UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

___________

Nos. 00-3873 and 00-3877

___________

CLEARLY CANADIAN *

BEVERAGE CORPORATION, *

*

Appellee, * 

* 

v. *

* 

AMERICAN WINERY, INC. d/b/a * Appeal from the United States

BEVERAGE CONCEPTS, and * District Court for the

HIGHLAND COMMUNITY BANK, * Eastern District of Missouri.

*

Appellants, * [PUBLISHED]

___________ 

No. 00-3876

___________ 

TIMOTHY J. RAND, *

*

Appellant, *

*

 v. *

*

CLEARLY CANADIAN *

BEVERAGE CORPORATION, *

*

Appellee. *

______________

Submitted: June 14, 2001

Filed: July 30, 2001

______________
1The Honorable Joseph F. Bataillon, United States District Judge for the District

of Nebraska, sitting by designation.

2

Before MORRIS SHEPPARD ARNOLD and RICHARD S. ARNOLD, Circuit Judges,

and BATAILLON,1 District Judge.

______________

BATAILLON, District Judge.

When one company’s fortunes take a turn for the worse, entities with whom it

contracts are often adversely affected. However, the degree to which an entity is

adversely affected will usually depend upon the contractual safeguards bargained for

and secured by the entity.

Following a precipitous decline in demand for its product, Clearly Canadian

Beverage Corporation (“Clearly Canadian”) filed suit in federal district court against

American Winery, Inc. (“American Winery”) seeking recovery on a promissory note

as well as replevin of certain equipment which secured the note. Clearly Canadian

amended its complaint, joining Highland Community Bank (“the Bank”) as a defendant

and requesting a declaratory judgment that its security interest in American Winery’s

collateral was superior to the security interest of the Bank in the same collateral.

American Winery filed counterclaims for breach of contract, breach of the covenant of

good faith and fair dealing, and negligent and fraudulent misrepresentation.

Timothy Rand (“Rand”), one of the owners of American Winery, filed a separate

action in Missouri state court against Clearly Canadian for fraudulent and negligent

misrepresentation. Rand’s suit was timely removed to federal court and consolidated

with Clearly Canadian’s pending federal action against American Winery and the Bank.

Clearly Canadian, American Winery and Rand submitted a series of summary

judgment motions, all of which were decided by the district court in favor of Clearly
3

Canadian. The district court entered a Final Judgment and Order of Replevin, entering

judgment in favor of Clearly Canadian on all its claims, dismissing American Winery’s

counterclaims and Rand’s claims with prejudice, and ordering that Clearly Canadian

was entitled to immediately replevy the collateral of American Winery. American

Winery, Rand, and the Bank appeal, and we affirm in part.

I. FACTUAL BACKGROUND

Beginning in 1987, Clearly Canadian, a publicly traded company based in

Vancouver, Canada, began to produce, distribute, and market bottled beverages,

including flavored carbonated bottled water marketed under the trademark “Clearly

Canadian®.” Clearly Canadian contracted with distributors and “licensees” (i.e.,

distributors that also have approved production capabilities) to get its products to retail

markets. Clearly Canadian also entered into arrangements with bottlers, also called

“co-packers,” to produce its products for Clearly Canadian to supply to its distributors.

In 1989, Clearly Canadian entered into a non-exclusive bottling agreement with

American Winery, a bottling facility whose principal place of business is St. Louis,

Missouri. 

A. Clearly Canadian’s Loans to American Winery

When Clearly Canadian entered into the bottling agreement with American

Winery in 1989, Clearly Canadian advanced funds to American Winery for certain

capital improvements. The purpose of these capital improvements was to allow

American Winery to produce Clearly Canadian products in greater volume. Although

American Winery was to repay these advances through a $0.05 per case reduction in

the fees Clearly Canadian would owe American Winery for bottling services, the

bottling agreement did not require Clearly Canadian to order any specific minimum

volume of production from American Winery. Clearly Canadian had similar

arrangements with numerous other co-packers at the time.
4

In 1991, because of adverse financial circumstances, American Winery planned

for and filed a Chapter 11 bankruptcy reorganization proceeding. Prior to this filing,

the parties had discussed the possibility of Clearly Canadian advancing additional funds

to American Winery to facilitate its reorganization. On March 13, 1991, Clearly

Canadian entered into a Credit Agreement to advance American Winery funds through

two separate loans: a Facility A loan and a Facility B loan.

Under the Facility A loan, Clearly Canadian would make term loans to American

Winery in an aggregate amount not to exceed $661,000 so that American Winery could

increase its production capacity to meet Clearly Canadian’s burgeoning production

demands. The parties agreed that American Winery could repay the Facility A loan

through the $0.05 per case credit repayment feature established in their original bottling

agreement.

Under the Facility B loan, Clearly Canadian would advance working capital

equal to $0.20 per case of Clearly Canadian products bottled by American Winery.

The Facility A Loans were evidenced by a promissory note entitled “Facility A Note,”

and the Facility B Loans were evidenced by a promissory note entitled “Facility B

Note.” The bankruptcy court approved these arrangements. None of the agreements

entered into between Clearly Canadian and American Winery on March 13, 1991,

required Clearly Canadian to order any particular volume of production from American

Winery.

In 1992, Clearly Canadian advanced an additional $650,000 to further increase

American Winery’s capacity to bottle Clearly Canadian beverages. American Winery

used these funds to convert a non-functioning canning line at American Winery’s plant

into a fully functioning bottling line dedicated solely to Clearly Canadian production.

Before this loan, the advances made to American Winery totaled $414,981 under the

Facility A loan and $985,678 under the Facility B loan. After all of the loan advances

had been made, the parties agreed in the summer of 1992 that all of the loans would be
5

combined and redocumented in the form of an Amended and Restated Credit

Agreement (the “Amended Credit Agreement”), effective May 31, 1992.

 In connection with the Amended Credit Agreement, American Winery also

executed a promissory note in which American Winery promised to pay to Clearly

Canadian, on or before the “Facility Termination Date,” the principal sum of

$2,450,000 or, if less, the unpaid principal amount of the loan, plus interest as specified

in the Agreement (the “Promissory Note”). The “Facility Termination Date” was

defined in the Amended Credit Agreement as follows: “Facility Termination Date shall

mean the earlier to occur of (i) May 31, 1994, and (ii) the date on which the Liabilities

shall become due in accordance with Section 9.2.” Section 4 of the Amended Credit

Agreement provided, “The Loan shall mature and be payable in full on the Facility

Termination Date.”

Under section 4 of the Amended Credit Agreement, American Winery was

required to make mandatory payments to Clearly Canadian prior to the Promissory

Note*s maturity date of May 31, 1994, in the form of a credit of five cents per case of

product produced by American Winery, plus payments from any “Available Funds,”

as defined in the Amended Credit Agreement, in excess of $500,000. The five cent

prepayments per case were offset against amounts Clearly Canadian owed American

Winery for bottling its products. American Winery never made any lump sum

payments from “Available Funds.”

 The Amended Credit Agreement further provided that American Winery was

to develop a Business Plan using data supplied by Clearly Canadian. Section 1.1 of the

Amended Credit Agreement defined the term “Business Plan” as follows:

Business Plan means the projections for the period from the date hereof

through May 31, 1994 prepared by Borrower and delivered to Lender

prior to the date hereof, including the assumptions used in preparing such

projections, provided that such projections may be amended and

supplemented . . . by agreement of Borrower and Lender if the volume of
6

production required (or anticipated to be required) by Lender is different

from the volume assumed to be required in such projections.

American Winery warranted that “absent circumstances beyond [its] control,

[American Winery] expects to be able to achieve the production levels with respect to

Cases of Lender*s Product specified in the Business Plan.” Likewise, American

Winery covenanted that it would “use its best efforts to achieve the levels of production

of Cases of Lender*s Product specified in the Business Plan.”

Neither the Amended Credit Agreement nor the Promissory Note contains any

provision expressly requiring Clearly Canadian to order any particular volume of

production from American Winery. In addition, neither the Amended Credit

Agreement nor the Promissory Note provides that American Winery*s payment of

unpaid principal and interest on the loan was to be based solely on the volume of

production produced by American Winery for Clearly Canadian or limited to five cents

per case of product produced.

B. Clearly Canadian*s Business Operations

In 1991, Clearly Canadian expected that demand for its products would continue

to increase. To meet this demand, Clearly Canadian attempted to locate additional

bottling capacity by expanding its production network. To that end, Clearly Canadian

entered into relationships with additional co-packers between April 1991 and February

1992. American Winery was aware that Clearly Canadian was entering into new

relationships with different co-packers.

None of the relationships Clearly Canadian entered into with co-packers was

exclusive. Some co-packers, however, negotiated “take or pay” provisions in their

agreements with Clearly Canadian, pursuant to which Clearly Canadian agreed to bottle

a specified minimum amount of product with the co-packer. American Winery*s
7

agreement with Clearly Canadian did not expressly contain such an obligation on the

part of Clearly Canadian.

As Clearly Canadian*s production network expanded and it entered into

relationships with more co-packers, its ability to service its distributors improved.

Because it began using co-packers in more areas of the United States and Canada,

Clearly Canadian became able to provide its product to its distributors from co-packers

who were geographically closer to each distributor. Logistical and efficiency concerns

at times led to changing the co-packer that filled orders for a given distributor. The

reallocation of production among co-packers was permissible under Clearly Canadian*s

agreements with its co-packers.

During 1991 and early 1992, Clearly Canadian did not have sufficient capacity

from its existing co-packers to meet anticipated demand for its product. As of early

1992, American Winery was producing Clearly Canadian product at maximum

capacity. In addition to expanding its production network and entering into

relationships with additional co-packers to meet the current and anticipated demand,

Clearly Canadian made every effort to obtain the maximum production available from

its existing co-packers, including American Winery. Accordingly, Clearly Canadian

sought assurances from American Winery that it could provide specific volumes of

production capacity to help meet Clearly Canadian*s anticipated demand.

Not only did Richard Gibson, American Winery*s Plant Manager, and Dwight

Roscoe, Clearly Canadian*s Director of Materials & Distribution, have conversations

in early 1992 about production capacity, Clearly Canadian sent correspondence on the

subject as well. In a letter dated February 14, 1992, Roscoe wrote to American Winery

in reference to American Winery*s “Proposed 1992 Production Forecast.” In that

letter, Roscoe asked American Winery to commit to its capacity to produce Clearly

Canadian*s “requirements” -- specific numbers of cases that Clearly Canadian desired

American Winery to provide on a monthly basis in 1992. Clearly Canadian*s
8

requirements for capacity from American Winery were restated in Roscoe*s letter dated

March 6, 1992. In his March 6, 1992, letter, Roscoe informed American Winery that

the projections were “minimum requirements for production in the months stated” and

requested that American Winery exert “every effort available to meet the requirements

of Clearly Canadian.” The volume amounts stated in Roscoe*s letters were ultimately

incorporated into the “Business Plan” referenced in the Amended Credit Agreement.

At the time these discussions were pending regarding American Winery*s

capacity to meet Clearly Canadian*s projected volume requirements, Clearly Canadian

believed that demand for its product would continue to increase. The demand for

Clearly Canadian product dramatically increased from 1991 to late 1992, at which time

demand abruptly abated. From sales of fewer than 600,000 cases in 1988, demand

increased to more than 18,000,000 cases in 1991, and to almost 23,000,000 cases in

1992. In 1993, however, sales plummeted to fewer than 15,000,000 cases. The impact

of this downturn was exacerbated by the fact that Clearly Canadian had projected an

increase in demand during 1993.

As the demand for its product decreased, Clearly Canadian*s demand for

capacity from its co-packers fell precipitously. Clearly Canadian reduced its

production orders from 1992 and 1993 substantially below the levels contemplated by

the Business Plan. The 1992 Business Plan levels were 8,027,626 cases in 1992 and

10,500,000 cases in 1993. However, Clearly Canadian only placed orders for

6,699,269 cases in 1992 – 82.4% of the 1992 case volume in the Business Plan. In

1993, Clearly Canadian placed orders for only 1,823,085 cases – 17.36% of the 1993

case volume in the Business Plan.

C. Clearly Canadian*s Offers To Purchase American Winery

The dramatic downturn in Clearly Canadian*s business from 1993 forward

adversely affected Clearly Canadian and all companies with which it did business,
9

including American Winery. The Facility Termination Date of May 31, 1994, came

without American Winery paying the amount due to Clearly Canadian. As American

Winery*s financial condition worsened, American Winery and Clearly Canadian began

looking for ways to alleviate the problem. Clearly Canadian was concerned about

repayment of its $2.4 million loan to American Winery. Clearly Canadian*s Stuart

Ross and American Winery*s Timothy Rand had a number of discussions regarding the

future of American Winery, as well as repayment of Clearly Canadian*s loan to

American Winery. Some of these discussions concerned the possibility of Clearly

Canadian purchasing American Winery so long as Rand insured that American Winery

remained solvent and a going concern. In view of these discussions, Rand invested

nearly $2.4 million of his personal funds in order to keep American Winery viable for

purchase by Clearly Canadian.

Clearly Canadian made three separate offers to acquire American Winery. The

first offer was for $500,000 and occurred at some unidentified time. The second offer

was for $600,000 and occurred in August 1996 when Rand received a written proposal

from Ross concerning an asset purchase of American Winery, paying off the bank debt,

and assuming the Clearly Canadian debt and the lease obligations. Clearly Canadian

made a third offer in March 1997 to purchase American Winery for $850,000. Rand

rejected all three of Clearly Canadian’s offers. In June 1997, Clearly Canadian

demanded that American Winery make immediate payment of the outstanding principal

balance of the loan, all interest accrued thereon and all other Liabilities (as defined in

the Amended Credit Agreement). American Winery did not pay the amount due.

D. Clearly Canadian*s Security Interest in American Winery*s Property

The Bank first loaned money to American Winery in 1985 for the purchase of

a bottling plant in St. Louis. The initial loan was secured by a lien on all of American

Winery’s assets, including its existing and after-acquired equipment. In 1988,
10

American Winery refinanced the 1985 loan and the Bank extended additional credit to

American Winery, increasing American Winery’s total indebtedness to $400,000. In

exchange, the Bank was granted a blanket security interest in American Winery’s

property, including all of its current and after-acquired equipment. In September 1990,

the Bank loaned an additional $880,000 to American Winery which was secured by the

same collateral securing the 1988 loan.

Clearly Canadian obtained a security interest in certain American Winery assets

in 1991. Pursuant to the Credit Agreement, Clearly Canadian received a security

interest in American Winery*s assets described as follows in Section 5.1 of the Credit

Agreement:

all equipment, spare parts, supplies and other goods acquired with the

proceeds of [Clearly Canadian’s] Facility A Loans (it being understood

and agreed that all equipment, spare parts, supplies and other goods

acquired by the Borrower after the date hereof shall be deemed to have

been acquired with proceeds of the Facility A Loans absent a final and

conclusive finding by the Bankruptcy Court to the contrary), and all

attachments, substitutions, replacements and improvements thereto and

therefor . . ., all general intangibles relating thereto . . . and all proceeds

and products of all of the foregoing. . . .

On March 22, 1991, American Winery filed a voluntary petition for

reorganization under Chapter 11 in the United States Bankruptcy Court. As part of the

restructuring, the bankruptcy court approved the Credit Agreement, and entered an

order granting Clearly Canadian a security interest in all “equipment, spare parts,

supplies and other goods acquired with the proceeds of [Clearly Canadian’s] Facility

A Loans. . . .”

In May 1992, Clearly Canadian and American Winery entered into an Amended

Credit Agreement. The Amended Credit Agreement purported to provide Clearly

Canadian with a security interest extending to virtually all of American Winery*s
11

property, except for certain property that had already been purchased with the Bank*s

money. Specifically, the security interest is described in Section 5.1 of the Amended

Credit Agreement as extending to:

(i) all of [American Winery*s] equipment, spare parts, and supplies,

excluding the Bank Equipment, (ii) all other goods acquired with proceeds

of the Loan, (iii) all attachments, substitutions, replacements and

improvements for any of the foregoing, (iv) all general intangibles relating

to any of the foregoing (including without limitation all warranty claims

and insurance contracts with respect thereto), and (v) all proceeds and

products of all the foregoing. . . .

The Bank Equipment described in the Agreement included all equipment as to which

the Bank had a valid security interest that was perfected before confirmation of

American Winery*s reorganization plan. In effect, therefore, the Amended Credit

Agreement granted Clearly Canadian a security interest in a broad range of American

Winery equipment (with the exception of the narrowly defined Bank Equipment)

beyond that equipment which had been purchased with the proceeds of Clearly

Canadian’s loans.

The Bank executed a “Waiver of Interest” on July 28, 1992. Through this

document, the Bank expressly waived any interest it might have in American Winery*s:

(i) equipment, spare parts, supplies and other goods acquired with the

proceeds of loans made to Debtor by [Clearly Canadian] (hereafter the

“Clearly Related Equipment”, which excludes, however, any equipment,

spare parts or supplies as to which Bank had a valid, perfected security

interest upon confirmation of Debtor’s plan of reorganization as filed in

the United States Bankruptcy Court . . .); (ii) all attachments,

substitutions, replacements and improvements for any of the Clearly

Related Equipment; (iii) all warranty claims, insurance contracts and other

general intangibles relating to the foregoing; and (iv) all products and

proceeds of the foregoing.
12

II. ANALYSIS

We review the district court’s award of summary judgment de novo. See Gentry

v. Georgia-Pacific Corp., 250 F.3d 646, 649 (8th Cir. 2001). The question before the

district court, and this court on appeal, is whether the record, when viewed in the light

most favorable to the non-moving party, shows 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. See

Fed. R. Civ. P. 56(c); Land v. Washington County, Minn., 243 F.3d 1093, 1095 (8th

Cir. 2001). “One of the principle purposes of the summary judgment rule is to isolate

and dispose of factually unsupported claims or defenses and the rule should be

interpreted in a way that allows it to accomplish this purpose.” Prudential Ins. Co. v.

Hinkel, 121 F.3d 364, 366 (8th Cir. 1997) (citing Celotex Corp. v. Catrett, 477 U.S.

317, 323-24 (1986)). The parties agree that Missouri law applies in this diversity

action.

A. Clearly Canadian’s Claim on American Winery’s Note/American Winery’s

Counterclaim for Breach of Contract

Arguing that Clearly Canadian was contractually obligated to order a minimum

number of cases of production from it, American Winery asserts that the district court

erred in granting summary judgment in favor of Clearly Canadian both on Clearly

Canadian’s claim on American Winery’s Note and on American Winery’s counterclaim

for breach of contract.

American Winery first contends that Section 1.1 of the Amended Credit

Agreement bound Clearly Canadian to order the amount of production specified in the

Business Plan. Section 1.1 of the Amended Credit Agreement contained the following

definitional statement:
2

 “A contract is ambiguous only if its terms are susceptible of more than one

meaning so that reasonable [persons] may fairly and honestly differ in their construction

of the terms. If there is no ambiguity, the court need not resort to construction of the

contract, but rather the intent of the parties is determined from the four corners of the

contract.” Eisenberg v. Redd, 38 S.W.3d 409, 411 (Mo. 2001) (en banc) (alteration

in original; citations and quotation marks omitted).

13

Business Plan means the projections for the period from the date hereof

through May 31, 1994 prepared by Borrower and delivered to Lender

prior to the date hereof, including the assumptions used in preparing such

projections, provided that such projections may be amended and

supplemented . . . by agreement of Borrower and Lender if the volume of

production required (or anticipated to be required) by Lender is different

from the volume assumed to be required in such projections.

American Winery claims that this provision obligated Clearly Canadian to order the

amount of production projected in the Business Plan unless American Winery expressly

consented to a change in the projections.

We disagree. The cooperative preparation of projections between vendor and

vendee is a normal function of business. Section 1.1 confirms the cooperative nature

of that endeavor by a plain statement that the Business Plan projections could not be

amended without the agreement of American Winery. Section 1.1 does not purport to

obligate Clearly Canadian to actually order production from American Winery in an

amount equal to the Business Plan projections. Nor is there any ambiguous language2

that reasonably could be interpreted to place such a duty on Clearly Canadian. See

Halls Ferry Inv., Inc. v. Smith, 985 S.W.2d 848, 853 (Mo. Ct. App. 1998) (“While the

lease failed to state that no such obligation existed, an ambiguity cannot be created by

silence, especially when both parties are sophisticated bargainers.”).

Notwithstanding Section 1.1’s plain language, American Winery argues that such

a construction would effectively render the provision meaningless. American Winery
14

correctly notes that a construction that renders a provision without meaning is to be

avoided where another reasonable construction exists. See JEP Enter., Inc. v.

Wehrenberg, 42 S.W.3d 773, 776 (Mo. Ct. App. 2001) (“A construction attributing a

reasonable meaning to each phrase and clause, and harmonizing all provisions of the

agreement is . . . preferred to one that leaves some of the provisions without function

or sense.”). Because parties rarely include meaningless provisions in their contracts,

this rule of construction is really a corollary to the “cardinal rule” that a court “is to

determine the intention of the parties and to give effect to that intention.” In re

Marriage of Thompson, 27 S.W.3d 502, 506 (Mo. Ct. App. 2000). However, a court

should not attempt to impose a meaning on a provision that may not be borne by the

plain language of the provision. Cf. Peet v. Randolph, 33 S.W.3d 614, 618 (Mo. Ct.

App. 2001) (“It is presumed the parties’ intent is expressed by the natural and ordinary

meaning of the language in the contract.”). 

If American Winery had desired to assure itself that Clearly Canadian would

actually order production in an amount equal to the Business Plan projections,

American Winery could have so bargained. Indeed, other Clearly Canadian co-packers

did negotiate “take or pay” provisions in their agreements with Clearly Canadian,

pursuant to which Clearly Canadian agreed to bottle a specified minimum amount of

product with the co-packer. This court will not construe an unambiguous contract to

contain a “take or pay” provision where the parties chose not to include such a

provision.

American Winery next contends that even if Clearly Canadian did not bind itself

in Section 1.1 to order production from American Winery in an amount equal to the

Business Plan projections, Clearly Canadian did so obligate itself through its

correspondence with American Winery in 1992. However, it is well established that

[e]xtrinsic evidence of a prior or contemporaneous agreement is generally

not admissible to vary, add to, or contradict the terms of an unambiguous
15

and complete written document, nor may such parol evidence be used to

create ambiguity in an otherwise unambiguous document. The parol

evidence rule is a rule of substantive law and not a mere rule of evidence.

Evidence offered in violation of it must be ignored. The law conclusively

presumes all prior and contemporaneous agreements have been merged

into an unambiguous written contract, which becomes the final memorial

of the agreement.

Union Elec. Co. v. Fundways, Ltd., 886 S.W.2d 169, 170 (Mo. Ct. App. 1994)

(citations omitted).

In an attempt to avoid the bar against parol evidence, American Winery argues

that the aforementioned correspondence constituted independent, separate agreements

obligating Clearly Canadian to supply American Winery with specified levels of

production. In support, American Winery points to this court’s statement in C.L.

Maddox, Inc. v. Benham Group, Inc., 88 F.3d 592 (8th Cir. 1996) that “evidence of an

oral agreement that is an independent and separate agreement will not be barred by the

parol evidence rule, provided that the oral agreement is not inherently in conflict with

the written agreement.” Id. at 599 (applying Missouri law). However, C.L. Maddox

is readily distinguishable from the instant case. In C.L. Maddox, this court stated that

“[w]here the parties bargain for a contract, payment on that contract is made, and the

contract is fully performed, we have little difficulty in concluding that the parties

intended this interaction to constitute a separate contract.” Id. at 600. In contrast, the

correspondence in this case purportedly obligates Clearly Canadian to order certain

levels of production in the future from American Winery.

In addition, the alleged oral agreement would inherently conflict with the

Amended Credit Agreement. The Amended Credit Agreement is an unambiguous and
3 Section 10.9 of the Amended Credit Agreement states as follows: “Entire

Agreement. This Agreement constitutes the entire agreement among the parties

pertaining to the subject matter hereof and supersedes all prior agreements and

understandings of the parties, whether oral or written.”

16

complete written document containing a standard integration clause.3 Through the

integration clause, the parties agreed that the Amended Credit Agreement constituted

the sole and final agreement of the parties. See Frisella v. RVB Corp., 979 S.W.2d

474, 477 (Mo. Ct. App. 1998) (“An integration clause generally confirms the allinclusive nature of the document.”). As such, any representations made by Clearly

Canadian prior to the execution of the Amended Credit Agreement were not integrated

into the Amended Credit Agreement and had no binding effect on Clearly Canadian.

Cf. Union Elec. Co., 886 S.W.2d at 170-71 (“The parol evidence rule is particularly

applicable in situations like this where the writing contains an integration clause and

requires any additions to or alterations in the contract to be in writing and signed by

both parties.”) (emphasis omitted).

Finally, American Winery argues that even if Clearly Canadian was not

contractually obligated to order specific levels of production from American Winery,

American Winery should, nevertheless, be afforded relief under a promissory estoppel

theory. However, promissory estoppel cannot be used to create rights not included in

the contract. See Halls Ferry Inv., Inc., 985 S.W.2d at 853 (“Promissory estoppel

cannot be used to engraft a promise on the [contract] that is different from the written

terms of the [contract].”). Because this court has found the Amended Credit

Agreement unambiguous, American Winery may not use a promissory estoppel theory

to expand upon Clearly Canadian’s obligations contained therein.
17

B. American Winery’s Fraud Claims

American Winery next asserts that the district court erred in granting summary

judgment in favor of Clearly Canadian on American Winery’s fraud defenses and

counterclaim. Arguing that even if Clearly Canadian was not contractually obligated

to order production from American Winery in an amount equal to the Business Plan

projections, Clearly Canadian made fraudulent misrepresentations regarding its intent

to do so.

The elements of a submissible case of fraudulent misrepresentation are:

(1) a false, material representation; (2) the speaker’s knowledge of its

falsity or his ignorance of its truth; (3) the speaker’s intent that it should

be acted upon by the hearer in the manner reasonably contemplated; (4)

the hearer’s ignorance of its falsity; (5) the hearer’s reliance on its truth;

(6) the hearer’s right to rely thereon; and (7) the hearer’s consequent and

proximately caused injury.

Ziglin v. Players MH, L.P., 36 S.W.3d 786, 791 (Mo. Ct. App. 2001). As the Missouri

Supreme Court explained in Bank of Kirksville v. Small, 742 S.W.2d 127 (Mo. 1987)

(en banc), “[f]raud may be established by circumstantial evidence; however, it may not

be presumed, and a party’s case will fail if he can show only facts and circumstances

which are equally consistent with honesty and good faith.” Id. at 131.

Nonperformance, without more, does not make out a submissible case of fraudulent

misrepresentation. See id. at 132 (“A mere failure of performance does not establish

knowledge or intent of the speaker to defraud, nor does it shift the burden of proof.”).

In order to avoid summary judgment on its fraud defenses and counterclaim, American

Winery was required to introduce evidence to establish each of the seven elements.

See id. at 131.

Viewing the evidence in the light most favorable to American Winery, the district

court concluded that even if Clearly Canadian had represented to American Winery that
18

it would order production in the amounts equal to the Business Plan projections,

American Winery had presented no evidence that Clearly Canadian made this

representation knowing that it was false at the time it was made. Disagreeing with the

district court’s assessment of the record, American Winery points to two pieces of

evidence which it believes establishes that Clearly Canadian knew its representation

was false at the time it was made.

American Winery first points to the deposition testimony of Clearly Canadian’s

Senior Vice President, Stuart Ross. Ross testified that the final decisions regarding the

allocation of production to its co-packers were not necessarily made on the basis of the

Business Plan projections, but, rather, on logistical concerns. Based on this testimony,

American Winery contends that Clearly Canadian knew that any representations

regarding the future ordering of production at American Winery were false because

Clearly Canadian knew that such decisions would ultimately be made on the basis of

logistical considerations.

The second piece of evidence to which American Winery cites is Clearly

Canadian’s decision in 1991 to shift some production from American Winery to two

new co-packers. American Winery claims that retaining two new co-packers and

shifting some production from American Winery to the new co-packers indicates that

Clearly Canadian knew that its representations regarding the future ordering of

production from American Winery were false.

We disagree. It is undisputed that in 1992 when Clearly Canadian allegedly

made its representations regarding the ordering of future production from American

Winery, Clearly Canadian believed that the demand for its product would continue to

increase dramatically as it had over the four previous years. It is also undisputed that

American Winery did not have adequate capacity in 1991 to bottle as much product as

Clearly Canadian projected it would need, requiring Clearly Canadian to contract with

other bottlers to meet its anticipated needs. In 1991 and 1992, Clearly Canadian
19

regularly shifted business from one bottler to another to meet increasing demand and

to match bottlers with distributors in ways that were logistically sensible. Despite this

shifting of orders, Clearly Canadian ordered from American Winery at least as many

cases as it could produce until demand for Clearly Canadian’s products dropped in late

1992. 

All the evidence indicates that in 1992 Clearly Canadian fully expected to keep

all of its co-packers, including American Winery, very busy for the foreseeable future.

Accordingly, American Winery has failed to adduce evidence that Clearly Canadian

made false representations regarding its then present intent to order certain amounts of

production from American Winery in the future. American Winery’s failure to establish

an essential fraud element entitled Clearly Canadian to summary judgment on American

Winery’s fraud defenses and counterclaim. 

Additionally, it is undisputed that American Winery failed to pay the promissory

note according to its terms. Because American Winery has failed to establish a defense

to its obligations under the promissory note, Clearly Canadian was entitled to summary

judgment on the note.

C. Rand’s Fraudulent Misrepresentation and Negligent Misrepresentation

Claims

Arguing that Clearly Canadian either fraudulently or negligently represented to

Rand that it would purchase American Winery so long as Rand kept the business

financially viable, Rand asserts that the district court erred in granting summary

judgment in favor of Clearly Canadian on Rand’s fraudulent misrepresentation and

negligent misrepresentation claims.

In support of his fraudulent misrepresentation claim, Rand alleges that he

presented evidence to the district court that Clearly Canadian had concocted an
20

elaborate scheme to avoid writing off the approximately $2.1 million dollars it had

loaned to American Winery. Namely, Rand claims that Clearly Canadian told him it

intended to purchase American Winery in the future if Rand continued to invest in

American Winery. Rand alleges that Clearly Canadian made these statements solely

for the purpose of convincing its auditors that it need not write off the American

Winery loans because Rand was committed to, and continuing to invest in, American

Winery. Rand primarily points to two statements Clearly Canadian made to its auditors

in March 1995:

We are in the process of re-negotiating the Credit Agreement. We have

left it in abeyance to give us an advantage in our negotiations with the

principals of [American Winery] to acquire the bottling plant. We have

made the decision recently to discontinue our attempt to purchase

[American Winery’s] plant and will therefore move forward in our

negotiation toward a new Credit Agreement and bottling contract.

In April 1996, Clearly Canadian further informed its auditors that it “prefer[red] not to

take over [American Winery] because they [sic] do not want to be in the bottling

business.”

However, as the Missouri Supreme Court has noted, “a party’s [fraud] case will

fail if he can show only facts and circumstances which are equally consistent with

honesty and good faith.” Bank of Kirksville, 742 S.W.2d at 131. Far from establishing

a fraudulent intent on the part of Clearly Canadian, these statements merely show that

Clearly Canadian vacillated in its intention to purchase American Winery. The March

1995 statement indicates that Clearly Canadian had just “recently” decided not to

purchase American Winery. This indicates that Clearly Canadian had previously

intended to purchase American Winery. Just as Clearly Canadian had changed its

strategy in March 1995 regarding the purchase of American Winery, it could reverse

this decision in the future. Indeed, Clearly Canadian made three separate offers in 1996

and 1997 to acquire American Winery. Although Rand rejected all three offers after
21

consulting with other American Winery shareholders, Rand considered these offers to

be “serious” and “sincere” at the time. Nor is there any evidence that Clearly Canadian

would not have followed through had Rand accepted any of the offers.

Additionally, the fact that Clearly Canadian stated in April 1996 that it

“prefer[red] not to take over [American Winery] because they [sic] do not want to be

in the bottling business” has no bearing on whether Clearly Canadian actually intended

to purchase American Winery. This statement merely indicates that Clearly Canadian

would prefer not to purchase American Winery, not that Clearly Canadian had no

intention of purchasing American Winery.

Rand does not claim Clearly Canadian ever suggested it would purchase

American Winery no matter the cost. Nor does Rand claim Clearly Canadian told him

it would purchase American Winery by any date certain. Accordingly, Rand’s

fraudulent misrepresentation claim fails for the same reason as did American Winery’s

fraudulent misrepresentation claim: Rand has adduced no evidence suggesting that

Clearly Canadian’s representations regarding its then present intent to take certain

actions in the future were false when made.

Rand next argues that even if the district court properly entered summary

judgment on his fraudulent misrepresentation claim, the district court erred in entering

summary judgment on his negligent misrepresentation claim.

A cause of action for negligent misrepresentation requires proof that: (1)

the speaker supplied information in the course of his or her business

because of some pecuniary interest; (2) due to the speaker’s failure to

exercise reasonable care or competence in obtaining or communicating

this information, the information was false; (3) the speaker intentionally

provided information for the guidance of a limited group of persons in a

particular business transaction; (4) the listener justifiably relied on the

information; and (5) as a result of the listener’s reliance on the statement,
22

the listener suffered a pecuniary loss. A negligent misrepresentation claim

is premised upon the theory that the speaker believed that the information

supplied was correct, but was negligent in so believing. Failure to prove

any one of the five elements of negligent misrepresentation defeats a

litigant’s claim. 

M&H Enter. v. Tri-State Delta Chem., Inc., 35 S.W.3d 899, 904 (Mo. Ct. App. 2001)

(citations and quotation marks omitted). Rand asserts he presented sufficient evidence

to satisfy all five elements of his negligent misrepresentation claim.

We disagree. In Missouri, “a negligent misrepresentation claim cannot arise

from a statement regarding the speaker’s future intent.” Hoag v. McBride & Son Inv.

Co., 967 S.W.2d 157, 174 (Mo. Ct. App. 1998) (citing Jacobs Mfg. Co. v. Sam Brown

Co., 792 F. Supp. 1520, 1528 (W.D. Mo. 1992) (aff’d in part and rev’d in part, 19 F.3d

1259 (8th Cir. 1994)). A claim does not lie for negligent misrepresentation of a

speaker’s future intent because “it is impossible to be negligent in failing to ascertain

the truth or falsity of one’s own future intentions. Even if the speaker is merely

uncertain regarding the truth of the statement of future intention, the statement is

fraudulent rather than negligent because the speaker is ignorant of the statement’s

truth.” Id. (citation omitted). Because Rand, in effect, alleges that Clearly Canadian

was negligent in believing that it would purchase American Winery at some

undetermined point in the future for some unknown price, Rand’s negligent

misrepresentation claim must fail under Missouri law.

D. Clearly Canadian’s and the Bank’s Security Interests

The Bank argues that the district court erred in two respects in ruling that Clearly

Canadian’s lien was superior to the Bank’s in the Amended Agreement Collateral.

First, the Bank alleges that the district court’s summary judgment ruling granting

Clearly Canadian a priority security interest with respect to the Amended Agreement

Collateral is erroneous on the merits. Second, the Bank contends that the district
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court’s summary judgment order is procedurally unsound because the bank was not

given the opportunity to present its arguments prior to the order being entered. We

shall first examine the Banks’s contention that the district court’s summary judgment

ruling was legally erroneous.

As explained previously, the Bank loaned money to American Winery in 1985,

1988, and 1990. In exchange, American Winery granted the Bank a blanket security

interest in all its assets, including all of its current and after-acquired equipment. In

1991, Clearly Canadian obtained a security interest in certain American Winery assets.

Pursuant to the Credit Agreement, Clearly Canadian received a security interest in

American Winery*s assets described as follows in Section 5.1 of the Credit Agreement:

all equipment, spare parts, supplies and other goods acquired with the

proceeds of [Clearly Canadian’s] Facility A Loans (it being understood

and agreed that all equipment, spare parts, supplies and other goods

acquired by the Borrower after the date hereof shall be deemed to have

been acquired with proceeds of the Facility A Loans absent a final and

conclusive finding by the Bankruptcy Court to the contrary), and all

attachments, substitutions, replacements and improvements thereto and

therefor. . ., all general intangibles relating thereto . . . and all proceeds

and products of all of the foregoing. . . .

The Bankruptcy Court approved the Credit Agreement, and entered an order granting

Clearly Canadian a security interest in all “equipment, spare parts, supplies and other

goods acquired with the proceeds of [Clearly Canadian’s] Facility A Loans. . . .”

In May 1992, Clearly Canadian and American Winery entered into an Amended

Credit Agreement which purported to provide Clearly Canadian with a security interest

extending to virtually all of American Winery*s property, except for certain property

that had already been purchased with the Bank*s money. Specifically, the security

interest is described in Section 5.1 of the Amended Credit Agreement as extending to:
24

(i) all of [American Winery*s] equipment, spare parts, and supplies,

excluding the Bank Equipment, (ii) all other goods acquired with proceeds

of the Loan, (iii) all attachments, substitutions, replacements and

improvements for any of the foregoing, (iv) all general intangibles relating

to any of the foregoing (including without limitation all warranty claims

and insurance contracts with respect thereto), and (v) all proceeds and

products of all the foregoing. . . .

The Bank Equipment described in the Agreement included all equipment as to which

the Bank had a valid security interest that was perfected before confirmation of

American Winery*s reorganization plan. In effect, therefore, the Amended Credit

Agreement granted Clearly Canadian a security interest in a broad range of American

Winery equipment (with the exception of the narrowly defined Bank Equipment)

beyond that equipment which had been purchased with the proceeds of Clearly

Canadian’s loans.

Two months later, the Bank executed a “Waiver of Interest.” Through this

document, the Bank expressly waived any interest it might have in American Winery*s

(i) equipment, spare parts, supplies and other goods acquired with the

proceeds of loans made to Debtor by [Clearly Canadian] (hereafter the

“Clearly Related Equipment”, which excludes, however, any equipment,

spare parts or supplies as to which Bank had a valid, perfected security

interest upon confirmation of Debtor’s plan of reorganization as filed in

the United States Bankruptcy Court . . .); (ii) all attachments,

substitutions, replacements and improvements for any of the Clearly

Related Equipment; (iii) all warranty claims, insurance contracts and other

general intangibles relating to the foregoing; and (iv) all products and

proceeds of the foregoing.

The Bank argues that the district court’s summary judgment ruling granting

Clearly Canadian a priority security interest with respect to the Amended Agreement

Collateral is without support in the record. We agree.
25

The bankruptcy court’s final order approving the 1991 Credit Agreement

between Clearly Canadian and American Winery gave Clearly Canadian a senior lien

only with respect to “equipment purchased with [Clearly Canadian’s] Facility A loan

funds and property traceable to the funds.” The bankruptcy court’s order expressly

affirmed that (1) the Bank retained its blanket lien on American Winery’s equipment,

including after-acquired equipment, (2) the bank’s lien was not limited to the equipment

specifically listed in American Winery’s reorganization plan, and (3) such blanket lien

survived the bankruptcy proceedings. There is no suggestion in the bankruptcy court’s

order that the Bank’s lien was to be subordinated to Clearly Canadian’s lien with

respect to any equipment not purchased with Clearly Canadian’s Facility A loan.

As for the Bank’s Waiver of Interest, the Bank only waived any interest it might

have in American Winery equipment “acquired with the proceeds of loans made to

debtor by Clearly Canadian. . . .” Thus, rather than affirmatively defining the Bank’s

security interest in American Winery assets, the Waiver merely described certain of

American Winery assets that the Bank was disclaiming all interest in. To the extent the

district court used the Waiver to determine which equipment (not addressed therein)

the Bank retained an interest in, said use was error.

Notwithstanding the fact that the Amended Credit Agreement is nowhere

referenced in the Waiver, Clearly Canadian argues that the Waiver and the Amended

Credit Agreement (to which the Bank was not a party) should be “read together” to

cover the same equipment. We decline Clearly Canadian’s invitation to expansively

construe the Waiver by looking outside the four corners of the Waiver. 

Rather than “expansively” construe the language of the Waiver, we must give

the language of the Waiver its normal and ordinary meaning. Cf. Robbins v.

McDonnell Douglas Corp., 27 S.W.3d 491, 496 (Mo. Ct. App. 2000) (“To ascertain

the intent of the parties to an unambiguous contract, we give the language used its

natural, ordinary, and common sense meaning. . . .”). We need not look outside the
26

Waiver to determine the intent of the parties because the language of the Waiver is

unambiguous. Cf. id. (“If a contract is not ambiguous, i.e., when the contract terms are

unequivocal, plain, and clear, the intent of the parties is determined from the contract

alone and the court is bound to enforce the contract as written.”). In addition, the

Waiver and the Amended Credit Agreement may not be construed together under the

law of Missouri because they were executed nearly two months apart and so construing

the Waiver would frustrate the intent of the parties. See Greenberg v. Dowdy, 930

S.W.2d 512, 514 (Mo. Ct. App. 1996) (“Several instruments made at the same time,

and relating to the same subject matter may be read together as one contract. This rule

is employed only for the purpose of giving effect to the intention of the parties and is

not applied arbitrarily and without regard to the realities of the situation.”) (emphasis

in original; citation omitted).

The district court’s conclusion that Clearly Canadian had priority over the Bank

as a matter of law with respect to the Amended Agreement Collateral is without

support in the summary judgment record. Neither the bankruptcy court’s order nor the

Bank’s Waiver of Interest supports such conclusion. There is no other basis from

which to conclude that Clearly Canadian had such a sweeping priority. Therefore, to

the extent the district court concluded as a matter of law that Clearly Canadian had

priority over the Bank with respect to equipment not purchased with Clearly Canadian

loan proceeds, said judgment is reversed. Because the district court’s summary

judgment order granting Clearly Canadian a priority security interest with respect to the

Amended Agreement Collateral is reversed, we need not consider the Bank’s

procedural complaint regarding the summary judgment order.

III. CONCLUSION

The district court’s Final Judgment and Order of Replevin is affirmed in all

respects with the exception of its conclusion regarding the security interests of the Bank
27

via-á-vis Clearly Canadian. Accordingly, the district court’s grant of summary

judgment in favor of Clearly Canadian with respect to its priority in the Amended

Agreement Collateral is reversed and the case remanded for further proceedings

consistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.