Opinion ID: 198975
Heading Depth: 2
Heading Rank: 1

Heading: Duration of the 1992 Agreement.

Text: 10 The centerpiece of Baccarat's appeal is its contention that the district court erred by not placing a finite temporal limit on the decree. This contention springs from the concept that the 1992 Agreement, if it has not already expired, will become terminable after the passage of a commercially reasonable period of time. The district court rejected this contention, ostensibly relying on the plain language and purpose of the contract. See Ross-Simons III, 66 F. Supp. 2d at 325-26. Importantly, however, the court also found as a fact that when the parties entered into the 1992 Agreement, they intended to establish a long-term relationship. See id. at 320. 11 We generally review the grant or denial of injunctive relief for abuse of discretion. See Ross-Simons I, 102 F.3d at 16. Withal, the standard of review is multi-dimensional and may vary depending on the specific issue under consideration. See Langlois v. Abington Housing Auth., 207 F.3d 43, 47 (1st Cir. 2000). Here, we review the lower court's interpretation of the language and purpose of the contract de novo and its findings of fact for clear error. See United States Liab. Ins. Co. v. Selman, 70 F.3d 684, 687 (1st Cir. 1995). Moreover, we do not consider ourselves bound by the trial court's rationale, but may affirm its judgment for any valid reason that finds support in the record. See Phillips Exeter Academy v. Howard Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999); Garside v. Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir. 1990). 12 The district court's reasoning spans its two most recent published opinions. At the summary judgment stage, the court rejected Baccarat's argument that the 1992 Agreement was too indefinite to be enforceable, holding instead that the agreement fell into the category of contracts terminable upon the happening of a specific event. See Ross-Simons II, 182 F.R.D. at 395-97. In reaching this conclusion, the court relied heavily on Payroll Express Corp. v. Aetna Cas. & Sur. Co., 659 F.2d 285 (2d Cir. 1981). The relevant insurance contract in that case did not specify a duration but stated only that it was terminable by the insurer for nonpayment of premiums. See id. at 288-89. New York's policy against perpetual commitments notwithstanding, the Second Circuit held that the insurer could not cancel the policy as long as the insured continued to pay the premium. See id. at 292. Embracing the logic of Payroll Express, the court below determined that the 1992 Agreement, by committing Baccarat to sell to Ross-Simons at such prices and upon such terms as are available to other authorized dealers, implicitly provided for termination upon the occurrence of a particular event, i.e., Ross-Simons's breach of these standard terms. See Ross-Simons II, 182 F.R.D. at 396. Thus, the 1992 Agreement was sufficiently definite to be enforceable. See id. at 396-97. 13 The difficulty with this reasoning is that every enforceable contract involves a bargained-for exchange of obligations, the material breach of which by one party gives the other party a right to terminate. See, e.g., Ahearn v. Scholz, 85 F.3d 774, 783 (1st Cir. 1996); Pelletier v. Masse, 143 A. 609, 610 (R.I. 1928); see also Restatement (Second) of Contracts § 237 (1981). If the existence of an affirmative commitment, without more, automatically converts a contract of indefinite duration into a contract terminable upon the happening of a specific event, then the presumption against perpetuity becomes illusory. Broadly postured, this would conflict with Rhode Island law, as that state's courts are quite clear that, in the employment context at least, a contract silent as to duration is terminable at will. See Salisbury v. Stone, 518 A.2d 1355, 1360 (R.I. 1986); Booth v. National India-Rubber Co., 36 A. 714, 715 (R.I. 1897). 14 Of course, the 1992 Agreement was an agreement for the settlement of a lawsuit, not an employment agreement - a distinction upon which the district court expressly relied. See Ross-Simons III, 66 F. Supp. 2d at 324-26; Ross-Simons II, 182 F.R.D. at 395-97. The central goal of a settlement agreement is to fashion a final and permanent resolution of a dispute, see City of Homestead v. Beard, 600 So. 2d 450, 454 (Fla. 1992); cf. Mathewson Corp. v. Allied Marine Indus., 827 F.2d 850, 857 (1st Cir. 1987) (There is an institutional interest in the solemnity of [settlement] agreements, in bringing certainty to the process, and in minimizing the opportunities for lawyers and litigants alike to act as Monday morning quarterbacks.), so applying the presumption against perpetual obligations to settlement agreements would be an extremely awkward fit. Limited to this one small corner of contract law, the district court's implied termination clause rationale might well be appropriate. 15 We need not resolve this question here. After all, it is common ground that where the presumption against perpetuity applies, it can be rebutted by evidence that the parties intended a permanent arrangement. See 1 Samuel Williston & Walter H.E. Jaeger, A Treatise on the Law of Contracts § 38, at 113 (3d ed. 1957) (stating that unless the circumstances show a contrary intention, [courts will] interpret a promise which does not... state the time of performance as intending performance in a reasonable time) (emphasis supplied); see also School Comm. v. Board of Regents for Educ., 112 R.I. 288, 308 A.2d 788,790 (1973) (explaining that the parties' intentions - as gleaned from the course of prior dealings or other surrounding circumstances - can rebut the presumption that an employment contract without a durational term is terminable at will). In this instance, such evidence abounds. 16 The 1992 Agreement was designed, first and foremost, to settle an antitrust suit in which Ross-Simons claimed that Baccarat had refused to deal with it due to its practice of undercutting suggested retail prices. This is evident from the title of the agreement (Agreement of Compromise and Settlement), the pact's delineation of its purpose, and the pact's description of the underlying dispute. In exchange for dismissal of that action, Baccarat installed Ross-Simons as an authorized dealer and pledged not to discriminate against it on the basis of its pricing or marketing policies. These facts support the conclusion that the parties intended the 1992 Agreement to last for an indefinite period of time. Cf. Rossmassler v. Spielberger, 112 A. 876, 880 (Pa. 1921) (inferring an absolute and indefinite obligation from the subject matter of a contract with no period of duration). As Judge Lagueux astutely noted, the arrangement was akin to an antitrust consent decree - a device that often mandates compliance for an indefinite duration. See Ross-Simons III, 66 F. Supp. 2d at 325. 17 Several other provisions of the 1992 Agreement favor this reading. For one thing, as we observed before, both Baccarat and Ross-Simons must have understood that the 1992 Agreement would operate at some length because they specifically provided... that each party assumed the risk of changes in the operative facts and relinquished any right to terminate the agreement on the basis of such factual shifts. Ross-Simons I, 102 F.3d at 18. For another thing, Baccarat promised that in the future it would consider Ross-Simons's applications for additional store locations under the same standards generally applied to other dealers - and it did not place any restriction on how far into the future this obligation would extend. Finally, the 1992 Agreement provided that its benefits would inure to the parties' successors and assigns. Viewed in the ensemble, these forward-looking provisions suggest that the parties envisioned a lasting relationship. 18 The attendant circumstances also are relevant to a determination of the parties' mutual intent. See Johnson v. Western Nat'l Life Ins. Co., 641 A.2d 47, 48 (R.I. 1994) (per curiam). Here, those circumstances push in the same direction as the provisions of the 1992 Agreement. Indeed, the former president of Baccarat, who negotiated the 1992 Agreement on its behalf, testified that he had discussed with his opposite number at Ross-Simons Baccarat's history of doing business with its dealers on a long-term basis (although Baccarat began selling its product in the United States in 1949, it had never terminated an American dealer for any reason other than nonpayment) and had described this praxis as consistent with Baccarat's philosophy. In short, the district court's finding that the parties intended a long-term relationship was not clearly erroneous, and this finding buttresses the court's conclusion that the 1992 Agreement was built to last. 19 In endeavoring to convince us to the contrary, Baccarat relies heavily on our decision in Puretest Ice Cream, Inc. v. Kraft, Inc., 806 F.2d 323 (1st Cir. 1986). Its reliance is mislaid. In that case, we applied Indiana law and ruled that a distributorship contract of indefinite duration was terminable at will. See id. at 324. Passing the point that Rhode Island law is not so clear, see Wayne Distributing Co. v. Schweppes U.S.A. Ltd., 352 A.2d 625, 626-27 & n.1 (R.I. 1976) (reserving determination of the rule to be applied to open-ended distributorship agreements), the fact remains that the presumption against perpetual commitments is rebuttable,see School Comm., 308 A.2d at 790. Moreover, we are confronted here not with a distributorship contract, but with an agreement intended to inter an antitrust dispute. The promise to forbear from allegedly illegal activity in exchange for dismissal of a lawsuit is more plausibly intended to be permanent than is a naked promise to sell goods for money. 20 We will not paint the lily. We hold, without serious question, that the district court did not err by refusing to engraft a finite temporal limit onto the injunction that it issued. 21