FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

INTERNATIONAL BROTHERHOOD OF 

TEAMSTERS, LOCAL 396,

Petitioner-Appellee,

v.

NASA SERVICES, INC.,

Respondent-Appellant.

No. 19-55166

D.C. No.

2:18-cv-03681-

SVW-E

OPINION

Appeal from the United States District Court

for the Central District of California

Stephen V. Wilson, District Judge, Presiding

Submitted March 31, 2020*

Pasadena, California

Filed May 1, 2020

Before: Consuelo M. Callahan, Kenneth K. Lee,

and Lawrence J. VanDyke, Circuit Judges.

Opinion by Judge VanDyke

* The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).
2 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

SUMMARY**

Labor Law

The panel reversed the district court’s order compelling 

arbitration of a labor dispute and remanded.

A waste management company and a union signed a 

Labor Peace Agreement containing an arbitration clause. 

The LPA’s terms were conditioned upon the company 

entering into an exclusive franchise agreement with the City 

of Los Angeles by December 31, 2016. The franchise 

agreement was signed by the President of the Board of 

Public Works on January 31, 2017.

The panel held that under California contract law, the 

LPA clearly and unambiguously contained a condition 

precedent to formation, rather than a condition precedent to 

performance. If the condition precedent failed, then there 

was no contract. The panel remanded for the district court 

to determine in the first instance whether the city and the 

company entered an exclusive franchise agreement by 

December 31, 2016. The panel held that if that condition 

failed, then the district court could not compel arbitration.

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 3

COUNSEL

L. Brent Garrett and April L. Szabo, Atkinson Andelson 

Loya Ruud & Romo, Cerritos, California, for RespondentAppellant.

Paul L. More and F. Benjamin Kowalczyk, McCracken 

Stemerman & Holsberry LLP, San Francisco, California, for 

Petitioner-Appellee.

OPINION

VANDYKE, Circuit Judge:

The City of Los Angeles created an exclusive franchise 

system for the collection and handling of municipal solid 

waste. L.A. Mun. Code § 66.33 (Apr. 8, 2014). To prevent 

the City’s waste collection services from being disturbed by 

picketing, work stoppages, or other interruptions, the 

Franchise Ordinance requires each franchisee to be party to 

a labor peace agreement with a union that represents or seeks 

to represent its employees. NASA Services, Inc., a waste 

management company, wished to be selected as a franchisee 

for one or more of the City’s eleven franchise zones.

NASA and Teamsters Local 396 signed a Labor Peace 

Agreement on October 27, 2014. The LPA contained a 

broad arbitration clause covering any disputes over its 

interpretation or application. But all the LPA’s terms were

“expressly conditioned” upon the City entering into an 

exclusive franchise agreement with NASA by December 31, 

2016. NASA submitted the LPA to the City with its 

franchisee proposal. On January 31, 2017, the President of 
4 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

the Board of Public Works signed NASA’s franchise 

agreement.

The parties’ underlying dispute amounts to this: NASA 

believes that, because its franchise agreement with the City 

was not signed until after December 31, 2016, the LPA’s 

condition precedent failed and therefore no contract with

Local 396 was formed; Local 396 believes the condition 

precedent did not fail, but even if it did, a contract was still 

formed. This case regards the proper mechanism to resolve 

the dispute. NASA contends the condition precedent related 

to the LPA’s formation, and that, due to the condition’s nonoccurrence, no contract ever materialized between the 

parties. Local 396, on the other hand, argues the dispute 

should be submitted to an arbitrator, because even if the 

condition precedent failed, the condition precedent related to 

the parties’ performance under the LPA, meaning a contract 

was duly formed and the arbitration clause is thus severable 

and binding under federal arbitration law.

Ruling on Local 396’s motion to compel arbitration, the 

district court found certain phrases in the LPA’s conditional 

provisions “inherently incompatible” and “impossible to 

reconcile” such that the agreement was ambiguous as to 

whether it contained a condition precedent to formation or to 

performance. Faced with this perceived irreconcilable 

ambiguity, the district court concluded the LPA contained a 

condition precedent to performance, because, the court 

reasoned, conditions precedent to formation are 

comparatively disfavored in the law. To aid in construing 

this ambiguous contract language, the district court 

considered extrinsic evidence that, it concluded, reaffirmed 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 5

its interpretation of the LPA.1 As a result, the district court 

concluded the arbitration clause was severable and directed 

the arbitrator to resolve the parties’ dispute over whether the 

City and NASA entered a franchise agreement by December 

31, 2016. The district court also concluded the arbitrator 

should decide whether NASA waived its right to enforce the 

LPA’s conditions, rejected NASA’s statute of limitations 

defense, and awarded Local 396 attorney fees and costs.

Jurisdiction & Standards of Review

NASA timely appealed, and we have jurisdiction under 

28 U.S.C. § 1291 and 29 U.S.C. § 185(a). We review de 

novo the district court’s order compelling arbitration, 

Quackenbush v. Allstate Ins. Co., 121 F.3d 1372, 1380 (9th 

Cir. 1997), the interpretation of a contract’s language, U.S. 

v. 1.377 Acres of Land, 352 F.3d 1259, 1264 (9th Cir. 2003), 

and the principles of law applied to facts adduced from 

extrinsic evidence, DP Aviation v. Smiths Indus. Aerospace 

& Def. Sys. Ltd., 268 F.3d 829, 836 (9th Cir. 2001). When 

a district court makes factual findings derived from extrinsic 

evidence used to interpret a contract, we review for clear 

error. DP Aviation, 268 F.3d at 836. Whether a contract is 

ambiguous is a matter of law we also review de novo. Cachil 

Dehe Band of Wintun Indians v. Cal., 618 F.3d 1066, 1075 

1 As explained below, the LPA was not ambiguous, so the district 

court should not have considered extrinsic evidence at all. See CAL. CIV.

CODE § 1639. Even so, the district court’s findings derived from that 

evidence were clearly erroneous. Instead of construing all facts and 

reasonable inferences that can be drawn from those facts in a light most 

favorable to the non-moving party, Three Valleys Mun. Water Dist. v. 

E.F. Hutton & Co., Inc., 925 F.2d 1136, 1141 (9th Cir. 1991), it did the 

opposite. The extrinsic evidence, properly construed in NASA’s favor 

as the non-moving party, clearly supports its position.
6 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

(9th Cir. 2010); Benach v. Cty. of L.A., 149 Cal. App. 4th 

836, 847 (2007).

Discussion

I

“Arbitration is strictly a matter of consent, and thus is a 

way to resolve . . . only those disputes . . . the parties have 

agreed to submit to arbitration.” Granite Rock Co. v. Int’l 

Bhd. of Teamsters, 561 U.S. 287, 299 (2010) (citations and 

quotation marks omitted). Because of this “axiomatic” 

principle, “a party cannot be required to submit [to 

arbitration] any dispute which he has not agreed so to 

submit.” Sanford v. MemberWorks, Inc., 483 F.3d 956, 962 

(9th Cir. 2007). Thus, courts may compel arbitration only 

after determining that an agreement to arbitrate has been 

formed. Granite Rock, 561 U.S. at 299. Importantly, the 

federal policy favoring arbitration of labor disputes plays a 

role only after a court has been satisfied that an arbitration 

agreement was “validly formed.” Id. at 303; see also id. at 

301 (explaining that courts apply an arbitrability 

presumption “only where a validly formed and enforceable

arbitration agreement is ambiguous about whether it covers 

the dispute at hand”) (emphasis added). In sum, the federal 

policy favoring arbitration is no substitute for party 

agreement, or lack thereof.

Accordingly, we “must determine whether a contract 

ever existed; unless that issue is decided in favor of the party 

seeking arbitration, there is no basis for submitting any 

question to an arbitrator.” Camping Const. Co. v. Dist. 

Council of Iron Workers, 915 F.2d 1333, 1340 (9th Cir. 

1990). To determine whether the parties formed an 

agreement to arbitrate, courts “apply ordinary state-law 

principles that govern the formation of contracts.” First 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 7

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).2 

Under California law, Local 396, the moving party, must 

prove by a preponderance of the evidence that an agreement 

to arbitrate exists. Knutson v. Sirius XM Radio Inc., 771 F.3d 

559, 565 (9th Cir. 2014).

Fundamental precepts of contract interpretation under 

California law (and not unique to California) guide our 

disposition of this case. The courts’ superseding objective 

when interpreting a contract is to “give effect to the mutual 

intention of the parties as it existed at the time of 

contracting.” Cal. Civ. Code § 1636. “When a contract is 

reduced to writing, the intention of the parties is to be 

ascertained from the writing alone, if possible . . . .” Id. 

§ 1639; MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 647 

(2003). Next, and most importantly, “[t]he whole of a 

contract is to be taken together, so as to give effect to every 

part, if reasonably practicable, each clause helping to 

interpret the other.” Cal. Civ. Code § 1641. California case 

law consistently reaffirms the primacy of this principle:

It is a primary rule of interpretation that 

contracts must be construed as a whole[,] that 

is, from their four corners, and the intention 

of the parties is to be collected from the entire 

instrument and not detached portions thereof, 

it being necessary to consider all of the parts 

to determine the meaning of any particular 

part as well as of the whole. Individual 

clauses and particular words must be 

2 Both parties take the position that there is no inconsistency 

between the California rules of contract interpretation and federal 

common law under Section 301 of the Labor Management Relations Act, 

29 U.S.C. § 185. We agree.
8 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

considered in connection with the rest of the 

agreement, and all of the writing and every 

word of it will, if possible, be given effect.

Ajax Magnolia One Corp. v. S. Cal. Edison Co., 167 Cal. 

App. 2d 743, 748 (1959); Moore v. Wood, 26 Cal. 2d 621, 

630 (1945) (same).

Local 396 correctly notes that ambiguous contract 

provisions should be construed against the drafter. See

Penthouse Int’l, Ltd. v. Barnes, 792 F.2d 943, 948 (9th Cir. 

1986); Jacobs v. Freeman, 104 Cal. App. 3d 177, 189 

(1980). But that rule of construction applies only where 

contract language is ambiguous and unresolved by the more 

fundamental principles of interpretation. Cal. Civ. Code 

§ 1654. Foremost among those preceding principles, for our 

purposes, is the mandate that contracts be construed as a 

whole. Id. § 1641.

“[P]arties may make the creation of a contract subject to 

a condition precedent.” Taylor Bus Serv., Inc. v. San Diego 

Bd. of Educ., 195 Cal. App. 3d 1331, 1345 (1987). “[A] 

condition precedent is either . . . an uncertain event that must 

happen before the contractual right accrues or the contractual 

duty arises.” Platt Pac., Inc. v. Andelson, 6 Cal. 4th 307, 313 

(1993). “The existence of a condition precedent normally 

depends upon the intent of the parties as determined from the 

words they have employed in the contract.” Realmuto v. 

Gagnard, 110 Cal. App. 4th 193, 199 (2003).

There are two species of conditions precedent: 

conditions precedent to formation and conditions precedent 

to performance. Jacobs, 104 Cal. App. 3d at 189–90. 

Essentially, “[w]here a condition precedent to formation is 

not satisfied, the proposed bargain between the parties does 

not become a binding contract.” Kum Tat Ltd. v. Linden Ox 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 9

Pasture, LLC, No. 14-cv-02857, 2014 WL 6882421, at *7 

(N.D. Cal. Dec. 5, 2014) (citing Taylor Bus Serv., 195 Cal. 

App. at 1345). Indeed, “[e]ven where the contract is 

complete and signed, it may be shown that the parties orally 

agreed that it should not become binding until the happening 

of some event.” Clyde Bldg. Ass’n, Inc. v. Walsh, 248 Cal. 

App. 2d 513, 515 (1967); Bravo v. Sharkey, 97 Cal. App. 2d 

883, 887 (1950) (holding the same, where the parties agreed 

to the condition precedent to formation in writing). 

Conversely, if a condition precedent to performance fails, 

the parties still have a contract, but they lose the right to 

enforce at least some of its terms. Kadner v. Shields, 20 Cal. 

App. 3d 251, 258 (1971). Courts will neither infer nor 

construe a condition precedent “absen[t] . . . language 

plainly requiring such construction.” Rubin v. Fuchs, 1 Cal. 

3d 50, 53 (1969); Frankel v. Bd. of Dental Exam’rs, 46 Cal. 

App. 4th 534, 550 (1996) (“[C]ourts shall not construe a 

[contract’s terms] so as to establish a condition precedent 

absent plain and unambiguous contract language to that 

effect.”).3 Conditions precedent must be expressed in plain, 

clear, and unambiguous language, but parties need not 

3 The district court relied upon Antonelle v. Kennedy & Shaw 

Lumber Co., 140 Cal. 309, 315 (1903), for the proposition that where 

ambiguity in a contract’s terms make it unclear what type of condition 

precedent the parties intended to create, the condition should be strictly 

construed against the party seeking to avail itself of a condition precedent 

to formation. But in Antonelle, strict enforcement of the condition 

precedent would have worked a significant forfeiture (a factor we may 

consider when construing ambiguous contract language), and the party 

urging its enforcement apparently caused the condition precedent to fail. 

140 Cal. at 316. So Antonelle is different than this case, where Local 

396 would suffer no cognizable forfeiture should the LPA have never 

materialized. Antonelle would be inapplicable even if the LPA’s terms 

were ambiguous.
10 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

invoke any “required magical incantation.” Roth v. Garcia 

Marquez, 942 F.2d 617, 626 (9th Cir. 1991).

Though the law generally disfavors conditions 

precedent, courts must still “consider all of the terms” of an 

agreement to determine what the parties intended and give 

effect to that intent. In re Marriage of Hasso, 229 Cal. App. 

3d 1174, 1180–81 (1991) (finding no condition precedent 

where “the agreement” lacked “language that it is ‘subject 

to’ or ‘conditioned on’” some event). Party intent remains 

paramount.

“A [contract] provision will be considered ambiguous

when it is capable of two or more constructions, both of 

which are reasonable. But language in a contract must be 

interpreted as a whole, and in the circumstances of the case, 

and cannot be found to be ambiguous in the abstract.” 

MacKinnon, 31 Cal. 4th at 648 (quoting Waller v. Truck Ins. 

Exch., Inc., 11 Cal. 4th 1, 18 (1995)) (applying the California 

rules of contract interpretation to construe an insurance 

policy).4 Moreover, “courts will not strain to create an 

ambiguity where none exists.” Waller, 11 Cal. 4th at 18–19. 

Nor is “[t]he language of a contract . . . made ambiguous 

simply because the parties urge different interpretations.” 

4 Because in our analysis below we discuss a New York case cited 

favorably by WILLISTON ON CONTRACTS (4th ed.), we note that the 

contract interpretation rules we apply in this case do not differ from New 

York’s rules. See Bayerische Landesbank v. Aladdin Capital Mgmt. 

LLC, 692 F.3d 42, 53 (2d Cir. 2012) (applying New York law: 

“ambiguity exists where a contract term could suggest more than one 

meaning when viewed objectively by a reasonably intelligent person 

who has examined the context of the entire integrated agreement”) 

(emphasis added).
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 11

Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 

428 (2d Cir. 1992).

II

The district court correctly observed that the threshold 

question is whether the LPA contains a condition precedent 

to formation. To answer this question, we must examine the 

LPA’s language. Realmuto, 110 Cal. App. 4th at 199.

A. Paragraph 1

Paragraph 1 of the LPA states that the “terms of this 

Agreement shall only become operative if all of the 

conditions set forth in paragraph 15 are satisfied.” This 

language clearly and unambiguously makes Paragraph 15’s 

stipulations a condition precedent to formation. As the 

district court recognized, “[t]his language is clear and 

unambiguous in its intent[:] if the conditions in Paragraph 15 

are not met, then purportedly the LPA never ‘becomes’ 

operative in the first instance.” The legal definition of 

“operative” is “[b]eing in or having force or effect.” 

Operative, Black’s Law Dictionary (10th ed. 2014). Thus, 

the plain reading of Paragraph 1 is that no “terms of this 

Agreement” shall “become” an instrument “having force or 

effect” unless all of Paragraph 15’s conditions are satisfied. 

Unless the prescribed stipulations occur, there is no LPA 

“having force or effect.” See, e.g., Paratore v. Scharetg, 

53 Cal. App. 2d 710, 712 (1942) (using “operative” and 

“effective” interchangeably to describe the contingent nature 

of a contract containing an express condition precedent to 

formation). Given that the “Agreement” itself—and not 

merely any particular obligations to perform under it—“shall 

only become operative” if Paragraph 15’s conditions are 

satisfied, it would be strange to conclude that the parties 

intended anything by this language other than a condition 
12 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

precedent to formation. Paragraph 1 is clear: the LPA 

contains a condition precedent to formation, not 

performance.

B. Paragraph 15

Paragraph 15, in its entirety, contains the following 

language:

All of the paragraphs of this Agreement are 

expressly conditioned on the City of Los 

Angeles entering into an exclusive franchise 

agreement or franchise agreements with the 

Employer for the collection of solid waste 

pursuant to City of Los Angeles Municipal 

Code, Article 6, Chapter VI, § 66.33.1 et seq. 

If the City enters into an exclusive franchise 

agreement for the collection of solid waste 

with the Employer, then the terms of this 

Agreement shall remain in effect for three 

(3) years following the effective date of the 

exclusive franchise agreement between the 

City and the Employer. If the City fails to 

enter into an exclusive franchise agreement 

for the collection of solid waste with the 

Employer by December 31, 2016, then this 

Agreement shall become null and void.

Read together, the district court correctly concluded that 

Paragraph 15’s three sentences clearly and unambiguously 

form one condition precedent: that the LPA shall only be 

operative if the City enters an exclusive franchise agreement 

with NASA by December 31, 2016. But the district court 

read the second and third sentences in Paragraph 15 as 

conflicting with Paragraph 1, and therefore concluded the 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 13

language, taken together, was ambiguous as to whether it 

was a condition precedent to formation or performance.

1. The district court’s analysis of Paragraph 15

To be clear, reading Paragraph 1 alone, the district court 

would have concluded that the parties’ condition precedent 

unambiguously applied to formation, not performance. But 

the court concluded that Paragraph 15’s language 

“contradicts” the “clear and unambiguous” language of 

Paragraph 1, therefore creating ambiguity. The district court 

reasoned that the phrase “become null and void” in the third 

sentence of Paragraph 15 could only mean that the LPA was 

operative before the satisfaction of the condition precedent: 

“[a]n agreement cannot ‘become’ null and void if it was 

never operative or in effect in the first place.” The court thus 

concluded Paragraph 15’s “become null and void” language 

was “impossible to reconcile” and “inherently incompatible” 

with Paragraph 1’s “become operative” language.

The district court then identified support for this position 

in Paragraph 15’s first two sentences by plucking phrases 

from the context of the entire, integrated agreement. The 

district court concluded that the first sentence (“All of the 

paragraphs of this Agreement are expressly conditioned on” 

the City and NASA entering a franchise agreement) “does 

not clearly and unambiguously state that the express 

condition pertains to the formation of the agreement as a 

whole.” And the district court read the paragraph’s second 

sentence (the LPA “shall remain in effect for three (3) years” 

as of the effective date of the City-NASA franchise 

agreement) as a party acknowledgment that the LPA was 

effective prior to the commencement of the three-year term.
14 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

2. The LPA clearly and unambiguously contains 

a condition precedent to formation.

The district court reached its conclusions by isolating 

Paragraph 15’s conditional clauses from the rest of the LPA, 

in violation of the fundamental canon requiring courts to 

construe contract terms in harmony, where possible. See

Cal. Civ. Code § 1641. It read the contract’s terms in the 

abstract, construed them against NASA, and created the 

conflict it deemed irreconcilable. The district court did not 

consider particular words within “the context of the entire 

integrated agreement.” Bayerische Landesbank, 692 F.3d 

at 53 (emphasis added). Nor did it use the whole agreement 

to help interpret the words and phrases it found ambiguous. 

Cal. Civ. Code § 1641. Rather, the court arrived at a 

superficial understanding of the words it deemed troubling, 

construed them against NASA, and made no attempt to 

harmonize all the LPA’s provisions. The district court 

therefore violated the “primary rule of interpret[ing]” 

contracts under California law: to give effect to the parties’ 

mutual intent gathered from the entire document. Ajax, 

167 Cal. App. 2d at 748; Cal. Civ. Code § 1641. Essentially, 

it applied interpretive canons out of order. See Cal. Civ. 

Code § 1654 (“In cases of uncertainty not removed by the 

preceding rules, the language of a contract should be 

interpreted most strongly against the party who caused the 

uncertainty to exist.”) (emphasis added). Had the district 

court applied them in order, it would have encountered no 

ambiguity at all.

Armed with the proper contract interpretation canons 

properly ordered, we analyze Paragraph 15 afresh. First, as 

stated above, and as recognized by the district court, 

Paragraph 1 clearly indicates that Paragraph 15 contains a 

condition precedent to formation. Next, we turn to 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 15

Paragraph 15 to analyze its conditions, understanding that 

we must read the instrument “as a whole.” Waller, 11 Cal. 

4th at 18 (“language in a contract . . . cannot be found to be 

ambiguous in the abstract”). Read in light of Paragraph 1, 

we presume Paragraph 15’s terms combine to form one 

condition precedent to formation. Cal. Civ. Code § 1641. 

That presumption yields only if we find plainly contrary 

language or ambiguity unresolvable by the fundamental 

rules of contract interpretation.

i. Paragraph 15, Sentence 1

Paragraph 15’s first sentence restates the conditional 

language from Paragraph 1 even more forcefully: “All of the 

paragraphs of this Agreement are expressly conditioned on” 

the City entering a franchise agreement with NASA under 

the City’s new ordinance. The district court concluded 

(without explanation) that this sentence stopped short of 

expressly self-identifying as a condition precedent to 

formation. Not so. “All paragraphs of this agreement” in 

Paragraph 15 mimics and accentuates “terms of this 

Agreement” used in Paragraph 1. Moreover, this sentence 

says the entirety of the Agreement’s content is “expressly 

conditioned” on the City awarding NASA a franchise. It 

emphatically restates Paragraph 1’s condition by even more 

clearly and unambiguously (and now, repetitively) 

stipulating the LPA’s very existence on a timely franchise 

agreement. This formation-contingent language “is too 

definite to be ignored. It jumps out at you. The words 

employed are too strong to permit of ambiguity.” Los 

Angeles Rams Football Club v. Cannon, 185 F. Supp. 717, 

722 (S.D. Cal. 1960).
16 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

ii. Paragraph 15, Sentence 2

Paragraph 15’s second sentence provides that the LPA 

shall “remain in effect for three (3) years following the 

effective date” of the City-NASA franchise agreement. The 

word “remain” naturally describes the length of the LPA’s 

life upon commencement. It need not, contrary to the district 

court’s assertion, speak to the LPA’s vitality before 

execution of the City-NASA franchise agreement. Indeed, 

even assuming arguendo that the district court’s 

interpretation is plausible, Paragraph 15’s second sentence 

cannot carry that alternative meaning when read as a part of 

the whole contract. Cal. Civ. Code § 1641. Because the 

LPA elsewhere contains clear formation-contingent 

language, “remain” “must be considered in connection with 

the rest of the agreement,” which resolves any potential 

ambiguity. Ajax, 167 Cal. App. 2d at 748. Moreover, the 

clause immediately preceding “shall remain” reaffirms this 

point: “If the City enters into an exclusive franchise 

agreement for the collection of solid waste with the 

Employer, then. . . .” Thus, “remain,” within its own 

sentence’s context, means the LPA will continue in effect for 

three years after its operative date.

iii. Paragraph 15, Sentence 3

Paragraph 15’s third sentence, which bore the brunt of 

the district court’s attention, states as follows: “If the City 

fails to enter into an exclusive franchise agreement for the 

collection of solid waste with the Employer by December 

31, 2016, then this Agreement shall become null and void.” 

It makes sense to read “become” here the same way we read 

it in Paragraph 1 (“become operative”). But that does not 

put the two paragraphs in conflict. Rather, reading them “as 

a whole,” if the condition is satisfied, the potential 

agreement “become[s] operative”; if the condition fails, the 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 17

potential agreement “become[s] null and void”—that is, it 

no longer can become operative. Contrary to the district 

court’s conclusions, the parties’ use of “become” here does 

not lead to the unavoidable conclusion that there existed an 

operative contract before the franchise agreement was 

awarded, nor does it create irreconcilable conflict with the 

LPA’s other conditional sentences.

First, the district court’s interpretive logic evidently 

originates from confusion over the nature of a signed 

instrument containing a condition precedent to formation. In 

short, such a document is a pre-negotiated agreement that 

will become effective if some articulated event occurs. It is 

a proposed contract, not a contract. “Thus, when the parties 

to a proposed contract have agreed that the contract is not to 

be effective or binding until certain conditions are performed 

or occur, no binding contract will arise until the conditions

specified have occurred or been performed.” 13 Williston 

on Contracts § 38:7 (4th ed.). Here, if the City and NASA 

entered into a franchise agreement by December 31, 2016, 

the LPA would “become” binding and operative.

If the condition failed, the LPA’s potential to become a 

binding, operative agreement became extinguished—“null 

and void.” The LPA was an agreement to agree—operative, 

binding, and enforceable according to its terms if the City 

and NASA timely entered a franchise agreement. It was 

similar to an option contract, which has the potential to 

become a broader agreement, but also has the potential to 

become nullified by its expiration. There is nothing 

anomalous in the law about such contractual forks in the 

road. The district court’s interpretation of “become null and 

void” overlooks this, effectively insisting that “become” in 
18 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

Paragraph 15 can only be read as an exit ramp, not a fork in 

the road.5

Second, and relatedly, the district court could only 

interpret “become null and void” as it did by ignoring the 

LPA’s other conditional language that clearly and 

unambiguously establishes the opposite proposition—that 

the LPA remained inoperative until the satisfaction of the 

condition. See Cal. Civ. Code § 1650 (“Particular clauses of 

a contract are subordinate to its general intent.”). As the 

district court observed, Paragraph 1 clearly and 

5 That NASA relied upon the signed LPA in its franchise proposal 

to the City is of no moment. First, we pass no judgment about whether 

the condition precedent was satisfied. If the district court on remand 

concludes it was, Local 396’s equities argument dissolves entirely. 

Second, Local 396’s equities argument fails to convince regardless. It is 

almost certainly true that NASA benefited from the signed LPA; parties 

don’t usually sign a contract unless they perceive a resulting benefit. But 

that hardly means that Local 396, a professional contract negotiating 

entity, got hoodwinked at the bargaining table. Local 396 received a 

benefit too—a contingent benefit. It bargained for a labor peace 

agreement with NASA if the condition precedent was satisfied. Like 

every condition precedent in every contract, there was some risk that the 

condition precedent to this contract could fail—a risk that Local 396 

voluntarily agreed to take. This is exactly how a clearly and 

unambiguously expressed condition precedent to formation works:

Freedom of contract prevails in an arm’s length 

transaction between sophisticated parties such as 

these, and in the absence of countervailing public 

policy concerns there is no reason to relieve them of 

the consequences of their bargain. If they are 

dissatisfied with the consequences of their agreement,

the time to say so was at the bargaining table.

13 WILLISTON ON CONTRACTS § 38:7 (4th ed.) (internal quotation marks 

omitted) (quoting Oppenheimer & Co. v. Oppenheim, Appel, Dixon & 

Co., 660 N.E.2d 415, 421 (N.Y. 1995)).
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 19

unambiguously announces a condition precedent to 

formation which consists of all the conditions in Paragraph 

15. This makes Paragraph 15 subordinate to Paragraph 1. 

The word “become” in Paragraph 15 should not be read in a 

way that upheaves the parties’ clearly established intent in 

Paragraph 1 (and Paragraph 15, by reference in Paragraph 

1), if it can be reasonably avoided. California law thus 

compels the court to interpret “become” as NASA urges: “to 

undergo change or development.” The district court’s 

dubious interpretation of “become” needlessly creates 

ambiguity where none exists. Moreover, its reasoning 

means the LPA’s two explicit references to the conditional 

efficacy of the entire “Agreement” apparently refer to 

something less than the entire agreement.

Williston cites Oppenheimer, a New York case, when 

illustrating a condition precedent to formation. 13 Williston 

on Contracts § 38:7 (4th ed.) (discussing Oppenheimer, 

660 N.E.2d at 688–95). In Oppenheimer, the underlying 

agreement stated that if the condition was not satisfied by a 

specific date, the agreement would be “deemed null and void 

and of no further force and effect.” 660 N.E.2d at 416. The 

Oppenheimer court concluded that the agreement contained 

a condition precedent to formation. Id. at 421. Oppenheimer

is pertinent here because its conditional language is 

effectively identical to that at issue in this case, except here 

the parties agreed that, upon failure of a condition precedent, 

the contract would “become null and void,” while in 

Oppenheimer, the parties agreed the contract would “be 

deemed null and void.” Id. at 416. If Williston and 

Oppenheimer are right (as we believe they are), the marginal 

difference between “deemed” and “become” must bear the 

full weight of the argument that Paragraph 15 can only have 

“the opposite meaning” of Paragraph 1. But the words 

“deemed” and “become” just aren’t that different in this 
20 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

context. Before the point in time where the condition 

precedent is satisfied or fails (here, before the end of 

December 31, 2016), the parties’ signed contract is capable 

of “becom[ing] operative.” After the point in time when the 

condition precedent can no longer be satisfied (here, January 

1, 2017), the parties’ signed contract is “null and void”—that 

is, no longer capable of “becom[ing] operative.” The key 

point is that the signed document has changed from one thing 

(capable of “becom[ing] operative”) to another (incapable of 

“becom[ing] operative”). In this context, whether you speak 

of that change as the signed document “becom[ing] null and 

void” or being “deemed null and void” is a distinction 

without a difference. If “shall be deemed null and void” 

evinced a condition precedent to formation “in the clearest 

language” in Williston and Oppenheimer, 660 N.E.2d at 421, 

so does “shall become null and void” in this case.

The district court’s insistence that “become null and 

void” must mean a contract already existed runs into another 

conflict with Williston and Oppenheimer. In Oppenheimer, 

the condition precedent stated, inter alia, “this letter 

agreement and the Sublease shall be deemed null and void 

and of no further force and effect.” 660 N.E.2d at 416 

(emphasis added). The New York Court of Appeals held 

that the Oppenheimer condition was a condition precedent 

to formation, despite the fact that “further” could be read the 

same way the district court here reads “become null and 

void”; namely, to admit the existence of a binding agreement 

before the satisfaction of the condition precedent. Yet the 

Oppenheimer court did not pin all its analysis on “no further 

force and effect” and conclude that a contract existed before 

the occurrence of the condition precedent. Id. Quite the 

opposite, the court determined the parties had agreed to a 

condition precedent to formation, stated in the “clearest 

language.” Id. at 421. That Williston finds Oppenheimer
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 21

illustrative of a condition precedent to formation reinforces 

the observations above regarding the nature of potential 

contracts. An agreement containing a condition precedent to 

formation is potentially operative until the failure of the 

condition, at which point it “becomes” null and void—

incapable of becoming operative.

Similarly, in Bravo the California Court of Appeals 

discussed an agreement containing the following condition 

precedent to formation: “[I]n the event the parties, after 

reasonable effort, are unable to agree on plans and 

specifications, this Agreement and the lease agreed to be 

executed by the parties hereto shall ipso facto, . . . become 

null and void.” 97 Cal. App. 2d at 886 (emphasis added). 

The parties never agreed on plans and specifications, and the 

court concluded that the agreement was “nothing more than 

an agreement to agree concerning a lease to be subsequently 

executed and as such it cannot be made the basis of an action 

either in law or in equity.” Id. at 887. Thus, like the present 

situation, “[e]ven when a written contract is complete and 

signed it may be shown that the parties agreed that it would 

not be binding until the happening of some future event, a 

condition precedent . . . .” Haines v. Bechdolt, 231 Cal. App. 

2d 659, 661 (1965); see also Clyde Bldg. Ass’n, 248 Cal. 

App. 2d at 515 (same).

Local 396 argues Oppenheimer doesn’t apply because 

the court there repeatedly referenced different conditional 

language (“unless and until”) not extant in the LPA. The 

district court likewise criticized NASA’s language choices. 

But parties need not deploy fine-tuned incantations to 

successfully create a condition precedent to formation. See

Roth, 942 F.2d at 626. What matters is that the parties—

both parties—were clear enough about their intent to create 

a condition precedent to formation. Here, as the district 
22 INT’L BHD. OF TEAMSTERS V. NASA SERVS.

court acknowledged, Paragraph 1’s “language is clear and 

unambiguous in its intent to designate the conditions in 

Paragraph 15 as necessary conditions to the terms of the LPA 

‘becoming’ operative.” And, as discussed, nothing in 

Paragraph 15’s language must be read as undermining 

Paragraph 1’s clear and unambiguous intent. There is no 

“stark contrast” among the LPA’s provisions. To the 

contrary, its provisions, read as a whole, are quite clear.

Conclusion

The district court’s unnecessary reading of Paragraph 15 

frustrated the intention of the parties clearly expressed in the 

LPA read as a whole. Under California law, “[a] contract 

must be so interpreted as to give effect to the mutual 

intention of the parties as it existed at the time of contracting, 

so far as the same is ascertainable and lawful.” Cal. Civ. 

Code § 1636. The LPA contains a condition precedent to 

formation that is both ascertainable and lawful. Consistent 

with the LPA’s plain language and fundamental canons of 

contract interpretation, if the condition precedent failed, the 

potential LPA has become null and void. This reading best 

honors “the intention of the parties . . . collected from the 

entire instrument.” Ajax, 167 Cal. App. 2d at 748.

We therefore reverse the district court’s order 

compelling arbitration. From October 17, 2014 to December 

31, 2017, NASA and Local 396 were parties to a proposed 

agreement that would become operative, effective, and 

enforceable if and only if the condition precedent therein was 

satisfied. If the condition precedent failed, there is no 

contract. We reach no other issues and remand for the 

district court to determine in the first instance whether the 

City and NASA entered an exclusive franchise agreement by 
INT’L BHD. OF TEAMSTERS V. NASA SERVS. 23

December 31, 2016. If that condition failed, the court may 

not compel arbitration. Granite Rock, 561 U.S. at 299.

REVERSED and REMANDED.