Title: Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. of America

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. of America1992 WY 162842 P.2d 1067Case Number: 91-151Decided: 12/03/1992Supreme Court of Wyoming
COLORADO 
INTERSTATE GAS COMPANY, a Delaware Corporation, Appellant 
(Plaintiff)

 
 
v.

 
 
NATURAL 
GAS PIPELINE COMPANY OF AMERICA, 
Appellee (Defendant).

 
 
Michael 
L. Beatty, Rebecca H. Noecker, and Michael L. Williams, Colorado Springs, 
Colorado; Elizabeth A. Phelan, Dubofsky & Phelan, Boulder, Colorado; and 
Marilyn S. Kite and Lawrence J. Wolfe, Holland & Hart, Cheyenne, for 
Appellant.

 

Paul 
Hickey and Richard Bush, Hickey & Evans, Cheyenne; Paul E. Goldstein, 
Lombard, Illinois; and Paul Korman, Washington, D.C., for 
Appellee.

 
 
Before 
MACY, C.J., and THOMAS, CARDINE, URBIGKIT,* and GOLDEN, 
JJ.

 
 
* 
Chief Justice at time of oral argument

 
 
THOMAS, 
Justice.

 
 

[¶1.]     The only substantive 
issue presented in this case is the interpretation of a provision relating to 
the presentation of a bill by the seller, which controls the obligation of the 
buyer to pay interest, in a contract for the sale of natural gas. The procedural 
question, since a summary judgment was granted in favor of the buyer, is whether 
the situation is one in which there are no genuine issues of material fact, and 
the buyer is entitled to judgment as a matter of law. The contract provided for 
the charging of interest by the seller to the buyer on amounts due under the 
contract pursuant to the general terms and conditions of the seller's Federal 
Energy Regulatory Commission (FERC) gas tariff, and required that amounts 
payable under the minimum bill "shall be billed by Seller on October 10 for 
deliveries during the prior fiscal year and shall be payable by buyer by October 
20."

 

[¶2.]     The trial court ruled 
there were no genuine issues of material fact in this case, and the contract 
provisions required the submission of a statement by Colorado Interstate Gas 
Company (CIG) to Natural Gas Pipeline Company of America (NGP) before any 
interest would accrue. We agree with the trial court that this record discloses 
no genuine issue of material fact, and NGP is entitled to judgment as a matter 
of law. The Order Granting Natural Gas Pipeline Company of America's Motion 
for Summary Judgment is affirmed.

 
 

[¶3.]     CIG, as appellant, sets 
forth this list of the issues:

 

I. 
Whether the court erred in failing to grant summary judgment for CIG because the 
undisputed facts showed that CIG satisfied the billing requirement of the 
contract?

 
 
A. 
Alternatively, whether the billing requirement of the contract raised questions 
of disputed material facts that precluded summary judgment for 
NGPL?

 

II. 
Whether the court erred in failing to grant summary judgment for CIG because the 
undisputed facts showed that NGPL was responsible for any delay in submission of 
an invoice?

 
 
A. 
Alternatively, whether NGPL's responsibility for any delay in submission of an 
invoice raised a question of disputed material fact that precluded summary 
judgment for NGPL?

 

III. 
Whether the court erred in failing to grant summary judgment for CIG because the 
undisputed facts showed the submission of an invoice would have been a useless 
act?

 
 
A. 
Alternatively, whether there were disputed material facts regarding the 
uselessness of submitting an invoice, which precluded summary judgment for 
NGPL?

 

IV. 
Whether, in any event, CIG is entitled to interest under basic principles of 
equity, recognized by Colorado and the FERC?

 

V. 
Whether, in any event, NGPL's tender of payment in 1986 required NGPL to pay 
interest on the 1986 minimum bill?

 

NGP, 
in its Answer Brief, states the issues in this way:

 

1. 
Is the decision of the District Court granting appellee Natural Gas Pipeline 
Company of America's ("Natural") motion for summary judgment, and thereby 
dismissing appellant Colorado Interstate Gas Company's ("CIG") First Amended 
Complaint for interest under its contract with Natural, supported by principles 
of contract interpretation and standards for summary 
judgment?

 

2. 
Is the decision of the District Court that CIG's obligation to timely present a 
minimum bill to Natural was neither excused as a "useless act" and that Natural 
was not responsible for CIG's delay in presenting minimum bills supported by 
principles of contract interpretation and standards for summary 
judgment?

 

3. 
Did Natural's tender of payment to CIG in 1986 and CIG's rejection of that 
tender excuse CIG's contractual obligation to render a bill as a prerequisite to 
collecting interest from Natural on the 1986 minimum bill?

 

4. 
Is CIG entitled to interest on "equitable" grounds notwithstanding the language 
of the parties' contract to the contrary?

 
 

[¶4.]     CIG brought this action 
to recover approximately $ 8 million from NGP, which was alleged to be the 
amount due as interest on contract payments for natural gas that NGP was 
obligated to pay for under the minimum take provisions of a gas purchase 
contract. The material contract provisions are:

 
 
In 
the event Buyer's [NGP] actual purchases for the fiscal year are less than the 
Minimum Volume, then any deficiency shall be billed at the unit fixed cost 
component under Rate Schedule F-1 as reflected on Sheet No. 8 of Seller's [CIG] 
FERC Gas Tariff, Original Volume No. 1. Interest shall be charged by Seller and 
paid by Buyer on amounts due hereunder pursuant to the General Terms and 
Conditions of Seller's FERC Gas Tariff. 
Any amounts payable under the minimum bill shall be billed by Seller_on October 
10 for deliveries during the prior fiscal year and shall be payable by Buyer by 
October 20. (Emphases added.)

 

The 
pertinent language in the FERC Tariff reads:

 
 
7.2 
Unpaid Amounts - Should Buyer fail to pay the amount of any bill for gas 
delivered, as herein provided, when such amount is due, interest on the unpaid 
amount shall accrue at the rate as currently prescribed by the Federal Energy 
Regulatory Commission in rate settlement refunds from the due date until the 
date of payment. * * *.

 
 
7.3 
Extension of Time of Payment - If presentation of a bill by Seller is delayed 
after the tenth day of the month, then the time of payment shall be extended 
accordingly unless Buyer is responsible for such delay.

 
 

[¶5.]     NGP did not make 
payments for the deficiencies (the disparity between actual purchases and the 
minimum volume prescribed in the contract) for 1986 and 1987 (fiscal years 1987 
and 1988) until 1990. CIG claimed in this suit that the interest was due under 
the "minimum bill" clause set forth above in its contract with NGP. Throughout 
the years at issue here, as well as in the preceding and following years, CIG 
and NGP were engaged in extensive litigation before the federal courts and the 
FERC addressing the amounts due to CIG from NGP under the contract. We will 
discuss that litigation more fully later in our opinion.

 

[¶6.]     The magnitude of the 
amount at issue in this appeal is significant. As would be anticipated in a 
contest between two giants of the natural gas industry, the creativity and 
attention to detail by both of the parties is impressive. However, aside from 
the amount of the recovery sought, the case is not necessarily of paramount 
significance in connection with the law relating to minimum-purchase, natural 
gas contracts. This controversy must be set in the historical context of the 
natural gas industry during the last decade. As demand for natural gas decreased 
and prices rose in the early 1980s, "minimum commodity bills came under attack 
by customers whose markets could no longer absorb such volumetric commitments." 
2 AMERICAN GAS ASSOCIATION, REGULATION OF THE GAS INDUSTRY § 35.04[2] at 35-24 
(1991). FERC ruled such agreements had the effect of distorting the markets and 
were anti-competitive and, "by the end of 1984, the only remnant of minimum 
bills and minimum take provisions was the fixed-cost portion of the minimum 
commodity bill." REGULATION OF THE GAS INDUSTRY § 35.04[2] at 35-24. CIG and NGP 
were involved in regulatory proceedings before FERC beginning in 1983 and 
continuing forward until the present time. Their disagreements resulted in legal 
confrontation in both state and federal courts, as well.

 
 

[¶7.]     We address the issues 
raised, first, under our well-recognized standard of review for summary 
judgments and, second, under our usual standards for the construction of 
contracts. A summary judgment is appropriate and is correctly entered only where 
there is no genuine issue of material fact, and the prevailing party is entitled 
to judgment as a matter of law. Century Ready-Mix v. CampbellCounty, 816 P.2d 795 (Wyo. 1991). The record 
discloses that CIG, knowingly and voluntarily, decided not to submit a bill to 
NGP because it did not deem it "appropriate" during the course of the other 
litigation between these parties. Correspondence addressed to NGP in both 1986 
and 1987 encompasses specific statements by CIG that it chose to "delay" sending 
minimum bills. While the reason that CIG chose to delay sending these bills does 
not make any difference to our decision, in the interest of candor, we 
acknowledge the claim of NGP that CIG made this choice in the hope that it could 
treble the amount of the interest due in its anti-trust litigation against NGP. 
The record is clear that CIG did not submit bills, and there is nothing in the 
factual materials in this record which even suggests NGP was responsible for the 
delay in submission of those bills.

 
 

[¶8.]     Our rule with respect 
to contractual construction is that, if there is no ambiguity in a written 
contract, summary judgment is appropriate because contracts must generally be 
construed as a matter of law. Metropolitan Mortgage & Securities Co, Inc. 
v. Belgarde, 816 P.2d 868 (Wyo. 1991). The terms of this contract are 
clear. In Quin Blair Enterprises, Inc. v. Julien Construction Co., 597 P.2d 945 (Wyo. 
1979), the principles applicable in this case are summarized. When parties make 
a contract and reduce it to writing, they must abide by its plainly stated 
terms. Quin Blair. See Westates Construction Company v. City of Cheyenne, 775 P.2d 502 (Wyo. 1989); Keith v. Burzynski, 621 P.2d 247 
(Wyo. 1980). 
The parties are free to ignore the provisions of an applicable contract but, any 
party does so at his peril, and that party must recognize he may bear the 
consequences of disregarding those provisions when a breach of the contract 
becomes a reality.

 
 

[¶9.]     Indeed, in such 
instances, it is especially important that contracts be honored. The terms of 
the contract at issue here accomplish a plain and beneficial purpose, i.e., the 
submission of the minimum bills starts the running of interest if that bill is 
not paid according to the terms of the contract. After competent parties have 
made a solemn contract, a court ought to exercise restraint in nullifying its 
terms because any other practice is dangerous. It is clear from the provisions 
of this contract that the requirement for billing by the seller is a condition 
precedent to any obligation of NGP to pay interest. See Holst v. Guynn, 
696 P.2d 632 (Wyo. 1985); 45 AM. JUR. 2d, Interest and 
Usury § 88 (1969). The obligation to pay interest in these circumstances 
must be consistent with the terms of the contract. 5 ARTHUR LINTON CORBIN, A 
COMPREHENSIVE TREATISE ON THE WORKING RULES OF CONTRACT LAW § 1045 (1964). Our 
review of the record compels us to agree with the district court that the 
contract in this instance is plain and unambiguous and, in accordance with our 
rules relating to the granting of summary judgments, NGP is entitled to judgment 
as a matter of law.

 
 

[¶10.]  CIG seeks reversal of the summary 
judgment the district court granted contending, seriatim, that either the 
billing requirement of the contract was satisfied, or genuine issues of material 
fact are raised with respect to the satisfaction of the billing requirement; the 
undisputed facts demonstrate NGP was responsible for the delay in billing or 
there are genuine issues of material fact with respect to that responsibility; 
the trial court erred in not granting summary judgment to CIG because the 
submission of invoices (bills) would have been a useless act or at least there 
is a genuine issue of material fact as to the futility of submitting invoices; 
it is entitled to interest under the basic principles of equity; and the tender 
of payment in 1986 on the part of NGP required it to pay interest on a minimum 
bill for 1986. We address these several contentions in 
order.

 
 

[¶11.]  As we pursue the analysis of the CIG 
contentions, it is necessary to place in context the posture that NGP assumed in 
this long course of litigation, the latter aspects of which now are before this 
court. CIG and NGP entered into an agreement pursuant to which NGP was to 
purchase certain minimum quantities of natural gas from CIG. The agreement 
provided that, if NGP failed to purchase a certain volume of natural gas, it 
still would have to pay CIG just as though it had actually purchased that gas. 
NGP went to FERC to challenge the contractual requirement of minimum purchases, 
and it was successful in that challenge to a significant degree. NGP never took 
the position that the contract was not enforceable according to its terms. 
Instead, it urged FERC to relieve NGP of its contractual obligation for a 
variety of regulatory and other economic reasons. NGP did not contend that it 
would not have to pay interest on minimum bills in the face of any regulatory or 
judicial order to do so. NGP's goal was for the litigation to relieve it of the 
requirement of minimum purchases of natural gas and, as a product of that 
relief, it also would be relieved of any obligation to pay interest on the 
amount of any minimum bills submitted to it.

 
 

[¶12.]  CIG asserts in its first contention that 
it fulfilled the terms of the contract because, in the course of the litigation 
between it and NGP, it identified the damages it was seeking in the form of 
interest on the minimum bills or minimum daily take. CIG maintains that 
information was sufficient to fulfill the requirement of a bill under the 
contract. In its form as a noun, the word "bill" means "a statement in gross of 
a creditor's claim; statement of account; total amount indicated as due; total 
charge." In its verbal form, the meaning is "to submit a bill of charges to." 
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 215 (1986). We do not agree with 
the rather broad but vague definition CIG urges in its construction of the 
contract terms. CIG did not submit a bill in any form contemplated by the 
contract. There is no genuine issue of material fact that needs to be presented 
to a finder of fact in this regard.

 
 

[¶13.]  In its next argument, CIG urges the 
proposition that NGP was responsible for the delay in billing or, alternatively, 
there were genuine issues of material fact about NGP's responsibility that 
inhibited the granting of summary judgment in favor of NGP. In this regard, 
also, we are unable to accept the rather imprecise reading of the contract that 
CIG urges, and we do not perceive the existence of any facts, which could 
sustain such a contention. The circumstances are clear. Even though it was not 
likely NGP would have paid any minimum bill submitted, in light of the pending 
litigation, that did not make NGP responsible for the failure of CIG to present 
a bill.

 
 

[¶14.]  CIG then contends it would have been 
futile for it to have submitted any bill and, for that reason, it should not 
have been required to submit a bill in order to be entitled to interest as 
provided by the contract. The authority referred to by CIG does not support the 
argument it makes. See 5 WALTER H. E. JAEGER, WILLISTON ON CONTRACTS, § 
699 (Chapter 25, Excuse of Condition by Promisor's Prospective Non-performance) 
(3d ed. 1961). In this instance, CIG was not compelled to incur any expense or 
suffer any detriment in order to comply with the terms of the contract, that is, 
to submit a bill. NGP did not make any anticipatory repudiation of the contract 
between it and CIG. What NGP did, in fact, was to refuse to pay the minimum 
bill, as well as any interest due, until FERC made its ruling that the minimum 
bill, or some portion of it, really had to be paid. That circumstance was not 
sufficient to relieve CIG from the obligation to submit the minimum bill 
according to the contract. There are no genuine issues of material fact 
requiring the presentation of this issue to a fact finder.

 
 

[¶15.]  In its penultimate argument, CIG claims 
that under Colorado law, which it appears both parties 
agree may be the appropriate choice of substantive law, it is entitled to 
interest under equitable principles. It would not matter if we were to consider 
this contention under Colorado law or our law, there is no reason 
that we have been able to identify to invoke principles of equity in this purely 
contract action as to which an adequate remedy at law was available.  Yellowstone Sheep Co. v. Ellis, 
55 Wyo. 63, 96 P.2d 895 (1939); Hoffman v. Colorado State Board of Assessment 
Appeals, 683 P.2d 783 (Colo. 1984); People ex rel. Winborun v. District 
Court, Eighth Judicial District, 87 Colo. 316, 287 P. 849 (Colo. 
1930).

 
 

[¶16.]  In its final argument, CIG urges the 
effect of a tender of payment of the 1986 minimum bill by NGP on October 26, 
1986, during the course of the litigation. CIG submits that, since NGP tendered 
payment, CIG should be relieved from the submission of a bill for 1986. In 
response to this argument, we also are unable to agree that this circumstance 
served to relieve CIG of a plain and unambiguous contractual obligation to 
submit a bill to NGP.

 
 

[¶17.]  The summary judgment entered by the 
district court is affirmed.

 
 
URBIGKIT, 
J., dissents without an opinion.