Court Opinion

ID: 213560
Source: CourtListenerOpinion
Date Created: 2011-03-29 19:40:39+00
Date Added: 2024-06-11T17:28:16.266989
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 07-1993

PACIFIC AG GROUP; ALLIANCE FARM GROUP, INCORPORATED,

                Plaintiffs - Appellees,

          v.

H. GHESQUIERE FARMS, INCORPORATED; GHESQUIERE PLANT FARMS
LIMITED; STRAWBERRY HILL, INCORPORATED,

                Defendants - Appellants.

Appeal from the United States District Court for the Eastern
District of North Carolina, at New   Bern. Louise W. Flanagan,
Chief District Judge. (5:05-cv-00809-FL)

Submitted:   January 13, 2011              Decided:   March 29, 2011

Before WILKINSON, DUNCAN, and AGEE, Circuit Judges.

Reversed by unpublished per curiam opinion.

John R. Wallace, Joseph A. Newsome, WALLACE, NORDAN & SARDA,
L.L.P., Raleigh, North Carolina, for Appellants.    Paige C.
Kurtz, SPROUSE & KURTZ, PLLC, Raleigh, North Carolina, for
Appellees.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

            H. Ghesquiere Farms, Inc. (“Ghesquiere Farms”) appeals

the district court’s judgment finding it liable to Pacific Ag

Group (“Pacific Ag”) for $190,600 in damages (plus interest)

stemming from a contract dispute between the parties.                   For the

reasons that follow, we reverse. *

            In 2003, Pacific Ag purchased a quantity of strawberry

runner tips (infant strawberry plants) from Ghesquiere Farms.

Pacific Ag contended that the runner tips were sub-standard and

infected with a disease that made them unusable and did not

tender payment.     Ultimately, Ghesquiere Farms sued Pacific Ag in

North Carolina state court, and the action was removed to the

district   court.       See   Strawberry     Hill,   Inc.   v.    Alliance   Farm

Group, Inc., No. 5:03-cv-795-FL (E.D.N.C.).

            As the federal litigation was pending, Frank Sances,

Pacific    Ag’s   principal,    met   with    Carl   Ghesquiere,     Ghesquiere

Farm’s     principal,     to     discuss      settling      the     litigation.

Ghesquiere became aware that Pacific Ag had been late planting

their fields that season, and saw an opportunity to immediately

     *
       On December 20, 2010, Ghesquiere Plant Farms Limited filed
a “Suggestion of Bankruptcy” notifying the court and the
opposing parties that it had filed for bankruptcy in a Canadian
court.   No party has suggested or argued that the bankruptcy
filing prevents this court from issuing its decision in this
case.

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supply young strawberry plants to Pacific Ag.                              At the end of

their meeting, Sances and Ghesquiere (without the assistance of

counsel)     drafted      and    executed         a    settlement          agreement       that

ultimately became the subject of the instant appeal.

             The    agreement        provided     that        Ghesquiere        Farms     would

provide 500,000 strawberry runner tips to Pacific Ag free of

charge   before      July      26,    2004.       The     agreement         also    required

Ghesquiere    Farms       to   sell     additional,       high       quality      strawberry

runner tips at a discounted rate to Pacific Ag in 2004, 2005,

and   2006.         The     agreement       provided          for    dismissal       of     the

litigation     “following            successful        performance         by     Ghesquiere

Farms[.]”     Paragraph 8 of the settlement agreement contained a

provision     that    “[i]f      Ghesquiere           Plant    Farms       ceases    growing

strawberry    runner      tips       for   [Pacific      Ag],       the    full    amount    of

promised discounts will be paid by Ghesquiere to [Pacific Ag].”

The parties (now assisted by counsel) later entered an addendum

to the settlement agreement providing for more gifting of plants

in    2005    and    facilitating          the        dismissal       of    the     previous

litigation.

             In late 2004, Sances and Ghesquiere began negotiations

for the purchase of strawberry runner tips for 2005.                                    Sances

claims that he repeatedly informed Ghesquiere that he might not

have any orders for 2005 based on the market and the quality of

Ghesquiere’s plants in 2003 and 2004.                          Sances ultimately did

                                              3
make    two   identical        written    offers     to     purchase     runner       tips

consistent with the agreement.                 Ghesquiere never accepted the

offers, however, as he and Sances continued to disagree on the

amount of the discount to be provided, whether payment was due

in advance, and whether inspection would occur before shipping

or after delivery.

              When Sances and Ghesquiere were unable to reach an

agreement     for     the    purchase     of   runner     tips     in   2005,        Sances

informed Ghesquiere that he had no purchases from his customers

and would be doing no business with Ghesquiere Farms for the

2005 season.        Sances later confirmed in writing that Pacific Ag

would not purchase any plants from Ghesquiere Farms.                          In a June

2005    memorandum,         Sances   informed    Ghesquiere        that       “the    full

amount of the discount is due” as a repayment for the damages

suffered from the sale of defective Ghesquiere Farms plants in

2003.

              Ghesquiere Farms failed to tender payment in response

to Sances’s communication, and Pacific Ag brought a complaint

against   Ghesquiere         Farms   in    district       court.        The    complaint

sought damages resulting from Ghesquiere Farms’s alleged failure

to perform on the settlement agreement by providing discounted

runner tips to Pacific Ag.                After a bench trial, the district

court   ruled    in    favor    of   Pacific    Ag    and    awarded      $190,600      in

damages (plus interest).             The court based its ruling primarily

                                           4
on    the   conclusions   that     the   term      “ceases”       in     the    settlement

agreement was ambiguous and that when the parties were unable to

reach an agreement for the purchase of runner tips in 2005,

Ghesquiere Farms “ceased” growing strawberry plants for Pacific

Ag.     When      Ghesquiere   Farms     did      not    pay     the     amount      of    the

discount,      the    district     court       ruled      that      it    breached          the

agreement.     Ghesquiere Farms noted a timely appeal.

             This court reviews a district court’s conclusions of

law at the bench trial de novo and its factual findings for

clear error.         Roanoke Cement Co. v. Falk Corp., 413 F.3d 431,

433    (4th Cir. 2005).        Ghesquiere         Farms    argues        that    the       term

“ceases”     is    unambiguous     and     should       not    be      read     to    impose

liability on them when Pacific Ag failed to place an order for

runner tips.         Pacific Ag, on the other hand, claims that the

language is subject to more than one reasonable interpretation

when viewed in the context of the agreement as a whole.                              Pacific

Ag further contends that analysis of extrinsic evidence reveals

that the parties intended for Pacific Ag to be able to elect

either to purchase runner tips at a discount or take the value

of the discount in cash.

             The     parties     agree     that     North        Carolina’s          law    of

contracts applies to their claims.                      “When the language of a

written contract is plain and unambiguous, the contract must be

interpreted as written and the parties are bound by its terms.”

                                           5
Atlantic & E. Carolina Ry. Co. v. Wheatley Oil Co., 594 S.E.2d
425,   429      (N.C. Ct. App. 2004).                An    ambiguity      exists   in   a

contract     when     either   the   meaning         of    words    or   the   effect   of

provisions       is    uncertain     or     capable         of     several     reasonable

interpretations.         Schnkel & Schultz, Inc. v. Hermon F. Fox &

Assocs., 658 S.E.2d 918, 922 (N.C. 2008) (citations omitted).

In determining whether a phrase is ambiguous, “words are to be

given their usual and ordinary meaning and all the terms of the

agreement are to be reconciled if possible[.]” Piedmont Bank and

Trust Co. v. Stevenson, 339 S.E.2d 49, 52 (N.C. Ct. App. 1986).

A court may not, “in the guise of construing an ambiguous term,

rewrite the contract or impose liabilities on the parties not

bargained for and found therein.”                         Dawes v. Nash Cnty., 584
S.E.2d 760, 764 (N.C. 2003) (internal citation omitted).

             The district court stated that “[a] reading of the

2004 [s]ettlement [a]greement which binds plaintiffs to trade in

strawberry runner tips in order to be compensated for losses

sustained as a result of purchase of tips from defendants in

2003, in the face of the facts of this case, is nonsensical.”

We do not agree.          As the court itself noted, the predominant

purpose    of    the    agreement     was       to    facilitate         the   continuing

business relationship between the parties, not merely to settle

past debts.

                                            6
            Our review of the agreement leads us to conclude that

the reading proposed by Pacific Ag is not a reasonable one and

accordingly, the term “ceases” is not ambiguous.                             “Ceases” in

the context of the settlement agreement, means just that.                             There

is no indication in the agreement that the parties intended to

give    Pacific    Ag     an   election     to    seek    either       to    trade     with

Ghesquiere Farms or to demand a monetary award.                             If that were

the case, Pacific Ag would have had no incentive to purchase

runner tips from Ghesquiere Farms and every incentive to simply

elect    the      cash    option.         Rather,        the      agreement      clearly

contemplated        a     continuing        business       relationship          between

Ghesquiere Farms and Pacific Ag unless Ghesquiere Farms stopped

(i.e., ceased) growing runner tips.

            Because       we     conclude       that    the    agreement        was    not

ambiguous, we need not review the extrinsic evidence contained

in the record.           Furthermore, we need not address the district

court’s conclusion that parol evidence shows that the parties

intended a different outcome.               Finally, though Ghesquiere Farms

did file a counterclaim against Pacific Ag that was dismissed by

the district court, it has not sought to appeal that issue, and

it is abandoned.

            We    therefore       reverse       the    judgment    of   the     district

court.     We dispense with oral argument because the facts and

legal    contentions       are   adequately       presented       in    the    materials

                                            7
before   the   court   and   argument   would   not   aid   the   decisional

process.

                                                                    REVERSED

                                    8