Opinion
3:19-cv-01677-HL
04-25-2022
WILLAMETTE BIOMASS PROCESSORS, INC., an Oregon corporation, Plaintiff, v. PERDUE AGRIBUSINESS LLC, a Maryland limited liability company, Defendant.
FINDINGS AND RECOMMENDATION
ANDREW HALLMAN United States Magistrate Judge
Plaintiff Willamette Biomass Processors, Inc. (“WBP”) filed this lawsuit against Defendant Perdue Agribusiness LLC (“Perdue”), asserting claims for breach of contract or, in the alternative, promissory estoppel, stemming from discussions between the parties that WBP alleges resulted in an oral agreement. This matter comes before the Court on Perdue's Motion for Summary Judgment. The Court heard oral argument on this motion on March 31, 2022. ECF 67. For the following reasons, Perdue's motion should be GRANTED.
BACKGROUND
Unless otherwise noted, the following facts are undisputed or viewed in the light most favorable to WBP. See Fed. R. Civ. P. 56(a):
I. The Parties
From 2007 until August 2019, WBP manufactured plant meal and plant oil in Rickreall, Oregon. Declaration of Craig Parker (“Parker Decl.”) ¶ 2, ECF 51; Declaration of Timothy W. Snider (“Parker Depo.”) Ex. A at 37-38, ECF 41. WBP crushed and pressed raw plant materials - in this case, soybeans - into different types of meal and different types of oils. Id. Craig Parker (“Parker”) was WBP's majority shareholder throughout its existence and served as its president and chief executive officer. Parker Depo. 33, 37-38, 45-47.
Excerpts of Parker's deposition were included with the parties' declarations at ECF 41, ECF 52, and ECF 62. This Court will refer to the page number of Parker's deposition throughout this opinion.
Perdue supplies various animal feed for Perdue Foods. Declaration of Timothy Thomas (“Thomas Decl.”) ¶ 3, ECF 45; Declaration of Kathy Flores (“Flores Decl.”) ¶ 3, ECF 40; Declaration of Frank DeGennaro (“DeGennaro Decl.”) ¶ 3, ECF 39. Soybean meal is an ingredient in the chicken feed that Perdue supplies to Perdue Foods. Thomas Decl. ¶ 4. Perdue can source the soybean meal by purchasing raw soybeans and processing them into soybean meal and soybean oil for delivery to Perdue's feed mills. Id. ¶ 5. Perdue uses west coast feed mills to manufacture chicken feed for Perdue Foods' chicken farms in Burlington, Washington and Petaluma, California. Id. ¶ 6.
II. The 2014 TPA
On December 22, 2014, WBP and Perdue executed a Toll Processing Agreement (the “TPA”), whereby Perdue hired WBP to manufacture all the organic soybean meal Perdue needed for its facilities in Washington and California. See DeGennaro Decl. Ex. A. Perdue agreed to ship approximately 1,440 tons of raw organic soybeans to WBP's plant each month. Id. WBP agreed to process those beans into organic soybean meal. Id. The TPA contained detailed handling and quality specifications for the soybean meal and oil produced by WBP. Id. at 1, 10. The TPA set the base price for WBP's processing services at $83.00 per ton with a 3% annual price increase. Id. at 3.
The term of the TPA was from February 1, 2015 through November 14, 2017. Id. at 5. The TPA also provided Perdue three five-year renewal options. Id. The TPA was set to expire on the same date as WBP's commercial lease of its plant in Rickreall. Parker Decl. ¶ 5. Perdue had to exercise the renewal option in writing no less than 240 days before the expiration of the TPA, which was March 19, 2017. See DeGennaro Decl. Ex. A at 5. If renewed, the TPA contained a formula for the new price, which could not be lower than $88 per ton. Id.
The TPA stated that any “additions, modifications or amendments to the Agreement shall not be binding unless made in writing and signed by both parties.” Id. at 8. Over the course of the TPA, the parties executed three written addenda. DeGennaro Decl. Exs. B-D. In addition, the parties resolved issues pertaining to moisture content of the soybeans in excess of what was specified in the TPA without modifying the agreement. Parker Decl. ¶ 9.
III. Perdue declines to renew the TPA.
Perdue was dissatisfied with multiple terms of the TPA. For example, during the term of the contract, Perdue's costs for organic soybean meal with WBP was steadily climbing higher than the market rate for alternative soybean meal supplies. Thomas Decl. ¶¶ 9-10; DeGennaro Decl. ¶ 11; Flores Decl. ¶ 9. WBP's inability to dry soybeans and its lack of sufficient storage space were also issues for Perdue. Thomas Decl. ¶ 11-12; Flores Decl. ¶ 10.
In August 2016, Frank DeGennaro (“DeGennaro”), Perdue's vice president of specialty crops, visited WBP's plant in Oregon. Parker Depo. 152:18-153:8; 155:11-156:1:3. During this visit, Parker discussed the TPA renewal with DeGennaro and informed him about the interrelated nature of the TPA and lease renewal. Id. DeGennaro did not commit to a renewal but expressed an intent for the parties to continue working together. Snider Decl. Ex. G at 35:23-36:15, 106:24-107:6.
On January 31, 2017, Parker visited Perdue's headquarters in Maryland to discuss the renewal of the TPA and met with Perdue's representatives for the entire day. Parker Decl. ¶¶ 1112; Parker Depo. 159. Prior to the visit, Perdue had prepared a list of issues concerning the TPA, which included multiple issues with facility infrastructure, reporting, and the price per ton of meal. Declaration of Samuel T. Smith (“Smith Decl.”) Ex. 6 at 1, ECF 52. DeGennaro recalls discussing those issues with Parker during the meeting. DeGennaro Decl. ¶ 10. Parker recalls specifically discussing the reduction in price per ton and reminding Perdue that WBP must renew its lease by May 2017. Parker Decl. ¶ 12.
On March 28, 2017, DeGennaro sent a letter to WBP stating that Perdue would not exercise its option to renew the TPA, but that it “would like to continue its business relationship with WBP and looks forward to discussing new terms and conditions to govern the relationship between the parties, to be memorialized in a separate agreement.” DeGennaro Decl. Ex. E. Parker responded that he would like to meet “as soon as possible to begin discussions on contract terms that would be acceptable to Perdue and work for both [businesses].” Id.
On March 30, 2017, Tim Thomas (“Thomas”), Perdue's Organic Inventory Manager, prepared notes regarding an upcoming call with WBP, which was to be scheduled on April 3, 2017. See Smith Decl. Ex. 9. Those notes indicate that the “starting point for negotiations should be $75.00 per ton, with an expectation that the final number will be higher.” Id. at 2. Those notes also listed multiple issues that Perdue had with WBP, including the lack of a dryer, limited storage space, total output, and other issues. Id.
III. The Alleged Oral Agreement
On April 3, 2017, WBP and Perdue discussed the terms of a new agreement during a conference call. Parker Decl. ¶ 14; DeGennaro Decl. ¶¶ 13-18. On summary judgment, the Court discounts Perdue's description of the call. The Court, however, must also reconcile Parker's differing recollections as to how the parties reached an alleged oral agreement:
A. Parker's Deposition
In his deposition, Parker testified that, during phone conversations occurring between his visit in January and the March 28, 2017 letter, the parties reached an oral agreement on a price of $75 per ton and a quantity of 880 tons. Parker Depo. 177-78. However, he later clarified that Perdue had told him it would “like to have the new terms be 880 tons at $75 a ton.” Id. To which, Parker responded that WBP would “like to see [1000] tons per month.” Id. at 176-179, 181-82. Parker also offered to find additional customers for Perdue's soybean meal in the western United States, hoping Perdue would increase the volume to a 1,000 tons per month minimum. Parker Depo. 176-177, 181-182. During these prior calls, there also was an “understanding” that the new agreement would be for five years based on WBP's lease renewal and the length of the prior agreement. Id. at 180-81. These three terms - price, quantity, and duration - were specifically discussed during “a number of conversations.” Id. at 182-83. Parker also recalled discussing the possibility of WBP performing additional services such as drying beans, but no agreement was reached. Id. at 179.
Parker also testified regarding the April 3, 2017 call. During this call, WBP and Perdue discussed 880 tons at $75 per ton, and Parker conveyed to Perdue that he needed have “[its] decision by May 15 as to what [they] were going to do.” Id. at 194. Despite his March 28, 2017 statement that he wanted to increase the quantity to 1000 tons, Parker did not recall whether he was still requesting 1000 tons during this particular call. Id. at 195. The parties continued discussing whether WBP would also do drying for Perdue. Id. at 195-96. Parker indicated that including drying in the $75 per ton figure was “a possible negotiating point.” Id. at 195-96. No other contract terms were discussed. See Id. Parker believed that all parts of the TPA would remain the same, except for volume and price. Id. at 199-200. During this phone call, DeGennaro also assigned Thomas to “work this out and get it on paper.” Id. at 179, 195.
B. Parker's Declaration
In his declaration, Parker does not offer any testimony concerning any conversations between the January 31, 2017 visit and the March 28, 2017 letter. Parker Decl. ¶¶ 12-14. He also recounts a different version of the April 3, 2017 call:
The alleged agreement appears to have been made during the April 3, 2017 call and not during the prior conversations, as Mr. Parker testified in his deposition. See Pl.'s Sur-Reply Opp'n Def.'s Mot. Summ. J. 4 n. 3 (noting that document discovery confirmed that Mr. Parker's prior recollection was incorrect). WBP asserts that this date distinction is immaterial for purposes of summary judgment, and, for their part, Perdue does not challenge that assertion. Accordingly, this Court will not address the discrepancy in dates apart from the discussion of the record.
Parker testified that, during the call, Perdue offered the 880-ton minimum at $75 per ton, and that he accepted the “price figure immediately.” Parker Decl. ¶ 15. In contrast to his deposition, Parker recalls specifically asking for a larger volume, but then accepting a minimum quantity of 880 tons after learning that Perdue's offer was determined based on the amount of meal it needed for its Washington facility. Id. The parties then discussed the option of jointly securing outside sales to increase the monthly quantity. Id. As for the length of the new TPA, Parker informed Perdue that an agreement would need to last five years, and Perdue indicated that it understood the agreement would be for five years. Id.
Consistent with his deposition, Parker testified that the parties also discussed the drying of beans. Id. ¶ 16. But Parker now testifies that they discussed “whether the parties should enter into a separate and additional agreement,” as opposed to discussing drying as a “possible negotiating point” with respect to the $75 per ton price. Id. The parties did not discuss any other issues during the call. Id. ¶ 17. Thomas was assigned to “reduce the parties' oral agreement to writing” and work with Parker on costing for a potential, additional dryer contact. Id. ¶ 18.
IV. The Parties' Continued Negotiations
The parties continued their discussions after the April 3, 2017 call. On April 13, 2017 and April 20, 2017, Parker emailed Thomas to inquire how much Perdue paid to dry soybeans at its other facilities. Thomas Decl. Ex. B; Parker Depo. 200-02. Parker intended to use that information in giving Perdue a cost bid on what WBP would charge for the service. Id. In the weeks following the April 3, 2017 call, Parker also traveled the western United States, finding new customers and bringing those sales opportunities to Perdue with the hope of increasing the total volume to 1000 tons. Parker Decl. ¶ 19. Parker communicated some of those opportunities to Perdue. Id.
On May 8, 2017, Thomas drafted internal notes regarding the call on April 3, 2017. His notes stated the Perdue “offered to use roughly half of WBP capacity to serve WA needs and cut price to current market levels plus install dryer and flat storage.” Smith Decl. Ex. 10 at 2. The “[c]ounter offer from WBP agreed to all terms except volume; requested additional rail car per week or jointly securing outside sales.” Id. Finally, Thomas noted that the next meeting was expected later in the month of May. Id.
On May 13, 2017, WBP renewed its facility lease for five years. Parker Depo. 215. According to Parker, if the parties had not reached an agreement during the April 3, 2017 call, then WBP would not have renewed the lease and would have liquidated all assets. Id. at 153-54. However, Parker did not inform Perdue that WBP had renewed the lease nor that the lease renewal was contingent upon a new TPA because he did not think it was “any of their business.” Id. at 159.
On June 12, 2017, Thomas emailed Mr. Parker to inquire about WBP's price to dry soybeans, so the parties could “then set up another meeting to see where [they] stand.” Thomas Decl. Ex. C. Parker responded with specific cost information. Id. These discussions continued any oat least through July 17, when Parker emailed Thomas about the process of the new TPA. Thomas Decl. Ex. E. Parker stated that, if WBP needed to get new equipment, negotiations would need to begin “within the next 30 days.” Id.
While still engaged in discussions with WBP, and without informing WBP, Perdue evaluated alternative options for supplying its meal. DeGennaro Decl. ¶ 18; Thomas Decl. ¶ 22, Ex. D; Flores Decl. ¶ 17. These evaluations continued through July 2017. DeGennaro Decl. ¶ 18; Thomas Decl. ¶¶ 22-24, Ex. D; Flores Decl. ¶ 17. On August 3, 2017, Perdue decided not to continue negotiations with WBP on a possible new processing agreement because “continued processing with WBP was substantially more expensive than alternative sources.” Thomas Decl. ¶ 22, ¶ 24, Exs. D, F; DeGennaro Decl. ¶¶ 18-19.
On August 6, 2017, Parker emailed Thomas regarding the status of the parties' new agreement. Thomas Decl. Ex. G. He first noted that he had not heard back from Thomas on his proposal for drying services. Id. He then recounted the parties' April 3, 2017 discussion as follows:
During that April phone conversation, a minimum volume of 880 tons per month was suggested by Perdue with a tolling price of $75/ton. I am able to agree to the $75/ton although I would like to see more volume if possible. It is important for me to utilize the full capacity of my plant and it is important for Perdue to know you have processing capacity available for your beans. Uncertainty is not good for either of us. Also depending upon what you decide on drying, new equipment would have to be purchased and installed. This all takes time. We are now at a critical juncture and really need to finalize the business terms of the agreement by the end of August or sooner if possible. We can always finalize the written contract after that if we are all in agreement on the business terms.Id. On or around August 8, 2017, DeGennaro called Parker to inform him that Perdue would not process soybeans with WBP after the expiration of the TPA. DeGennaro Decl. ¶¶ 18-19.
The TPA expired by its terms on November 14, 2017. DeGennaro Decl. Ex. A at 5. On November 17, 2017, Perdue and WBP agreed to extend the TPA until “approximately midJanuary 2018,” so WBP could process all the organic soybeans Perdue had remaining in its stocks. Flores Decl. Ex. A.
On November 19, 2017, Parker contacted Perdue's president by email and made one last effort to finalize an agreement. Parker Decl. Ex. 7. In that email, he recounted the April 3, 2017 oral agreement as follows:
I was told on that phone call that Perdue would not be renewing [the TPA] “under the current terms.” I was told that the volume would drop to about 880 tons per month for meal to Cargill in Washington and that Perdue would need a reduction in the tolling fee to continue. I agreed to both of these terms although we did not lock in specifics on the call. [DeGennaro] tasked [] Thomas as the point person to finalize the agreement with me.Id. Perdue did not continue the negotiations. Parker Decl. ¶ 27.
V. This Litigation.
WBP filed this action in Polk County Circuit Court on September 12, 2019. Notice of Removal Ex. 1 (“Compl.”), ECF 1. WBP alleges claims for breach of contract and promissory estoppel under Oregon law. Id. ¶¶ 10-22. Perdue removed this action to District Court on October 18, 2019. Notice of Removal of Action, ECF 1. Perdue then moved to compel arbitration pursuant to the terms of the prior TPA, but that motion was denied. Op. & Order, ECF 22. This motion followed.
LEGAL STANDARD
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. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). 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. Id.
An issue of fact is genuine “‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”' Villiarmo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court must draw all reasonable inferences in favor of the nonmoving party. Id. A mere disagreement about a material issue of fact, however, does not preclude summary judgment. Jackson v. Bank of Haw., 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 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 v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001).
When Oregon law applies to an issue, this Court 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
Perdue moves for summary judgment on both grounds of WBP's complaint. Def.'s Mot. Summ. J. (“Mot. Summ. J.”), ECF 38. First, Perdue asserts that WBP's claim for breach of contract fails as a matter of law because it is barred by the statute of frauds, Or. Rev. Stat. (“ORS”) § 41.580, and because there is no evidence of mutual assent to the terms of a new agreement. Mot. Summ. J. 14-24. Perdue also asserts that WBP's promissory estoppel claims fails as a matter of law because there is no evidence that Perdue made any definite promises to WBP during the April 3, 2017 call or that it was reasonably foreseeable that WBP would have relied on those promises to renew the lease. Id. at 24-30. In response, WBP asserts that there are multiple disputes of material fact that preclude entry of summary judgment. Pl.'s Resp. Def.'s Mot. Summ. J. (“Resp.”) passim. For the following reasons, Perdue's motion should be GRANTED as to both claims.
I. Statute of Frauds
Perdue argues that WBP's claim for breach of contract is barred by the statue of frauds. Mot. Summ. J. 14. The parties agree that the alleged oral contract in this case is subject to the statute of frauds, and that the only “note or memorandum” that could satisfy the statute of frauds is Thomas' pre- and post-meeting notes. Resp. 23-24; Def.'s Reply Mem. Supp. Mot. Summ. J. (“Reply”) 4-6. The parties disagree as to whether Thomas' notes reflect any agreement or contain all the essential terms of the agreement. Id. For the following reasons, this Court finds that they do not.
A. Applicable Law
Under Oregon's statutory version of the common law statute of frauds rule, “[a]n agreement that by its terms is not to be performed within a year from the making” is
void unless it, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party to be charged, or by the lawfully authorized agent of the party; evidence, therefore, of the agreement shall not be received other than the writing, or secondary evidence of its contents[.]ORS 41.580(1)(a). “The statute is satisfied, despite the absence of a written agreement, where ‘some note or memorandum' provides evidence of the parties' agreement.” McInnis v. Lind, 198 Or.App. 139, 145 (2005) (citing ORS 41.580(1)).
“In addition to evidencing the existence of the alleged agreement, the note or memorandum must be subscribed by the party sought to be charged or the party's agent and must evidence the essential terms of the alleged agreement.” Id. (citing The Oregon Home Builders v. Crowley, 87 Or. 517, 536 (1917) (“the writing must identify the contracting parties, the subject matter involved, the ‘terms and conditions of the agreement,' and the consideration”); see also Webster v. Harris, 189 Or. 671, 679 (1950) (“In order to conform to the requirements of the statute [of frauds], the written memorandum must be complete and must include all of the terms actually agreed upon between the parties.”); Sequoia Partners, LLC v. F.D.I.C., No. 1:11-CV-3057-CL, 2012 WL 1657049, at *3 (D. Or. Mar. 13, 2012), report and recommendation adopted, No. 1:11-CV-03057-CL, 2012 WL 1657066 (D. Or. May 10, 2012) (“Although proof of contract formation and whether the statute of frauds is satisfied are separate issues, all the material terms of the contract must be included in the writing to satisfy the statute.”).
B. Analysis
Even when read together, Thomas' pre- and post-meeting notes do not satisfy the statute of frauds because they do not reference an agreement on the essential terms of the agreement. WBP asserts that the “essential terms” of this contract are “a minimum monthly quantity (880 tons of meal per month), a price term ($75 per ton of meal), and a duration term (five years).” Resp. 19. Even if this Court were to accept that those are the only essential terms, Thomas' pre-and post-meeting notes, when read together, reflect at most an agreement on the price term of $75 per ton.
As recounted above, the pre-meeting notes indicate that the “starting point for negotiations should be $75.00 per ton” and listed a multitude of issues that Perdue wanted to discuss with WBP, including volume. Smith Decl. Ex. 9 at 2. The post-meeting notes indicate that WBP agreed to all terms except volume, but those notes did not describe any of the supposed agreed terms. Smith Decl. Ex. 10 at 2. Moreover, neither the pre- nor post-meeting notes contain any reference to a five-year duration term. Id. Accordingly, the pre- and post-meeting notes reflect an agreement as to the $75 per ton figure, a disagreement as to the volume, and silence as to the alleged five-year duration. Thus, the pre- and post-meeting notes do not constitute evidence of “the essential terms of the alleged agreement,” see McInnis, 198 Or.App. at 145, even when accepting WBP's limited view of which terms are essential. Summary judgement should be granted as to WBP's breach of contract claim because WBP cannot satisfy the statute of frauds under ORS 41.580(1)(a).
II. Breach of Contract
In addition to the statute of frauds arguments, Perdue asserts that WBP cannot demonstrate a factual dispute as to whether the parties entered into an oral contract during the April 3, 2017 call. Mot. Summ. J. 16-34. This Court agrees. The undisputed material facts demonstrate that WBP did unequivocally accept the 880 tons per month quantity that Perdue proposed; that Perdue did not unequivocally accept the five-year duration that WBP proposed; and the unresolved drying issue was a material term. Accordingly, there is no genuine issue of material fact as to whether the parties entered into an oral agreement.
Perdue also argues that there were other material unresolved terms and, absent some agreement as to those remaining terms, no contract could be formed. Mot. Summ. J. 23. These unresolved terms include quality and shrinkage specifications and storage capacity. Mot. Summ. J. 22 (citing Parker Depo. 197-98). This Court need not consider this additional argument given the recommended disposition of WBP's breach of contract claim.
A. Applicable Law
The party asserting breach bears the burden of proving the existence of an enforceable contract in the first instance. Holdner v. Holdner, 176 Or.App. 111, 120 (2001). To warrant enforcement, proof of the contract must be “clear, unequivocal and by a preponderance of the evidence.” Richardson v. Fields, 270 Or. 368, 372 (1974). Whether a contract was formed is a question of law. Real Estate Loan Fund v. Hevner, 76 Or.App. 349, 355 (1985); Ken Hood Const. Co. v. Pac. Coast Const., Inc., 201 Or.App. 568, 577 (2005), opinion adhered to as modified on reconsideration, 203 Or.App. 768 (2006). On summary judgment, the Court must determine whether the evidence, when viewed in the light most favorable to the non-moving party, demonstrates that a contact was formed as a matter of law. Ken Hood Const. Co., 201 Or.App. at 577.
“Even when it has not been reduced to a formal writing, a valid contract can be created ‘by [an] offer and its unqualified acceptance.'” Bridge City Fam. Med. Clinic, P.C. v. Kent & Johnson, LLP, 270 Or.App. 115, 121 (2015) (quoting Williams v. Burdick, 63 Or. 41, 49 (1912)). “Oregon subscribes to the objective theory of contracts.” Ken Hood Const. Co., 201 Or.App. at 577. “The existence of a contract . . . is not determined by the parties' subjective understanding of their communications. Instead, to determine whether a contract was formed, [courts] examine the parties' objective manifestations of intent, as evidenced by their communications and acts.” Lyons v. Beeman, 311 Or.App. 560, 570 (2021) (citing Newton/Boldt v. Newton, 192 Or.App. 386 (2004) and Ken Hood Const. Co., 201 Or.App. at 577) (quotations omitted). “Those manifestations of intent must show that there has been a ‘meeting of the minds' as to the contract's terms and that no material terms remain for future negotiation.” Bridge City, 270 Or.App. at 121 (2015) (quoting Phillips v. Johnson, 266 Or. 544, 555 (1973)). “Thus, the offer to form a contract ‘must be certain so that upon an unqualified acceptance the nature and extent of the obligations of each party are fixed and may be determined with reasonable certainty.'” Id. (quoting Klimek v. Perisich, 231 Or. 71, 78-79 (1962)).
“Acceptance of an offer must be ‘positive, unconditional, unequivocal and unambiguous, and must not change, add to, or qualify the terms of the offer.'” Lang v. Oregon Idaho Ann. Conf. of United Methodist Church, 173 Or.App. 389, 395 (2001) (citing Wagner v. Rainier Mfg. Co., 230 Or. 531, 538 (1962)). Likewise, “the acceptance must coincide with and be in the same terms as the offer, and if a new provision is suggested the answer is a mere counter-offer.” Bridge City, 270 Or.App. at 121 (2015) (citing Small v. Paulson, 187 Or. 76, 85, 209 P.2d 779 (1949)). A response to an offer does not constitute an acceptance if it varies from the offer even as to a single term. See Lang, 173 Or.App. at 395 (concluding that a response to an offer that varied as to a single term was a counteroffer and not an acceptance).
To constitute an enforceable contract, the parties do not need to agree on all terms of the agreement. Rather, for an agreement to constitute an enforceable contract, the parties must agree on the essential terms. Pacificorp v. Lakeview Power Co., 131 Or.App. 301, 307 (1994) (“[A] meeting of the parties' minds on the essential terms of an oral agreement, rather than all terms, is all that is required.”). “A term is ‘material' to an enforceable agreement when it goes to the substance of the contract and, if breached, defeats the object of the parties in entering into the agreement.” Johnstone v. Zimmer, 191 Or.App. 26, 34 (2003).
B. Analysis
1. WBP did not unequivocally accept Perdue's proposal for 880 tons per month.
Even when the evidence is viewed in the light most favorable to WBP, the parties did not reach an agreement as to the quantity of 880 tons per month. To be sure, a reasonable factfinder could conclude that Perdue specifically offered - not merely suggested - terms for a new agreement at 880 tons per month at $75 per ton. See Parker Depo. 181-82 (Perdue's statement that “we would like to have the new terms be 880 tons at $75 a ton.”). A reasonable factfinder could also conclude that WBP accepted the $75 per ton figure. Id. But the evidence, when viewed in the light most favorable to WBP, does not demonstrate that WBP unambiguously accepted Perdue's offer of 880 tons per month.
Parker's testimony regarding his acceptance of the 880-ton volume term is inconsistent at best. In his deposition, Parker testified that he had multiple conversations with Perdue about the volume being 880 tons, and that he responded that WBP would “like to see [1000] tons per month.” Parker Depo. 181-82. He also testified that, during the April 4, 2017 meeting, WBP and Perdue discussed 880 tons, but he does not recall whether he was still requesting 1000 tons during that meeting. Id. at 195. In other instances, Parker testified that they had “an agreement on 880 [tons per month]” but that he “wanted 1,000.” Id. at 178. In his declaration, Parker testified that he “agreed to the minimum quantity of 880 tons per month” and only “expressed hope” for 1000 tons per month. Parker Decl. ¶ 15.
In reply, Perdue asserted that Parker's declaration testimony as to the volume term was so inconsistent with his deposition testimony that it violated the sham affidavit rule. Reply at 9; see Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (cleaned up) (“The sham affidavit rule prevents a party who has been examined at length on deposition from raising an issue of fact simply by submitting an affidavit contradicting his own prior testimony.”). Although there are unexplained inconsistencies between Parker's deposition and declaration testimony, this Court cannot conclude that those ambiguities are “clear and unambiguous to justify striking the affidavit.” See Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 267 (9th Cir. 1991). Parker's testimony was consistent insofar as he registered some acceptance to the 880-ton volume minimum but continued to seek an increased volume amount.
Based on this testimony, there is not sufficient evidence for a reasonable jury to conclude that WBP's purported “acceptance” of the 880-ton minimum was “positive, unconditional, unequivocal and unambiguous” and did “not change, add to, or qualify the terms of the offer.” Lang, 173 Or.App. at 395 (2001). Parker may have subjectively believed that the parties agreed to the 880-ton minimum. However, his continued negotiation of the 880-ton volume term, when viewed objectively, demonstrates that this term was not unambiguously and unequivocally accepted and that Parker continued to try to change the terms of the offer to 1000 tons per month.
WBP's actions during and after the April 3, 2017 call further demonstrate that it did not unambiguously and unequivocally accept the 880-ton volume term. During his conversations with Perdue, Parker discussed ways to increase the total number of tons and offered to find additional customers for the additional product. Parker Depo. 176-177, 181-182. After these conversations, he traveled the western United States to find new sales, hoping to increase the volume to 1000 tons. Parker Decl. ¶ 19. Parker also discussed those potential opportunities with Perdue. Id. Further, in his email dated August 6, 2017, Parker confirmed that he was “able to agree to the $75/ton although [he] would like to see more volume if possible.” Thomas Decl. Ex. G. Thus, based on Parker's communication and acts, and not his subjective intent, there is insufficient facts for a reasonable juror to conclude that Parker, on behalf of WBP, unambiguously accepted the 880-ton volume term.
2. Perdue did not unequivocally accept WBP's proposal for a five-year duration.
Again, even when the evidence is viewed in the light most favorable to WBP, Perdue's “acceptance” of WBP's offer of a five-year term was not “positive, unconditional, unequivocal, and unambiguous.” See Lang, 173 Or.App. At 395. Parker's testimony confirms a lack of “unequivocal” acceptance by Perdue:
Q. Was there any agreement on a duration of this new continuing agreement of 880?
A. We had - we had discussed that my - my lease renewal was for five years.
Q. Was there an agreement on a duration?
A. We continued - we discussed that I had to have notice by May 15th in order to renew my lease for five years and it was for a five-year period of time. And the original contract was for five years also, five-year renewals also.
Q. Right. And my question was -
A. And everybody was aware of that.
Q. I know. I understand that. But my question was, was there an agreement between Perdue on the one hand, and [WBP] on the other, for a duration of 880 tons, $75 per ton arrangement?
A. There was an understanding that that would be for five years.
Q. Okay. And what do you base that understanding on?
A. The fact that the original contract was for five-year extensions.Parker Depo. 179-80; see also Parker Decl. ¶ 15 (“Defendant's representatives indicated on the phone that they understood that the new agreement would be for five years.”). This testimony does not evidence a positive, clear, and unambiguous acceptance of a five-year duration for a new contract. The fact that the parties knew that WBP's lease would be renewed for five years and “understood” that any new agreement would need to be for five years is insufficient to establish that Perdue positively and unequivocally accepted WBP's offer of a five-year duration term.
3. Drying was an essential and unresolved term.
Finally, the drying of beans is a material issue to the contract that was not resolved by the parties' alleged oral agreement. Neither party disputes that WBP's capacity to dry beans was a continued discussion point that was left unresolved. Indeed, excess moisture content in the beans was an issue under the prior agreement. Parker Decl. ¶ 9. Discussions about WBP's drying capacity began before Perdue declined to renew the prior TPA. Smith Decl. Ex. 6 at 1; DeGannaro Decl. ¶ 10. This issue was discussed during the April 3, 2017 call. Parker Depo. 195. Parker and Thomas had extensive discussions about this issue after the April 3, 2017 call. Thomas Decl. Exs. C, E. Finally, Parker specifically referenced this issue in his email dated August 6, 2017. Thomas Decl. Ex. G (“Also depending upon what you decide on drying, new equipment would have to be purchased and installed.”). Any objective observer to these negotiations would have concluded that the drying of beans was a material term that had not been resolved and was subject to future negotiation. See Bridge City, 270 Or.App. at 121; Johnstone, 191 Or.App. at 34.
WBP contends that this failure to agree is irrelevant because WBP and Perdue discussed a separate drying contract. Resp. 21. Based on Parker's declaration testimony, WBP asserts that the parties had to “set aside” the issue of drying during the April 3, 2017 call and that Perdue was going to work with WBP on “costing for a potential, additional dryer contract.” Parker Decl. ¶¶ 18-19. WBP also alleges that Perdue accounted for the dryer issue when it pitched a “low ball number,” and because the parties previously executed addendums on separate issues. Resp. 2122.
Perdue asserts that this declaration testimony violates the “sham affidavit rule.” Indeed, Parker did not testify regarding a separate, additional dryer contact during his deposition, see Parker Depo. 195, and then relies on his declaration testimony regarding the separate additional contract in an effort to create a factual dispute. This Court need not strike this testimony, however. Parker's testimony was consistent insofar as he testified that that the drying of beans was a material issue to the discussions that was not resolved through the alleged oral agreement.
These arguments fail to address the concern that the parties never resolved what WBP's obligations would be with respect to drying beans. Regardless of whether the drying of beans was to be resolved through a new TPA or a separate, additional dryer contract, the obligations of the parties could not be established “with reasonable certainty” until this issue was resolved. See Klimek v. Perisich, 231 Or. 71, 78-79 (1962); see also Glob. Exec. Mgmt. Sols., Inc. v. Int'l Bus. Machines Corp., 260 F.Supp.3d 1345, 1371 (D. Or. 2017) (“Even if an oral agreement is otherwise established by mutual assent, the terms may still be sufficiently uncertain as to prevent enforcement.”). Accordingly, the drying of beans is a material issue to the contract that was not resolved by the parties' alleged oral agreement.
For these reasons, this Court finds that there is no genuine issue of material fact as to whether the parties entered into an oral agreement, and summary judgment should be granted to Perdue on WBP's breach of contract claim.
IV. Promissory Estoppel.
Perdue also moves for summary judgment on WBP's alternative theory of relief of promissory estoppel. Specifically, Perdue asserts that there is no genuine issue of material fact as to whether Perdue made any promise to WBP, whether WBP's reliance on such promise was reasonably foreseeable, or whether WBP actually relied on that promise to its detriment. Mot. Summ. J. 24-31. This Court agrees in part. WBP has put forth sufficient facts for a reasonable jury to conclude that Perdue promised WBP that it would negotiate a new TPA with a contract price of $75 per ton at ¶ 880-ton monthly minimum. WBP has also put forth sufficient facts for a reasonable jury to conclude that WBP relied on that promise to its detriment. There is not, however, sufficient facts for a reasonable jury to conclude that Perdue would have foreseen WBP relying on indefinite, verbal agreements as the basis for renewing its lease. Accordingly, summary judgment should be granted to Perdue on WBP's alternative claim for promissory estoppel.
A. Applicable Law
Promissory estoppel is not a “cause of action.” Neiss v. Ehlers, 135 Or.App. 218, 227-28 (1995). Rather, promissory estoppel is “a substitute for consideration” and is a basis for enforcement, despite a lack of consideration, “when the promisee has relied on a promise to his or her detriment.” City of Ashland v. Hoffarth, 84 Or.App. 265, 270 (1987). “[P]romissory estoppel can only become necessary as a remedy for an unperformed promise if no traditional contractual remedy is available for the nonperformance.” Neiss, 135 Or.App. at 228. Claims for promissory estoppel are not subject to the statute of frauds. Stevens v. Good Samaritan Hosp. & Med. Ctr., 264 Or. 200, 204-07 (1972)).
“Under promissory estoppel, the party seeking enforcement of a promise must demonstrate: “1) a promise, 2) which the promisor, as a reasonable person, could foresee would induce conduct of the kind which occurred, 3) actual reliance on the promise, 4) resulting in a substantial change in position.” Bixler v. First Nat'l Bank, 49 Or.App. 195, 199 (1980). Oregon uses the term promissory estoppel to refer to two separate concepts. First, “courts have recognized that actions taken in reliance on a definite promise may serve as a substitute for consideration even though the action was not bargained for by the promisor and was not performed as an agreed exchange for the promise.” Staley v. Taylor, 165 Or.App. 256, 261 & n. 5 (2000). Under this conception, “promissory estoppel serves as a consideration substitute [and] the plaintiff is entitled to the usual contractual remedies.” Id. at 261 n. 5.
Oregon courts have also recognized that “promissory estoppel can apply, under appropriate circumstances, to promises that are indefinite or incomplete, including agreements to agree.” Neiss, 135 Or.App. at 228. The Neiss court further explained:
The evil to be rectified through promissory estoppel is not the breach of the promise, but the harm that results from the promisor's inducement and the promisee's actions in reliance. The fact that a promise is indefinite, incomplete or even incapable of enforcement according to its own terms, does not mean that no redress should be possible for the damage that directly flows from the promisee's reliance on the promise.Id. at 229 (emphasis in original). “In other words, ‘promissory estoppel derives from a promise that induces reasonably foreseeable, detrimental reliance[.]'” Glob. Exec. Mgmt. Sols., Inc. v. Int'l Bus. Machines Corp., 260 F.Supp.3d 1345, 1381 (D. Or. 2017) (quoting Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1108 (9th Cir. 2009)). Accordingly, under this conception, “only reliance damages are allowed.” Id.
Merely demonstrating the existence of a promise and reliance on that promise is insufficient to support a claim for promissory estoppel. “[T]he facts of specific cases may be such that the promise is not only too indefinite for enforcement as a contract, but is so illusory that it could not reasonably have been acted on or foreseen as an inducement to action.” Neiss, 135 Or.App. at 229. “A promise is illusory when the promisor has an unconditional power to refuse to perform.” Kraft v. Arden, No. CV. 07-487-PK, 2008 WL 4866182, at *11 (D. Or. Nov. 7, 2008) (citing Shannon v. Mathers, 271 Or. 148, 152 (1975)). Oregon courts focus on whether the promisor made a specific promise to the promisee. Id. There is no Oregon case holding that “a party negotiating at arms' length foreseeably relied on an indefinite promise.” Id. (emphasis added).
B. Analysis in this Case
1. Existence of a Promise
The evidence, when viewed in the light most favorable to WBP, could support a finding that Perdue promised WBP that it would negotiate a new TPA with a contract price of $75 per ton at a minimum of 880 tons per month. Even though this same evidence is not sufficient to demonstrate an enforceable contract, it is sufficient to demonstrate that the parties had an “agreement to agree.” Neiss, 135 Or.App. at 228; see Glob. Exec. Mgmt. Sols., Inc. v. Int'l Bus. Machines Corp., 260 F.Supp.3d 1345, 1382 (D. Or. 2017) (agreement lacking “must haves” was too indefinite to support enforcement in contract, but could support a promissory estoppel theory because the parties agreed on fundamental principles). Whether Perdue actually promised to enter into a contract on these terms or merely negotiated with WBP is a question of fact that can only be resolved by the jury. See, e.g, Kraft, 2008 WL 4866182, at *11.
2. Actual Reliance/ Substantial Change
WBP presented sufficient facts such that a reasonable jury could conclude that WBP actually relied on Perdue's promises and suffered a substantial change in position. On May 13, 2017, WBP renewed its facility lease for five years. Parker Depo. 215. According to Parker, if the parties had not reached an agreement during the April 3, 2017 call, WBP would not have renewed the lease and would have liquidated all assets. Id. at 153-54. Even though Perdue disputes WBP's reliance, see Mot. Summ. J. 27, this evidence sufficiently creates a triable issue of fact as to whether WBP actually relied on the alleged promises made during the April 3, 2017 call in renewing its lease and whether WBP sustained a substantial change in its position by doing so.
3. Reasonably Foreseeable Reliance
WBP did not, however, present sufficient evidence such that a reasonable jury could conclude that Perdue would have foreseen WBP relying on indefinite, verbal agreements in renewing its lease. Even though WBP put forth evidence that Perdue knew about the interrelatedness of the upcoming lease renewal and the negotiations for a new TPA, the indefinite nature of the promise, the fact that it was not reduced to writing, and WBP's own statements demonstrate that Perdue could not reasonably foresee that WBP would rely on alleged oral representations made during the April 3, 2017 call as the basis for renewing its lease.
First, the alleged promise in this case-negotiating a new TPA based on $75 per ton with an 880-ton monthly minimum-was too indefinite to support a claim of foreseeable reliance. This alleged agreement must be considered in the context of the parties' then-current business dealings. At the time of the alleged agreement, the parties were operating under the complex terms of the prior TPA. The prior TPA detailed handling and quality specifications, as well as pricing and payment information. Id. at 1, 10. Such terms would need to be negotiated in a new TPA. Id. Moreover, both parties knew that the prior TPA had unresolved terms apart from price and volume, including Perdue's concerns about WBP's ability to dry beans. Even if Perdue made promises regarding price and minimum volume, Perdue could nevertheless unilaterally decline to enter into that agreement if it was not satisfied with the other terms. Thus, promises made to WBP as to price and volume were too indefinite to support a claim of foreseeable reliance. See Kraft, 2008 WL 4866182, at *11 (promise was indefinite because the promisor had discretion to determine whether the conditions were met to honor it).
Next, there is not sufficient evidence for a reasonable juror to conclude that that Perdue would have known that WBP was relying on the alleged oral representations in deciding to renew its lease. Even if Perdue knew that WBP linked the lease renewal to the new TPA, WBP never informed Perdue that it was renewing its lease or stated that it was doing so based on the oral representations made. See Parker Depo. 159 (stating that Parker chose not to disclose that, without the renewal of the TPA, WBP would not have renewed its lease and would have liquidated its assets because Parker “didn't think it was any of [Perdue's] business.”). Moreover, Perdue could not foresee that WBP would have relied on those oral representations in renewing its lease. The parties were operating under a written agreement and had previously modified that written agreement through written addenda. See DeGennaro Decl. Exs. A-D. Both parties in this case are sophisticated business entities charged with the knowledge that any agreement as to a new five-year TPA would have also had to have been in writing. See, e.g., 168th & Dodge, LP v. Rave Revs. Cinemas, LLC, 501 F.3d 945, 957 (8th Cir. 2007). Therefore, Perdue could not reasonably foresee that WBP would rely on its oral representations.
Finally, the parties' communications before and after the April 3, 2017 call demonstrate that Perdue could not reasonably foresee that WBP was relying on alleged oral representations. According to Parker, the purpose of the April 3, 2017 call was to “begin discussions on contract terms that would be acceptable to Perdue.” DeGennaro Decl. Ex. E. WBP's communication after the call then confirmed “the business terms” of the contract needed to be finalized and noted that both volume and drying were unresolved issues. Id. Critically, during the course of the parties' communications, WBP never indicated to Perdue that it was relying on oral representations made during the April 3, 2017 call, and Perdue never asked WBP to take any additional action in reliance on promises made during that call. Thus, even if WBP had relied on alleged promises made by Perdue during the April 3, 2017 call, such reliance was not apparent during the course of the parties' communications, and a reasonable person would not have foreseen WBP's reliance.
ORDER
In sum, the facts of this case, when viewed in the light most favorable to WBP, demonstrate that any alleged promise made during the April 3, 2017 call was “so illusory that it could not reasonably have been acted on or foreseen as an inducement to action.” Neiss, 135 Or.App. at 229. As Judge Papak stated in Kraft, “[t]o conclude otherwise would allow a promissory estoppel claim in almost every case where a plaintiff alleges that he or she relied on a promise- no matter how indefinite.” 2008 WL 4866182, at *11. Accordingly, summary judgment should be granted to Perdue on WBP's alternative claim for promissory estoppel.
RECOMMENDATION
Perdue's motion for summary judgment, ECF 38, should be GRANTED.
SCHEDULING ORDER
The Findings and Recommendation will be referred to a district judge. Objections, if any, are due fourteen (14) days from service of the Findings and Recommendation. If no objections are filed, then the Findings and Recommendation will go under advisement on that date.
A party's failure to timely file objections to any of these findings will be considered a waiver of that party's right to de novo consideration of the factual issues addressed herein and will constitute a waiver of the party's right to review of the findings of fact in any order or judgment entered by a district judge. These Findings and Recommendation are not immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1) of the Federal Rules of Appellate Procedure should not be filed until entry of judgment.