Opinion ID: 171119
Heading Depth: 1
Heading Rank: 4

Heading: Judgment as a matter of law on Pabst's asserted defenses of impossibility or impracticability

Text: Pabst contends that the district court erred when it granted Specialty judgment as a matter of law on Pabst's asserted defenses of impossibility or impracticability. In response, Specialty asserts that the district court correctly granted the judgment as a matter of law because Pabst failed to demonstrate both that its performance was completely impossible and that Marrs's defense of its legal rights was objectively unforeseeable. As discussed more completely below, we conclude that the district court properly granted Specialty judgment as a matter of law on this issue because Pabst failed to present the jury with evidence sufficient to allow the jury to conclude that the defense of impossibility or impracticability excused its nonperformance. Under Oklahoma law, the defense of impossibility of performance is a common law doctrine, see, e.g., Okla. Gas & Elec. Co. v. Pinkerton's Inc., 742 P.2d 546, 547 n. 2 (Okla.1986); however, the Oklahoma courts regularly consider this defense when analyzing contracts governed by the UCC. Golsen v. ONG W., Inc., 756 P.2d 1209, 1212 (Okla.1988); see also Resources Inv. Corp. v. Enron, 669 F.Supp. 1038, 1043 (D.Colo.1987) (applying Oklahoma law). The Oklahoma Supreme Court has defined this doctrine as follows: Where, from the nature of the contract, it is evident that the parties contracted on the basis of the continued existence of the person, thing, condition, or state of things, or of facts, to which it relates, the subsequent perishing of the person or thing, or cessation of existence of the condition or state will excuse the performance, or terminate the contract, a condition to that effect being implied, in spite of the fact that the promise may have been unqualified. Kan., Okla. & Gulf Ry. Co. v. Grand Lake Grain Co., 434 P.2d 153, 157 (Okla.1967). The Oklahoma Supreme Court has also adopted several limitations on the scope of this defense. The defense applies only if it appear[s that] the thing to be done cannot be accomplished by any means. Id. ; see also Pinkerton's, 742 P.2d at 548 (The duty of a promisor is not discharged by the mere fact that supervening events deprived him of the ability to perform, if they are not such as to deprive other persons similarly situated of the ability to so perform.). In addition, the defense does not apply if the promisor had any reason to anticipate the facts that rendered performance impossible. Grand Lake Grain, 434 P.2d at 158. In other words, the defense is not available if a promisor was aware of a potential risk that could interfere with its performance and assumed that risk by not explicitly addressing it in the contract. Id. Unlike impossibility of performance, impracticability is a UCC-based defense. See Okla. Stat. tit. 12A, § 2-615. That statute provides, in pertinent part: a seller . . . is not [in] breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made. . . . Id. § 2-615(a). Similar to the defense of impossibility, impracticability does not excuse nonperformance if the contingency was foreseeable. See id. cmt. 8 ([T]he exemptions of this section do not apply when the contingency in question is sufficiently foreshadowed at the time of contracting to be included among the business risks which are fairly to be regarded as part of the dickered terms, either consciously or as a matter of reasonable, commercial interpretation from the circumstances.); see also Sabine Corp. v. ONG W., Inc., 725 F.Supp. 1157, 1174 (W.D.Okla.1989) (noting that under Oklahoma law, the defense of impracticability is available only if the occurrence making performance impracticable [was] unforeseeable). Turning to the case at bar, we conclude that the district court correctly granted Specialty a judgment as a matter of law on both defenses because the contingency in questionthe interference caused by the exclusive distribution agreement with Marrswas foreseeable. The record indicates that Pabst anticipated that its contractual obligations to Marrs might interfere with its nascent relationship with Specialty. Pabst's general counsel testified that at the time Pabst was negotiating with Specialty, he was aware that terminating the agreement with Marrs might lead to litigation. In addition, the record indicates that the general counsel believed that the distribution agreement with Marrs was binding and that Pabst would not likely be able to cancel that contract. In light of this evidence, we conclude that the interference caused by the Marrs contract was objectively foreseeable, and thus, the defenses of impossibility and impracticability were not available to Pabst. See Sabine Corp., 725 F.Supp. at 1174; Grand Lake Grain, 434 P.2d at 158. Accordingly, the district court correctly decided that a rational jury could not find in favor of Pabst based on these defenses, and therefore properly granted judgment as a matter of law on this issue. Pabst argues that its impossibility and impracticability defenses should have survived because, although litigation between Marrs and Pabst was foreseeable, the state court grant of the TRO was not. With this tenuous nuance, however, Pabst jumps from the frying pan into the fire. In the first place, it is far from unforeseeable that Marrs might obtain a TRO to enforce the distribution agreement. Moreover, Pabst's argument fails because the TRO did not render its performance impossible or impracticable as the TRO was in place for only the short period of time. Oklahoma law dictates that a TRO may be in place only until the state court can hold a hearing on the requested preliminary injunction. Okla. Stat. tit. 12, § 1384.1. The record indicates that Marrs obtained the TRO on May 3, 2004, and that the state court set a preliminary injunction hearing for May 25, 2004. Therefore, the TRO could remain in place only for that 22-day period. In any event, Marrs and Pabst settled their dispute on May 20. Thus, after the settlement, it was Pabst's election to settle the dispute with Marrs that prohibited it from fulfilling its obligations to Specialty. Under Oklahoma law, this type of subjective impossibility falls outside of the scope of the defense of impossibility. See Pinkerton's, 742 P.2d at 548 (The duty of a promisor is not discharged by the mere fact that supervening events deprived him of the ability to so perform, if they are not such as to deprive other persons similarly situated of the ability to perform.). Given the similar concerns underlying both defenses, we conclude that the Oklahoma courts would reach the same conclusion regarding the defense of impracticability. See Enron, 669 F.Supp. at 1043 (applying Oklahoma law and concluding that [s]imilar considerations govern the claim based upon impossibility and commercial impracticability); see also E. Capitol View Cmty. Dev. Corp., Inc., v. Robinson, 941 A.2d 1036, 1040 n. 6 (D.C.2008) (applying District of Columbia law and reaching the same conclusion); Hartman v. El Paso Natural Gas Co., 107 N.M. 679, 763 P.2d 1144, 1151 (1988) (applying New Mexico law and reaching the same conclusion). Accordingly, we conclude that the district court properly granted Specialty's Rule 50(a) motion on this point. [8]