Starry Const. Co., Inc. v. Murphy Oil USA, Inc., Civ. No. 4-90-767.

• Decision Date: 27 February 1992
• Docket Number: Civ. No. 4-90-767.
• Parties: STARRY CONSTRUCTION CO., INC., a Minnesota corporation, Plaintiff, v. MURPHY OIL USA, INC., a foreign corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

785 F. Supp. 1356

STARRY CONSTRUCTION CO., INC., a Minnesota corporation, Plaintiff, v. MURPHY OIL USA, INC., a foreign corporation, Defendant.

Civ. No. 4-90-767.

United States District Court, D. Minnesota, Fourth Division.

February 27, 1992.

COPYRIGHT MATERIAL OMITTED

Kyle E. Hart, Marvin T. Fabyanske, Fabyanske, Svoboda, Westra & Davis, St. Paul, Minn., for plaintiff.

Lawrence T. Hofmann, Terese S. Wallschlaeger, Zelle & Larson, Minneapolis, Minn., David L. Doyle, Joseph A. Strubbe, Pope & John, Chicago, Ill., for defendant.

ORDER

MacLAUGHLIN, District Judge.

This matter is before the Court on defendant's motion for summary judgment and on plaintiff's motion for summary judgment as to defendant's commercial impracticability defense. Defendant's motion will be granted.

FACTS

This case, arising in the context of the highway construction industry, involves the purported modification to a contract for the sale of asphalt cement oil. Plaintiff Starry Construction Co. (Starry) is a general contractor engaged in the business of asphalt road construction. Defendant Murphy Oil USA, Inc. (Murphy) is a supplier of asphalt cement oil, one of the materials required for installing asphalt pavement.

In March 1990, Robert Billingsley, one of Murphy's sales managers, orally agreed to sell Starry 20,000 tons of asphalt cement oil for $90 per ton, excluding taxes. Aff. of Steven Minnerath ¶ 8. Murphy sent Steven Minnerath, Starry's president, a sales acknowledgment form dated April 12, 1990. See Pl.'s Mem. in Opp'n to Summ. J., Ex. A. That form by its terms confirms the quantity and price of Starry's order, but also contains in particular the following clauses:

Fire, flood, strikes, differences with workmen, accidents to plants or machinery, failure of or unusual conditions surrounding the usual source of supplies of material, or other causes beyond the control of either party shall be a sufficient excuse for any delay or failure upon the part of either party to perform this order, provided, however, that such party shall notify the other with reasonable promptness as to the existence of such cause.

If, by reason of any said causes, Murphy is unable to make deliveries to all its customers (whether under contract or not) its failure in whole or in part to make deliveries to purchaser, while delivering to others, shall not be a breach of this agreement and in such event Murphy may, but shall not be obligated to, prorate its available supply.

Pl.'s Mem. in Opp'n to Summ. J., Ex. A.

Starry acknowledges receiving the form, but neither signed nor returned it to Murphy. Minnerath Aff. ¶ 10. According to Minnerath, the form included additional terms that were not a part of the oral agreement. Instead, Minnerath proceeded to bid work for Starry, allegedly under the assumption that Starry and Murphy had a valid oral contract which was limited to the terms specifically agreed upon. Id.

Toward the end of April, Minnerath determined that Starry would need more oil. He contacted Billingsley and requested an additional 5,000 tons. Billingsley said that he would "check on it" and inform Starry in a day or so. Minnerath Aff. ¶ 4. Murphy did not contact Starry. Several days later, Minnerath called Billingsley, who allegedly indicated that Murphy would sell the additional oil on the same terms and conditions as those initially agreed to. Minnerath Aff. ¶ 5. Although Starry allegedly obtained additional work based on the increased figures, see Minnerath Aff. ¶ 11; Pl.'s Mem. in Opp'n to Summ. J., Ex. B, Minnerath neglected to send a confirmatory memorandum of this oral modification. Pl.'s Mem. in Opp'n to Summ. J. at 6-7; Minnerath Aff. ¶ 15.

During the spring and summer of 1990, Minnerath periodically communicated with Billingsley regarding the delivery of asphalt cement oil. Minnerath Aff. ¶ 16. Minnerath allegedly told Billingsley that Starry had obtained enough work to use all of the asphalt cement oil, including the additional 5,000 tons, that Murphy had agreed to provide. Minnerath Aff. ¶ 16. Minnerath claims that Billingsley never contested the quantity under the contract in their discussions. Minnerath Aff. ¶ 16.

In August of 1990, Iraq invaded Kuwait. Members of the media reported that prices for all oil-based products were likely to rise substantially. During September 1990, approximately one month before the end of the 1990 paving season, Murphy began experiencing an unprecedented demand for asphalt cement oil. Def.'s Mem. in Opp'n to Summ. J., Ex. B at 14. (Dep. of Maurice Peel). Essentially, Murphy's customers began requesting the full amount of oil under their contracts after the War in the Persian Gulf began, while historically they requested only ninety to ninety-five percent of those amounts. Peel Dep. at 14, 21-22, 32-33, 88.

Tom O'Brien, Starry's comptroller, became concerned that Murphy would not supply the additional oil. He asked Minnerath to call Billingsley and obtain a written confirmation of the modification. Minnerath Aff. ¶ 17. Minnerath did so. Billingsley allegedly responded, "Don't worry about it. I'll take care of you. I've never cheated you in the past. You are a good customer, and I treat our good customers right." Minnerath Aff. ¶ 18.

Later, Minnerath learned that Murphy was promoting Robert Billingsley and would be replacing him with Michael Palmgren. Minnerath allegedly called Billingsley once again and suggested the need to let his successor know about the agreement for 25,000 tons. Minnerath Aff. ¶ 19. Minnerath claims that Billingsley told him that he would leave a note on Palmgren's desk. Although Minnerath claims that after replacing Billingsley Palmgren acknowledged that he had seen such a note, see Minnerath Aff. ¶ 22, Palmgren does not remember one. See Dep. of Michael Palmgren at 80.

In September 1990, Palmgren informed Starry that because of an oil crisis Murphy would be forced to allocate its supply. Consequently, Starry would not be receiving the additional 5,000 tons of oil, although Murphy did eventually supply an additional 107 tons. Minnerath Aff. ¶ 24. Believing that Murphy would inevitably provide the full 5,000 tons requested, Starry did not approach other suppliers to cover the shortfall until September 24, 1990. At that time Starry agreed to purchase 1,000 tons of oil from Richards Asphalt Company for $117 per ton. See Pl.'s Mem. in Opp'n to Summ. J., Ex. D. In addition, Starry agreed to purchase another 3,000 tons from the Ashland Petroleum Company at $130 per ton on September 30, 1990. See Pl.'s Mem. in Opp'n to Summ. J., Ex. D.

On October 5, 1990, Minnerath, on advice of counsel, see Def.'s Reply, Ex. A at 119-20 (Dep. of Steven Minnerath), sent Palmgren a letter. Pl.'s Mem. in Opp'n to Summ. J., Ex. E. That letter contains the following paragraph:

When we met on September 27, 1990, you indicated that you would get back to us with some kind of a schedule of the amount and timing for the ... asphalt cement oil you would give us so that we could, in turn, schedule our hot mix plants and make arrangements to purchase oil elsewhere if you would not supply us with the 25,000 ton called for by our Agreement.

Id. The letter further provides:

We now understand that you intend to provide us with approximately 54 ton of oil per day, but won't guarantee its availability.

Id.

Murphy now denies that the agreement was ever modified to include an additional 5,000 tons of oil. Starry commenced this action against Murphy and asserted claims for breach of contract, equitable estoppel, promissory estoppel, and negligent misrepresentation. Murphy answered, alleging as its fourth affirmative defense that performance of the contract was commercially impracticable. Answer at 2. Murphy now moves the Court for summary judgment and Starry moves for summary judgment as to Murphy's commercial impracticability defense.

DISCUSSION

A movant is not entitled to summary judgment unless the movant can show that no genuine issue exists as to any material fact. Fed.R.Civ.P. 56(c). In considering a summary judgment motion, a court must determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The role of the court is not to weigh the evidence but instead to determine whether, as a matter of law, a genuine factual conflict exists. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir.1987). "In making this determination, the court is required to view the evidence in the light most favorable to the nonmoving party and to give that party the benefit of all reasonable inferences to be drawn from the facts." AgriStor Leasing, 826 F.2d at 734. When a motion for summary judgment is properly made and supported with affidavits or other evidence as provided in Fed.R.Civ.P. 56(c), then the nonmoving party may not merely rest upon the allegations or denials of the party's pleading, but must set forth specific facts, by affidavits or otherwise, showing that there is a genuine issue for trial. Lomar Wholesale Grocery, Inc. v. Dieter's Gourmet Foods, Inc., 824 F.2d 582, 585 (8th Cir.1987), cert. denied, 484 U.S. 1010, 108 S.Ct. 707, 98 L.Ed.2d 658 (1988). Moreover, summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

I. Murphy's Motion for Summary Judgment

Murphy moves for summary judgment on all four counts of Starry's second amended complaint. As noted above, the second amended complaint asserts four separate claims: 1) modification of an oral agreement; 2) promissory estoppel; 3) equitable estoppel; and 4) negligent...