Lincoln Farm, L.L.C. v. Oppliger

Decision Date16 December 2013
Docket NumberNo. 111018.,111018.
Citation315 P.3d 971
PartiesLINCOLN FARM, L.L.C., Plaintiff/Petitioner, v. Donald L. OPPLIGER; Joi M. Oppliger; Farming Technology Corporation; and Farming Technology, Inc., Defendants/Respondents.
CourtOklahoma Supreme Court
OPINION TEXT STARTS HERE
CERTIORARI TO REVIEW INTERLOCUTORY ORDER.

¶ 0 Lincoln Farm, L.L.C., had a contract to sell potatoes to Farming Technology Corporation. Lincoln Farm brought an action in the District Court of Oklahoma County alleging that Farming Technology Corp. breached the contract. Farming Technology Corp. brought a counterclaim for breach of contract against Lincoln Farm. Lincoln Farm sought summary judgment against Farming Technology Corp. and the Oppligers who sold the potato farm to Lincoln Farm. Farming Technology Corp. sought summary judgment against Lincoln Farm, and alleged that Lincoln Farm was required to build a railway spur to satisfy a contractual obligation to load potatoes on railway cars supplied by Farming Technology Corp. The Honorable Lisa Tipping Davis, District Judge, granted, in part, the motion for summary judgment sought by Farming Technology Corp., and granted a partial summary adjudication on the issue of liability, and denied the motion for summary judgment sought by Lincoln Farm. The trial court determined that the ruling in favor of Farming Technology Corp. affected the merits of the controversy, that an immediate appeal may advance the termination of the litigation, and certified its ruling for interlocutory review. We previously granted the writ of certiorari. We hold that the unambiguous language of the contract did not require Lincoln Farm to build a private railway spur to deliver potatoes, and we reverse the order of the District Court.

PETITION FOR CERTIORARI TO REVIEW A CERTIFIED INTERLOCUTORY ORDER PREVIOUSLY GRANTED; ORDER OF THE DISTRICT COURT REVERSED; AND CAUSE REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH OPINION

.

Mark K. Stonecipher, Andrew L. Walding, Fellers Snider Blankenship Bailey and Tippens, P.C., Oklahoma City, Oklahoma, for Plaintiff/Petitioner, Lincoln Farm, L.L.C.

Raymond E. Zschiesche, Phillips Murrah, P.C., Oklahoma City, Oklahoma, for Defendants/Respondents, Farming Technology Corporation and Farming Technology, Inc.

Cheryl P. Hunter, James M. Chaney, Kirk & Chaney, Oklahoma City, Oklahoma, for Defendants/Respondents, Donald L. Oppliger and Joi M. Oppliger.

EDMONDSON, J.

¶ 1 The controversy framed by the parties involves whether Lincoln Farm, L.L.C., breached a contract to sell potatoes to Farming Technology Corporation, and whether certain provisions of the Uniform Commercial Code involving the unavailability of a carrier and a commercially impracticable method of delivery are applicable to the parties. Farming Technology argued in the trial court that Lincoln Farm was required to build a private rail spur in order to fulfill Lincoln Farm's contractual obligation to load potatoes on railcars or trucks furnished by Farming Technology Corporation to take delivery of the potatoes. We hold that the contract unambiguously states that Farming Technology Corporation will furnish railcars or trucks to take delivery of the potatoes, the contract does not state that Farming Technology has the right to insist on delivery solely by rail, and that the contract does not require the building of a private rail spur by Lincoln Farm in a circumstance where at the time the purchase agreement was made the potatoes were being loaded on railway cars parked on the main line of the railway.

I. The Controversy Before the Court

¶ 2 Donald and Joi Oppliger agreed on February 1, 2008, to sell their 18,800 acre farm in Nebraska to Redwolf Farms, L.L.C., and its permitted assigns. Redwolf Farms, L.L.C., was assignor to Lincoln Farm, L.L.C. (Lincoln Farm). The parties agreed that the Oppligers reserved the right to designate the physical purchaser and the sale price of the potatoes produced on the real property from the 2008 and 2009 crop years. A crop year is defined by the parties as the year in which the seeds of the crop are planted.

¶ 3 They agreed that income from the sale of potato crops would satisfy a certain amount payable to Lincoln Farm with additional amounts from the sale, if any, to be paid to the Oppligers. According to Lincoln Farm, one of the contract terms required the Oppligers to guarantee prices Lincoln Farm would receive in 2008 and 2009 for potatoes harvested from the Nebraska farm. This guarantee also provided that the Oppligers would select the purchaser and sale price of the crops.

¶ 4 Pursuant to the provisions of the agreement for the real estate purchase, the Oppligers designated Farming Technology Corporation (FTC) as the Buyer for the 2008 potato crop from the Seller of said crop, Lincoln Farm. The Oppligers' practice was to contract for the sale of their crops prior to their planting, and they had sold them to FTC for several years prior to the sale of the real property. The 2008 Purchase Agreement for the potato crop was executed on February 20, 2008, the same day that closing occurred on the real estate contract for the purchase of the potato farm.

¶ 5 The Nebraska Kansas Colorado Railway (NKCR) allegedly informed the Oppligers that their potato storage and loading facility encroached on the NKCR's property and that the encroachment must be removed from the NKCR property. For several years the NKCR had permitted the Oppligers to use the railway's main line for the purpose of loading potatoes on railway cars parked temporarily on the main line. It is also alleged that Don Oppliger received notice from the NKCR in 2007 for the need of a private spur line to continue loading potatoes on railway cars at the storage facility. FTC states on appeal that Don Oppliger informed Lincoln Farm in November 2007 that the NKCR “was going to require him to build a rail spur.” 1 Lincoln Farm states in reply that Oppliger told it that initially the NKCR had informed Oppliger that a spur would be needed, but: “... this was not the case because he worked an arrangement with the railroad so that a rail spur was not required to be built at that time, and railcars could continue to be parked on the main line next to the Potato Building for loading.... Oppliger told his employees that rail spur would not be required ... He instructed them to re-build the load-out area so potatoes could be loaded directly from the Potato Building into railcars parked on the mainline ... [and] Oppliger knew, but failed to inform Redwolf or Lincoln Farm the arrangement with NKC Railway was only temporary.” 2 FTC and Lincoln Farm do not contest that the 2007 potato crop was loaded on railway cars parked on the main line until some point shortly after May 6, 2008, and that on approximately June 9, 2008, Lincoln Farm was notified by the NKCR that railway cars would no longer be allowed to be parked on the main line for loading potatoes.3

¶ 6 In September 2008 a potato crop harvesting began. The crop contract between Lincoln Farm (Seller) and FTC (Buyer) contained the following.

(B) Seller warrants its is capable of harvesting and loading a minimum of 7,500 CWT. of potatoes per day. Buyer shall have no obligation to accept any potatoes not loaded by April 30, 2009.

(C) Seller agrees to load potatoes on trucks or railcars furnished by Buyer.

(E) The approximate quantity of potatoes set out on page 1 will be delivered and piled by Seller into Seller's storage which is located in or near Wallace Nebraska. Seller will remove anything that will affect the flow of air through the potatoes. However, Buyer may at its option, load potatoes direct from the field.

O.R. at 221, 470.

¶ 7 When the harvest began, FTC rented railway cars which the NKCR parked in Nebraska off of the main line, but not in a location for direct loading of potatoes from the potato storage facility. The NKCR informed Lincoln Farm that the railway cars could not be loaded while parked on the main line, and Lincoln Farm informed FTC that it was ready to load potatoes on trucks supplied by FTC.

¶ 8 On October 23, 2008, FTC notified Lincoln Farm that “there were no alternatives under the 2008 Potato Contract other than for the potatoes to be loaded into railcars.” Lincoln Farm understood that its contractual obligation could be satisfied by loading potatoes on either railway cars or trucks supplied by FTC. Lincoln Farm argued that the potato contract required it to deliver potatoes to a storage facility “to be piled and held there for loading ‘on trucks or railcars furnished by Buyer [FTC].’ After the June 8th notice from the NKCR and before harvest began, Lincoln Farm started the process to build a private spur line, and insisted that it was not building the spur to satisfy any contractual agreement with FTC. The rail spur became operational by January 30, 2009, and potatoes were loaded by Lincoln Farm and shipped by FTC using this spur pursuant to the parties' agreement. The 2008 potato contract had a cutoff date of April 30, 2009, but FTC continued shipping potatoes “as long as the condition and quality of the potatoes are good.” The last railway car of potatoes was shipped on May 21, 2009.

¶ 9 On June 18, 2009, Lincoln Farm sent its final invoice to FTC for $244,401. The invoice was not paid and Lincoln Farm brought an action in the District Court of Oklahoma County alleging that Farming Technology Corporation breached the contract. Farming Technology Corporation brought a counterclaim for breach of contract against Lincoln Farm. Farming Technology Incorporated (FTI), an entity owned by FTC, claimed that Lincoln Farm owed $82,774 to FTI for storage fees, switching charges, railway car payments for rail cars sent to Nebraska before the rail spur was operational.

¶ 10 Lincoln Farm sought summary judgment against Farming Technology Corporation and the Oppligers. FTC sought summary judgment against Lincoln Farm and stated that due to the rail spur not being available...

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