F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
AUG 17 1998
TENTH CIRCUIT
__________________________ PATRICK FISHER
Clerk
VOLLAND D. HALLEY; GENE EUCKER,
Plaintiffs-Appellants,
v. No. 97-8019
(D. Wyo.)
MUTUAL OF OMAHA INSURANCE (D.Ct. No. 95-CV-202-B)
COMPANY; UNITED OF OMAHA LIFE
INSURANCE COMPANY; OMAHA PROPERTY
AND CASUALTY COMPANY; MUTUAL OF
OMAHA FUND MANAGEMENT COMPANY,
Defendants-Appellees.
JOHN FERRI; TERRY PAUL HALLEY; JOHN
MYRICK,
Plaintiffs-Appellants,
No. 97-8020
v. (D. Wyo.)
(D.Ct. No. 95-CV-204-B)
MUTUAL OF OMAHA INSURANCE
COMPANY; UNITED OF OMAHA LIFE
INSURANCE COMPANY; OMAHA PROPERTY
AND CASUALTY COMPANY; MUTUAL OF
OMAHA FUND MANAGEMENT COMPANY,
Defendants-Appellees.
__________________________
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. The court generally disfavors the
Before BRORBY, KELLY, and HENRY, Circuit Judges.
__________________________
Volland D. Halley and Eugene Eucker, formerly general agents for Mutual
of Omaha Insurance Company, sued the Company for breach of contract in the
United States District Court for the District of Wyoming. John Ferri, Terry Paul
Halley, and John Myrick, formerly district sales managers for the general agents,
sued the Company as third-party beneficiaries to the contracts of Messrs. Halley
and Eucker. The derivative claims of the former district sales managers were
consolidated with the contract claims of the former general agents. The district
court determined the Company was entitled to summary judgment as a matter of
law because the former agent's breach of contract claims were time-barred. We
have jurisdiction under 28 U.S.C. § 1291, and we affirm the decision of the
district court.
Mutual of Omaha Insurance Company sells financial products, including
insurance. The Company marketed these products through independently owned
and operated general agencies, and through Company-owned and operated
division offices. Mr. Volland Halley owned a general agency located in
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
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Cheyenne, Wyoming, where Mr. Terry Halley served as a district sales manager.
Mr. Eucker owned a general agency located in Spokane, Washington, where
Messrs. Myrick and Ferri served as district sales managers.
The Company’s relationship to each of the general agents was governed by
a written contract. The general agents, in turn, contracted with the district sales
managers. The Company's contracts with the general agents provided for
termination by either party at any time, with or without cause.
Starting in 1988, the Company implemented a series of changes which
allegedly breached the contracts of the general agents. The general agents allege,
inter alia , that the Company imposed minimum production standards, essentially
sales quotas, on the general agents and required termination of sales agents who
failed to meet the quotas; charged general agents higher rates than those charged
to division offices for the same products; and withdrew products from sale by
general agents.
Ultimately, faced with the prospect of termination for failure to comply
with the new Company requirements, Messrs. Halley and Eucker resigned in
1990. They subsequently brought suit, contending the changes implemented by
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the Company breached their contracts.
When the general agents resigned, their respective district sales managers
were effectively terminated. Consequently, the district sales managers brought a
second action against the Company, claiming to be third party beneficiaries to the
contracts between their respective general agents and the Company.
Because relevant acts in this case occurred in Nebraska, where the
Company's home offices are located, and in Wyoming and Washington, where the
general agencies were owned and operated, the district court applied the law of
the forum state, Wyoming’s “borrowing” statute, to ascertain the applicable
statute of limitations. As a result of its inquiry, the district court concluded the
Nebraska five-year statute of limitations for breach of written contract actions
applied to the claims raised by the general agents. The district court further
determined these breach of contract claims were time-barred. Accordingly, the
district court granted the Company’s motions for summary judgment on all claims
in both suits.
The former general agents and sales managers, collectively the Plaintiffs,
now appeal the grant of summary judgment, claiming the district court erred in
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determining when and where their cause of action arose. We review the grant of
summary judgment de novo , applying the same well-recognized legal standard
used by the district court pursuant to Fed. R. Civ. P. 56(c). See Kaul v. Stephan ,
83 F.3d 1208, 1212 (10th Cir. 1996). We examine the record in the light most
favorable to the nonmoving party. Thomas v. International Bus. Mach. , 48 F.3d
478, 484 (10th Cir. 1995).
In this case, each of the three states where relevant acts occurred has a
different statute of limitations for a breach of a written contract action.
Consequently, each state has a different bar date, i.e. , if the cause of action arose
prior to the bar date, the applicable statute of limitations precludes the right of
action. Wyoming has a ten-year statute of limitations, making September 5, 1985
the applicable bar date. Wyo. Stat. Ann. § 1-3-105(a)(i) (Michie 1988).
Washington has a six-year statute of limitations, making September 5, 1989 the
bar date. Wash. Rev. Code Ann. § 4.16.040(1) (West Supp. 1997). Nebraska has
a five-year statute of limitations, making September 5, 1990 the bar date. Neb.
Rev. Stat. Ann. § 25-205(1) (Michie 1995).
According to the Plaintiffs, the Company began to implement the changes
which allegedly breached the contracts of the general agents in early 1988. The
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Plaintiffs’ complaints, however, were not filed until September 6, 1995. Thus,
where and when the Plaintiffs’ cause of action actually arose is critical to the
resolution of this case because the applicable Wyoming “borrowing” statute
provides that “[i]f by the laws of the state or country where the cause of action
arose the action is barred, it is also barred in this state.” Wyo. Stat. Ann. § 1-3-
117 (Michie 1988).
Plaintiffs contend the district court erred in determining their cause of
action arose in Nebraska. This is so, Plaintiffs argue, because the district court
incorrectly applied the holding of Cantonwine v. Fehling , 582 P.2d 592 (Wyo.
1978), to the facts of this case, and failed to recognize that the rule of
Cantonwine was modified by Stanbury v. Larsen , 803 P.2d 349 (Wyo. 1990), cert.
denied , 499 U.S. 960 (1991). 1
1
This court provided an alternative, and perhaps clearer statement
of Wyoming law in Mullinax Eng'g Co. v. Platte Valley Constr. Co., 412 F.2d 553 (10th
Cir. 1969), where we held that “[u]nder Wyoming law, ‘where a contract is made in one
state to be performed in another, the law of the state of performance will govern unless it
shall clearly appear that the parties intended otherwise.’” Mullinax Eng'g Co., 412 F.2d
at 555 (quoting J.W. Denio Milling Co. v. Malin, 165 P. 1113, 1116 (1917)). However,
the Plaintiffs would fare no better under this statement of the rule than under Cantonwine
and Stanbury. As we discuss infra, Nebraska is the state where most of the performance
occurred with respect to the alleged breaches. Moreover, the choice of law provisions in
the contracts forming the basis of the Plaintiffs’ claims all evidence the parties shared
intent to have Nebraska law govern. Thus, under Mullinax the law of Nebraska would
govern, and Plaintiffs' claims would be barred by Nebraska's five-year statute of
limitations.
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In Cantonwine , the Wyoming Supreme Court had to resolve where and
when a cause of action for failure to honor several promissory notes arose, in
order to determine the applicable statute of limitations. Cantonwine , 582 P.2d at
596-98. In applying Wyoming’s borrowing statute, the Wyoming court turned to
the standard for determining where and when a cause of action arises adopted
previously by the Kansas Supreme Court:
The cause of action arises when that is not done which ought to have
been done, or that is done which ought not to have been done. But
the time when the cause of action arises determines also the place
where it arises; for when that occurs which is the cause of action, the
place where it occurs is the place where the cause of action arises.
Id. at 597 (quoting Bruner v. Martin , 93 P. 165, 166 (Kan. 1907) (citation
omitted)) (emphasis omitted). Importantly, the Cantonwine court was further
constrained in making its determination by a Wyoming statute which specified
when a cause of action on a demand instrument arises. Id. at 597-98.
In Stanbury , the Wyoming Supreme Court again was asked to determine
where a cause of action on an unpaid promissory note arose in order to ascertain
the applicable statute of limitations under the Wyoming borrowing statute.
Stanbury , 803 P.2d at 352-53. The Stanbury court concluded the Wyoming
statute on demand notes had been applied too broadly in Cantonwine and
narrowed the interpretation accordingly. Stanbury , 803 P.2d at 353. However,
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there is nothing in Stanbury to suggest the Wyoming Supreme Court altered its
earlier approval of the Bruner analysis as the generally appropriate means of
determining when and where a cause of action arises. Moreover, in applying
Cantonwine and Stanbury to determine when and where the Plaintiffs’ cause of
action arose, we must be sensitive to the differences between the instruments at
issue in those cases, promissory notes, and the contracts at issue herein.
This court’s task in determining when and where the cause of action in this
case arose is complicated by the Plaintiffs’ rather fluid characterization of the
alleged breach or breaches of the contracts at issue. In their statement of the
“undisputed facts,” the Plaintiffs indicate multiple breaches occurred:
The plaintiffs contend that these changes, which occurred over a
period of time, culminated in an overall breach of the contracts
which were entered into by the [D]efendants’ general agents.
Ultimately, this series of breaches had the desired effect of forcing
the Defendants’ general agents into resigning from their agencies ....
This characterization comports with the district court’s treatment of the Plaintiffs’
claims as three alleged breaches (the Company’s imposition of sales quotas,
discriminatory pricing, and withdrawal of products), i.e. , a “series of breaches.”
However, the Plaintiffs also contend, for purposes of determining when
their cause of action arose, that the changes implemented by the Company,
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specifically the implementation of sales quotas, “did not ‘breach’ their contract
with the plaintiffs in 1988.” Instead, the Plaintiffs claim the Company’s conduct
“amounts to an ‘anticipatory repudiation’ of the contract entered into with the
plaintiffs and not an actual ‘breach.’” Thus, according to the Plaintiffs, they were
innocent parties allowed to “wait and see if the other party will ultimately
perform under the contract.” Therefore, their argument goes, the “statute of
limitations did not begin to run until 1990 when the defendants made further
performance impossible and the plaintiffs terminated their contracts.” From this
line of reasoning, the Plaintiffs conclude the actual breach did not occur “until the
[Company] materially failed to perform by making performance on the part of the
plaintiffs impossible,” and this did not occur “until 1990 in Washington and
Wyoming.” Consequently, the Plaintiffs claim, the district court erred in fixing
the time when their cause of action arose. We disagree.
The Wyoming Supreme Court has described a repudiation of a contract or
an anticipatory breach as “‘one committed before the time has come when there is
a present duty of performance, and is the outcome of words or acts evincing an
intention to refuse performance in the future.’” J.B. Service Court v. Wharton ,
632 P.2d 943, 945 (Wyo. 1981) (quoting 17 Am. Jur. 2d Contracts § 448 (1964)).
In determining whether a party to a contract has committed an anticipatory
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breach, “‘it is the intention manifested by his acts and words which controls, and
not his secret intention.’” Id. (quoting 17 Am Jur. 2d Contracts § 448 (1964)).
Nothing in the documentation concerning the Company’s implementation of
quotas evinces an intention by the Company to refuse performance in the future.
Plaintiffs themselves admit that when the changes were instituted, the Company
“at that time indicated only their intent to apply minimum production standards
over a three-to-five year period of time, without the stated objective of
eliminating all general agents by the end of December 1992.” Plaintiffs provide
no evidence they contemporaneously recognized the Company's implementation of
quotas in 1988 as an “anticipatory breach.” “‘A mere request for a change in the
terms ... of the contract is not in itself enough to constitute a repudiation.’” Id. ,
632 P.2d at 945 (quoting Corbin, Corbin on Contracts § 973, at 905-06 (1951)).
Thus, notwithstanding the Plaintiffs’ strenuous, if not strained, efforts to
somehow portray the Company’s implementation of and on-going efforts to
enforce sales quotas as an anticipatory repudiation of the contracts, we agree with
the analysis of the district court. Under the general principle of Cantonwine , the
Company’s decision to impose sales quotas was the action “which ought not to
have been done,” and Plaintiffs’ cause of action, if any, arose in 1988 when that
decision was made. See 582 P.2d at 597. We also note that the factual record is
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consistent with our legal conclusion; the former general agents recognized the
Company’s decision to impose sales quotas as a breach of their contracts when the
decision was made in 1988.
The district court determined the other two alleged breaches, discriminatory
pricing and withdrawal of products, also occurred more than five years before the
Plaintiffs filed their claims. The record indicates the Company practice of
charging discriminatory rates to general agents was in place in 1988. The
withdrawal of certain products from sale by general agents occurred prior to June
1990. On appeal, Plaintiffs provide no evidence or argument to the contrary.
Accordingly, we reject Plaintiffs’ claim that the district court erred in
determining when the alleged breaches of the contracts occurred. The cause or
causes of action arising from the imposition of the sales quotas and discriminatory
pricing arose in 1988. Any cause of action based on the withdrawal of products
had arisen by June of 1990.
Plaintiffs further contend the district court erred in determining where their
cause of action arose. They claim under Stanbury “the test” for determining
where a cause of action arises is “where performance is to be made.” See
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Stanbury , 803 P.2d at 353. Plaintiffs claim performance was to occur in
Wyoming and Washington, where the general agencies were located. In support
of this claim, the Plaintiffs point to the fact that each general agent was assigned
to a geographic territory in Wyoming and Washington, and was required to
conduct operations in that area; all their business was written in Wyoming and
Washington; and they were prevented from performing their duties in Wyoming
and Washington when the sales quotas were enforced.
But Plaintiffs’ designation of the place of performance presupposes their
characterization of the breach as the Company’s “making performance on the part
of the plaintiffs impossible.” The breaches actually alleged were changes in
administrative practices made by the Company from their home offices in Omaha,
Nebraska. The performance complained of is that of the Company, and took place
in Nebraska.
Because the act or acts “which ought not to have been done,” the alleged
breaches of the contracts, were decisions made and implemented in Nebraska,
Plaintiffs' cause or causes of action arose in Nebraska. Under Wyoming’s
borrowing statute, the court must apply the Nebraska five-year statute of
limitations. Coupled with our finding that the alleged breaches occurred prior to
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September 5, 1990, we conclude each of the Plaintiffs’ claims is time-barred.
Accordingly, the decision of the district court is AFFIRMED .
Entered by the Court:
WADE BRORBY
United States Circuit Judge
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