United States District Court, D. New Mexico
BAR J SAND & GRAVEL, INC., a New Mexico corporation, Plaintiff,
FISHER SAND & GRAVEL CO., a North Dakota corporation, doing business in New Mexico through its division SOUTHWEST ASPHALT & PAVING, Defendant.
AMENDED MEMORANDUM OPINION AND
MATTER is before the Court on Plaintiff Bar J Sand &
Gravel, Inc.'s (“Bar J”) Motion for Partial
Declaratory Summary Judgment. Doc. 103. In this motion, Bar J
asks the Court to find as a matter of law that the Exclusive
Supply Agreement (“ESA”) entered into between Bar
J and Defendant Fisher Sand & Gravel Co.
(“Fisher”) on June 28, 2007 was renewed for a
second five-year term in 2012. Having considered the motion,
the briefing, accompanying evidence, and the relevant law,
the Court concludes that the ESA was not renewed and
therefore expired on June 28, 2012. Accordingly, Bar J's
Motion (Doc. 103) is denied.
The Exclusive Supply Agreement (ESA)
1996, Plaintiff Bar J acquired an exclusive right to
excavate, remove and sell aggregate earth products, remove
asphalt, and to process material on land located within the
Pueblo of San Felipe. See ESA at 1 (Doc. 6-1). In
2007, Bar J entered into the ESA with Defendant Fisher that
forms the basis of this lawsuit. Id. Under the ESA,
Bar J agreed to sell materials removed from the Pueblo to
Fisher on an exclusive basis and Fisher in turn agreed to
purchase a minimum quantity of material from Bar J each year.
ESA ¶ 1. The ESA further provided Fisher with the right
“to use the [p]remises for the purpose of excavating,
processing . . . and removing the specified minimums.”
ESA ¶ 5.
initial term of the ESA was a period of five years commencing
on June 28, 2007, the effective date of the ESA. ESA ¶
4. As set forth in Section 1 of the ESA, the amount of
material Fisher was required to purchase from Bar J
incrementally increased each year, with the annual minimum
tonnage requirement reaching 400, 000 tons in 2012. ESA
¶ 1. Section 6 of the ESA, entitled
“Payments”, detailed the “rate”
(i.e., the amount per ton of material) that Fisher was
obligated to pay Bar J throughout the course of the ESA.
See ESA ¶ 6.
further provided Fisher with the option to renew the ESA for
an additional five years after the completion of the initial
five-year term. ESA ¶ 4. As set forth in Section 4 of
the ESA, this provision stated that in order to exercise the
on or before one hundred twenty (120) days before the
expiration of the Term, [Fisher] shall deliver written notice
of its intention to exercise the renewal option to [Bar J].
If [Fisher] does not exercise its renewal option within the
prescribed time, this Agreement will terminate at the
expiration of the Term. In all matters relating to renewal
[Fisher] shall contact and negotiate exclusively with [Bar
J], and not the Pueblo or governmental agencies. The terms
and conditions of this Agreement for the Renewal Term shall
remain the same except that all payments shall be subject to
See ESA ¶ 4. In the event Fisher exercised the
renewal option, the ESA stated that minimum tonnage
requirements during the renewal term would be as follows:
400, 000 tons of material annually from January 1, 2012 until
December 31, 2013, and 500, 000 tons of material annually
from January 1, 2014 until expiration of the renewal term.
ESA ¶ 1. With regard to payments during the renewal
term, the ESA provided that the “[p]ayments to be
applicable during the [r]enewal [t]erm shall be subject to
renegotiation by the parties, provided that in no event shall
the payments be lower during the [r]enewal [p]eriod than it
is on the date the renewal period begins.” ESA ¶
the ESA provides that it shall be governed by and construed
in accordance with New Mexico law (ESA ¶ 29), the Court
will apply New Mexico law.
events that led to the filing of this federal suit began in
2012, the final year of the ESA's initial term, and bear
on whether Fisher exercised the ESA's renewal option.
Since the initial term of the ESA was set to expire on June
28, 2012, Fisher was required under the ESA to “deliver
written notice of its intention to exercise the renewal
option” to Bar J by February 28, 2012, which was 120
days prior to expiration of the initial term. See ESA
alleges that in late 2011 and early 2012, it began
experiencing reduced sales volumes in part due to a downturn
in the market. See Tommy Fisher Depo., January 21,
2016, 49:21-52:25 (Doc. 138-1). Fisher alleges that its
president, Tommy Fisher, met with Ted Martinez, vice
president of Bar J, in early 2012 to discuss these issues.
Id. at 51:22-54:8. Mr. Fisher testified that he told
Mr. Martinez during this meeting that Fisher was “going
to be way off in 2012” with regard to the minimum
tonnage requirement, that Fisher expected to purchase
“around 150, 000 [tons]” in 2012, and that Mr.
Martinez told him to “do the best you can.”
Id. at 52:19-22, 53:13, 53:24-54:1, 160:25-161:2.
Mr. Fisher testified that Mr. Martinez informed him that
reducing the minimum tonnage requirement going forward would
“not [be] an issue . . . because [Bar J] was not paying
minimums” to the Pueblo, but that Bar J was unable to
“do anything” with regard to royalty rate
payments. Id. at 154:20-25; 202:24-203:1 (Doc.
136-1). Mr. Fisher testified that he believed Mr. Martinez
had agreed to a reduction in the minimum tonnage requirements
going forward. Id.
Mr. Martinez denies telling Mr. Fisher in 2012 that it would
be okay to reduce the tonnage requirement to 150, 000 tons
annually going forward (Martinez Depo. 112:10-18), he
testified in his deposition that he did not remember having
any conversations regarding the minimums in 2012
(Id. 113:16-18), that he did not remember if Mr.
Fisher told him in 2012 that Fisher would only continue its
relationship with Bar J if the royalty or the mandatory
minimums were reduced (Id. 110:8-15), did not
remember if he told Mr. Fisher that Bar J would reduce the
mandatory minimums going forward (Id.
110:21-111:23), and did not remember if he told Mr. Fisher
that Bar J was not able to renegotiate the mandatory minimums
(Id. 112:21-24). See Ted Martinez Depo.,
January 19, 2016, (Doc. 136-4).
March 27, 2012, Michael Moehn, a vice president of Fisher,
sent an email regarding renewal of the ESA to Tommy Fisher,
Tim Priebe (Fisher's general counsel), and David Olson
(vice president of Fisher's New Mexico operations). Doc.
103-3. He stated in the email:
Per the attached lease we are to send written notice to Bar J
at least 120 days prior to expiration. Dave talked to
Louie a little bit ago and he said to get with
Frank (Ted's CFO) on what to put in the notice. Dave just
talked to Frank and he said he had to get with Louie and Ted
to see if they wanted to renegotiate anything to do with
Minimums and Royalty (those are both too high). Technically,
both of those are still spelled out through 2015 in the
lease. Should we just send a notice over that we intend
to renew anyway? They have never screwed with us before, so I
don't think they will now, but technically we are only 90
days out from expiration.
Doc. 103-3 (emphasis added); see also Louis Jacques
Aff., Doc. 103-11 at ¶ 4 (stating that he “spoke
to someone from Fisher in late March 2012 who told [him]
Fisher had questions about having missed the technical 120
day renewal option deadline and whether Bar J  was going to
enforce that provision.”); see also Louis
Jacques Depo., Jan. 18, 2016, 87:1-89:12 (Doc. 136-5)
(testifying that although he did not recall when this
conversation occurred, Dave Olson spoke with him about
sending Bar J a letter “stating that they were going to
J's end - although it is not clear when this occurred -
Louis Jacques, Bar J's president, and Ted Martinez asked
Frank Duran, Bar J's CFO, to “find out if Fisher
intended to renew the ESA for the renewal term and, if so, to
ask Fisher to send Bar J  the formal notice required by the
ESA.” See Jacques Aff., Doc. 103-11 at ¶
4; Ted Martinez Aff., Doc. 103-10 at ¶ 4. It appears
that Frank Duran reached out to Fisher on April 12, 2012
based on an email sent from Mr. Moehn to Tommy Fisher and Tim
Priebe, which stated:
Frank Duran (CFO for Ted Martinez) called today and asked us
if we could go ahead and send over the formal notice that we
want to extend our agreement as required in the original
document. Technically it is late. He did mention to state
that we will continue to work on the particulars surrounding
royalty and volumes. Tommy [Fisher] has been discussing those
with Ted. So, I tried to write a notice that said “yes,
we would like to extend” and also mention that we are
both in agreement that we will work on the other two issues.
Doc. 103-4. A draft of the notice was attached to the email.
Id. The next day, after having received approval to
send the notice to Bar J, Mr. Moehn submitted a letter to Bar
J with the subject: “Notice of intent to extend supply
agreement”. Doc. 103-5. In the letter, Moehn stated:
Per earlier conversations between Fisher . . . and Bar J . .
. personnel, Fisher has notified Bar J of its intent to
extend the current supply agreement between Fisher and Bar J.
This letter is to provide written documentation of
Fisher's intent to extend the agreement as you have
requested. Per earlier conversations regarding this notice,
it is agreed that we will continue to try and best address
the issues regarding royalty and volume as we move forward to
the maximum benefit of both parties.
Doc. 103-5. Both Mr. Jacques and Mr. Martinez stated in their
affidavits that Bar J “accepted” this letter from
Mr. Moehn as “complying with the notice of renewal
requirement although technically late.” See
Jacques Aff., Doc. 103-11 at ¶ 5; Martinez Aff., Doc.
103-10 at ¶ 5.
25, 2012, Mr. Moehn sent an email to Tommy Fisher stating
that “Our lease is official up at the beginning of
June. We sent them [Bar J] notice a while back that we would
like to extend and continue discussions regarding royalty and
minimums.” Doc. 105-3.
parties do not dispute that Fisher continued its operations
on the premises after June 28, 2012. In early 2013, Fisher
received an invoice from Bar J for unpaid minimum tonnages
during 2012. See Fisher Depo. 209:22-210:12 (Doc.
136-1); see also Doc. 38-4. This invoice indicated
that the minimum tonnage requirement was 400, 000 tons, that
Fisher removed and paid for approximately 183, 764 tons, and
that Fisher owed Bar J approximately $564, 375 for the 216,
235 tons that it was below the minimum. Doc. 38-4. Upon
receipt of this invoice, Tommy Fisher reached out to Mr.
Martinez. See Fisher Depo. 209:22-210:12 (Doc.
136-1). Mr. Fisher testified that Mr. Martinez told him that
the invoice was sent in error, that he would take care of it,
and that he reconfirmed the parties had agreed to a reduced
tonnage requirement of 150, 000. See Fisher Depo.
228:8-230:24 (Doc. 136-1). Mr. Fisher testified that Mr.
Martinez told him to send a letter to him following up on
their conversation and, on February 8, 2013, he sent such a
letter. Id.; Doc. 6-2. In this letter, Mr. Fisher
summarized the communications he believed Bar J and Fisher
employees had the prior year regarding “adjustments to
the terms” of the original ESA and expressed his
“understanding that while [they] hadn't established
a minimum requirement going forward, as long as [Fisher] did
at least 150, 000 Tons in 2012, there wouldn't be any
additional royalty amounts sought.” Doc. 6-2. Mr.
Fisher also indicated in the letter that he hoped the bill
for additional minimums was sent in error “as it
didn't reflect our earlier conversations.”
February 20, 2013, Mr. Martinez responded to Mr. Fisher's
letter and indicated that Bar J “agree[d] we should get
together for an in person meeting to create a mutually
beneficial agreement going forward.” Doc. 6-3. This
meeting was held on April 22, 2013. Doc. 136-3 at 9. Mr.
Fisher testified that the purpose of this meeting was to
“get together . . . [to] explore all possibilities if
we can lower the royalty rates.” Fisher Depo. 245:14-24
(Doc. 138-1). Id. Mr. Fisher further testified that
neither the minimum tonnage requirement nor the 2012 invoice
came up at this meeting, and that the reason for this was
because he believed those issues had already been resolved.
Id. 248:25-249:1-13. Following the April 2013
meeting, Mr. Moehn sent an email to Frank Duran of Bar J
regarding a “Proposed Ammendment [sic] to Supply
Agreement”. Doc. 103-7. Mr. Moehn stated in the email:
I've been working with Tommy over the past two weeks to
try and come up with a proposed amendment to our supply
agreement. I tried to keep it simple. It spells out lower
minimums and also a flat royalty rate. I didn't adjust
the royalty per the provisions in our ...