Ray Anderson, Inc. v. Buck's, Inc. , 300 Neb. 434 ( 2018 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    09/07/2018 08:10 AM CDT
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    Nebraska Supreme Court A dvance Sheets
    300 Nebraska R eports
    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    R ay A nderson, Inc., a Nebraska corporation,
    appellee and cross-appellant, v. Buck’s, I nc.,
    a Nebraska corporation, appellant
    and cross-appellee.
    ___ N.W.2d ___
    Filed July 6, 2018.     No. S-17-816.
    1.	 Summary Judgment: Appeal and Error. 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.
    2.	 ____: ____. 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.
    3.	 Declaratory Judgments: Appeal and Error. 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.
    4.	 Contracts. The meaning of a contract and whether a contract is ambigu-
    ous are questions of law.
    5.	 ____. In interpreting a contract, a court must first determine, as a matter
    of law, whether the contract is ambiguous.
    6.	 Contracts: Words and Phrases. 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.
    7.	 Contracts. The meaning of an ambiguous contract is generally a ques-
    tion of fact.
    8.	 ____. A contract written in clear and unambiguous language is not sub-
    ject to interpretation or construction and must be enforced according to
    its terms.
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    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    9.	 ____. The court must accord clear terms their plain and ordinary mean-
    ing as an ordinary or reasonable person would understand them.
    10.	 ____. The fact that the parties have suggested opposite meanings of a
    disputed instrument does not necessarily compel the conclusion that the
    instrument is ambiguous.
    11.	 ____. A court is not free to rewrite a contract or to speculate as to terms
    of the contract which the parties have not seen fit to include.
    12.	 ____. Extrinsic evidence is not permitted to explain the terms of a con-
    tract that is unambiguous.
    13.	 ____. Instruments made in reference to and as part of the same transac-
    tion are to be considered and construed together.
    14.	 Appeal and Error. An appellate court is not obligated to engage in an
    analysis that is not necessary to adjudicate the case and controversy
    before it.
    Appeal from the District Court for Douglas County: Gary B.
    R andall, Judge. Affirmed.
    Stephen M. Kalhorn, Benjamin W. Hulse, of Blackwell
    Burke, P.A., and John P. Passarelli, of Kutak Rock, L.L.P., for
    appellant.
    Aaron F. Smeall and Jacob A. Acers, of Smith, Slusky,
    Pohren & Rogers, L.L.P., for appellee.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, and
    Papik, JJ., and Daugherty, District Judge.
    Daugherty, District Judge.
    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 con-
    tracting 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 con-
    clusion. Therefore, we affirm.
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    Nebraska Supreme Court A dvance Sheets
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    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    BACKGROUND
    Parties and Governing Contracts
    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, includ-
    ing 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 agree-
    ments. 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 incor-
    porated 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:
    Buck’s . . . and . . . Anderson executed [the] Agreement
    ....
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    RAY ANDERSON, INC. v. BUCK’S, INC.
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    300 Neb. 434
    It has been brought to our attention that you may be
    contemplating the breach of [the] Agreement by entering
    into a like contract with other suppliers.
    ....
    . . . Paragraph 20(b) of the Agreement imposes upon
    you an affirmative duty to avoid entering into an agree-
    ment with other suppliers, which would breach [the]
    Agreement.
    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.
    District Court Proceedings
    Anderson’s complaint requested the court to declare, pursu-
    ant 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 rebrand-
    ing some of its facilities; and to determine that if Anderson
    sought to terminate the Agreement, it could do so upon reason-
    able 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 affirm­
    ative 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
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    RAY ANDERSON, INC. v. BUCK’S, INC.
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    300 Neb. 434
    of the Agreement and requested declaratory relief, injunctive
    relief, and monetary damages.
    Both parties moved for summary judgment on their declara-
    tory 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 provi-
    sions 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 obli-
    gate [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 sec-
    tion 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 pro-
    vides 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
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    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    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.
    ASSIGNMENTS OF ERROR
    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 com-
    mence buying Shell Oil Company-branded fuel from a third-
    party suppler, 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 ambigui-
    ties 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.
    STANDARD OF REVIEW
    [1,2] 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
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    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    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
    [3,4] In an appeal from a declaratory judgment, an appel-
    late 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
    ANALYSIS
    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.
    [5-7] In interpreting a contract, a court must first determine,
    as a matter of law, whether the contract is ambiguous.5 A con-
    tract 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
    1
    Walters v. Colford, 
    297 Neb. 302
    , 
    900 N.W.2d 183
    (2017).
    2
    Id.
    3
    State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 
    268 Neb. 439
    , 
    684 N.W.2d 14
    (2004).
    4
    Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist., 
    291 Neb. 642
    , 
    868 N.W.2d 67
    (2015).
    5
    Id.
    6
    Id.
    7
    
    Id. - 441
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    Nebraska Supreme Court A dvance Sheets
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    RAY ANDERSON, INC. v. BUCK’S, INC.
    Cite as 
    300 Neb. 434
    [8-12] A contract written in clear and unambiguous lan-
    guage 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 that
    the parties have suggested opposite meanings of a disputed
    instrument does not necessarily compel the conclusion that
    the instrument is ambiguous.10 A court is not free to rewrite
    a contract or to speculate as to terms of the contract which
    the parties have not seen fit to include.11 Extrinsic evidence
    is not permitted to explain the terms of a contract that is
    unambiguous.12
    Buck’s A ppeal
    The issue in the appeal filed by Buck’s is whether the
    Agreement imposes an affirmative duty upon Anderson not
    to rebrand. We conclude, as a matter of law, that the terms
    of the Agreement and the EDDP are unambiguous and do not
    prevent Anderson from rebranding. As a result, the court did
    not err when it denied the motion for summary judgment filed
    by Buck’s.
    Buck’s asserts that numerous provisions in the Agreement
    preclude Anderson from rebranding. Buck’s points to sections
    6, 19, 20, and 36 of the Agreement and contends that these
    provisions require Anderson to sell BP-branded fuel purchased
    from Buck’s and thus prohibit rebranding. Anderson, for its
    8
    Frohberg Elec. Co. v. Grossenburg Implement, 
    297 Neb. 356
    , 
    900 N.W.2d 32
    (2017).
    9
    Kasel v. Union Pacific RR. Co., 
    291 Neb. 226
    , 
    865 N.W.2d 734
    (2015).
    10
    Id.; Sack Bros. v. Tri-Valley Co-op., 
    260 Neb. 312
    , 
    616 N.W.2d 786
          (2000).
    11
    Bedore v. Ranch Oil Co., 
    282 Neb. 553
    , 
    805 N.W.2d 68
    (2011); Gary’s
    Implement v. Bridgeport Tractor Parts, 
    270 Neb. 286
    , 
    702 N.W.2d 355
          (2005).
    12
    In re Claims Against Pierce Elevator, 
    291 Neb. 798
    , 
    868 N.W.2d 781
          (2015).
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    part, makes counterarguments that those same terms of the
    Agreement do not prohibit it from selling fuel purchased from
    another source.
    [13] Our inquiry as to the parties’ agreement concerning
    rebranding, however, is not limited to the Agreement. The
    parties also entered into the EDDP on the same day as the
    Agreement. We consider and construe together instruments
    made in reference to and as part of the same transaction.13 It
    is particularly clear that the Agreement and the EDDP must
    be construed together, because the agreements are related
    and are part of one transaction. The parties agreed that they
    are actually part of the same agreement: The first line of the
    EDDP states that it is “attached to and made a part of [the
    Agreement] dated [July 30, 2007,] between [Buck’s] and
    [Anderson].”
    The EDDP directly speaks to rebranding. Section 12 of the
    EDDP, titled “Independent Business,” provides that “[n]oth­
    ing herein shall obligate [Buck’s] to sell or [Anderson] to
    purchase products, nor preclude [Anderson] from selling
    ­competitive-brand products . . . .” Buck’s is forced to con-
    cede that section 12 pertains to rebranding, but it contends
    that the word “herein” limits the scope of that language.
    According to Buck’s, “‘herein’” must be understood as mean-
    ing “‘in this’”14 and thus section 12 of the EDDP should be
    understood as governing the EDDP alone. Buck’s argues the
    EDDP merely concerns fuel delivery and does not alter terms
    within the Agreement which preclude Anderson from selling
    ­competitive-brand products. We are not persuaded.
    The attempt by Buck’s to limit the scope of section 12 via
    the word “herein” fails because the parties explicitly made
    the EDDP part of the Agreement. Accordingly, the word
    “herein” must refer to both the Agreement and the EDDP.
    13
    McCord & Burns Law Firm v. Piuze, 
    276 Neb. 163
    , 
    752 N.W.2d 580
          (2008).
    14
    Brief for appellant at 14.
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    RAY ANDERSON, INC. v. BUCK’S, INC.
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    300 Neb. 434
    Because the Agreement and the EDDP together constitute
    one agreement, it is difficult to see what purpose section 12
    of the EDDP would serve under the interpretation provided
    by Buck’s.
    Having concluded that section 12 of the EDDP applies to
    both the Agreement and the EDDP, this case becomes consid-
    erably easier to resolve. Section 12 makes clear that there is
    nothing in the Agreement (or EDDP) that precludes Anderson
    from rebranding. And while we have not forgotten the various
    arguments Buck’s premised on sections 6, 19, 20, and 36 of
    the Agreement, those arguments lose all of their force in light
    of the clear language permitting Anderson to rebrand in sec-
    tion 12 of the EDDP.
    The most Buck’s could accomplish with its arguments
    based on the terms of the Agreement would be to show a con-
    flict between the Agreement and the EDDP. But that would
    not be enough, because section 10 of the EDDP directly
    speaks to that possibility. It provides that to the extent there
    is any conflict between the terms of the Agreement and
    the terms of the EDDP, the EDDP’s terms shall control.
    Accordingly, there is no way Buck’s can show that there is
    contractual ambiguity as to whether Anderson may rebrand, let
    alone show that the parties’ agreements unambiguously pro­
    hibit rebranding.
    [14] Because the unambiguous terms of the parties’ agree-
    ments permit rebranding, we find that the district court cor-
    rectly denied the motion for summary judgment filed by
    Buck’s. Because we find that the terms of the Agreement and
    the EDDP are unambiguous, we need not address the final
    assignment of error of Buck’s that the court erred by not
    resolving contractual ambiguities through a trial. An appellate
    court is not obligated to engage in an analysis that is not neces-
    sary to adjudicate the case and controversy before it.15
    15
    Woodmen of the World v. Nebraska Dept. of Rev., 
    299 Neb. 43
    , 
    907 N.W.2d 1
    (2018).
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    RAY ANDERSON, INC. v. BUCK’S, INC.
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    A nderson’s Cross-A ppeal
    The issue in Anderson’s cross-appeal is whether the
    Agreement affords Anderson a right of termination. We con-
    clude, as a matter of law, that the terms of the Agreement are
    unambiguous and afford Anderson no right of termination. As
    a result, the court did not err when it denied that aspect of
    Anderson’s motion for summary judgment.
    Anderson acknowledges the Agreement grants Buck’s the
    sole authority to terminate and is silent regarding any right of
    termination held by Anderson, and Anderson does not chal-
    lenge the enforceability of a unilateral right to terminate a
    contract under Nebraska law. Anderson is concerned, however,
    that the Agreement is for an indefinite period and may no
    longer be “commercially reasonable,”16 especially where the
    Agreement does not obligate Anderson to buy BP-branded fuel
    exclusively from Buck’s. Anderson argues this court should fill
    the gap under Nebraska’s Uniform Commercial Code, specifi-
    cally Neb. U.C.C. § 2-309(2) and (3) (Reissue 2001), in order
    to grant Anderson both an uncontracted-for right of termination
    and to provide that such right of termination is effective upon
    reasonable notice. This we will not do.
    Sections 19 and 20 of the Agreement contemplate that the
    power to terminate is held by only Buck’s, and there are no
    similar provisions in the Agreement or the EDDP providing
    such a right to Anderson. Section 36 provides that even in
    a situation such as this case, where Anderson has elected to
    rebrand, Anderson would not have the power to terminate and
    the Agreement “shall remain in effect.”
    Section 2-309(2) of the Uniform Commercial Code states,
    “Where the contract provides for successive performances
    but is indefinite in duration it is valid for a reasonable time
    but unless otherwise agreed may be terminated at any time
    by either party.” Buck’s argues that § 2-309(2) does not
    apply, because the parties “otherwise agreed” that Buck’s
    16
    Brief for appellee on cross-appeal at 22.
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    has the sole power to terminate. The district court found that
    “[§] 2-309(2) . . . cannot be used to contradict the express
    provisions of the Agreement.” We agree with Buck’s and the
    district court, and we find Buck’s has the sole right to termi-
    nate the Agreement. We therefore affirm the judgment of the
    district court.
    CONCLUSION
    We determine the district court did not err when it deter-
    mined that the Agreement and the EDDP do not prohibit
    Anderson from rebranding fuel sold at some of its stations and
    that Buck’s holds the sole right to terminate the Agreement.
    For the reasons explained above, we affirm.
    A ffirmed.