Opinion ID: 214973
Heading Depth: 2
Heading Rank: 1

Heading: The Agreement and Termination

Text: COP claims that the bankruptcy court erred in concluding that COP was required to take additional action after the expiration of the 60-day notice period because there was no explicit language in the Agreement about further action. The relevant text is in paragraph nine: If [CWM] shall not comply with any of the provisions, or covenants, or agreements herein written and contained, and such default shall continue for a period of 60 days after service of written notice, by certified or registered mail, by [COP] identifying the default and specifying with reasonable particularity the nature and extent thereof, then and in such event this Agreement may be terminated and all of the rights of [CWM] shall cease and be wholly determined and [COP] may at once take possession of any or all of the properties herein described. Aplt.App., Vol. II at COP512. The bankruptcy court concluded: The Agreement clearly states that COP may terminate the Agreement if the Debtor fails to cure within the 60-day cure period. Although the Agreement does not include what specific action is needed, COP must take some action in order to exercise its discretionary authority at the end of the 60-day period to terminate the Agreement. Id. at COP496. COP disagrees with the bankruptcy court's conclusion that the permissive word may required COP to take additional action to terminate the Agreement. COP argues that [t]his inference contradicts the plain language of the Operating Agreement that after the 60 day notice period COP `may at once take possession of any or all the properties herein described.' Aplt. Br. at 18 (quoting Aplt.App., Vol. II at COP512) (emphasis added by COP). COP asserts that [t]he immediacy of the Operating Agreement language is inconsistent with any additional notice requirement at the end of the 60 day period. Id. The trustee argues that COP quotes out of context. Additional key language of paragraph nine states that if CWM's default shall continue for a period of 60 days after service of written notice, ... then and in such event this Agreement may be terminated and all of the rights of [CWM] shall cease and be wholly determined and [COP] may at once take possession. Aplt.App., Vol. II at COP512. The trustee contends that the Agreement demonstrates a temporal progression of events: (1) written notice of default, (2) default period lasting 60 days `after' service of the notice, (3) `then' the [Agreement] may be terminated, and upon which occurrence (4) all of CWM's rights shall cease, and (5) COP may at once take possession. Aplee. Br. at 32. In accord with Utah law, the bankruptcy court reached its decision by determining the intent of the parties from the plain language of the Agreement. As the Utah Supreme Court has explained: In interpreting a contract, the intentions of the parties are controlling. We first look to the four corners of the agreement to determine the intentions of the parties. If the language within the four corners of the contract is unambiguous, the parties' intentions are determined from the plain meaning of the contractual language, and the contract may be interpreted as a matter of law. Cent. Fla. Invs., Inc. v. Parkwest Assocs., 40 P.3d 599, 605 (Utah 2002) (quotation, citations, and alteration omitted). We agree with the trustee that the language of the Agreement is unambiguous and supports the bankruptcy court's determination that the Agreement did not provide for automatic termination. COP needed to take additional action to exercise its discretionary authority to terminate the Agreement after the 60-day notice period expired. The Agreement established a step-by-step termination process. Only after CWM has failed to cure its default at the end of the 60-day notice period may COP then terminate the Agreement. The conditional language may be terminated gives COP the option to terminate; it does not provide for automatic termination when the 60-day notice period ends. By then, of course, COP could not take action to terminate because it was foreclosed from doing so under the automatic stay in 11 U.S.C. § 362. [3]