                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-16-2007

DL Resources Inc v. FirstEnergy
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-1855




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                                              PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT
                    ____________

                         No. 05-1855
                        ____________

                   DL RESOURCES, INC.

                               v.

            FIRSTENERGY SOLUTIONS CORP.,

                                 Appellant.
                        ____________

              On Appeal from the District Court
           for the Western District of Pennsylvania
                 (D.C. Civil No. 03-cv-00200)
            District Judge: Hon. Gary L. Lancaster
                   Argued January 23, 2007

Before: SCIRICA, Chief Judge, FUENTES, and CHAGARES,
                     Circuit Judges

                        ____________

                  (Filed: October 16, 2007)


Counsel for Appellant

Richard W. Hosking, Esq. (Argued)
Gerard J. Schirato, Esq.
Melissa J. Tea, Esq.
Kilpatrick & Lockhart Nicholson Graham LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222

Counsel for Appellee
Thomas T. Frampton, Esq. (Argued)
Mandi L. Scott, Esq.
Stacy F. Vernallis, Esq.
Goehring, Rutter & Boehm
1424 Frick Building
437 Grant Street
Pittsburgh, PA 15219


                   OPINION OF THE COURT

CHAGARES, Circuit Judge.

        This dispute arises out of a contract for the purchase of
natural gas. When the seller, appellee DL Resources, Inc. (DL
Resources), was unable to supply the volume of natural gas to the
buyer, appellant FirstEnergy Solutions Corporation (FirstEnergy),
to which FirstEnergy believed it was contractually entitled,
FirstEnergy withheld payments to DL Resources to offset the costs
it incurred by having to purchase natural gas on the open market at
higher prices than it would have paid pursuant to the parties’
contract. FirstEnergy also informed a potential customer of DL
Resources, Mid-American, that it might get involved in litigation
with Mid-American if Mid-American entered a contract with DL
Resources for natural gas because FirstEnergy believed that, by
virtue of its agreement with DL Resources, it was contractually
entitled to the gas Mid-American was contemplating purchasing
from DL Resources.          Mid-American promptly ended its
negotiations with DL Resources.

        Thereafter, DL Resources initiated this litigation, asserting
both contract and tort-based claims against FirstEnergy. The
parties filed cross-motions for summary judgment, and the District
Court granted summary judgment to DL Resources on several
claims. In this appeal, we conclude that the District Court properly
granted summary judgment to DL Resources on its contract-based
claims.      As to DL Resources’ claim for prospective
advantage/tortious interference with a future contractual
relationship, however, we hold that the District Court erred in
granting summary judgment sua sponte without notice.
Accordingly, we will affirm in part and vacate in part the District

                                 2
Court’s decision, and remand for further proceedings consistent
with this opinion.

                                 I.

      DL Resources finds, extracts, and markets oil and natural
gas in western Pennsylvania. Prior to and during 2002, DL
Resources acquired leases and/or interests in natural gas deposits
in McKean County, Pennsylvania, and began drilling to recover the
gas. By May 2002, DL Resources had begun extracting and
marketing natural gas from eighty-six wells in McKean County.

        On May 15, 2002, DL Resources and FirstEnergy entered
into a contract for the sale of natural gas. Under this contract,
known as the “Base Gas Purchase Agreement,” DL Resources
agreed to sell FirstEnergy a supply of natural gas from its gas wells
in McKean County. The output from these wells was less than the
parties anticipated, and as a result, FirstEnergy had to purchase
natural gas on the open market to compensate for this production
shortfall. Because the open market price was higher than the price
FirstEnergy would have paid for an equivalent amount of natural
gas under the parties’ contract, FirstEnergy reasoned that it was
entitled under the contract to withhold monies from the payments
it owed DL Resources to offset these higher procurement costs.

       In the summer or fall of 2002, FirstEnergy learned that Mid-
American, a potential purchaser of natural gas, was engaged in
negotiations with DL Resources to obtain natural gas. Prior to the
execution of this contract, and while negotiations between DL
Resources and Mid-American were ongoing, Eric Wright, an agent
and employee of FirstEnergy, informed Mark Williams, Vice-
President of Gas at Mid-American, that FirstEnergy believed it had
a contractual right to the output DL Resources was attempting to
sell to Mid-American. Wright also informed Williams that
FirstEnergy might get involved in litigation with Mid-American if
it consummated its deal with DL Resources. Shortly thereafter,
Mid-American ended its negotiations with DL Resources.

      On February 10, 2003, DL Resources filed the lawsuit
underlying this appeal in federal district court. DL Resources’
amended complaint alleged the following causes of action:

                                 3
declaratory judgment (Count I), breach of contract (Count II),
unjust enrichment (Count III), tortious interference with a
contractual relationship (Count V), and prospective
advantage/tortious interference with a future contractual
relationship (Count VI).1 Counts I-III resulted from FirstEnergy’s
withholding of monies to offset procurement costs it incurred in
having to purchase natural gas on the open market, while Counts
V and VI pertained to FirstEnergy’s interference with DL
Resources’ dealings with Mid-American.

        DL Resources and FirstEnergy filed cross-motions for
summary judgment. FirstEnergy moved for summary judgment on
all claims, while DL Resources moved only for summary judgment
on its breach of contract and declaratory judgment claims (Counts
I and II). By a memorandum opinion and order entered February
9, 2005, the District Court granted summary judgment in DL
Resources’ favor with respect to Counts I, II, III, and VI, and
granted summary judgment in FirstEnergy’s favor with respect to
Count V.2 The District Court did not, however, calculate the
damages to which DL Resources would be entitled with respect to
any claim. Notwithstanding this failure, the District Court entered
a final judgment order on February 11, 2005, and marked the case
closed.

       On February 18, 2005, DL Resources filed a motion to
amend the judgment pursuant to Fed. R. Civ. P. 54(c) and 59(e),
asking the District Court to specify the monetary damages to which
DL Resources was entitled as a result of FirstEnergy’s breach of


       1
       The amended complaint also alleged intentional
misrepresentation (Count IV), but that count was later withdrawn.
       2
        DL Resources did not appeal the District Court’s grant of
summary judgment to FirstEnergy regarding Count V (DL
Resources’ claim for tortious interference with a contractual
relationship). Accordingly, that aspect of the District Court’s
decision is not before us. Unless otherwise noted, all references to
DL Resources’ claim for tortious interference pertain exclusively
to Count VI (alleging prospective advantage/tortious interference
with a future contractual relationship).

                                 4
the parties’ contract and its tortious interference with DL
Resources’ prospective relationship with Mid-American. On
March 11, 2005, while DL Resources’ motion to amend the
judgment was still pending, FirstEnergy filed a notice of appeal
from the District Court’s order entered February 11, 2005.

        The parties stipulated that DL Resources was entitled to
damages in the amount of $2,473,005.35 on its breach of contract
claim, which included interest calculated at 6% through November
21, 2005. However, the parties were not able to agree regarding
the amount of damages to which DL Resources would be entitled
on its tortious interference claim. To determine these damages, the
District Court held a bench trial on November 21, 2005. The
District Court issued an opinion and an amended judgment order
on December 19, 2005 awarding DL Resources $2,384,267.03 on
its tortious interference claim in addition to the agreed-upon
damages of $2,473,005.35 for breach of contract, for a total
damage award of approximately $4.85 million. FirstEnergy did not
file a new or amended notice of appeal.

                                 II.

       Our analysis must begin with DL Resources’ contention that
FirstEnergy failed to file a timely notice of appeal. The question
whether FirstEnergy’s notice of appeal was timely is a question of
law over which we exercise plenary review. Lazy Oil Co. v. Witco
Corp., 166 F.3d 581, 585-87 (3d Cir. 1999).

        We have appellate jurisdiction only to hear appeals from
final judgments of the district courts and other matters not relevant
here. See 28 U.S.C. § 1291. FirstEnergy filed its notice of appeal
on March 11, 2005 from the District Court’s order entered
February 11, 2005. This order determined FirstEnergy’s liability
but did not fix damages. DL Resources argues that FirstEnergy
failed to perfect its appeal because at the time FirstEnergy filed its
notice of appeal on March 11, 2005, the District Court’s decision
was not final for purposes of appellate review. We have
recognized that “[a] finding of liability that does not also specify
damages is not a final decision.” Marshak v. Treadwell, 240 F.3d
184, 190 (3d Cir. 2001) (citing Liberty Mut. Ins. Co. v. Wetzel,
424 U.S. 737, 744 (1976)); see Gen. Motors Corp. v. New A.C.

                                  5
Chevrolet, Inc., 263 F.3d 296, 311 n.3 (3d Cir. 2001) (“In general
terms, a decision that fixes the parties’ liability but leaves damages
unspecified is not final, and the adjudication of liability is not
immediately appealable.”). Accordingly, DL Resources is correct
that the order expressly appealed from did not constitute a final and
appealable order. This does not end this initial inquiry, however.
We must consider whether FirstEnergy’s premature notice of
appeal “ripened” as a result of events following its filing.

        Federal Rule of Appellate Procedure 4(a)(2) provides “[a]
notice of appeal filed after the court announces a decision or order
-- but before the entry of the judgment or order -- is treated as filed
on the date of and after the entry.” The Supreme Court has noted
“Rule 4(a)(2) permits a notice of appeal from a nonfinal decision
to operate as a notice of appeal from the final judgment only when
a district court announces a decision that would be appealable if
immediately followed by the entry of judgment.” FirsTier Mortg.
Co. v. Investors Mortg. Ins. Co., 498 U.S. 269, 276 (1991). This
rule is plainly inapplicable insofar as FirstEnergy appealed from an
order that had been entered and was not final.

        After FirstEnergy filed its notice of appeal, DL Resources
filed a motion to amend the judgment pursuant to Fed. R. Civ. P.
54(c) and 59(e), seeking to have the District Court specify the
monetary damages to which it was entitled. Following a stipulation
fixing a portion of the damages and a bench trial to determine the
remainder of the damages, the District Court awarded DL
Resources a total damage award of approximately $4.85 million via
an amended judgment order entered on December 19, 2005.
Because FirstEnergy failed to renew or amend its notice of appeal
following the District Court’s entry of its amended judgment order,
DL Resources argues that FirstEnergy failed to perfect its appeal,
thus depriving us of jurisdiction over this appeal.3


       3
        It remains an open question whether Rule 4 of the Federal
Rules of Appellate Procedure limits our subject matter jurisdiction,
or whether it is merely a judicially-imposed “inflexible claim
processing rule” that sets out guidelines which, if fractured, will
typically cause us to decline to exercise our jurisdiction. See
United States v. Carelock, 459 F.3d 437, 440 n.6 (3d Cir. 2006).

                                  6
Although some of our case law clearly views Rule 4 as
jurisdictional, see, e.g., Poole v. Family. Ct. of New Castle County,
368 F.3d 263, 264 (3d Cir. 2004) (“The timeliness of an appeal is
a mandatory jurisdictional prerequisite.”); Ragan v. Tri-County
Excavating, Inc., 62 F.3d 501, 505 (3d Cir. 1995) (implicitly
assuming that Rule 4 is jurisdictional, and sua sponte raising
concern that we lacked authority to decide the appeal in light of
party’s failure to comply with Rule 4), recent Supreme Court
decisions cast doubt on the validity of this view. In Eberhart v.
United States, 546 U.S. 12, 126 S. Ct. 403 (2005) (per curiam), the
Supreme Court held that Rule 33 of the Federal Rules of Criminal
Procedure was not jurisdictional, but instead is an “inflexible
claim-processing rule.” Id. at 404 (quotation marks omitted).
Similarly, in Kontrick v. Ryan, 540 U.S. 443, 456 (2004), the
Supreme Court held that Rules 4004 and 9006 of the Federal Rules
of Bankruptcy Procedure were “claim-processing rules,” rejecting
the argument they were jurisdictional. But cf. Carelock, 459 F.3d
at 440 n.6 (suggesting in dicta, post-Kontrick and Eberhart, that
“the language and commentary of the rules, along with their prior
treatment by the Supreme Court and this Court, strongly support
the conclusion that Rules 3 and 4 [of the Federal Rules of
Appellate Procedure] govern subject-matter jurisdiction”).
        The Supreme Court’s decision last term in Bowles v.
Russell, 127 S. Ct. 2360 (2007), similarly leaves this question
open. In Bowles, the Supreme Court determined that the time for
filing a notice of appeal pursuant to Federal Rule of Appellate
Procedure 4(a)(6) was jurisdictional and therefore not subject to
waiver or judicial modification. Central to this determination was
that the limitations in Rule 4(a)(6) “carrie[d] into practice [28
U.S.C. § 2107(c)],” which itself expressly limited district courts’
ability to extend the time for filing a notice of appeal. See id. at
2366 (“Because Congress specifically limited the amount of time
by which district courts can extend the notice-of-appeal period in
[§ 2107(c)], that limitation is more than a simple claim-processing
rule. As we have long held, when an appeal has not been
prosecuted in the manner directed, within the time limited by the
acts of Congress, it must be dismissed for want of jurisdiction.
Bowles’ failure to file his notice of appeal in accordance with the
statute therefore deprived the Court of Appeals of jurisdiction.

                                 7
       Federal Rule of Appellate Procedure 4, inter alia, grapples
with the effect that certain post-judgment motions have on a notice
of appeal. Rule 4(a)(4)(A) states, in pertinent part:

       If a party timely files in the district court any of the
       following motions under the Federal Rules of Civil
       Procedure, the time to file an appeal runs for all
       parties from the entry of the order disposing of the
       last such remaining motion:

       ***

       (iv) to alter or amend the judgment under Rule 59 .
       ...

Rule 4(a)(4)(B) discusses the proper procedure when a party files
a notice of appeal while a Rule 59 motion (or motion pursuant to
another rule listed in Rule 4(a)(4)(A)) is still pending. Rule
4(a)(4)(B)(ii) states:




And because Bowles’ error is one of jurisdictional magnitude, he
cannot rely on forfeiture or waiver to excuse his lack of compliance
with the statute’s time limitations.”) (quotation marks and citations
omitted). By contrast, Congress imposed no such analogous
limitation on appeals governed by Rule 4(a)(4)(B); accordingly,
Bowles does not control the jurisdictional question presented in
this case.
        Following Kontrick and Eberhart (but prior to Bowles), at
least one court has construed Rule 4(a)(4)(A)(vi) to be a mere
claim-processing rule. See Wilburn v. Robinson, 480 F.3d 1140,
1145-46 (D.C. Cir. 2007) (rejecting argument that a specific
provision of Rule 4 is jurisdictional). It is unnecessary for us to
reach or decide whether the provision of Rule 4 in issue here is
jurisdictional, because it is undisputed that DL Resources raised a
timely objection to FirstEnergy’s appeal. In other words, even
assuming that Rule 4(a)(4)(B)(ii) is a mere claim-processing rule --
and therefore subject to waiver if not raised -- DL Resources
preserved the issue.

                                  8
       A party intending to challenge an order disposing of
       any motion listed in Rule 4(a)(4)(A), or a judgment
       altered or amended upon such a motion, must file a
       notice of appeal, or an amended notice of appeal --
       in compliance with Rule 3(c) -- within the time
       prescribed by this Rule measured from the entry of
       the order disposing of the last such remaining
       motion.

Fed. R. Civ. P. 4(a)(4)(B)(ii) (emphasis added). Insofar as
FirstEnergy failed to renew or amend its notice of appeal following
the District Court’s entry of its amended judgment order on DL
Resources’ Rule 59 motion, Rule 4(a)(4)(B)(ii) does not aid
FirstEnergy’s argument that jurisdiction exists.

        FirstEnergy essentially ignores the text of Rule
4(a)(4)(B)(ii), and instead relies heavily on a line of our cases
beginning with Cape May Greene, Inc. v. Warren, 698 F.2d 179
(3d Cir. 1983). The so-called Cape May Greene doctrine dictates
that, absent a showing of prejudice not present (or even alleged)
here, “a premature notice of appeal, filed after disposition of some
of the claims before a district court, but before entry of final
judgment, will ripen upon the court’s disposal of the remaining
claims.” Lazy Oil, 166 F.3d at 585 (citing Cape May Greene, 698
F.2d at 184-85). This doctrine clearly represents an “expansive
view of appellate jurisdiction.” ADAPT of Phila. v. Phila. Housing
Auth., 433 F.3d 353, 362 (3d Cir. 2006). Notwithstanding the
tension between our interpretation of Rule 4 and the text of the
rule, we have justified our interpretation based upon the view that
Rule 4 does not exclusively govern every “situation in which a
premature notice of appeal will ripen at a later date.” Lazy Oil, 166
F.3d at 587.4 The Court is bound by our prior interpretation


       4
        Several other circuits have either declined to adopt or
repudiated the sort of ripening analysis we first sanctioned in Cape
May Greene. See, e.g., Outlaw v. Airtech Air Conditioning &
Heating, Inc., 412 F.3d 156, 160 n.2 (D.C. Cir. 2005) (Roberts, J.)
(rejecting the interpretation of Rule 4(a)(4) we articulated in Lazy
Oil, and observing that “[t]he fact that there is a rule governing
pre-judgment premature notices of appeal and another rule

                                 9
regarding the scope and effect of Rule 4 unless and until we revisit
that determination en banc. See Mariana v. Fisher, 338 F.3d 189,
201 (3d Cir. 2003) (“‘[N]o subsequent panel overrules the holding
in a precedential opinion of a previous panel. Court en banc
consideration is required to do so.’”) (quoting Third Circuit
Internal Operating Procedure 9.1).

        We applied the Cape May Greene doctrine in somewhat
analogous circumstances in Ragan. 62 F.3d at 505-06. There, the
appellant filed a notice of appeal after the District Court
determined liability against it, but before it fixed damages. The
District Court later entered an order awarding damages. This
Court, in examining whether it had jurisdiction, determined that the
order appealed from was not a final order for purposes of appeal.
Id. at 505. Nonetheless, the Court found that “[t]his defect was not
fatal to [appellant’s] appeal.” Id. The Court acknowledged the
Cape May Greene doctrine, explaining that “this Court may
entertain an appeal from a nonfinal order if an order which is final
is subsequently entered before our adjudication on the merits.” Id.
at 506. Applying the Cape May Greene doctrine, the Court held
“[e]ven though the [liability] order was not final when entered, it
became final upon entry of the [] order fixing [damages].” Id. at
505-06. As a result, the Court found it had jurisdiction under 28
U.S.C. § 1291. Id. at 506.

       We hold that FirstEnergy’s premature notice of appeal
ripened on December 19, 2005, when the District Court entered the


governing post-judgment premature notices of appeal hardly means
that courts are at liberty to fashion additional doctrines saving
premature notices of appeal that are not saved under the rules, as
construed by the Supreme Court”); United States v. Cooper, 135
F.3d 960, 963 (5th Cir. 1998) (repudiating its prior “expansive
view of appellate jurisdiction” regarding premature notices of
appeal); United States v. Hansen, 795 F.2d 35, 37, 38 (7th Cir.
1986) (expressly rejecting Cape May Greene doctrine); Gen.
Television Arts, Inc. v. Southern Ry., 725 F.2d 1327, 1330-31
(11th Cir. 1984) (“[A] final judgment does not retroactively
validate the premature notice of appeal.”) (quotation marks
omitted).

                                10
amended judgment order quantifying the damage award. We also
hold that we have jurisdiction to hear FirstEnergy’s appeal under
28 U.S.C. § 1291.

                                III.

        On the merits, we exercise plenary review over the District
Court’s grant of summary judgment. Summary judgment is
appropriate if there are no genuine issues of material fact presented
and the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). We resolve
all factual doubts and draw all reasonable inferences in favor of
FirstEnergy, the nonmoving party. Hugh v. Butler County Family
YMCA, 418 F.3d 265, 267 (3d Cir. 2005), cert. denied, 126 S. Ct.
1065 (2006).

        As this is a diversity case, we must apply the choice of law
principles of Pennsylvania, the forum state, to determine what law
governs this dispute. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496-97 (1941); On Air Entertainment Corp. v. Nat’l
Indem. Co., 210 F.3d 146, 149 (3d Cir. 2000). Accordingly, using
Pennsylvania choice of law rules, we must determine which state
law applies to the causes of action in issue here. With respect to
the contract-based claims, the parties’ contract contains a choice of
law provision specifying that the contract shall be interpreted
according to Ohio law. Moreover, the parties agree that Ohio law
governs the contractual claims in issue. We see no reason to depart
from the general rule that choice of law provisions shall be
honored. See Nationwide Mut. Ins. Co. v. West, 807 A.2d 916,
920 (Pa. Super. Ct. 2002) (“In contract disputes, Pennsylvania
courts generally honor the parties’ choice of law provisions.”), and
will therefore apply Ohio law to the parties’ contract based-claims.5

                                 A.



       5
        Although this case contains both contract and tort-based
causes of action, each of which requires a separate choice of law
analysis, our decision renders it unnecessary for us to determine
what law governs DL Resources’ tort-based claim.

                                 11
        Under Ohio law, the construction of a written contract is a
matter of law that we review de novo. Saunders v. Mortensen, 801
N.E.2d 452, 454 (Ohio 2004). The role of a court is to give effect
to the intent of the parties to the agreement. To accomplish this,
we must examine the contract as a whole and presume that the
intent of the parties is reflected in the language used in the policy.
Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261 (Ohio 2003).
We look to the plain and ordinary meaning of the language used in
the policy unless another meaning is clearly apparent from the
contents of the policy. When the language of a written contract is
clear, a court may look no further than the writing itself to
determine the intent of the parties. Id.

       However, “where a contract is ambiguous, a court may
consider extrinsic evidence to ascertain the parties’ intent.” Id.
Contractual ambiguities will be construed against the drafter. Id.
at 1262. A court, nonetheless, may not “alter a lawful contract by
imputing an intent contrary to that expressed.” Id. at 1261-62.
Under Ohio law, then, analysis properly begins with an
examination of the relevant contractual language. If the contract
language is unambiguous, then the analysis ends there.

        Although both parties agree that the contract is
unambiguous, they nonetheless disagree sharply regarding the
nature of their contract. For its part, DL Resources maintains that,
by its plain terms, the parties’ contract is an output contract which
calls for DL Resources to supply FirstEnergy with all of the natural
gas produced at each of the eighty-six wells in issue, subject to
certain minor exceptions not at issue here. By contrast,
FirstEnergy apparently6 argues that the parties’ contract is a


       6
        We say apparently because FirstEnergy makes conflicting
statements in its brief regarding its conception of the parties’
contract. At certain points, FirstEnergy suggests that the parties
reached an output contract with a volume minimum, while at other
points it intimates that the parties reached a purely volume-based
agreement. Compare FirstEnergy Br. at 9-10 (stating that parties
reached an output contract with a volume minimum) with
FirstEnergy Br. at 20 (“[B]ecause the Agreement required the
delivery of fixed minimum volumes, the identity of the wells to be

                                 12
volume contract that required DL Resources to supply a minimum
daily volume of natural gas to FirstEnergy, and specified the per
unit price that FirstEnergy would be obligated to pay at various
output levels above that minimum. In essence, then, FirstEnergy
argues that the parties entered an output contract with a volume
minimum.

        It is undisputed (i) that DL Resources sold FirstEnergy all
the natural gas produced by the eighty-six wells at all relevant
points in time; and (ii) that this output was substantially less than
what the parties had anticipated the wells would generate, and, at
some points in time, less than the minimum volumes FirstEnergy
maintains DL Resources was contractually obligated to provide.
Because the parties agree that DL Resources furnished FirstEnergy
all of the natural gas produced by the wells in issue, summary
judgment is appropriate on the parties’ contract-based claims if we
determine that the parties did in fact enter a purely output contract.
Therefore, how we characterize the parties’ contract is central to
our resolution of the contract-based claims in issue.

       For several reasons, it is clear that the parties’ agreement is
purely an output contract that calls for DL Resources to supply to
FirstEnergy all of the output produced by the eighty-six
Pennsylvania natural gas wells in which DL Resources had an
interest in May 2002, the time when the contract was formed. To
begin with, the contract makes clear in several places that the
parties entered an output-based contract, not a volume-based one.
The contract states in pertinent part that:


listed on Exhibit A-1 is irrelevant. In other words, DL Resources
had an obligation to deliver a specific volume of gas to
FirstEnergy, regardless of the origin of that gas.”); FirstEnergy Br.
at 10 (“Despite the reference to wells listed on Exhibit A-1, Exhibit
A-1 was blank. From FirstEnergy’s standpoint, this made sense:
because it was purchasing a minimum fixed quantity of gas at fixed
prices, it did not matter from which wells that gas came.”)
(quotation marks and citations omitted). In any event, for the
reasons stated infra, this confusion is ultimately immaterial, as the
contract is clear on its face that it is purely an output agreement
(with no minimum volume).

                                 13
       1. AGREEMENT. Subject to the terms and
       conditions herein contained, [FirstEnergy] shall buy
       the gas delivered to it by [DL Resources] at the
       Delivery Point(s). [DL Resources] shall deliver and
       sell to Buyer all the gas owned, produced or
       purchased by [DL Resources] from the Wells,
       excepting only such quantity as [DL Resources] may
       require for drilling or pumping operations on said
       premises and such quantity as may be reserved to the
       landowners by their oil and gas leases.

Appendix (App.) 31 (emphasis added). This provision mentions
nothing about a volume minimum. Short of labeling the contract
as an “output contract,” it is hard to imagine how the parties could
have been any more clear regarding the nature of their agreement.

       The contractual provision about the price of the natural gas
also indicates that the parties reached an output contract. In this
regard, the contract states that:

       5. PRICE. [FirstEnergy] shall pay [DL Resources]
       for all gas delivered and measured at the Delivery
       Point(s). The price to be paid by [FirstEnergy] to
       [DL Resources] for gas delivered to [FirstEnergy] at
       the Delivery Point(s) shall be identified on Exhibit
       “B-” attached to and made a part of this Agreement
       ....

App. 32 (emphasis added). The express requirement that
FirstEnergy pay for “all gas delivered” further indicates that the
parties reached an output contract without a volume minimum.

       The preamble to the contract further supports this
interpretation. The preamble to the contract states as follows:

       WHEREAS, [DL Resources] has developed a
       supply of natural gas (“gas”) from gas wells
       enumerated and described on Exhibit “A-”
       attached hereto, and which may be amended from
       time to time by mutual agreement between the
       parties; and

                                14
       WHEREAS, [DL Resources] is the owner of such
       gas or is the authorized agent for the owner or
       owners of such gas and therefore has the authority to
       contract for the sale of such gas; and

       WHEREAS, [DL Resources] desires to sell and
       agrees to sell, for itself and those owners for which
       it is the authorized selling agent, and to deliver to
       [FirstEnergy], at the Delivery Point(s) hereinafter
       specified, natural gas produced from the well or
       wells described on Exhibit “A-”, hereinafter referred
       to as “the Wells”; and

       WHEREAS, [FirstEnergy] is willing to purchase
       from [DL Resources] the gas produced from the
       wells [sic] at the rates and subject to the terms,
       conditions, and limitations herein provided.

App. 31 (emphasis added).

        Insofar as FirstEnergy argues that the contract calls for
delivery of a fixed volume only (as opposed to an output contract
with a volume minimum), this cannot be squared with the preamble
to the contract, which only makes sense if the contract was output-
based. Indeed, if FirstEnergy is correct, and the parties’ agreement
is a volume contract rather than an output contract, it is not at all
clear what purpose the preamble would serve, as it would not
matter where DL Resources procured the natural gas that it was
contractually obligated to sell to FirstEnergy; all that would matter
is that DL Resources obtained the requisite amount of natural gas.
Cf. FirstEnergy Br. at 20 (“[B]ecause the Agreement required the
delivery of fixed minimum volumes, the identity of the wells to be
listed on Exhibit A-1 is irrelevant.”). Moreover, under this
interpretation, the preamble is all the more bizarre when one
considers that FirstEnergy -- not DL Resources -- drafted the
contract.7 Thus, FirstEnergy would have us believe that it included


       7
        At oral argument, counsel for FirstEnergy maintained that
DL Resources -- not FirstEnergy -- drafted Exhibit B-1 to the
parties’ contract. At no point, however, did FirstEnergy dispute

                                 15
language in the contract that was not merely irrelevant (as it now
contends), but that affirmatively supports an interpretation that
FirstEnergy claims it never intended. We can think of no reason
(nor does FirstEnergy offer any) sufficient to explain why we
should adopt such a strained interpretation of the parties’ contract.

       The sole evidence FirstEnergy offers in support of its claim
that the parties reached a minimum volume arrangement is an
addendum to the contract titled Exhibit B-1. To understand the
significance of this addendum, it is both necessary and appropriate
to consider it in the context of the contract as a whole. The original
contract states that the parties will specify the price per unit of
natural gas in an addendum. In keeping with this agreement, the
parties crafted Exhibit B-1, which states in pertinent part as
follows:

DELIVERY
PERIOD:               06/01/02 - 03/31/04

VOLUME:               5,000 Dth/Day @ $3.04         J u n e
                                                    2002 thru
                                                    March
2004
                      30,000 Dth/Month @
                      $3.565                        N o v .
                                                    2002 thru
                                                    Oct. 2003

                      Balance @ NYMEX
                      + $0.105                      J u n e
                                                    2002 thru
                                                    March
                                                    2004

                      Less any gathering charges.

                      (100% of the production from wells


that it alone drafted the remainder of the contract, including the
preamble.

                                 16
                      listed on Exhibit A-1)

RECEIPT POINT: NFGS

App. 38 (emphasis added).8

       Based on Exhibit B-1, FirstEnergy argues that the pricing
chart shows the parties intended that DL Resources would supply
a minimum of 5,000 dekatherms of natural gas per day, and that
any additional output above that minimum level would be
purchased according to the pricing structures established by the
parties. FirstEnergy is only half right. Exhibit B-1 does set out
graduated pricing structures at various levels of output, but it does
not set any sort of a per-day volume floor. From June 2002 to
March 2004, the addendum established one price for daily volumes
of natural gas up to 5,000 dekatherms, and a second price for any
level of daily output above 5,000 dekatherms. The parties
modified this pricing schedule somewhat for the time period
between November 2002 and October 2003. For this period, there
would be one price for monthly volumes of natural gas up to
30,000 dekatherms, and a second price for any level of monthly
output above 30,000 dekatherms.

        Moreover, as stated previously, paragraph five of the
parties’ contract explicitly contemplated the execution of an
“Exhibit B” to establish the per dekatherm price of natural gas. It
is simply not plausible that, by adding this anticipated Exhibit B --
which was called for by a provision of the contract titled “PRICE”
-- the parties intended to overhaul their arrangement on volume.
Such a reading would override the contract’s numerous references


       8
        In its opinion, the District Court mistakenly transcribed
Exhibit B-1, omitting the section header “Volume” and rearranging
some of the information listed therein. Compare App. 13 (District
Court’s transcription of Exhibit B-1) with App. 38 (actual copy of
Exhibit B-1). While FirstEnergy makes much of this error, see
FirstEnergy Br. at 18-19, it is ultimately immaterial, as no portion
of the District Court’s opinion hinged on this error. Moreover, the
plenary scope of our review ensures that FirstEnergy will suffer no
prejudice as a result of this mix-up.

                                 17
to an output-based agreement sub silencio, which would be
particularly questionable given that Exhibit B-1 itself explicitly
reaffirms FirstEnergy’s obligation to purchase “100% of the
production from the wells listed on Exhibit A-1.” See id. Viewed
in the context of the contract as a whole, we cannot agree that
Exhibit B-1 required DL Resources to provide a minimum daily
volume of natural gas. Rather, the plain terms of the contract make
clear that the parties entered an output arrangement. Because it is
undisputed that DL Resources furnished FirstEnergy all of the
output by the wells governed by this contract, the District Court
properly granted DL Resources’ motion for summary judgment on
its contract-based claims.

                                 B.

        Quite apart from whether the parties’ contract is ambiguous,
FirstEnergy argues that the District Court committed several errors
that merit reversal of its grant of summary judgment on the
contract-based claims. First, FirstEnergy maintains that the District
Court was unjustified in assuming that the wells to which the
contract refers were the eighty-six wells in western Pennsylvania
in existence at the time the parties reached their contract. In this
regard, the parties’ contract states that the natural gas in issue
would be drawn from wells the parties would specify in Exhibit A-
1. As the District Court noted, however, the parties failed to
specify any wells in Exhibit A-1. The District Court determined
that this oversight was inadvertent, and determined that the parties
intended to list the eighty-six Pennsylvania wells developed at the
time the contract was executed in May 2002. While FirstEnergy
argues that the District Court’s determination was improper, it is
not clear why. Nowhere in its briefs does FirstEnergy actually
dispute that the parties intended to list the eighty-six wells (and
only those wells) on Exhibit A-1.9 The parties’ failure to list these


       9
       Moreover, under FirstEnergy’s interpretation of the
contract, it is difficult to see why this finding would be material,
given FirstEnergy’s position that the contract called for DL
Resources to produce a fixed amount of natural gas. Indeed,
FirstEnergy candidly admits that it views this finding as
immaterial. See FirstEnergy Br. at 10 (“Despite the reference to

                                 18
wells therefore presents no impediment to summary judgment.

       FirstEnergy’s second argument is that the District Court’s
conclusion that Exhibit B-1 was a fee schedule rather than a
minimum volume commitment cannot be reconciled with certain
provisions of the contract, namely the provision titled “Trigger
Rights.” This provision states in pertinent part that:

       [DL Resources] may, at any time prior to Noon on
       the day of the applicable NYMEX Contract closing
       day, notify an authorized representative of
       [FirstEnergy] by telephone to trigger the NYMEX
       futures price currently traded for that month on a
       specified volume (Contract Trigger Volume).
       Contract Trigger Volume shall be defined as any
       portion (in 10,000 Dth increments) of the volumes
       which [DL Resources] is obligated to deliver during
       any forward month.           Upon [FirstEnergy’s]
       execution of said Contract Trigger(s), [FirstEnergy]
       will send a confirmation notice to [DL Resources]
       outlining the price, volume and delivery month for
       each Contract Trigger transaction.           If [DL
       Resources] delivers less than One Hundred (100)
       Percent of the Contract Trigger Volumes in a given
       month, and the Contract Trigger Price is lower than
       the NYMEX Contract Settlement Price for that
       month, [DL Resources] shall be assessed a Market
       Differential Cost (Contract Trigger Price minus
       NYMEX Contract Settlement Price) on the
       unutilized Contract Trigger Volumes. If [DL
       Resources] elects not to trigger a price prior to the
       time as specified above, the price shall default to the


wells listed on Exhibit A-1, Exhibit A-1 was blank. From
FirstEnergy’s standpoint, this made sense: because it was
purchasing a minimum fixed quantity of gas at fixed prices, it did
not matter from which wells that gas came.”) (quotation marks and
citations omitted); FirstEnergy Br. at 20 (“[B]ecause the
Agreement required the delivery of fixed minimum volumes, the
identity of the wells to be listed on Exhibit A-1 is irrelevant.”).

                                 19
       basis settlement agreement as stated in Exhibit B-1.

App. 32 (emphasis added).10

       Essentially, then, this provision gives DL Resources the
option to fix -- or, to use the language of the contract, “trigger” --
an obligation to deliver a set volume of gas at a set price. In other
words, this provision permits (but does not require) DL Resources
to convert its commitment for a given month from an output
contract to a fixed-volume contract. This provision further
provides that if DL Resources exercised this option to convert its
obligation to a fixed volume agreement but failed to deliver to
FirstEnergy the volume of natural gas it promised, and if
FirstEnergy had to purchase the balance of the promised volume on
the open market at a higher price, FirstEnergy would be entitled to
recoup the incremental costs it incurred as a result of DL
Resources’ failure to deliver the promised volume. Given the non-
mandatory nature of this provision, we cannot say that it is
inconsistent with the District Court’s interpretation of the parties’
agreement as an output contract.

       There is the further question whether DL Resources ever
exercised this triggering option. While DL Resources argues that
it never did so, FirstEnergy argues that DL Resources did so on
two occasions. Specifically, FirstEnergy notes (i) that on January
16,
2001, DL Resources triggered an obligation to supply 5,000
decatherms per day for June 1, 2002 until March 31, 2004 at the
price of $3.04 per decatherm; and (ii) that on March 11, 2002, DL
Resources again exercised its option to lock in a monthly volume
of 30,000 decatherms for the period between November 1, 2002
and October 31, 2003 at a price of $3.565 per decatherm. But even
assuming (as we must, given the procedural posture of this case)


       10
         This provision also lends further support to the notion that
Exhibit B-1 established the pricing component -- not volume -- of
the parties’ arrangement. See App. 32 (noting that if DL Resources
“elects not to trigger a price prior to the time as specified above,
the price shall default to the basis settlement agreement as stated in
Exhibit B-1”).

                                 20
the validity of both of these triggering agreements, both agreements
preceded the parties’ execution of the contract in May 2002, and
are therefore barred by the parol evidence rule. Galmish v.
Cicchini, 734 N.E.2d 782, 788 (Ohio 2000) (“The parol evidence
rule states that absent fraud, mistake or other invalidating cause,
the parties’ final written integration of their agreement may not be
varied, contradicted or supplemented by evidence of prior or
contemporaneous oral agreements, or prior written agreements.”)
(quotation marks omitted). And, by its own terms, it is clear that
the contract represented the “final written integration” of the
parties’ dealings.11 Because there is no evidence that DL
Resources exercised this option at any point after the parties’
execution of the contract, we find unpersuasive FirstEnergy’s
argument based on the “Trigger Rights” provision of the contract.

        Third, FirstEnergy argues that the District Court’s
interpretation renders the contract’s “force majeure” provision
superfluous. See App. 34, ¶ 17 (immunizing both parties from
liability for failure to perform due to acts of God or other events
beyond the parties’ control). The force majeure provision is not
applicable in this context, FirstEnergy argues, because DL
Resources is obliged only to supply its output, nothing more. Thus,
if DL Resources’ production had been hampered or even
extinguished for a period of time, it would have had no contractual
liability to FirstEnergy as long as it furnished FirstEnergy with
whatever output it did produce, even if that output were nothing.
To begin with, FirstEnergy cites no authority whatsoever for the


       11
        The contract’s integration clause reads as follows:

       Entire Agreement. This Agreement sets forth all
       understandings between the parties respecting the
       subject matter of this transaction and all prior
       agreements, understandings, and representations,
       whether superceded by this Agreement. No
       modification or amendment of the Agreement shall
       be binding on either party unless in writing and
       agreed to by both parties . . . .

App. 36.

                                21
proposition that force majeure provisions are superfluous in output
contracts.    This absence of authority is unsurprising, as
FirstEnergy’s argument rests on the mistaken assumption that, at
least from a supplier’s perspective, there is no reason to have a
force majeure provision when the parties have entered into a output
contract. In fact, there are valid reasons why DL Resources might
have desired the force majeure provision notwithstanding the fact
that the parties entered an output contract. For instance, DL
Resources may have wanted to protect itself from liability if it
triggered a fixed volume obligation pursuant to the contract, but
was then unable to deliver to FirstEnergy the required volume due
to an event contemplated by the force majeure provision.
Accordingly, we are unpersuaded that the District Court’s
interpretation of the contract renders the force majeure provision
irrelevant.    Thus, FirstEnergy’s objections do not, either
individually or collectively, convince us that the District Court
erred by granting summary judgment to DL Resources on its
contract-based claims.12
                                  C.

        We turn to the District Court’s grant of summary judgment
as to DL Resources’ claim for tortious interference with a
prospective contractual relationship. As noted previously, DL
Resources did not move for summary judgment on this claim;
rather, the District Court entered summary judgment sua sponte.
FirstEnergy argues that the District Court’s unprompted entry of


       12
         FirstEnergy also argues that the District Court’s grant of
summary judgment to DL Resources on its unjust enrichment claim
(Count III) was legally unfounded, or, alternatively, premature.
See FirstEnergy Br. at 24-25. In view of our conclusion that the
District Court properly granted summary judgment on the breach
of contract claim, we need not address these arguments, as it is
undisputed (i) that FirstEnergy would be liable for at least the same
amount of damages under DL Resources’ breach of contract claim
as its unjust enrichment claim; and (ii) that the District Court’s
damage award does not double count DL Resources’ contract-
based damages. Put another way, then, even assuming that the
District Court erred by granting DL Resources’ summary judgment
on its unjust enrichment claim, that error was harmless.

                                 22
summary judgment on this claim deprived FirstEnergy of sufficient
notice to oppose summary judgment.

       Federal Rule of Civil Procedure 56 sets forth the procedures
and standard for the grant of summary judgment. Rule 56(c)
requires a minimum of ten days notice to the nonmoving party to
afford that party an opportunity to oppose the entry of summary
judgment. Our Court has “insisted on strict compliance with the
procedural requirements of Rule 56(c).” Brooks v. Hussman Corp.,
878 F.2d 115, 116-17 (3d Cir. 1989).

        District courts may grant summary judgment sua sponte in
appropriate circumstances. However, a district court may not
generally grant summary judgment sua sponte unless it gives prior
notice and an opportunity to oppose summary judgment. Celotex
Corp. v. Catrett, 477 U.S. 317, 326 (1986) (“[D]istrict courts are
widely acknowledged to possess the power to enter summary
judgments sua sponte, so long as the losing party was on notice
that she had to come forward with all of her evidence.”)
(emphasis added); Prusky v. Reliastar Life Ins. Co., 445 F.3d 695,
699 n.6 (3d Cir. 2006) (“A district court may not grant summary
judgment sua sponte unless the court gives notice and an
opportunity to oppose summary judgment.”) (quotation marks and
citations omitted); Chambers Dev. Co. v. Passaic County Util.
Auth., 62 F.3d 582, 584 n.5 (3d Cir. 1995) (“[A] judgment cannot
be entered without first placing the adversarial party on notice that
the court is considering a sua sponte summary judgment motion.
The court must also provide the party with an opportunity to
present relevant evidence in opposition to that motion.”).

       It is undisputed that neither party had notice that the District
Court was considering granting summary judgment to DL
Resources on its tort-based claim.13 Nonetheless, citing Gibson v.
Mayor & Council of City of Wilmington, 355 F.3d 215, 223-24 (3d
Cir. 2004), DL Resources argues that FirstEnergy had “a fair


       13
        Indeed, at oral argument, DL Resources’ counsel stated
candidly that he was “surprised” when the District Court granted
summary judgment in DL Resources’ favor on claims on which DL
Resources had not sought summary judgment.

                                  23
opportunity to put its best foot forward” on the tort-based claim
insofar as FirstEnergy had filed its own summary judgment motion
on those claims, and, therefore, the District Court did not err in
granting summary judgment sua sponte. Id. at 223 (quotation
marks omitted). We disagree.

        In Gibson, a disgruntled former police officer, Christopher
Gibson, brought a lawsuit under 42 U.S.C. § 1983 against various
city officials, alleging that he was terminated pursuant to an
unconstitutionally vague and overbroad police department
directive, which Gibson claimed infringed on his First Amendment
right to free speech, and that his right to procedural due process
was violated. 355 F.3d at 221. Gibson moved for summary
judgment on all of his claims and the District Court denied the
motion. At the start of trial, the District Court informed the parties
that it was entering summary judgment sua sponte against Gibson
on his claims of vagueness and overbreadth. Gibson appealed,
arguing that the lack of notice was fatal to the District Court’s sua
sponte grant of summary judgment. Although we noted that “the
notice requirement applies to sua sponte grants of summary
judgment,” we affirmed the grant of summary judgment in that
case. Id. at 223. We recognized that an exception to the notice
requirement in such cases was subject to meeting the following
three conditions: “(1) the point at issue is purely legal; (2) the
record was fully developed[;] and (3) the failure to give notice does
not prejudice the party.” Id. at 219. In that case, we found that all
three conditions had been met. Id. at 219, 224.14

       None of these conditions are present in this case. To begin
with, the tortious interference claim at issue here was not an
abstract question of law; rather, it was, by definition, a fact-bound
determination that required the District Court to weigh various


       14
         The Court in Gibson did not express an opinion regarding
whether a sua sponte grant of summary judgment would be
appropriate where some but not all of these conditions were
present. Id. at 224. We have the converse situation here, as none
of the three conditions present in Gibson is satisfied in this case.
Accordingly, we too have no occasion to express an opinion on this
question.

                                 24
competing considerations. Regarding the completeness of the
record, though FirstEnergy did move for summary judgment, it was
DL Resources that bore the ultimate burden of persuasion, so
FirstEnergy was under no obligation to come forward with all of its
evidence to obtain summary judgment; it merely needed to
demonstrate that DL Resources could not satisfy one of the
elements of its tortious interference claim.              Moreover,
FirstEnergy’s counsel represented at oral argument that had
FirstEnergy known the District Court was inclined to grant
summary judgment to DL Resources on its tortious interference
claim, it would have offered testimony or affidavits from Williams
and Wright (i) clarifying the nature of their conversation; (ii)
justifying why FirstEnergy took the course of action that it did; and
(iii) explaining why its course of action was privileged. The failure
to have this opportunity, FirstEnergy claims, caused it to suffer
prejudice. We agree. Given the lack of notice and the fact that
none of the conditions set forth in Gibson militates in favor of an
exception to the notice requirement in this case, we will vacate and
remand the District Court’s sua sponte grant of summary judgment.

        We hasten to add, however, that in reaching this conclusion
we express no opinion on the District Court’s ultimate
determination that DL Resources was entitled to summary
judgment on its claim of tortious interference. On remand, the
District Court may well reach the same conclusion, or it may
decide the issue differently following any evidentiary submissions
the parties may make. For present purposes, it is sufficient to say
that the District Court should have given the parties notice and the
opportunity to make such submissions before granting summary
judgment sua sponte on DL Resources’ tort-based claim.

                                III.

       For the foregoing reasons, we will affirm the judgment of
the District Court in part, vacate in part, and remand for further
proceedings consistent with this opinion.




                                 25
