Acklie v. Greater Omaha Packing Co.

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
09/04/2020 09:10 AM CDT
- 108 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
Allen D. Acklie, appellant, v.
Greater Omaha Packing Co., Inc.,
a Nebraska corporation,
appellee.
___ N.W.2d ___
Filed June 12, 2020. No. S-18-1128.
1. Contracts: Appeal and Error. The construction of a contract is a mat-
ter of law, in connection with which an appellate court has an obligation
to reach an independent, correct conclusion irrespective of the determi-
nations made by the court below.
2. Jury Instructions: Appeal and Error. Whether jury instructions are
correct is a question of law, which an appellate court resolves indepen-
dently of the lower court’s decision.
3. Contracts. In interpreting a contract, a court must first determine, as a
matter of law, whether the contract is ambiguous.
4. ____. A contract written in clear and unambiguous language is not sub-
ject to interpretation or construction and must be enforced according to
its terms.
5. ____. 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.
6. ____. The determination of whether a contract is ambiguous is to be
made on an objective basis, not by the subjective contentions of the par-
ties suggesting opposing meanings of the disputed language.
7. ____. A contract must receive a reasonable construction and must be
construed as a whole, and if possible, effect must be given to every part
of the contract.
8. Contracts: Proof. A party seeking to enforce a contract has the burden
of establishing the existence of a valid, legally enforceable contract.
9. Contracts. To create a contract, there must be both an offer and an
acceptance; there must also be a meeting of the minds or a binding
mutual understanding between the parties to the contract.
- 109 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
10. ____. It is a fundamental rule that in order to be binding, an agreement
must be definite and certain as to the terms and requirements. It must
identify the subject matter and spell out the essential commitments and
agreements with respect thereto.
11. ____. Generally, mutuality of obligation is an essential element of every
enforceable contract and consists in the obligation on each party to do,
or permit something to be done, in consideration of the act or promise
of the other. Mutuality is absent when only one of the contracting parties
is bound to perform, and the rights of the parties exist at the option of
one only.
12. ____. An agreement which depends upon the wish, will, or pleasure
of one of the parties is illusory and does not constitute an enforce-
able promise.
Appeal from the District Court for Douglas County: Leigh
Ann Retelsdorf, Judge. Affirmed.
Ari D. Riekes and Steven J. Riekes, of Marks, Clare &
Richards, L.L.C., for appellant.
Michael F. Coyle, Robert W. Futhey, and Brian J. Fahey, of
Fraser Stryker, P.C., L.L.O., for appellee.
Heavican, C.J., Miller‑Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Funke, J.
Allen D. Acklie brought this breach of contract action
against Greater Omaha Packing Co., Inc. (Greater Omaha).
The matter was tried, and the jury returned a verdict in favor
of Greater Omaha. Acklie appeals, arguing that errors by the
district court necessitate a new trial. Because we determine
that Acklie’s action is based on an unenforceable contract, we
affirm the judgment.
BACKGROUND
Acklie began working for Greater Omaha as a corporate
controller in 1986. Acklie was part of Greater Omaha’s senior
management team and was responsible for supervising the cor-
poration’s financial accounts and managing office staff.
- 110 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
In 1989, the parties purported to enter into a deferred com-
pensation agreement (the agreement). The agreement provides
that in addition to a monthly salary, the company shall pay
Acklie deferred compensation. The agreement further pro-
vides that Greater Omaha would establish a general ledger
account and that the account would be funded at the discre-
tion of Greater Omaha’s board of directors. The agreement
does not contemplate Acklie’s contributing any amount of his
salary to the deferred compensation account. Greater Omaha
entered into similar deferred compensation agreements with
other members of the senior management team.
In 1994, Greater Omaha terminated Acklie’s employment,
and in 2006, Acklie turned 60 years old. In 2011, Acklie
demanded payment from Greater Omaha under the terms of
the agreement. He contended that his right to deferred com-
pensation vested upon his attaining age 60 and that payment
became due on the first day of the first month following his
attaining age 61. The agreement’s vesting provision, paragraph
6, provides:
The Employee’s Deferred Compensation Account shall
be one hundred percent (100%) vested upon and after
the earlier of his completing ten (10) consecutive years
of service commencing the date first above written or his
attaining age Sixty (60), so long as he does not violate
[the agreement’s covenant not to compete provision], or
if he terminates as a result of death.
Greater Omaha refused payment. As a result, in May 2012,
Acklie filed this action against Greater Omaha in the dis-
trict court for Douglas County, asserting claims of breach of
contract and violation of the Nebraska Wage Payment and
Collection Act, see Neb. Rev. Stat. § 48-1228 et seq. (Reissue
2010, Cum. Supp. 2018 & Supp. 2019). Acklie alleged that
Greater Omaha breached the agreement by failing to pay him
the amounts due to him. Acklie alleged that at the time of his
firing in June 1994, the value of his interest in the account
was $18,574.92.
- 111 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
Greater Omaha moved to dismiss the complaint, argu-
ing that Acklie’s rights under the agreement had not vested,
because his employment with the company ended prior to his
turning age 60. The court overruled the motion to dismiss,
finding that the language of paragraph 6 is unambiguous and
does not require that Acklie be employed with Greater Omaha
at the time he turned 60 in order to become fully vested. The
court stated that paragraph 6 has no “language limiting the
receipt of the deferred compensation to employees who were
still employed when they turned the specified age, nor was
there a provision specifying that an employee is not entitled to
any pension not accrued prior to termination.” Greater Omaha
filed an answer.
Acklie then moved for summary judgment. The court
granted Acklie’s motion for summary judgment with respect
to Greater Omaha’s liability for breach of contract and viola-
tion of the Nebraska Wage Payment and Collection Act. The
court found that “the language vesting [Acklie’s] deferred
compensation is unambiguous,” that a valid and enforceable
contract exists between the parties, and that as a matter of
law, Acklie was entitled to an amount equal to the fair mar-
ket value of “the assets placed in the [account] as deferred
compensation to [Acklie].” The court found that based on
Acklie’s claim, pursuant to § 48-1231, he is entitled to costs
and attorney fees not less than 25 percent of the damages to
be determined at trial.
The court found genuine issues of material fact regarding
the amount of Acklie’s damages. Acklie claimed that under
the agreement, he is entitled to the fair market value of the
assets in his deferred compensation account as of October
1, 2007, the first day of the first month following his turn-
ing age 61. Evidence adduced at the hearing showed that
Greater Omaha established a single investment account for
deferred compensation for all eligible employees and used
the account to pay multiple employees pursuant to several
- 112 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
separate deferred compensation agreements. The court noted
that an account record in evidence, dated December 31, 1993,
lists contributions made in 1989 and 1990 for six employees,
including Acklie, as well as their salaries and percent of distri-
bution. The account record indicated that the total value of the
account was $97,170.16 and that Acklie’s share of distribution
was $18,574.92. In a letter dated December 31, 2015, Greater
Omaha stated that, as of September 2007, the fair market value
of the total assets in the account was $98,130.63. Because the
2007 valuation did not itemize the asset distribution for each
employee, there was no evidence of the value of Acklie’s
general ledger account and there was a triable issue of fact
regarding damages.
Prior to the trial on Acklie’s damages, the court conducted
a bench trial on Greater Omaha’s counterclaim for reforma-
tion based on mutual mistakes made in the agreement. Greater
Omaha asked that the court reform the agreement’s covenant
not to compete provision, which prohibits working in the
meatpacking business “within any of the restricted areas,” to
add a schedule specifying that the provision includes Omaha
and Douglas County, Nebraska. In addition, Greater Omaha
asked that the court reform the vesting provision to make
clear that an employee vests upon attaining age 60 only if the
employee is still working at the company. The court found that
Greater Omaha failed to prove that there was a mutual mistake
and dismissed its counterclaim.
At the trial on Acklie’s damages, prior to the opening of
evidence, the court and parties’ counsel discussed the scope
of trial. They recognized that in disposing of Greater Omaha’s
motion to dismiss and Acklie’s motion for summary judg-
ment, the court determined that under the unambiguous mean-
ing of paragraph 6, Acklie’s right had vested. Consequently,
Greater Omaha could not present evidence that Acklie had
not vested. However, the court considered how another provi-
sion of the agreement, paragraph 11, affected the evidence.
- 113 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
Paragraph 11, referred to by Greater Omaha as the “discretion-
ary provision,” 1 provides:
Company’s powers and liabilities. The Company shall
have full power and authority to interpret, and administer
[the] [a]greement. The Company’s interpretations and
construction of any provision or action taken under [the]
[a]greement, including any valuation of the Deferred
Compensation Account, or the amount of recipient of the
payment due under it, shall be binding and conclusive
on all persons for all purposes. No member of the Board
shall be liable to any person for any action taken or omit-
ted in connection with the interpretation and administra-
tion of [the] [a]greement unless attributable to the mem-
ber’s willful misconduct or lack of good faith.
The court found paragraph 11 to be ambiguous when con-
strued with other provisions within the agreement, such as
paragraph 4, which provides for the creation of a deferred
compensation account into which Greater Omaha may dis-
tribute funds, and paragraph 7, which establishes the terms of
the benefits to be paid as deferred compensation. In ruling on
Acklie’s motion for summary judgment, the court found that
pursuant to paragraph 7, Greater Omaha must pay Acklie the
fair market value of the assets in his deferred compensation
account as of the first day of the first month following his
attaining age 61. The court determined that because paragraph
11 conflicts with the terms of paragraphs 4 and 7, the meaning
of paragraph 11 is ambiguous and is therefore a question of
fact for the jury.
Greater Omaha argued that it should be permitted to present
evidence that paragraph 11 gave it the discretion to eliminate
deferred compensation for employees who left the company
prior to attaining age 60 or retiring, so long as the company
did not act in bad faith. The court agreed, stating that Greater
1
Brief for appellee at 1.
- 114 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
Omaha could suggest that Acklie is “entitled to zero, but you
can’t suggest he’s not entitled.” Acklie’s counsel stated that
the court’s ruling conflicted with its prior determination that
Acklie had vested. Acklie’s counsel argued that if paragraph
11 were interpreted to contradict payment terms of the agree-
ment, then the agreement would be unenforceable, but claimed
the agreement is enforceable due to the duty of good faith and
fair dealing. The court stated that the issue of vesting would
not be relitigated.
Trial evidence showed that Greater Omaha contributed
$50,083.23 to the account in 1989 and $26,000 in 1991.
Greater Omaha maintained the investments in the account,
but made no other contributions. Thereafter, Greater Omaha
switched to a 401K compensation plan. The parties stipu-
lated that on September 19, 2007, the account balance was
$98,130.67, and that as of July 2018, the account balance was
$195,274.32. Based on his calculation of the account’s rate of
growth between those two dates, Acklie testified that at the
time of trial, the value of his share was $119,336.86.
Greater Omaha’s president testified that on September
1, 1989, he held an office meeting with several employees,
including Acklie, and presented them with identical deferred
compensation agreements to sign and return. Greater Omaha’s
president testified that Acklie’s account was reduced to zero
because he left the company prior to vesting and that in addi-
tion to Acklie, the company had eliminated deferred compen-
sation for two other employees who left the company prior to
vesting. Greater Omaha’s president stated that under the agree-
ment, this was a matter of the company’s discretion.
At the jury instruction conference, Acklie lodged an objec-
tion to the court’s statement of the case and damages jury
instructions, but the court found no merit to Acklie’s proposed
instructions. The court instructed the jury that as a matter of
law, Acklie’s deferred compensation rights under the agree-
ment had vested. The court instructed the jury that “[v]esting
- 115 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
creates a contractual right that may be upheld by law. A vested
right is fixed, settled, absolute, and not contingent upon any-
thing.” The court instructed the jury that Acklie carried the
burden to prove (1) that Greater Omaha breached the agree-
ment by failing to pay Acklie the amount due under the agree-
ment, (2) that the breach of contract was a proximate cause
of some damage to Acklie, and (3) the nature and extent of
that damage. The court instructed the jury that “[i]f you find
in favor of Acklie on his claim for breach of contract, then
you must determine the amount of Acklie’s damages. Acklie is
entitled to recover the amount of money in the deferred com-
pensation account to which he was entitled . . . .”
The jury returned a verdict in favor of Greater Omaha.
The district court entered judgment on the verdict, and later
overruled Acklie’s motion for new trial. Acklie appealed. We
moved the appeal to our docket pursuant to our statutory
authority to regulate the caseloads of the appellate courts of
this state. 2
ASSIGNMENTS OF ERROR
Acklie assigns that the district court erred in (1) finding
ambiguity in the agreement, (2) refusing proposed jury instruc-
tions, and (3) giving confusing, conflicting jury instructions.
STANDARD OF REVIEW
[1,2] The construction of a contract is a matter of law, in
connection with which an appellate court has an obligation
to reach an independent, correct conclusion irrespective of
the determinations made by the court below. 3 Whether jury
instructions are correct is a question of law, which an appellate
court resolves independently of the lower court’s decision. 4
2
See Neb. Rev. Stat. § 24-1106 (Cum. Supp. 2018).
3
Johnson Lakes Dev. v. Central Neb. Pub. Power, 254 Neb. 418, 576
N.W.2d 806 (1998).
4
State v. Swindle, 300 Neb. 734, 915 N.W.2d 795 (2018).
- 116 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
ANALYSIS
Acklie argues that the district court erred in determin-
ing that paragraph 11 is ambiguous when construed with
other provisions of the agreement. Acklie contends that para-
graph 11 is not ambiguous and that by finding ambiguity
where it did not exist, the court’s determination confused
the jurors as to whether they were to decide whether Greater
Omaha breached the agreement or were to exclusively con-
sider the damages owed to Acklie. Acklie further argues that
the court should have not permitted Greater Omaha to pre­
sent evidence supporting its theory that it denied payment to
Acklie, because the company had denied payment to two pre-
vious employees under the same contract. In response, Greater
Omaha argues that the agreement grants it sole decision-
making authority over whether to contribute to the deferred
compensation account, as well as the amount of any payment
due, and that the district court properly admitted extrinsic
evidence to permit the jury to determine the meaning of
paragraph 11.
[3-7] The issues raised in Acklie’s appeal concern general
contract principles. In interpreting a contract, a court must
first determine, as a matter of law, whether the contract is
ambiguous. 5 A contract written in clear and unambiguous lan-
guage is not subject to interpretation or construction and must
be enforced according to its terms. 6 A contract is ambigu-
ous when a word, phrase, or provision in the contract has,
or is susceptible of, at least two reasonable but conflicting
interpretations or meanings. 7 The determination of whether
a contract is ambiguous is to be made on an objective basis,
not by the subjective contentions of the parties suggesting
5
City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147, 917
N.W.2d 826 (2018).
6
Id.
7
Id.
- 117 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
opposing meanings of the disputed language. 8 A contract must
receive a reasonable construction and must be construed as a
whole, and if possible, effect must be given to every part of
the contract. 9
We do not interpret the terms provided within paragraph
11 to be ambiguous. When viewed objectively, paragraph 11
is not susceptible of two reasonable but conflicting meanings.
The provision unmistakably grants Greater Omaha the sole
authority to interpret and administer the agreement. Likewise,
the provision clearly grants Greater Omaha binding author-
ity to determine the valuation of the account and the amount
of any payment due under the agreement. We therefore con-
clude that paragraph 11 is unambiguous and must be under-
stood according to its clear terms, without regard to extrin-
sic evidence.
However, we determine that the plain and ordinary mean-
ing of paragraph 11, as well as paragraph 4, raises an issue
which goes to the heart of Acklie’s appeal: whether the agree-
ment is an enforceable contract under which Acklie could
recover. Acklie’s lawsuit is premised on the claim that Greater
Omaha breached the agreement by failing to pay him the
amount due to him. If, pursuant to our obligation to reach an
independent, correct conclusion irrespective of the determina-
tions made by the court below, we determine the agreement is
unenforceable, then Acklie would be entitled to no relief and
there would be no merit to the assignments of error Acklie has
raised. Therefore, the principal issue before us is whether the
agreement is enforceable.
Deferred compensation is presently earned but is to be paid
to an employee in the future if he or she possesses the qualifi-
cations required by the plan and complies with the conditions
8
Johnson Lakes Dev., supra note 3.
9
Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435
(2018).
- 118 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
prescribed by it. 10 The conditions of the agreement in this case
include the terms of paragraph 11, provided above, which
permits Greater Omaha to take “binding and conclusive”
“action[,]” “including any valuation of the [account], or the
amount of . . . payment due under [the agreement].” In addi-
tion, paragraph 4 states that a general ledger account shall
be established for the purpose of reflecting deferred com-
pensation and that Greater Omaha will annually determine
“an amount” to credit to the account. Critically, paragraph 4
uses clear language qualifying Greater Omaha’s obligation
to fund the account by stating, “The amount of the contribu-
tion and the decision as to whether to make one at all, shall
be solely the decision of [Greater Omaha].” Pursuant to a
plain and ordinary meaning of these terms, the decision of
whether Acklie ever qualifies for payment under the deferred
compensation plan is a matter left to Greater Omaha’s sole
discretion. The agreement clearly grants Greater Omaha the
binding and conclusive authority to decide whether or not to
pay Acklie.
[8-10] A party seeking to enforce a contract has the bur-
den of establishing the existence of a valid, legally enforce-
able contract. 11 To create a contract, there must be both an
offer and an acceptance; there must also be a meeting of the
minds or a binding mutual understanding between the parties
to the contract. 12 It is a fundamental rule that in order to be
binding, an agreement must be definite and certain as to the
terms and requirements. 13 It must identify the subject matter
and spell out the essential commitments and agreements with
respect thereto. 14
10
Sindelar v. Canada Transport, Inc., 246 Neb. 559, 520 N.W.2d 203 (1994).
11
Houghton v. Big Red Keno, 254 Neb. 81, 574 N.W.2d 494 (1998).
12
Id.
13
Davco Realty Co. v. Picnic Foods, Inc., 198 Neb. 193, 252 N.W.2d 142
(1977).
14
Id.
- 119 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
[11] Generally, mutuality of obligation is an essential ele-
ment of every enforceable contract and consists in the obliga-
tion on each party to do, or permit something to be done, in
consideration of the act or promise of the other. 15 Mutuality
is absent when only one of the contracting parties is bound
to perform, and the rights of the parties exist at the option of
one only. 16 One of the most common types of promise that is
too indefinite for legal enforcement is the promise where the
promisor retains an unlimited right to decide later the nature
or extent of his or her performance. 17 In that situation, the
promisor’s unlimited choice in effect destroys the promise
and makes it illusory. 18 An illusory promise is one that is so
indefinite that it cannot be enforced, or by its terms makes
performance optional or entirely discretionary on the part of
the promisor. 19
[12] An agreement which depends upon the wish, will, or
pleasure of one of the parties is illusory and does not consti-
tute an enforceable promise. 20 Without a mutuality of obli-
gation, the agreement lacks consideration and, accordingly,
15
Johnson Lakes Dev., supra note 3; De Los Santos v. Great Western Sugar
Co., 217 Neb. 282, 348 N.W.2d 842 (1984).
16
Id. Accord Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88 (1991).
See, 17 C.J.S. Contracts § 135 (2011); 17A Am. Jur. 2d Contracts § 22
(2016).
17
Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306 (6th Cir. 2000);
Davis v. General Foods Corporation, 21 F. Supp. 445 (S.D.N.Y. 1937).
18
Floss, supra note 17, citing 1 Samuel Williston, A Treatise on the Law
of Contracts § 43 (3d ed. 1957); Davis, supra note 17. See Midland Steel
Sales Co. v. Waterloo Gasoline Engine Co., 9 F.2d 250 (8th Cir. 1925).
19
Fagerstrom v. Amazon.com, Inc., 141 F. Supp. 3d 1051 (S.D. Cal. 2015),
affirmed sub nom. Wiseley v. Amazon.com, Inc., 709 F. Appx. 862 (9th Cir.
2017).
20
Johnson Lakes Dev., supra note 3; Pantano v. McGowan, 247 Neb. 894,
530 N.W.2d 912 (1995), disapproved on other grounds, Weyh v. Gottsch,
303 Neb. 280, 929 N.W.2d 40 (2019); Chadd v. Midwest Franchise Corp.,
226 Neb. 502, 412 N.W.2d 453 (1987).
- 120 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
does not constitute an enforceable agreement. 21 As relevant
here, an agreement to pay such wages as the employer desires
is invalid. 22
In De Los Santos v. Great Western Sugar Co., 23 this court
considered a breach of contract action brought by a contrac-
tor which agreed to transport “‘such tonnage of beets as may
be loaded by’” a sugar company. Because the sugar company
hired other truckers in addition to the contractor, the com-
pany terminated the contractor’s services after 2 months. The
contractor sought to enforce the parties’ agreement, and the
district court granted summary judgment in favor of the sugar
company. On appeal, we stated the sugar company made no
promises other than to pay for the transportation of beets
which were in fact loaded by the company. We found that in
the absence of a contractual provision specifying quantity, the
company was not obligated to use the contractor’s services,
and the company’s decision to cease using those services
is not actionable. 24 In interpreting the contract at issue, we
found that “the right of the defendant to control the amount
of beets loaded onto the plaintiff’s trucks was in effect a
right to terminate the contract at any time, and this rendered
the contract as to its unexecuted portions void for want
of mutuality.” 25
In Davis v. General Foods Corporation, 26 the plaintiff
revealed an idea and recipe to the defendant for fruit flavors
to be used in homemade ice cream. The defendant agreed to
pay the plaintiff reasonable compensation if it used the recipe
21
See Floss, supra note 17.
22
See, Day’s Stores, Inc. v. Hopkins, 573 P.2d 1366 (Wyo. 1978); Varney v.
Ditmars, 217 N.Y. 223, 111 N.E. 822 (1916); Calkins v. Boeing Company,
8 Wash. App. 347, 506 P.2d 329 (1973).
23
De Los Santos, supra note 15, 217 Neb. at 283, 348 N.W.2d at 844.
24
See id.
25
Id. at 286, 348 N.W.2d at 845.
26
Davis, supra note 17.
- 121 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
and idea in its business, and it wrote that any compensation
paid would rest solely in the defendant’s discretion. The court
found the parties’ agreement was so indefinite that it could
not support a binding obligation. The court found that the
defendant’s promise was illusory, reasoning that by agreeing
to the defendant’s unlimited right to decide the compensation
to be paid, the plaintiff was in effect throwing herself upon the
mercy of those with whom she contracted. 27
Applying the foregoing principles to this case, we deter-
mine that Greater Omaha’s promise to pay Acklie deferred
compensation is fatally indefinite. The conditions relating to
payment were not fully determined and were left to the dis-
cretion of one contracting party only. Per the express terms of
the agreement, Acklie’s expectancy interest is no greater than
the possibility of receiving payment from Greater Omaha,
unless Greater Omaha chose not to make such a payment.
These terms did not create a binding contract or one under
which Acklie could establish a right to any specific funds. 28
One of the primary reasons that an illusory promise is unen-
forceable is that the indefiniteness of such a promise pre-
cludes the court from being able to fix exactly the legal liabil-
ity of the parties to the contract. 29 We find that the indefinite
features of the agreement here are like those addressed in
De Los Santos and Davis, because Greater Omaha’s right to
control the amount of payment due, if any, is in effect a right
to terminate the contract at any time. Accordingly, the agree-
ment is not a valid, legally enforceable contract under which
Acklie could recover.
The arguments made by Acklie and Greater Omaha in
anticipation of a determination that the agreement is unen-
forceable are not persuasive. While both parties contend that
27
See id.
28
See, Charter Inv. & Dev. Co. v. Urban Med. Serv., 136 Ga. App. 297, 220
S.E.2d 784 (1975); Calkins, supra note 22.
29
Fagerstrom, supra note 19.
- 122 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
the duty of good faith and fair dealing saves the agreement
from being rendered illusory, they provide no legal authority
demonstrating why such is the case under the circumstances of
this case. To be sure, there are circumstances under which the
duty of good faith and fair dealing is sufficient to avoid the
finding of an illusory promise. 30 However, this case does not
present such a circumstance, because the illusory nature of the
agreement stems from its express terms, and Greater Omaha’s
exercise of rights clearly granted to it cannot constitute bad
faith on its part. 31
The implied covenant of good faith and fair dealing exists in
every contract and requires that none of the parties to the con-
tract do anything which will injure the right of another party
to receive the benefit of the contract. 32 However, in order for
the implied covenant of good faith and fair dealing to apply,
there must be in existence a legally enforceable contractual
agreement. 33 In the case at bar, we have held that Acklie failed
to prove the existence of an enforceable contract. Therefore,
the implied covenant of good faith and fair dealing does not
save the agreement from being rendered illusory.
Additionally, there is no merit to the argument that the
covenant not to compete provision saves the agreement from
being rendered illusory. No party challenged the district
court’s conclusion that the covenant not to compete provision
is unenforceable, because it prohibits only working “within
any of the restricted areas” and the agreement does not specify
any restricted areas. Moreover, the fact that Greater Omaha
30
See, Milenbach v. C.I.R., 318 F.3d 924 (9th Cir. 2003); Fagerstrom, supra
note 19; Corthell v. Summit Thread Co., 132 Me. 94, 167 A. 79 (1933);
Horizon Corp. v. Westcor, Inc., 142 Ariz. 129, 688 P.2d 1021 (Ariz. App.
1984); Mezzanotte v. Freeland, 20 N.C. App. 11, 200 S.E.2d 410 (1973).
See, also, Chadd, supra note 20.
31
See De Los Santos, supra note 15.
32
Spanish Oaks v. Hy-Vee, 265 Neb. 133, 655 N.W.2d 390 (2003).
33
Cimino v. FirsTier Bank, 247 Neb. 797, 530 N.W.2d 606 (1995).
- 123 -
Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
ACKLIE v. GREATER OMAHA PACKING CO.
Cite as 306 Neb. 108
made two contributions does not create an enforceable agree-
ment, because the contract’s unambiguous language imposes
no obligation upon Greater Omaha to pay Acklie any money
from the account.
Because the agreement lacks mutuality of obligation, the
agreement does not create a binding obligation, making the
agreement unenforceable. Because the agreement is unenforce-
able, all of Acklie’s claims fail as a matter of law. Where
the record adequately demonstrates that the decision of a
trial court is correct—although such correctness is based on
a ground or reason different from that assigned by the trial
court—an appellate court will affirm. 34 Because we find that
Acklie cannot recover under the agreement, we need not
address his remaining assignments of error.
CONCLUSION
For the foregoing reasons, the judgment is affirmed.
Affirmed.
34
State v. Barbeau, 301 Neb. 293, 917 N.W.2d 913 (2018).