Glacial Plains Coop. v. Chippewa Valley Ethanol Co., LLLP
Can I rely on this case?
Yes — no negative treatment found
- —
Analysis generated from citing opinions in this archive. Not legal advice.
Glacial Plains Coop. v. Chippewa Valley Ethanol Co., LLLP
Opinion of the Court
*235Chippewa Valley Ethanol Company, LLLP and Glacial Plains Cooperative entered into a grain-handling contract that was to "continue indefinitely." Chippewa Valley sought to end the contract with Glacial Plains Cooperative on the ground that it was a contract of indefinite duration, terminable at will by either party. Glacial Plains Cooperative argued that the contract was perpetual in duration, not indefinite, and was therefore not terminable at will. The district court held that the contract was perpetual, not indefinite, and the court of appeals affirmed. We hold that the contract does not unambiguously express an intent to form a contract of perpetual duration, and is thus a contract of indefinite duration. Accordingly, it is terminable at will upon reasonable notice once a reasonable time has passed. We therefore reverse and remand to the district court for further proceedings consistent with this opinion.
FACTS
This case centers on a dispute over a grain-handling contract between Chippewa Valley Ethanol Company, LLLP (CVEC) and Glacial Plains Cooperative (GPC).
Paragraph 1 of the contract states that "this agreement shall continue indefinitely until either terminated by the terms of this agreement, or by the mutual agreement of both parties." Paragraph 5 of the contract states that if GPC "default[s] or fail[s] to perform any of its obligations" under the contract, CVEC may declare, through written notice, that the contract has been breached. GPC then has 30 days to correct the breach. If GPC fails to correct the breach within 30 days, it is obligated to deed the land and the grain-processing plant back to CVEC. Disputes over whether GPC is in breach of the contract under paragraph 5 are required to be submitted to an arbitrator. The contract contains no other terms that would terminate the contract after the ethanol plant was built.
After signing the contract, CVEC and GPC had a productive working relationship for more than 10 years. The two organizations have "very significant overlap" in members, estimated to be 60-70 percent. In 2009, a new general manager took over at CVEC, and the relationship between the two organizations deteriorated almost immediately. In 2009, the two litigated disputed grain-storage charges, and the court of appeals eventually ordered *236judgment in favor of GPC on the issue. Glacial Plains Coop. v. Chippewa Valley Ethanol Co. , No. A10-869,
After a bench trial, the district court issued extensive findings of fact and found that CVEC had wrongfully terminated the grain handling contract. CVEC appealed the district court's decision.
In a published opinion, the court of appeals affirmed the district court's decision. Glacial Plains Coop. v. Chippewa Valley Ethanol Co. ,
ANALYSIS
I.
The core question before us is whether the contract between CVEC and GPC is one of perpetual duration or of indefinite duration. In general, contracts of perpetual duration are disfavored as a matter of public policy; thus, while we will enforce a contract that unambiguously expresses an intent to be of perpetual duration, we construe ambiguous language regarding duration against perpetual duration. See 1 Williston, Contracts 112-13 § 38 (3rd ed. 1957); accord Barton v. Idaho ,
"Whether language in a contract is plain or ambiguous is a question of law that we review de novo." Storms, Inc. v. Mathy Constr. Co. ,
Several contract provisions suggest that the parties contemplated a permanent relationship. The contract established that GPC would be "the exclusive handler of grain to the [CVEC] ethanol plant, as long as it is complying with all warranties and agreements[.]" GPC was deeded the land on which to build its grain-processing plant next to CVEC, and is required to deed the *237land back to CVEC if it fails to cure a material breach of the contract. In signing the contract, GPC was required to certify that it understood and agreed that "the completion of the grain handling facility [was] an integral part of the ethanol plant" and pledged that GPC would "always maintain[ ] the ability to provide enough grain to keep the ethanol plant at full capacity, in a timely manner."
Yet any conclusion that the contract was intended to be one of perpetual duration must rely on some level of inference. Nowhere is such an intent clearly and directly expressed. Paragraph 1 states, "[i]t is the intent of the parties that this agreement shall continue indefinitely until either terminated by the terms of this agreement, or by the mutual agreement of both parties." The "until" phrasing suggests that the contract will continue forever unless there is a breach or mutual agreement to end the contract. These two methods of ending a contract are provided for by common law, see, e.g. , Minn. Ltd., Inc. v. Pub. Utils. Comm'n of Hibbing ,
Because the durational language of the contract is ambiguous, we will construe it against perpetual duration. As there is no definite duration expressed in the contract, we conclude that the contract must be one of indefinite duration. A contract of indefinite duration is terminable at will upon reasonable notice to the other party after a reasonable time has passed. See Borg Warner Acceptance Corp. v. Shakopee Sports Ctr., Inc. ,
II.
We must next consider the appropriate method to determine whether a reasonable time has passed, such that a contract of indefinite duration may be terminated at will with reasonable notice. CVEC argues that given the 20-year length of the contractual relationship thus far, "as a matter of law" the contract must have already lasted a reasonable time. We disagree. A "reasonable time" is determined not by a specific number of years, but by the individualized circumstances surrounding each case. It is for the district court, sitting in its role as factfinder, to weigh the evidence and apply the law to determine whether a reasonable time has passed. We therefore remand this case to the district court for proceedings consistent with this opinion.
*238CONCLUSION
For the foregoing reasons, we reverse the decision of the court of appeals.
Reversed and remanded.
THISSEN, J., not having been a member of this court at the time of submission, took no part in the consideration or decision of this case.
The contract was originally signed between two predecessor organizations, United Farmers Elevator (now GPC) and Chippewa Valley Ethanol Company, LLC (now CVEC). For simplicity and consistency with the decisions of the trial court and court of appeals, we use the current names of the organizations throughout.
Reference
- Full Case Name
- GLACIAL PLAINS COOPERATIVE, formerly known as United Farmers Elevator v. CHIPPEWA VALLEY ETHANOL COMPANY, LLLP, successor to Chippewa Valley Ethanol Company, LLC
- Cited By
- 5 cases
- Status
- Published