Burger King Corp. v. Horn & Hardart Co.
| Decision Date | 19 January 1990 |
| Docket Number | 224,Nos. 223,D,s. 223 |
| Citation | 893 F.2d 525 |
| Parties | BURGER KING CORPORATION, Plaintiff-Appellant, v. The HORN & HARDART COMPANY, Defendant-Appellee. ockets 89-7440, 89-7558. |
| Court | U.S. Court of Appeals — Second Circuit |
Eric M. Nelson, New York City (Stephen R. Lang, Alan J. Sorkowitz, Jill I. Braverman, Breed, Abbott & Morgan, New York City, of counsel), for plaintiff-appellant.
Ronald S. Rauchberg, New York City (Steven C. Krane, Michael S. Elkin, Michael D. Povman, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendant-appellee.
Before LUMBARD, MESKILL and WINTER, Circuit Judges.
These appeals require us to consider the propriety of the district court's disposition by summary judgment of a question of contract interpretation. Plaintiff Burger King Corporation (Burger King) appeals from two judgments entered in the United States District Court for the Southern District of New York, Knapp, J., denying Burger King's motion for summary judgment and granting defendant Horn & Hardart Company's (Horn & Hardart) cross-motion for summary judgment. Each party sought in its motion a declaration regarding the term of certain franchises. Horn & Hardart is a franchisee of Burger King, and maintains that its franchises have twenty year terms. Burger King asserts that the franchises have fifteen year terms, and wishes to terminate those franchises at the end of the fifteen year period.
The district court concluded that the agreement between the parties regarding the term of the franchises was ambiguous, and then deduced from the extrinsic evidence submitted by the parties that the franchises had twenty, rather than fifteen year terms. Because we believe that triable issues of fact exist concerning the contemplated term of the franchises, we vacate the district court's amended final judgment dated May 17, 1989 to the extent
that it granted Horn & Hardart's summary judgment motion and remand for trial. Burger King's appeal from the judgment dated April 19, 1989 is dismissed for lack of appellate jurisdiction. The district court's opinion is reported at 710 F.Supp. 103 (S.D.N.Y.1989).
The pleadings and other evidentiary materials submitted by the parties establish the following facts. Defendant Horn & Hardart, a Nevada corporation, has been a franchisee of plaintiff Burger King, a Florida corporation, for many years, and operates several Burger King restaurants in the New York metropolitan area. In 1980, Burger King and Horn & Hardart entered into a settlement agreement (Settlement Agreement) to resolve litigation arising from Horn & Hardart's operation of competing Arby's restaurants. The present dispute focuses on section 2 of the Settlement Agreement (section 2), which provides:
[Horn & Hardart] shall retain 14 Burger King franchises which shall be governed by the existing form of franchise agreement set forth as Exhibit B. Set forth on Schedule 1 is a list by address of each of these 14 franchises indicating the expiration date of the initial term of each.
From this deceivingly simple paragraph a vigorous dispute has arisen. Prior to the Settlement Agreement, some of the fourteen franchises mentioned in section 2 were governed by franchise agreements that provided for fifteen year terms, and others by agreements providing for twenty year terms. Schedule 1 to the Settlement Agreement (Schedule 1) lists these fourteen franchises, and across from each franchise it lists the expiration date provided for in the original franchise agreement that applied to that franchise. Thus, some of the dates in Schedule 1 reflect fifteen year terms, and others twenty year terms. Exhibit B to the Settlement Agreement (Exhibit B), however, which now "governs" these fourteen franchises, is a franchise agreement that provides for a twenty year term. The question, then, is whether Schedule 1 or Exhibit B controls the franchise terms.
The fifteen year date of some of Horn & Hardart's franchises now approaches, and Burger King wishes to terminate those franchises. Burger King commenced this action seeking a declaratory judgment that, under section 2 of the Settlement Agreement, the parties agreed on the expiration dates in Schedule 1. Horn & Hardart counterclaimed for a declaratory judgment that Exhibit B, which provides for a twenty year term, is to govern all the franchises. Horn & Hardart also asserted a second counterclaim that Burger King violated the terms of the Settlement Agreement by refusing to renew the franchises in issue.
Burger King moved for summary judgment on the term issue, and Horn & Hardart cross-moved for summary judgment on both counterclaims. The district court found the language of the Settlement Agreement ambiguous as to the term of the franchises, and admitted extrinsic evidence on the intended meaning of section 2. The court then granted Horn & Hardart's motion on the term issue, denied Burger King's motion, and, with Horn & Hardart's consent, dismissed Horn & Hardart's second counterclaim without prejudice. 710 F.Supp. at 106.
The clerk entered judgment on April 19, 1989. Burger King timely filed a notice of appeal from that judgment. Judge Knapp then entered an amended judgment on May 17, 1989, and Burger King timely filed a notice of appeal from this judgment as well. The parties agree that New York law governs this diversity action.
The first matter that we must address is exactly which appeal is before us. This question is something of a non-issue because Horn & Hardart does not dispute that Burger King filed timely notices of appeal from both the original and the amended judgment. The only problem presented is which appeal we should consider.
The initial judgment entered by the clerk recites the district court's grant and denial of the summary judgment motions and directs "[t]hat Horn & Hardart have judgment against Burger King on the termination claim, and ... that the counterclaim against Burger King be and it is hereby dismissed." The amended final judgment entered by Judge Knapp orders "[t]hat the initial term of Horn & Hardart's first eight Burger King franchises ... is a period of 20 years from the date each restaurant first opened for business[; t]hat Horn & Hardart's Second Counterclaim is dismissed, on consent and without prejudice [and t]hat Burger King's complaint is dismissed, with prejudice."
The parties agree that the district court's purpose in amending its judgment was simply to clarify the court's intended disposition of the case. A district court clearly has power to make this type of clerical correction. See Fed.R.Civ.P. 60(a). Normally, Burger King's filing of the notice of appeal from the first judgment would terminate the district court's power to amend the judgment without leave of the Court of Appeals. See id.; Leonhard v. United States, 633 F.2d 599, 609-10 (2d Cir.1980), cert. denied, 451 U.S. 908, 101 S.Ct. 1975, 68 L.Ed.2d 295 (1981). The district court did not seek our permission to amend the judgment, but we nevertheless believe that it retained power to make the amendment.
We deem the initial judgment entered by the clerk not to be final because it did not dispose of Burger King's complaint. The judgment also is unclear as to the term of Horn & Hardart's franchises and as to which of Horn & Hardart's two counterclaims is dismissed. Cf. Foremost Sales Promotions, Inc. v. Director, Bureau of Alcohol, Tobacco and Firearms, 812 F.2d 1044, 1045-46 (7th Cir.1987) (per curiam) (); Rappaport v. United States, 557 F.2d 605, 606 (7th Cir.1977) (per curiam) (). Consequently, Burger King's notice of appeal from this judgment was premature, and did not divest the district court of jurisdiction to amend the judgment. See Leonhard, 633 F.2d at 610. Because the appeal from the first judgment was premature, we dismiss that appeal for lack of appellate jurisdiction and consider only the appeal from the amended judgment entered on May 17, 1989.
The first question on the merits is whether the Settlement Agreement is ambiguous as to the term of the franchises. We conclude that it is.
Parol evidence is admissible to aid in interpretation of a contract only when the language of the contract is ambiguous. See International Klafter Co. v. Continental Casualty Co., 869 F.2d 96, 100 (2d Cir.1989); Namad v. Salomon Inc., 74 N.Y.2d 751, 753, 543 N.E.2d 722, 723, 545 N.Y.S.2d 79, 80-81 (1989). Contract language is ambiguous if it is reasonably susceptible of more than one interpretation, and a court makes this determination by reference to the contract alone. Curry Road Ltd. v. K mart Corp., 893 F.2d 509, 511 (2d Cir. 1990); Chimart Assocs. v. Paul, 66 N.Y.2d 570, 572-73, 489 N.E.2d 231, 233, 498 N.Y.S.2d 344, 346 (1986); Breed v. Insurance Co. of North America, 46 N.Y.2d 351, 355, 385 N.E.2d 1280, 1282, 413...
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