Northeast Neb. Pub. Power Dist. v. Nebraska Pub. Power Dist.

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/27/2017 09:09 AM CDT
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NORTHEAST NEB. PUB. POWER DIST. v. NEBRASKA PUB. POWER DIST.
Cite as 24 Neb. App. 837Northeast Nebraska Public Power District,
appellee and cross-appellant, v.
Nebraska Public Power District,
appellant and cross-appellee.
___ N.W.2d ___
Filed June 27, 2017. No. A-16-309.
1. Contracts: Appeal and Error. The construction of a contract is a ques-
tion of law, and is reviewed de novo.
2. Summary Judgment: Appeal and Error. An appellate court will affirm
a lower court’s granting 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 the facts
and that the moving party is entitled to judgment as a matter of law.
3. ____: ____. In reviewing a summary judgment, an appellate court views
the evidence in the light most favorable to the party against whom the
judgment was granted, and gives that party the benefit of all reasonable
inferences deducible from the evidence.
4. Declaratory Judgments. A declaratory judgment action is ripe for judi-
cial determination if the issue presented is fit for judicial determination
and would result in significant harm if review were delayed.
5. Courts: Judgments: Damages. A court may proceed to the merits of
a case where the issues presented are largely legal in nature, the issue
may be resolved without further factual development, or judicial resolu-
tion will largely settle the parties’ dispute; and significant harm applies
to both actual damages, pecuniary or otherwise, and also the heightened
uncertainty and resulting behavior modification that may result from
delayed resolution.
6. Pretrial Procedure: Appeal and Error. On a discovery issue, the dis-
trict court’s ruling is reviewed for an abuse of discretion.
7. Contracts. The meaning of a contract and whether a contract is ambig­
uous are questions of law.
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Cite as 24 Neb. App. 8378. 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.
9. Contracts. If the terms of a contract are clear, a court may not resort
to rules of construction and must accord clear terms their plain and
ordinary meaning as an ordinary or reasonable person would under-
stand them.
10. ____. The fact that the parties suggest opposing meanings of a dis-
puted instrument does not compel the conclusion that the instrument
is ambiguous.
11. Judgments: Appeal and Error. When reviewing questions of law, an
appellate court has an obligation to resolve the questions independently
of the conclusion reached by the trial court.
Appeal from the District Court for Wayne County: James G.
Kube, Judge. Affirmed.
Kile W. Johnson and Corey J. Wasserburger, of Johnson,
Flodman, Guenzel & Widger, and John C. McClure, of
Nebraska Public Power District, for appellant.
Steven D. Davidson and David C. Levy, of Baird Holm,
L.L.P., for appellee.
Inbody, R iedmann, and A rterburn, Judges.
A rterburn, Judge.
INTRODUCTION
Nebraska Public Power District (NPPD) appeals and
Northeast Nebraska Public Power District (Northeast) cross-
appeals from an order entered by the district court for Wayne
County granting summary judgment in favor of Northeast and
denying NPPD’s motion for summary judgment. On appeal,
NPPD argues the district court erred in overruling NPPD’s
motion to dismiss for lack of subject matter jurisdiction, over-
ruling NPPD’s motion to compel, interpreting the relevant
contract provisions, failing to find that equitable estoppel
did not give rise to a cause of action, and granting summary
judgment in favor of Northeast. On cross-appeal, Northeast
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Cite as 24 Neb. App. 837preserved its right to relief on its alternative claim alleging
promissory estoppel as a matter of law. For the reasons set
forth below, we affirm.
BACKGROUND
Northeast is a political subdivision of the State of Nebraska
and a public power district engaged in the distribution of
electricity to approximately 8,500 metered accounts in parts
of Pierce, Thurston, Wayne, Dixon, and Dakota Counties.
Northeast operates approximately 3,000 miles of electric
lines and over 100 miles of high-voltage transmission lines
in its service area. Northeast is governed by an elected board
of directors.
NPPD is a political subdivision of the State of Nebraska and
a public power district engaged in the generation and trans-
mission of electricity at wholesale to numerous towns, public
power districts, and cooperatives across Nebraska. NPPD is
Nebraska’s largest wholesale electric utility.
Prior to January 1, 2015, Northeast was a member of the
Nebraska Electric Generation and Transmission Cooperative,
Inc. (NEG&T). NEG&T is a nonprofit cooperative of more
than 25 Nebraska public power districts and nonprofit elec-
tric membership corporations, all of whom are wholesale
customers of NPPD. NEG&T was formed, in part, to pro-
vide a single point of negotiation with NPPD on behalf of
its members in order to obtain energy through a single con-
tract between NEG&T and NPPD. As a member of NEG&T,
Northeast satisfied all of its demand and energy requirements
under a wholesale power agreement with NEG&T, which, in
turn, purchased electricity at wholesale from NPPD. Under
Northeast’s contract with NEG&T, Northeast did not have the
right to limit or reduce the amounts of demand and energy
it was obligated to purchase under the contract. Northeast
had to withdraw from NEG&T if Northeast desired to limit
and reduce its purchases of demand and energy requirements
in order to purchase demand and energy requirements from
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Cite as 24 Neb. App. 837another wholesale provider. Upon withdrawing from NEG&T,
Northeast was obligated under the wholesale power contract
(WPC) to contract with NPPD for the remainder of the term
of the WPC. Once contracted with NPPD under the WPC,
Northeast could avail itself of the limit and reduction provi-
sions contained in the WPC.
Northeast engaged an outside consultant to assist with issues
regarding its potential transition from NPPD to a new whole-
sale electricity provider in 2013. There were 77 wholesale
customers bound by the same WPC, either through individual
contracts with NPPD or through the NEG&T cooperative con-
tract. The WPC was originally implemented with most of those
customers on January 1, 2002, for a term of 20 years. The
NEG&T member agreement contract stated:
Beginning January l, 2008, and thereafter, pursuant
to the terms of the Member Agreement, a Member may
elect to limit or reduce its purchase of demand and
energy from NEG&T; provided, a Member electing to
limit or reduce its purchase of demand and energy from
NEG&T may only do so upon notice of termination of its
Member Agreement. Upon the effective termination date
of the Member Agreement, the Member shall enter into an
Individual Wholesale Power Contract with NPPD, a copy
of which is attached hereto as Exhibit E, for the remain-
der of the 20-year term of this Contract, which Individual
Wholesale Power Contract shall set forth the terms and
conditions governing such limitation or reduction and
which Individual Wholesale Power Contract shall be the
same contract as is offered to other NPPD wholesale cus-
tomers under similar conditions of service.
The WPC, in turn, provided that until January 1, 2008, the cus-
tomer must purchase from NPPD the entire amount of demand
and energy needed to service its customers. After January
1, 2008, the WPC gave the customer the ability to limit and
reduce its purchase of demand and energy from NPPD upon
advanced written notice under a specified formula.
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Cite as 24 Neb. App. 837Northeast withdrew from NEG&T at the end of 2014 and
entered into the WPC with NPPD effective January 1, 2015.
Northeast provided notice to NPPD of its intent to limit
and reduce its purchases of demand and energy requirements
under the WPC when it executed the WPC in January 2015.
The WPC limit and reduction provision, which is the provi-
sion upon which Northeast requested declaratory relief in this
action, stated:
Effective on and after the calendar year commenc-
ing January l, 20ll, Customer shall have the right, for
any reason and with proper written notice, to reduce the
amount of Demand and Energy it purchases from NPPD
in any calendar year to levels below the Base Demand
and Energy Obligation; provided, such notice(s) of reduc-
tion shall be given no earlier than January 1, 2008.
Customer can reduce its monthly Demand and Energy
obligations from NPPD in any such calendar year by an
amount no greater than the product of (a) ten percent
(10%) of the Customer’s Base Monthly Demand and
Energy Obligation, multiplied by (b) the number of years
between the effective date of the reduction and either (i)
January 1, 2010, or (ii) one year prior to the ending date
of a previous reduction, whichever is later; provided,
however, in no event shall Customer be allowed to reduce
to a level below ten percent (10%) of the Customer’s
Base Monthly Demand and Energy Obligation prior to
completion of the term of this Contract. Notification(s)
to reduce purchases of Demand and Energy by thirty
percent (30%) or less must be given by Customer to
NPPD not less than three (3) calendar years prior to the
effective date of such reduction. Notification(s) to reduce
purchases of Demand and Energy by more than thirty
percent (30%) must be given by Customer to NPPD not
less than five (5) calendar years prior to the effective date
of such reduction.
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Cite as 24 Neb. App. 837In early 2013, Northeast retained its outside consultant to
explore alternatives with respect to wholesale power suppliers.
He began communicating with NPPD in order to determine
the maximum reduction available in the shortest amount of
time. In May 2013, NPPD’s vice president of customer serv­
ices communicated to Northeast’s outside consultant that he
understood the reduction paragraph to allow Northeast, with
proper notice, to reduce its demand and energy purchases from
NPPD at the rate of 30 percent per year for 3 consecutive
years (30/30/30 method).
In June 2013, Northeast’s board of directors issued a request
for proposals, soliciting proposals from potential suppliers
of wholesale power. Northeast sent NPPD a copy of the
request for proposals as a prospective bidder. In August 2013,
Northeast’s general manager was authorized by the board of
directors to issue notice to NEG&T of its intent to withdraw
from the membership agreement. He issued this notice to
NEG&T on October 28.
On November 1, 2013, NPPD communicated to Northeast’s
outside consultant that after further review, NPPD no longer
understood the reduction paragraph to permit the 30/30/30
method of reduction. In late 2013, Northeast executed a pur-
chase agreement with Big Rivers Electric Corporation (BREC)
to purchase power at the maximum schedule of reduction
from NPPD.
On June 23, 2014, Northeast filed an action for declara-
tory judgment in the district court. Northeast also filed an
action for equitable estoppel to prevent NPPD from prohib-
iting Northeast from reducing in any manner other than the
30/30/30 method. On July 24, NPPD filed a motion to dismiss
on the basis of lack of subject matter jurisdiction. The district
court overruled NPPD’s motion to dismiss on December 2.
On December 30, 2014, during the pendency of litigation,
Northeast and NPPD executed the WPC, which had an effec-
tive date of January 1, 2015. Northeast sent formal notice
that it intended to limit and reduce its purchase under the
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30/30/30 method.
During discovery, the district court entered a protective
order that was stipulated to by both parties. The protective
order provided that any material exchanged in the course of
discovery and marked “‘Confidential’” would be limited in
use to the purposes of litigation. Northeast provided NPPD
with a redacted copy of its contract with BREC, and removed
13 sections of the agreement. On June 9, 2015, NPPD filed
a motion to compel the disclosure of the unredacted docu-
ment. On August 14, the district court overruled the motion
to compel.
Each party filed a motion for summary judgment in June
2015. On January 19, 2016, the district court entered an order
granting Northeast’s motion for summary judgment, in part, and
overruling NPPD’s motion for summary judgment. The district
court found that the reduction provision in the contract was
unambiguous. The court concluded that the 30/30/30 method
was the appropriate reduction method. The court declined to
reach the promissory estoppel issue, finding it moot because
Northeast obtained all the relief it requested on the contract
claim. NPPD filed a notice of appeal on March 23.
ASSIGNMENTS OF ERROR
NPPD argues the district court erred in (1) overruling
NPPD’s motion to dismiss for lack of subject matter jurisdic-
tion, (2) overruling NPPD’s motion to compel, (3) interpreting
the relevant contract provisions, (4) failing to find that equi-
table estoppel did not give rise to a cause of action, and (5)
granting summary judgment in favor of Northeast. On cross-
appeal, Northeast preserved its right to relief on its alternative
claim alleging promissory estoppel as a matter of law.
STANDARD OF REVIEW
[1-3] The construction of a contract is a question of law,
and is reviewed de novo. Labenz v. Labenz, 291 Neb. 455,
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Cite as 24 Neb. App. 837866 N.W.2d 88 (2015). An appellate court will affirm a lower
court’s granting 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 the facts and that the moving party is entitled to
judgment as a matter of law. Pittman v. Western Engineering
Co., 283 Neb. 913, 813 N.W.2d 487 (2012). In reviewing a
summary judgment, an appellate court views the evidence in
the light most favorable to the party against whom the judg-
ment was granted, and gives that party the benefit of all rea-
sonable inferences deducible from the evidence. Id.ANALYSIS
Motion to Dismiss
NPPD argues that the district court erred in overruling its
motion to dismiss for lack of subject matter jurisdiction. NPPD
asserts that the district court should have dismissed the case
because Northeast “sought an advisory opinion to determine
whether its future actions would constitute a breach under a
contract that had yet to be executed at the time the declaratory
judgment action was filed.” Brief for appellant at 15. NPPD
argues the case was not, and is not, ripe for judicial review. We
find these assertions lack merit.
The Nebraska Supreme Court in City of Omaha v. City of
Elkhorn, 276 Neb. 70, 752 N.W.2d 137 (2008), adopted a two-
step analysis from the U.S. Court of Appeals for the Eighth
Circuit to determine whether a declaratory judgment action
was ripe. In Nebraska Public Power Dist. v. MidAmerican
Energy, 234 F.3d 1032 (8th Cir. 2000), NPPD sought declara-
tory relief regarding the meaning of a contract provision
addressing decommissioning payments for a MidAmerican
Energy Company (MidAmerican) nuclear power facility.
Certain payments were allegedly due only after MidAmerican
made a contractual election to extend the time to decommis-
sion the facility, the deadline for which had not yet occurred.
NPPD asked the court to interpret contractual duties that
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MidAmerican contended that NPPD’s declaratory judgment
claim was not ripe, and could not be ripe for adjudication until
after the contractual election occurred. Id.[4,5] The Eighth Circuit held that a declaratory judgment
action is ripe for judicial determination if the issue presented
is fit for judicial determination and would result in significant
harm if review were delayed. The first prong of the test, fitness
for judicial determination, goes to a court’s ability to visit an
issue. Id. A court may proceed to the merits of a case where the
issues presented are largely legal in nature, the issue may be
resolved without further factual development, or judicial reso-
lution will largely settle the parties’ dispute; and significant
harm applies to both actual damages, pecuniary or otherwise,
and also the heightened uncertainty and resulting behavior
modification that may result from delayed resolution. Id. A
party need not wait for actual harm to occur; however, both the
immediacy and the size of the threatened harm must be signifi-
cant. Id. A party seeking judicial relief must necessarily satisfy
both prongs to at least a minimal degree. Id.The court in MidAmerican Energy found the case ripe
despite the fact that the triggering event for MidAmerican’s
payment or nonpayment remained in the future. The court
noted that the case presented primarily a legal question of
contract interpretation about which the facts were already
established, the resolution of which would largely resolve the
dispute. Id. Moreover, delay would cause harmful uncertainty
that would require NPPD to gamble millions of dollars on
an uncertain legal foundation. Id. The insecurity caused by
the parties’ contending interpretations of the contract worked
a definite, tangible, and significant future harm, and even
worked as a present harm on their ability to plan and conduct
business operations. Id. Finally, the court found it significant
that the case would not change if the court waited for the
future contractual deadline to pass. The parties were 3 years
from the decommissioning decision. If the court were to
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Cite as 24 Neb. App. 837withhold adjudication, the parties would have returned shortly,
making precisely the same arguments, with nary a scintilla of
additional relevant evidence. Id.The present case presents an issue of contract interpreta-
tion where all relevant facts and contingencies have already
occurred and the resolution of which will end the dispute.
The current record confirms that Northeast has terminated the
WPC with NEG&T, has entered into the required direct WPC
with NPPD, and has provided the required advance contrac-
tual notice of its intention to limit and reduce its purchases.
Northeast’s first reduction will occur on January l, 2018. All
triggering events that define the legal issues and give context
to the interpretation of the contract have already taken place.
The contract is in force, requisite notices to limit and reduce
have been given, and there is a clear and defined dispute about
the parties’ rights in light of that notice. There is no remaining
factual uncertainty and no future event yet to take place other
than implementation of decisions already made. As a result, the
legal issues of contract interpretation raised in this case are fit
for determination now.
There is both a present significant potential harm, a nearly
$1 million difference between the proposed reduction meth-
ods, and future uncertainty from an operational standpoint for
Northeast. Absent resolution, Northeast will not know from
whom, or in what amount, it will be purchasing demand and
energy for its customers over a multiyear period. Logistical
and business planning regarding Northeast’s operations would
be significantly impacted. If this case were dismissed, the
parties would return with the same contract provision dispute
and nearly the same evidence. This case is ripe for review,
and the district court did not err in denying NPPD’s motion
to dismiss.
Motion to Compel
NPPD argues the district court erred in denying its motion
to compel an unredacted version of the wholesale power
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Cite as 24 Neb. App. 837contract between Northeast and BREC. NPPD asserts that
without an opportunity to verify or contradict Northeast’s
claims with respect to the cost difference between the BREC
and NPPD contracts, the district court deprived NPPD of
important evidence which could have been dispositive in this
case. We find these assertions lack merit.
[6] On a discovery issue, the district court’s ruling is
reviewed for an abuse of discretion. See Roskop Dairy v. GEA
Farm Tech., 292 Neb. 148, 871 N.W.2d 776 (2015). It is dif-
ficult to show that a party has been prejudiced by a discovery
order, or that the question is not moot; and the harmless error
doctrine, together with the broad discretion the discovery rules
vest in the trial court, will bar reversal save under very unusual
circumstances. Id.The district court determined that whatever reduction
method utilized involves a calculation of a percentage of
energy purchase reduction under the contract between NPPD
and Northeast. The court noted that there was some relevance
in reviewing the contract between Northeast and BREC for
establishing the materiality of contractual aspects which would
help determine the ultimate costs to Northeast. However, the
court determined that the potential harm of disclosing BREC’s
contract to NPPD, one of its business competitors, outweighed
the purpose for which NPPD sought the unredacted contract.
The court determined that the redacted contract disclosed suf-
ficient information in order for NPPD to defend its position
in this case. After a review of the record, we find the district
court did not abuse its discretion in denying NPPD’s motion
to compel.
Contract Interpretation
NPPD argues the district court erred in its contract inter-
pretation finding that the 30/30/30 method was consistent
with the plain language of the WPC. NPPD asserts that the
unambiguous language of the WPC only allows successive
reductions after the first year at a maximum of 10 percent per
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Cite as 24 Neb. App. 837year (30/10/10 method). Upon our review, we find this asser-
tion lacks merit.
[7-11] The meaning of a contract and whether a contract is
ambiguous are questions of law. Facilities Cost Mgmt. Group
v. Otoe Cty. Sch. Dist., 291 Neb. 642, 868 N.W.2d 67 (2015). 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. Kasel v. Union Pacific
R.R. Co., 291 Neb. 226, 865 N.W.2d 734 (2015). If the terms
of a contract are clear, a court may not resort to rules of con-
struction and must accord clear terms their plain and ordinary
meaning as an ordinary or reasonable person would understand
them. See id. The fact that the parties suggest opposing mean-
ings of a disputed instrument does not compel the conclusion
that the instrument is ambiguous. Id. When reviewing ques-
tions of law, an appellate court has an obligation to resolve the
questions independently of the conclusion reached by the trial
court. Facilities Cost Mgmt. Group, supra.
There is no question that the contract language in dispute is
unnecessarily complicated. However, we find that there is only
one reasonable interpretation of the contract. We, therefore,
find that the contract is not ambiguous. According clear terms
their plain and ordinary meaning, we find that the reduction
provision at issue allows for the 30/30/30 method, commencing
on January 1, 2018.
First, the parties agree that the maximum potential reduction
under the WPC is 90 percent of the base obligation. The par-
ties also agree that 3 years’ advance notice must be given to
implement a reduction of 30 percent or less and that 5 years’
advance notice must be given to implement a reduction of
more than 30 percent. Finally, the parties agree that Northeast
can reduce its demand by 30 percent in its first year of reduc-
tion. The parties disagree on whether subsection (i) or subsec-
tion (ii) applies to the reductions proposed for 2019 and 2020.
NPPD argues that subsection (i) is inapplicable after the initial
reduction, so subsection (ii) must apply.
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Cite as 24 Neb. App. 837NPPD argues that the phrase “(ii) one year prior to the end-
ing date of a previous reduction, whichever is later,” should be
fairly read to mean “‘ending date of a previous reduction level’
within the context of the reduction paragraph as a whole,”
brief for appellant at 28. Therefore, after Northeast’s initial
reduction of 30 percent of its demand, the subsequent reduc-
tions would be limited to 10 percent multiplied by the ending
date of the previous reduction, which was 1 year for each
subsequent reduction that Northeast had given advance notice.
This is how NPPD arrived at its 30/10/10 method. In contrast,
Northeast argues, and the district court found, that there was
not an “ending date of a previous reduction,” therefore the lim-
iting provision of subsection (ii) is inapplicable and subsection
(i) applies.
Affording the plain and ordinary meaning as an ordinary
or reasonable person would understand it, the phrase “(ii)
one year prior to the ending date of a previous reduction,
whichever is later,” we find that there is no “ending date of a
previous reduction.” Northeast provided notice of continuous,
cumulative, and maximum reductions of 30 percent annually
to the maximum reduction level of 90 percent of its monthly
base demand and obligation under the WPC. The district court
found: “The ending of previous reduction cannot mean that
the reduction continues to exist. To ‘end’ means to terminate;
a cessation; a point beyond which something does not con-
tinue, or which ceases to exist.” We agree with the district
court’s conclusion given the context of this contract that the
ordinary meaning of the term “ending date” is the date on
which a previous reduction ends. Here, the proposed reduc-
tions will not end. They will each remain in place through the
duration of the contract’s term, which expires on January 1,
2022. The original 30-percent reduction that begins in 2018
will remain in place during 2019. Each additional reduction
will be capped at 30 percent, and the total will be capped at
90 percent per the reduction provision. Since there was no
“ending date of a previous reduction,” subsection (ii) does not
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every notice. However, the notice requirement of the contract
capped each years’ subsequent reduction to a 30-percent total,
and at 90 percent from January 1, 2020, until the expiration
of the WPC. Upon our review, we find that the district court
did not err in its interpretation of the contract provisions and,
therefore, did not err in granting summary judgment in favor
of Northeast.
R emaining Assigned Errors
On cross-appeal, Northeast preserved its right to relief on
its alternative claim alleging promissory estoppel as a matter
of law. NPPD argues that the district court should have found
that equitable estoppel did not give rise to a cause of action,
but can serve only as a defense.
The district court found that the equitable estoppel issue
was moot, since it granted summary judgment on the contract
claim to Northeast. We agree. Our findings above render this
issue contained in the remaining assigned errors moot.
CONCLUSION
Upon our review, we find the district court did not err in
overruling NPPD’s motion to dismiss for lack of subject matter
jurisdiction. The district court did not err in overruling NPPD’s
motion to compel. Additionally, the district court did not err in
its interpretation of the relevant contract provisions. The dis-
trict court did not err in granting summary judgment in favor of
Northeast. Finally, our opinion regarding the contract’s mean-
ing renders moot the remaining causes of action.
A ffirmed.