Opinion
No. A05-375.
Filed November 1, 2005.
Appeal from the Hennepin County, District Court, File No. AC-04-005596.
Norman J. Baer, Janel M. Dressen, Anthony Ostlund Baer, P.A., (for appellant).
Ralph Vernon Mitchell, Jr., Lapp, Libra, Thomson, Stoebner Pusch, Chartered, (for respondent).
Considered and decided by Lansing, Presiding Judge; Stoneburner, Judge; and Worke, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
In this breach-of-contract claim, the district court granted summary judgment in favor of respondent. Appellant argues that the district court erred by speculating as to the parties' intent regarding unambiguous contracts; by failing to apply a statutory definition of "Director of the Minnesota State Lottery"; and by determining that enforcing the contracts would lead to an absurd result. Because the district court properly granted summary judgment, we affirm.
FACTS
On September 30, 2003, appellant Media Rare, Inc. and respondent The Foley Group, Inc., two agencies that provide marketing and advertising services, entered into four "Letter[s] of Agreement" on behalf of the Minnesota State Lottery:
[1] [Appellant] shall be responsible for the production, syndication and placement of the weekly Minnesota State Lottery's Player Spotlight radio series. . . .
. . . .
Costs for these programs will be billed to [respondent] on a monthly basis. [Respondent] will then, in turn, bill the Lottery for these costs with no agency mark-up. . . . Upon written approval by the Director of the Lottery, annual cost may increase by up to 3%. . . .
[2] [Appellant] shall be responsible for the production, syndication and placement of the weekly Minnesota State Lottery's Environmental Journal radio series. . . .
. . . .
Costs for these programs will be billed to [respondent] on a monthly basis. [Respondent] will, in turn, bill the Lottery for these costs. . . . Upon written approval from the Director of the Lottery, the base cost of the show may increase at an annual amount not to exceed 3%. . . .
[3] [Appellant] shall be responsible for the production, syndication and placement of the weekly Minnesota State Lottery's Environmental Journal television. . . .
. . . .
Costs for the program will be billed to [respondent] on a monthly basis. [Respondent] will, in turn, bill the Lottery for these costs with no agency mark-up. . . . [T]he cost to produce the program may be increased by an amount not to exceed $40,000 each year, which amount shall be approved by the Director of the Lottery.
[4] [Appellant] shall be responsible [for] General Public Relations Consultation activities as requested by the Lottery. . . .
. . . .
. . . Approval for these costs will then be obtained from the Lottery Director. The costs will be billed to [respondent] who will then, in turn, bill the Minnesota State Lottery for these costs with no agency mark-up.
The agreements were acknowledged by George R. Andersen, then-director of the Lottery. Each agreement was for a three-year term expiring on November 30, 2006, and included the following clause regarding early termination: "This Agreement may be terminated by [respondent] with the written approval of the Director of the Minnesota State Lottery or [appellant] upon sixty (60) days written notice by either party."
On February 19, 2004, the Legislative Auditor released the results of a study it conducted on the Lottery's financial practices and recommended that the Lottery reexamine its relationship with appellant and the services appellant provided. Shortly before the results were released, George R. Andersen committed suicide, and Governor Tim Pawlenty appointed Michael Vekich as Acting Director of the Lottery. The position of acting director was created under Minn. Stat. § 43A.08, subd. 2a (2004), which authorizes the Minnesota Commissioner of Employee Relations to "authorize the temporary designation of a position in the unclassified service." The job description of the "Executive Director Minnesota State Lottery" was adopted to describe the scope of the position.
On February 24, 2004, Vekich notified respondent that the Lottery would be discontinuing the services appellant provided in the agreements and that, as acting director, he approved early termination of the agreements. On the same day, respondent provided appellant with 60 days written notice and Vekich's written approval terminating the agreements effective April 27, 2004. Respondent's contract with the Lottery expired on September 4, 2004.
Appellant initiated a breach-of-contract action, claiming that respondent impermissibly terminated the agreements early without written approval from the "Director of the Minnesota State Lottery." The district court granted respondent's motion for summary judgment and this appeal follows.
DECISION
On appeal from summary judgment, this court determines whether any genuine issues of material fact exist and whether the district court erred as a matter of law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). In this case, the facts are undisputed. The only question is whether the district court erred in its application of the law. When summary judgment is granted after applying the law to undisputed facts, this court reviews the legal conclusion de novo. Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn. 1998).
The agreements are not ambiguous and the district court did not erroneously speculate as to the parties' intent.
Appellant argues that the district court erred in granting summary judgment in favor of respondent because respondent did not get approval from the "Director of the Minnesota State Lottery" for early termination as the agreements required. Appellant contends that although the district court determined that the agreements were unambiguous, it erred by speculating that the parties intended that the Lottery would have authority to terminate contracts its agents entered into on its behalf. "On appeal, a reviewing court may make a determination of whether a contract is ambiguous without deference to the trial court's determination." Blackburn, Nickels Smith, Inc. v. Erickson, 366 N.W.2d 640, 643 (Minn.App. 1985), review denied (Minn. June 24, 1985).
A contract is ambiguous if it is reasonably susceptible to more than one interpretation. Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn. 1995). However, the terms of a contract will not be considered ambiguous solely because the parties dispute their proper interpretation. Knudsen v. Transp. Leasing/Contract, Inc., 672 N.W.2d 221, 223 (Minn.App. 2003), review denied (Minn. Feb. 25, 2004). Although the parties dispute the proper interpretation, the agreements unambiguously require the written approval of the "Director of the Minnesota State Lottery" for early termination.
Appellant argues that the parties specifically designated the "Director of the Minnesota State Lottery" to approve early termination and it is improper to go beyond the agreements to ascertain any other intent. "[T]he primary goal of contract interpretation is to determine and enforce the intent of the parties." Motorsports Racing Plus, Inc., v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003). Where there is a written agreement, the intent of the parties is determined from the plain language of the agreement itself. Metro. Sports Facilities Comm'n. v. General Mills, Inc., 470 N.W.2d 118, 123 (Minn. 1991). Looking solely to the agreements, however, does not support appellant's argument.
The agreements do not define the term "Director of the Minnesota State Lottery." Appellant suggests that because the agreements provide that they are to be construed according to the laws of the State of Minnesota, the term "Director of the Minnesota State Lottery" is defined in the State Lottery chapter of the Minnesota Statutes. Under Minn. Stat. § 349A.01, subd. 5 (2004): "`Director' is the director of the state lottery."
A state lottery is established under the supervision and control of the director of the state lottery appointed by the governor with the advice and consent of the senate. The director must be qualified by experience and training in the operation of a lottery to supervise the lottery. The director serves in the unclassified service.
Minn. Stat. § 349A.02, subd. 1 (2002). The agreements do not, however, refer to a statutory definition. Appellant relies on a standard choice-of-law clause, but this serves to determine which state laws govern the agreement. Appellant does not provide any authority that a choice-of-law clause means that a term defined in the Minnesota Statutes defines a term in the agreements. Additionally, the agreements refer to the "Director of the Minnesota State Lottery," while the statute uses the term "director of the state lottery." Thus, appellant's argument that the term "Director of the Minnesota State Lottery" is precisely defined by statute fails.
Appellant suggests that Bank Midwest, Minn., Iowa, N.A. v. Lipetzky, 674 N.W.2d 176 (Minn. 2004), supports its contention that this court should rely on a statutory definition. The issue in Lipetzky was whether the word "transfer" in a consent clause included a mortgage. 674 N.W.2d at 179. This court determined that the word "transfer" was synonymous with the word "convey," and relied on a statute to conclude that a mortgage was not a conveyance. Id. at 179-80. The Minnesota Supreme Court reversed, stating that the statutory meaning of "convey" was only helpful by analogy. Id. at 180. The supreme court concluded that, in common usage, the term "transfer" is a broader term than "convey," and referenced a dictionary definition to understand the word in the context of the entire contract. Id. at 180-81. Therefore, it is appropriate to look to a dictionary to define a word's plain and ordinary meaning. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn. 1979) ("The language found in a contract is to be given its plain and ordinary meaning."). A "director" is "[o]ne that supervises, controls, or manages." The American Heritage College Dictionary 393 (3d ed. 2000); see also Black's Law Dictionary 414 (5th ed. 1979) ("One who, or that which directs; as one who directs or regulates, guides or orders; a manager or superintendent, or a chief administrative official."). Under these common definitions, the agreements called for the director, i.e., the supervisor, manager, or chief administrative official, of the Lottery to authorize early termination.
Moreover, contracts are read in the context of the entire contract and interpreted in a way that gives meaning to all of its provisions while avoiding an interpretation that would lead to a harsh and absurd result. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998). Appellant argues that the word "director" cannot be isolated from "of the Minnesota State Lottery." However, the agreements use varying titles for the director of the Lottery. Specifically, while all four of the agreements require approval of the "Director of the Minnesota State Lottery" for early termination, three of the agreements require approval of the "Director of the Lottery" for cost increases, and one of the agreements requires approval of the "Lottery Director" for cost increases. Appellant concedes that these three labels refer to the same person. If, as appellant argues, "Director of the Minnesota State Lottery" cannot be separated, then the other terms in the agreements, i.e., Director of the Lottery and Lottery Director, have no meaning and nobody is responsible for approving increased costs.
Finally, parties' intentions are drawn from the entire instrument, not from isolated clauses. Country Club Oil Co. v. Lee, 239 Minn. 148, 151, 58 N.W.2d 247, 249 (1953). "Words which admit of a more extensive or more restrictive signification must be taken in that sense which will best effectuate what it is reasonable to suppose was the real intention of the parties." Kane v. Oak Grove Co., 221 Minn. 500, 504, 22 N.W.2d 588, 590 (1946). Because the agreements freely substitute alternative terms to identify the same individual, the contract construed as a whole suggests that the parties intended that the person directing the Lottery had the authority to approve early termination of agreements entered into on its behalf.
The district court did not err by failing to apply a statutory definition.
Appellant argues that Vekich did not meet the statutory requirements of the director of the state lottery because he was not appointed with the advice and consent of the senate and he did not have experience and training in lottery operations. See Minn. Stat. § 349A.02, subd. 1 (2002). Vekich was appointed "Acting Director Minnesota State Lottery," pursuant to Minn. Stat. § 43A.08, subd. 2a (2004), which provides: "The commissioner [of employee relations], upon request of an appointing authority, may authorize the temporary designation of a position in the unclassified service. The commissioner may make this authorization only for professional, managerial or supervisory positions which are fully anticipated to be of limited duration." The position was created to provide a temporary director to perform as the director, evidenced by the position description being identical to that of the "Executive Director Minnesota State Lottery." The description included: "The Lottery Director operates and administers the lottery and has the overall supervisory authority and responsibility of the lottery, including the adoption of rules and game procedures, governing its establishment and operation." Because Vekich, as acting director, was assigned all of the duties of the executive director in operating and supervising the Lottery, he was authorized to approve early termination of agreements entered into on the Lottery's behalf.
Appellant agues that because a specific statute should prevail over a general statute, this court should define "Director of the Minnesota State Lottery" using a specific definition in Minn. Stat. § 349.02, subd. 1, rather than a general definition in Minn. Stat. § 43A.08, subd. 2a. For support, appellant refers to Burgi v. Eckes, 354 N.W.2d 514 (Minn.App. 1984). In Burgi, this court interpreted a particular landlord/tenant contract and stated that a general rule of contract construction is that the specific in a writing governs over the general. 354 N.W.2d at 519. Appellant does not provide any authority that this general rule of contract construction also applies to statutory definitions. Furthermore, under Minn. Stat. § 43A.08, subd. 2a, the commissioner is authorized to designate a temporary professional, managerial, or supervisory position, the statute does not define "director," the position is defined by the position description of the "Executive Director Minnesota State Lottery."
Applying appellant's definition would lead to an absurd result.
The district court determined that it would be absurd if the governor was allowed to appoint an agency head but was not allowed to give that appointee the power to conduct duties authorized by statute. Appellant argues that this is a breach-of-contract claim and the governor cannot confer authority to intervene in agreements between private parties. But the terms of a contract should be read in the context of the entire contract and the terms will not be construed as so to lead to a harsh or absurd result. Brookfield Trade Ctr., 584 N.W.2d at 394.
Here, when the term is read in the context of the entire contract it leads to the conclusion that the individual responsible for overseeing the Lottery's operations had the authority to approve early termination of the agreements. To read it otherwise would render additional contract terms meaningless. Additionally, the agreements were entered into on behalf of the Lottery and acknowledged by the Lottery, indicating that the Lottery, through its agency head, had the authority to approve early termination. Finally, appellant recognizes that enforcing the agreements would lead to a harsh result, i.e., respondent would be paying appellant for services that appellant no longer performs, and respondent would no longer be reimbursed from the Lottery because neither appellant nor respondent have contracts with the Lottery, but insists that this does not matter in enforcing unambiguous contracts. Denelsbeck v. Wells Fargo Co., 666 N.W.2d 339, 346-47 (Minn. 2003) ("If a contract is unambiguous, the contract language must be given its plain and ordinary meaning, and shall be enforced by courts even if the result is harsh." (quotation omitted)). However, the plain and ordinary meaning of "Director of the Minnesota State Lottery," when read in the context of the entire contract, leads to the result that the parties' intended that the Lottery, through its director, had the authority to approve early termination. Therefore, respondent's 60-day written notice and written approval from the acting director of the Minnesota State Lottery effectively terminated the agreements. The district court did not err in granting summary judgment.