SSI Big Sky LLC v. Russell et al

Filing 64

ORDER denying 56 Motion for Partial Summary Judgment. Signed by Judge Donald W. Molloy on 10/1/2013. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION

SSI BIG SKY LLC, d/b/a SCHNITZERBILLINGS,
Plaintiff,

CV 11–49–M–DWM

ORDER

vs.
WILLIAM M. RUSSELL,
Defendant/ThirdParty Plaintiff,
vs.
SCHNITZER STEEL INDUSTRIES
INC., an Oregon corporation,
Third-Party
Defendant.
INTRODUCTION
In March 2011, Plaintiff SSI Big Sky, LLC (“SSI Big Sky”) filed a
Complaint against Defendant William M. Russell (“Russell”) alleging breach of a
scrap metal contract. In January 2012, Russell filed a counter-claim, alleging SSI
Big Sky in fact breached the contract by attempting to remove metals not provided
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for in the agreement and ultimately failing to perform. On June 5, 2012, Russell
filed a Third-Party Complaint against Schnitzer Steel Industries, Inc. (“Schnitzer”)
on the same grounds. (Doc. 45.) Russell now moves for partial summary
judgment as to his breach of contract claims against SSI Big Sky and Schnitzer.
(Doc. 56.) Although the term “material” is not ambiguous, it is not reasonably
susceptible to Russell’s interpretation. The motion for summary judgment is
denied.
BACKGROUND
Russell owns and operates two scrap yards in Montana, one in Columbia
Falls at the “Columbia Heights” area (commonly known as Russell’s Trucking &
Equipment), and another yard on U.S. Highway 2 which is referred to as “10
West.” (Aff. Gallup, doc. 61-1 at ¶ 13.) On January 26, 2011, Russell entered into
a contract to sell “materials” from his scrap yards to SSI Big Sky/Schnitzer.
(Def.’s SUF, doc. 57 at ¶¶ 1-3.) The items to be purchased under the contract are
referred to therein only as “material(s)” and “equipment.” (Contract, Ex. A., doc.
5-1.) The contract provided SSI Big Sky would pay Russell $215 per net ton “for
all the material.” (Id.) The materials were to be picked up by SSI Big
Sky/Schnitzer after Russell had marked them with a green stripe, indicating they
were ready for scrap. (Def.’s SUF, doc. 57 at ¶ 8; Aff. Gallup, doc. 61-1 at ¶ 17.)
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A short time after the contract was executed, SSI Big Sky sent employees of
Rosin Brothers Trucking to Russell’s yard at “10 West” to begin processing scrap
material. (Depo. Rosin, doc. 61-2 at 48:22-49:11.) Rosin Brothers Trucking
began shearing items in the scrap yard, spending approximately three days sorting
ferrous and non-ferrous material.1 (Id. at 37:9-11, 39:9-16, 43:13-17.) After that
time, Rosin Brothers Trucking was informed by Russell’s agent and son, Austin
Russell, that they were to remove only the ferrous material. (Id. at 21:23-22:1,
24:2-5, 43:9-12, 80:20-81:4; Aff. Gallup, doc. 61-1 at ¶ 19.) Following that
exchange, Rosin Brothers Trucking and SSI Big Sky were locked out of the
property to prevent further scrapping. (Depo. Russell, doc. 61-2 at 104:25-105:1.)
Russell moves for summary judgment as to Count 2 of his counterclaim,
asking this Court to find that the contract term “material” refers only to ferrous
material.2 SSI Big Sky and Schnitzer contend the term “material” refers to both
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Ferrous material is defined in the scrap metal industry as “[i]roncontaining used steel which is remelted and recast into new steel by both fully
integrated mills (approximately 25% mix of scrap).” (Def.’s Br. in Support, doc.
58 at 9-10.) Non-ferrous material, on the other hand, includes metals such as
aluminum, copper, and lead. (Def.’s SUF, doc. 57 at ¶ 10.) Russell contends a
different in value between the two types of metals, with non-ferrous materials
being more valuable. (Def.’s Br. in Support, doc. 58 at 10.)
2

It is unclear whether Russell intends to move for summary judgment as to
all of his breach of contract claims. (See docs. 56, 58.) However, the arguments
contained in his brief and reply address only the meaning of the term “material”
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ferrous and non-ferrous materials.
STANDARD
A party is entitled to summary judgment if it can demonstrate that “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). Summary judgment is warranted where
the documentary evidence produced by the parties permits only one conclusion.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Only disputes over
facts that might affect the outcome of the lawsuit will preclude entry of summary
judgment; factual disputes that are irrelevant or unnecessary to the outcome are
not considered. Id. at 248.
ANALYSIS
Both parties insist that the term “material” is not ambiguous. However,
each party has interpreted the term differently based on the language of the
contract. Russell contends “material” unambiguously refers to only ferrous
materials as the price term of the contract matches the market price of ferrous
materials ($215/net ton). SSI Big Sky and Schnitzer contend “material” refers to
all metallic items in the scrap yard, excluding only those items specifically
and not SSI Big Sky’s removal of its equipment or its alleged failure to perform.
Count 2 of the Counterclaim is at issue regarding the meaning of “material.”
(Doc. 23.)
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mentioned in the contract, such as non-metallic and hazardous materials.
In Montana, “[w]hether an ambiguity exists in a contract is a question of
law.” Mary J. Baker Revocable Trust v. Cenex Harvest Sts., Coops., Inc., 164
P.3d 851, 857 (Mont. 2007). “If the language of the contract is unambiguous-i.e.,
reasonably susceptible to only one construction-the duty of the court is to apply
the language as written. However, if the language of a contract is ambiguous, a
factual determination must be made as to the parties’ intent in entering into the
contract.” Id. (internal quotations and citations omitted). “[T]he mere fact that the
parties disagree as to the interpretation of a contract does not automatically create
an ambiguity.” Wurl v. Polson Sch. Dist. No. 23, 127 P.3d 436, 442 (Mont. 2006).
“A contract must be so interpreted as to give effect to the mutual intention
of the parties as it existed at the time of contracting, so far as the same is
ascertainable and lawful.” Mont. Code Ann. § 28-3-301 (2013). The mutual
intention of the parties should then be ascertained from the writing, if possible. §
28-3-303. In addition, evidence of the circumstances under which the contract
was made and the matter to which it relates may be considered. § 28-3-402.
However, such evidence is not admissible to add to, vary, or contradict the terms
of the contract. See § 28-2-904.
Although the term “material” is ambiguous when standing alone, it is
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susceptible to only one reasonable interpretation when considered in the context of
the contract.3 The contract states in part:
Seller will paint an obvious green strip across the equipment showing
that it is ready to be scrap[p]ed. Buyer will have exclusive rights to all
the materials without regard to any value assigned by seller or buyer.
Seller will not sell any equipment or parts of without approval from the
buyer. There are a few pieces of equipment that the seller will retain
ownership of. Those pieces will be clearly identified prior to buyer
removing anything.
(See Contract, Ex. A, doc. 5-1.) The contract makes no limitation on what that
“material” may or may not include, except to say that SSI Big Sky would not take
non-metallic or hazardous materials. (Id.)
Russell’s contention that this Court should interpret “materials” based on
the market price of metals is unpersuasive. First, the contract specifically states
that SSI Big Sky had a right to all the materials from scrapped equipment without
regard to their value. Even if this severely undercuts the market price of some of
the metals involved, such is the right of freedom of contract. Russell relies on
Frigaliment Importing Co. v. B.N.S. Intl. Sales Corp., 190 F. Supp. 116 (S.D.N.Y.
1960) (involving a contract dispute over the meaning of the word “chickens”) to
argue that SSI Big Sky could not have expected Russell to incur a loss on the

3

The contract itself fills less than one page, yet contains the word
“material” 14 times.
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contract. However, as was the case in Frigaliment Importing Co., price is not
necessarily dispositive, but just one factor the Court must consider. 190 F. Supp.
at 121. Furthermore, as noted by SSI Big Sky and Schnitzer, the contract price
included a 90-day guarantee, which provided its own value to the contract as it
was better than the guarantee offered by SSI Big Sky’s competitors. (See
Statement of Disputed Facts, doc. 62 at ¶ 6; Aff. Russell, doc. 63-1 at ¶ 4.)
Second, the contract gives SSI Big Sky veto rights on any equipment or
parts that Russell may want to sell, indicating an existing interest in those parts.
Finally, the contract states that any equipment that is not to be removed would be
“clearly identified” prior to SSI Big Sky scrapping anything. There is no
indication that Russell identified non-ferrous component parts as not to be
removed. In fact, it was not until Rosin Brothers Trucking had scrapped for a
number of days that they were told ferrous and non-ferrous materials were being
treated differently. (See Depo. Rosin, doc. 61-2 at 21:23-22:1, 24:2-5, 43:9-12,
80:20-81:4; Aff. Gallup, doc. 61-1 at ¶ 19.)
It is clear from the language of the contract that “material” means any
component parts that result from the scrapping of the agreed upon equipment. A
material dispute exists as to whether or not SSI Big Sky attempted to remove
properly marked equipment and material.
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CONCLUSION
The Plaintiff’s Motion for Partial Summary Judgment (doc. 56) is DENIED.
The Clerk is directed to notify the parties of the entry of this order.
Dated this 1st day of October, 2013.

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