Whеn this appeal is reduced to its bare essentials and stripped of all hyperbole, technical terminology, and obfuscatory theorizing, it presents a straightforward exercise in the interpretation of the provisions of two contracts: the “Agreement for System License” (the License Agreement); and a commercial store space lease — actually forty-three separate retail store space leases (the Leases). As the licensee of Defendant-Appellant Blockbuster,
We conclude that under the instant circumstances (1) Trient cannot be prevented from unilaterally terminating the License Agreement, and (2) Blockbuster cannot force Trient to convey the Leases to Blockbuster following Trient’s unilateral termination of the License Agreement. Consequently, we affirm the district court’s summary judgment and lift all judicial constraints on alienation of the Leases. Our ruling leaves Trient free to dispose of the Leases as it sees fit, subject, of course, to the rights of its lessors thereunder, who were neither made parties hereto nor intervened herein, and whose rights are in no manner affected by our judgment.
I.
FACTS
In 1987 Blockbuster granted the License Agreement to Trient’s predecessor, James M. Grisebaum. Covering several geographical areas in the country, the License Agreement authorized Grisebaum or his successor to develop and operate Blockbuster Superstores in those areas for the rental and sale of videotapes. After obtaining Blockbuster’s consent as required in the License Agreement, Grisebaum transferred it to Trient, a Texas Limited Partnership, the General Partner of which is a Texas corporation. The License Agreement specified that all matters arising thereunder would be governed by Texas law, and neither the parties nor the courts have questioned the applicability of Texas law thereto.
Over the course of the ensuing eight years, Trient successfully opened and operated forty-three Blockbuster Superstores in its licensed areas in or around Portland, Oregon, and Seattle, Washington. By 1995 Trient’s Superstores were generating middle-eight-figures gross income.
Trient and Blockbuster first tangled judicially in 1994, after Blockbuster opened proprietary music stores in close proximity to a number of Trient’s Superstore locations. Trient took umbrage with this move by Blоckbuster largely because, in addition to audio disks and cassettes, the music stores sold blank and recorded videotapes, laser disks and video games. Contending that Blockbuster had violated non-competition provisions in the License Agreement, Trient sued Blockbuster in district court. In response, Blockbuster voluntarily ceased selling recorded videotapes from its music stores but continued to sell video games, video laser disks, and blank videotapes. Aspects of that litigation are ongoing.
Following these negative developments in the relationship between Trient and Block
Apparently aware of provisions in the License Agreement that prohibit the transfer of the going business and the alienation of specified proprietary materials, computer programs, and the like without Blockbuster’s consent, Trient nevertheless prepared to liquidate its unrestricted assets — among which it included the Leases — on the open market. In furtherance of this effort, Trient hired an investment banking firm to put together an offering or bid package and shop the package among potential purchasers. After Blockbuster received a copy of that package, it advised Trient that its Superstores could not be alienated without Blockbuster’s consent, and that any attempt by Trient to transfer those stores would be met with opposition from Blockbuster. In response, Trient called to Blockbuster’s attention the fact that the proposed disposition of assets would expressly exclude Trient’s rights under the License Agreement, as well as the Superstores as operating businesses.
Again, the only assets of concern to us today are the forty-three Leasеs. On the one hand, Trient insists that it can terminate the License Agreement and thereafter dispose of all nonproprietary assets, including the Leases, to anyone it chooses, whether that be Blockbuster, competitors of Blockbuster, or non-competitive third parties. On the other hand, Blockbuster insists that some of the provisions of the License Agreement, as well as an express provision found in twenty-three of the forty-three Leases, prohibit Trient from selling or assigning the Leases on the open market and give Blockbuster the right to acquire them.
II.
PROCEEDINGS
Trient filed this declaratory judgment action against Blockbuster in federal district court in Texas, seeking judicial recognition of Trient’s right to (1) terminate the License Agreement unilaterally, even in the absence of a default by Blockbuster or other cause, and (2) proceed thereafter with its plan to sell its assets, principally the Leases. The case comes to us from a unique procedural history in the district court. The court signed an Order on November 30, 1995, allowing “the sale of Trient’s assets clear from obligations to Blockbuster” to proceed as scheduled, with bids due to be received on December 8, 1995. On December 4, 1995, Blockbuster filed (1) a notice of appeal in that ease, to which appeal this court assigned Nо. 95-21011; and (2) an emergency petition for a writ of mandamus, to which we assigned No. 95-21008. We denied the mandamus on December 13, 1995, but held other motions in abeyance so that Blockbuster could promptly file a motion in the district court for severance, and the district court could act expeditiously on such motion. The day after we took that action, Blockbuster filed a joint motion for severance in which it requested a ruling from the district court by or before December 20, 1995. The motion for severance included Blockbuster’s motion for reconsideration based on newly discovered evidence.
Trient’s bid deadline had been moved to January 5,1996, so — аfter conducting a hearing on December 20,1995 — the district court, on the afternoon of January 4, 1996, rendered its opinion on limited remand and its order of severance. In response, Blockbuster amended its notice of appeal to include this ruling of January 4th. Blockbuster followed that with a motion asking this court for a stay pending appeal, and Trient filed a motion seeking expedited appeal. We granted both motions, and heard oral argument on March 5,1996.
III.
ANALYSIS
A. Appellate JuRISDICtion
Athough Blockbuster and Trient agree that the district court’s rulings of No-
B. STANDARD OF REVIEW
The aspect of this case that was severed by the district court was determined on summary judgment, which we will affirm only when we are “convinced, after an independent rеview of the record, that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.”
Our de novo review of legal questions includes the interpretation of contracts.
We agree in general with Blockbuster’s analytical framing of the issues presented in this appeal. Two straightforward questions of a purely legal nature are at the heart of the dispute: (1) Can Trient unilaterally terminate the License Agreement without cause?; and (2) if we answer that question in the affirmative, do the assignment provisions in the Leases between Trient as lessee and the property owners as lessors nevertheless create an obligation of Trient to sell, assign, or otherwise transfer those Leases to Blockbuster upon the termination of the License Agreement at a time when Trient is not in default? These two purely legal questions of contract interpretation are reviewed de novo.
C. The Merits
1. Terminating the License Agreement
a. Indefinite in Duration
We examine first the question whether Trient can unilaterally terminate the License Agreement absent breach or default by Blockbuster. The resolution of this issue depends in large measure on whether the License Agreement is “indefinite in duration.”
We hold that the conditions provided for in the “termination provisions” of the License Agreement are not the kind of determinable events that transform a contract of indefinite duration into one of definite duration. With regard to the first condition, the License Agreement merely provides that it will “continue indefinitely” until — meaning “unless” — it is breached by means of an incurable or uncured default. Under foundational principles of contract law, the term of any contract is terminable by one party upon a total or material breach by another party. Accordingly, an agreement which is otherwise indefinite in duration and terminable at will cannot be converted into an agreement of definite duration by the mere transcription of such universals within the text of the contract.
Moreover, taken as a whole, the conditions contained in the License Agreement’s “termination provisions” do not limit the duration of the License Agreement or make its duration determinable in any real or concrete way. We will not hold that a contract is definite in duration when it (1) expressly states that it will “continue indefinitely,” and (2) is confined in time only by “termination provisions” which contain conditions that are likely never to transpire.
b. The Impact of Big Spring
Not to be dissuaded easily, Blockbuster insists that the Texas Supreme Court’s opinion in City of Big Spring v. Bd. of Control
In Big Spring, the City of Big Spring, Texas, already the provider of water to its own inhabitants, agreed — as an inducеment
Recognizing the dangers of making an “Erie guess,” we nonetheless conclude that the Big Spring opinion does not control the outcome of the instant ease. The Big Spring court was faced with the question whether one governmental body (the City) should be required to perform a quintessential public service (the furnishing of water) for another governmental body (the State), which was operating a paradigmatically public institution (the hospital). We are here faced with an entirely different and distinguishable set of circumstances. It is one thing to require a municipality, which is already charged with providing water to its citizens for an indefinite period of time, to furnish water to a state-operated hospital as well for an uncertain period of time, particularly when the City’s promise to supply water was an inducemеnt for the State to build the hospital there in the first place.
This conclusion is supported by our decision in Southern Telephone & Telegraph Co. v. Florida East Coast Ry. Co.,
One of the parties, Southern Bell, nevertheless argued that the contract was not terminable at will. In so arguing, Southern Bell relied heavily on a Florida Supreme Court case that is closely analogous to the Texas Supreme Court’s decision in Big Spring. Our discussion of the Florida case makes evident its similarities to Big Spring:
The only Florida case which gives support to Southern Bell’s position is City of Gainesville v. Board of Control, [81 So.2d 514 ] [ (Fla.1955) ], in which in 1905 the City and University of Florida officials entered into an agreement whereby the city would provide water to the university without charge. No termination date or cancellation procedurеs were provided. After fifty years, the city, hard pressed for funds, sought cancellation_ The Florida Supreme Court concluded that the issue for decision was whether the contract was one to last in perpetuity.... [T]he court said that the contract ... contemplated] a free service so long as the University remained in Gainesville [rather than perpetually] and, therefore, it enforced theagreement. 26
Rejecting Southern Bell’s argument that City of Gainesville controlled the outcome of its contract dispute, we held that (1) City of Gainesville simply provided an exception to the general rule of law governing indefinite duration contracts in Florida, and (2) this exception did not apply to Southern Bell's contract.
Similarly, we hold in the instant case that (1) Big Spring simply carves out an exception to the general rule of law governing indefinite duration contracts in Texas, and (2) this exception does not apply to the contract between Blockbuster and Trient.
c. Reasonable Duration
Blockbuster argues alternatively that even if the contract is indefinite in duration, we should imply a term of “reasonable duration” to give Blockbuster the opportunity to develop “its own 43-store network” in Seattle and Portland. The Texas Supreme Court has recognized that courts often imply a term of reasonable duration during which franchise agreements that “contemplate the expenditure of substantial sums of money ... by one of the parties” will not be terminable at will.
In the instant ease, however, the record establishes that Trient, аnd not Blockbuster, has expended “substantial sums of money” in connection with the License Agreement. Moreover, Trient and Blockbuster bound themselves by the terms and conditions of the License Agreement more than eight years before Trient decided to terminate it in connection with existing the videotape rental and sales business. Accordingly, we need not engage in an exercise to ascertain just what would be a “term of reasonable duration” for this particular License Agreement; we are satisfied that whatever such a duration might be, it has long since been met and passed. We note in passing that it took Trient years to build its 43-store network, and it would be a commercial absurdity to force Trient to keep operating for additional years during which Blockbuster would attempt to replicate that feat — all the time creating competition for Trient at its leased locations.
2. The Assumption of the Leases
a. Provisions of the License Agreement
Having determined that Trient may, under the instant facts, unilaterally terminate the License Agreement, we must next consider whether, once it does so, Blockbuster would nevertheless have the right to acquire the Leases, which are bilateral contracts between Trient as lessee and the third-party property owners as lessors. In this regard we note first that in the License Agreement itself the parties expressly enumerated their respective rights upon its termination “for any reason.” Yet this extensive list does not include the right of Blockbuster to acquire Trient’s Leases; and the language of the License Agreement nowhere suggests that the list is intended to be merely illustrative or nonexclusive.
b. The Leases
(1) The Assignment Provisions
Regardless of the absence of any such provision in the License Agreement, however, Blockbuster nevertheless insists that provisions of the Leases — to which it concedes that it is not a party — give Blockbuster the right to acquire Trient’s leasehold interests in the former Suрerstore sites. Blockbuster argues that assignment provisions which are found in twenty-three of the forty-three Leases — and which Trient was obliged to expend its best efforts to obtain in all of them — obligate Trient to transfer its leasehold interests to Blockbuster upon the termination of the License Agreement. Those assignment provisions read:
Without Landlord’s consent, Tenant may assign the Lease to Blockbuster ... at any time during the Lease Term or any renewal thereof, and upon the termination or expiration of the Agreement for System License between Blockbuster and Tenant (“the Agreement”) Blockbuster may, at its sole option and without the consеnt of the Landlord, assume all of the obligations and liabilities of Tenant for the balance of the term of the Lease....30
We decline Blockbuster’s invitation to hold that these assignment provisions divest Trient of the right to assign its Leases as it wills when the License Agreement is terminated by Trient at a time when neither Blockbuster nor Trient is in default. The provisions in question can only be read to constitute the lessors’ pre clearance of Blockbuster as a potential assignee and permit Blockbuster to step into Trient’s shoes as substitute or successor lessee rather than have the Leases terminate — not unlike an attornment clause in a mortgage. When еach assignment provision is viewed in the context of the entire lease agreement — a contract between landlord and tenant — and the lease is read in its entirety, the manifest purpose of the provision clearly is to not to bind Trient to transfer the Leases to Blockbuster, but rather to bind the lessors to accept Blockbuster as an assignee or successor tenant if (1) Trient should choose to assign the lease to Blockbuster, or (2) Blockbuster should choose to take over Trient’s lease at a time when the lessor could terminate the lease due to a default by Trient as lessee.
The assignment provisions of the Leases obligate the lessors to permit the Leases to be assumed by Blоckbuster, given an assignment from Trient. These provisions could not, as a matter of contractual law, obligate a lessor to assign his or her lessee’s leasehold interest; every lessor is powerless to do that.
(2) Third Party Beneficiary Status
Even assuming arguendo that there were some ambiguity whether the as
In arguing that the assignment provisions impose an obligation on Trient to assign the Leases to Blockbuster upon termination of the License Agreement, Blockbuster insists that the language of the assignment provisions, together with particular clauses of the License Agreement, unambiguously establish that Trient and the lessors intended to impose such an оbligation on Trient. We disagree. First, even when viewed in the light most favorable to Blockbuster, there is at best some ambiguity as to whether the assignment provisions give Blockbuster a right to acquire the Leases from Trient upon the termination of the License Agreement. Such ambiguity is insufficient as a matter of law to establish that, at the inception of the several Leases, either Trient or the lessors, or both, clearly intended to impose an obligation on Trient to transfer the Leases to Blockbuster upon termination of the License Agreement.
Moreover, as discussed earlier, the provisions of the License Agreement do not support the cоnclusion that Trient intended to ensure that the Leases would confer on Blockbuster the right to acquire the leasehold interests from Trient upon termination of the Agreement. On the contrary, the License Agreement details at great length the duties that Trient agreed to undertake, or to continue to undertake, vis á vis Blockbuster following the termination of the License Agreement, and none of those duties include the obligation to transfer the leasehold interests in its store sites to Blockbuster. Thus, far from evidencing that Trient intended the assignment 'provisions in the Leases to confer on Blockbuster the right automatically to assume the Leases upon terminаtion of the License Agreement, the absence of such an obligation in the provisions of the License Agreement actually supports the conclusion that Trient did not so intend.
In sum, the plain language of the assignment provisions of the Leases creates no third party beneficiary obligations running from Trient to Blockbuster. If any such obligations are created in the Leases, they run only from the lessors to Blockbuster, and then only passively, i.e., the obligation not to object to assignments of the lessee’s interests to Blockbuster — assignments that the lessors are clearly unable to effectuate.
Accordingly, Blockbuster is not a third party beneficiary of the Lеases, at least as far as an assignment obligation of Trient is concerned. As a result, Blockbuster cannot enforce the assignment provisions against Trient; and any enforceability against the lessors of their obligation to permit Blockbuster to succeed Trient as lessee would be
IV.
CONCLUSION
For the foregoing reasons, we affirm the district court’s grant of summary judgment in favor if Trient and lift all judicial restraints on alienation of the Leases. As Trient’s lessors are not parties to this litigation, nothing herein contained is intended to affect their rights or to impose obligations on them. In light of the delays suffered by Trient as a result of this litigation, we order the mandate to issue forthwith.
AFFIRMED, MANDATE TO ISSUE INSTANTER.
Notes
. Blockbuster Entertainment Corporation, parent corporation of Blockbuster Videos, Inc., merged with Viacom, Inc., which is now successor by merger to Blockbuster Entertainment Corporation. For the sake of simplicity, these parties will be referred to in the opinion simply as Blockbuster.
. Blockbuster conceded in oral argument to this court that the License Agreement contains no express provision that vests Blockbuster with the right to acquire the Leases upon the termination of the Agreement.
. See Matter of Watson,
. Wilson P. Abraham Constr. Corp. v. Armco Steel Corp.,
. See id.
. Herrera v. Millsap,
. See id.
. See D.E.W., Inc. v. Local 93, Laborers’ Int'l Union of N. Am.,
. See D.E.W., Inc.,
. See Clear Lake City Water Auth. v. Clear Lake Util. Co.,
. See id.
. See Delta Serv. & Equip., Inc. v. Ryko Mfg. Co.,
. See id.
. Cf. Delta Serv.,
. Cf. id. at 12 (holding that "the termination clause permitting [one party] to immediately terminate the contract if [the other party] did not meet its sales quota” did not prevent contract of otherwise indefinite duration from being terminable at will); Moore v. Sec. Trust & Life Ins.,
Blockbuster notes that in Univ. Computing Co. v. Leader Corp.,
. See Richard A. Lord, Williston on Contracts § 4:19, at 432-33 (4th ed. 1990).
.
. See id. at 811.
. See id.
. See id. at 815.
. See id.
. Blockbuster notes that Big Spring is cited in a recent Fifth Circuit decision. See Hiller v. Mfr. Prod. Research Group of N. Am.,
.
. Id. at 858.
. Id. at 855.
. Id. at 859 (citations omitted) (emphasis added).
. Id.
. See Clear Lake,
. Section 7.2 of the License Agreement provides:
(a)Upon termination of this Agreement for any reason, [Trient] shall immediately pay Blockbuster any and all royalties, advertising contributions, or other amounts due to Blockbuster on the date of such termination.
(b) Upon termination of this Agreement for any reason, [Trient] shall immediately (i) cease all use of the Trade Names, the Service Marks, and any other trade names or service marks that might reasonably be construed to indicate that it has any relationship with Blockbuster, its trade names, or service marks, (ii) cease all use of the proprietary systems, procedures, methods and specifications for the management and operation of video tape rental and sales business ..., (iii) cease all use of the Licensed Programs, (iv) allow Blockbuster employees or agents to deinstall each Licensed Program from its Designated Equipment, and (v) return to Blockbuster all other copies of the Licensed Programs ... and any other items provided by Blockbuster.
(c) Upon any termination of this Agreement by Blockbuster for cause, any damages sufferedby Blockbuster for non-pаyment of amounts due Blockbuster under this Agreement shall be in a lien in favor of Blockbuster against the personal property, inventory ... and other equipment owned by [Trient] at the Superstores ....
. Some of the Leases include assignment provisions that vaty slightly from this language. The variations are inconsequential to our analysis of this issue.
. As earlier noted, twenty of the Leases do not include an assignment provision. Nevertheless, Blockbuster argues that it has the right to assume those leasehold interests as well, for the reason that the License Agreement requires Trient to use its "best efforts" to ensure that the Leases include assignment provisions. As we hold that the аssignment provisions do not confer on Blockbuster the unilateral right to acquire the Leases from Trient, this argument is moot.
. Trient and Blockbuster disagree whether Texas, Washington, or Oregon law should be applied to this issue. We need not resolve this dispute, as under the law of each of the three states, a third party to a contract may not enforce the provisions of that contract unless it is clear ab initio that the parties to the contract intended to impose a direct obligation with respect to the third party. See Sisters of St. Joseph of Peace, Health, & Hosp. Serv. v. Russell,
. Had the License Agreement been terminated by Blockbuster for one of the causes specified therein, the results of this analysis might have been different; but that case clearly is not before us today.