EDMONDSON, J.
¶ 1 The controversy framed by the parties involves whether Lincoln Farm, L.L.C., breached a contract to sell potatoes to Farming Technology Corporation, and whether certain provisions of the Uniform Commercial Code involving the unavailability of a carrier and a commercially impracticable method of delivery are applicable to the parties. Farming Technology argued in the trial court that Lincoln Farm was required to build a private rail spur in order to fulfill Lincoln Farm's contractual obligation to load potatoes on railcars or trucks furnished by Farming Technology Corporation to take delivery of the potatoes. We hold that the contract unambiguously states that Farming Technology Corporation will furnish railcars or trucks to take delivery of the potatoes, the contract does not state that Farming Technology has the right to insist on delivery solely by rail, and that the contract does not require the building of a private rail spur by Lincoln Farm in a circumstance where at the time the purchase agreement was made the
¶ 2 Donald and Joi Oppliger agreed on February 1, 2008, to sell their 18,800 acre farm in Nebraska to Redwolf Farms, L.L.C., and its permitted assigns. Redwolf Farms, L.L.C., was assignor to Lincoln Farm, L.L.C. (Lincoln Farm). The parties agreed that the Oppligers reserved the right to designate the physical purchaser and the sale price of the potatoes produced on the real property from the 2008 and 2009 crop years. A crop year is defined by the parties as the year in which the seeds of the crop are planted.
¶ 3 They agreed that income from the sale of potato crops would satisfy a certain amount payable to Lincoln Farm with additional amounts from the sale, if any, to be paid to the Oppligers. According to Lincoln Farm, one of the contract terms required the Oppligers to guarantee prices Lincoln Farm would receive in 2008 and 2009 for potatoes harvested from the Nebraska farm. This guarantee also provided that the Oppligers would select the purchaser and sale price of the crops.
¶ 4 Pursuant to the provisions of the agreement for the real estate purchase, the Oppligers designated Farming Technology Corporation (FTC) as the Buyer for the 2008 potato crop from the Seller of said crop, Lincoln Farm. The Oppligers' practice was to contract for the sale of their crops prior to their planting, and they had sold them to FTC for several years prior to the sale of the real property. The 2008 Purchase Agreement for the potato crop was executed on February 20, 2008, the same day that closing occurred on the real estate contract for the purchase of the potato farm.
¶ 5 The Nebraska Kansas Colorado Railway (NKCR) allegedly informed the Oppligers that their potato storage and loading facility encroached on the NKCR's property and that the encroachment must be removed from the NKCR property. For several years the NKCR had permitted the Oppligers to use the railway's main line for the purpose of loading potatoes on railway cars parked temporarily on the main line. It is also alleged that Don Oppliger received notice from the NKCR in 2007 for the need of a private spur line to continue loading potatoes on railway cars at the storage facility. FTC states on appeal that Don Oppliger informed Lincoln Farm in November 2007 that the NKCR "was going to require him to build a rail spur."
¶ 6 In September 2008 a potato crop harvesting began. The crop contract between Lincoln Farm (Seller) and FTC (Buyer) contained the following.
O.R. at 221, 470.
¶ 7 When the harvest began, FTC rented railway cars which the NKCR parked in Nebraska off of the main line, but not in a location for direct loading of potatoes from the potato storage facility. The NKCR informed Lincoln Farm that the railway cars could not be loaded while parked on the main line, and Lincoln Farm informed FTC that it was ready to load potatoes on trucks supplied by FTC.
¶ 8 On October 23, 2008, FTC notified Lincoln Farm that "there were no alternatives under the 2008 Potato Contract other than for the potatoes to be loaded into railcars." Lincoln Farm understood that its contractual obligation could be satisfied by loading potatoes on either railway cars or trucks supplied by FTC. Lincoln Farm argued that the potato contract required it to deliver potatoes to a storage facility "to be piled and held there for loading `on trucks or railcars furnished by Buyer [FTC].'" After the June 8th notice from the NKCR and before harvest began, Lincoln Farm started the process to build a private spur line, and insisted that it was not building the spur to satisfy any contractual agreement with FTC. The rail spur became operational by January 30, 2009, and potatoes were loaded by Lincoln Farm and shipped by FTC using this spur pursuant to the parties' agreement. The 2008 potato contract had a cutoff date of April 30, 2009, but FTC continued shipping potatoes "as long as the condition and quality of the potatoes are good." The last railway car of potatoes was shipped on May 21, 2009.
¶ 9 On June 18, 2009, Lincoln Farm sent its final invoice to FTC for $244,401. The invoice was not paid and Lincoln Farm brought an action in the District Court of Oklahoma County alleging that Farming Technology Corporation breached the contract. Farming Technology Corporation brought a counterclaim for breach of contract against Lincoln Farm. Farming Technology Incorporated (FTI), an entity owned by FTC, claimed that Lincoln Farm owed $82,774 to FTI for storage fees, switching charges, railway car payments for rail cars sent to Nebraska before the rail spur was operational.
¶ 10 Lincoln Farm sought summary judgment against Farming Technology Corporation and the Oppligers. FTC sought summary judgment against Lincoln Farm and stated that due to the rail spur not being available until January 30, 2009, it was necessary for it to "cover" the purchase of potatoes from third parties at an additional cost of $575,650.45, and that it was entitled to a judgment in that amount against Lincoln Farm. The trial court granted the motion for summary judgment sought by Farming Technology Corporation on the issue of liability, and denied the motion for summary judgment sought by Lincoln Farm. The trial court certified part of its order for discretionary interlocutory appellate review pursuant to the provisions of 12 O.S.2011 § 952(b)(3) and Supreme Court Rule 1.50.
¶ 11 The parties argue that the standard for appellate review of a summary judgment in Oklahoma applies herein. The standard applicable herein to review an order granting partial summary adjudication is de novo review similar to that provided on appellate review of a summary judgment.
¶ 12 Generally, a standard of appellate review is based, in part, upon the nature of the decision of trial tribunal and whether it adjudicated issues of fact, law, or mixed fact and law.
¶ 13 Further, when a trial court exercises jurisdiction via summary process to adjudicate the merits of a cause of action and any defenses as a matter of law, the well-known respective burdens of the parties must be satisfied. For example, in the matter before us FTC sought, via summary process, adjudication on the merits of its cause of action that Lincoln Farm breached a contract.
¶ 14 Generally, the scope of our appellate review may be affected by the nature of the trial court's order reviewed, the nature of the appellate proceeding, the issues raised by the parties, and in the controversy before us the substantive law of Texas which is a choice of law issue presented by the parties.
¶ 15 Although the standard of appellate review is based upon Oklahoma's procedural law,
¶ 16 Generally, in Texas the elements of breach of contract are (1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.
¶ 17 In its motion for summary judgment, FTC states that it never advised Lincoln Farm that it had to build a rail spur.
¶ 18 Lincoln Farm denied the allegation that completion and operational status of a rail spur was a material part of the basis of the bargain between the parties.
¶ 19 One argument of FTC is that the contractual language requiring Lincoln Farm to load potatoes at the potato storage building on railway cars necessarily means that Lincoln Farm must provide a railway spur line for loading because such a spur was a reasonable condition for Lincoln Farm to fulfill its contractual obligation to load railway cars. The exact nature of this necessity in FTC's arguments must be noted. In its trial court Reply, FTC stated that "FTC has never contended that there is a provision in that contract which states that plaintiff must build a rail spur," and it echoes this position on appeal.
¶ 20 As previously noted, the contract does not contain express language stating that Lincoln Farm must build a private spur line. We note that the agreement states that it is the "entire agreement among the parties ... And may not be contradicted or varied by evidence or prior, contemporaneous, or subsequent oral agreements or discussions." Agreement, at ¶ (P). However, the Texas Commercial Code allows evidence of meaning of contract terms
This argument requires the contract language "Seller agrees to load potatoes on trucks or railcars furnished by Buyer" to be based upon an implied term that is a promise by Lincoln Farm to contract in the future with the NKCR for building a spur in time for the 2008 crop.
¶ 22 One issue involves when a promise by one party for future negotiation with a third party is enforceable pursuant to Texas jurisprudence. Generally, an agreement is judicially enforceable only if its terms are sufficiently definite to enable a court to understand the parties' obligations, and an agreement to make a future contract is legally enforceable only if it does not leave material terms open for future negotiation.
¶ 24 The record before us on summary adjudication shows that the 2008 crop agreement was drafted by FTC based upon earlier agreements FTC had with the Oppligers. The record before us also shows that Lincoln Farm was not informed until either after May 6, 2008, or in June 2008, a few months after the execution of the agreement on February 20, 2008, that a rail spur would be needed to load the 2008 potato crop on railway cars at the facility. The record shows that in August 2008 Lincoln Farm had submitted a survey of its property and was waiting to receive documents to go forward with building a spur, and on October 31, 2008, was "working on getting the contract signed with the RR" to start construction of a spur. On these facts we cannot say that at the time the Purchase Agreement was made in February 2008, that Lincoln Farm building a rail spur for the 2008 crop was "so clearly within the contemplation of the parties that they deemed it unnecessary to express it" in that Agreement. We hold that the facts in the record fail to show that the building of a rail spur was clearly within the contemplation of the parties sufficient to be an implied term of the Agreement based upon partes' mutual intent at the time the Agreement was created. Similarly, the record before us on appeal from a summary adjudication contains nothing to show that a discretion by FTC to select rail delivery as the only method for taking delivery could be an unstated and assumed agreement of the parties that was "so clearly within the contemplation of the parties that they deemed it unnecessary to express it."
¶ 25 We must note that Texas courts avoid construing a contract in a manner which makes performance impossible.
In February 2008, when the parties agreed for Lincoln Farm to load railway cars, the NKCR was allowing loading on the main line, and the record on summary adjudication that is before us fails to show that either Lincoln Farm or FTC knew of had reason to know that the NKCR would later stop the practice of loading on the main line and that a spur would be needed for railway loading the following September. In February 2008, loading on railway cars and accepting delivery was not only possible, but a practice that had occurred for several years by FTC.
¶ 26 A few non-precedential Texas appellate opinions have discussed the Restatement of Contracts and the impossibility of performance of a contract after it has been executed.
¶ 27 Neither party expressly relies upon application of either the First or Second Restatement of Contracts, or upon the doctrines of impossibility or commercial impracticability as applied by Texas Courts.
¶ 28 On summary adjudication, FTC was required to show that the language "Seller agrees to load potatoes on trucks or railcars furnished by Buyer" to be a unambiguous promise in February 2008 "under that contract" that Lincoln Farm would provide a facility that was capable to ship the 2008 crop by rail even if Lincoln Farm had to modify that facility to comply with then unknown conditions not yet imposed by the railway on Lincoln Farm. The issue of whether the language is unambiguous presents a question of law relating to the parties' intent.
¶ 29 A Texas court's primary objective when interpreting a contract is to ascertain and give effect to the intent of the parties as it is expressed in the contract.
¶ 30 Whether a contract is ambiguous is a question of law that must be decided by examining the contract as a whole in light of the circumstances present when the contract was entered,
¶ 31 Although FTC and Lincoln Farm construe their obligations under this contract quite differently, a contract is not ambiguous merely because the parties disagree on its meaning.
¶ 32 FTC's position is that even if Lincoln Farm and FTC agreed to use the main line of the railway, once Lincoln Farm was notified that a spur would be needed for rail delivery then Lincoln Farm had an obligation to build a spur as a reasonable condition to fulfill its obligation for loading railway cars furnished by FTC. FTC argues that failure of delivery occurred because Lincoln Farm could not load potatoes in railway cars parked on the main line of the NKCR and had not taken the reasonable action of building a private rail spur. On the other hand, Lincoln Farm's position is that loading of potatoes on railway cars did not occur because FTC failed to supply railway cars for loading at the storage facility. Further, because FTC was both buyer and shipper it was the party responsible for taking reasonable steps to provide either railway cars of trucks for loading. One issue presented by the parties is did failure of delivery occur because FTC failed to furnish either railway cars or trucks, or did failure occur because Lincoln Farm declined to build a railway spur?
¶ 33 FTC contends that even if the contract did not require Lincoln Farm to build a rail spur, the contract did require delivery of the potatoes on railway cars and Lincoln Farm, "as a necessary consequence of this obligation," was required at its own expense to perform whatever may be necessary to enable Lincoln Farm to fulfill this obligation, even if building a private spur was required. Lincoln Farm responds that contract-specified "delivery" was not on railway cars, but at the storage facility, and that it fulfilled the contract.
¶ 34 The "2008 Purchase Agreement Nebraska Potato Crop" does not contain the word "delivery." However, it does use the term "deliver" twice.
Lincoln Farm argues that delivery occurred when the potatoes were "delivered" or piled in the storage building. Thus, Lincoln Farm argues that loading was a contractual duty after delivery.
¶ 35 The term "delivery" is a term with meaning in the Commercial Code of Texas. For example, the Texas Business and Commerce Code, which contains Texas' version of the Uniform Commercial Code, provides that title to goods passes to the buyer at the time and place the seller completes performance regarding the physical delivery of the goods.
¶ 36 While actual delivery consists in the giving real possession to the vendee or his servants or special agents who are identified with him in law and represent him, a constructive delivery of goods sold may be substituted for an actual delivery when in pursuance of agreement by the parties, or an established custom, and where by construction of law the agreement, custom, or acts of the parties are equivalent to acts of real delivery.
¶ 37 Lincoln Farm had to plant, grow, harvest, and store the potatoes in the storage building prior to loading. In this appeal, there are no facts with supporting authority to show that possession, actual or constructive, or that title to the potatoes,
¶ 39 We agree with FTC that the contract unambiguously required Lincoln Farm to load potatoes on trucks or railcars furnished by FTC, and that delivery would occur at that time. However, we disagree with FTC that delivery upon loading necessarily means that Lincoln Farm assumed the risk of the unanticipated event of non-availability of the main line for the NKCR and thus breached the agreement by not providing a rail spur. A contract is construed to determine whether a party unconditionally obligated itself to do a thing possible of performance, and if so, then it must be required to perform it.
¶ 40 Lincoln Farm argued that it was able to timely load at the storage facility all of the contract-specified potatoes on trucks to be furnished by FTC. FTC argues that it had the option to send either trucks or railcars for loading the potatoes and require Lincoln to provide whatever was necessarily required
¶ 41 The express language of the contract specified two methods of delivery to FTC, one using the NKCR main line for delivery on railway cars furnished by FTC, and another using trucks furnished by FTC. We would be inclined to agree, in part, with FTC that the language "trucks or railcars furnished by buyer" could be interpreted to mean the buyer has complete discretion for selection for a delivery method if the phrase "at Buyer's option" were not found in other provisions of the contract.
¶ 42 In the trial court, FTC relied on the deposition of Fred Helper, a representative for Lincoln Farm, for the proposition that FTC possessed an option for delivery by either railway cars or trucks.
¶ 43 The contract, taken as a whole, is not silent on Buyer's options to be exercised pursuant to the terms of the contract. It provides such options for Buyer in two provisions of the contract, and neither includes the specific provision that Buyer has the sole
¶ 44 Further, the record before us indicates that FTC had used the main line for several years for railway cars it provided for shipping the potatoes, it knew that the main line was not on the property of Lincoln Farm, and it based the 2008 agreement on agreements it had made with the Oppligers in previous years. There is no allegation that Lincoln Farm paid any amounts to the NKCR for the use of its railway or for leasing railway cars. Although Lincoln Farm loaded the potatoes on the railway cars leased by FTC, the record before us shows that FTC was the party actually using the NKCR main line and railway cars to accept delivery and ship its potatoes, and that this use of the NKCR line and railcars was the contractual obligation incurred by FTC. The contract is clear that it is FTC, and not Lincoln Farm, that assumed the risk of the unanticipated event of non-availability of the main line for the NKCR.
¶ 45 FTC argues that Lincoln Farm raised the Uniform Commercial Code (U.C.C.) §§ 2-614, 2-615, as defenses to FTC's motion for summary judgment. In the trial court and on appeal, Lincoln Farm has argued that these sections were raised by Lincoln Farm to show the analysis needed for FTC to excuse FTC's performance, and that these provisions were not raised by Lincoln Farm to excuse its own performance; i.e., the provisions were invoked for arguments concerning the alleged duties of FTC.
¶ 46 Lincoln Farm argues that in June, 2008, an agreed type of carrier became unavailable when the NKCR informed Lincoln Farm that loading could not occur on the
¶ 47 The record before us clearly shows that Lincoln Farm's citations to U.C.C. §§ 2-614 & 2-615 were used in arguments that were proleptic in nature; i.e., arguments in the nature of anticipation and answering arguments before one's opponent has put them forward. Lincoln Farm's arguments relate to its claims that FTC breached the potato sales agreement. FTC argues on appeal that the trial court could have ruled against Lincoln Farm without considering U.C.C. §§ 2-614, 615. Whether FTC breached the potato sale agreement is not before us on reviewing a partial summary adjudication determining that Lincoln Farm breached the agreement. First, Texas courts use the "same transaction or occurrence" language for defining a cause of action,
¶ 48 We hold that the unambiguous language of the 2008 Purchase Agreement for the potato crop required FTC to provide railcars or trucks for taking delivery of the potatoes from Lincoln Farm. We hold that the unambiguous language of that agreement did not give FTC a right to demand delivery by rail as the sole method for delivery; and as a consequence of that holding, we hold that Lincoln Farm did not breach the 2008 Purchase Agreement for the potato crop when it did not build a private railway spur on its property for taking FTC's railways cars from the main line of the NKCR until January, 2009. The questions presented by the parties on the application of U.C.C. §§ 2-614, 615, are not properly before us for adjudication in this appeal. The only issue before us in this appeal is whether Lincoln Farm breached the potato purchase agreement when it did not build a rail spur until January 2009.
¶ 49 The trial court's order on partial summary adjudication adjudicating that Lincoln Farm breached the 2008 potato sale agreement is reversed, and the cause is remanded to the District Court for further proceedings consistent with this opinion.
¶ 50 COLBERT, C.J., REIF, V.C.J., KAUGER, WATT, WINCHESTER, EDMONDSON, TAYLOR, COMBS, JJ., concur.
¶ 51 GURICH, J., recused.
(b) The Supreme Court may reverse, vacate or modify any of the following orders of the district court, or a judge thereof: ...
3. Any other order, which affects a substantial part of the merits of the controversy when the trial judge certifies that an immediate appeal may materially advance the ultimate termination of the litigation; provided, however, that the Supreme Court, in its discretion, may refuse to hear the appeal ...
Oklahoma Supreme Court Rule 1.50 provides:
"Any interlocutory order not appealable by right under the statutes, which order affects a substantial part of the merits of the controversy, may be brought for review to this Court in compliance with the rules in this Part when the trial judge or the judge's successor has certified that an immediate appeal from that order may materially advance the ultimate termination of the litigation. In the exercise of its statutory discretion this Court may refuse to review a certified interlocutory order. 12 O.S.2011 § 952, Subdiv. (b)(3).
No certified interlocutory order shall be considered if taken from an order overruling a motion for summary judgment. See Rule 1.40 for the application of other rules to review of a certified interlocutory order."
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented
(1) by course of performance, course of dealing, or usage of trade (Section 1.303); and
(2) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
Texas law states that a promise to do something in the future may be used to show a claim of fraud. But before a promise to do something in the future can be actionable fraud, a plaintiff must plead and prove that at the very time such promise was made the one making the promise did not intend to carry it out. Torres v. State, 605 S.W.2d 394, 396 (Tex.Civ.App.-Beaumont 1980, no writ). No fraud claim is before this Court.
If a contract is ambiguous, a fact issue exists on the parties' intent that may be properly submitted to the trier of fact. Certain Underwriters at Lloyd's v. KKM Inc., 215 S.W.3d at 491 citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d at 229 and Universal Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d at 746.
FTC relies upon an opinion without precedential value for the proposition that a seller must perform whatever is necessary to enable the seller to perform the seller's obligation. FTC Answer Brief, at 12, citing Tejas Power Corp. v. Amerada Hess Corp., No. 14-98-00346-CV, 1999 WL 605550, at *2 (Tex.App.-Houston [14th Dist.] Aug. 12, 1999, no pet.) (not designated for publication). Under Texas Rules, RAP, Rule 47.7, unpublished opinions have no precedential value but may be cited with the notation Not Designated for Publication. We conclude that the language in opinions such as Chevron Phillips Chem. Co., L.P. v. Kingwood Crossroads, L.P., 346 S.W.3d at 52-53 and Ellwood v. Nutex Oil Co., 148 S.W.2d at 864 explain Texas law.
Section 2.614 provides in part, that: "Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted." Tex. Bus. & Comm.Code Ann. § 2.614(a) (Vernon 2009).
