Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-94-05133/USCOURTS-ca10-94-05133-0/pdf.json

Parties Involved:
Burlington Northern Railroad Company
Appellant
Public Service Company of Oklahoma
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

PUBLIC SERVICE COMPANY OF OKLAHOMA, 

Plaintiff-Appellee, 

v. 

BURLINGTON NORTHERN RAILROAD 

COMPANY, 

Defendant-Appellant. 

.-FILED 

UDJted States Court of Apput; 

Tenth Circuit 

APR 1 8 1995 

PATRICK FISHER 

Clerk 

No. 94-5133 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF OKLAHOMA 

(D.C. No. 92-C-473-E) 

Samuel M. Sipe (Thomas M. Barba and David A. Stein of Steptoe & 

Johnson, Washington, D.C.; J. Warren Jackman of Pray, Walker, 

Jackman, Williamson & Marlar, Tulsa, Oklahoma; and Janice G. 

Barber, Fort Worth, Texas, Of Counsel, with him on the briefs) for 

appellant. 

Richard P. Hix (William C. Anderson, Lewis N. Carter and Jon E. 

Brightmire of Doerner, Stuart, Saunders, Daniel & Anderson, Tulsa, 

Oklahoma; and Orrin Harrison, III, Harry M. Reasoner and Michael 

J. Henke of Vinson & Elkins, Dallas, Texas, with him on the brief) 

for appellee. 

Before KELLY and BARRETT, Circuit Judges, and OWEN,* District 

Court Judge. 

BARRETT, Senior Circuit Judge. 

*The Honorable Richard Owen, Senior District Judge, United States 

District Court for the Southern District of New York, sitting by 

designation. 

Appellate Case: 94-5133 Document: 01019282505 Date Filed: 04/18/1995 Page: 1 
Burlington Northern Railroad Company (BN) appeals from an 

order of the district court granting partial summary judgment in 

favor of Public Service Company of Oklahoma (PSO) and denying BN's 

motion for summary judgment. In this diversity case, we are 

called upon to review an issue of contract construction governed 

by Oklahoma law. 

Facts 

During the early 1970's, BN began developing rail transportation in the Powder River Basin of Wyoming to enable it to ship 

extensive coal deposits in that region. (Joint Appendix at 1142). 

One route, known as the Orin Line, was completed in 1979 at a cost 

of $113 million. Id. In addition to adding new track, BN 

improved some 10,000 miles of existing track to handle the weight 

of the 15,000 ton coal trains. Id. at 1143. BN's capital 

spending began to decline in 1980-81 and it attempted to recoup 

its investments from increasing coal traffic. Id. 

By 1984, however, it became evident to BN that its Powder 

River Basin trackage required substantial repair and maintenance 

due to the strain of the heavy coal trains, the extreme weather, 

and the terrain conditions of northeast Wyoming. Id. Due to the 

magnitude of its maintenance and expansion efforts, it became 

important for BN to secure long-term transportation agreements 

from utilities and other shippers of coal with guaranteed minimum 

and maximum annual commitments. Id. at 1144. 

On August 27, 1985, BN and PSO entered into a Coal Transportation Agreement (Agreement) under which BN agreed to transport 

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Wyoming coal purchased by PSO to PSO's electric generating facilities in Oklahoma. PSO desired "BN to transport, and BN 

desire[d] to transport [for PSO] certain specified volumes of coal 

in unit trains." (Joint Appendix at 0145). 

It was the "intent of the parties . . . that [PSO will] 

receive reliable, high volume, unit train transportation service 

at a cost which is ascertainable and which reflects overall 

economic conditions and indices, and that BN [will] provide such 

transportation services at rates which [will] fairly and adequately compensate BN." Id. at 0194-95. In the event that either one of the parties "believes that the intentions of the 

parties as above described ha[s] not been effectuated," then 

"either party shall have the right to request renegotiation of the 

Effective Rate and/or renegotiation of the adjustment method." 

Id. at 0195. 

Based on the above intentions, the parties agreed that BN 

would transport coal for PSO at a base rate of $14.00 per net ton, 

as adjusted, pursuant to the Agreement, and that PSO would tender 

a minimum of 2,600,000 tons of coal for each year of the long term 

contract.1 Id. at 0157 and 0168. "The parties acknowledge that 

the Base Rate, Effective Rate and charges for service provided 

hereunder are predicated on Utility tendering for transportation 

no less than such minimum annual volume requirement as may be 

required under this Agreement." Id. at 0193-94. "In the event 

that [PSO] fails to tender to BN for transportation the agreed to 

1 The contract was originally a twelve-year agreement, extended 

to seventeen years in 1987. 

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minimum annual volume requirement for any calendar year as required under this agreement," then PSO "shall have a 'tonnage 

shortfall' [for which it shall pay BN] ... liquidated damages .. 

" Id. at 0194. (emphasis added). 

PSO agreed to provide BN written notice by October of each 

year "of the forecast volume of coal to be tendered for transportation during each quarter of the next calendar year, subject 

to the requirements of Section 5.1." Id. at 0170. In the event 

that PSO's "coal cars are damaged, destroyed or derailed by BN and 

have been removed from service, and BN is unable to substitute BN 

cars as provided for in this section, the minimum annual volume 

set out in Section 5 shall be reduced." Id. at 0180. 

PSO could terminate the contract at any time at its "sole and 

absolute discretion" by paying BN "an amount equal to thirty 

percent (30%) of the Effective Rate at the date of termination 

multiplied by the minimum annual volume requirement as described 

in Section 5 . for each full calendar year remaining in term 

of the Agreement." Id. at 0205. The parties further agreed that 

PSO could commence shipping "beneficiated coal" (coal which has 

been dried or otherwise treated or processed beyond the raw 

state), but "[i]t is understood and agreed that [PSO's] minimum 

volume requirement as set forth in Subsection 5.1 ... will not 

be reduced as a result of the transportation of Beneficiated Coal 

pursuant to this Agreement, both parties recognizing that Beneficiated Coal may require less tonnage than Coal otherwise 

transported to achieve the same Btu value. . " Id. at 0213. 

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The parties agreed that "[n]either party may assign this 

Agreement or any rights or obligations hereunder without the prior 

written consent of the other party," and that "[a]ll amendments, 

supplements, modifications to and waivers of the terms of this 

Agreement shall be in writing and signed by the parties hereto. 

II Id. at 0216. 

To meet its obligations under the Agreement, BN purchased 

seventeen locomotives at a cost of approximately $13 million. Id. 

at 1146. The Agreement had an original expiration date of December 31, 1997, subsequently extended in 1987 to December 31, 

2002. 

Section 5.1 of the Agreement provided, in part: 

Tender of Tonnages; Origins 

Subject to the Force Majeure provisions of Section 12, 

Utility hereby agrees to tender, or cause to be tendered 

to BN for transportation, each calendar year . . . a 

minimum of 2,600,000 tons of Coal ... and to pay for 

such transportation at the Effective Rate set forth in 

Section 4 hereof .... 

* * * 

In the event tonnage in excess of 2.6 million tons per 

year is to be shipped from the Powder River Basin in 

Wyoming to Destination and Utility has received a quotation of a lower rate than the Effective Rate under 

this Contract, Utility, in so far as it is able, must 

give BN the price terms of the competitor's written 

quotation . . . and Utility shall give BN the final 

opportunity to meet such competitive rate on such tonnage in order to prevent diversion. 

(Joint Appendix at 0168-69). 

Section 10. of the Agreement provided, in part: 

Indemnification for failure to Tender Minimum Annual 

Tonnage 

The parties acknowledge that the Base Rate, Effective 

Rate and charges for service provided hereunder are 

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predicated on Utility tendering for transportation no 

less than such minimum annual volume requirement as may 

be required under this Agreement during each calendar 

year of the Agreement subsequent to the initiation of 

Single Line Direct Service by BN. In the event Utility 

fails to tender to BN for transportation the agreed to 

minimum annual volume requirement for any calendar year 

as required under this Agreement, Utility shall have a 

"tonnage shortfall." In such event, Utility agrees to 

pay the following sum to BN as liquidated damages, and 

not as a penalty, for any tonnages not shipped during 

any calendar year and such liquidated damages shall be 

calculated as follows .. 

(Joint Appendix at 0193-94). 

Section 16.2 provided: 

Termination for Convenience 

Utility may terminate this Agreement at any time at 

Utility's sole and absolute discretion. Any such termination shall be effective by written notice from 

Utility to BN at least six months in advance of such 

termination. After receipt of such notice of termination, BN shall be entitled to receive from Utility an 

amount equal to thirty percent (30%) of the Effective 

Rate at the date of termination multiplied by the 

minimum annual volume requirement as described in Section 5 hereof for each full calendar year remaining in 

the term of the Agreement. The provisions of Section 10 

hereof shall govern the amount owed by Utility for any 

failure by Utility to meet its minimum annual volume 

requirement during the calendar year in which a termination pursuant to this Subsection occurs. Payment of 

the amount due hereunder shall constitute the sole and 

exclusive remedy against Utility by BN in the event of 

Utility's Termination For Convenience. 

(Joint Appendix at 0205-06). 

From 1986 through 1991, PSO shipped a minimum of 2,600,000 

tons of Wyoming coal annually with BN in accordance with the 

Agreement. In 1992, however, PSO entered into a transportation 

agreement with Chicago and North Western Railroad Company and the 

Union Pacific Railroad Company, hereinafter jointly referred to as 

CNW/UP, after "the high rate for hauling coal under the Agreement 

[made it] economically advantageous for PSO to pay BN liquidated 

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damages under § 10 and to ship coal on the spot market on the 

Union Pacific Railroad." (Joint Appendix at 0089). In 1992, PSO 

shipped approximately 1,000,000 tons of coal on CNW/UP. Id. 

Litigation 

After BN asserted that the shipments on CNW/UP breached the 

Agreement, PSO filed a complaint on June 1, 1992, seeking a declaratory judgment, alleging, inter alia: the Agreement permitted 

it a buy-out of one million tons of coal for 1992; PSO's use of 

CNW/UP to transport coal was not contrary to BN's contract rights, 

and; PSO had not breached the Agreement nor engaged in any other 

wrongful or tortious conduct in violation of the Agreement. 

BN moved for summary judgment, contending, inter alia, that: 

PSO was obligated under the agreement to ship a minimum of 

2,600,000 tons of coal each year with BN; § 10 of the Agreement 

did not provide PSO a buy-out option in derogation of PSO's 

specific minimum performance obligations; § 12 of the Agreement 

excused PSO from meeting its minimum tonnage obligation only for 

unanticipated force majeure, and; PSO's interpretation of § 10 is 

inconsistent with § 16.2. 

On December 9, 1992, the parties entered into an "Agreed 

Stipulations and Limited Case Management Order" in which the 

parties agreed, inter alia: 

2. The parties stipulate and agree that, where 

Section 10 of the Agreement applies, Section 10 is enforceable and PSO is permitted and required to pay BN 

liquidated damages (as calculated pursuant to Section 

10) as a result of a "tonnage shortfall" (as that term 

is used in Section 10); and further stipulate and agree 

that, where Section 10 applies, and provided PSO tenders 

timely payment of such liquidated damages to BN, BN is 

entitled to no further amounts of money as a result of 

a "tonnage shortfall," and PSO is not in breach of the 

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Agreement as a result of a "tonnage shortfall." It is 

the parties' agreement and intent that they are bound by 

the foregoing stipulation whether or not the court decides to enter this order .... 

3. Notwithstanding the foregoing stipulation, the 

parties acknowledge that they continue to have a dispute 

concerning the facts and circumstances under which 

Section 10 of the Agreement applies. PSO contends that 

Section 10 applies to any "tonnage shortfall," occurring 

for any reason, including "tonnage shortfalls" occurring 

as a result of PSO's discretionary election. BN contends that Section 10 applies only with respect to 

"tonnage shortfalls" which occur under particular facts 

and circumstances, which do not included "tonnage 

shortfalls" occurring as a result of PSO's discretionary 

election to haul coal on a competing carrier. 

(Joint Appendix at 0068-69). 

On March 30, 1993, PSO filed a motion for partial summary 

judgment in which it requested the court to determine, as a matter 

of law, that § 10 "applies to permit and require PSO to make 

liquidated damage payments in any and all circumstances 

where PSO does not tender to Defendant, Burlington Northern 

Railroad Company . 2.6 million tons of coal for transportation 

in a calendar year." (Joint Appendix at 0078) (footnote omitted). 

On May 6, 1993, PSO filed a second motion for partial summary 

judgment in which it requested the court determine, as a matter of 

law, that under § 5.1 it was "not required to disclose to [BN] the 

price terms of a competing carrier's bid to haul PSO coal tonnage 

between 2.6 and 3.6 million tons per year, when the bid from the 

competing carrier has been submitted on the condition that it be 

kept confidential." (Joint Appendix at 0735). 

On March 24, 1994, the court entered an order granting PSO's 

motions for partial summary judgment. The court ruled that § 10 

was an alternative performance provision which allowed PSO to 

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unilaterally reduce it minimum annual tonnage commitment to BN. 

On May 13, 1994, the court entered its final judgment. 

Issues 

On appeal, BN contends that: (1) the district court erred by 

ignoring § 5.1 of the Agreement which establishes an exclusive 

shipping arrangement between the parties for a minimum of 2.6 

million tons per year and prevents diversion to other carriers; 

(2) the district court e~red in viewing § 10 as an alternative 

performance provision and in disregarding PSO's obligation to make 

a good faith effort to perform; (3) if we determine that the 

Agreement is ambiguous, we may consider record evidence confirming 

that the district court erred in adopting PSO's construction of 

the Agreement; and (4) the district court erred in disregarding 

the plain language of the third paragraph of § 5.1 which guarantees BN a final opportunity to transport PSO's coal in excess of 

2.6 million tons per year. 

Standards on Appeal 

Summary judgment is appropriate only "if the pleadings, 

depositions, answers to interrogatories, and admissions on file, 

together with the affidavits, if any, show that there is no 

genuine issue as to any material fact and that the moving party is 

entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). 

We review the district court's grant of summary judgment de novo, 

applying the same standards as the district court. Thrifty RentA-Car v. Brown Flight Rental One, 24 F.3d 1190, 1194 (lOth Cir. 

1994). The interpretation of an unambiguous contract is a question of law to be determined by the court, Resolution Trust Corp. 

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v. Federal Savings & Loan Insurance Corp., 25 F.3d 1493, 1500 

(lOth Cir. 1994), and may be decided on summary judgment. Utah 

Power & Light Co. v. Federal Insurance Co., 983 F.2d 1549, 1553 

(lOth Cir. 1993). 

In diversity cases governed by state law, we must ascertain 

and apply the state law so as to reach the same result that the 

state court would reach. Id. Our review of the district court's 

applications of state law is de novo. Salve Regina College v. 

Russell, 499 U.S. 225, 231 (1991). "If [a] court of appeals finds 

that the district court's analytical sophistication and research 

have exhausted the state-law inquiry, little more need be said in 

the appellate opinion. Independent review, however, does not 

admit of unreflective reliance on a lower court's inarticulable 

intuitions. Thus, an appropriately respectful application of de 

novo review should encourage a district court to explicate with 

care the basis for its legal conclusions." Id. at 232-33. 

Disposition 

I. & II. 

BN contends that the district court erred by ignoring § 5.1 

of the Agreement which establishes an exclusive shipping arrangement between the parties for a minimum of 2.6 million tons per 

year and prevents diversion to others carriers. BN also contends 

that the court erred in viewing § 10 as an alternative performance 

provision and in disregarding PSO's obligation to make a good 

faith effort to perform. BN, PSO and the district court agreed 

that the Agreement was unambiguous. (Unsealed Joint Appendix at 

053-54, 079, and 110). 

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Under § 5.1, Tender of Coal; Origins, PSO agreed "to tender 

or cause to be tendered to BN for transportation, each calendar 

year a minimum of 2,600,000 tons of coal." Under§ 10, 

Indemnification for Failure to Tender Minimum Annual Tonnage, PSO 

agreed to pay BN liquidated damages in the event that it "fails to 

tender to BN for transportation the agreed to minimum annual 

volume requirement." 

In its order granting PSO's motions for partial summary 

judgment on §§ 5.1 and 10, the district court ruled: 

The court has for its address an issue of contract 

construction. Specifically: is Section 10 of the 

Agreement an alternative performance provision which 

would permit PSO to reduce its tonnage commitment to 

ship the required minimum of 2.6 million tons of coal 

over Burlington rails, unilaterally (that is, whenever 

it is economically advantageous to do so) , and to pay 

liquidated damages equal to 30% of the Agreement's 

"Effective Rate"? The plain language of §10 indicates 

that it is. Therefore, because §21 of the Agreement 

directs application of Oklahoma law and because 15 ·O.S. 

§154 requires a "plain meaning" construction of contract 

language, PSO's construction of §10 must prevail. The 

court further finds that the term "fail", as it appears 

in §10 is a term of result, not of intent; therefore the 

court declines to infer that "fail" means unintentionally fail. . . . Finally, the court finds that the 

phrases "permitted and required" as found in §10 supports the court's construction of that Section. 

(Unsealed Joint Appendix at 113-14) (emphasis added). 

On May 13, 1994, the district court entered an amended order 

and final judgment in which it acknowledged that the above order 

had improperly referenced the phrase "permitted and required" to 

Section 10 and that it should have referenced the phrase to the 

Agreed Stipulations and Limited Case Management Order of December 

9, 1992. 

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Section 21. of the Agreement provided that "this Agreement 

shall be deemed to be a contract made in the State of Oklahoma and 

governed by and construed according to the laws of that State." 

(Joint Appendix at 0208). In Oklahoma, "[t]he language of a contract is to govern its interpretation, if the language is clear 

and explicit, and does not involve an absurdity." 15 Okl.St.Ann. 

§ 154. Under Oklahoma law, the interpretation of an unambiguous 

contract is a question of law for the courts. Devine v. Ladd 

Petroleum Corp., 805 F.2d 348, 349 (lOth Cir. 1986); CMI Corp. v. 

Gurries, 674 F.2d 821, 825 (lOth Cir. 1982); Ferrell Construction 

Co. v. Russell Creek Coal Co., 645 P.2d 1005, 1007 (Okla. 1982). 

Where no ambiguity exits, intent must be determined from the words 

used, unless there is fraud, accident, or pure absurdity. Lindhorst v. Wright, 616 P.2d 450, 453 (Okl. Ct. App. 1980). The district court agreed with BN and PSO that the Agreement was unambiguous. (Unsealed Joint Appendix at 110). We, too, so agree. 

Contracts must be interpreted as to give effect to the intention of the parties at the time of contracting, with the intention of the parties to be determined from the terms of the contract itself. Provident Life & Accident Insurance Co. v. Ridenour, 838 P.2d 530, 531 (Okl. Ct. App. 1992); Mercury Investment 

Company v. F.W. Woolworth Co., 706 P.2d 523, 529 (Okla. 1985). 

Contracts are to be construed with each clause helping to interpret other clauses. Shepherd v. French, 612 P.2d 727, 729 (Okl. 

Ct. App. 1980). Courts are bound to give effect to every part of 

a contract if reasonably practicable. Dooley v. Cordes, 

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434 P.2d 289, 294 (Okla. 1967). "Particular clauses of [an 

Oklahoma] contract, though persuasive in isolation, are not deemed 

controlling when violative of the general intent of the parties 

expressed in the contract as a whole." United States v. H. G. 

Cozad Construction Company, 324 F.2d 617, 619 (lOth Cir. 1963). 

The intention of the parties to a contract must be deduced from 

the four corners of the instrument. McEvoy v. First Nat. Bank and 

Trust Co., 624 P.2d 559 (Okl. App. 1980). One convenant implicit 

in every Oklahoma contract is the agreement that neither party 

will intentionally do anything to injure the other party's right 

to the fruits of the contract. Bonner v. Oklahoma Rock 

Corporation, 863 P.2d 1176, 1184 n. 46. (Okla. 1993). 

Applying these standards to the Agreement, we hold that the 

district court erred in granting PSO's motions for partial summary 

judgment. 

Section 5.1 

We agree with BN that the district court erred in ignoring 

PSO's commitment under § 5.1 to ship a minimum of 2,600,000 tons 

of coal with BN for each year of the Agreement. 

As set forth, supra, the district court did not address PSO's 

commitment under § 5.1 at the time it granted PSO's motions for 

partial summary judgment, concentrating instead on § 10. This, 

notwithstanding that courts are bound to give effect to every part 

of a contract if reasonably practicable, Dooley, 434 P.2d at 294, 

and that "[p]articular clauses of a contract [such as § 10], 

though persuasive in isolation, are not deemed controlling when 

violative of the general intent of the parties expressed in the 

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contract as a whole." H.G. Cozad Construction Company, 324 F.2d 

at 619. 

Our review of the Agreement establishes that PSO's commitment 

to tender or to cause to be tendered a minimum of 2,600,000 tons 

of coal annually for transportation by BN is, when considered with 

the rate provisions, the single most important provision of the 

Agreement. Even though either BN or PSO could request 

rennegotiation of BN's rates if they "believe[d] that the 

intentions of the parties ... had not been effectuated," (Joint 

Appendix at 0195), the Agreement required PSO to ship a minimum of 

2,600,000 tons of coal via BN each year of the Agreement. 

Moreover, numerous provisions within the Agreement were 

specifically predicated on PSO's commitment to ship a minimum of 

2,600,000 tons annually via BN, e.g.: PSO agreed to provide BN 

with written notice by October of each year "of the forecast 

volume of coal to be tendered for transportation during each 

quarter of the next calendar year, subject to the requirements of 

Section 5.1," (Joint Appendix at 0170); BN's "Base Rate ... and 

charges for service provided hereunder are predicated on Utility 

tendering for transportation no less than such minimum annual 

volume requirement," id. at 0193-94; PSO could terminate the 

contract at any time at its "sole 

paying BN "an amount equal to 

Effective Rate . multiplied 

and absolute 

thirty percent 

by the minimum 

discretion" by 

(30%) of the 

annual volume 

requirement as described in Section 5," id. at 205; in the event 

that PSO commenced shipping beneficiated coal (which would require 

less tonnage to achieve the same Btu value required by PSO), it is 

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"understood and agreed that [PSO's] minimum volume requirement as 

set forth in Subsection 5.1 ... [would] not be reduced." Id. at 

0213. 

Under these circumstances, we hold that the court erred in 

ignoring PSO's commitment under § 5.1 to ship a minimum of 

2,600,000 tons of coal annually via BN when it granted PSO's motions for partial summary judgment. 

Section 10 

a. 

We agree with BN that the district court erred in concluding 

that § 10 constituted an alternative performance provision which 

allowed PSO to unilaterally reduce its commitment under § 5.1 to 

ship a minimum of 2,600,000 tons of coal annually and pay liquidated damages, in lieu. 

Section 10 provides that 11 [i]n the event [PSO] fails to 

tender to BN for transportation the agreed to minimum annual 

volume requirement . . . [PSO] agrees to pay the following sum to 

BN as liquidated damages." The court concluded that § 10 was an 

alternative performance provision whereby PSO could unilaterally 

reduce its minimum tonnage commitment and pay liquidated damages. 

However, a contract with a liquidated damages provision is 

not an alternative contract. 5 A. Corbin, Corbin on Contracts § 

1082, at 462 (1964). "Where a contractor promises to render a 

certain performance or, in default thereof, to pay a definite sum 

as liquidated damages, he has not made an alternative contract." 

Id. 

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The difference between alternative 

liquidated damages is lucidly explained 

Corbin on Contracts: 

performance 

in § 1082 

It is evident that some alternative 

contracts giving the power of choice between 

the alternatives to the promissor can easily 

be confused with contracts that provide for 

the payment of liquidated damages in case of 

breach, provided that one of the alternatives 

is the payment of a sum of money . . . . If, 

upon a proper interpretation of the contract, 

it is found that the parties have agreed that 

either one of the two alternative performances 

is to be given by the promissor and received 

by the promissee as the agreed exchange and 

equivalent for the return performance rendered 

by the promisee, the contract is a true alternative contract. 

and 

of 

Prenalta Corp. v. Colorado Interstate Gas Co., 944 F.2d 676, 689 

(lOth Cir. 1991) (quoting Corbin § 1082, at 463-64). 

PSO's commitment to ship 2,600,000 tons of coal annually via 

BN was not set forth in the Agreement as "one of the two 

alternative performances . to be given" by PSO. We hold that 

the court erred in concluding that § 10 constituted an alternative 

performance contract. 

b. 

We also agree with BN that the district court erred in interpreting the meaning of the word "fails" as it is used in § 10. 

Words used in a contract are to be understood in their ordinary 

and proper sense. Martin v. Harper, 255 P.2d 943 (Okla. 1953). 

Section 10 provides that "[i]n the event Utility fails to 

tender to BN for transportation the agreed to minimum annual 

volume requirement . . . . Utility agrees to pay . . . liquidated 

damages." In granting PSO's motions for partial summary judgment, 

the district court found that: 

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the term "fail", as it appears in§ 10 is a term of 

result, not of intent; therefore the court declines to 

infer that "fail" in§ 10 means "unintentionally fail." 

(Unsealed Joint Appendix at 114). We hold that the court erred in 

this finding. 

as: 

Black's Law Dictionary 712 (6th ed. 1991) defines "fail" as: 

Fault, negligence, or refusal. Fall 

cessful or deficient. Fading health. 

short; be unsucSee Extremis. 

Fail also means: involuntarily to fall short of 

success or the attainment of one's purpose; to become 

insolvent and unable to meet one's obligations as they 

mature; to become or be found deficient or wanting; to 

keep or cease from an appointed, proper, expected, or 

required action. 

Black's Law Dictionary 1304 (6th ed. 1991) defines "require" 

To direct, order, demand, instruct, command, claim, 

compel, request, need, exact. To ask for 

authoritatively or imperatively .... 

Applying these definitions, we hold that "fails," as used in 

§ 10 of the Agreement, means "involuntarily to fall short of suecess or the attainment of one's purpose," or to "unintentionally 

fail" to "tender or cause to be tendered" the "minimum annual 

volume requirement as may be required under this Agreement during 

each calendar year of the Agreement." Any other interpretation 

would be in derogation of the Agreement and would contravene 

established Oklahoma law that "[a]t least one covenant is always 

implicit in every contract--the agreement that neither party will 

intentionally do anything to injure the other party's right to the 

fruits of the contract." Bonner, 863 P.2d at 1184 n.46. 

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III. 

BN contends that if we determine that the Agreement is ambiguous, we may consider record evidence confirming that the 

district court erred in adopting PSO's construction of the 

Agreement. This contention is mooted by our holding that the 

Agreement is unambiguous. 

IV. 

BN contends that the district court erred in disregarding the 

plain language of the third paragraph of § 5.1 which guarantees it 

a final opportunity to transport PSO's coal in excess of 2,600,000 

tons a year. Paragraph 3. of § 5.1 provides in part: 

In the event tonnage in excess of 2.6 million tons per 

year is to be shipped from the Powder River Basin in 

Wyoming to Destination and Utility has received a 

quotation of a lower rate than the Effective Rate under 

this Contract, Utility, in so far as it is able, must 

give BN the price terms of the competitor's written 

quotation . . . without disclosing the identity of the 

competitor or terms other than those affecting price . . . and Utility shall give BN the final opportunity to 

meet such competitive rate on such tonnage in order to 

prevent diversion. 

(Joint Appendix at 0168-69). 

In its motion for partial summary judgment filed May 6, 1993, 

PSO requested that the court determine as a matter of law that it 

was not "not required to disclosed to [BN] the price terms of a 

competing carrier's bid to haul PSO tonnage between 2.6 and 3.6 

million tons per year, when the bid from the competing carrier has 

been submitted on the condition that it be kept confidential." 

(Joint Appendix at 0735). PSO argued that because the competing 

carrier had requested that its bid be kept confidential, and 

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because it was obligated to disclose such bids under § 5.1 only 

"in so far as it is able," it was not required to disclose the 

bid. 

The court accepted these arguments and granted PSO's motion 

for partial summary judgment on its interpretation of § 5.1 

without comment. 

BN contends that: if PSO is "not able" to disclose the price 

term of a competitor's written quotation, it must ship any incremental tons via BN; the district court's ruling impermissibly 

reads out of the Agreement BN's final opportunity to match a 

competitor's rates; and record evidence of the parties' intent and 

course of dealing demonstrates that the district court erroneously 

interpreted § 5.1. 

We hold that the district court did not err in granting PSO's 

motion for partial summary judgment on its interpretation of the 

third paragraph of § 5.1. Under that paragraph, PSO was, "in so 

far as it is able," required to provide BN with the price terms of 

the competitor's written quotation. PSO, having received a 

confidential bid from a competing carrier, was not able to provide 

BN with the price terms of the competitor's written quotation. 

REVERSED in part, AFFIRMED in part, and REMANDED for further 

proceedings consistent herewith. 

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