RTS Shearing, LLC v. Bni Coal, Ltd.

• Decision Date: 30 September 2021
• Docket Number: No. 20200340,20200340
• Parties: RTS SHEARING, LLC, Plaintiff and Appellant v. BNI COAL, LTD., Defendant and Appellee
• Court: North Dakota Supreme Court

965 N.W.2d 40

RTS SHEARING, LLC, Plaintiff and Appellant

v.BNI COAL, LTD., Defendant and Appellee

No. 20200340

Supreme Court of North Dakota.

FILED SEPTEMBER 30, 2021

Matthew D. Kirschenmann (argued) and Ronald J. Knoll (on brief), Fargo, N.D., for plaintiff and appellant.

Zachary R. Eiken, Bismarck, N.D., for defendant and appellee.

Tufte, Justice.

[¶1] RTS Shearing, LLC ("RTS") appeals from a judgment dismissing its action with prejudice after the district court granted summary judgment in favor of the defendant BNI Coal, Ltd. ("BNI"). We conclude the court did not err in granting BNI's motion for summary judgment. We affirm.

I

[¶2] RTS provides rock crushing services for use on various construction projects. BNI operates a coal mine near Center, North Dakota. As part of its operations, BNI periodically needs crushed rock for various purposes, including road maintenance and construction projects.

[¶3] In about July 2014, a BNI mine engineer communicated with RTS's chief executive officer about BNI's need for crushed rock. In October 2014, BNI issued an initial purchase order under which RTS was to deliver crushed rock to BNI's mine. BNI asserts RTS did not perform under this initial purchase order, and this purchase order is not at issue. BNI and RTS subsequently discussed having RTS crush rock that had been unearthed at BNI's mine, rather than providing crushed rock to the mine. BNI subsequently issued purchase orders in March 2015 and July 2015, under which RTS would provide rock crushing services in specified amounts to BNI.

[¶4] Unlike the October 2014 purchase order, the two subsequent single-page purchase orders stated in bold letters: BNI Coal, LTD's Standard Terms & Conditions apply for a copy of the Terms & Conditions contact BNI Coal, LTD. The document in the record purporting to contain the standard terms and conditions is entitled TERMS AND CONDITIONS OF CONTRACT and contains the following provision:

BNI Coal shall have the right to cancel or suspend by written notice, in whole or in part, the Contract. Except in the case of termination for breach, allowance will be made for normal and reasonable expenses incurred by the Seller or Contractor prior to the notice of cancellation, but BNI Coal will not be liable for any charges or expenses incurred by Seller or Contractor in advance of the normal or reasonable lead time necessary to meet scheduled delivery dates nor for any expenses, charges or liability incurred subsequent to the giving of notice of cancellation.

BNI asserts the Terms and Conditions were available for review upon request to BNI at all relevant times.

[¶5] RTS performed rock crushing services under the March 2015 purchase order beginning in April 2015, and RTS continued performing crushing services after BNI issued the July 2015 purchase order. RTS invoiced BNI for its services under these two purchase orders in the amount of $432,800. RTS's corresponding invoices referenced its respective purchase order. BNI issued payment for the invoiced amount under the two purchase orders, and RTS accepted payment. BNI asserts RTS did not perform any services for which BNI did not pay.

[¶6] RTS eventually left BNI's coal mine without completing the combined quantities stated in the two purchase orders, although rock was still available to crush. In November 2015, RTS inquired when it could return to complete the purchase orders. In January 2016, BNI informed RTS that it was exercising its right to cancel the balance of the purchase orders under the Terms and Conditions.

[¶7] In February 2019, RTS commenced this action against BNI, claiming breach of contract after BNI canceled purchase orders for RTS to provide further rock-crushing services to BNI. BNI asserted it exercised its right to cancel the balance of the purchase orders under the Terms and Conditions that were incorporated by reference in the purchase orders. In January 2020, BNI moved for summary judgment, arguing RTS's breach-of-contract claim failed and the action should be dismissed because the two purchase orders at issue had also incorporated BNI's standard "Terms and Conditions," which allowed for the cancellation.

[¶8] In support of summary judgment, BNI argued that this incorporated provision allowed for BNI's unilateral cancellation and that RTS assented to the terms by not reading the purchase orders or the incorporated Terms and Conditions and by performing and accepting payment under those purchase orders. BNI also argued, alternatively, that no contract existed for want of "mutual assent" and that RTS had no equitable claim because BNI had paid for all services performed. RTS opposed BNI's summary judgment motion.

[¶9] In August 2020, the district court held a hearing on BNI's motion. The court granted summary judgment in favor of BNI and dismissed RTS's action with prejudice. Although the defendant BNI had made alternative arguments in support of its summary judgment motion, the district court in its September 2020 order granting summary judgment only stated: "For the reasons stated in Plaintiff's [sic] brief in support of its motion for summary judgment; IT IS HEREBY ORDERED that Defendant's motion for summary judgment be GRANTED."

[¶10] In October 2020, the district court granted BNI's unopposed motion under N.D.R.Civ.P. 60(a) to correct the court's prior order granting summary judgment in favor of defendant BNI to state: "For the reasons stated in Defendant's brief in support of its motion for summary judgment." The court subsequently entered an order for dismissal with prejudice, and judgment was entered.

II

[¶11] This Court's standard for reviewing a district court's summary judgment decision is well established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

G&D Enters. v. Liebelt , 2020 ND 213, ¶ 5, 949 N.W.2d 853 (quoting Ceynar v. Barth , 2017 ND 286, ¶ 10, 904 N.W.2d 469 ). This Court has also explained that "[i]ssues of fact may become issues of law if reasonable persons could reach only one conclusion from the facts." Bjerk v. Anderson , 2018 ND 124, ¶ 10, 911 N.W.2d 343 (quoting APM, LLLP v. TCI Ins. Agency, Inc. , 2016 ND 66, ¶ 8, 877 N.W.2d 34 ).

III

[¶12] RTS argues that the district court erred by entering summary judgment dismissing its complaint for breach of contract. The dispositive issue is whether BNI's separate "Terms and Conditions" were incorporated by reference into the March 2015 and July 2015 purchase orders.

[¶13] Generally, the interpretation of a written contract to decide its legal intent presents a question of law, fully reviewable on appeal. 26th Street Hospitality, LLP v. Real Builders, Inc. , 2016 ND 95, ¶ 11, 879 N.W.2d 437.

Contracts are construed to give effect to the mutual intention of the parties at the time of contracting. N.D.C.C. § 9-07-03 ; Lire, [Inc. v. Bob's Pizza Inn Restaurants, Inc. , 541 N.W.2d 432, 433–34 (N.D. 1995) ]. The parties’ intention must be ascertained from the writing alone, if possible. N.D.C.C. § 9-07-04 ; Lire , at 434. A contract must be construed as a whole to give effect to each provision if reasonably practicable. N.D.C.C. § 9-07-06 ; Lire , at 434.... Words in a contract are construed in their ordinary and popular sense, unless used by the parties in a technical sense or given a special meaning by the parties. N.D.C.C. § 9-07-09. If the parties’ intention in a written contract can be ascertained from the writing alone, the interpretation of the contract is a question of law for the court to decide. Ohio Farmers Ins. Co. v. Dakota Agency, Inc. , 551 N.W.2d 564, 565 (N.D. 1996).

26th Street Hospitality , at ¶ 11 (quoting State ex rel. Stenehjem v. Philip Morris, Inc. , 2007 ND 90, ¶ 14, 732 N.W.2d 720 ). Additionally, "[s]everal contracts relating to the same matters between the same parties and made as parts of substantially one transaction are to be taken together." N.D.C.C. § 9-07-07.

[¶14] The parties on appeal acknowledge that this Court has previously recognized the validity of contracts that incorporated terms by reference in some circumstances. See Limberg v. Sanford Med. Ctr. Fargo , 2016 ND 140, ¶ 12, 881 N.W.2d 658. One noted treatise has explained the interpretation of several connected writings:

As long as the contract makes clear reference to the document and describes it in such terms that its identity may be ascertained beyond doubt, the parties to a contract may incorporate contractual terms by reference to a separate, noncontemporaneous document, including a separate agreement to which they are not parties, and including a separate document which is unsigned. It is not necessary to refer to or incorporate the entire document; if the parties so desire, they may incorporate a portion of the document. However, incorporation by reference is ineffective to accomplish its intended purpose when the provisions to which reference is made do not have a reasonably clear and ascertainable meaning. Additionally, in order to uphold the validity of terms

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