Dakota Energy Coop, Inc. v. East River Electric Power Coop., Inc., No. 22-1884 (8th Cir. 2023)
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Dakota Energy Power Cooperative, Inc., a member of East River Electric Power Cooperative, Inc., sought to withdraw from East River and to terminate the parties’ long-term power contract so that it could purchase electricity from another source. When East River resisted, Dakota Energy sued for anticipatory breach of contract and sought a declaratory judgment providing that it had a contractual right to withdraw from East River by way of a buyout. The district court granted summary judgment in favor of East River, and Dakota Energy appealed.
The Eighth Circuit affirmed. The court explained that under the UCC, the terms of a written contract “may be explained or supplemented” by certain extrinsic evidence, including “usage of trade.” Dakota Energy’s proffered trade usage evidence would effectively add an entirely new provision to the WPC. Moreover, under the UCC, “the express terms of an agreement and any applicable . . . usage of trade must be construed whenever reasonable as consistent with each other.” Here, the express terms of the WPC—which provide that the agreement will “remain in effect” until December 31, 2075, and which contain no provision allowing for an early buyout—are inconsistent with any trade usage evidence suggesting something to the contrary. Therefore, the court concluded that the WPC unambiguously requires Dakota Energy to purchase all of its electricity from East River until December 31, 2075, and that no provision in the WPC or East River’s Bylaws allows for an earlier termination of that obligation.
Court Description: [Kelly, Author, with Benton and Erickson, Circuit Judges] Civil case - Contracts. Plaintiff sought to withdraw from the parties' long-term power contract so that it could contract with another electricity provider; defendant resisted, and plaintiff sued for anticipatory breach of contract and a declaratory judgment that it had the right to withdraw from the contract by way of a buyout; the district court granted summary judgment to defendant, and plaintiff appeals. The district court did not err in determining the contract documents unambiguously require plaintiff to purchase all of its electricity from defendant until December 31, 2075, and no provision of the agreement or the defendant's bylaws allow for an earlier termination of the agreement.
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