Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01948/USCOURTS-ca10-88-01948-0/pdf.json

Parties Involved:
Bokum Resources Corporation
Appellant
Long Island Lighting Company
Appellee

Document Text:

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

BOKUM RESOURCES CORPORATION, 

Plaintiff-Appellant, 

FILED 

United St.ates Court of Appeals Tenth Circuit 

FEB 1 41989 

ROBERT L. HOECKER 

Clerk 

v. 

LONG ISLAND LIGHTING COMPANY, 

Defendant-Appellee. 

No. 88-1948 

(D.C. No. 85-0859-JB) 

(D. N.M.) 

ORDER AND JUDGMENT 

Before McKAY, SEYMOUR, and EBEL, Circuit Judges. 

This is a breach of contract case involving two uranium supply contracts. Under both contracts, plaintiff Bokum Resources 

Corporation ("Bokum") was the uranium seller and defendant Long 

Island Lighting Company ("LILCO") was the buyer. Bokum appeals 

from the district court's directed verdict in favor of LILCO on 

Bokum's claims and from the district court's judgment, after a 

bench trial, in favor of LILCO on LILCO's counterclaims. 

At oral argument on appeal, Bokum conceded that if the 

district court's findings of fact concerning LILCO's counterclaims 

were upheld, those findings would control Bokum's claims too as 

the law of the case. Bokum also conceded that our standard for 

Appellate Case: 88-1948 Document: 01019962722 Date Filed: 02/14/1989 Page: 1 
reviewing the district court's factual findings concerning the 

counterclaims is the clearly erroneous standard. Fed. R. Civ. P. 

52(a). 

As the trier of fact for LILCO's counterclaims, the district 

court found that the uranium to be supplied under both of the 

contracts had to come from Bokum's "property near Marquez, New 

Mexico ••• or, at Bokum's option, from other properties owned or 

controlled by Bokum. 11 (Findings at 2, 5.) The district court 

concluded that Bokum had materially breached both contracts by 

"failing to timely deliv~r uranium from the Marquez property or 

any other properties owned or controlled by Bokum. 11 (Findings at 

8-9.) 

Bokum argues that LILCO did not present sufficient evidence 

to support those findings. We disagree. 

The principal issue is whether the 1976 contract required 

Bokum to supply uranium mined from its own property, or whether 

Bokum instead could purchase uranium on the spot market and resell 

it to LILCO. It is undisputed that the other contract, the 1978 

contract, did require Bokum to supply uranium from its own 

property. See Bokum Br. at 13. It is also undisputed that 

although Bokum eventually tendered uranium purchased on the spot 

market, Bokum never tendered or delivered any uranium mined from 

its own property. 

We believe that the operative language of the 1976 contract, 

when viewed in context with the contract as a whole, is ambiguous. 

Therefore, it is proper to examine extrinsic evidence regarding 

the meaning of the contract. 

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Appellate Case: 88-1948 Document: 01019962722 Date Filed: 02/14/1989 Page: 2 
The district court heard extrinsic evidence on the contract 

interpretation issue. LILCO's officer in charge of negotiating 

the 1976 contract testified that the purpose of the contract was 

to assure a stable source of uranium supply from a specific ore 

body: 

[H]aving gone through the Westinghouse situation, we wanted to be very sure that in order 

to meet our requirements that there was ore in 

the ground and that it could be mined on an 

economic basis and that in a couple of years 

we would be able to get the material. 

(Tr. at 526-27.) He further testified that LILCO did not want to 

be at the mercy of the spot market, but rather wanted the uranium 

to "come from the Marquez Property, from the mine that would be 

developed on the property." (Id. at 532.) He testified that the 

relevant sections of the contract meant that Bokum was required to 

supply the uranium from its own property: 

Q. I'd like to ask you what the phrase, 

"or at seller's option from other properties 

located in the United States of America or 

elsewhere," refers to? 

A. Well, the sentence starts off ••. 

by talking about, "shall be mined from 

deposited property under lease to seller." 

And to the best of our knowledge, the only 

properties that [Bokum] had at that time was 

the Marquez property and possibly the ••. 

adjacent property that was in litigation with 

Kerr-McGee. 

But then we -- we were providing a million and a half dollars ••• for the development of other properties. And so if, as a 

result of using that money, and these people 

came up with uranium from other properties, 

whether it was in the U.S., in Mexico, 

Wyoming, Utah or Canada, we wanted to be able 

to buy the uranium from those properties. We 

wanted to have the first call on that uranium. 

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Appellate Case: 88-1948 Document: 01019962722 Date Filed: 02/14/1989 Page: 3 
And that's what -- that's what is 

intended by that language. 

(Id. at 536-37.) 

Other language in the contract similarly supports the 

district court's interpretation. Bokum's failure to have a 

uranium mine on the ore body premises in operation and production 

by June 1, 1978 (later extended to June 1, 1979) itself was 

defined in the 1976 contract as a "Material Breach." (Pl. 

Exh. B-1, Article 15.) 

Based upon our review of the 1976 contract and LILCO's 

extrinsic evid~nce, and despite Bokum's presentation of contrary 

evidence (~, Pl. Exh. B-22), we conclude that the district 

court's findings were not clearly erroneous. Although uranium 

generally is a fungible commodity, the evidence supports the 

conclusion that LILCO contracted for a stable supply of uranium 

from specific properties. LILCO did not want, and did not 

contract for, a situation where Bokum could fulfill its 

obligations by purchasing uranium on the spot market without 

developing a mine. 

Because Bokum admittedly failed to tender or deliver uranium 

from the Marquez property or any other Bokum properties, the 

evidence supports the district court's rulings that Bokum had 

breached the contracts; that its tenders were non-conforming; and 

that LILCO's refusal to accept those tenders did not amount to a 

repudiation of the contracts by LILCO. Therefore, the district 

court properly entered judgment against Bokum on its claims and in 

favor of LILCO on LILCO's counterclaims. 

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Appellate Case: 88-1948 Document: 01019962722 Date Filed: 02/14/1989 Page: 4 
The judgment of the district court is AFFIRMED. 

-5-

Entered for the Court 

David M. Ebel 

Circuit Judge 

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