Opinion ID: 4542654
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: Acklie argues that the district court erred in determining that paragraph 11 is ambiguous when construed with other provisions of the agreement. Acklie contends that paragraph 11 is not ambiguous and that by finding ambiguity where it did not exist, the court’s determination confused the jurors as to whether they were to decide whether Greater Omaha breached the agreement or were to exclusively consider the damages owed to Acklie. Acklie further argues that the court should have not permitted Greater Omaha to pre­ sent evidence supporting its theory that it denied payment to Acklie, because the company had denied payment to two previous employees under the same contract. In response, Greater Omaha argues that the agreement grants it sole decisionmaking authority over whether to contribute to the deferred compensation account, as well as the amount of any payment due, and that the district court properly admitted extrinsic evidence to permit the jury to determine the meaning of paragraph 11. [3-7] The issues raised in Acklie’s appeal concern general contract principles. In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous. 5 A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms. 6 A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. 7 The determination of whether a contract is ambiguous is to be made on an objective basis, not by the subjective contentions of the parties suggesting 5 City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147, 917 N.W.2d 826 (2018). 6 Id. 7 Id. - 117 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 opposing meanings of the disputed language. 8 A contract must receive a reasonable construction and must be construed as a whole, and if possible, effect must be given to every part of the contract. 9 We do not interpret the terms provided within paragraph 11 to be ambiguous. When viewed objectively, paragraph 11 is not susceptible of two reasonable but conflicting meanings. The provision unmistakably grants Greater Omaha the sole authority to interpret and administer the agreement. Likewise, the provision clearly grants Greater Omaha binding authority to determine the valuation of the account and the amount of any payment due under the agreement. We therefore conclude that paragraph 11 is unambiguous and must be understood according to its clear terms, without regard to extrinsic evidence. However, we determine that the plain and ordinary meaning of paragraph 11, as well as paragraph 4, raises an issue which goes to the heart of Acklie’s appeal: whether the agreement is an enforceable contract under which Acklie could recover. Acklie’s lawsuit is premised on the claim that Greater Omaha breached the agreement by failing to pay him the amount due to him. If, pursuant to our obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below, we determine the agreement is unenforceable, then Acklie would be entitled to no relief and there would be no merit to the assignments of error Acklie has raised. Therefore, the principal issue before us is whether the agreement is enforceable. Deferred compensation is presently earned but is to be paid to an employee in the future if he or she possesses the qualifications required by the plan and complies with the conditions 8 Johnson Lakes Dev., supra note 3. 9 Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435 (2018). - 118 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 prescribed by it. 10 The conditions of the agreement in this case include the terms of paragraph 11, provided above, which permits Greater Omaha to take “binding and conclusive” “action[,]” “including any valuation of the [account], or the amount of . . . payment due under [the agreement].” In addition, paragraph 4 states that a general ledger account shall be established for the purpose of reflecting deferred compensation and that Greater Omaha will annually determine “an amount” to credit to the account. Critically, paragraph 4 uses clear language qualifying Greater Omaha’s obligation to fund the account by stating, “The amount of the contribution and the decision as to whether to make one at all, shall be solely the decision of [Greater Omaha].” Pursuant to a plain and ordinary meaning of these terms, the decision of whether Acklie ever qualifies for payment under the deferred compensation plan is a matter left to Greater Omaha’s sole discretion. The agreement clearly grants Greater Omaha the binding and conclusive authority to decide whether or not to pay Acklie. [8-10] A party seeking to enforce a contract has the burden of establishing the existence of a valid, legally enforceable contract. 11 To create a contract, there must be both an offer and an acceptance; there must also be a meeting of the minds or a binding mutual understanding between the parties to the contract. 12 It is a fundamental rule that in order to be binding, an agreement must be definite and certain as to the terms and requirements. 13 It must identify the subject matter and spell out the essential commitments and agreements with respect thereto. 14 10 Sindelar v. Canada Transport, Inc., 246 Neb. 559, 520 N.W.2d 203 (1994). 11 Houghton v. Big Red Keno, 254 Neb. 81, 574 N.W.2d 494 (1998). 12 Id. 13 Davco Realty Co. v. Picnic Foods, Inc., 198 Neb. 193, 252 N.W.2d 142 (1977). 14 Id. - 119 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 [11] Generally, mutuality of obligation is an essential element of every enforceable contract and consists in the obligation on each party to do, or permit something to be done, in consideration of the act or promise of the other. 15 Mutuality is absent when only one of the contracting parties is bound to perform, and the rights of the parties exist at the option of one only. 16 One of the most common types of promise that is too indefinite for legal enforcement is the promise where the promisor retains an unlimited right to decide later the nature or extent of his or her performance. 17 In that situation, the promisor’s unlimited choice in effect destroys the promise and makes it illusory. 18 An illusory promise is one that is so indefinite that it cannot be enforced, or by its terms makes performance optional or entirely discretionary on the part of the promisor. 19 [12] An agreement which depends upon the wish, will, or pleasure of one of the parties is illusory and does not constitute an enforceable promise. 20 Without a mutuality of obligation, the agreement lacks consideration and, accordingly, 15 Johnson Lakes Dev., supra note 3; De Los Santos v. Great Western Sugar Co., 217 Neb. 282, 348 N.W.2d 842 (1984). 16 Id. Accord Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88 (1991). See, 17 C.J.S. Contracts § 135 (2011); 17A Am. Jur. 2d Contracts § 22 (2016). 17 Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306 (6th Cir. 2000); Davis v. General Foods Corporation, 21 F. Supp. 445 (S.D.N.Y. 1937). 18 Floss, supra note 17, citing 1 Samuel Williston, A Treatise on the Law of Contracts § 43 (3d ed. 1957); Davis, supra note 17. See Midland Steel Sales Co. v. Waterloo Gasoline Engine Co., 9 F.2d 250 (8th Cir. 1925). 19 Fagerstrom v. Amazon.com, Inc., 141 F. Supp. 3d 1051 (S.D. Cal. 2015), affirmed sub nom. Wiseley v. Amazon.com, Inc., 709 F. Appx. 862 (9th Cir. 2017). 20 Johnson Lakes Dev., supra note 3; Pantano v. McGowan, 247 Neb. 894, 530 N.W.2d 912 (1995), disapproved on other grounds, Weyh v. Gottsch, 303 Neb. 280, 929 N.W.2d 40 (2019); Chadd v. Midwest Franchise Corp., 226 Neb. 502, 412 N.W.2d 453 (1987). - 120 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 does not constitute an enforceable agreement. 21 As relevant here, an agreement to pay such wages as the employer desires is invalid. 22 In De Los Santos v. Great Western Sugar Co., 23 this court considered a breach of contract action brought by a contractor which agreed to transport “‘such tonnage of beets as may be loaded by’” a sugar company. Because the sugar company hired other truckers in addition to the contractor, the company terminated the contractor’s services after 2 months. The contractor sought to enforce the parties’ agreement, and the district court granted summary judgment in favor of the sugar company. On appeal, we stated the sugar company made no promises other than to pay for the transportation of beets which were in fact loaded by the company. We found that in the absence of a contractual provision specifying quantity, the company was not obligated to use the contractor’s services, and the company’s decision to cease using those services is not actionable. 24 In interpreting the contract at issue, we found that “the right of the defendant to control the amount of beets loaded onto the plaintiff’s trucks was in effect a right to terminate the contract at any time, and this rendered the contract as to its unexecuted portions void for want of mutuality.” 25 In Davis v. General Foods Corporation, 26 the plaintiff revealed an idea and recipe to the defendant for fruit flavors to be used in homemade ice cream. The defendant agreed to pay the plaintiff reasonable compensation if it used the recipe 21 See Floss, supra note 17. 22 See, Day’s Stores, Inc. v. Hopkins, 573 P.2d 1366 (Wyo. 1978); Varney v. Ditmars, 217 N.Y. 223, 111 N.E. 822 (1916); Calkins v. Boeing Company, 8 Wash. App. 347, 506 P.2d 329 (1973). 23 De Los Santos, supra note 15, 217 Neb. at 283, 348 N.W.2d at 844. 24 See id. 25 Id. at 286, 348 N.W.2d at 845. 26 Davis, supra note 17. - 121 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 and idea in its business, and it wrote that any compensation paid would rest solely in the defendant’s discretion. The court found the parties’ agreement was so indefinite that it could not support a binding obligation. The court found that the defendant’s promise was illusory, reasoning that by agreeing to the defendant’s unlimited right to decide the compensation to be paid, the plaintiff was in effect throwing herself upon the mercy of those with whom she contracted. 27 Applying the foregoing principles to this case, we determine that Greater Omaha’s promise to pay Acklie deferred compensation is fatally indefinite. The conditions relating to payment were not fully determined and were left to the discretion of one contracting party only. Per the express terms of the agreement, Acklie’s expectancy interest is no greater than the possibility of receiving payment from Greater Omaha, unless Greater Omaha chose not to make such a payment. These terms did not create a binding contract or one under which Acklie could establish a right to any specific funds. 28 One of the primary reasons that an illusory promise is unenforceable is that the indefiniteness of such a promise precludes the court from being able to fix exactly the legal liability of the parties to the contract. 29 We find that the indefinite features of the agreement here are like those addressed in De Los Santos and Davis, because Greater Omaha’s right to control the amount of payment due, if any, is in effect a right to terminate the contract at any time. Accordingly, the agreement is not a valid, legally enforceable contract under which Acklie could recover. The arguments made by Acklie and Greater Omaha in anticipation of a determination that the agreement is unenforceable are not persuasive. While both parties contend that 27 See id. 28 See, Charter Inv. & Dev. Co. v. Urban Med. Serv., 136 Ga. App. 297, 220 S.E.2d 784 (1975); Calkins, supra note 22. 29 Fagerstrom, supra note 19. - 122 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 the duty of good faith and fair dealing saves the agreement from being rendered illusory, they provide no legal authority demonstrating why such is the case under the circumstances of this case. To be sure, there are circumstances under which the duty of good faith and fair dealing is sufficient to avoid the finding of an illusory promise. 30 However, this case does not present such a circumstance, because the illusory nature of the agreement stems from its express terms, and Greater Omaha’s exercise of rights clearly granted to it cannot constitute bad faith on its part. 31 The implied covenant of good faith and fair dealing exists in every contract and requires that none of the parties to the contract do anything which will injure the right of another party to receive the benefit of the contract. 32 However, in order for the implied covenant of good faith and fair dealing to apply, there must be in existence a legally enforceable contractual agreement. 33 In the case at bar, we have held that Acklie failed to prove the existence of an enforceable contract. Therefore, the implied covenant of good faith and fair dealing does not save the agreement from being rendered illusory. Additionally, there is no merit to the argument that the covenant not to compete provision saves the agreement from being rendered illusory. No party challenged the district court’s conclusion that the covenant not to compete provision is unenforceable, because it prohibits only working “within any of the restricted areas” and the agreement does not specify any restricted areas. Moreover, the fact that Greater Omaha 30 See, Milenbach v. C.I.R., 318 F.3d 924 (9th Cir. 2003); Fagerstrom, supra note 19; Corthell v. Summit Thread Co., 132 Me. 94, 167 A. 79 (1933); Horizon Corp. v. Westcor, Inc., 142 Ariz. 129, 688 P.2d 1021 (Ariz. App. 1984); Mezzanotte v. Freeland, 20 N.C. App. 11, 200 S.E.2d 410 (1973). See, also, Chadd, supra note 20. 31 See De Los Santos, supra note 15. 32 Spanish Oaks v. Hy-Vee, 265 Neb. 133, 655 N.W.2d 390 (2003). 33 Cimino v. FirsTier Bank, 247 Neb. 797, 530 N.W.2d 606 (1995). - 123 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports ACKLIE v. GREATER OMAHA PACKING CO. Cite as 306 Neb. 108 made two contributions does not create an enforceable agreement, because the contract’s unambiguous language imposes no obligation upon Greater Omaha to pay Acklie any money from the account. Because the agreement lacks mutuality of obligation, the agreement does not create a binding obligation, making the agreement unenforceable. Because the agreement is unenforceable, all of Acklie’s claims fail as a matter of law. Where the record adequately demonstrates that the decision of a trial court is correct—although such correctness is based on a ground or reason different from that assigned by the trial court—an appellate court will affirm. 34 Because we find that Acklie cannot recover under the agreement, we need not address his remaining assignments of error.