Bob's Red Mill Natural Foods, Inc. v. Excel Trade, LLC

Filing 29

OPINION & ORDER: Plaintiff's Motion for Partial Summary Judgment 16 is Granted as to Excel's affirmative defense of unjust enrichment only, and is otherwise Denied. Signed on 10/30/13 by Magistrate Judge Paul Papak. (gm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

BOB'S RED MILL NATURAL FOODS,
INC.,
Plaintiff I Counter Defendant,
3:12-CV-2194-PK
v.

OPINION At'JD
ORDER

EXCEL TRADE, LLC,
Defendant I Counter Claimant.
PAPAK, Magistrate Judge:
Plaintiff Bob's Red Mill Natural Foods, Inc. ("BRtvl"), filed this action against defendant
Excel Trade, LLC ("Excel"), on December 4, 2012, seeking this comi's declaration that BRM
does not owe Excel a commission under the parties' written "Commission Agreement" on any
order received by BRtvl from any of its customers subsequent to the date BRM unilaterally
terminated that agreement. On January 31, 2013, Excel filed counterclaims against BRM seeking
this comi's declaration that, pursuant to the parties' Commission Agreement, BRM owes and will
continue to owe Excel commissions on an ongoing basis in connection with orders received by

Page 1 - OPINION AND ORDER

BR!vf from any of its customers on whose accounts Excel performed services on BR!vl's behalf
during the effective period of the agreement, for so long as such customers continue to place
orders with BRM, and in addition alleging BRM's liability both fol' breach of the Commission
Agreement prior to its termination and for anticipatmy breach of the agreement from its
termination date forward. This court has subject-matter jurisdiction over the parties' claims
pursuant to 28 U.S.C. § 1332, based on the complete diversity of the patties and the amount in
controversy.
Now before the comt is BR!vl's motion (# 16) for partial summary judgment, styled as a
motion for summary judgment and for partial summary judgment, by and through which BRJ\1
seeks summaty adjudication of its own declaratmy relief claim and of Excel's declaratory relief
and anticipatory breach claims. I have considered the motion, oral argument on behalf of the
patties, and all of the pleadings and papers on file. For the reasons set fmth below, the motion is
granted in patt and denied in part, as discussed below.

LEGAL STANDARD
Summaty judgment is appropriate "if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter oflaw." Fed. R. Civ. P.
56(a). A patiy taking the position that a material fact either "cannot be or is genuinely disputed"
must supp01t that position either by citation to specific evidence of record "including depositions,
documents, electronically stored information, affidavits or declarations, stipulations (including
those made for purposes of the motion only), admissions, interrogatmy answers, or other
materials," by showing that the evidence of record does not establish either the presence or
absence of such a dispute, or by showing that an opposing party is unable to produce sufficient

Page 2 - OPINION AND ORDER

admissible evidence to establish the presence or absence of such a dispute. Fed. R. Civ. P. 56( c).
The substantive law governing a claim or defense determines whether a fact is material. See
1\Iorelandv. Las Vegas }vfetro. Police Dep't, !59 F.3d 365, 369 (9th Cir. 1998).
Summary judgment is not proper if material factual issues exist for trial. See, e.g.,
Celotex Cmp. v. Catrett, 477 U.S. 318, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert. denied, 116
S.Ct. 1261 (1996). In evaluating a motion for summary judgment, the district coUliS of the
United States must draw all reasonable inferences in favor of the nonmoving party, and may
neither make credibility determinations nor perf01m any weighing of the evidence. See, e.g.,
Lytle v. Household lvlfg., Inc., 494 U.S. 545, 554-55 (1990); Reeves v. Sanderson Plumbing
Products, Inc., 530 U.S. 133, 150 (2000).

MATERIAL FACTS'
I.

The Parties
BRlvl is an Oregon Corporation with its principal place of business in Milwaukie,

Oregon, and is engaged in the business of manufacturing and selling food products. Excel is a
Washington limited liability company with its principal place of business in Seattle, Washington,
and is engaged in the business of providing export management services.

II.

History of the Parties' Dispute
In the fall of 2004, Robert Agnew, Vice President of sales for BRlvf, contacted Sally Cox,

Excel's principal and at that time its sole employee, to discuss the possibility ofBRlvf hiring

1

Except where otherwise indicated, the following recitation constitutes my construal of
the evidentiary record in light of the legal standard governing motions for summary judgment
under Federal Civil Procedure Rule 56.
Page 3 - OPINION AND ORDER

Excel to develop and manage its expott business, which at that time totaled approximately
$180,000 annually. In the course of their negotiations, Cox expressed concern over the
possibility that Excel might develop business on BRlVI's behalf and then later be "cut out" of any
return on that business development, and Agnew indicated that he "understood and
acknowledged that [Excel] should be compensated and protected accordingly."' The parties
ultimatelyagreed that BRlVI would retain Excel to provide exp01t management services.
Agnew requested that Cox prepare a broker agreement to memorialize the patties'
understanding. Cox did so, and on November 18, 2004, Agnew signed the instrument prepared
by Cox, without modification. That agreement (the patties' "Commission Agreement") provides
in full as follows:
We, Bob's Red Mill Natural Food Inc.[,] agree to pay Excel Trade Limited a
monthly retainer of $1000, or 5% of the total net sales for each calendar month
on sales related to export accounts that are managed by Excel Trade Ltd,
whichever is greater, for each month beginning Nov. I, 2004. This agreement is
effective begitming with the last half of October 2004 for the amount of $500, and
for the full month of November and thereafter.
The above described retainer is effective for one year and shall be renegotiated
after one year.
Excel Trade shall receive the commission of 5% on an ongoing basis for all
orders related to the described accounts as long as they purchase Bob's Red
Mill products even if the above described monthly retainer agreement is not
renegotiated at the close of one year. Excel Trade shall provide exp01t
management services related to all export accounts for BRM with the exception of
Japan which is not covered by this agreement.
Payment of commission shall be made to Excel Trade Limited on a monthly basis.
(Emphasis supplied.) The agreement is signed by Agnew for BRlVI, but bears no signature nor

2

I consider evidence of the parties' conmmnications in connection with negotiating the
Commission Agreement only for limited analytical purposes, as discussed below.
Page 4 - OPINION AND ORDER

any space for a signature on behalf of Excel.
Over the course of the next approximately 8 years, Excel actively managed BIUvi's expmi
business, growing BRivi's overseas sales from approximately $180,000 annually to approximately
$4 million annually by 2012, and growing BRM's overseas markets from three countries to over
sixty countries over that time period.
On October 31, 2012, BRivf sent Excel a letter stating that "as of November 30, 2012,
there w[ould] be a dissolution of the [Cmmnission] [A]greement between [BRlVl] and Excel. ... "
BRlvi's letter indicated that BRlvf would pay Excel "commissions on all orders received [by
BRlvf] prior to December 1, 2012."
On November 1, 2012, counsel for Excel wrote to BRlvf indicating that Excel interpreted
the parties' Commission Agreement of November 2004 as providing that Excel would continue
to receive a 5% commission on sales made to accounts that had previously been managed by
Excel on BRlvi's behalf, including after the termination of the agreement, on an ongoing basis,
for so long as the BRM clients in question continued to purchase BRlvf products. The pmiies
failed to resolve their dispute over Excel's purpmied entitlement to commissions on an ongoing
basis following dissolution of the agreement, and this action followed.

ANALYSIS
I.

Applicable Law
The Commission Agreement contains no choice of law provision. BRlvf expressly argues

that this court should apply Oregon law in analyzing the pmiies' dispute, and Excel does not
contest BRlvf's position.
"When a federal comi sits in diversity, it must look to the forum state's choice of law

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rules to determine the controlling substantive law." Patton v. Cox, 276 F.3d 493,495 (9th Cir.
2002). In Oregon, prior to embarking on a choice oflaw analysis, the comis must first detetmine
whether the laws of the states having a connection with the controversy are in conflict on the
particular issue or issues in question. See Lilienthal v. Kaufman, 239 Or. 1, 5 (1964). "The
proponent of the law of another forum has the obligation to identify material differences between
the applicable law of Oregon and of the other forum." Spirit Partners, LP v. Stoel Rives LLP,
212 Or. App. 295 (2007). Where there is no material conflict in the laws of the different
candidate fora, the courts are fi·ee to apply the law of either forum. See, e.g., W: L. 11.1ay Co. v.
Phi/co-Ford Corp., 273 Or. 701, 705 n. 1 (1975); Deerfield Commodities, Ltd. v. Nerco, Inc., 72

Or. App. 305,316 (1985). However, where the laws of the fora are in material conflict, the
comis must consider the states' relative connection to and interests in the litigation. See
Lilienthal, 239 Or. at 14. Where the states' relative connection to and interests in the matter are

equivalent, the Oregon courts apply Oregon law. See id. at 16 (where "[t]he interests of neither
jurisdiction are clearly more important than those of the other. . . the law of Oregon should be
applied"); see also, e.g., Straight Grain Builders v. Track N' Trail, 93 Or. App. 86, 92 (1988) (to
same effect).
Here, as noted, no patiy is a proponent of any law other than that of Oregon.
Nevertheless, because there is a colorable argument that Washington law could potentially be
applicable, and because (notwithstanding BRlvl's contrmy representation) there is at least one
respect in which Washington law of contract interpretation and Oregon law of contract
interpretation could be in material conflict, I hereinafter conduct a full analysis of the question
whether it is indeed appropriate to apply Oregon law to the parties' dispute.
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Under Washington law, as under Oregon law, "[a] court's primary task in interpreting a
written contract is to determine the intent of the parties." Barton v. Dep't ofTransp., 2013 Wash.
LEXIS 662 (Wash. Aug. 15, 2013), citing US. Life Credit Ins. Co. v. Williams, 129 Wn.2d 565,
569 (1996). The Washington courts, however, are authorized to consider extrinsic evidence "in
order to assist the court in asce11aining the intent of the parties and in interpreting the contract."

US. Credit Life Ins. Co. v. Williams, 129 Wn.2d 565, 569 (1996), citing Berg v. Hudesman, 115
Wn.2d 657, 667 (1990). "Such evidence is admissible regardless of whether or not the contract
language is deemed ambiguous," but may not be considered "for the purpose of varying the tenns
of a written contract." Id, citing Berg, 115 Wn.2d at 669. By contrast, under Oregon law,
extrinsic evidence is admissible only to the extent the court has determined that the contractual
language contains a material ambiguity. See Yogman v. Parrott, 325 Or. 358, 364-365 (1997).
Because Excel has offered extrinsic evidence tending to establish that the parties discussed the
possibility ofBRLvi unilaterally terminating the contract, and that Excel drafted the Commission
Agreement specifically to provide that it would continue to receive compensation in the event
such unilateral termination occmTed, this distinction between Oregon and Washington law could
potentially prove material to the resolution of the pmties' dispute.
Assuming arguendo that the identified conflict of law will prove material to the pmties'
dispute, I compare the two states' relative connections to and interests in the enforcement of the
Commission Agreement and find that neither state's interest in the dispute is clearly more
important than the other's. The contract was drafted in Washington and executed in Oregon;
Excel's obligations under the contract were performed largely in Washington and BRLVI's largely
in Oregon; Excel is a resident of Washington and BRLvi of Oregon; payments under he contract

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were to be made in Oregon but received in Washington. Moreover, the interests of both states in
the outcome of this litigation would be broadly similar, namely a fimdamental interest in the
enforcement of contracts and in protecting state residents from breach of contract by an out-ot:
state party. Because neither state's interests clearly outweigh the other's, the Oregon courts
would apply Oregon law to the parties' dispute even in the event of a material conflict of law.

See Lilienthal, 239 Or. at 16.
For the foregoing reasons, I agree with the parties that Oregon law properly governs the
analysis the court is called upon to perfonn.

II.

Evidentiary Issues
Excel objects to Bfuvl's reliance on the exhibit attached as Exhibit D to the declaration of

Robert Agnew. The exhibit is a letter from Excel's counsel to Bfuvl's counsel dated November
29,2012, and contains clear indicia that it constitutes an offer of settlement of the dispute now
before the court. As such, the letter is clearly inadmissible in these proceedings. See Fed. R.
Evid. 408(a). Excel inf01mally requests that the exhibit accordingly be stricken from the
evidentimy record.
Although Excel's objection to BRM's attempted reliance on the offer of settlement is well
taken, motions to strike are generally disfavored. Here, I have entirely disregarded the offer of
settlement, as well as any argument premised thereon. Excel's inf01mal request is therefore
denied as moot.

III.

BRM's Motion (#16) for Partial Summary Judgment
By and through its motion, BRM seeks summary adjudication of its own declaratory

relief claim and of Excel's declarat01y relief and anticipatory breach claims. Disposition of each

Page 8 - OPINION AND ORDER

of these claims requires, and is dependent upon, resolution of the parties' dispute over the
intended duration ofBRM's contractual obligation to pay commissions on export sales. In the
altemative, BR!vf argues that Excel's asserted affirmative defense of unjust enrichment, pursuant
to which Excel takes the position that BRlvf will be unjustly enriched in the event the court
declares that BRlvl owes Excel no commissions under the parties' agreement in connection with
orders placed by BRM's customers following termination of the agreement, is inapplicable under
the circumstances, and should be either stricken or disregarded.

A.

Duration ofBRM's Obligation to Pay Commissions on Export Sales

As indicated above, resolution of the parties' dispute hinges largely on a single question
of contract interpretation: \vhether or not the parties' Commission Agreement provides for Excel
to continue receiving commissions in perpetuity on purchases made by BRM's customers in
connection with whose export accounts Excel provided management services prior to tetmination
of the agreement. Both parties agree that the phrase "the described accounts" in the clause "Excel
Trade shall receive the commission of 5% on an ongoing basis for all orders related to the
described accounts as long as they purchase Bob's Red Mill products" refers to the "export
accounts that are managed by Excel" referenced in the first paragraph of the agreement. On
BRlvl's proffered interpretation, the pln·ase "that are managed" in the latter clause must be
interpreted to mean "that continue to be managed," such that as soon as· Excel ceased to manage
the accounts (i.e., immediately upon dissolution of the agreement), BRM's obligation to pay
ended. On Excel's proffered interpretation, the phrase "that are managed" must be interpreted to
mean "that Excel managed during the effective period of the agreement," such that BR!vl's
obligation to continue paying commissions on such accounts would continue on an ongoing basis

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until such time as each such customer stopped purchasing BRivl's products. That is, BRM urges
an interpretation pursuant to which all obligations under the agreement are terminable at the will
of either party, whereas Excel urges an interpretation pursuant to which BRLvl's obligation to pay
commissions is perpetual, intended to remain in force for so long as the customers whose
accounts Excel served continue to purchase BRLV!'s products. 3
In interpreting a contract, the Oregon courts "seek to implement the intent of the patiies to
the contract by considering the contract terms in their context." James v. Clackamas County, 353
Or. 431, 441 (20 13), citing Anderson v. Jensen Racing, Inc., 324 Or. 570, 575-576 (1997). The
Oregon coutis apply a three-step analytical process for dete1mining the intent of the patiies to a
contract. At the first step, the courts "examine[] the text of the disputed provision, in the context
of the document as a whole." Yogman, 325 Or. at 361. If the meaning of the provision is clear at
that stage, the analysis ends without recourse to the second or third steps:
When considering a written contractual provision, the couti's first inqui1y is what
the words of the contract say [rather than] what the parties say about [the
provision's interpretation]. To determine that, the court looks at the four comers
of a written contract, and considers the contract as a whole with emphasis on the
provision or provisions in question. . .. The meaning of disputed text in that
context is then determined. . . . In making that determination, the couti inquires
whether the provision at issue is ambiguous. Whether terms of a contract are

3

Excel characterizes its interpretation differently, arguing that because it interprets the
conttact as providing for te1mination of BRM's commission obligation upon the occurr-ence of a
specified contingency, namely when each ofBRNl's export customers ceases buying BRNI's
products, it is not asking the court to find that the agreement provides for a "perpetual"
obligation. In so characterizing its interpretation, Excel imports a requirement (i.e., freedom
from contingency) that the Oregon comis do not recognize. See, e.g., Paul Gabrilis, Inc. v. Dahl,
154 Or. App. 388, 394 (1998) (finding that the patiies' agreement provided for a perpetual, albeit
contingent, obligation: "the membership agreements contain ... provisions that. .. lead us to
conclude that the memberships in the country club were intended to be perpetual, in force so
long as the members continued to pay their dues and to abide by the club's rules" (emphasis
supplied)).
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ambiguous is a question of law. . .. In the absence of an ambiguity, the comi
construes the words of a contract as a matter of law.

Eagle Industries, Inc. v. Thompson, 321 Or. 398, 405 (1995) (citations omitted).
In the event of an ambiguity, the courts proceed to the second step of the analytic
framework, at which it considers extrinsic evidence of the patiies' intent. See Yogman, 325 Or. at
364. The application of such extrinsic evidence is generally a question of fact which may not
properly be resolved at summmy judgment. See Biomass One, L.P. v. S-P Constr., 120 Or. App.
194, 200 (1993), citing, e.g., OSEA v. Rainier School Dist. No. 13, 311 Or. 188, 194(1991);

Pierce v. }.it. Hood ivfeadmvs Oregon, Ltd., 118 Or. App. 450, 454 (1993). In the event extrinsic
evidence pe1mits the courts to resolve the ambiguity, the analysis ends at the second step. See

Yogman, 325 Or. at 364-365.
In the event the courts cannot resolve the ambiguity on the basis of extrinsic evidence, the
correct interpretation is dete1mined on the basis of "appropriate maxims of construction." I d. at
264.
In dete1mining the meaning of a provision, the Oregon courts consider "the instrument as
a whole rather than its isolated clauses." Dee1jield Commodities, Ltd. v. Nerco, Inc., 72 Or. App.
305, 319 (1985), citing Sproul v. Gilbert, 226 Or. 392, 402 (1961 ). The Oregon cou1is do not
interpret a contract in such a manner as to render one of its terms or provisions superfluous. See

id.
As noted above, the parties' dispute boils down to a disagreement as to whether their
agreement provides for a perpetual commission obligation. Under Oregon law, "perpetual
agreements are disfavored." Klamath Off-Project Water Users, Inc. v. PacijiCorp, 237 Or. App.

Page II - OPINION AND ORDER

434, 441 (20 10), quoting Portland Section of Council ofJewish Women v. Sisters of Charity, 266
Or. 448,456 (1973). "But, where 'clearly provided for' in the language of the agreement,"
perpetual agreements "will be enforced according to their terms." Id, quoting Council ofJewish
Women, 266 Or. at 456 (enforcing a perpetual agreement as such where its terms- viz.:
"Obligation in perpetuity" -clearly provided for a perpetual duration). "The question is whether
a given contract has 'clearly provided' for its perpetual duration." Id
The Klamath court's discussion of Oregon's previous "perpetual agreement" cases is
instmctive as to how clearly an agreement must provide for perpetual duration before the Oregon
comis will so construe it:
In Andersen v. Waco Scaffold & Equip., 259 Ore. 100,485 P.2d 1091 (1971), the
Supreme Comi addressed the question in a case in which the pmiies entered into
an equipment rental contract for a three-year term, renewable· upon mutual
agreement. When the three-year term expired, the parties did not agree to renew
it; they simply continued on the same terms. Several months later, a dispute arose
about the enforceability of the agreement. One party contended that the contract
remained in effect because both parties had continued to abide by its te1ms even
after its expiration. The Supreme Court rejected the argument, explaining that

"th[at] fact does not of itself establish a renewal of the contract. The
contract itself provided for renewal only by mutual agreement; there is no
evidence that the parties ever agreed to extend their contract for another
non-cancelable period. At most, the evidence indicates an informal
continuation under the terms of the contract; since no new agreement with
a specific duration was reached, the relationship between the parties was
terminable at the will of either."
Id at 105 (citations omitted; emphasis added).
InLundv. Arbonne International, Inc., 132 Ore. App. 87,887 P.2d 817 (1994),
we had occasion to apply Andersen in a dispute concerning a consulting contract
between a beauty and skin care company and its registered consultant. The
contract said nothing about a particular te1m. When a dispute arose between the
company and its consultant, the company "deregistered" the consultant, who
promptly sued for, among other things, breach of contract. The trial court

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dismissed the claim on summary judgment, and we affirmed. Notwithstanding
the consultant's contentions that there were issues of tact about whether the parties
intended the agreement to be terminable at will, we concluded the claim could not
be maintained as a matter of law. Citing Andersen, we explained:
"[T]he rule in Oregon is that a contract for an indefinite period may be
terminated at will when reasonable notice is given. Here, the only
agreement* * * does not set out a definite period for the relationship. We
conclude that the agreement established an 'at will' relationship."
Lund, 132 Ore. App at 90-91 (citations and footnote omitted).
The issue arose again in Paul Gabrilis, Inc. v. Dahl, 154 Ore. App. 388, 394, 961
P.2d 865, rev den, 327 Ore. 553, 971 P.2d 409 (1998), a case in which a countly
club unilaterally terminated several memberships. The countly club argued that,
because the membership agreement said nothing about its duration, membership
was te1minable at will. We rejected the argument. We explained that, "[i]fthere
is nothing in the nature or language of a contract to indicate that the contract is
perpetual, cou1is will interpret the contract to be terminable at will * * *." Id. at
394. The important consideration, we explained, is the wording of the
contract. Citing Coun. Jewish Wom., we added that, "where provided for,
perpetual agreements will be enforced according to their terms." Paul Gabrilis,
Inc., 154 Ore. App at 3 94. We concluded that several provisions of the
membership agreement--in particular, the transferability of memberships and
provisions suggesting that memberships could be terminated only for cause--were
inconsistent with the notion that the memberships were terminable at will. Id at
395.
Klamath, 237 Or. App. at 441-443 (bolded emphasis supplied; italicized emphasis and
modifications original). The last case discussed by the Klamath court, Paul Gabrilis, Inc. v.
Dahl, 154 Or. App. 388 (1998), is particularly instructive. In that case, as indicated by the
Klamath court, at issue was the interpretation of a coun!ly club membership agreement, in
particular the question whether membership could be terminated at the will of the coun!ly club.
The court offered three independent grounds for concluding that the agreement was intended to
be perpetual, notwithstanding the fact that the agreement did not expressly (or otherwise facially)
provide for perpetual duration. See Paul Gabrilis, 154 Or. App. at 394-395. First, the court
Page 13 - OPINION AND ORDER

dete1mined that the agreement provided for no mechanism for refund of a club member's onetime-only "initiation fee," and the absence of any such mechanism suggested to the court that
"the pmiies intended the fee to secure more than a mere license that is revocable at any time." !d.
at 395. Second, the comi found that the fact that the memberships were expressly transferable
under the agreement was not consistent with the notion that membership was also revo.cable. See
id Third, and finally, the court found that the agreements provided non-exhaustive grounds for
suspension or termination of memberships, and reasoned that "[a]lthough the inclusion of
grounds for te1mination in an agreement is not always a sign that the agreement can be
terminated only for cause, the inclusion of such a provision strongly suggests that it is." ld
BRLvi takes the position that the Oregon comis impose two additional restrictions on the
analysis of potentially perpetual agreements. First, BRM asserts that the Oregon comis will not
find an agreement to be perpetual if that finding would require any "second thought" as to the
meaning of the agreement's material provisions. In support of this proposition, BRlvi cites
Bancard Servs. v. E*Trade Access, Inc., 292 F. Supp. 2d 1235, 1250 (D. Or. 2002), a decision of
the District of Oregon. I disagree with BRM's interpretation of Bancard Servs., and reject BRLvi's
asse1iion that the Oregon courts recognize the "no second thought" restriction.
In Bancard Servs., Judge Bubel was called upon to interpret a renewal provision of a
lease agreement providing for a five-year te1m and for renewal at the discretion of the lessee for
additional terms of five years. See Bancard Servs., 292 F. Supp. 2d at 1245-1246. Both sets of
parties before Judge Bubel cited and relied upon a 1904 decision of the Washington Supreme
· Comi, namely Tischner v. Rutledge, 35 Wash. 285 (1904). See id at 1249. Judge Bubel quoted
the Tischner comi's reasoning as follows:

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Moreover, the phrase used which is thought to create the perpetual right is of itself
likely to conceal its real meaning. When we speak of a thing as continuing from
year to year, it is only on second thought that we conclude it means forever. This
we do not think is the direct and unequivocal language necessmy to create a lease
of the character contended for.

Id, quoting Tischner, 35 Wash. at 289. In considering the renewal provision before him, Judge
Hubel relied in part on the Tischner court's "only on second thought" language to find that the
provision was not clearly intended to provide for perpetual duration as opposed to providing for
one or more finite terms. See id at 1250. Judge Hubel did not purport to apply the language
outside the limited context of interpreting lease renewal provisions, and did not suggest that the
Oregon comis had ever adopted a "no second thoughts" requirement in connection with the
analysis of agreements of potentially perpetual duration. See id,passim. Indeed, I am aware of
no decision of the Oregon courts so suggesting, and BRL\1 cites to none. Moreover, the Paul

Gabrilis decision necessarily stands for the contrmy proposition, namely that in analyzing the
perpetuity question the Oregon courts will consider the implications of contractual provisions not
directly or expressly related to duration, and will find that perpetual duration is intended if the
alternative interpretation would lead to potential inconsistency with those provisions or their
implications, even at an attenuated level.
Second, BRM asserts that the Oregon courts will not find an agreement to be perpetual on
· cthe basis of extrinsic evidence alone, but rather require that an agreement unambiguously provide
for perpetual duration on its face if it is to be so construed. In supp01i of this proposition, BRL\1
points only to Bancard Servs. Although I agree with BRM that the Oregon courts disfavor
perpetual agreements, I have not identified any Oregon case suggesting that such agreements are
so disfavored as to be outside the three-step analytical process described in Yogman, supra.
Page 15- OPINION AND ORDER

Moreover, as noted above, Bancard Servs. provides no support for BRtvi's assertion, and Paul
Gabrilis significantly undermines BRlvf's reasoning.
Under Yogman, extrinsic evidence is never sufficient to create a contractual obligation
where the language of the agreement itselfprovides no support for that obligation. Only where
the language of the agreement is ambiguous between two or more competing interpretations can
extrinsic evidence be relied upon to resolve the ambiguity in favor of one of the interpretations
supported by the contract language. No principle of Oregon law suggests that where contract
language can reasonably be interpreted as intended to provide for a perpetual obligation, but is
also subject to a reasonable alternative interpretation, extrinsic evidence is inadmissible to
resolve the ambiguity other than in favor of the latter, alternative interpretation. In consequence,
I decline to adopt BRl\1's asserted rule.
In similar vein, BRtvf fi.niher asse11s that in the event of any ambiguity in the provisions
of the parties' Commission Agreement, such ambiguity must necessarily be resolved against the
interests of Excel, the drafter of the agreement. In supp011, BRtvf cites Hoffinan Constr. Co. v.
Fred S. James & Co., 313 Or. 464,470-471 (1992). However, the rule discussed in Hoffinan was
applied by that court solely in the context of agreements drafted by insurance companies, and is
impliedly applicable only in the broader context of adhesion contracts generally. No Oregon
court has ever applied any such rule in connection with a contract negotiated at arm's length
between pmiies of roughly equal bargaining power. I therefore decline to adopt this asse11ed
rule, as well.
With the foredescribed analytical framework in mind, I now tum to analysis of the parties'
agreement. At the first stage of the three-step analytical process, I read the disputed provision in
Page 16- OPINION AND ORDER

context in an effort to determine whether it is subject to a clear and unambiguous interpretation.
The agreement provides that for a period of one year BRM would pay Excel either a
$1,000 monthly "retainer" or "5% of the total net sales for each calendar month on sales related
to export accounts that are managed by Excel Trade Ltd, whichever is greater" (and that Excel
was obliged to "provide export management services related to all export accounts for BR!vl with
the exception of Japan"). According to the plain language of the agreement, BRN!'s obligation to
pay monthly installments of $1,000 for one year would exist even in the event that BR!vl had no
export accounts other than Japan, and even in the event that the contemplated commission never
exceeded $1,000 per month. The agreement provides that the provision memorializing BR!vl's
retainer obligation was to be renegotiated after one year.
By and through the disputed provision, the parties further agreed that BRM's obligation to
pay commissions "for all orders related to the described accounts" would survive the patties'
failure to renegotiate "on an ongoing basis" for "as long as [BRM's customers whose accounts
Excel managed] purchase [BR!vl] products," whereas, impliedly, the monthly retainer obligation
would not so survive the failure to renegotiate.
BR!vl urges the coutt to construe the phrase "the described accounts" as referring to those
expmt accounts which Excel continued to manage following the failure to renegotiate the retainer
provision. If the court were to adopt this interpretation, the additional phrase "as long as they
purchase [BRNI] products" would necessarily become superfluous. In light of the prohibition
against adopting an interpretation which would render contract language superfluous, see
Dee1jield Commodities, 72 Or. App. at 319, BRM's proffered interpretation is disfavored, and

should not be adopted in the absence of admissible evidence that the patties intended the

Page 17 - OPINION AND ORDER

agreement to be so interpreted, or that the provision is subject to no other reasonable
interpretation.
For its part, Excel urges the cou1i to construe "the described accounts" as referring to
those export accounts which Excel managed during the effective period of the parties' agreement,
without regard to whether it continued to manage those accounts following termination of the
agreement. On this interpretation, none of the contract language would be rendered superfluous,
and the interpretation of the language "shall receive the commission of 5% on an ongoing basis
for all orders related to the described accounts as long as they purchase Bob's Red Mill products"
as providing for a perpetual obligation to pay commissions on such accounts subject to the
contingency that the customers in question continue purchasing BR!vf products is reasonable and
suppmied by the plain language itself. The language "even if the above described monthly
retainer agreement is not renegotiated at the close of one year," which modifies the foregoing
language, is subject to the coherent, reasonable interpretation that whereas the minimum retainer
obligation would not survive failure to renegotiate, the commission obligation would so survive.
Excel's proffered interpretation is reasonable in light of the plain language of the
agreement, and is the only interpretation offered by the paliies that would not fall afoul of the
principle that contracts must not to be interpreted so as to render their provisions superfluous. I
therefore find that the parties' agreement is not ambiguous, but rather can only reasonably be
interpreted under Oregon's analytical framework for contract interpretation as providing for a
perpetual obligation to continue paying commissions on sales to BR!v1's expmi customers on
whose accounts Excel provided management services during the effective period of the
Commission Agreement. I make no finding as to whether it was prudent for the pmiies to enter
Page 18- OPINION Al"\!D ORDER

into an agreement so providing, or as to whether such an interpretation will result in a desirable
resolution of the parties' dispute, but rather find only that, under Oregon's law of contract
interpretation, the Commission Agreement cannot properly be intetpreted otherwise.
Moreover, the same result would obtain were I to find that the disputed provision was
ambiguous between the parties' competing interpretations. On the arguendo assumption that the
meaning of"on an ongoing basis ... as long as [the customers at issue] purchase Bob's Red Mill
products" cannot be resolved by contextual analysis, I would next consider extrinsic evidence of
the parties' intent in drafting and executing their agreement. See Yogman, 325 Or. at 364. The
only material evidence offered by either party on this point is Cox' testimony that over the course
of her negotiations with Agnew, she expressed concern over the.possibility that Excel might
develop business on BR.!vi's behalf and then later be "cut out" of any return on that business
development, and that Agnew indicated in response that he "understood and acknowledged that
[Excel] should be compensated and protected accordingly." 4 In the absence of any contrmy
evidence of record, Cox' testimony compels resolution of the putative ambiguity in Excel's favor.
BR.!\t! fmther argues that even if Oregon law compels adoption of Excel's proffered
interpretation, this court should reject it on the theory that calculation of Excel's assetied
damages would be so difficult and so speculative as to constitute a compelling ground for finding
the Commission Agreement terminable in its entirety at the will of either party. I am aware of no
case law supporting BRM's position, and find no grounds for so concluding.

4

I consider this extrinsic evidence only in this context, and only for the limited purpose
of analyzing the pmiies' dispute on the arguendo assumption that the parties' Commission
Agreement is ambiguous as to the duration ofBRM's obligation to pay commissions on its nonJapanese export sales.
Page 19- OPINION AND ORDER

For the foregoing reasons, to the extent BRLvi seeks summary adjudication of its own
claim for declaratory relief, Excel's claim for declaratory reliet: and Excel's claim of anticipatmy
breach, its motion is denied.
B.

Excel's Affirmative Defense of Unjust Enrichment

Under Oregon law, unjust emichment is a quasi -contractual doctrine pursuant to which,
in appropriate situations, a person may be entitled to the fair value of services provided to
another in the absence of a fonnal agreement for such compensation. See, e.g., Prestige Homes

Real Estate Co. v. Hanson, 151 Or. App. 756, 761 (1997), quoting Kashmir v. Patterson, 43 Or.
App. 45, 47-48 (1979). It is clear thatthe doctrine is applicable only where no enforceable
contract for provision of the services exists between the party providing and the party receiving
them. See id BRJvi argues that, here, Excel may not rely on its asse1ied affi1mative defense of
unjust enrichment, because the parties' Commission Agreement covers BRLvl's obligation to
compensate Excel for its provision of expmi management services.
BRJvl is correct. It is both clear and undisputed that the Commission Agreement covers
all of the services Excel provided to BRLvL In consequence, even in the event that Excel failed to
recover from BRLvi on either of its counterclaims for breach of contract, its unjust emichment

Ill
Ill
Ill

Ill
Ill
Ill
Page 20 - OPINION AND ORDER

defense would not lie. BRlvf's motion is therefore granted to the extent it addresses Excel's
asserted unjust enrichment defense, and that defense is stricken from Excel's pleading.
CONCLUSION
For the reasons set forth above, BRL\I!'s motion (#16) for partial summary judgment is
granted as to Excel's affirmative defense of unjust emichment only, and is otherwise denied.

D"ed

\hi" 30\h <hy or Oc<oh~, 20lr)
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Honorable P(ml'Papa
United States Magistrate Judge

Page 21 -OPINION AND ORDER