Associated Petroleum Products, Inc. v. Northwest Cascade, Inc.

203 P.3d 1077
Court of Appeals of Washington·Decided March 31, 2009·No. 36834-0-II·Published·Cited by 20 cases

Opinion

203 P.3d 1077 (2009)

ASSOCIATED PETROLEUM PRODUCTS, INC., a Washington corporation, Respondent,
v.
NORTHWEST CASCADE, INC., Appellant.

No. 36834-0-II.

Court of Appeals of Washington, Division 2.

March 31, 2009.

*1079 Lucy R. Clifthorne, Attorney at Law, Tacoma, WA, for Appellant.

Ken Fielding, James Victor Handmacher, Morton McGoldrick PS, Tacoma, WA, for Respondent.

ARMSTRONG, J.

¶ 1 Associated Petroleum Products, Inc. (Associated), a diesel fuel provider for Northwest Cascade, Inc. (Northwest), sued Northwest for money due under several invoices. Northwest had deducted the claimed amounts from its payments to Associated to compensate for fees Northwest had paid after Associated added them to its invoices without telling Northwest. Northwest now appeals the trial court's summary judgment in favor of Associated, arguing that (1) Associated had a duty to give "reasonable notice" before unilaterally modifying the contract and (2) Northwest's repeated payments of the disputed charges do not constitute an "account stated" as a matter of law because they were based on an excusable mistake. Northwest also appeals the trial court's award of attorney fees to Associated. Because issues of material fact exist as to whether Associated gave reasonable notice to Northwest of its new charges, we reverse the summary judgment, vacate the attorney fees award, and remand for further proceedings.

FACTS[1]

¶ 2 Associated is a petroleum products wholesaler. Northwest uses diesel-powered equipment at its construction sites. In 2005, Northwest hired Associated to provide "fleet fueling" services wherein Associated employees fueled Northwest's equipment at its job sites in the evenings. The companies agreed that as a service charge, Northwest would pay 20 cents per gallon over the market "rack rate" for the fuel it purchased. The agreement was terminable at will by either party.

¶ 3 Associated began providing the service in August 2005. In December 2005, Associated's sales manager, Chris Bertram, arranged a meeting with Northwest's fleet manager, Jeff Warren, to "discuss housekeeping issues" regarding the fleet fueling arrangement. Clerk's Papers (CP) at 286. According to Warren, Bertram "wanted to talk about ways our construction crews could make their job easier, such as lining up the equipment that needed to be fueled by the roadside." CP at 286. Warren also recalled that Bertram had suggested adding "demurrage" fees to the contract, but Warren had responded, "No, no way." CP at 201. Overall, the meeting "did not stand out in [Warren's] mind" as involving any renegotiation of contract terms. CP at 286.

¶ 4 After the meeting, Associated's lengthy invoices began to include charges referred to as "time on site" charges. Over four months, those charges totaled $13,404.16. Associated added the charges because Northwest was often sending Associated out to refuel equipment that needed very little fuel. Warren did not notice the "time on site" charges, however, and consequently authorized payment on seven bi-monthly invoices that included them.

¶ 5 In March 2006, Associated terminated the fleet fueling arrangement for other reasons. Warren began going through Associated invoices to prepare for negotiating an agreement with a new fuel provider. He discovered the "time on site" charges and called Bertram to ask what they were for. Bertram initially said that he "could not explain" the charges; later, he told Warren that he had told him about the charges in the "housekeeping" meeting several months earlier. CP at 287. Bertram produced an undated document entitled "APP Fleet Fueling —Wet-Hosing—Small Tank Delivery Policies & Procedures," claiming that he gave it to Warren at the meeting. CP at 281. The *1080 document included a section labeled "Gallonage Requirements" that described an hourly "demurrage fee" for deliveries where fewer than 200 gallons were needed. CP at 281. Warren did not remember discussing any such charges, and he testified in a declaration that he would not have agreed to them even if they had come up because he knew that he did not have authority to do so.

¶ 6 Northwest still had two pending Associated invoices at the time, so in paying them it deducted the amounts already paid for the "time on site" charges. Associated sued Northwest for the balance due under the invoices, $13,871.39, plus interest. Associated then moved for summary judgment, arguing that it was entitled to the invoiced amounts as a matter of law under the doctrine of "account stated" and because the agreement was terminable at will. The trial court granted Associated's motion for summary judgment and awarded it attorney fees pursuant to the parties' contract.

ANALYSIS

¶ 7 Northwest argues that the trial court erred in granting summary judgment to Associated because questions of material fact exist as to whether Associated gave adequate notice of the new charges and whether Northwest agreed to them. A trial court may grant a motion for summary judgment where there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). We review an order on summary judgment de novo, viewing the facts in the light most favorable to the nonmoving party. Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wash.2d 16, 26, 109 P.3d 805 (2005).

A. Terminable At Will Contracts

¶ 8 Associated argues that it was entitled to unilaterally modify the contract because it was terminable at will. Northwest responds that it should not be bound by Associated's unilateral modification because Associated did not provide Northwest with reasonable notice of it.[2]

¶ 9 A party to a terminable at will contract can unilaterally modify the contract because, in doing so, the party is simply terminating the old contract and offering a new one. Cascade Auto Glass, Inc. v. Progressive Casualty Ins. Co., 135 Wash.App. 760, 768-69, 145 P.3d 1253 (2006) (citing Gaglidari v. Denny's Rests., Inc., 117 Wash.2d 426, 433-34, 815 P.2d 1362 (1991)), review denied, 161 Wash.2d 1012, 166 P.3d 1217 (2007). But before terminating such a contract, the party must give reasonable notice to the other party. Cascade Auto Glass, 135 Wash.App. at 766, 145 P.3d 1253 (citing Mayflower Air-Conditioners, Inc. v. W. Coast Heating Supply, Inc., 54 Wash.2d 211, 213, 339 P.2d 89 (1959)). Reasonable notice is notice "`fairly to be expected or required under the particular circumstances.'" Cascade Auto Glass, 135 Wash.App. at 767, 145 P.3d 1253 (quoting Black's Law Dictionary 1091 (8th ed.1999)). Whether notice is reasonable depends on the circumstances of each case and is ordinarily a question of fact for the jury. Cascade Auto Glass, 135 Wash. App. at 766-67, 145 P.3d 1253 (citing Lano v. Osberg Constr. Co.,

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Associated Petroleum Products, Inc. v. Northwest Cascade, Inc., 203 P.3d 1077 (Wash. Ct. App. 2009).

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