Opinion
No. 07-426.
Filed February 5, 2008.
Jackson County No. 05 CVS 305.
Appeal by plaintiff from order filed 18 November 2006 by Judge Laura J. Bridges in Superior Court, Jackson County. Heard in the Court of Appeals 30 October 2007.
Melrose, Seago Lay, P.A., by Randal Seago, for plaintiff-appellant. Attorney General Roy Cooper, by Special Deputy Attorney General Joseph E. Herrin, for defendant-appellee.
A requirements contract is an "agreement[] to supply the other party to the contract with as much of the ordered good as needed by the purchaser." Here, the plaintiff contends that the defendant breached their contract by failing to employ his mowing company for the number of hours required under the contract. However, because we conclude that the plain language of the agreement in question made it a requirements contract, with no specified quantity term, we find no error by the trial court and affirm its grant of summary judgment to the defendant.
IWTMM, Inc. v. Forest Hills Rest Home, 156 N.C. App. 556, 561, 577 S.E.2d 175, 178 (2003).
On 1 July 2003, Plaintiff Ricky Buchanan, doing business as Buchanan Mowing, and Defendant, the North Carolina Department of Transportation (DOT), entered into a contract for Mr. Buchanan to provide mowing tractors and operators to mow the grassy banks along the sides of state highways in Jackson, Macon, and Swain Counties in North Carolina. This type of agreement is based on what is known as a "Fully Operated Equipment Rental" or "FOER" proposal, which is commonly used by DOT as a means of supplementing its own equipment on an as-needed basis. Mr. Buchanan had previously submitted FOER proposals that were subsequently approved by DOT in 2001 and 2002, as well as the one leading to the contract at issue in this case. DOT indicated its acceptance of each of Mr. Buchanan's proposals by issuing a purchase order.
The first paragraph of DOT's standard FOER proposal states in pertinent part that, "[t]he undersigned contractor . . . shall furnish to the Department of Transportation the fully-operated equipment described in paragraph 10 herein, in quantities as may be needed from time to time by the Department of Transportation and for such periods as may be necessary." Additionally, the standard language of the FOER proposal provides that the agreement "shall commence on the date the Department of Transportation issues a purchase order and shall be effective for a period of one (1) year," and "[r]ental shall be on an hourly basis in accordance with the rates set out in paragraph 10 herein." In the FOER proposal at issue in this case, Mr. Buchanan had filled out Jackson, Swain, and Moore under "List of Counties" and had also named two pieces of mowing equipment at $50.00/hour in paragraph 10. Above Mr. Buchanan's signature and the information about his company in the FOER proposal, the final paragraph states that "[t]his proposal and the Department of Transportation purchase order indicating its acceptance shall constitute the rental agreement as executed below." The purchase order issued by DOT listed the quantity of 5,000 hours next to each of the two pieces of equipment named by Mr. Buchanan in his FOER proposal.
On 14 April 2005, Mr. Buchanan filed a complaint in Jackson County, asserting that he had purchased additional equipment to enable Buchanan Mowing to fulfill the terms of the agreement in question, and that DOT had breached the contract "by failing and refusing to direct [Buchanan Mowing] when and where to perform the contracted work, and by failing and refusing to pay [Buchanan Mowing]." In lieu of an answer to Mr. Buchanan's complaint, DOT filed a motion to dismiss, which was denied on 17 November 2005. DOT then filed an answer to the complaint, followed by a motion for summary judgment on 21 September 2006. Attached to the motion for summary judgment was an affidavit from Donnie E. Thorne, the purchasing officer for DOT, outlining the purpose of the purchase orders issued by DOT and the history of FOER proposals and agreements between DOT and Buchanan Mowing. Additionally, DOT submitted copies of the past FOER proposals and agreements between the two parties. The substantive provisions of each of the proposals and agreements were the same; the sole differences among the documents were the names of the counties and type of equipment listed by Mr. Buchanan in the FOER proposals, and the number of hours stated on the purchase orders issued by DOT.
On 18 November 2006, following a hearing on the motion, the trial court granted summary judgment to DOT, finding that no genuine issue of material fact remained as to Mr. Buchanan's claim for breach of contract and dismissing his complaint with prejudice. Mr. Buchanan now appeals, arguing that the trial court erred by granting summary judgment because he had forecast evidence sufficient to establish that he had a viable cause of action under North Carolina law.
The essence of Mr. Buchanan's breach of contract claim is that the quantities of 5,000 hours stated in the DOT purchase order were guaranteed under the terms of the contract; on the other hand, DOT asserts that the figures were for accounting purposes only, used to indicate the maximum number of hours allowed to be paid under the contract. DOT maintains that the contract called for payment only for the actual use of and hours worked by Mr. Buchanan's equipment and operators. Mr. Buchanan also argues that, under the parol evidence rule, the affidavit of Mr. Thorne, the DOT purchasing officer, should not be considered to determine the meaning of the terms of the contract between the two parties.
We find Mr. Buchanan's arguments to be without merit. The plain language of the FOER proposal states that the equipment described in the agreement would be furnished " in quantities as may be needed from time to time by the Department of Transportation and for such periods as may be necessary[,]" and that "[r]ental shall be on an hourly basis . . . based upon the time the equipment was in actual productive operation." (Emphasis added). Likewise, the FOER proposal refers only to the purchase order as "indicating [DOT's] acceptance" of the FOER proposal, not as providing any additional terms to the agreement. This language is controlling and sufficient to make this agreement a requirements contract, an "agreement[] to supply the other party to the contract with as much of the ordered good as needed by the purchaser." IWTMM, Inc. v. Forest Hills Rest Home, 156 N.C. App. 556, 561, 577 S.E.2d 175, 178 (2003); see also Roanoke Props. v. Spruill Oil Co., 110 N.C. App. 443, 448, 429 S.E.2d 752, 755 (1993) ("[V]alid requirements contracts . . . are recognized by our Courts and our Legislature."). As long held by this Court, "[i]t must be presumed the parties intended what the language used clearly expresses, and the contract must be construed to mean what on its face it purports to mean." Hartford Accident Indem. Co. v. Hood, 226 N.C. 706, 710, 40 S.E.2d 198, 201 (1946) (internal citations omitted).
Even were we to conclude that the contract contained an ambiguity as to the agreed-upon quantity of hours, we note that Mr. Buchanan had previously entered into two other mowing contracts with DOT, the terms of which were exactly the same except for the equipment and the number of hours listed. In both instances, he was paid for the actual number of hours worked, rather than what was listed on the contracts. Under these circumstances, Mr. Buchanan's claim that he believed the quantity to be a definitive order, rather than a maximum allowed, is specious at best. See Davison v. Duke Univ., 282 N.C. 676, 713-14, 194 S.E.2d 761, 784 (1973) ("In contract law, where the language presents a question of doubtful meaning and the parties to a contract have, practically or otherwise, interpreted the contract, the courts will ordinarily adopt the construction the parties have given the contract ante litem motam[,]" or, before the suit was brought).
Accordingly, we find that no genuine issue of material fact remains as to the question of whether DOT breached its contract with Mr. Buchanan. See Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998) (citation omitted) (summary judgment is properly granted when the evidence, viewed in the light most favorable to the non-moving party, shows no genuine issue of material fact).
Affirmed.
Judges STEELMAN and GEER concur.
Report by Rule 30(e).