Pacific Ag Group v. H. Ghesquiere Farms, Inc. , 420 F. App'x 278 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1993
PACIFIC AG GROUP; ALLIANCE FARM GROUP, INCORPORATED,
Plaintiffs - Appellees,
v.
H. GHESQUIERE FARMS, INCORPORATED; GHESQUIERE PLANT FARMS
LIMITED; STRAWBERRY HILL, INCORPORATED,
Defendants - Appellants.
Appeal from the United States District Court for the Eastern
District of North Carolina, at New Bern. Louise W. Flanagan,
Chief District Judge. (5:05-cv-00809-FL)
Submitted: January 13, 2011 Decided: March 29, 2011
Before WILKINSON, DUNCAN, and AGEE, Circuit Judges.
Reversed by unpublished per curiam opinion.
John R. Wallace, Joseph A. Newsome, WALLACE, NORDAN & SARDA,
L.L.P., Raleigh, North Carolina, for Appellants. Paige C.
Kurtz, SPROUSE & KURTZ, PLLC, Raleigh, North Carolina, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
H. Ghesquiere Farms, Inc. (“Ghesquiere Farms”) appeals
the district court’s judgment finding it liable to Pacific Ag
Group (“Pacific Ag”) for $190,600 in damages (plus interest)
stemming from a contract dispute between the parties. For the
reasons that follow, we reverse. *
In 2003, Pacific Ag purchased a quantity of strawberry
runner tips (infant strawberry plants) from Ghesquiere Farms.
Pacific Ag contended that the runner tips were sub-standard and
infected with a disease that made them unusable and did not
tender payment. Ultimately, Ghesquiere Farms sued Pacific Ag in
North Carolina state court, and the action was removed to the
district court. See Strawberry Hill, Inc. v. Alliance Farm
Group, Inc., No. 5:03-cv-795-FL (E.D.N.C.).
As the federal litigation was pending, Frank Sances,
Pacific Ag’s principal, met with Carl Ghesquiere, Ghesquiere
Farm’s principal, to discuss settling the litigation.
Ghesquiere became aware that Pacific Ag had been late planting
their fields that season, and saw an opportunity to immediately
*
On December 20, 2010, Ghesquiere Plant Farms Limited filed
a “Suggestion of Bankruptcy” notifying the court and the
opposing parties that it had filed for bankruptcy in a Canadian
court. No party has suggested or argued that the bankruptcy
filing prevents this court from issuing its decision in this
case.
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supply young strawberry plants to Pacific Ag. At the end of
their meeting, Sances and Ghesquiere (without the assistance of
counsel) drafted and executed a settlement agreement that
ultimately became the subject of the instant appeal.
The agreement provided that Ghesquiere Farms would
provide 500,000 strawberry runner tips to Pacific Ag free of
charge before July 26, 2004. The agreement also required
Ghesquiere Farms to sell additional, high quality strawberry
runner tips at a discounted rate to Pacific Ag in 2004, 2005,
and 2006. The agreement provided for dismissal of the
litigation “following successful performance by Ghesquiere
Farms[.]” Paragraph 8 of the settlement agreement contained a
provision that “[i]f Ghesquiere Plant Farms ceases growing
strawberry runner tips for [Pacific Ag], the full amount of
promised discounts will be paid by Ghesquiere to [Pacific Ag].”
The parties (now assisted by counsel) later entered an addendum
to the settlement agreement providing for more gifting of plants
in 2005 and facilitating the dismissal of the previous
litigation.
In late 2004, Sances and Ghesquiere began negotiations
for the purchase of strawberry runner tips for 2005. Sances
claims that he repeatedly informed Ghesquiere that he might not
have any orders for 2005 based on the market and the quality of
Ghesquiere’s plants in 2003 and 2004. Sances ultimately did
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make two identical written offers to purchase runner tips
consistent with the agreement. Ghesquiere never accepted the
offers, however, as he and Sances continued to disagree on the
amount of the discount to be provided, whether payment was due
in advance, and whether inspection would occur before shipping
or after delivery.
When Sances and Ghesquiere were unable to reach an
agreement for the purchase of runner tips in 2005, Sances
informed Ghesquiere that he had no purchases from his customers
and would be doing no business with Ghesquiere Farms for the
2005 season. Sances later confirmed in writing that Pacific Ag
would not purchase any plants from Ghesquiere Farms. In a June
2005 memorandum, Sances informed Ghesquiere that “the full
amount of the discount is due” as a repayment for the damages
suffered from the sale of defective Ghesquiere Farms plants in
2003.
Ghesquiere Farms failed to tender payment in response
to Sances’s communication, and Pacific Ag brought a complaint
against Ghesquiere Farms in district court. The complaint
sought damages resulting from Ghesquiere Farms’s alleged failure
to perform on the settlement agreement by providing discounted
runner tips to Pacific Ag. After a bench trial, the district
court ruled in favor of Pacific Ag and awarded $190,600 in
damages (plus interest). The court based its ruling primarily
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on the conclusions that the term “ceases” in the settlement
agreement was ambiguous and that when the parties were unable to
reach an agreement for the purchase of runner tips in 2005,
Ghesquiere Farms “ceased” growing strawberry plants for Pacific
Ag. When Ghesquiere Farms did not pay the amount of the
discount, the district court ruled that it breached the
agreement. Ghesquiere Farms noted a timely appeal.
This court reviews a district court’s conclusions of
law at the bench trial de novo and its factual findings for
clear error. Roanoke Cement Co. v. Falk Corp., 413 F.3d 431,
433 (4th Cir. 2005). Ghesquiere Farms argues that the term
“ceases” is unambiguous and should not be read to impose
liability on them when Pacific Ag failed to place an order for
runner tips. Pacific Ag, on the other hand, claims that the
language is subject to more than one reasonable interpretation
when viewed in the context of the agreement as a whole. Pacific
Ag further contends that analysis of extrinsic evidence reveals
that the parties intended for Pacific Ag to be able to elect
either to purchase runner tips at a discount or take the value
of the discount in cash.
The parties agree that North Carolina’s law of
contracts applies to their claims. “When the language of a
written contract is plain and unambiguous, the contract must be
interpreted as written and the parties are bound by its terms.”
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Atlantic & E. Carolina Ry. Co. v. Wheatley Oil Co., 594 S.E.2d
425, 429 (N.C. Ct. App. 2004). An ambiguity exists in a
contract when either the meaning of words or the effect of
provisions is uncertain or capable of several reasonable
interpretations. Schnkel & Schultz, Inc. v. Hermon F. Fox &
Assocs., 658 S.E.2d 918, 922 (N.C. 2008) (citations omitted).
In determining whether a phrase is ambiguous, “words are to be
given their usual and ordinary meaning and all the terms of the
agreement are to be reconciled if possible[.]” Piedmont Bank and
Trust Co. v. Stevenson, 339 S.E.2d 49, 52 (N.C. Ct. App. 1986).
A court may not, “in the guise of construing an ambiguous term,
rewrite the contract or impose liabilities on the parties not
bargained for and found therein.” Dawes v. Nash Cnty., 584
S.E.2d 760, 764 (N.C. 2003) (internal citation omitted).
The district court stated that “[a] reading of the
2004 [s]ettlement [a]greement which binds plaintiffs to trade in
strawberry runner tips in order to be compensated for losses
sustained as a result of purchase of tips from defendants in
2003, in the face of the facts of this case, is nonsensical.”
We do not agree. As the court itself noted, the predominant
purpose of the agreement was to facilitate the continuing
business relationship between the parties, not merely to settle
past debts.
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Our review of the agreement leads us to conclude that
the reading proposed by Pacific Ag is not a reasonable one and
accordingly, the term “ceases” is not ambiguous. “Ceases” in
the context of the settlement agreement, means just that. There
is no indication in the agreement that the parties intended to
give Pacific Ag an election to seek either to trade with
Ghesquiere Farms or to demand a monetary award. If that were
the case, Pacific Ag would have had no incentive to purchase
runner tips from Ghesquiere Farms and every incentive to simply
elect the cash option. Rather, the agreement clearly
contemplated a continuing business relationship between
Ghesquiere Farms and Pacific Ag unless Ghesquiere Farms stopped
(i.e., ceased) growing runner tips.
Because we conclude that the agreement was not
ambiguous, we need not review the extrinsic evidence contained
in the record. Furthermore, we need not address the district
court’s conclusion that parol evidence shows that the parties
intended a different outcome. Finally, though Ghesquiere Farms
did file a counterclaim against Pacific Ag that was dismissed by
the district court, it has not sought to appeal that issue, and
it is abandoned.
We therefore reverse the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
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before the court and argument would not aid the decisional
process.
REVERSED
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