Dalton v. Cellular South, Inc.

• Decision Date: 12 November 2009
• Docket Number: No. 2007-CT-00750-SCT.,2007-CT-00750-SCT.
• Citation: 20 So.3d 1227
• Parties: Gregory S. DALTON, Individually and d/b/a Louisville Electronics v. CELLULAR SOUTH, INC.
• Court: Mississippi Supreme Court

20 So.3d 1227

Gregory S. DALTON, Individually and d/b/a Louisville Electronics v. CELLULAR SOUTH, INC.

No. 2007-CT-00750-SCT.

Supreme Court of Mississippi.

November 12, 2009.

William Liston, Winona, Dewitt T. Hicks, Columbus, John M. Montgomery,

Sara Elaine Woodrell, attorneys for appellants.

Charles Louis McBride, Anne Clarke Sanders, Katie Lofton Wallace, Jackson, attorneys for appellee.

EN BANC.

ON WRIT OF CERTIORARI

RANDOLPH, justice, for the court.

¶ 1. This case involves the termination clause of an agency contract. The issues are whether the contract was ambiguous vel non and whether Cellular South, Inc. ("CSI") was within its contractual rights to terminate its agency agreement with Gregory Dalton. Dalton submits that the Court of Appeals erred in affirming a grant of summary judgment in favor of CSI. We agree. Dalton asks also that we reverse the denial of his motion for partial summary judgment. We decline. The judgments of the circuit court and the Court of Appeals are affirmed in part and reversed in part. We remand this case to the Winston County Circuit Court for proceedings consistent with this opinion.

BACKGROUND

¶ 2. Dalton was the owner of a Radio Shack store in Louisville, Mississippi. In April 1992, he entered into an agency agreement with Cellular Holding, a predecessor corporation of CSI. The original agreement was replaced on March 1, 1993, with a new Authorized Agent Agreement, which is the contract at dispute.¹ Under the agreement drafted by CSI, Dalton was, inter alia, to procure cellular-phone customers for CSI in exchange for commission payments. The circuit court found that the agency relationship was beneficial to both parties, to wit:

Dalton worked hard to help [CSI] establish a presence in the seven Mississippi counties covered by the Agreement. He helped [CSI] locate a site for a cellular tower in Louisville, Mississippi, and assisted it in obtaining the approval of the city government to re-zone the property so that a cellular tower could be erected there. Over the course of his relationship with [CSI], Dalton helped it gain over 6,000 customers. Dalton's hard work for [CSI] proved to be very rewarding to him as reflected by the 1099-MISC tax forms that were provided to him. In the form for 1999, it shows that Dalton was paid $81,970.30; for 2000, $127,740.00; for 2001, $172,095.00; for 2002, $183,380.00; and for 2003, $197,160.00.

The agency relationship lasted twelve years, during which Dalton operated a cellular-phone store in the same building as his Radio Shack store. Dalton was a nonexclusive agent in a seven-county area. CSI reserved the right to market its product through its own employees or other independent contractors.

¶ 3. In 1993, CSI instituted a policy concerning new agents. Beginning that year, all new agency contracts contained different provisions for termination. CSI removed the language in clause 3.1 requiring it to determine that it would be detrimental to continue an agency relationship. The new contracts were terminable at will. Six years later, CSI sent Dalton a new contract. Dalton refused to execute the new contract. The parties continued to operate under the March, 1, 1993, agreement. Subsequent to Dalton's 1999 refusal, payments by CSI increased significantly, more than doubling by 2003.

¶ 4. In December 2003, CSI informed Dalton by letter that it was terminating the agency agreement. The stated reason for termination reads as follows: "This letter serves as notice to you under the Authorized Agent Agreement executed by you and [CSI] pursuant to a reorganization of [CSI]'s retail distribution plan, [CSI] is terminating its agent agreement with you effective February 6, 2004." Enclosed with the letter was a Full and Final Release, which Dalton refused to sign.² At the same time, CSI terminated ninety other agents in Mississippi. Only eight other agents had the 3.1 clause found in the Dalton contract. The remaining agents were terminated at will.

LEGAL PROCEEDINGS

¶ 5. After Dalton refused to sign the Full and Final Release, CSI filed a declaratory-judgment action in the Circuit Court of Winston County, seeking a judgment that it had complied with the agreement in terminating Dalton. CSI moved for summary judgment, asserting that the contract allowed it to terminate the agreement at will, as long as it gave Dalton thirty-days' notice. After Dalton filed a motion for partial summary judgment, CSI abandoned that position, claiming that it had made the determination that continuation of the contract would be detrimental to CSI, as provided in 3.1. Contemporaneously, CSI filed an affidavit from its president, Hu Meena. Meena cited the administrative burdens of maintaining the agency agreements, as well as the need for good customer service and uniformity, before concluding that continuation would be "detrimental to the overall well being, reputation and goodwill of Cellular South." Meena's affidavit tracked the contractual language of 3.1 concerning termination. Thus, CSI acceded that 3.1 placed limitations upon its termination rights under 3.5. CSI then argued that it had complied with the requirements of 3.1 by referencing corporate reorganization in its December 2003 letter to Dalton. Dalton argued that 3.1 required CSI to determine that continuation of his contract was detrimental to CSI, and that CSI had not done so, and could not have done so, because of the success of his agency relationship with CSI. Dalton argued also that it would be error to grant summary judgment based on a self-serving, conclusory affidavit, which posited that CSI had complied with the contract terms. Further, Dalton argued that the terms of the contract had not been honored, as CSI admitted in the proceeding that the only stated basis for the termination, before litigation, was its reorganization plan.

¶ 6. The circuit court found the contract to be unambiguous, and that there was only one reasonable interpretation regarding the parties' authority to terminate the contract: (1) Dalton could have terminated the contract at any time, with or without a reason, so long as he gave thirty-days' notice; (2) CSI could have terminated without prior notice for a reason listed in the unnumbered paragraph following clause 3.5 (see note 1), or after thirty days for a continued failure of Dalton to comply with a contract term; (3) however, because the second sentence of 3.1 limited CSI's right to terminate, absent any of the for-cause reasons in 3.4 and 3.5, CSI could terminate Dalton's "successful Agency relationship" only after thirty-days' notice to Dalton that CSI had determined that continuation "would be detrimental to the overall well being, reputation and goodwill of [CSI]"; (4) CSI was the sole arbiter of whether continuation of the agency was detrimental. The court found no requirement that CSI determine that Dalton or his agency had caused the detriment, just that continuation had been determined by CSI to be detrimental. Thus, according to the trial court, CSI was contractually required, before terminating Dalton, to determine that continuation of the contract was to the detriment of its well-being, reputation, and goodwill.

¶ 7. After considering the Meena affidavit, the court then found that CSI had made the required determination. The court held that, viewing the evidence in the light most favorable to Dalton, no genuine issue of material fact existed as to whether the contract had been followed, and that CSI was entitled to a judgment as a matter of law. The circuit court granted CSI summary judgment, and denied Dalton's motion for partial summary judgment. A divided Court of Appeals affirmed the trial court. See Dalton v. Cellular South, Inc., 2008 WL 4212553, at *5 (Miss.Ct.App. Sept.16, 2008). Dalton's motion for rehearing was denied. This Court granted certiorari. Dalton v. Cellular South, Inc., 12 So.3d 531 (Miss.2009).

ISSUES

The issues are as follows:

I. Whether it was error to find the contract unambiguous.

II. Whether the circuit court erred in its summary judgment decisions.

DISCUSSION

¶ 8. Our standard of review is de novo. For contract construction, the standard is:

"Questions concerning the construction of contracts are questions of law that are committed to the court rather than questions of fact committed to the fact finder." We, as an appellate court, employ the de novo standard of review for questions of law.

Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So.2d 107, 110 (Miss.2005) (quoting Miss. State Highway Comm'n v. Patterson Enters., Ltd., 627 So.2d 261, 263 (Miss.1993)). The standard for review of a summary judgment is likewise de novo:

The circuit court's grant [or denial] of a motion for summary judgment is reviewed by this Court de novo. See Wilner v. White, 929 So.2d 315, 318 (Miss. 2006).... In this Court's de novo review, "[t]he evidence must be viewed in the light most favorable to the party against whom the motion has been made." Daniels v. GNB, Inc., 629 So.2d 595, 599 (Miss.1993) (citation omitted).

Kilhullen v. Kan. City S. Ry., 8 So.3d 168, 174 (Miss.2009).

¶ 9. Dalton first submits that the contract is unambiguous. Dalton next argues that the circuit court failed to use applicable contract-construction rules, and improperly used parol or extrinsic evidence, i.e., the Meena affidavit, in finding that the contract was unambiguous. Dalton maintains, alternatively, that if the Court finds the contract to be ambiguous, the ambiguous terms should, as a matter of law, be determined in his favor. CSI counters that the contract was properly construed and that Dalton's interpretation selectively adds and subtracts words from the contract.

I. Whether it was error to find the contract unambiguous.

¶ 10. We find the contract clauses, standing alone, are unambiguous. Giving the words their plain and ordinary meaning does not generate an ambiguity. See Miss. Farm Bureau Cas. Ins. Co. v. Britt, 826 So.2d 1261, 1266 (Mi...