Opinion ID: 805939
Heading Depth: 4
Heading Rank: 1

Heading: Facial Ambiguity

Text: “A contract is ambiguous if it is reasonably susceptible to at least two different constructions. To decide whether a contract is ambiguous we look to the language of the entire agreement. A contract must be considered as a whole so as to give effect to all its provisions.” Pitco, 63 P.3d at 545–46 (footnotes omitted). In our view, the 1975 Agreement is not reasonably susceptible to two different constructions regarding the type of water that it concerns. Its plain language -17- grants Eureka a right to use the Ozarka trademark only in connection with purified water and what it terms drinking water. The language granting Eureka a license to use the Ozarka trademark is unequivocal: The Franchise Agreement between the parties of [Arrowhead] and [Eureka] is hereby terminated and [Eureka] is granted a royalty-free, paid-up right and license to use the said OZARKA mark in connection with the processing, bottling, sale and distribution within [a specified region] of purified water and/or drinking water made from OZARKA drinking water concentrates . . . . Aplt. App., Vol. 29 at 9397 (emphasis added). No reasonable reading of this paragraph could extend Eureka’s right to use the Ozarka trademark to spring water. The provision lists only “purified water” and “drinking water” without referencing any other products. At least three other parts of the Agreement further support this conclusion. First, § 1 sets forth detailed standards that Eureka must follow in producing and labeling purified water and drinking water, with no reference to spring water or any other Ozarka products. The purified-water provision states that “[a]ll purified water sold under the OZARKA mark . . . shall be designated as purified water with the method of preparation specified” and that “[t]he mineral content of any such purified water sold . . . shall not at any time exceed ten (10) parts per million by weight.” Id. at 9398 (emphasis added). 2 The drinking-water provision 2 The requirement reads in full: (continued...) -18- states that “[a]ll OZARKA drinking water sold by DISTRIBUTOR shall be produced from purified water plus OZARKA drinking water concentrates” and that “[a]ll OZARKA drinking water bottled or sold by DISTRIBUTOR shall be produced in accordance with the production and control specifications of drinking water . . . supplied to DISTRIBUTOR by SUPPLIER.” Id. (emphasis added). 3 2 (...continued) All purified water sold under the OZARKA mark whether produced by distillation, deionization or other means of demineralization shall be designated as purified water with the method of preparation specified, i.e., “Purified Drinking Water Prepared by Distillation,” or by such other designation as may be approved by SUPPLIER in writing. The mineral content of any such purified water sold under the OZARKA mark shall not at any time exceed ten (10) parts per million by weight. Aplt. App., Vol. 29 at 9398. 3 The paragraphs setting forth these requirements are as follows: All OZARKA drinking water sold by DISTRIBUTOR shall be produced from purified water plus OZARKA drinking water concentrates. The labeling shall conform substantially to the form of label annexed hereto as Exhibit I or as may be modified from time to time by SUPPLIER through written notice to DISTRIBUTOR. Aplt. App., Vol. 29 at 9398. All OZARKA drinking water bottled or sold by DISTRIBUTOR shall be produced in accordance with the production and control specifications of drinking water effective March 7, 1972 supplied to DISTRIBUTOR by SUPPLIER, and DISTRIBUTOR shall conform in all respects to the quality control provisions respecting concentration, sanitation, sampling, and other procedures set forth in said production and control specifications. (continued...) -19- Later § 1 states that “SUPPLIER . . . shall have access to the purification and drinking water production facilities of DISTRIBUTOR at all times during normal operations hours for the purpose of checking . . . the quality of the purified and/or drinking water produced by DISTRIBUTOR,” id. at 9399 (emphasis added); 4 and that “[a]ll labels employed by DISTRIBUTOR for use on or in connection with OZARKA drinking water and/or OZARKA purified water shall first be approved 3 (...continued) Id. at 9398–99. 4 The full text of this requirement is: SUPPLIER through its qualified representative shall have access to the purification and drinking water production facilities of DISTRIBUTOR at all times during normal operations hours for the purpose of checking the procedures employed by DISTRIBUTOR in the operation of such facilities and the quality of the purified and/or drinking water produced by DISTRIBUTOR and bottled and sold by it under the OZARKA trademark. SUPPLIER shall from time to time inspect the OZARKA water production and bottling operations of DISTRIBUTOR and take production line samples for tasting and laboratory analysis. DISTRIBUTOR will also send production line samples to SUPPLIER for quality control testing at least quarterly. Such inspections by SUPPLIER shall be in addition to any and all supply of written data to DISTRIBUTOR, as may be required under the production and control specifications, and in addition to any and all inspections and analyses required under United States Public Health drinking water regulations, as well as any state regulations of the state within which DISTRIBUTOR is operating, and DISTRIBUTOR agrees to comply with all such Federal and state regulations controlling the standards of drinking water, as well as the said production and control specifications of SUPPLIER. Aplt. App., Vol. 29 at 9399–9400. -20- in writing by SUPPLIER for trademark usage,” id. at 9400 (emphasis added). 5 The language of § 1 unequivocally establishes that neither purified water nor drinking water encompasses spring water. Likewise, § 2 of the Agreement makes no mention of spring water. It provides terms for the supply of materials necessary for producing drinking water, saying that Nestle “shall furnish DISTRIBUTOR OZARKA drinking water concentrates . . . for the production of OZARKA drinking water.” Id. at 9402 (emphasis added). We also note that the recitals reference only purified water and drinking water. The summary of the 1972 franchise agreement states that under that agreement Eureka had “installed facilities for production of OZARKA ‘scientifically prepared’ drinking water produced by adding OZARKA drinking water concentrates to purified water” and “ha[d] been engaged in the sale of such OZARKA drinking water and OZARKA purified water in [Eureka’s territory].” 5 This requirement states in full: All labels employed by DISTRIBUTOR for use on or in connection with OZARKA drinking water and/or OZARKA purified water shall first be approved in writing by SUPPLIER for trademark usage and compliance with state and Federal labeling laws, and all advertising and listings and printed matter of DISTRIBUTOR shall also be submitted for approval to SUPPLIER prior to publication where the mark OZARKA is included in the listing, advertisement, or other printed matter. Aplt. App., Vol. 29 at 9400. -21- Id. at 9396 (emphasis added). In short, nothing in the Agreement indicates that it covers spring water. Eureka responds that the Agreement is ambiguous because on several occasions it uses the terms Ozarka products and Ozarka waters. But “[a] contract must be considered as a whole so as to give effect to all its provisions without narrowly concentrating upon some clause or language taken out of context.” Mercury Inv. Co., 706 P.2d at 529; see also Okla. Stat. tit. 15, § 157 (“The 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 others.”). When viewed in light of the Agreement’s focus on purified water and drinking water, the references to Ozarka products and waters cannot reasonably be read to expand the scope of the licensing provision beyond the only two specific products mentioned. Rather, the unmodified terms products and waters are clearly used only as shorthand for the products and waters specified elsewhere, just as we have often referred to the 1975 Agreement as “the Agreement.” For example, Eureka points to the licensing provision’s heading: “LICENSE TO DISTRIBUTE, BOTTLE, ADVERTISE, AND SELL OZARKA PRODUCTS.” Aplt. App., Vol. 29 at 9397. But immediately following the heading is the statement that the license granted is “in connection with the . . . distribution . . . of purified water and/or drinking water.” Id. The only licensed Ozarka “products” are purified water and drinking water. The heading cannot reasonably be interpreted as -22- expanding the coverage of the provision. Similarly, the sole appearances of the term Ozarka water(s) in the Agreement are in subsections 1(d) and 1(f), which allow Nestle to inspect Eureka’s purification and drinking-water production facilities and which require Eureka’s compliance with production standards that are applicable only to purified water and drinking water—the only “waters” of interest. Eureka also claims that the Agreement’s reference to trademark registration number 836,026, which is a registration for Ozarka drinking water, creates an ambiguity because in 1967, when Ozarka (Arrowhead’s predecessor) registered the trademark, it sold only Ozarka spring water. 6 Eureka argues that “[i]t is reasonable to conclude that based on the reference to this trademark, Arrowhead and Eureka believed that spring water and drinking water are sufficiently alike that a trademark or license for one necessarily covers the other.” Aplee. Br. at 25. Eureka’s argument fails because it relies on extrinsic evidence—evidence 6 The reference appears in the Agreement’s recitals: The parties now believe that it will be to their mutual advantage to terminate the continuing obligation of DISTRIBUTOR under said Franchise Agreement to pay said royalties in consideration of a lump sum payment for a paid-up license, and to discontinue all obligations of SUPPLIER under said Franchise Agreement except for . . . the maintenance of OZARKA registrations in the United States Patent Office for drinking water and for refrigerated and evaporative coolers for drinking water, Nos. 836,026 and 876,741, issued September 26, 1967 and March 5, 1969, respectively. Aplt. App., Vol. 29 at 9396–97. -23- that in 1967 Ozarka sold only spring water. But even if we could consider the evidence, and even if whoever filed the trademark thought that “drinking water” encompassed spring water, that does not tell us the meaning of “drinking water” in the 1975 Agreement eight years later. The Agreement specifies that the drinking water it covers must be produced by adding concentrates to purified water, and no one has suggested that spring water is so produced.