In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 01-1774

BRISTOL-MYERS SQUIBB COMPANY,

Plaintiff-Appellee,

v.

IKON OFFICE SOLUTIONS, INC.,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Southern District of Indiana, Evansville Division.

No. EV 99-48-C -H/H—David F. Hamilton, Judge.

____________

ARGUED SEPTEMBER 25, 2001—DECIDED JULY 1, 2002

____________

Before ROVNER, DIANE P. WOOD, and EVANS, Circuit

Judges.

ROVNER, Circuit Judge. Bristol-Myers Squibb Company

(“Bristol-Myers”) filed a complaint with the district court

to determine whether it had the right to cancel a contract that it had entered into with Ikon Office Solutions,

Inc. (“Ikon”) for photocopy equipment and services. The district court granted summary judgment in favor of the plaintiff after determining that Bristol-Myers had the unconditional right to terminate the contract subject only to the

payment of the agreed upon cancellation fee. Ikon appeals

and we affirm.
2 No. 01-1774

I.

On December 29, 1995, Bristol-Myers entered into a lease

agreement with Modern Business Systems, which is now

known as Ikon. The lease required Ikon to provide photocopy equipment and services to the Bristol-Myers Mead

Johnson Nutritional Facilities in Evansville, Indiana for a

term of five years. After approximately one month of negotiations, and several draft agreements, the parties signed

a contract consisting of a preprinted form and a typed addendum. The preprinted portion of the contract states, “This

lease is noncancelable,” but provides a space for “Other Options and Conditions.” Within that space, Ikon typed, “See

Addendum #1 for terms and conditions.” The relevant language in Addendum #1 is as follows:

Throughout the length of the 5 year contract, Modern

Business Systems will consider renegotiation of the cost

per copy pricing to match competitor bids to BristolMyers Squibb Corporate Office. Cancellation Penalty

is 25% of the remaining equipment portion of the contract:

1 year into contract $142,560

2 years into contract $106,920

3 years into contract $ 71,280

4 years into contract $ 35,640

Approximately $32,000 penalty to cancel Xerox rentals

can be rolled into the cost per copy at any time during

the contract. The cost per copy increase will be determined by how many months remain in the contract. If

the contract is canceled for any reason, Bristol-Myers

Squibb will be responsible for the remaining portion of

the money sent to Xerox, to be added to the cancellation

penalty.

Two years after signing the contract, in late 1996, BristolMyers’ corporate office began soliciting bids for the pro-
No. 01-1774 3

vision of photocopying equipment for all of its facilities nationwide, including the Mead Johnson Nutritional Facilities. After finding a suitable bidder, Bristol-Myers sent

a letter notifying Ikon that it was terminating the contract pursuant to the cancellation terms. Ikon responded

that Bristol-Myers could not cancel the lease before first

giving Ikon the opportunity to match any competitive bid.

Ikon gave Bristol-Myers the option of buying out the remaining months on the lease for an amount substantially

greater than the cancellation fee.

Bristol-Myers then brought a declaratory relief action

seeking a determination that it had complied with the

terms of the contract and owed nothing further to Ikon.

Bristol-Myers in turn moved for partial summary judgment

seeking a determination that the contract (1) allowed

for early termination, and (2) did not give Ikon a right of

first refusal. The district court granted the motion for

summary judgment, declaring that Bristol-Myers had the

unconditional right to terminate the lease, subject only

to the payment of the appropriate cancellation fee, and

that the contract did not give Ikon a right of first refusal.

Because the parties disagreed on the proper amount of the

cancellation fee, the district court withheld entry of a final judgment and set a trial date to determine the proper

amount of the fee. Shortly thereafter, the parties were able

to reach agreement on the appropriate amount of the cancellation fee, and the district court entered final judgment on

February 28, 2001. Ikon appeals.

II.

Summary judgment is appropriate where there is no

genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Gawley v. Indiana

Univ., 276 F.3d 301, 308 (7th Cir. 2001). We review the district court’s ruling on summary judgment de novo, constru-
4 No. 01-1774

ing the record in the light most favorable to the nonmovant,

Ikon. Id. Ikon contends that the district court erred by (1)

rejecting the substantial extrinsic evidence offered by Ikon

of the contracting parties’ intent, (2) finding and declaring that the contract between the parties was unambiguous,

(3) providing Bristol-Myers with an unconditional and unilateral right to terminate the contract at any time, subject only to the payment of an appropriate cancellation fee,

and (4) finding that the contract did not give Ikon a right of

first refusal.

The contract provides, and the parties agree, that the

lease shall be governed by Missouri law. Under Missouri

law, the cardinal rule of contract interpretation is to ascertain the intention of the parties and to give effect to that intention. Sonoma Mgmt. Co. v. Boessen, 70 S.W.3d 475, 479

(Mo. App. 2002) (citing J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. 1973)). Unless the contract is ambiguous, the intent of the parties

must be based on the contract alone, and not on extrinsic

evidence. Id. The issue of whether a contract is ambiguous

is a question of law. Lupo v. Shelter Mut. Ins. Co., 70 S.W.3d

16, 19 (Mo. App. 2002). A contract is ambiguous only if

its terms, when given their natural and ordinary meaning, are reasonably open to more than one meaning, or

the meaning of the language used is uncertain. Sonoma

Mgmt. Co., 70 S.W.3d at 479. A contract is not ambiguous

merely because the parties disagree over its meaning. Id. A

court may not create an ambiguity by using extrinsic or

parol evidence. Lupo, 70 S.W.3d at 20. Nor may it create

ambiguities by distorting contractual language that may

otherwise reasonably be interpreted. Sonoma Mgmt, 70

S.W.3d at 479.

As both parties agree, there is a plain and irreconcilable

conflict between the preprinted form that states that the

contract is “noncancelable” and the typewritten addendum

that lays out the terms for cancellation on the assumption
No. 01-1774 5

that the contract may be “canceled for any reason.” Ikon

asserts that once an ambiguity is found in a contract, the

ambiguity must be resolved by submission to a jury. Under

Missouri law, however, the “mere fact of ambiguity does not

automatically require intervention of a jury.” Busch & Latta

Painting Corp. v. State Highway Comm’n of Mo., 597 S.W.2d

189, 198 (Mo. App. 1980). Even if a court finds that a contract is ambiguous, “the court must still declare the meaning of the contract unless the surrounding circumstances

or other extrinsic evidence admitted on the ambiguity question raise issues of fact for the jury to resolve.” Id. (internal citations omitted); see also Auto Owners Mut. Ins. Co.

v. Wieners, 791 S.W.2d 751, 758 (Mo. App. 1990) (same);

Girardeau Contractors, Inc. v. Missouri Highway and

Transp. Comm’n, 644 S.W.2d 360, 363 (Mo. App. 1982)

(“Even if the contract could be considered ambiguous, that

does not necessarily mean that there is a jury question. The

court itself must still declare the meaning of the contract

unless the evidence admitted raised a real issue of fact to

be resolved by the jury.”); Commerce Trust Co. v. Howard,

429 S.W.2d 702, 705-06 (Mo. 1968) (declaring that, “where

there is no real conflict of evidence upon any of the essential

facts properly to be considered is [sic] construing the contract, and the true meaning of the words used is made clear

by such evidence, it becomes the duty of the Court, and not

the jury, to construe it”) (quoting National Corp. v. Allan,

280 S.W.2d 428, 432 (Mo. App. 1955)). Before submitting the matter to a jury, a court first must attempt to

construe the contract “based on all the circumstances, evidence, and rules of construction.” Vandever v. Junior Coll.

Dist. of Metro. Kansas City, 708 S.W.2d 711, 717 (Mo. App.

1986).

In this case, there are no essential facts that must be

considered in construing the conflicting portions of the contract. The contradictory language in the contract refers

solely to whether the contract may be cancelled or not, and
6 No. 01-1774

neither party disputes that the contract could be terminated.

The parties only disagree as to the terms by which the

contract may be cancelled. Furthermore, the meaning of

the arguably ambiguous portion of the contract easily is

construed by applying a well-known rule of construction as

required by Vandever, and therefore the question is not one

for submission to a jury. 708 S.W.2d at 717.

Under Missouri law, when a conflict arises between a

preprinted portion and a typewritten portion of a contract,

the typewritten language will prevail. Silver Dollar City,

Inc. v. Kitsmiller Constr., Co., 931 S.W.2d 909, 914 (Mo.

App. 1996); House of Lloyd, Inc. v. Director of Revenue, 824

S.W.2d 914, 923 (Mo. 1992) (overruled on other grounds

by Spico, Inc. v. Director Revenue, 875 S.W.2d 539 (Mo.

1994)). Missouri courts have turned to this rule and other

such rules of construction, in the context of a motion for

summary judgment, to resolve ambiguous language without submission to a jury. See, e.g., Hayward v. Taylor, 807

S.W.2d 171 (Mo. App. 1991). Likewise, we may resolve

any ambiguity over conflicting language of the contract—

in this case whether the contract could be cancelled or

not—by well-established principles of Missouri law for construing contracts. The addendum controls, and thus, BristolMyers has the right to cancel the contract.

The parties also dispute the terms under which the

contract can be cancelled. Ikon claims that the following

language gave it a right of first refusal: “Throughout the

length of the 5 year contract, Modern Business Systems

will consider renegotiation of the cost per copy pricing to

match competitor bids to Bristol-Myers Squibb Corporate

Office.” Bristol-Myers contends that this language does

not give rise to a right of first refusal, but rather merely

reflects Ikon’s willingness to renegotiate pricing. We find

that the terms regarding the conditions of cancellation are

not ambiguous in any material respect and did not give

Ikon a right of first refusal.
No. 01-1774 7

Under Missouri law, a right of first refusal requires an

owner, when and if that owner decides to sell, to offer the

property first to the person who has the right of first refusal.

Schroff v. Smart, 73 S.W.3d 28, 29, n.1 (Mo. App. 2002)

(citing Beets v. Tyler, 290 S.W.2d 76, 81 (Mo. 1956)). The

party with the right of first refusal may, but does not have

to, elect to purchase the offered property. Id. If the party

with the right of first refusal elects not to purchase the

property, the owner may then sell to anyone it chooses. Id.

An owner must make an offer to a holder of the right of

first refusal before accepting an offer from a third party.

Unlimited Equip. Lines, Inc. v. The Graphic Arts Ctr.,

Inc., 889 S.W.2d 926, 935 (Mo. App. 1994). A right of first

refusal is often given in connection with the sale or lease

of real estate, but can be a part of any contract. Id. at 932.

Nothing in the disputed contract clause establishes any

duty or obligation on the part of Bristol-Myers to give

Ikon the right of first refusal. It does not require BristolMyers to notify Ikon of its intention to solicit competing

bids, nor does it require Bristol-Myers to consider competing bids from Ikon. It merely does what the plain language

says it does—it allows Ikon to consider renegotiating the

cost per copy pricing to match competitive bids that BristolMyers might receive. This Court must give effect to the

intent expressed by the plain language of the contract. Wildflower Comty. Ass’n v. Rinderknecht, 25 S.W.3d 530, 534

(Mo. App. 2000). It may not give effect to a party’s secret

surmise or undisclosed assumption. Peet v. Randolph, 33

S.W.3d 614, 618 (Mo. App. 2000).

Missouri courts liberally find right of first refusal clauses

to be specific enough to be enforced, even when they are

missing some important terms. See, e.g., Peet, 33 S.W.3d at

618 (lacking price and duration); Unlimited Equip. Lines,

Inc., 889 S.W.2d at 933-34 (lacking price terms, scope of

right, and the type of transactions to which the right applied); Barling v. Horn, 296 S.W.2d 94, 95 (Mo. 1956)
8 No. 01-1774

(lacking price or method for determining price). Nevertheless, the agreements in each of these cited cases contained

very explicit language granting a right of first refusal. Peet,

33 S.W.3d at 616 (“Buyers to have first right of refusal

to any offer on the above mentioned 20 A tract if said tract

is ever sold, wholly or in part, written first right of refusal

to be executed at the time of closing of this contract”);

Unlimited Equip. Lines, Inc., 889 S.W.2d at 933 (“[GAC]

agrees to give first right of refusal to [UEL] on all equipment

that is to be released for the next twelve months”); Barling,

296 S.W.2d at 95 (if Lessors have “notified the Lessees in

writing of their desire to sell the building and the premises

prior to the expiration of this term . . . Lessees shall have

the first opportunity to purchase the premises”). The contract in this case lacks any such explicit language granting

a right of first refusal.

Corbin on Contracts discusses myriad terms that have

been used to create a right of first refusal including, “first

option to buy,” “first privilege of buying,” “preemptive option,” “preemptive right,” “preemptive right to purchase,”

“right of preemption,” “first right of purchase,” “first refusalto-purchase option,” “preferential right to purchase,” “first

option to buy,” “preference as purchaser,” and “independent

privilege.” 3 Eric Mills Holmes, Corbin on Contracts, §§ 11.3,

n. 1, 11.4 (revised ed. 1993). None comes close to the vague

statement contained in the contract in this matter that Ikon

is “willing to consider renegotiation.”

Unable to point to any specific language within the contract granting a right of first refusal, Ikon urges this Court

to look to external evidence to establish the parties’ intention to include such a right. Ikon argues that the Court may

do so because the contract is ambiguous. Ikon’s argument,

however, requires this Court to declare all parts of the

contract related to cancellation ambiguous merely because

of the easily resolved conflict discussed above between the

printed form that states that the contract is “noncancelable”
No. 01-1774 9

and the typewritten addendum that lays out the terms

for cancellation on the assumption that the contract may

be “canceled for any reason.” But such an argument defies

logic. It would require this Court to construe that which is

clear and unambiguous on its face. There simply is nothing ambiguous in the phrase “[Ikon] will consider renegotiations of the cost per copy pricing to match competitor

bids.” A court may not create ambiguities by distorting contractual language that may otherwise reasonably be interpreted. Sonoma Mgmt., 70 S.W.3d at 479.

“The parol evidence rule prohibits evidence of prior or

contemporaneous agreements that vary or contradict the

terms of an unambiguous and complete contract absent

fraud, common mistake, accident or erroneous admission.”

Kassebaum v. Kassebaum, 42 S.W.3d 685, 693 (Mo. App.

2001). The contract term regarding Ikon’s “willing[ness]

to consider renegotiation of the cost per copy pricing to

match competitor bids” was not ambiguous. Ikon does not

allege fraud, common mistake, accident, or erroneous admission. The parties in this case spent a month negotiating

the terms of the agreement and intended for it to be the

complete and final agreement between the parties. See

Poelker v. Jamison, 4 S.W.3d 611, 613 (Mo. App. 1999) (noting that if a document “appears to be a complete agreement

on its face, it is conclusively presumed to be a final as well

as a complete agreement between the parties”). Extrinsic

evidence, therefore, is not admissible to create a right of

first refusal that does not exist on the face of the contract.

We agree with the district court that the terms of the

contract did not require Bristol-Myers to give Ikon a right

of first refusal prior to cancelling the contract. BristolMyers had the right to terminate the contract subject only

to the payment of the appropriate cancellation fee.
10 No. 01-1774

III.

For the reasons stated above, we affirm the district court’s

grant of summary judgment in favor of Bristol-Myers.

AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-97-C-006—7-1-02