United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER DENYING MOTION FOR
PARTIAL SUMMARY JUDGMENT
N. Parrish United States District Court Judge.
the court is a Motion for Summary Judgment filed by Defendant
and Counterclaim Plaintiff PVS Chloralkali, Inc.
(“PVS”). [Docket 47]. PVS’s motion for
partial summary judgment is DENIED.
13, 2013, PVS and U.S. Magnesium (“USMAG”)
entered into a five-year agreement (the “Commercial
Agreement”), under which USMAG would supply
hydrochloric acid to PVS. On July 28, 2015, the parties
executed a new agreement for the sale of hydrochloric acid
(the “Sales Agreement”). The Sales Agreement,
which was backdated to June 1, 2015, expressly terminated the
Commercial Agreement. It further required PVS to purchase a
minimum of 600 tons of hydrochloric acid per week from USMAG.
Also on July 28, 2015, PVS and USMAG executed three railcar
sublease agreements (the “Sublease Agreements”).
Under the Sublease Agreements, PVS subleased to USMAG sixty
hydrochloric acid railcars for a period running from June 1,
2015, to May 31, 2018. Each of the Sublease Agreements
conveyed to USMAG a sublease in hydrochloric railcars that
PVS had leased from one of three hydrochloric acid railcar
September 30, 2016, USMAG filed a complaint against PVS,
alleging that PVS had breached the Sales Agreement and its
implied duty of good faith and fair dealing. USMAG also
sought a declaration that it was excused from further
performance under the Sales Agreement and the Sublease
answered USMAG’s complaint, asserted a counterclaim for
breach of the Sublease Agreements, and sought a declaration
that the Sublease Agreements are valid and enforceable,
regardless of the enforceability of the Sales Agreement. In
its answer, USMAG conceded that it had stopped paying rent
under the Sublease Agreements but argued that payment under
the Sublease Agreements was excused as a result of
PVS’s alleged breach of the Sales Agreement.
filed a motion for partial summary judgment on all claims in
its counterclaim. PVS argues that it is entitled to relief as
a matter of law because USMAG stopped paying the monthly rent
due to PVS and continued to retain and make use of the
railcars in breach of the Sublease Agreements. In response,
USMAG asserts that the Sales Agreement and the Sublease
Agreements comprise a single agreement and that PVS
materially breached the Sales Agreement, thus excusing
USMAG’s obligation to perform under the Sublease
Agreements. In its reply, PVS argues that the Sales Agreement
and the Sublease Agreements are separate contracts and that
its alleged failure to perform under the Sales Agreement does
not excuse USMAG’s obligations under the Sublease
judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). The
movant bears the initial burden of demonstrating the absence
of a genuine dispute of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
met this burden, the burden shifts to the nonmoving party to
“set forth specific facts showing that there is a
genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986) (citation
moves for summary judgment on its counterclaim, alleging that
USMAG breached three independent Sublease Agreements as a
matter of law. USMAG asserts in its defense that the Sublease
Agreements and Sales Agreement were sub-parts of one
overarching agreement between the parties and argues that its
obligations under the Sublease Agreements were excused when
PVS allegedly breached the Sales Agreement. To prevail on its
motion for summary judgment, PVS must therefore establish
that the Sublease Agreements and the Sales Agreement were
separate, independent contracts as a matter of law.
support of its assertion that the parties executed one
contract, USMAG argues that Utah courts have interpreted
multiple agreements as a single contract in some
circumstances. Sacramento Baseball Club, Inc. v. Great N.
Baseball Co., 748 P.2d 1058, 1060 (Utah 1987) (“An
agreement may be a single contract even though it consists of
several writings that the parties have never physically
attached to each other.”). Whether these contracts
should similarly be read as one depends on the intentions of
the parties and is therefore an issue of contract
interpretation. See id.
Utah law, “[t]he cardinal rule in construing any
contract must be to give effect to the intentions of the
parties.” Atlas Corp. v. Clovis Nat. Bank, 737
P.2d 225, 229 (Utah 1987). In giving effect to the intentions
of parties to a contract, Utah courts look first to the
language of the agreement. Winegar v. Froerer Corp.,
813 P.2d 104, 108 (Utah 1991). If the language is unambiguous
as to the parties’ intentions, then Utah courts do not
look beyond that language. Id. Interpretation of the
contract in such cases is a question of law. Kimball v.
Campbell, 699 P.2d 714, 716 (Utah 1985). If, on the
other hand, the court concludes that the language of the
contract is ambiguous, then the court may look to extrinsic
evidence in order to determine the parties’ intentions.
Atlas Corp., 737 P.2d at 229 (citing Big Butte
Ranch, Inc. v. Holm, 570 P.2d 690 (Utah 1977)). The
interpretation of an ambiguous contract using extrinsic
evidence is a question of fact. Kimball, 699 P.2d at
716. So long as there is a genuine dispute as to the
extrinsic evidence, summary judgment is precluded. Grow
v. Marwick Dev., Inc., 621 P.2d 1249, 1252 (Utah 1980).
The Language of the Sales Agreement and ...