Ray Anderson, Inc. v. Buck's, Inc.
| Decision Date | 06 July 2018 |
| Docket Number | No. S-17-816.,S-17-816. |
| Citation | 300 Neb. 434,915 N.W.2d 36 |
| Parties | RAY ANDERSON, INC., a Nebraska corporation, appellee and cross-appellant, v. BUCK'S, INC., a Nebraska corporation, appellant and cross-appellee. |
| Court | Nebraska Supreme Court |
Stephen M. Kalhorn, Omaha, Benjamin W. Hulse, of Blackwell Burke, P.A., and John P. Passarelli, of Kutak Rock, L.L.P., Omaha, for appellant.
Aaron F. Smeall and Jacob A. Acers, of Smith, Slusky, Pohren & Rogers, L.L.P., Omaha, for appellee.
In this declaratory judgment action, the district court for Douglas County determined that a contract between Ray Anderson, Inc. (Anderson), and Buck’s, Inc., to supply "BP-branded" motor fuel did not prevent Anderson from contracting with a competitor, Western Oil, Inc., to rebrand fuel sold at some of Anderson’s facilities. The court further found that Buck’s held a unilateral right to terminate the fuel supply agreement. Upon our de novo review, we reach the same conclusion. Therefore, we affirm.
Anderson is a Nebraska corporation operating retail gasoline stations and convenience stores in Omaha, Nebraska. Buck’s is a Nebraska corporation which also operates retail gasoline stations in Omaha. In addition, Buck’s acts as a "jobber" by purchasing fuel from BP Products North America Inc. (BP) and selling BP-branded fuel to individual gasoline stations, including to some of Anderson’s stations.
Before Anderson entered into the BP-branded fuel supply contract with Buck’s, Anderson was also a "jobber" and had purchased BP-branded gasoline directly from BP. In 2007, Anderson was unable to meet its gasoline sales commitments to BP and incurred $840,000 in volume fees. Buck’s agreed to "bail out" Anderson and assumed Anderson’s contractual rights and obligations under its "jobber" agreement with BP.
On July 30, 2007, the parties entered into a series of agreements. The parties executed a "Jobber Purchase and Sale Agreement," in which Buck’s agreed to (1) pay Anderson $300,000, (2) assume Anderson’s $840,000 liability to BP, and (3) assume Anderson’s volume sales commitments to BP. The parties also entered into a fuel supply contract entitled the "Subjobber Supply Agreement" (the Agreement), which incorporated a rider entitled the "Electronic Dealer Delivery Plan" (the EDDP). The parties' rights under the Agreement are at issue in this appeal.
In December 2015, Anderson negotiated terms with Western Oil, a competitor of BP, to sell Shell Oil Company-branded gasoline at four of Anderson’s stations. Anderson claims that on January 11, 2016, it informed Buck’s of its agreement with Western Oil. Buck’s issued cease-and-desist letters to Anderson and Western Oil the following day. The letter Buck’s sent to Anderson stated:
Anderson filed suit seeking a declaration that it was not prohibited from rebranding under the Agreement, and Buck’s counterclaimed, seeking a declaration that the Agreement required Anderson to buy BP-branded fuel and damages for anticipatory repudiation.
Anderson’s complaint requested the court to declare, pursuant to Nebraska’s Uniform Declaratory Judgments Act, Neb. Rev. Stat. §§ 25-21,149 to 25-21,164 (Reissue 2016), the rights of the parties under the Agreement; to find that the Agreement does not prohibit Anderson from withdrawing and rebranding some of its facilities; and to determine that if Anderson sought to terminate the Agreement, it could do so upon reasonable notice.
The answer and counterclaim filed by Buck’s alleged that the Agreement requires Anderson to buy BP-branded fuel from Buck’s for sale at Omaha-area facilities identified in the Agreement. The counterclaim stated, "Read together, Paragraphs 20(b) and 36 [of the Agreement] impose an affirmative duty on [Anderson] to ... avoid discontinuing ... the sale of [Buck’s]-supplied BP-branded gasoline." It further stated, "[Anderson’s] affirmative duty is extremely important to [Buck’s]," and "[t]his re-branding will send the message to potential customers that [Anderson] endorses another brand, and no longer stands by BP." Buck’s claimed Anderson’s agreement with Western Oil constituted a material breach of the Agreement and requested declaratory relief, injunctive relief, and monetary damages.
Both parties moved for summary judgment on their declaratory judgment claims, and following a hearing, the district court granted Anderson’s motion and denied the motion filed by Buck’s. In considering the motion filed by Buck’s, the court analyzed provisions within the Agreement, including section 19, titled "Grounds for Termination and Nonrenewal"; section 20(b), found under the section titled "Procedures for Termination or Nonrenewal"; and section 36, titled "Franchise Relationship." The court found it was unclear whether these provisions of the Agreement could be construed together to support the position of Buck’s, and stated that "the Agreement itself is, at the very least, ambiguous as to whether Anderson rebranding its stations would violate Section 20(b) of the Agreement." Based upon its review of the Agreement alone, the court denied the motion filed by Buck’s.
The court continued its analysis and discussed provisions of the EDDP in reviewing Anderson’s motion. The court pointed to section 12 of the EDDP, titled "Independent Business," which provides that "[n]othing herein shall obligate [Buck’s] to sell or [Anderson] to purchase products, nor preclude [Anderson] from selling competitive-brand products ... provided there occurs no infringement of [the] Branded Trade Identities" of Buck’s. The court determined that section 12 of the EDDP was clear and unambiguous and that the Agreement and the EDDP must be read together as a whole. The court concluded that "nothing within either the Agreement or the EDDP prohibits Anderson from selling competitive-brand products."
The court then found that even if Buck’s interpretation of its rights under the Agreement were correct, the EDDP provides that "in the event of a conflict between [the Agreement and the EDDP], the terms of the [EDDP] shall supersede any conflicting provisions elsewhere." The court found Anderson’s right to rebrand under section 12 of the EDDP controlled over any affirmative duty to avoid rebranding imposed by the Agreement.
In a separate order, the court rejected Anderson’s argument that it may terminate the Agreement upon reasonable notice. The court determined that the Agreement grants Buck’s "an unambiguous and valid unilateral right of termination." The court stated, "Anderson cannot, by invoking [its] contracted for right to rebrand, also circuitously assume the uncontracted for power to terminate the Agreement."
Buck’s appealed, Anderson filed a cross-appeal, and we moved the appeals to our docket.
Buck’s assigns, restated, that the district court erred by (1) interpreting the Agreement in a way to permit Anderson to discontinue buying BP-branded fuel from Buck’s and commence buying Shell Oil Company-branded fuel from a third-party supplier, notwithstanding affirmative duties imposed upon Anderson by the Agreement; (2) finding that the EDDP released Anderson of its obligation to buy fuel from Buck’s and concluding that the EDDP superseded conflicting provisions in the Agreement; and (3) failing to resolve contractual ambiguities through a trial.
On cross-appeal, Anderson assigns that the district court erred by (1) finding that Anderson has no right to terminate the Agreement and the EDDP and (2) failing to find that Anderson can terminate upon reasonable notice.
An appellate court will affirm a lower court’s grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.1 In reviewing a summary judgment, the court views the evidence in the light most favorable to the party against whom the judgment was granted and gives such party the benefit of all reasonable inferences deducible from the evidence.2
In an appeal from a declaratory judgment, an appellate court, regarding questions of law, has an obligation to reach its conclusion independently of the conclusion reached by the trial court.3 The meaning of a contract and whether a contract is ambiguous are questions of law.4
We first address the appeal filed by Buck’s regarding the issue of whether the Agreement and the EDDP prevent Anderson from rebranding fuel sold at some of its stations. We then address Anderson’s cross-appeal regarding the issue of whether Anderson has a contractual right to terminate the Agreement. In both appeals, we find the plain language of the Agreement and the EDDP compels affirmance of the district court’s decision.
In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous.5 A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.6 The meaning of an ambiguous contract is generally a question of fact.7
A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms.8 The court must accord clear terms their plain and ordinary meaning as an ordinary or reasonable person would understand them.9 The fact...
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