LOWELL STAATS MIN. CO. v. Pioneer Uravan, Inc.

• Decision Date: 02 November 1984
• Docket Number: Civ. A. No. 82-K-2039.
• Citation: 596 F. Supp. 1428
• Parties: LOWELL STAATS MINING COMPANY, INC., Plaintiff, v. PIONEER URAVAN, INC., Defendant.
• Court: U.S. District Court — District of Colorado

596 F. Supp. 1428

LOWELL STAATS MINING COMPANY, INC., Plaintiff, v. PIONEER URAVAN, INC., Defendant.

Civ. A. No. 82-K-2039.

United States District Court, D. Colorado.

November 2, 1984.

William G. Waldeck, Joseph C. Coleman, Dufford, Waldeck, Ruland, Wise & Milburn, Grand Junction, Colo., for plaintiff.

Gregory K. Hoskin, Theodore Allegra, Nelson, Hoskin, Groves & Prinster, Grand Junction, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

During the late spring and summer of 1978, representatives of Pioneer Uravan, Inc. entered into negotiations with Lowell Staats Mining Company, Inc., an independent mining contractor, regarding mine development and mining on certain property owned by Pioneer located in Mesa County, Colorado and Grand County, Utah. The negotiations culminated in a Mine Development and Ore Mining Contract between the parties dated September 15, 1984. The contract provided for Staats to construct a decline mine shaft and perform related mine development work on Pioneer's property. Upon completion of the development work, Staats would mine uranium and vanadium ore on behalf of Pioneer. The contract provided for an initial term of three years, expiring on September 15, 1981. Thereafter, the contract was to continue on a year to year basis unless terminated by either party on six months prior written notice. In March, 1981, Pioneer elected to terminate the Contract at the end of the initial three year term. Accordingly, Pioneer sent written notice to Staats of the termination. Staats received the notice on March 10, 1981.

Staats' amended complaint alleges two types of claims through six separate claims for relief. The first and second claims for relief allege that Pioneer wrongfully terminated the contract. The remaining claims allege various breaches by Pioneer through its failure to perform or its inadequate performance of its obligations under the contract.

The amended complaint seeks only damage remedies¹ but Staats has also filed a lis pendens providing notice of this action allegedly involving judicial determination of rights affecting an interest in certain real property.

Before me now are Pioneer's motion for summary judgment as to the first and second claims for relief of the amended complaint and Pioneer's motion to release the notice of the lis pendens. The issues have been extensively briefed by both sides² and oral argument would not add to the delineation of the issues.

MOTION FOR SUMMARY JUDGMENT

Pioneer argues that its notice of termination complied with the requirements of the contract and, therefore, Staats has no cause of action for premature termination. The relevant portion of the contract provides:

3. (e) Unless terminated as herein provided, this Agreement shall continue for a three (3) year period, beginning Sept. 15, 1978, and ending Sept. 15, 1981, and shall thereafter continue on a year to year basis; after the initial three (3) year period, either party shall have the right of termination on six (6) months prior written notice to the other party.

Staats argues that this termination clause is ambiguous; its meaning not appropriately determined on a motion for summary judgment. Moreover, Staats argues that rules of construction compel a finding that the contract precludes any termination notice before September 15, 1981 and in fact requires that the contract continue through the first yearly extension.

Staat's allegations as to the correct construction of the contract must be examined in the light of well-established principles of contract law as applied in Colorado. The primary purpose of construing and interpreting a written agreement is to ascertain the intent of the parties, which is to be determined primarily from the language of the instrument itself. See Harrison Western Corp. v. Gulf Oil Co., 662 F.2d 690, 694-95 (10th Cir.1981); Ader v. Hughes, 570 F.2d 303, 309 (10th Cir.1978). The express provisions of a document should not be rewritten merely because of the contrary assertions of a party to the agreement. See Griffin v. United Bank of Denver, 198 Colo. 239, 599 P.2d 866, 868 (1979). Rather, I must enforce an unambiguous contract as written and in accordance with its terms. See, e.g., People v. Johnson, 618 P.2d 262, 266 (Colo.1980); Jameson v. Foster, 646 P.2d 955, 958 (Colo.App.1982).

In construing instruments to determine their meaning, I am also guided by a number of established rules. The prime objective is to ascertain the intention of the parties from the plain and generally accepted meaning of the words used from the language of the agreement. See Ader v. Hughes, supra; Cave Constr., Inc. v. United States, 387 F.2d 760, 762 (10th Cir. 1967). See also Griffin v. United Bank of Denver, supra; Radiology Professional Corp. v. Trinidad Area Health Ass'n, Inc., 195 Colo. 253, 577 P.2d 748, 750-51 (1978). I must avoid a construction which is unreasonable or absurd, and should be hesitant to imply conditions or terms which result in a breach. See Sunshine v. M.R. Mansfield Realty, Inc., 195 Colo. 95, 575 P.2d 847, 849 (1978); Bator v. Mines Development, Inc., 32 Colo.App. 320, 513 P.2d 220, 225 (1973). Where, as here, the evidence of agreement between the parties consists of an unambiguous document, the determination of the meaning and effect of its provisions is a question of law for the Court, proper for resolution by summary judgment. See, e.g., Harrison Western Corp. v. Gulf Oil Co., supra; Resort Car Rental System, Inc. v. Chuck Ruwart Chevrolet, Inc., 519 F.2d 317, 320 (10th Cir.1975); Eastern Tunneling Corp. v. Southgate Sanitation District, 487 F.Supp. 109, 112 (D.Colo. 1980); Radiology Professional Corp. v. Trinidad Area Health Ass'n, supra; Martynes and Associates, No. 1 By Martynes v. Devonshire Square Apartments, 680 P.2d 246, 249 (Colo.App.1984).

While paragraph 3(e) of the contract could have been more artfully drafted, its meaning and import are clear. The analysis advanced by Staats relies upon strained interpretations of language and grammar. To view paragraph 3(e) as requiring an initial term longer than three years would eviscerate the plain meaning of the contract.

This is not a situation where the terms of the agreement need be applied against the party responsible for drafting the agreement. See, e.g., Christmas v. Cooley, 158 Colo. 297, 406 P.2d 333, 335 (1965). Such analysis should only be applied as a last resort. Here, however, the meaning of the document is clear. See Quad Constr. Co. v. Wm. A. Smith Contracting Co., 534 F.2d 1391, 1394 (10th Cir.1976). Moreover, neither party is a stranger to the business world or to transactions such as the one into which they entered. Staats had full opportunity to review the contract prior to signing it. In fact, Staats attorney Thomas Harshman was concerned with the initial language of paragraph 3(e) and suggested modifications which were made.³

Staats also argues that the provisions in paragraph 3(e) were intended for Staats benefit and should, accordingly, be interpreted for the benefit of the party for whose protection they were inserted. Christmas v. Cooley, supra. The contract, however, gives benefits to both sides, allowing either party the option to terminate. Paragraph 3(e), when drafted, was not clearly designed for the protection of Staats. Hence there is no justification for balancing the interpretation in Staats' favor.

Paragraph 3(e) was clearly intended to allow termination by either party upon six months prior notice, provided that said termination would not occur before September 15, 1981. This is the unambiguous and plain meaning of the language of the contract.

Finally, Staats argues that various other breaches of the contract by Pioneer preclude allowing termination of the contract on September 15, 1981. By this argument Staats seeks to bolster its first and second claims for relief with the facts and legal theories underlying the third through sixth claims for relief. Claims one and two, however, deal specifically with Pioneer's termination and the validity of Pioneer's exercise of that right. Trying to bootstrap all of the claims together is inconsistent with the claims presented in the amended complaint. Other claims of breach of contract are irrelevant to Pioneer's motion for summary judgment which focuses only upon the first two claims asserted in the amended complaint.

Staats correctly notes that if Pioneer's alleged breaches go to the essence of the contract then the affect of Pioneer's attempted termination will be constrained. Thus, Corbin has suggested that:

a party who has reserved a power of termination loses that power if he himself commits such a breach as goes to the essence and discharges the other party. A subsequent notice of termination has no effect upon the other party's right to full damages for the existing total breach. However, one who commits a partial breach that does not discharge the other party from his contractual obligation does not thereby extinguish his power of termination that is expressly reserved.

6 A. Corbin, CORBIN ON CONTRACTS § 1266, at 68-69 (2d ed. 1962). See also Concrete Specialities, Inc. v. Smith Constr. Co., 423 F.2d 670 (10th Cir.1970). This argument, however, goes to the amount of damages Staats may recover on the third through sixth claims for relief. It has nothing to do with the proper interpretation of the termination clause which is alleged in the first and second claims. Thus, if Pioneer's breaches, as alleged in the third through sixth claims for relief, go to the essence of the contract then Staats damages may include losses which arose over the course of the entire contract including the extensions. Pioneer could not minimize the damages it could owe to Staats by seeking to terminate the contract. Logically, however, breach of contract claims are independent of the issue of interpreting the termination clause as raised in the first and second claims and addressed in...