Richards v. Jtl Group, Inc.

• Decision Date: 19 May 2009
• Docket Number: No. DA 07-0081.,DA 07-0081.
• Citation: 350 Mont. 516,212 P.3d 264,2009 MT 173
• Parties: John RICHARDS and Seeley Lake Ready Mix Company, a Montana Corporation, Plaintiffs and Appellants, v. JTL GROUP, INC., a Montana corporation, Defendant and Appellee.
• Court: Montana Supreme Court

212 P.3d 264

2009 MT 173

350 Mont. 516

John RICHARDS and Seeley Lake Ready Mix Company, a Montana Corporation, Plaintiffs and Appellants, v. JTL GROUP, INC., a Montana corporation, Defendant and Appellee.

No. DA 07-0081.

Supreme Court of Montana.

Submitted on Briefs December 19, 2007.

Decided May 19, 2009.

Rehearing Denied July 22, 2009.

For Appellant: Dennis E. Lind, Trent N. Baker; Datsopoulos, MacDonald & Lind, P.C.; Missoula, Montana.

For Appellee: Susan G. Ridgeway, Christopher B. Swartley; Attorneys at Law; Missoula, Montana.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 This case concerns a dispute over a sale agreement for a ready mix concrete plant in Seeley Lake entered into by John Richards and JTL Group, Inc. Richards and Seeley Lake Ready Mix Company (collectively, "Richards") appeal from the decision of the District Court for the Fourth Judicial District, Missoula County, granting summary judgment in favor of JTL Group, Inc. (hereinafter "JTL"). We affirm.

¶ 2 We restate the issues on appeal as follows:

1. Did the District Court err in determining that the Sale Agreement was the parties' final and complete agreement?

2. Did the District Court err in determining that the language of the Sale Agreement was unambiguous?

3. Did the District Court err in refusing to consider parol evidence under the statutory exceptions to the parol evidence rule?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 JTL is a Montana corporation doing business in several western Montana counties. In 2003, JTL owned the Seeley Lake Ready Mix plant (hereinafter "SLRM"). JTL also owned several other concrete plants including Kalispell Ready Mix, Polson Ready Mix, and Missoula Ready Mix. John Richards, a construction business and gravel pit owner in the Seeley Lake area, wanted to enter the ready mix concrete business and contacted JTL. Richards and JTL thereafter entered into a written agreement (hereinafter "Sale Agreement") dated September 30, 2003, followed by a closing on October 1, 2003, in Seeley Lake.

¶ 4 The Sale Agreement took the form of a one-page letter addressed to Richards on Polson Ready Mix letterhead from JTL general manager Butch Woolard, who signed the Sale Agreement on behalf of JTL. The Sale Agreement included the subject line "Re: Purchase of Seeley Lake Ready Mix/SLRM" and then listed several terms as follows:

The following are terms that have been agreed upon:

1. Non-Compete Agreement-Territory to include the area north and east of Greenough Hill, mile post marker 22.3 on Hwy #200 and nothing south of Swan Lake. The non-compete territory does not include Montana State Highway projects, as we want the opportunity to bid on these. Any concrete delivered by MRM [Missoula Ready Mix], JTL, affiliates, successors, or assigns, in the non-compete territory, we agree to pay John Richards $5.00¹ per cubic yard.

2. At the time of the closing, October 1, 2003 in Seeley Lake, Montana, this will be a cash sale, payable by a bank issued cashier's check in the amount of $67,000 dollars payable to JTL Group, Inc.

3. MRM will provide support to SLRM to help the continued success of SLRM. This will include help with mix designs, supply sources and business consulting.

The Sale Agreement also enumerated the assets of the sale, including three mixer trucks, a batch plant and control trailer, two cement trailers, and a truck mounted blower.

¶ 5 The parties contemporaneously executed a second page entitled "Amendment # 1," regarding JTL's payment to Richards for continued batching of concrete at SLRM. The Amendment stated:

As of October 1, 2003, MRM agrees to pay John Richards $5.00 per cubic yard to batch at the Seeley Lake Plant for the bridge on the Blackfoot River at the Jct of Hwy 200 and Hwy 141. All Sales after September 30, 2003 are to be John Richards/SLRM proceeds.

That same day, the parties also signed a third one-page document in which JTL agreed to rent Richards a truck at $50 per hour "until freeze-up" (hereinafter "Rental Agreement"). It contained no references to the sale of SLRM. Both Woolard and Richards signed and dated the amendment as well as the Rental Agreement. Shortly after the closing, Richards incorporated as Seeley Lake Ready Mix Company and commenced business.

¶ 6 On October 3, 2003, MRM's plant manager, John Young, sent a letter to MRM customers, stating, in pertinent part:

This letter is to inform you, Missoula Ready Mix is no longer the owner of Seeley Lake Ready Mix. The Seeley Lake Plant is still open with the same name and phone number. We would like to thank you for the opportunity to be of service to you these past years. We are still available to serve your needs in the Potomac Valley up to Greenough Hill.

Again thank you for your past business and please remember we still have Pumps, Conveyors, and concrete supplies available to service your needs in the Seeley Lake market.

This letter, known as the "Customer Letter," also listed the current customer prices for pumps and conveyors.

¶ 7 On May 25, 2005, Richards filed suit against JTL, alleging that the parties had a covenant not to compete, which JTL violated by continuing to do business in the "non-compete territory." Richards claimed that JTL induced Richards to purchase SLRM by promising non-competition in the immediate vicinity and promising support for SLRM. The complaint further alleged that JTL agreed to provide Richards with a customer list but had failed to do so. Richards claimed that JTL's actions breached the implied covenant of good faith and fair dealing and constituted actual malice and, as a result of JTL's competition, he suffered lost profits, sales, and goodwill. Richards sought damages and a permanent injunction to prevent JTL from further breaching the asserted covenant not to compete.

¶ 8 JTL denied Richards' allegations and asserted that JTL did not agree to sell the goodwill of the business to Richards or to refrain from carrying on business within the area specified in the Sale Agreement. JTL's motion for summary judgment argued that nothing in plain language of the Sale Agreement precluded it from doing business in the non-compete territory and that, to the contrary, the Sale Agreement's provision that JTL would pay Richards $7 per cubic yard for concrete delivered in the territory as well as the amendment regarding batching of concrete "unambiguously contemplate" that JTL would do business in the non-compete territory. JTL further asserted that, contrary to Richards' assertions, the Sale Agreement neither restricted the price that JTL could charge for concrete delivered to the territory nor required JTL to furnish Richards with a customer list. Finally, JTL argued that parol evidence was inadmissible to establish oral agreements not set forth in the written agreement.

¶ 9 Richards' response to JTL's summary judgment motion asserted the court should look at circumstances and contemporaneous oral and written representations in order to interpret and expand upon the Sale Agreement. Richards asserted that the Sale Agreement was ambiguous, and as such, extrinsic evidence was admissible to determine the parties' intent. Richards argued that the parol evidence rule did not preclude consideration of this evidence as the Sale Agreement lacked a merger or integration clause and there were aspects of the deal that were not in the written agreement, such as the purported agreement to supply Richards with a customer list. Richards also contended that the evidence was admissible under the § 28-2-905(2), MCA, exception to the parol evidence rule allowing consideration of extrinsic evidence when there is an allegation of fraud.

¶ 10 The District Court issued an order on December 18, 2006, granting JTL's motion for summary judgment. The court determined that the Sale Agreement was final and complete, as there were no other written agreements to the contrary, and rejected Richards' assertion that the Customer Letter was evidence of an executed oral agreement modifying the written contract or a signed memorandum of a separate agreement for JTL not to compete in the territory. The court also concluded that the Sale Agreement superseded all the preceding and accompanying oral negotiations or stipulations and was not reasonably subject to two different interpretations. The court determined the Sale Agreement did not impose an obligation on JTL to charge customers a certain price for concrete, but simply required JTL to pay Richards $7 per cubic yard for any concrete delivered within the territory, and did not require JTL to furnish Richards with a customer list. Based on these conclusions, the District Court dismissed all of Richards' claims.

STANDARD OF REVIEW

¶ 11 We review a district court's ruling on a motion for summary judgment de novo, applying the same criteria of M.R. Civ. P. 56 as did the district court. Phelps v. Frampton, 2007 MT 263, ¶ 15, 339 Mont. 330, 170 P.3d 474. Rule 56(c) provides that summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." M.R. Civ. P. 56(c); Bitterroot Inter. Sys. v. West. Star Trucks, 2007 MT 48, ¶ 32, 336 Mont. 145, 153 P.3d 627.

¶ 12 The moving party bears the initial burden of demonstrating there is no genuine issue of material fact and entitlement to judgment as a matter of law. Phelps, ¶ 16. "Once the moving party has met its burden, the opposing party must, in order to raise a genuine issue of material fact, present substantial evidence essential to one or more elements of its case rather than mere conclusory or speculative statements." Reisbeck v. Farmers Ins. Exchange, 2007 MT 171, ¶ 8, 338 Mont. 171, 163 P.3d 1289. We draw all reasonable inferences in favor of the party opposing summary judgment. Bitterroot Inter. Sys....