Opinion
CV 01-1073-BR
September 23, 2002
Gregory P. Lynch, Hurley, Lynch Re, P.C., Bend, OR, for Plaintiff.
Charles J. Pruitt, George L. Kirklin, Lane Powell Spears Lubersky LLP, Portland, OR, for Defendant.
OPINION AND ORDER
This matter comes before the Court on Defendant's Motion for Summary Judgment (#13), Defendant's Motion to Strike Defective Evidence Submitted by Plaintiff in its Opposition to Defendant's Motion for Summary Judgment (#40), and Defendant's Motion to Strike Affidavit of Jim Catterson (#45).
Plaintiff Prineville Sawmill Company brought this action against Defendant Longview Fibre Company for breach of a Settlement Agreement. Plaintiff alleges Defendant failed to pay Plaintiff all sums due under the Settlement Agreement, intentionally prevented Plaintiff from performing its contractual obligations, and breached the duty of good faith and fair dealing. Plaintiff seeks "actual, incidental, and consequential damages." The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.
For the reasons that follow, the Court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment and GRANTS in part and DENIES in part Defendant's Motion to Strike Defective Evidence. The Court DENIES Defendant's Motion to Strike Affidavit of Jim Catterson.
FACTS
Defendant manufactures paper products at a mill in Longview, Washington. In 1989, Plaintiff and Defendant entered into a Sales Agreement in which Plaintiff agreed to sell and Defendant agreed to buy wood chips produced by Plaintiff. A dispute arose between the parties concerning their respective rights under the Sales Agreement, and Plaintiff commenced an action against Defendant in federal court. That action was settled, and the parties ultimately entered into a Settlement Agreement effective August 2, 1999. Pursuant to the terms of the Settlement Agreement, the parties executed a Purchase Agreement, a Promissory Note, a Security Agreement, and an Option Agreement.
The Settlement Agreement had the following major components:
1. The parties agreed to continue performing their respective obligations under the 1989 Sales Agreement subject to all subsequent amendments and modifications until the Agreement expired on September 30, 1999.
2. The parties entered into a Purchase Agreement effective October 1, 1999, to December 31, 2000. The Purchase Agreement provided Plaintiff would deliver and Defendant would accept during the term of the Purchase Agreement up to 50,000 units of wood chips that met Defendant's quality specifications as set forth in the Purchase Agreement.
3. Defendant loaned or advanced $500,000 to Plaintiff against the purchase price of wood chips to be delivered pursuant to the Purchase Agreement. Plaintiff's obligation to repay the advance was governed by the Promissory Note and Security Agreement executed by the parties as part of the settlement.
4. The parties entered into an Option Agreement that gave Plaintiff the option to sell Plaintiff's wood chip plant to Defendant. The option was subject to various terms and conditions more fully discussed below.
Plaintiff disputes Defendant's characterization of the $500,000 payment as a loan and contends it was payment of settlement proceeds structured as a loan for Defendant's bookkeeping convenience. This dispute, however, is immaterial to Defendant's Motion because Plaintiff makes no claim based on the $500,000 payment.
The Wood Chip Purchase and Sale Agreements
After the settlement, Plaintiff tendered and Defendant accepted a total of 5,147.55 units of wood chips pursuant to the 1989 Sales Agreement before its expiration on September 30, 1999. Defendant delayed some payments due to concerns about chip quality. Ultimately, however, Defendant paid Plaintiff all sums due for chips delivered under the 1989 Sales Agreement, including interest on any late payments. Plaintiff does not allege any breach of the 1989 Sales Agreement.The 1999 Purchase Agreement expressly required all chips delivered by Plaintiff to be "entirely clear of char and substantially free of bark and rot. Chips must not contain over 1/2% bark." Bark content affects the quality of wood chips, which is important in the production of paper pulp. By letter dated September 23, 1999, Defendant informed Plaintiff that a shipment of chips Plaintiff delivered the day before contained a log that damaged Defendant's machinery and created a safety hazard. Defendant also stated other loads of chips from Plaintiff contained log pieces and rocks.
Defendant notified Plaintiff that it would not accept any chips from Plaintiff in the future "until [Plaintiff] can guarantee the chips are not contaminated by rocks, logs, etc." Defendant also stated it could not continue "to accept the barky chips we are receiving." Defendant stated it would deduct $50 per unit "for all loads with over 1.0% bark" and noted "[t]hese bad loads are contaminating our inventory and product." Plaintiff asserts this notice was the first time Defendant attempted to require compliance with quality standards in the 20 years that Plaintiff had conducted business with Defendant.
In September 1999, Plaintiff obtained Defendant's consent to transport a shipment of wood chips to Defendant's Longview, Washington, mill by barge on the Columbia River. Plaintiff engaged Tidewater Barge Lines to transport the chips. Tidewater tested the chips for bark content and reported the results to Defendant. The Tidewater bark tests showed the chips to have a bark content between 1.24% and 1.83%, which was substantially higher than the .5% allowed under the Purchase Agreement. Plaintiff believed Tidewater's testing was faulty and tried unsuccessfully to contact Defendant to discuss the bark content of the chips. In the meantime, Defendant informed Plaintiff by letter dated October 12, 1999, that it would not accept any of the chips at Tidewater or any future deliveries "unless the truck driver presents test results prepared by Tidewater or a comparable third-party testing agency showing that the subject load of chips does not contain over 1/2% bark."
The Purchase Agreement specifies "[a]ll chips shall be delivered by Seller to Buyer by either rail or truck, F.O.B. Buyer's main mill located at Longview, Washington. Seller must, at the expense and risk of Seller, transport the chips to that place and there tender delivery of them to Buyer."
On October 29, 1999, Gerald Calbaum, Defendant's Vice President of Fiber Supply, met with Jim Catterson, Plaintiff's controller, at Tidewater to do a resampling of the wood chips. Following the meeting, Calbaum brought samples of wood chips to Defendant's facility in Longview for testing. Based on this testing, Defendant decided the bark content of the chips was within acceptable limits and agreed to accept them. The chips were shipped to Defendant in November 1999.
During the term of the Purchase Agreement, Plaintiff tendered and Defendant accepted 36,075.45 units of wood chips. Defendant contends it paid the full contract price for all chips it accepted, but concedes some payments were late. Plaintiff, however, contends Defendant did not pay the full contract price for all chips delivered.
The Option Agreement
As part of the Settlement Agreement, the parties entered into an Option Agreement. Pursuant to the Option Agreement, Defendant granted to Plaintiff "the right and option to require [Defendant], upon the terms and conditions hereinafter set forth, to purchase all that certain real property constituting [Plaintiff's] chip mill . . . together with all the wood manufacturing equipment used in said chip mill. . . ." Plaintiff had discretion to include or to exclude from the transaction a portion of the real property Plaintiff used as a truck stop. The option expired at 5:00 p.m., October 31, 2000.
To exercise the option effectively, Plaintiff was required to deliver a written notice to Defendant on or before the expiration date. The Option Agreement specified several requirements for the written notice. The Agreement required the notice: 1) to inform Defendant that Plaintiff was exercising the option, 2) to include a metes and bounds legal description of the property to be sold prepared by a registered land surveyor, 3) to include a complete list of the wood-manufacturing equipment used in the chip mill that was to be included in the sale, and 4) to set a closing date not less than 30 days in advance and not later than December 31, 2000.
Plaintiff attempted to exercise the option by letter to Defendant dated October 31, 2000. Plaintiff did not include a metes and bounds legal description prepared by a registered land surveyor, but Plaintiff stated in the letter that such a description would be provided within ten days. Plaintiff opted to exclude the truck stop property from the sale and included a site map showing an "approximate new boundary."
In the event Plaintiff effectively exercised the option, the Option Agreement also included several conditions that had to be satisfied prior to closing. These included, inter alia, a requirement that Plaintiff provide Defendant within ten days following exercise of the option: 1) a preliminary title report showing fee simple title vested in Plaintiff, 2) proof of ownership of the wood manufacturing equipment included in the sale, 3) a "U.C.C. report" showing the equipment was free and clear of liens other than those that would be cleared at closing, and 4) a "full environmental assessment."
Plaintiff concedes it did not provide the required preliminary title report, proof of ownership of the equipment, or a U.C.C. report. Plaintiff provided a Phase I Environmental Assessment, but Defendant contends it was not a "full environmental assessment" as required under the Option Agreement.
By letter dated November 13, 2000, Defendant notified Plaintiff that it was terminating the Option Agreement based on Plaintiff's failure to satisfy its terms and conditions on time.
STANDARDS
Fed.R.Civ.P. 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show the absence of an issue of material fact. Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001). In response to a properly-supported motion for summary judgment, the nonmoving party must go beyond the pleadings and show there is a genuine issue of material fact for trial. Fed.R.Civ.P. 56(e).
An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Guidroz-Brault v. Missouri Pacific R.R. Co., 254 F.3d 825, 829 (9th Cir. 2001) (internal quotation and citation omitted). All reasonable inferences from the facts in the record must be drawn in favor of the nonmoving party. Hensley v. Northwest Permanente P.C. Retirement Plan Trust, 258, F.3d 986, 999 (9th Cir. 2001). A mere disagreement about a material issue of fact, however, does not preclude summary judgment. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1389 (9th Cir. 1990). When the nonmoving party's claims are factually implausible, that party must come forward with more persuasive evidence than otherwise would be required. Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir. 1998) (citation omitted).
The substantive law governing a claim or a defense determines whether a fact is material. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). If the resolution of a factual dispute would not affect the outcome of the claim, the court may grant summary judgment. Arpin, 261 F.3d at 919.
As the parties apparently agree, Oregon law governs this breach of contract action. This Court, therefore, must interpret and apply Oregon law as the Oregon Supreme Court would apply it. See S.D. Myers, Inc. v. City and County of San Francisco, 253 F.3d 461, 473 (9th Cir. 2001). If no decision by the Oregon Supreme Court is available to guide the Court's interpretation of state law, the Court must predict how the Oregon Supreme Court would decide the issue by using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance. Id.
DISCUSSION
In its Complaint, Plaintiff alleges a single claim for breach of the Settlement Agreement. Plaintiff contends Defendant "failed and refused and still refuses to abide by the terms [of the] settlement agreement and to pay to plaintiff said settlement sums." Defendant moves for summary judgment and contends it has fully complied with the Settlement Agreement and the four contracts executed as part of the settlement.
Plaintiff accepted substantially all of the facts set forth in Defendant's Concise Statement of Material Facts. In particular, Plaintiff admitted Defendant accepted and paid for all chips tendered pursuant to the 1989 Sales Agreement, Plaintiff tendered only 36,075.45 units of wood chips pursuant to the 1999 Purchase Agreement, Defendant accepted all units tendered, and Plaintiff did not satisfy several of the conditions set forth in the Option Agreement. Plaintiff, however, denied Defendant paid the full contract price for all of the chips.
After oral argument on Defendant's Motion on May 28, 2002, the Court permitted additional briefing and directed Plaintiff to identify the contract provisions that Defendant allegedly breached, to outline Plaintiff's legal theories, and to set forth the evidence and law that supports Plaintiff's claims. In its Supplemental Response, however, Plaintiff does not identify any particular provision in the Settlement Agreement that Defendant allegedly breached. Instead, Plaintiff contends Defendant violated certain extra-contractual duties. Specifically, Plaintiff asserts Defendant breached the Settlement Agreement by intentionally preventing Plaintiff from fully performing its contractual obligations and obtaining the full benefit of the settlement. Plaintiff did not contend in its original Response to Defendant's Motion for Summary Judgment and does not assert in its Supplemental Response that the terms of the Settlement Agreement, the Purchase Agreement, or the Option Agreement are ambiguous.
I. Failure to Pay for All Wood Chips Delivered
In its response to Defendant's Motion, Plaintiff contended Defendant failed to pay the full contract price for all wood chips delivered under the 1999 Purchase Agreement. In its Supplemental Response, however, Plaintiff did not address Defendant's alleged failure to pay. In the absence of a clear withdrawal of this claim, however, the Court assumes Plaintiff still asserts a claim against Defendant for failure to pay for wood chips.
In his Affidavit, Craig Woodward testified Plaintiff has not been paid in full. In addition, Plaintiff submitted letters from its controller to Defendant complaining about Defendant's failure to pay. The Court finds this evidence is sufficient to raise a disputed issue of material fact that precludes summary judgment on Plaintiff's allegation that Defendant breached the 1999 Purchase Agreement by failing to pay the full contract price for all wood chips delivered. The Court, therefore, denies Defendant's Motion for Summary Judgment as to Plaintiff's claim for failure to pay in full for wood chips delivered.
II. The Wood Chip Purchase Agreement
Plaintiff articulates eight grounds for its claim that Defendant breached the Settlement Agreement by intentionally preventing Plaintiff from performing its contractual obligations. Seven of these grounds arise from Defendant's enforcement of the .5% bark limit. For the eighth ground, Plaintiff contends Defendant failed to pay for wood chips in advance of delivery in accordance with its prior course of dealing.
A. Strict Enforcement of the Bark Limit 1. Prevention of Performance
Plaintiff contends Defendant's strict enforcement of the bark limit resulted in Defendant's rejection of otherwise acceptable chips, rejection of five loads of otherwise acceptable chips and diversion of those chips to "hogfuel," rejection of chips at Tidewater, delayed retesting of the Tidewater chips, imposition of strict testing standards on Plaintiff by forcing Plaintiff to test chips for bark content every 30 minutes, and imposition of a fine of $50 per unit for any shipment of chips with bark content exceeding 1.0%.
The parties explained at oral argument that "diverting chips to hogfuel" means burning them as fuel or otherwise disposing of them because they cannot be used in paper production.
Plaintiff mentions Defendant's rejection of "otherwise acceptable chips" several times. It is not clear from Plaintiff's briefs, however, when or how often Defendant allegedly rejected "otherwise acceptable chips." This allegation also is inconsistent with Plaintiff's acceptance of Defendant's statement that Defendant accepted all of the chips tendered by Plaintiff. See Pl.'s Resp. to Def.'s Mot. for Summ. J. at 2.
Plaintiff contends Defendant's actions prevented Plaintiff from producing the full 50,000 units of wood chips allowed under the Purchase Agreement and breached Defendant's implied duty not to prevent intentionally Plaintiff's performance. Plaintiff relies on Feldschau v. Clatsop County, 117 Or. 482, 244 P. 528 (1926), as authority for this claim. In Feldschau, the plaintiff entered into a contract with the defendant to excavate a roadway. The contract required the work to be completed no later than July 15, 1917. The southern part of the project was to take place in an area prone to flooding and difficult to excavate. The northern part of the excavation presented an easier task. Plaintiff alleged the defendant acted in bad faith to cause plaintiff to abandon the contract by requiring plaintiff to work in the flooded area first (during an unusually rainy season) rather than allowing plaintiff to work on the part of the road where conditions were more favorable.
The Feldschau court noted the contract granted defendant the discretion to designate where plaintiff was to start the work and the sequence in which Plaintiff would perform the work. The court found the defendant was required to exercise its discretion "in a fair, honest, and reasonable manner. In every contract there is an implied undertaking on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carrying out the agreement on his part." 117 Or. at 489. The court held:
If the manner in which this work was directed and supervised was so unreasonable and arbitrary as to imply bad faith, and, as a result thereof, the plaintiff was prevented from performing his contract and was obliged to abandon it, he would be entitled to recover the reasonable value of his work performed and materials furnished.
Id. at 490.
Feldschau, however, does not support Plaintiff's claim for at least two reasons. First, taking the evidence in the light most favorable to Plaintiff, no reasonable juror could find Defendant's insistence on compliance with the unambiguous bark limit was arbitrary or unreasonable nor that Defendant's insistence on such compliance prevented Plaintiff from performing its obligations under the contract. On the contrary, the only reasonable inference is that Defendant attempted to ensure that Plaintiff complied with the contract by producing chips that satisfied the contract's specific requirement regarding bark content.
Second, the Feldschau court recognized "if the contractor had agreed specifically to begin work on the extreme southern end of this road he would be obliged to do what he had contracted to do, regardless of the difficulties he encountered." Id. at 491. Here Plaintiff specifically agreed to provide wood chips with no more than .5% bark. The Court concludes Plaintiff cannot base a breach of contract action on Defendant's enforcement of that specific agreement, regardless of how difficult it was to perform.
2. Duty of Good Faith and Fair Dealing
Plaintiff also argues Defendant's actions in enforcing the bark limit breached the implied duty of good faith and fair dealing. That claim, however, also fails.
The governing law relating to a party's duty of good faith in the performance of a contract is well settled. Every contract contains an implied covenant of good faith and fair dealing, one that serves to protect the objectively reasonable contractual expectations of the parties. Significantly, however, that implied covenant cannot contradict an express contractual term, nor otherwise provide a remedy for an unpleasantly motivated act that is permitted expressly by the contract. Thus, the terms of a contract help serve to define the objectively reasonable expectations of the parties. As a corollary to that proposition, a party invoking an express contractual right does not, merely by doing so, violate the duty of good faith.
Zygar v. Johnson, 169 Or. App. 638, 645, 10 P.3d 326 (2000) (citations and internal quotations omitted). Accordingly, the Court finds Defendant's enforcement of the bark limit, which is an express contractual term, cannot constitute a breach of the implied duty of good faith and fair dealing.
3. Usage of Trade and Course of Dealing
Plaintiff also contends the meaning of the .5% bark limit is a fact question "based on the usage of trade and the party's course of dealing." Plaintiff asserts it is not the custom in the industry to strictly enforce a .5% bark limitation, and such a limitation is treated as a rough guideline. Plaintiff also maintains Defendant did not strictly enforce the .5% bark limit in its prior dealings with Plaintiff under the 1989 Sales Agreement. Plaintiff relies solely on Hurst v. W.J. Lake Co., 141 Or. 306, 16 P.2d 627 (1932) to support these assertions.
Hurst involved a contract for the sale of horse meat scraps. The contract required all scraps to contain a "minimum 50% protein." For any scraps that contained less than 50% protein, the buyer was to receive a discount of $5 per ton. The buyer took the discount for a delivery of scraps that contained 49.53% protein. The seller alleged "minimum 50% protein" meant 49.5% protein was equal to and the same as 50% protein according to the custom and usage in the trade that was well known to both plaintiff and defendant. Although the court noted the terms in a contract are presumed to have been used in their primary and general sense, the court held "evidence is nevertheless admissible that they have a technical, local, or otherwise peculiar signification, and were so used and understood in the particular instance, in which the agreement shall be construed accordingly." This rule was codified at Or. Rev. Stat. § 42.250.
In this record, however, Plaintiff has not presented any evidence that the term "1/2% bark" has a special meaning in the trade or any evidence identifying specific alternate meanings for the term "1/2% bark." Although Plaintiff argues the general practice in the industry is to apply such a standard flexibly instead of strictly, the Court finds Hurst does not support Plaintiff's assertion that the Court should enforce the parties' prior course of dealing instead of the unambiguous terms of the contract.
4. Uniform Commerical Code (U.C.C.)
At oral argument, the Court directed Plaintiff to address in its Supplemental Response the applicability of the U.C.C. to the 1999 Purchase Agreement. Plaintiff argues the U.C.C. does not apply because this contract was executed as part of the settlement of litigation. Plaintiff, however, offers no legal authority to support this assertion.
The Purchase Agreement is a contract for the sale of goods. Oregon's Uniform Commercial Code-Sales "applies to transactions in goods." Or. Rev. Stat. § 72.1020. The statute defines "goods" as "all things . . . which are movable at the time of identification to the contract for sale. . . ." Or. Rev. Stat. § 72.1050(1). In the absence of any authority to the contrary, the Court concludes the U.C.C. governs the 1999 Purchase Agreement for the sale and purchase of wood chips.
The U.C.C. provides the proper standard to analyze Plaintiff's argument that the parties' course of dealing should control over the express terms of the contract. Or. Rev. Stat. § 72.2080(2) provides
The express terms of the agreement and any course of performance, as well as course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade.
"Course of dealing" means "a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct." Or. Rev. Stat. § 71.2050(1). Plaintiff contends the parties' course of dealing under the 1989 Sales Agreement was inconsistent with strict enforcement of the .5% bark limit in the 1999 Purchase Agreement. Plaintiff asks the Court, therefore, to enforce the prior course of dealing instead of the express terms of the contract. Oregon law, however, requires the Court to apply the contract's express terms when those terms are inconsistent with the prior course of dealing. Or. Rev. Stat. § 72.2080(2). The Purchase Agreement requires Plaintiff to provide chips that do not contain more than .5% bark. The Court finds, therefore, Defendant was entitled to require Plaintiff to comply with that requirement, regardless of the parties' prior course of dealing.
B. Failure to Pay Advances
Plaintiff also asserts Defendant prevented Plaintiff from fully performing the contract when Defendant discontinued a long-established practice of paying in advance for undelivered wood chips. The Purchase Agreement provides:
By the twentieth day of each month, Buyer shall provide Seller with a chip purchase invoice summarizing the volume of chips received during the preceding calendar month and showing the net amount earned by Seller for such deliveries after deducting all rail freight charges paid by Buyer and any advances withheld by Buyer in accordance with agreements or understandings by and between the parties. Buyer shall remit to Seller, with the chip purchase invoice, Buyer's check payable to the order of Seller in the amount shown on the chip purchase invoice to be due to Seller.
The 1999 Purchase Agreement, however, also contains the following language:
This Agreement shall, as of its effective date of October 1, 1999, supercede and replace that certain Sales Agreement Covering Chips From Whole Logs to Be Shipped By Railroad Or Truck dated June 1, 1989, by and between Buyer and Seller. . . .
The contract does not require Defendant to pay for wood chips in advance of delivery, and Plaintiff does not assert otherwise. Again, Plaintiff instead asks the Court to enforce a prior course of dealing between the parties under the 1989 Sales Agreement. Plaintiff, however, cites no authority to support its argument that the Court should require Defendant to follow its previous practice of paying in advance of delivery under the 1989 contract instead of the enforcing the express provision of the 1999 Purchase Agreement, that provides for payment on the 20th day of each month for chips delivered the previous month.
The Court finds Defendant's payment practices in compliance with the express terms of the contract did not arbitrarily or unreasonably prevent Plaintiff from fully performing under the contract. The Court concludes the uncontroverted facts, viewed in the light most favorable to Plaintiff, support summary judgment in favor of Defendant as to Plaintiff's claim that Defendant breached the Settlement Agreement or the 1999 Purchase Agreement by intentionally preventing Plaintiff's performance.
III. The Option Agreement
Defendant also seeks summary judgment as to Plaintiff's claim that Defendant breached the Option Agreement. Defendant asserts it terminated the Option Agreement in accordance with its terms. Again, neither party asserts the Option Agreement is ambiguous.
The uncontroverted evidence establishes Plaintiff did not comply with the plain terms of the Option Agreement. The Option Agreement required Plaintiff to provide a metes and bounds legal description of the property to be conveyed in order to exercise the option. In its notice to Defendant of its decision to exercise the option, Plaintiff did not provide a metes and bounds legal description of the property to be conveyed, but stated such a description would be provided at a later date. Plaintiff's attempt to exercise the option did not comply with the plain terms of the contract and, therefore, was not effective.
In its Concise Statement of Material Facts pursuant to Local Rule 56.1, Defendant asserted Plaintiff failed to provide the required metes and bounds description. Plaintiff denied this fact and cited to the Affidavit of Craig Woodward as evidence. Woodward's Affidavit, however, says nothing about the metes and bounds description. Plaintiff presented no evidence from which a trier of fact could conclude Plaintiff had supplied the required description.
Even if Defendant had accepted Plaintiff's defective notice, the Option Agreement required Plaintiff to take several actions within ten days of its notice that Plaintiff did not take. The Option Agreement required Plaintiff to provide a preliminary title report showing Plaintiff held marketable title to the chip plant and a U.C.C. report showing Plaintiff held title to the manufacturing equipment.
Plaintiff admits it did not provide these documents. In fact, title to the property was held by Craig Woodward and his wife rather than Plaintiff. Plaintiff also admits it failed to provide the U.C.C. statement confirming ownership of the manufacturing equipment required by the Option Agreement. Plaintiff further contends there are factual disputes concerning whether Plaintiff substantially complied with the terms of the Option Agreement. Plaintiff, however, produces no evidence of any disputed material facts. Plaintiff asserts Defendant knew at the time the Option Agreement was signed that title to the real property was in the name of Craig Woodward and his wife, and the parties "expected a simultaneous transfer at closing." Defendant's knowledge of the status of the title at the time the Option Agreement was executed is immaterial to the issue whether Plaintiff complied with its obligations under the Agreement.
"If the Court determines that the language of a contract is ambiguous, evidence may be admitted relating to the intention of the parties, and that question becomes one of fact." Deerfield Commodities, Ltd. v. Nerco, Inc., 72 Or. App. 305, 317, 696 P.2d 1096 (1985). Plaintiff has not identified any ambiguity in the Option Contract, and the Court finds none. The Court concludes, therefore, evidence of the parties' intentions when they entered into the contract is irrelevant and does not create a fact question.
The Court also finds Plaintiff has not presented any evidence that Defendant took any arbitrary or unreasonable action to prevent Plaintiff from performing its obligations under the Option Agreement. Based on the undisputed facts, the Court concludes Plaintiff failed to satisfy the conditions necessary to exercise the Option Agreement and to require Defendant to purchase the chip mill. Accordingly, the Court finds Defendant did not breach the Option Agreement or the Settlement Agreement by terminating the Option.
DEFENDANT'S MOTION TO STRIKE DEFECTIVE EVIDENCE SUBMITTED BY PLAINTIFF IN ITS OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Following the supplemental briefing requested by the Court, Defendant filed a Motion to Strike Defective Evidence Submitted by Plaintiff in its Opposition to Defendant's Motion for Summary Judgment (#40).
Motion No. 1
Defendant first moves to strike a July 28, 1999, letter from Gregory Lynch to Charles Pruitt suggesting changes to a draft of the Settlement Agreement. Defendant contends the letter constitutes inadmissible parole evidence.
Plaintiff submitted the letter twice. It appears in the record as Exhibit A to the Affidavit of Gregory Lynch filed in support of Plaintiff's Response to Defendant's Motion for Summary Judgment and again as Exhibit 2 to the [second] Affidavit of Gregory Lynch filed in support of Plaintiff's Supplemental Brief.
Or. Rev. Stat. § 41.740 provides in pertinent part:
When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except where a mistake or imperfection of the writing is put in issue by the pleadings or where the validity of the agreement is the fact in dispute. However this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in ORS 42.220, or to explain an ambiguity, intrinsic or extrinsic, or to establish illegality or fraud.
(Emphasis added.) Or. Rev. Stat. § 42.220 provides: "In construing an instrument, the circumstances under which it was made, including the situation of the subject and of the parties, may be shown so that the judge is placed in the position of those whose language the judge is interpreting." Plaintiff asserts the July 29, 1999, letter is offered to "provide a context in which the Settlement Agreement was drafted so the court might understand the circumstances leading up to and culminating with the execution of the Agreement." The Court finds the letter is admissible for that purpose pursuant to Or. Rev. Stat. § 42.220. The Court, therefore, denies Defendant's Motion No. 1.
Motion No. 2
Defendant next moves to strike Plaintiff's Exhibits 3, 4, 5, and 6 to the Lynch Affidavit. The exhibits are letters from Lynch to Pruitt documenting problems between Plaintiff and Defendant. Defendant moves to strike the letters on the ground they are inadmissible hearsay. In response to Defendant's Motion, Plaintiff contends the letters are offered "to provide context to the issues that led to the lawsuit" and not as proof of the matters discussed therein. The letters are admissible for this limited purpose. The Court, therefore, denies Defendant's Motion to Strike Exhibits 3, 4, 5, and 6.
Defendant also moves to strike the attachments to some of these exhibits on the ground they are not authenticated properly. Defendant does not identify the attachments specifically. Exhibits 3 and 6 have no attachments. Exhibit 4 has several attachments consisting of letters or memos from Jim Catterson to Gregory Lynch. Exhibit 5 also has a memo from Catterson to Lynch attached, which is the same memo attached to Exhibit 4 with the addition of handwritten notes.
In response to Defendant's Motion, Plaintiff submitted an affidavit of Jim Catterson in which he attested he is the author of the documents attached to Exhibits 4 and 5. Catterson does not identify the author of the handwritten comments. Fed.R.Evid. 901(b)(1) provides a document may be authenticated by the testimony of a witness that the document "is what it is claimed to be." Catterson's affidavit is sufficient to authenticate all of the attachments except the attachment to Exhibit 5 that includes handwritten comments. The Court, therefore, grants Defendant's Motion to Strike the attachment to Exhibit 5 and denies Defendant's Motion to Strike the attachments to Exhibit 4.
Motion No. 3
Finally, Defendant moves to strike Exhibits 9, 12, 15, and 20 to the Lynch Affidavit and Exhibits 5 and 7 to Plaintiff's Response to Defendant's Motion for Summary Judgment on the grounds they are not properly authenticated. All of these exhibits are deposition excerpts. Each exhibit includes the cover page of the deposition identifying the deponent, the action, and the time and place of the deposition. Lynch attests in his Affidavit that the excerpts are "true copies of the transcripts provided to me by the court reporter that [sic] took the depositions."
Defendant argues the excerpts are not properly authenticated because they do not include a copy of the reporter's certification and cites to Orr v. Bank of America, 285 F.3d 764, 774 (9th Cir. 2002). Plaintiff offers no response to Defendant's Motion No. 3.
In Orr, the Ninth Circuit upheld the District Court's exclusion of deposition excerpts that lacked not only the reporter's certification, but also did not identify the deponent or the action. The court held:
A deposition or an extract therefrom is authenticated in a motion for summary judgment when it identifies the names of the deponent and the action and includes the reporter's certification that the deposition is a true record of the testimony of the deponent.
Id. at 774. The court, however, did not rule this is the only method of authenticating a deposition excerpt. The excerpts may also be authenticated by reviewing their contents pursuant to Fed.R.Evid. 901(b)(4). Authentication is accomplished "by evidence sufficient to support a finding that the matter in question is what its proponent claims." Fed.R.Evid. 901(a). Defendant has not submitted any evidence to show the excerpts are fraudulent. In light of the authenticating information Plaintiff did provide and in the absence of any evidence to the contrary, the Court concludes Plaintiff has submitted sufficient evidence to authenticate the deposition excerpts for the purposes of this record. The Court, therefore, denies Defendant's Motion No. 3. The Court notes, in any event, that none of the excerpts is material to the Court's decision on Defendant's Motion.
DEFENDANT'S MOTION TO STRIKE AFFIDAVIT OF JIM CATTERSON
Defendant also filed a Motion to Strike Affidavit of Jim Catterson (#45) offered by Plaintiff in opposition to Defendant's first Motion to Strike. In his Affidavit, Catterson states he is the author of documents attached to Plaintiff's Exhibits 4 and 5. In its Motion to Strike, Defendant offers no reason to conclude the affidavit itself is inadmissible. Defendant instead argues Catterson's testimony fails to properly authenticate the documents. The Court finds this is not a sufficient reason to strike the Affidavit and, therefore, denies Defendant's Motion to Strike Catterson's Affidavit.
CONCLUSION
For these reasons, therefore, the Court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment (#13) and GRANTS in part and DENIES in part Defendant's Motion to Strike Defective Evidence (#40). The Court DENIES Defendant's Motion to Strike Affidavit of Jim Catterson (#45).
IT IS SO ORDERED.