     Case: 15-30195       Document: 00513295846         Page: 1     Date Filed: 12/04/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                       No. 15-30195                       United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
TAJ AL KHAIRAT LIMITED,                                                   December 4, 2015
                                                                            Lyle W. Cayce
               Plaintiff - Appellee                                              Clerk

v.

SWIFTSHIPS SHIPBUILDERS, L.L.C.,

               Defendant - Appellant




                   Appeal from the United States District Court
                      for the Western District of Louisiana
                             USDC No. 6:13-CV-2609


Before DAVIS, BARKSDALE, and DENNIS, Circuit Judges.
PER CURIAM:*
       For Swiftships Shipbuilders, L.L.C.’s challenge to the summary
judgment awarded Taj Al Khairat, Ltd., on its breach-of-contract claim
regarding their settlement agreement, primarily at issue is whether a genuine
dispute of material fact exists for whether Swiftships and Taj reached an oral
agreement constituting a novation of the settlement agreement. AFFIRMED.




       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
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                                       I.
      Two contracts form the basis for this dispute. The first is the settlement
agreement, executed in August 2011 by Taj and Swiftships.            To resolve
disputes arising from a contract the parties executed the year before, the
settlement agreement required Swiftships to pay Taj either a lump sum of $5.2
million, or monthly installments totaling $6.8 million; if Swiftships failed to
make timely payment, Taj was entitled to default judgment, which Swiftships
expressly waived its right to challenge. A choice-of-law provision designated
Texas law as governing. Rahman, the United States representative for Taj
through its United States subsidiary, Crown Contracting, Inc., signed the
agreement for Taj.
      The second contract is a master services agreement (MSA) between
Swiftships and IWG, Inc., executed in February 2013. The MSA obligated
Swiftships to pay IWG for consulting services on a shipbuilding contract with
South Oil Company in Iraq (SOC contract). The MSA included a merger
provision, identifying the MSA as “the entire agreement between the parties
. . . , supersed[ing] any oral promises, proposals, representations,
understandings and negotiations between the parties respecting the subject
matter” of the MSA. In addition to being the United States representative for
Taj, Rahman served as an officer for IWG, and executed the MSA for it.
      Taj filed this action in September 2013, claiming Swiftships breached
the settlement agreement by failing to make timely payment. Swiftships did
not dispute that it only made one payment under that agreement. Instead, it
claimed, inter alia, a novation occurred when the MSA was executed, relieving
it of obligations under the settlement agreement. Along that line, Swiftships
contended: an oral agreement in the summer of 2012 between its then-new
owners, brothers Shehraze and Khurram Shah, and Rahman (again, United
States representative for Taj and officer for IWG), substituted the MSA for the
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settlement agreement; and, under the MSA, Swiftships’ payments to IWG
satisfied Swiftships’ debt to Taj. The Shah brothers’ attorney, Nubani, was
also present at the summer-2012 meeting at which Swiftships contends it and
Taj reached an oral agreement.
      In awarding summary judgment to Taj, the district court ruled that
“nothing in the testimony of the parties permits the conclusion that a meeting
of the minds ever occurred concerning how the Taj debt would be handled, and
therefore, a new oral agreement was never formed which could be considered
a novation of the Settlement Agreement”. Taj Al Khairat, Ltd. v. Swiftships
Shipbuilders, L.L.C., No. 13-02609, 2015 WL 464749, at *5 (W.D. La. 3 Feb.
2015). Additionally, the court held, inter alia, “the merger clause in the MSA
bars any novation defense”. Id.
                                       II.
      Summary judgment is reviewed de novo, applying the same legal
standards as the district court. E.g., Nobel Energy, Inc. v. Bituminous Cas.
Co., 529 F.3d 642, 645 (5th Cir. 2008). Viewing all evidence and drawing all
reasonable inferences in the nonmovant’s favor, summary judgment is
appropriate when “no genuine dispute [of] material fact” exists and “the
movant is entitled to judgment as a matter of law”. Fed. R. Civ. P. 56(a); see,
e.g., Nunez v. Allstate Ins. Co., 604 F.3d 840, 844 (5th Cir. 2010). No such
dispute exists “[i]f the record, taken as a whole, could not lead a rational trier
of fact to find for the nonmoving party”. Dediol v. Best Chevrolet, Inc., 655 F.3d
435, 439 (5th Cir. 2011). Once the movant satisfies its burden of demonstrating
no such dispute exists, the nonmovant must point to specific evidence in the
summary-judgment record to demonstrate there is a material-fact dispute
regarding the essential elements of the case. Forsyth v. Barr, 19 F.3d 1527,
1533 (5th Cir. 1994). On the other hand, “if the nonmoving party rests merely
upon conclusory allegations, improbable inferences, and unsupported
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speculation”, summary judgment may be proper.                Id. (quoting Krim v.
BancTexas Grp., Inc., 989 F.2d 1435, 1449 (5th Cir. 1993)).
                                        A.
      Before reaching whether there is a genuine dispute of material fact, two
points must be addressed.
                                         1.
      The district court found no basis for Swiftships’ challenges to the validity
of the settlement agreement. Taj, 2015 WL 464749, at *5–6 & n.4. Those
issues are not raised on appeal; therefore, they are waived. E.g., United States
v. Whitfield, 590 F.3d 325, 346 (5th Cir. 2009).
                                         2.
      Similarly, Swiftships does not contest the district court’s ruling that the
MSA’s merger clause bars Swiftships’ novation defense. Taj, 2015 WL 464749,
at *5. The court cited New York law, which the parties agreed governed the
MSA, to articulate the enforceability of merger clauses: “The purpose of a
merger clause is to require the full application of the parol evidence rule . . . to
bar the introduction of extrinsic evidence to alter, vary or contradict the terms
of the writing. . . . by evincing the parties’ intent that the agreement is to be
considered a completely integrated writing”. Id. at *5 n.4 (quoting Jarecki v.
Shung Moo Louie, 95 N.Y.2d 665, 669 (2001)) (internal quotation marks
omitted). Merger clauses are also generally enforceable under Texas law. See,
e.g., ISG State Operations, Inc. v. Nat’l Heritage Ins. Co., 234 S.W.3d 711, 719
(Tex. App.—Eastland 2007).
      Swiftships waives any issue concerning the MSA merger provision by
failing to challenge this part of the district court’s ruling. Tewari De-Ox Sys.,
Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 609–10 (5th Cir. 2011).
As a result, it arguably forfeits its right to dispute the summary judgment. See
id. “We will not raise and discuss legal issues that [the appellant] . . . failed to
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assert.” Brinkmann v. Dallas Cty. Deputy Sheriff Abner, 813 F.2d 744, 748
(5th Cir. 1987).
      Assuming this point may be considered, and for our de novo review, a
plain reading of the MSA merger provision calls into question its applicability
regarding the claimed novation. The clause prevents the parties to the MSA
from presenting evidence of prior oral agreements between the same parties
concerning the subject matter of the MSA. The alleged summer-2012 oral
agreement was, according to the Shah brothers, between Taj and Swiftships,
not IWG. And, the parties to the MSA were Swiftships and IWG, not Taj.
Although Swiftships contends the debt to Taj was satisfied by payments to
IWG under the MSA, Taj is not a party to the MSA. On the other hand,
Rahman could execute contracts for both Taj and IWG.
      Even assuming arguendo the merger clause does not bar our considering
evidence of an oral agreement, Swiftships’ challenge still fails, for the following
reasons.
                                        B.
      In maintaining the district court erred in holding Swiftships and Taj did
not reach an oral agreement, Swiftships contends: had the court construed all
the evidence in the light most favorable to the nonmovant, it would have
concluded the Shah brothers’ deposition testimony created a genuine dispute
of material fact on whether the parties reached an oral agreement and
novation; and, therefore, summary judgment was improper.
      Under Texas law, novation is an affirmative defense to a breach-of-
contract claim. Honeycutt v. Billingsley, 992 S.W.2d 570, 577 (Tex. App.—
Houston [1st Dist.] 1999). A “[n]ovation is the substitution of a new agreement
between the same parties or . . . of a new party on an existing agreement”. N.Y.
Party Shuttle, LLC v. Bilello, 414 S.W.3d 206, 214 (Tex. App.—Houston [1st
Dist.] 2013).   “Where a novation occurs, only the new agreement may be
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enforced.” Id. The party asserting novation as a defense must show: “(1) a
previous, valid obligation; (2) a mutual agreement of the parties to the
acceptance of a new contract; (3) the extinguishment of the old contract; and
(4) the validity of the new contract”. Vickery v. Vickery, 999 S.W.2d 342, 356
(Tex. 1999). In other words, a “novation is never presumed”. In re Bath Junkie
Franchise, Inc., 246 S.W.3d 356, 365 (Tex. App.—Beaumont 2008). Obviously,
the party claiming a novation must present evidence showing the parties’
intent to effect one. Id.
      Furthermore, the requisite “elements of both written and oral contracts
are the same and must be present for a contract to be binding”. Searcy v. DDA,
Inc., 201 S.W.3d 319, 322 (Tex. App.—Dallas 2006). An agreement must detail
its essential terms such that a court could enforce it. E.g., id.; T.O. Stanley
Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). And, the parties
must have, inter alia, a meeting of the minds, and intend the agreement to be
mutual and binding. See, e.g., Labor Ready Cent. III, L.P. v. Gonzalez, 64
S.W.3d 519, 522 (Tex. App.—Corpus Christi 2001). Moreover, the requisite
meeting of the minds is evaluated “on the objective standard of what the
parties said and did—and not on their subjective state of mind”. Wal-Mart
Stores, Inc. v. Lopez, 93 S.W.3d 548, 556 (Tex. App.—Houston [14th Dist.]
2002). “It is well settled law that when an agreement leaves material matters
open for future adjustment and agreement that never occur, [the agreement]
is not binding upon the parties and merely constitutes an agreement to agree.”
Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex.
2000).
      Swiftships points to the Shah brothers’ deposition testimony, regarding
the summer-2012 meeting, as evidence the parties reached an oral agreement,
which substituted the MSA for the settlement agreement. Nevertheless, that
testimony―viewed      in    the   light   most   favorable   to   the   nonmovant,
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Swiftships―fails to demonstrate a rational finder of fact could find a meeting
of the minds took place, essential terms were articulated, and a court could
enforce the articulated terms. See, e.g., Dediol, 655 F.3d at 439; Stanley Boot,
847 S.W.2d at 221–22.
      In support of an oral agreement, Swiftships asserts Shehraze Shah
understood the Taj debt would be satisfied by the amounts Swiftships paid
IWG under the MSA. He based this assumption in part on his recollection of
Rahman’s statements at the summer-2012 meeting: “[W]e will settle the
disagreement, and the disbursement will take care of the Taj settlement and
whatever is the balance would be considered as a fee for the services” provided
under the future MSA. But the rest of his deposition testimony is ambiguous
on whether the parties reached an agreement. According to him, Rahman said
“we will settle all the past dues, and we will move forward if we can procure
this contract, the SOC contract, and the performance bond”. (Emphasis added.)
He also was unclear about whether the SOC contract or the MSA was the
vehicle for discharging Taj’s debt.    Similarly, he could not articulate the
essential terms concerning payment. Regarding the amount to which the
parties allegedly agreed, he testified, “The debt was part of the settlement that
we had with $3 million as the principal amount of the debt. . . . [It] was agreed
upon [ ] that’s what the Taj people wanted, and that’s all we [would] pay as
part of our settlement”.
      Like his brother, Khurram Shah testified he believed the payments
under what would become the MSA would satisfy the debt to Taj; but, his
testimony demonstrates his understanding was contingent on procuring the
SOC contract and lacked concrete essential terms. When asked whether he
thought the debt to Taj would be resolved by the future MSA, he answered, “I
specifically recall using the words ‘bygones are bygones’ and ‘let’s move
forward,’ and [Rahman] agreed, yes, we’re [going to] move forward”. He also
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conceded he was uncertain what Rahman’s understanding was: “I don’t recall
distinctly stating that the monies -- I mean, the idea was that, okay, let’s move
forward. . . . [F]or [Swiftships], I’m very clear what moving forward means, and
I don’t know what part of that [Rahman] didn’t rec- -- didn’t understand”.
Finally, he further confused the issue when he testified that he understood the
entire debt was not “being dismissed or [ ] forgotten”: “[W]hy would somebody
want to give that up?”
      Even if the deposition testimony by the Shah brothers could be seen as
suggestive of an oral agreement, neither their attorney, Nubani, nor Rahman’s
deposition testimony supports an oral agreement. Nubani stated “there was a
reference made to an agreement that would be . . . produced, [but] there was
no discussion at the time of what the provisions of that agreement would be”.
Swiftships’ attorney further testified: “I don’t know if there was ever a formal
sitting down between all of the parties involved in this matter”; “no one had
the full picture at any given time[,] [b]ecause things were not defined”; and
“people were talking based on their assumptions”. And, Rahman denied the
formation of any agreement that replaced the debt to Taj with Swiftships’
payment to IWG.
      Moreover, the Shah brothers believed Rahman represented Taj, not
IWG, at the summer-2012 meeting. Although their attorney Nubani’s
imprecise recollection of the summer-2012 meeting included IWG, the Shahs
suggest in their deposition testimony that Rahman created IWG to collect on
the original Taj debt and render their oral agreement unnecessary. The parties
do not brief this contention, however; and no other evidence in the record
besides the Shahs’ deposition testimony supports it.
      Furthermore, any such suggestion fails to explain why Swiftships signed
the MSA, which contained references only to IWG, and not Taj. As the district
court noted, the “MSA makes no mention of Taj, the Settlement Agreement, or
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Swiftships’ obligations thereunder”. Taj, 2015 WL 464749, at *5. Instead, the
MSA provides Swiftships’ payments to IWG are in consideration for IWG’s
services.   As self-serving testimony unsupported by any other summary-
judgment evidence, and left un-briefed by Swiftships, this suggestion fails to
overcome summary judgment. See DIRECTV, Inc. v. Budden, 420 F.3d 521,
531 (5th Cir. 2005); Hardison v. Abdon Callais Offshore, L.L.C., 551 F. App’x
735, 738–39 (5th Cir. 2013) (unpublished).      If the MSA in 2013 was the
memorialization of the alleged oral agreement in the summer of 2012, it does
not demonstrate satisfaction for Swiftships’ debt to Taj.
                                      III.
      For the foregoing reasons, the judgment is AFFIRMED.




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