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

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www.nebraska.gov/apps-courts-epub/
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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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
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
300 Nebraska R eports
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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 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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Nebraska Supreme Court A dvance Sheets
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RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
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.
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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
[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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Nebraska Supreme Court A dvance Sheets
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RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 300 Neb. 434
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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 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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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 300 Neb. 434
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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Nebraska Supreme Court A dvance Sheets
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RAY ANDERSON, INC. v. BUCK’S, INC.
Cite as 300 Neb. 434
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.