Cedar Vale Cooperative Exchange, Inc. v. Petroleum Products (Midwest), Inc.

150 B.R. 58, 1993 U.S. Dist. LEXIS 994, 1993 WL 17860
CourtDistrict Court, D. Kansas
DecidedJanuary 11, 1993
DocketCiv. A. No. 91-1464-MLB
StatusPublished

This text of 150 B.R. 58 (Cedar Vale Cooperative Exchange, Inc. v. Petroleum Products (Midwest), Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cedar Vale Cooperative Exchange, Inc. v. Petroleum Products (Midwest), Inc., 150 B.R. 58, 1993 U.S. Dist. LEXIS 994, 1993 WL 17860 (D. Kan. 1993).

Opinion

[59]*59MEMORANDUM AND ORDER

BELOT, District Judge.

This case comes before the court on Petroleum Products, Inc.’s (PPI) appeal of the bankruptcy court’s decision denying PPI’s counterclaim in an adversary proceeding brought by Cedar Vale Cooperative Exchange, Inc. (Cedar Vale) (Doc. 1) The bankruptcy court ruled that PPI was not entitled to damages for lost profits due to Cedar Vale’s withholding of a customer list. Cedar Vale has filed a cross-appeal of the bankruptcy court’s finding that it breached its contract with PPI. (Doe. 2)

Cedar Vale, a cooperative organized under Kansas law, operated a retail propane and gasoline business in Cedar Vale, Kansas. Cedar Vale filed a Chapter 11 bankruptcy petition on November 2, 1990. It executed a contract to sell most of its propane related assets for $70,000 to Orville L. Bair, d/b/a Bair’s LP Gas on November 8, 1991. Before the prospective sale was noticed out, PPI learned Cedar Vale’s assets were for sale and offered to purchase them for $71,000. Cedar Vale accepted PPI’s offer, and a contract1 was executed on November 12, 1990, subject to bankruptcy court approval. The contract called for Cedar Vale to turn over possession of the property described in the agreement upon proof that adequate insurance had been secured.

A dispute arose shortly after the contract was executed when Cedar Vale, through its attorney, refused to deliver Cedar Vale’s customer lists. PPI presented evidence that it had procured insurance on November 19,1990, but Cedar Vale refused to surrender possession of the customer list, although it did deliver the keys to the propane truck and the propane tanks. In the mean time, PPI assembled a list of former and potential propane customers using a “route book” found in the propane truck as well as the memory of a former Cedar Vale employee, Tim Stone. The list contained approximately 169 names and addresses. On November 16, 1990, PPI sent a form letter to everyone on the list for whom an address could be located soliciting propane purchases. A similar letter soliciting purchases was mailed on December 5, 1990. A third solicitation letter was mailed in January, 1991.

Cedar Vale eventually turned over the customer list to PPI on December 12, 1990. The evidence at trial revealed that 43 persons on the customer list did not purchase propane from PPI through June, 1991.

The bankruptcy court ruled Cedar Vale breached its contract by failing to deliver the customer list .upon presentation of proof of insurance on November 19, 1990. Notwithstanding the breach, the court ruled PPI had failed to demonstrate any causal connection between Cedar Vale’s failure to deliver the customer list and either a loss of customers or sales.

Standard of Review

Bankruptcy Rule 8013 sets forth the standard of review for appeals from Orders of a Bankruptcy Court. Findings of fact will be upheld “unless clearly erroneous”. In re Burkart Farm and Livestock, 938 F.2d 1114, 1115 (10th Cir.1991). Findings of fact are clearly erroneous if the appellate court has the definite and firm conviction that a mistake has been committed after reviewing the entire record. Hall v. Vance, 887 F.2d 1041, 1043 (10th Cir.1989). The bankruptcy court’s conclusions of law are reviewed de novo. Burkart, 938 F.2d at 1115.

Cross-Appeal

Cedar Vale argues the bankruptcy court erred in finding it breached its contract by withholding the customer list until December 12, 1991. Alternatively, it argues the parties entered into an accord and satisfaction of their dispute, or a subsequent modification of their agreement.

Paragraph 5 of the contract provided in part:

Buyer is in the process of securing adequate insurance against casualty loss to the sale property in an amount equal to or greater than the price bid for the [60]*60property. Upon proof that adequate insurance has been secured naming the Seller and Buyer as loss payees, Buyer will be granted possession of the property referenced herein ...

Paragraph 1 of the contract specifically listed Cedar Vale’s customer lists as personal property PPI agreed to purchase. Cedar Vale argues that the customer lists were not included as “property” within the meaning of paragraph 5 and therefore it was not required to turn the lists over to PPI when presented with proof of adequate insurance. Cedar Vale contends the inclusion of customer lists within the meaning of “property” would mean that PPI must obtain insurance coverage over the customer lists. This interpretation, if accepted, would mean that the parties meant to exclude the customer lists from the property Cedar Vale agreed to turn over on November 19.

The general rule is that the meaning of the parties and the meaning of a contract are to be determined from the plain, general, and common meaning of terms used. Wood River Pipeline Co. v. Willbros Energy Services Co., 241 Kan. 580, 586, 738 P.2d 866 (1987) (Citation omitted). Doubtful language in a contract is construed most strongly against the party preparing the instrument. Id.2

The court finds no ambiguity in the contract. The customer lists, along with the other listed property in paragraph 1, were to be turned over to PPI at the time PPI produced proof of adequate insurance as provided in paragraph 5. Forcing PPI to obtain insurance on the customer lists is an unreasonable interpretation of the contract and clearly was not within the contemplation of the parties. In any event, Cedar Vale’s attorney drafted the contract. If Cedar Vale had meant to delay turning over the customer lists until a later date, it could have expressly stated so in the contract. In fact, the reason Cedar Vale withheld the lists was to maintain some leverage over PPI. According to the testimony of Richard Urie, Cedar Vale’s manager, Cedar Vale withheld the customer list upon the advice of its attorney, who told Urie “we were going to hang on to it to protect it until the closing.”

Our construction of the contract renders Cedar Vale’s claim of accord and satisfaction unavailing. An accord and satisfaction requires that a dispute exist between the parties that is capable of adjustment. E F Hutton & Co. v. Heim, 236 Kan. 603, 610-11, 694 P.2d 445 (1985). The court holds that the parties had an agreement, and thus no dispute existed.

The court finds no credible evidence in the record to support Cedar Vale’s argument that the parties entered into an agreement modifying the terms of the contract. The only evidence is the testimony of Cedar Vale’s attorney, who was asked by PPI to take possession of the customer list on November 12, 1990. In no way does this testimony modify Cedar Vale’s obligation to turn over the customer list upon receiving adequate proof of insurance.

The bankruptcy court’s finding that Cedar Vale breached the contract is affirmed.

Appeal

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re Burkart Farm and Livestock
938 F.2d 1114 (Tenth Circuit, 1991)
Wood River Pipeline Co. v. Willbros Energy Services Co.
738 P.2d 866 (Supreme Court of Kansas, 1987)
Vickers v. Wichita State University
518 P.2d 512 (Supreme Court of Kansas, 1974)
EF Hutton & Co. v. Heim
694 P.2d 445 (Supreme Court of Kansas, 1985)

Cite This Page — Counsel Stack

Bluebook (online)
150 B.R. 58, 1993 U.S. Dist. LEXIS 994, 1993 WL 17860, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cedar-vale-cooperative-exchange-inc-v-petroleum-products-midwest-inc-ksd-1993.