United States District Court, N.D. Oklahoma
BFK ENTERPRISE CO. d/b/a Bedrisystems, Plaintiff,
ABB MOTORS AND MECHANICAL, INC. f/k/a Baldor Electric Company, Defendant.
OPINION AND ORDER
V. EAGAN, UNITED STATES DISTRICT JUDGE.
before the Court is Defendant's Motion to Dismiss and
Brief in Support (Dkt. # 8). Defendant ABB Motors and
Mechanical, Inc. (ABB) asks the Court to dismiss plaintiff s
breach of contract claim, because the parties' contract
permitted ABB to terminate the parties' contractual
relationship "for convenience." Dkt. # 8, at 1.
Plaintiff BFK Enterprise Co. (BFK) argues that ABB omits a
material part of the relevant provision of the contract, and
the initial three year term stated in the parties'
written agreement controls over any of the terms or
conditions attached to the contract by ABB.
29, 2019, BFK filed a complaint alleging a single breach of
contract claim against ABB. BFK alleges that it entered a
service agreement with ABB and the parties agreed to a three
year initial term for the contract. Dkt. # 2, at 2. The
agreement became effective on January 1, 2017. Id.
at 1. The complaint alleges that the agreement does not
permit either party to terminate the contract during the
initial three year period. Id. at 2. BFK alleges
that "ABB has attempted to unilaterally terminate the
Agreement, and has failed to pay as agreed."
Id. at 2. Plaintiff seeks damages in the amount of
filed a motion to dismiss on the ground that the parties'
written agreement incorporated ABB's General Terms and
Conditions for the Purchase of Goods and/or Services, and the
terms and conditions allow ABB to terminate the agreement at
any time for "convenience" as long as it provides
30 days notice to BFK. The agreement states that "[t]he
initial term is for three years and it will be automatically
renewed for successive one year periods, subject to either
Party providing the other with at least 30 days prior written
notice of its intent not to renew at the end of the then
currentterm." Dkt. # 8-1, at 1. The agreement further
provides that ABB's General Terms and Conditions for the
Purchase of Goods and Services "found at
http://www.abb.com/supplying and attached hereto are
incorporated herein and apply to all transactions covered by
this Agreement." Defendant's motion to dismiss omits
the following sentence in this provision, which provides that
"[i]n the event of a conflict between the terms of this
Agreement and the [ABB] GTC Goods and Services, the terms of
this Agreement shall control." Dkt. # 8-1, at 3. The
terms and conditions state that "[ABB] may terminate the
Contract for convenience in whole or in part by giving [BFK]
thirty (30) calendar days written notice."
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
a court must determine whether the claimant has stated a
claim upon which relief may be granted. A motion to dismiss
is properly granted when a complaint provides no "more
than labels and conclusions, and a formulaic recitation of
the elements of a cause of action." Bell Atlantic
Corp. v. Twomblv. 550 U.S. 544, 555 (2007). A complaint
must contain enough "facts to state a claim to relief
that is plausible on its face" and the factual
allegations "must be enough to raise a right to relief
above the speculative level." Id. (citations
omitted). "Once a claim has been stated adequately, it
may be supported by showing any set of facts consistent with
the allegations in the complaint." Id. at 562.
Although decided within an antitrust context,
Twomblv "expounded the pleading standard for
all civil actions." Ashcroft v. Iqbal. 556 U.S.
662, 683 (2009). For the purpose of making the dismissal
determination, a court must accept all the well-pleaded
allegations of the complaint as true, even if doubtful in
fact, and must construe the allegations in the light most
favorable to a claimant. Twomblv. 550 U.S. at 555;
Alvarado v. KOB-TV. L.L.C.. 493 F.3d 1210, 1215
(10th Cir. 2007); Moffettv. Halliburton Energy Servs..
Inc.. 291 F.3d 1227, 1231 (10th Cir. 2002). However, a
court need not accept as true those allegations that are
conclusory in nature. Erikson v. Pawnee Cntv.Bd. of
Cntv.Comm'rs. 263 F.3d 1151, 1154-55 (10th Cir.
2001). "[C]onclusory allegations without supporting
factual averments are insufficient to state a claim upon
which relief can be based." Hall v. Bellmon.
935 F.2d 1106, 1109-10 (10th Cir. 1991).
argues that it had a right to terminate BFK's services
"for convenience" as long as it provided 30 days
notice to BFK, even if the three year initial term stated in
the agreement had not expired. Dkt. # 8. BFK responds that
the language of the agreement controls over the ABB's
terms and conditions in the event of a conflict, and the
agreement does not provide ABB a right to unilaterally
terminate the contract before the initial three year period
has expired. Dkt. # 14.
written agreement is not attached to BFK's complaint but
it is referenced throughout. A district court must ordinarily
convert a motion to dismiss into a motion for summary
judgment if the parties request that the court consider
evidence outside of the pleadings. GFF Corp. v. Assoc.
Wholesale Grocers. Inc.. 130 F.3d 1381, 1384 (10th Cir.
1997). However, a district court may consider a document that
is referred to in the complaint and is central to plaintiffs
claims, even if a copy of the document has not been attached
to the complaint. Id., Defendant has attached a copy of the
parties' written agreement, including the incorporated
terms and conditions, and the Court may consider these
documents without converting defendant's motion to
dismiss into a motion for summary judgment.
Oklahoma law, "[t]he language of a contract is to govern
its interpretation, if the language is clear and explicit,
and does not involve an absurdity." Okla. Stat. tit. 15,
§ 154. "A contract must be considered as a whole so
as to give effect to all its provisions without narrowly
concentrating upon some clause or language taken out of
context." Lewis v. Sac & Fox Tribe of Okla.
Housing Auth.. 896 P.2d 503, 514 (Okla. 1994). "The
terms of the parties' contract, if unambiguous, clear,
and consistent, are accepted in their plain and ordinary
sense, and the contract will be enforced to carry out the
intention of the parties as it existed at the time the
contract was negotiated." Dodson v. St. Paul Ins.
Co.. 812 P.2d 372, 376 (Okla. 1991); see also
Okla. Stat. tit. 15, § 160. "When a contract is
reduced to writing, the intention of the parties is to be
ascertained from the writing alone, if possible ... ."
OKLA. STAT. tit. 15, § 155. "Interpretation of
contracts, and whether they are ambiguous, are matters of law
for the court to determine." Livesav v.
Shoreline. LkC, 31 P.3d 1067, 1070 (Okla.Civ.App. 2001)
(citing Osprev L.L.C. v. Kelly Moore Paint Co.. 984
P.2d 194 (Okla. 1999)).
Court initially notes that it is not clear if Oklahoma or New
York law applies to the parties' dispute. The terms and
conditions incorporated into the agreement state that the
"Contract is governed by the laws of the State of New
York, including the Uniform Commercial Code adopted therein .
. . ." Dkt. # 8-1, at 19. However, a separate document
entitled "Scope of Work" was also attached to the
agreement, and it states that the "agreement among the
parties in this contract will be governed by and construed in
accordance with the laws of Oklahoma...." Id., at 13.
BFK takes the position that choice of law has no effect on
the outcome of the case, because the contractual provision
concerning the initial three year term is ambiguous and
Oklahoma and New York have similar law on the interpretation
of ambiguous contractual language. Dkt. # 14, at 5. ABB
ignores the choice of law issue and assumes that Oklahoma law
applies to the parties' dispute. Dkt. # 16, atl.
Court finds that it does not need to resolve the choice of
law issue to rule on ABB's motion to dismiss, because BFK
has stated a plausible claim for relief under at least two
theories regardless of whether New York or Oklahoma law
applies. First, ABB omitted a material part of the relevant
contractual provision concerning the incorporation of
ABB's terms and conditions, and ABB failed to mention
that the terms of the agreement would control over the terms
and conditions. See Dkt. # 8, at 4. There may not be an
ambiguity between the agreement and the terms and conditions,
because the parties agreed that "the terms of this
agreement shall control." The agreement provides for an
initial three year term with a right for either party to
terminate the agreement at the end of the three year term.
The terms and conditions would permit ABB to terminate the
agreement "for convenience," but this conflicts
with the plain language of the agreement. The parties agreed
that the terms and conditions would be incorporated into the
agreement to the extent that there was no conflict, and it
appears that the agreement and the terms and conditions
conflict as to ABB's right to terminate the agreement.
BFK has made a plausible argument that the terms of the
agreement control and that ABB did not have a right to
terminate the agreement before the initial three year term
expired. Second, BFK argues that the terms and conditions
create an ambiguity that should be construed against the
drafter of the contract. The agreement contains a notation
that it is the "ABB Standard Service Agreement,"
and this supports an inference that ABB drafted the
agreement. Both Oklahoma and New York law permit a court to
construe any ambiguity in a written contract against the
drafter. McMinn v. City of Oklahoma City. 952 P.2d
517, 522 (Okla. 1997) ("If terms in the contract are
ambiguous, it must be construed against the drafter of the
contract"); Village of Ilion v. County of
Herkimer. 18 N.E.3d 359 (N.Y. 2014) (stating general
rule that ambiguities in a contract are construed against the
drafter). If the Court were to find the agreement ambiguous
as to ABB"s right of termination, this would permit
either side to offer extrinsic evidence in support of their
proposed interpretation of the contract, and this issue would
not be suitable for resolution on a motion to dismiss.
Piano Petroleum. LLC v. GHK Exploration. L.P.. 250
P.3d 328, 331 (Okla. 2011); Justinian Capital SPC v.
WestLB AG. 65 N.E.3d 1253, 1262 (N.Y. 2016).
argues that the Tenth Circuit has determined that a contract
that provides for a fixed initial term can be subject to a
right of termination. Dkt. # 16, at 2-3. In F.W.
Woolworth v. Petersen Co.. 78 F.2d 47 (10th Cir. 1935),
F.W. Woolworth (Woolworth) entered an employment contract
with M.M. Petersen providing for a one year initial term of
employment, and Petersen's employment would continue from
year to year if no party took any action to terminate the
contract before it automatically renewed. Id. at
47-48. However, the contract also provided both parties a
right to terminate the contract at any time during the year
by giving 30 days notice of their intent to terminate the
contract. Id., at 48. The Tenth Circuit considered the
contract as a whole, including a provision that Petersen
could resign at any time, and found that Woolworth had a
similar right to terminate Petersen's employment. Id., at
49. This was a diversity case arising from the state of
Colorado, and the Tenth Circuit was not applying Oklahoma
law. The case has not been cited by the Oklahoma Supreme
Court and the Court does not find that F.W.
Woolworth is consistent with Oklahoma contract law. In
any event, the Court finds that there are important factual
distinctions that would render F.W. Woolworth
inapplicable to the present case. F.W. Woolworth involved an
employment contract and this context was significant to the
manner in which the Tenth Circuit resolved the case. It is
also significant that the contract in F.W. Woolworth
provided a mutual right to terminate the contract, while the
agreement in this case provides that ABB alone may terminate
the contract before the three year initial term expires. The
written contract in this case also specifies that the ...