Hayter Trucking, Inc. v. Shell Western E&P, Inc., No. F016359

• Court: California Court of Appeals
• Writing for the Court: MARTIN; Court; BEST, P.J., and FRANSON
• Citation: 18 Cal.App.4th 1,22 Cal.Rptr.2d 229
• Parties: HAYTER TRUCKING, INC., Plaintiff and Appellant, v. SHELL WESTERN E & P, INC., Defendant and Respondent.
• Docket Number: No. F016359
• Decision Date: 25 August 1993

Page 229

22 Cal.Rptr.2d 229 18 Cal.App.4th 1 HAYTER TRUCKING, INC., Plaintiff and Appellant,
v.
SHELL WESTERN E & P, INC., Defendant and Respondent. No. F016359. Court of Appeal, Fifth District, California. Aug. 25, 1993.
Review Denied Nov. 17, 1993.

Page 231

[18 Cal.App.4th 5] Klein, Wegis, DeNatale, Hall, Goldner & Muir, David J. Cooper and Barry E. Rosenberg, Bakersfield, for plaintiff and appellant.

Borton, Petrini & Conron and Mark A. Jones, Bakersfield, for defendant and respondent.

Page 232

OPINION

MARTIN, Associate Justice.

Plaintiff transportation firm appeals from a defense judgment in an action for termination of a contract for vacuum truck services. ¹

18 Cal.App.4th 6

STATEMENT OF THE CASE

On January 31, 1991, plaintiff filed a complaint for breach of written contract, naming Shell Western E & P, Inc., and 50 Does as defendants and praying for compensatory damages according to proof. Defendant Shell Western demurred to the complaint on the grounds it did not state facts sufficient to constitute a cause of action (Code Civ.Proc., § 430.20, subd. (a)) and, after a contested hearing, the trial court sustained defendant's demurrer with 20 days leave to amend.

On April 18, 1991, plaintiff filed a first amended complaint for breach of written contract. The first amended complaint pleaded the same cause of action but in greater detail. Defendant again demurred, alleging the pleading did not state facts sufficient to constitute a cause of action.

On June 4, 1991, the court conducted a contested hearing and sustained the demurrer without leave to amend, and on June 11, 1991, the court filed a formal order on demurrer to the first amended complaint.

On or about June 14, 1991, plaintiff moved for reconsideration (Code Civ.Proc., § 1008) of the order sustaining demurrer to the first amended complaint. Plaintiff alleged a different state of facts supporting the motion and attached a proposed second amended complaint to its pleading. On July 2, 1991, the court conducted a contested hearing and denied the motion by minute order and, on July 16, 1991, filed a formal order denying plaintiff's motion for reconsideration.

Plaintiff filed a timely notice of appeal.

FACTS

In 1987, plaintiff Hayter Trucking, Inc., a California corporation, performed vacuum truck services for oil industry clients from its principal place of business in Taft, California. That same year, defendant Shell Western E & P, Inc., a Delaware corporation, conducted oil field operations in Kern County. Defendant Shell Western, an affiliate of Shell Oil Company, operated the Kernridge Production Division at Highway 33 and 7th Standard Road, 12 miles north of McKittrick.

In the fall of 1987, defendant requested bids on vacuum truck services to be rendered on its Kernridge Production Division facility. Plaintiff submitted a bid on a Shell proposal form and defendant eventually selected plaintiff as the successful bidder. On December 2, 1987, plaintiff and defendant [18 Cal.App.4th 7] entered into a separate written contract entitled "PURCHASE ORDER NO. AFSB-823087-KD." Pursuant to that contract, plaintiff agreed to provide defendant with vacuum truck services at Shell's facilities in Kern County from December

Page 233

3, 1987, through January 31, 1989. Plaintiff and defendant agreed to four alterations to the purchase order during the term of the contract. The alterations occurred on January 19, 1988, July 21, 1988, August 22, 1988, and January 10, 1989. On January 22, 1990, plaintiff and defendant entered into a fifth alteration of the purchase order. The terms of the alteration were effective from February 1, 1990, through January 31, 1992.

Purchase order No. AFSB-823087-CA, ² as amended by the fifth alteration, stated in relevant part:

"1.1 THIS ALTERATION NUMBER FIVE (5) TO THE ABOVE-NUMBERED BLANKET ORDER IS ORIGINALLY DATED 12/02/87. DO NOT CONFUSE THIS WITH ANY RELEASE AGAINST THIS BLANKET ORDER WHICH MAY CONTAIN SPECIFIC BILLING INSTRUCTIONS WHICH ARE NOT AFFECTED BY THIS ALTERATION.

"1.2 This Blanket Order including instructions and conditions on the reverse side hereof shall constitute an agreement to cover the furnishing by Contractor [plaintiff] of all necessary tools and equipment, materials, labor and supervision (and including the cost of Workers' Compensation and/or Employers' Liability Insurance and all payroll taxes on such labor) to perform work as [specified in the purchase order].

"...

"3.1 THIS ORDER IS EFFECTIVE 2/01/90 AND SHALL REMAIN IN EFFECT THROUGH 1/31/92 UNLESS CANCELLED BY EITHER PARTY BY GIVING THIRTY (30) DAYS' WRITTEN NOTICE TO THE OTHER PARTY.

"...

"5.1.4 IT IS AGREED THAT THE CONTRACT AND THE ATTACHMENTS THERETO SET FORTH THE ENTIRE AGREEMENT BETWEEN BUYER [DEFENDANT] AND CONTRACTOR. NO ORAL AGREEMENTS MADE HERETOFORE SHALL BE BINDING, AND THAT NO MODIFICATION OR SUPPLEMENT THERETO SHALL BE MADE EXCEPT BY WRITTEN AGREEMENT SIGNED BY BOTH PARTIES.

[18 Cal.App.4th 8] "...

"5.3 Buyer reserves the right to suspend services immediately at any time and/or terminate Contract immediately if, in Buyer's opinion, serious harm would otherwise result to Buyer's operations due to activity of Contractor or quality of product. Buyer would then be free to engage the services of another contractor if necessary for continuity of operations.

"...

"8.1 ALL OTHER TERMS AND CONDITIONS OF THE ORIGINAL ORDER AND ALTERATION(S) THERETO REMAIN THE SAME." ³

On February 6, 1990, Charles E. Beard, president of plaintiff corporation, signed a written acceptance of the fifth alteration of the purchase order. Pursuant to that acceptance, plaintiff approved the face of the purchase order, the general and work order conditions printed on the back of the purchase order, and applicable attachments and specifications. These attachments included the "SHELL WESTERN E & P, INC. PURCHASE AND BLANKET ORDER STANDARD TERMS AND CONDITIONS." The standard terms and conditions stated in relevant part:

"1.1 BUYER [defendant] reserves the right to suspend services immediately at any time and/or terminate the order immediately if, in BUYER's opinion, serious harm would otherwise result to BUYER's operations due to activity of CONTRACTOR or quality of product. BUYER would then be free to engage

Page 234

the services of another contractor if necessary for continuity of operations.

"1.2 This order is issued subject to BUYER's option to reduce or cancel purchase commitment in the event of a noncompetitive price increase, quality deficiency, failure to deliver as scheduled or other unsatisfactory service.

"...

"6.5 It is agreed that the order and the Attachments thereto set forth the entire agreement between BUYER and CONTRACTOR with respect to the work, that no oral agreements made heretofore shall be binding, and that no modification or supplement thereto shall be made except by written agreement signed by both parties."

[18 Cal.App.4th 9] On November 8, 1990, defendant sent plaintiff a copy of alteration No. 9 to purchase order No. AFSB-823087-CA. The ninth alteration was designed to "[p]rovide thirty (30) days notice that, effective 12/9/90, this Order is cancelled in its entirety." Plaintiff's president subsequently signed, but did not date, an acceptance letter as to the ninth alteration.

Plaintiff's first amended complaint alleged in relevant part:

"10. The agreements between the parties [the Dec. 2, 1987, purchase order and the Jan. 22, 1990, alteration No. 5] permitted either party to cancel said contract on thirty (30) days written notice pursuant to paragraph 3.

"11. At all times herein mentioned, there existed a trade, custom and usage that contracts for services such as those provided by HAYTER to SHELL could be terminated only for good cause.

"12. That said custom and usage is, and at all times herein mentioned has been, certain and uniform, of general continuity and notoriety, peaceful, and acquiesced by the whole of the industry.

"13. This custom and usage was well known to plaintiff and to defendant and was in fact deemed by each of the parties hereto to be an integral part of the contract as set forth in Alteration 5.... Accordingly, it was understood and agreed by the parties that the contract could only be terminated for good cause, and that the 30 day termination clause of paragraph 3 of the Alteration Five ... governed the manner in which the contract could be terminated rather than the basis upon which the contract could be terminated.

"14. SHELL and HAYTER, knowing said trade, custom and usage in the industry, at all times mentioned herein, did intend, understand, and agree that said termination clause to require good cause.

"15. Although paragraph 5.3 of Alteration Five (5) also permitted the parties to suspend the agreement immediately under emergency or extreme circumstances, this clause was intended by the parties to be limited in its effect to such emergency circumstances and was not intended by the parties to govern in non-emergency or non-extreme circumstances.

"16. On or about November 8, 1990, without good cause, SHELL provided HAYTER with thirty (30) days written notice that SHELL was terminating the written agreement ... effective December 9, 1990....

"17. HAYTER has performed all conditions, covenants and promises required by them on their part to be performed in accordance with the terms and conditions of [alteration No. 5].

[18 Cal.App.4th 10] "18. On or about November 8, 1990, SHELL breached the contract with HAYTER by terminating the contract without good cause under the terms of the contract."

Defendant demurred to the first amended complaint, arguing:

"In its original complaint, plaintiff alleged that its understanding of the termination clause was that the provision could be exercised only for 'good cause.' Plaintiff further asserted that this understanding was in accordance with an alleged trade, custom and usage that contracts for services similar to those to be provided under the...