Opinion
No. 106,345.
2012-07-27
HIGGINBOTHAM MANAGEMENT COMPANY, INC., and Higginbotham Aviation, L.L.C., Appellees, v. CESSNA AIRCRAFT COMPANY, Appellant.
Appeal from Sedgwick District Court; Jeff Goering, JUDGE. John C. Nettels, Jr., and Molly Walsh, of Stinson Morrison Hecker LLP, of Kansas City, Missouri, and Alisa Nickel Ehrlich, of the same firm, of Wichita, for appellant. Randall K. Rathbun and Molly McMurray, of Depew Gillen Rathbun & McInteer LC, of Wichita, for appellees.
Appeal from Sedgwick District Court; Jeff Goering, JUDGE.
John C. Nettels, Jr., and Molly Walsh, of Stinson Morrison Hecker LLP, of Kansas City, Missouri, and Alisa Nickel Ehrlich, of the same firm, of Wichita, for appellant. Randall K. Rathbun and Molly McMurray, of Depew Gillen Rathbun & McInteer LC, of Wichita, for appellees.
Before GREENE, C.J., MALONE and ATCHESON, JJ.
MEMORANDUM OPINION
PER CURIAM.
Cessna Aircraft Company (Cessna) appeals a money judgment awarded to business entities owned by Dennis Higginbotham following a jury trial. This case stems from a contract between the parties under which Cessna agreed to build a business jet for Higginbotham with a scheduled delivery month of February 2009. When Cessna delayed delivery of the airplane to March 30, 2009, Higginbotham attempted to terminate the contract and requested the return of his $1,250,000 deposit. Cessna refused to return the deposit, claiming that Higginbotham had breached the contract by refusing to accept delivery of the airplane and the company was entitled to keep the deposit as liquidated damages. Higginbotham sued, and a jury found that Cessna had defaulted on the contract in two ways—by failing to provide timely notice of the scheduled delivery month and by failing to deliver the airplane in February 2009. The district court entered judgment in Higginbotham's favor for $1,250,000.
Cessna appeals, arguing that the district court erred in finding the contract ambiguous and in admitting parol evidence, in giving factually and legally incorrect jury instructions, and in submitting questions of law to the jury. We agree with Cessna's primary claim that the district court erred in finding the contract ambiguous and in admitting parol evidence to alter the terms of the contract as to delivery of the airplane. And even if Cessna may have breached the contract by failing to provide timely notice of the scheduled delivery month, we conclude as a matter of law that Higginbotham waived his right to a remedy for this breach. Accordingly, we reverse the district court's judgment in favor of Higginbotham.
Factual and Procedural Background
Higginbotham is the sole shareholder and president of Higginbotham Management Company, Inc., and he the sole member of Higginbotham Aviation, LLC. Higginbotham is an automobile dealer, and he owns multiple dealerships. He is also experienced in purchasing airplanes. Over the years, as his business expanded, Higginbotham purchased airplanes in order to travel between his dealerships throughout Florida, Mississippi, and South Carolina. Higginbotham had purchased 10 or 12 Cessna airplanes over the years, and he made it a practice to sell each airplane as the warranty expired and purchase another airplane that was still under warranty. Although Higginbotham started out purchasing used airplanes, he purchased his first new airplane around 2001, working with Ralph Lloyd, a Cessna sales manager.
On December 20, 2006, Higginbotham signed a purchase agreement for a new airplane, a 2008 Cessna Citation XLS+. The total purchase price for the airplane was $11,595,000, and Higginbotham paid a first deposit of $250,000 when he signed the purchase agreement. The relevant language of the purchase agreement is as follows:
“1. AIRCRAFT PURCHASE. Seller hereby agrees to sell and Purchaser hereby agrees to purchase a 4th Quarter 2008 Cessna Model 560XL CITATION XLS+, as described in the Specifications and Description dated October 2006, Preliminary (Specification), a copy of which is attached hereto and incorporated herein as Exhibit A.
....
“7. DELIVERY
“a. Preliminary delivery quarter Fly–Away–Factory (F.A.F.) Wichita, Kansas, is 4th Quarter 2008.
“b. Scheduled Delivery Month will be furnished to Purchaser by Seller six (6) months prior to the last day of the preliminary delivery quarter.
....
“12. PURCHASER'S COMMITMENTS. Purchaser commits:
“a. Purchaser's Default. In the event this Agreement is breached or terminated by Purchaser for any cause whatsoever other than Seller's default, including Purchaser's failure to make all payments when due, then all deposits shall be retained by Seller not as a forfeiture but as liquidated damages for default and this Agreement shall end.
....
“15. AIRCRAFT DELIVERY DELAY. Seller shall not be liable to Purchaser for any delay in making delivery for any cause whatsoever; provided, however, if Seller should fail to make delivery within 90 days after the last day of the Scheduled Delivery Month and such failure is not due to fire, flood, strikes, or other industrial disturbances, accident, war, riot, insurrection, delay in vendor deliveries, or other causes beyond the control of the Seller, or, if for any reason Seller should fail to make delivery within 180 days after the last day of the Scheduled Delivery Month, Purchaser shall have the right to demand return of all deposits plus interest, unless Purchaser agrees to a later Scheduled Delivery Month....
....
“17. SOLE AGREEMENT. This Agreement is wholly integrated and is the sole agreement controlling this Aircraft purchase and sale. It is exclusive of any other express, implied, verbal, or written representations, omissions, or agreements, and is binding on Purchaser and Seller, their heirs, executors, administrators, successors, or assigns. Purchaser acknowledges receipt of a written copy of this Agreement, which may not be modified in any way except by written agreement executed by authorized representatives of all parties.”
The term “Fly–Away–Factory” or “F.A.F.” is similar to the term “F.O.B.” or “free on board,” where risk of loss is shifted from the seller to the buyer when goods are put on board a common carrier for shipment to the buyer. See K.S.A. 84–2–319. Cessna has two facilities from which it delivers new airplanes: Wichita and Independence, Kansas. In this case, “Fly–Away–Factory (F.A.F.) Wichita, Kansas” means that delivery will be at Cessna's Wichita factory and that Higginbotham would take title, possession, and assume the risks of owning the new airplane in Wichita.
On March 17, 2008, Higginbotham and Adam Smith, Cessna's customer solution manager, executed a document entitled “Amendment No. 1” (the first amendment). The first amendment changed the model year of the airplane from 2008 to 2009 and assigned a unit number to the airplane. The first amendment also changed the “Preliminary delivery quarter Fly–Away–Factory” of “4th quarter 2008” in the purchase agreement to a “Preliminary Delivery Month Fly–Away–Factory” of February 2009. Section IV of the first amendment stated: “Except as provided in this Amendment, all terms and conditions of the Agreement are hereby ratified and confirmed by the parties.” On May 21, 2008, Higginbotham paid the second deposit in the amount of $500,000.
On August 8, 2008, Higginbotham and Smith executed a document entitled “Amendment No. 2” (the second amendment). The second amendment listed the optional equipment Higginbotham had selected for the airplane. The second amendment also deleted the “Preliminary Delivery Month Fly–Away–Factory” of February 2009 from the first amendment and substituted in its place a “Scheduled Delivery Month Fly–Away–Factory” of February 2009. Section III of the second amendment stated: “The net effect of the above-mentioned changes INCREASES the price by the amount of $316,025, resulting in the TOTAL PURCHASE PRICE being revised to $11,911,025, and the delivery month being revised to February, 2009.” The second amendment also contained a ratification clause identical to the one in the first amendment. Also in August 2008, Higginbotham paid a third deposit in the amount of $500,000.
On February 9, 2009, Smith wrote to Higginbotham and informed him that the “Ready–for–Delivery–Date,” or the exact date the airplane was to be ready for delivery, was March 30, 2009. On February 24, 2009, Higginbotham wrote to Lloyd, asserting that he was unable to sell his used plane due to the unacceptable delivery delays on the new plane and requesting that Cessna return his $1,250,000 deposit. Lloyd replied, stating that the parties had mutually agreed in August to a scheduled delivery month of February 2009, and that the delay to March was within the terms of the purchase agreement; thus, Cessna would not grant the request for a refund. Lloyd further stated that, pursuant to the purchase agreement, if Higginbotham chose not to take delivery of the airplane, Cessna would retain his deposit as liquidated damages. The parties exchanged additional letters but were unable to resolve the dispute.
On June 2, 2009, Higginbotham filed a lawsuit in district court. In his petition, Higginbotham alleged that he had been explicit from the beginning of the negotiations that he needed a firm delivery date for the airplane in order to qualify for certain tax breaks. Higginbotham also alleged that Cessna representatives repeatedly assured him of a delivery date not later than the February 2009 date stated in the written contract. Higginbotham claimed that Cessna had breached the agreement between the parties and, accordingly, he was entitled to a refund of his deposit.
Cessna filed an answer to the petition and generally denied that the company had breached the contract. Cessna contended that under the terms of the purchase agreement and subsequent amendments, the scheduled delivery month for the airplane was February 2009, and Cessna was not liable for any delay in making delivery within 90 days after the last day of the scheduled delivery month. Cessna further claimed that Higginbotham breached the contract by refusing to accept delivery of the airplane on March 30, 2009; thus, Cessna claimed it was entitled to retain the deposit as liquidated damages.
Discovery was completed and an agreed pretrial conference order was filed on September 3, 2010. On September 9, 2010, Cessna filed a motion for summary judgment and a supporting memorandum. In the motion, Cessna argued that the parol evidence rule served to eliminate any disputed issue of material fact and that, without parol evidence, Higginbotham failed to state a claim upon which relief could be granted. Cessna also argued that the company could retain the deposit as liquidated damages under the purchase agreement. On October 1, 2010, Higginbotham filed a response to the summary judgment motion, arguing that Cessna had breached the purchase agreement by failing to give timely notice of the scheduled delivery month as required under the purchase agreement. Specifically, paragraph 7(b) of the purchase agreement stated that the “Scheduled Delivery Month will be furnished to Purchaser by Seller six (6) months prior to the last day of the preliminary delivery quarter,” which the purchase agreement had set as the fourth quarter of 2008. Higginbotham argued that Cessna was required to notify him of the scheduled delivery month by June 30, 2008, and Cessna had failed to do so.
Higginbotham also argued that Cessna breached its obligation of good faith and fair dealing, that the parol evidence rule did not exclude extrinsic evidence about the delivery month of the airplane because the purchase agreement was incomplete and the second amendment created an ambiguity, that promissory estoppel barred the forfeiture of his deposit, and that the liquidated damages clause in the purchase agreement was illegal and unenforceable. On December 6, 2010, the district court filed a memorandum decision finding that the contract was ambiguous, that the ambiguity allowed for the consideration of parol evidence, and that parol evidence created genuine issues of material fact that required denial of the motion for summary judgment.
In the agreed pretrial conference order, Higginbotham asserted that he detrimentally relied upon Cessna's oral promises regarding delivery dates which were different from the dates stated in the purchase agreement and amendments. Cessna filed numerous motions in limine, arguing, among other things, that Higginbotham should not be allowed to introduce evidence of or make arguments regarding promissory estoppel or detrimental reliance. Cessna asserted that the doctrine of promissory estoppel was inapplicable and any evidence in support of this theory should be excluded as unduly prejudicial and confusing to the jury. The district court held a hearing on the motions in limine on February 4, 2011. The district court deferred ruling on the motions, stating that the court would make a decision at the close of evidence and, if need be, instruct the jury not to consider any claims that were struck as a matter of law.
The jury trial began on February 8, 2011. At trial, Higginbotham testified to facts beyond the four corners of the written contract. Higginbotham testified that he had been explicit from the beginning of the negotiations that he needed a firm delivery date for the airplane because, in order to qualify for like-kind exchange and receive the resulting federal tax break, he needed to close on the purchase of his new airplane within 180 days of selling his previous airplane. Higginbotham testified that he only signed the first amendment because Cessna representatives assured him that the airplane would be delivered in January 2009, even though the first amendment listed February 2009 as the preliminary delivery month. Higginbotham also testified that throughout the process, Cessna representatives continually assured him that the airplane would be delivered in January or February 2009. Cessna objected to Higginbotham's testimony, and the district court overruled the objection “based on prior pretrial rulings.”
At the end of Higginbotham's case-in-chief, Cessna moved for judgment as a matter of law on the following issues: (1) liquidated damages; (2) the June 2008 breach, which was related to the notice provision of the scheduled delivery month; (3) promissory estoppel; (4) breach of the duty of good faith and fair dealing; and (5) the admissibility of the parol evidence on the delivery terms under the contract. In response to the motion for judgment as a matter of law, Higginbotham voluntarily withdrew his promissory estoppel claim. As to the other issues, the district court found that the changes in the delivery terms from the purchase agreement to the first amendment—“preliminary delivery quarter” to “preliminary delivery month”—created an ambiguity as to whether the 6–month notice of a scheduled delivery month was still required. The district court also found that language in the second amendment created an ambiguity as to the continuing viability of the delivery delay provisions of the purchase agreement, which limited Cessna's liability for delays past the scheduled delivery month.
The district court deferred ruling on the issue concerning the duty of good faith and fair dealing, and Cessna proceeded to present its case-in-chief. Lee Butler, who worked in contract administration for Cessna, testified; so did Steve Morrisey, Cessna's controller and vice-president. Smith also testified extensively for Cessna. Lloyd testified for Cessna as well, after which Cessna rested its case. At that time, the district court ruled on the reasonableness of the liquidated damages provision in the purchase agreement, finding that the clause was reasonable and enforceable.
At the conclusion of the evidence, the district court submitted a special verdict form to the jury with three questions. Question 1 asked the jury whether Cessna was in default under the contract by failing to give notice of the scheduled delivery month by June 30, 2008. The jury answered yes to this question. Question 2 asked the jury whether Higginbotham had waived his right to terminate the contract by signing the second amendment, paying the additional $500,000 deposit, and not affirmatively terminating the contract after June 30, 2008. The jury answered no to this question. Question 3 asked the jury if Cessna was in default under the contract by failing to deliver the airplane in February 2009. The jury answered yes to this question. Based on the verdict, the district court entered judgment against Cessna in the amount of $1,250,000, and the journal entry of judgment was filed on March 9, 2011.
On April 6, 2011, Cessna filed a renewed motion for judgment as a matter of law and a supporting memorandum. Cessna renewed its argument that the purchase agreement was not ambiguous and that the district court erred in admitting parol evidence to alter the terms of the contract as to the delivery of the airplane. Cessna also argued that even if it breached the contract by failing to provide timely notice of the scheduled delivery month, Higginbotham waived his right to a remedy for this breach as a matter of law. After a hearing, the district court denied Cessna's motion for judgment as a matter of law. Cessna timely appealed the district court's judgment.
On appeal Cessna argues that the district court erred in finding that the contract was ambiguous and in admitting parol evidence to alter the terms of the unambiguous, fully integrated contract. Cessna also argues that the district court erred in instructing the jury on the alleged ambiguity created by the second amendment. Cessna further argues that the district court erred in allowing the jury to determine whether Higginbotham waived his right to a remedy for the June 30, 2008, breach, rather than determining this issue as a matter of law. Finally, Cessna argues that the district court erred in instructing the jury on the covenant of good faith and fair dealing.
Was the Contract Ambiguous?
We will begin by examining Cessna's primary claim that the district court erred in finding the contract ambiguous and in admitting parol evidence to alter the terms of the contract as to the delivery of the airplane. The district court ruled repeatedly that the purchase agreement and the subsequent amendments were ambiguous regarding the delivery date of the airplane. The first such ruling occurred in the district court's denial of Cessna's motion for summary judgment. The district court also found that the written instruments were ambiguous in denying Cessna's motion for judgment as a matter of law at the end of Higginbotham's case-in-chief, and the renewed motion for judgment as a matter of law after the trial.
Although Cessna does not appeal the district court's denial of its motion for summary judgment, Cessna appeals the denial of its motions for judgment as a matter of law. The denial of a motion for judgment as a matter of law is reviewed de novo. Smith v. Kansas Gas Service Co., 285 Kan. 33, 40, 169 P.3d 1052 (2007). Furthermore, the interpretation and legal effect of a written contract are matters of law over which an appellate court has unlimited review. Regardless of the district court's construction of a written contract, an appellate court may construe a written contract and determine its legal effect. Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900, 220 P.3d 333 (2009). Likewise, the question of whether a written instrument is ambiguous is a question of law subject to de novo review. National Bank of Andover v. Kansas Bankers Surety Co., 290 Kan. 247, 264, 225 P.3d 707 (2010).
Our Supreme Court has stated that in determining whether an instrument is ambiguous, “we strive to determine the document's meaning and the parties' intent from within its four corners; we consider, construe, and harmonize the entire instrument without isolating any one particular sentence or provision. [Citation omitted.]” Central Natural Resources v. Davis Operating Co., 288 Kan. 234, 244–45, 201 P.3d 680 (2009); see Gore v. Beren, 254 Kan. 418, 427, 867 P.2d 330 (1994). “Ambiguity in a contract does not appear until two or more meanings can be construed from the contract provisions. [Citation omitted.]” Carrothers Constr. Co. v. City of South Hutchinson, 288 Kan. 743, 751, 207 P.3d 231 (2009). Ambiguity in a contract is determined from “ ‘a natural and reasonable interpretation of its language,’ “ not from a consideration of evidence outside the four corners of the document. See Gore, 254 Kan. at 427, 867 P.2d 330.
Generally, the terms of a contract intended by the parties to be a final expression of their agreement cannot be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement. See K.S.A. 84–2–202. But there are exceptions to this general rule. Our Supreme Court has held that “[i]t is a general rule that parol evidence may not be introduced to contradict, alter, or vary the terms of a written instrument, but where the contract is silent or ambiguous concerning a vital point incident thereto, parol evidence will be received to aid in its construction. [Citations omitted.]” Barbara Oil Co. v. Kansas Gas Supply Corp., 250 Kan. 438, 452, 827 P.2d 24 (1992).
Here, the district court admitted parol evidence at trial for two reasons: to support Higginbotham's promissory estoppel claim and because the district court found the written instruments to be ambiguous regarding the delivery terms for the airplane. But Higginbotham ultimately withdrew his promissory estoppel claim. Thus, Higginbotham's extensive trial testimony that altered or contradicted the written delivery terms under the contract was admissible only if the contract between the parties was ambiguous as a matter of law. If there was no ambiguity in the written instruments, then the district court erred in admitting Higginbotham's trial testimony and in denying Cessna's motions for judgment as a matter of law on this issue.
In denying Cessna's motion for judgment as a matter of law after Higginbotham's case-in-chief, the district court found ambiguity in two portions of the contract. First, the district court found that ambiguity was created when the first amendment changed the term “Preliminary delivery quarter” in paragraph 7(a) to “Preliminary Delivery Month,” while leaving the requirement of notice of the scheduled delivery month tied to the “Preliminary delivery quarter,” which was no longer identified in the document as amended. The district court found another ambiguity existed in relation to the second amendment. Although not entirely clear, it appears that the district court found that the ambiguity was created when the term “delivery month” was used in section III of the second amendment, which stated that “the delivery month [was] being revised to February 2009.” (Emphasis added.) The district court found that this language created an ambiguity as to the continuing viability of the delivery delay provisions in paragraph 15 of the purchase agreement.
Whether the contract is ambiguous is a question of law subject to our de novo review. National Bank of Andover, 290 Kan. at 264, 225 P.3d 707. We will walk through the principal terms of the contract between Higginbotham and Cessna, including the original purchase agreement and the two amendments, to determine whether two or more meanings can be reasonably construed from the contract provisions. As a preliminary matter, the parties agree and acknowledge the fact that the original purchase agreement executed in December 2006 left open two important terms under the contract: the final delivery price and the exact delivery date for the airplane. This fact is common and necessary regarding purchase agreements for newly manufactured airplanes. When the purchase agreement was executed in December 2006, the final delivery price for the airplane could not be determined because Higginbotham had not yet selected his optional equipment, and the purchase agreement indicated the final price of the airplane was “to be determined” based on the selection of the optional equipment. In any event, there is no dispute between the parties concerning the final delivery price of the airplane.
Likewise, when a purchase agreement is executed for a newly manufactured custom-built airplane, it is impossible for the manufacturer to specify the exact delivery date for the airplane. Here, the initial purchase agreement identified only a “Preliminary delivery quarter.” Thereafter, Cessna was required to notify Higginbotham of the “Scheduled Delivery Month.” Finally, Cessna was required to notify Higginbotham of the “Ready–for–Delivery–Date” or the exact day the airplane would be ready for delivery. This process of narrowing down the exact delivery date for the airplane is set forth in the purchase agreement executed in December 2006 and is not disputed by the parties. What is disputed is whether the subsequent amendments created two or more reasonable interpretations of when Higginbotham's airplane finally would be ready for delivery.
We will now focus on the written instruments executed by the parties herein. In December 2006, the parties executed the original purchase agreement whereby Higginbotham agreed to purchase a 2008 Cessna Citation XLS+ for the total purchase price of $11,595,000. The purchase agreement specified that optional equipment would alter the final delivery price of the airplane. As to delivery of the airplane, paragraph 7(a) specified the “Preliminary delivery quarter Fly–Away–Factory” as “4th Quarter 2008.” Paragraph 7(b) of the purchase agreement stated: “Scheduled Delivery Month will be furnished to Purchaser by Seller six (6) months prior to the last day of the preliminary delivery quarter.” Stated differently, paragraph 7(b) of the purchase agreement required Cessna to notify Higginbotham of the scheduled delivery month by June 30, 2008. Higginbotham later claimed that Cessna breached this provision of the contract because the evidence is undisputed that Cessna did not notify Higginbotham of the scheduled delivery month until the second amendment was signed on August 8, 2008.
Paragraph 12(a) of the purchase agreement addressed default by the purchaser. This paragraph provided that in the event the agreement is breached or terminated by the purchaser for any cause whatsoever other than the seller's default, then all deposits shall be retained by the seller not as a forfeiture but as liquidated damages.
Paragraph 15 of the purchase agreement addressed aircraft delivery delay and is crucial to the resolution of the dispute between the parties. Specifically, paragraph 15 provided that Cessna shall not be liable to Higginbotham for any delay in making delivery for any cause whatsoever provided that the airplane is delivered within 90 days of the last day of the scheduled delivery month. Cessna was entitled to a 180–day grace period if failure to deliver the airplane was due to fire, flood, strikes, or other industrial disturbances, accident, war, riot, insurrection, delay in vendor deliveries, or other causes beyond the control of Cessna. The parties referred to paragraph 15 throughout the proceedings as the “safe harbor” provision of the purchase agreement.
Paragraph 17 of the purchase agreement constituted an integration clause. This paragraph stated: “This Agreement is wholly integrated and is the sole agreement controlling this Aircraft purchase and sale.... Purchaser acknowledges receipt of a written copy of this Agreement, which may not be modified in any way except by written agreement executed by authorized representatives of all parties.” (Emphasis added.)
On March 17, 2008, the parties executed the first amendment to the purchase agreement. The first amendment changed the model year of the airplane from 2008 to 2009 and assigned a unit number to the airplane. The first amendment also changed the “Preliminary delivery quarter Fly–Away–Factory” of “4th Quarter 2008” in the purchase agreement to a “Preliminary Delivery Month Fly–Away–Factory” of February 2009. Finally, the first amendment contained a ratification clause, which stated that, except as provided in the amendment, all terms and conditions of the purchase agreement were ratified and confirmed by the parties.
We agree with the district court that the first amendment may have caused some confusion between the parties about notification of the scheduled delivery month. Under paragraph 7(b) of the purchase agreement, notice of the scheduled delivery month was tied to the “Preliminary delivery quarter,” which was no longer identified in the document after the first amendment. However, any possible confusion on this point was clarified by the second amendment which specifically provided for a scheduled delivery month of February 2009.
On August 8, 2008, Higginbotham and Smith executed the second amendment to the purchase agreement. The second amendment listed the optional equipment Higginbotham had selected for the airplane. The second amendment also deleted the “Preliminary Delivery Month Fly–Away–Factory” of February 2009 from the first amendment and substituted in its place a “Scheduled Delivery Month Fly–Away–Factory” of February 2009. Section III of the second amendment stated: “The net effect of the above mentioned changes INCREASES the price by the amount of $316,025, resulting in the TOTAL PURCHASE PRICE being revised to $11,911,025, and the delivery month being revised to February 2009.” Finally, the second amendment also contained a ratification clause identical to the one in the first amendment.
In determining whether the contract between Higginbotham and Cessna is ambiguous, “we consider, construe, and harmonize the entire instrument without isolating any one particular sentence or provision.” Central Natural Resources, 288 Kan. at 244–45, 201 P.3d 680. Here, considering the purchase agreement together with the two amendments, it is clear that the agreed scheduled delivery month for the airplane was February 2009. Section III of the second amendment stated that “the delivery month [was] being revised to February 2009.” But there is nothing about this language that created an ambiguity as to the continuing viability of the delivery delay provisions in paragraph 15 of the purchase agreement. Even if we interpret the second amendment as establishing a firm delivery date of February 2009, as Higginbotham insists, there is no language within the four corners of the written instruments to lead anyone to believe that the “safe harbor” provisions under paragraph 15 of the purchase agreement no longer applied. In fact, both amendments clearly stated: “Except as provided in this amendment, all terms and conditions of the agreement are hereby ratified and confirmed by the parties.”
Returning to our facts, on February 9, 2009, Smith wrote to Higginbotham and informed him that the “Ready–for–Delivery–Date” was March 30, 2009. Although Cessna failed to meet the February 2009 deadline for delivering the airplane, the “Ready–for–Delivery–Date” of March 30, 2009, was clearly within the 90–day grace period or safe harbor provision under paragraph 15 of the purchase agreement. Because Higginbotham refused to accept delivery of the airplane on March 30, 2009, he breached the terms of the contract and Cessna was entitled to retain the deposit as liquidated damages.
At trial, Higginbotham testified that Cessna representatives repeatedly assured him of a delivery date in January or February 2009—not after the February 2009 date stated in the written contract. But paragraph 17 of the purchase agreement required all modifications of the contract to be in writing and signed by the parties. The district court allowed Higginbotham's testimony based on its finding that the contract was ambiguous concerning delivery of the airplane. However, we conclude as a matter of law that the contract was not ambiguous. Ambiguity in a contract does not appear until two or more meanings can be construed from the contract provisions. Carrothers Const. Co., 288 Kan. at 751, 207 P.3d 231. Here, under the only reasonable interpretation of the contract, Cessna was entitled to a 90–day grace period after February 2009 in which to deliver the airplane to Higginbotham. Simply stated, under the unambiguous terms of the written instruments, Cessna did not breach the contract by failing to deliver the airplane in February 2009. We conclude the district court erred in allowing Higginbotham to present parol evidence to alter the terms of the contract as to the delivery of the airplane. We further conclude the district court erred in denying Cessna's motions for judgment as a matter of law on this issue.
Waiver of Remedy
Our conclusion that Cessna did not breach the unambiguous contract by failing to deliver the airplane in February 2009 does not completely resolve this appeal. The jury also found that Cessna breached the contract by failing to give notice of the scheduled delivery month by June 30, 2008. On appeal, Cessna does not dispute that there was sufficient evidence for the jury to find that Cessna failed to provide timely notice of the scheduled delivery month. However, Cessna argues that as a matter of law Higginbotham waived his right to a remedy for this breach by his conduct after June 30, 2008. Thus, Cessna argues that the district court erred in denying its motions for judgment as a matter of law and submitting this issue to the jury.
Generally, waiver of a contractual right is a mixed question of law and fact. See Patrons Mut. Ins. Ass'n v. Union Gas System, Inc. ., 250 Kan. 722, 725, 830 P.2d 35 (1992). “ ‘Where, however, the facts and circumstances relating to the subject are admitted or clearly established, waiver becomes a question of law.’ “ Kansas Wheat Growers Ass'n v. Windhorst, 131 Kan. 423, 430, 292 P. 777 (1930), supplemented on other grounds by Kansas Wheat Growers Ass'n v. Windhorst, 132 Kan. 21, 294 Pac. 928 (1931).
The facts material to the waiver issue are undisputed. Paragraph 7(b) of the purchase agreement stated: “Scheduled Delivery Month will be furnished to Purchaser by Seller six (6) months prior to the last day of the preliminary delivery quarter.” The purchase agreement set the preliminary delivery quarter as “4th Quarter 2008 .” The parties agree that these terms required Cessna to give notice of the scheduled delivery month by June 30, 2008, and that Cessna failed to give the required notice by that date. The parties also agree that Higginbotham did not take steps to cancel the contract when Cessna failed to give him a scheduled delivery month by June 30, 2008. Instead, Higginbotham signed the second amendment and paid an additional $500,000 deposit on August 8, 2008.
“Waiver is the intentional relinquishment of a known right. [Citation omitted.] ... [I]n order to establish a waiver there must be evidence that manifests, in an unequivocal manner, an intent that is inconsistent with the intent to claim a right. [Citation omitted.]” Razorback Contractors v. Board of Johnson County Comm'rs, 43 Kan.App.2d 527, 545, 227 P.3d 29 (2010), rev. denied 292 Kan. 967 (2011). Regarding a waiver, “ intent may be inferred from conduct, and the knowledge may be actual or constructive, but “ ‘both knowledge and intent are essential elements.’ “ [Citations omitted.]” Lyons v. Holder, 38 Kan.App.2d 131, 138, 163 P.3d 343 (2007).
Higginbotham argues that he could not have waived his right to a remedy for the June 30, 2008, breach because he was not aware of the breach and his rights under the contract. More specifically, Higginbotham argues that he could not have waived his right to a remedy for the breach because he did not read and understand the contract. Essentially, Higginbotham's argument is summarized as follows: a waiver requires knowledge and intent; but he did not read the contract and so he was unaware that Cessna was required to notify him of a scheduled delivery month by June 30, 2008; and, therefore, he could not have waived his right to cancel the contract due to Cessna's default.
But as Cessna points out, parties to a contract are presumed to have read and understood the contract. This court has previously held that “it is the responsibility of every contracting party to learn and know the contents of a contract before signing it. [Citation omitted.]” Aylward v. Dar Ran Furniture Industries, Inc., 32 Kan.App.2d 697, 700, 87 P.3d 341 (2004). Our Supreme Court, on the same subject, has stated:
“It is a well-established rule of law that contracting parties have a duty to learn the contents of a written contract before signing it, and such duty includes reading the contract and obtaining an explanation of its terms. [Citation omitted.] The negligent failure of a party to read the written contract entered into will estop the contracting party from voiding the contract on the ground of ignorance of its contents. [Citation omitted.] Therefore, a party who signs a written contract is bound by its provisions regardless of the failure to read or understand the terms, unless the contract was entered into through fraud, undue influence, or mutual mistake. [Citations omitted.]” Albers v. Nelson, 248 Kan. 575, 578–79, 809 P.2d 1194 (1991).
Following this logic, Higginbotham had a duty to read and understand not only his obligations, but his rights under the contract. Although generally waiver requires the relinquishment of a known right, a party to a contract cannot claim lack of knowledge of a right simply by claiming that he or she failed to read the contract. Higginbotham's lack of knowledge of his rights under the contract due to his own negligence may not work to create a loophole to allow him to avoid Cessna's defense of waiver.
Here, Higginbotham took no action to cancel the contract after Cessna failed to give notice of the scheduled delivery month by June 30, 2008. Instead, Higginbotham signed the second amendment to the contract and paid an additional $500,000 deposit on August 8, 2008. These actions reflected Higginbotham's intent to move forward with the airplane purchase and his conduct after June 30, 2008, was clearly inconsistent with his right to cancel the contract. See Razorback Contractors, 43 Kan.App.2d at 545, 227 P.3d 29. In fact, Higginbotham took no action to cancel the contract until he learned that Cessna could not deliver the airplane in February 2009. Even construing the facts in the light most favorable to Higginbotham, we conclude he waived his right to a remedy for the June 30, 2008, breach as a matter of law. Accordingly, the district court erred by denying Cessna's motions for judgment as a matter of law and submitting this issue to the jury.
In summary, we agree with Cessna's primary claim that the district court erred in finding the contract ambiguous and in admitting parol evidence to alter the terms of the contract as to delivery of the airplane. And even if Cessna may have breached the contract by failing to provide timely notice of the scheduled delivery month, we conclude as a matter of law that Higginbotham waived his right to a remedy for this breach. The district court erred in denying Cessna's motions for judgment as a matter of law, and we reverse the district court's judgment in favor of Higginbotham. As a result, we need not address Cessna's arguments that the district court erred in giving factually and legally erroneous jury instructions.
Reversed and remanded with directions to enter judgment for Cessna.