Opinion ID: 157848
Heading Depth: 4
Heading Rank: 1

Heading: I would think so, uh-huh.

Text: 84 .... 85 Q. Was that the intent of the parties when they entered into the contract back in '76? 86 A. Well, I don't think it was the intent of MDU to be the highest priced, but when you put a favored nations clause in the contract, that's the way it works. 87 5 J.A. 2397-98 (portions of Pickard's deposition introduced at trial) (emphasis added). Pickard also testified, at trial, that the main purpose of intrastate contracts was to obtain higher prices under favored nations clauses, and that higher prices under the area rate clause or the favored nations clause would supersede the base price. 5 J.A. 2373-74, 2396. 88 Apparently this testimony underlies the district court's finding of fact that Moncrief and Woods believed that the price could not decrease from the highest rate achieved at any time during the contract. 3 J.A. 1175. But, as the Pickard testimony quoted above indicates, it was not the intent of MDU to be the highest priced. Pickard then went on to state, nevertheless, that the favored nations clause works that way. 89 None of this evidence, or any other, directly addresses what the parties intended to happen to regulated prices upon deregulation. Such evidence as there is refers consistently to prices paid to bona fide purchasers, a term used in the favored nations clause. This supports the defendants', not the plaintiffs', view. 90 Neither Tex Moncrief nor Claud Pickard, the only witnesses at trial involved in negotiating the contract, had any recollection of the parties' intent or discussions regarding the operation of the pricing clauses following deregulation. 5 J.A. 2260-62, 2267-70, 2298-2306, 2409-10. Moncrief did not testify that the price set under the area rate clause could not decrease after deregulation. 5 J.A. 2396. Thus, to reiterate the point, the evidence regarding the parties' intent at the time of drafting, unlike the evidence in JER, is hardly overwhelming or crystal clear regarding prices on deregulation. 91 The parties' course of conduct, however, cuts directly against plaintiffs' argument. The defendants paid amounts equal to the highest applicable regulated rates until the end of 1984 when they considered such prices to have been deregulated by Congress. At the time the regulated price was $3.845 per MMBtu. The defendants then notified the Moncriefs that the price would drop to $2.25. The Moncriefs refused to sign any contract amendment to that effect, but stated they would not sue, and they accepted, without protest, payments based on the $2.25 rate in 1985 and 1986. After a similar notification, the defendants dropped the price to $1.75 per MMBtu, which the Moncriefs accepted, without protest, from 1987 to 1993. 92 Not once during this time did the Moncriefs claim that the higher price paid in 1984 was required under the contract to continue. Nor did Woods or the other working interest owners who had contracts identical to the Moncrief contract claim that 1984 regulated prices must continue. See 6 J.A. 2966. 93 In sum, as the district court found, the Moncriefs knowingly received prices lower than the 1984 regulated price for more than eight-and-a-half years, and collected approximately $1,244,000 at those rates, 11 without once voicing the highest price/benchmark interpretation of the contract they now urge. Their explanation is that Moncrief was simply waiving contract rights month by month, Appellants' Reply Br. at 41, 49, or that the defendants laid low knowing, apparently, that Moncrief was making a mistake, id. at 48. These arguments do not square with the fact that the Moncriefs were and are experienced professionals in the oil and gas business. 12 When parties on both sides of a contract are knowledgeable, experienced professionals, their course of dealing under the contract is more likely to show their intent as to the operation of the contract than to suggest mistake or ignorance. That is especially true here where the plaintiffs do not seriously advance the latter position, there is no evidence to support it, and the district court made express findings to the contrary. Thus, eight and one-half years of payments, knowingly received, essentially defeats the plaintiffs' argument. 94 It is true that the plaintiffs do point to some contrary evidence in the way of defendants' filings with the FERC in 1987, in which higher applicable rates are mentioned. 9 J.A. 3851, 3863. Even crediting this evidence, however, it is impossible to conclude that the district court erred by rejecting the plaintiffs' argument that the contract price could never decrease. Even if we assume, arguendo, that the contract was ambiguous on this point, the extrinsic evidence contained in the record, especially the parties course of performance over eight-and-one-half years, is too much against the plaintiffs to support a remand to the district court for fact findings based on parol evidence.