2d 577, 582 (6th Cir. 1992). That the

Dynasteel package lacked a special sticker says nothing about whether it was handled in the usual

manner for mail items lacking a mail-stop number. The sticker may have been omitted for a number

of reasons, none of which has anything to do with the processing of lookup mail. As for the

possibility that the Dynasteel package was processed the same morning it was received, this is no

more than speculation. Based on decades of experience in the TVA’s mailroom, Frank Fichera, the

Manager of TVA Mail Services, stated that most lookup mail is done after lunch, and it “would be

highly unusual for a piece of lookup mail to be looked up and be distributed on the 10:00 a.m. mail

run on the day that it was received.” (Fichera Decl. ¶ 9.g.) Indeed, Fichera confirmed that the

mailroom received more mail in December–when the Dynasteel package was received–than at other

times of the year because of the holidays, (id. ¶ 5), making it improbable that mailroom employees

would have time to handle the lookup mail received that morning in time to include it in the morning

mail run. Consequently, TIMCO can offer no more than speculation.




                                                 10
No. 11-5169
Gillham v. TVA


                                          IV.

      For the foregoing reasons, the judgment of the district court is REVERSED and

REMANDED with instructions to enter summary judgment in favor of the TVA.




                                          11
No. 11-5169
Gillham v. TVA


       ALICE M. BATCHELDER, Chief Judge, dissenting. I dissent not because I find the

majority’s interpretation of the contract language wrong—to the contrary, I find it both persuasive

and elegant, indeed, considerably more elegant than the contract itself. Rather, I dissent because I

believe it is possible to reasonably disagree with that interpretation, in no small part due to the

contract’s noted inelegance. Thus, I would find this contract ambiguous and in need of trial to

determine what the parties intended it to mean.

       As the majority recognizes, the dispute in this case turns on two key sentences in the contract.

The first is in ¶ 1.D., which defines what it means for TIMCO to “qualify.” The second is in ¶ 4,

which places a two-day, pre-auction deadline on when other bidders can qualify. Though no

language directly defines what “qualify” means for other bidders, the parties agree that the ¶1.D.

definition provided for TIMCO applies to other bidders as well. See, e.g., TVA Br. at 22 n.13.

Thus, the contract requires the following for other bidders to bid at the auction:

       [Other bidders] must qualify to bid at the auction by submitting evidence, satisfactory
       to TVA, in its sole discretion, of [their] financial ability to close the sale. [Other
       bidders] must qualify at least two (2) days prior to the date of the auction.

       The parties’ dispute over this language essentially boils down to a matter of timing: when

must TVA review the submitted evidence to determine if it is satisfactory? Both parties agree that

a bidder must submit its evidence before the two-day deadline. Further, and crucially, both parties

agree that a bidder does not ultimately qualify to bid at the auction until TVA determines that the

bidder’s submitted evidence is satisfactory. See, e.g., TVA Br. at 38 (“If TVA determines, in its sole

discretion, that the [bidder’s] evidence is not satisfactory, then the bidder . . . cannot bid at the


                                                  12
No. 11-5169
Gillham v. TVA


auction.”) and 33 (“TVA had up to the start of the auction to determine whether a potential bidder

had qualified . . . .” (emphasis added)). Where they part ways is that TIMCO argues that TVA must

make the determination by the two-day, pre-auction deadline, while TVA argues that it can make that

determination any time before the auction itself. TIMCO Br. at 21; TVA Br. at 33. While I agree

with the majority that TVA has the better argument, I do not see TIMCO’s approach as unreasonable.

       Viewed in isolation, ¶ 1.D. favors TVA’s timeline, establishing only that TVA must find a

bidder’s submitted evidence satisfactory in order for the bidder to qualify to bid at the auction; it

does not require the pre-auction deadline for TVA’s review. The only apparent time limit is that a

bidder must qualify before the auction takes place (“to bid at the auction,” a bidder “must qualify”),

which is consistent with TVA’s position on appeal regarding when it must make the qualification

determination.

       But TIMCO argues that ¶ 4 does create a deadline for qualification. It requires that bidders

“must qualify at least two days” before the auction. This could reasonably be interpreted to mean

that all the necessary elements of “qualify” must be completed by that time. Because a necessary

element of qualification is TVA’s determination that the submitted evidence is satisfactory, such an

alternative interpretation would require TVA to determine that the evidence is satisfactory before

the deadline.

       TIMCO’s approach is strengthened by the fact that TVA’s argument requires interpreting

“qualify” to mean something different in ¶ 1.D. than it does in ¶ 4. As TVA sees it, to “qualify”

under ¶ 1.D. a bidder must have submitted evidence and TVA must have determined that the


                                                 13
No. 11-5169
Gillham v. TVA


evidence is satisfactory, but to “qualify” under ¶ 4 a bidder need only submit its evidence before the

two-day deadline. Thus, under TVA’s interpretation, a bidder who has “qualified” under ¶ 4 by

submitting his materials before the two-day deadline can then be “disqualified” under ¶ 1.D.’s post-

deadline (but pre-auction) review. Defining the same key term in the same contractual provision to

mean two different things is questionable and supports recognizing the contract language as

ambiguous.

       The majority’s approach offers a route around this ambiguity problem. In its analysis,

qualification occurs simply because the bidder submits satisfactory evidence. Thus, a bidder who

(1) submits evidence before the two-day, pre-auction deadline that (2) TVA finds satisfactory

sometime after the deadline (3) “qualified” at the moment it submitted its satisfactory evidence. So

how is it, as the district court asked below, that the evidence could be satisfactory to TVA without

review? The majority answers, “The character of the bidder’s evidence does not change between

the time of receipt and review. If [the other bidder’s] evidence was satisfactory to Wasdin when he

opened the package and reviewed it—even after the deadline for submissions had expired—it was

satisfactory” when it was submitted before the deadline, too. Maj. Op. at 8.

       Though I find this persuasive, I do not think it solves the ambiguity problem. By reserving

the satisfaction determination to its “sole discretion” and eschewing any explicit limitations on that

discretion, TVA has arguably made its review an indispensable element of what it means to

“qualify.” Thus, it seems reasonable to read the contract as making TVA’s exercise of judgment a

necessary part of the qualification process—until TVA renders judgment, a bidder is not qualified.


                                                 14
No. 11-5169
Gillham v. TVA


Notably, that is precisely TVA’s position on appeal: it will not allow a bidder to participate at the

auction until it has determined that the bidder is, in fact, qualified. TVA Reply Br. at 21 (noting that

the “sole discretion” language means that TVA “reserve[s] the right to consider a potential bidder’s

financial wherewithal before allowing it to bid”).

        Where contract language is susceptible to more than one reasonable interpretation, it is

ambiguous. Sec’y of U.S. Air Force v. Commemorative Air Force, 585 F.3d 895, 900 (6th Cir.

2009). The proper interpretation of ambiguous language turns on the intent of the parties and is an

issue of fact, Parrett v. Am. Ship Bldg. Co., 990 F.2d 854, 858 (6th Cir. 1993), meaning that it

ordinarily must be resolved at trial. Summary judgment is appropriate to resolve ambiguity only

“where extrinsic evidence leaves no genuine issue of material fact and permits interpretation of the

agreement as a matter of law.” Reardon v. Kelly Servs., Inc., 210 F. App’x 456, 458 (6th Cir. 2006).

The state of the extrinsic evidence in this case does not permit such a conclusion, and neither the

district court nor the majority found otherwise. I would remand this case for trial.




                                                  15
