The Honorable Lawrence L. Piersol, United States District

Judge for the District of South Dakota. United States Court of Appeals
FOR THE EIGHTH CIRCUIT

___________ No. 95-3848

___________ In re: Heine Feedlot Company, * * Debtor, * * * Farm Credit Services, also * known as Production Credit * Association, * * Appellee, * * v. * Appeal from the United States * District Court for the Distric t Heine Feedlot Company, * of South Dakota. * Appellant. *

___________ Submitted: October 24, 1996 Filed: February 26, 1997

___________ Before MAGILL, ROSS and MURPHY, Circuit Judges.

___________ ROSS, Circuit Judge.

Heine Feedlot Company (debtor) appeals from the distric t court's decision denying its Motion to Compel Interest Adjustments

1 on a debt owing to Farm Credit Services, also known as Production-2-

Credit Association of the Midlands (PCAM). We affirm.
Debtor filed a voluntary petition under Chapter 11 on March 6, 1986. The bankruptcy court entered an order confirming the Chapter 11 plan on January 27, 1988. The terms of the order incorporated byref erence a "Stipulation between [PCAM] and Debtors Regardin g Secured Status and Plan Treatment," which obligated the debtor to payPCAM's remaining claim of $788,672.45 over a 20-year period
. According to the agreement, payments included interest

at the existing variable "A" rate of the PCAM as fro m ti me to time may exist . . . , commencing January 1 , 1988, and continuing each year thereafter in like fashio n until January 1, 1997, when th e final balloon payment is due. The parties agree that B-stock in the amount o f $93,340.00 shall be retired by PCAM.

At the time the parties negotiated for the variable "A " interest rate, PCAM offered five rate classifications enumer ated as "AAA," "AA," "A," "B" and "C." Following confirmation of debtor's plan, PCAM discontinued the "C" classification, and eventuall y cancelled its alphabet pricing altogether.
On November 1, 1988, PCAM notified its borrowers that intere st on all alphabetical loans would effectively increase by .75% if the borrow er did not own B-stock. Because debtor had previousl y retired its B-stock, this action raised debtor's interest ra te from 11.2% to 11.95% and remained in effect until debtor paid off it s loan.

OnFebruary 2, 1989, debtor and PCAM entered into a secon d stip ulationto reflect that debtor's payment of $264,899.35 ha d reduced the outstanding principal balance to $514,579.01. Adopting la nguage from the original stipulation, the modified stipulatio n definedthe applicable interest as "the variable 'A' rate of th e PCAM a s from time to time may exist." The debtor then commence d making payments pursuant to th e terms of the modified stipulation,-3-

eventu allyacquiring other financing and paying PCAM in full o n December 23, 1992.

Debtor filed a Motion to Compel Interest and Legal Fe e Adjustments on January 3, 1992 , arguing that the post-confirmation interest rates failed to reflect the "A" accrual rate as agree d upon by the parties, and that when PCAM discontinued its alphabet pricing, it imposed a new, arbitrary interest rate accrual.
On June 8, 1994, the bankruptcy court conducted a hearing on the debtor's motion and, over PCAM's objections, allowed debtor to introduce evidence regarding the parties' understanding of what was meant by the variable "A" rate of interest. Specifically, th e debtor , through its president, Allen Heine, was asked what rat e classification had been negotiated. In response, Heine testified that it w as the "middle rate" of all PCAM borrowers. Th e bankruptcy court rejected PCAM 's objection that this testimony was improper parol evidence, and a ccordingly entered an order granting debtor's motion to compel inte rest adjustments and awarding debtor $20,044.68, plus interest.

On app eal, the district court reversed the decision of th e bankruptcy court and denied debtor's motion to adjust the in terest. The court ruled that the bankruptcy court lacked jurisdiction t o determine the reasonableness of the interest rate and that th e bankruptcycourt erred in permitting the debtor to testify as t o the pa rties' intentions regarding the negotiated "A" rate o f interest.

On appeal, debtor first challenges the district court' s conclusion that the bankruptcy court did not have jurisdiction to consid er the "reasonableness" of the "A" interest rate. Debto r argues that the January 27, 1988 order confirming the plan an d discharging the debtor explicitly allowed the bankruptcy court to retain jurisdiction to determine if post-confirmation paymen ts were reasonable and that such post-confirmation payments remained-4-

subject to court approval. Paragraph 4B of the order provided:
Any such payment made before c onfirmation of the plan is rea sonable; or if such payment is to be fixed afte r confirmation of the plan, such payment is subject to the approval of the court as reasonable.
While we acknowledge that a bankruptcy court may explicitl y retainjurisdiction in the plan itself related to it s administration and interpretation, United States v. Unger , 9 49 F.2d 231 , 234 (8th Cir. 1991), we reject debtor's argument tha t paragraph 4B of the order conferred upon the bankruptcy court the jurisd ictionto determine the reasonableness of the "A" interes t rate. Paragraph 4B allowed the court to only determine th e reasonableness of payments "fi xed after confirmation of the plan." Howeve r, in the present case, the parties agreed prior t o confirmation that the variable "A" interest rate would apply. As such, the imposition of the variable "A" interest rate was f ixed by agreement of the parties prior to confirmation and the bankruptcy court was without jurisdiction to determine its reasonableness.

We also reject debtor's argument on appeal that the paro l evidence rule does not preclude the debtor from explaining th e terms and conditions of the st ipulation. Here, the district court det erminedthat the bankruptcy court erred when it allowed paro l evidence to be introduced in the form of debtor's testimony about the negotiations culminating in the original stipulation , specifically that the "A" inte rest rate actually meant the "middle rate" of interest charged to all PCAM borrowers.

Under South Dakota law, "[t]he execution of a contract i n writing, whether the law requires it to be written or not , supersedes all the oral negotiations or stipulations concern ing its matter which preceded or accompanied the execution of th e instrument." S.D. Codified Laws Ann. § 53-8-5. Further, th e "written agreement supersedes all previous understandings and the intent of the parties must be ascertained therefrom, except, of-5-

course, in cases involving fra ud, mistake or ambiguity." Quick v. Bakke, Kopp, Ballou & McFarlin, Inc. , 380 N.W.2d 364, 366 (S.D
. 1986). A writing is considered ambiguous when it is reasonabl y capable of being understood in more than one sense. Id
.

He re, the language in the original stipulation is no t ambiguous. The stipulation clearly stated that debtor would make payments "including interest at the existing variable 'A' rate of the PCAM as from time to time may exist (the present rate is 10.9% per annum)." The parties' written agreement expressly recognized that the " A" rate was variable and would change "from time t o time." The parties did not st ate, as they could have, that debtor was entitled to the "middle rate of all PCAM borrowers," but only that they agreed upon the variable "A" rate. Moreover, th e agreement of the parties to adopt a variable "A" rate was further acknowledged in the second, modified stipulation which repeated a pertin ent portion of the language from the original stipulation , again wi th no mention of any "middle rate." Therefore, we agre e wit hthe district court that the stipulation language was no t ambigu ous and that the bankruptcy court erred in permitting th e debtor to testify and present evidence of its own interpreta tion of the agreement. We also reject the argument that PCAM's post

con firmationcancellation of its alphabet pricing created a n ambiguity in an otherwise unam biguous agreement. According to the cl ear and unambiguous language of the stipulation, the partie s agreed to a variable rate of i nterest, and not to a "middle rate." The district court did not err in concluding that debtor's motion to compel interest adjustments should be denied.
Accordingly, the judgment of the district court is affirmed.-6-

A true copy.

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