315 P.3d 971
Okla.2013Background
- FTC designated Lincoln Farm to deliver the Nebraska potato crop by loading into railcars or trucks furnished by FTC.
- NKCR main line allowed loading of potatoes on railcars parked on the main line prior to June 2008; later NKCR refused main-line parking requiring a private spur.
- LGF began building a private rail spur in 2008; spur became operational January 30, 2009, enabling loading via railcars.
- The 2008 Purchase Agreement states potatoes will be delivered on trucks or railcars furnished by Buyer, with no express requirement to build a rail spur.
- FTC sought summary judgment claiming Lincoln Farm breached by not building the spur; Lincoln Farm contended delivery could occur via FTC-furnished trucks, and that spur was not a contractual condition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the contract require Lincoln Farm to build a rail spur? | FTC: spur not expressly required; delivery by trucks possible. | Lincoln Farm: spur unnecessary unless rail delivery required by FTC. | No explicit spur obligation; not a required term under the contract. |
| Was FTC permitted to insist on rail delivery to the exclusion of trucks? | FTC: contract unambiguously requires FTC-furnished railcars or trucks; no sole rail delivery right in absence of main-line availability. | Lincoln Farm: delivery method not exclusively rail; spur not implied as sole requirement. | Contract unambiguously allows trucks or railcars; no exclusive rail delivery right. |
| Does the contract's delivery language create an implied term forcing a spur if rail delivery is unavailable? | FTC: implied term to secure delivery method when rail available; otherwise construction of spur needed. | Lincoln Farm: implied terms not proven; no certainty spur was contemplated at contract formation. | No implied obligation to build a spur; not clearly contemplated at contract formation. |
| Does transfer of risk and delivery timing affect whether Lincoln Farm breached when main line was unavailable? | FTC: Lincoln Farm bore risk; failure to secure spur breached contract. | Lincoln Farm: delivery occurred via FTC-furnished trucks; main-line unavailability did not excuse performance. | Delivery obligation satisfied by trucks or railcars; main-line unavailability did not by itself breach contract. |
Key Cases Cited
- Universal Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 747 (Tex. 2003) (implied covenants permitted only when clearly contemplated by express terms)
- Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 589 (Tex. 1996) (ambiguity resolved via contract-wide examination; sua sponte consideration possible)
- Certain Underwriters at Lloyd's v. KKM Inc., 215 S.W.3d 471 (Tex. 2006) (interpretation of contract terms; ambiguity grounds for extrinsic evidence)
- Chevron Phillips Chem. Co., L.P. v. Kingwood Crossroads, L.P., 346 S.W.3d 37 (Tex. App.—Houston [14th Dist.] 2011) (impossibility/impracticability concepts and contract performance risks)
- Donzis v. McLaughlin, 981 S.W.2d 58 (Tex. App.—San Antonio 1998) (construction of contract terms; implied terms generally disfavored)
- Jon-T Chemicals, Inc. v. Freeport Chemical Co., 704 F.2d 1412 (5th Cir. 1983) (delivery by rail vs. other methods; implied exclusivity in absence of agreement)
- Sun Oil Co. v. Madeley, 626 S.W.2d 726 (Tex. 1981) (contract interpretation; delivery and title transfer considerations)