Summary
The Montana Supreme Court affirmed summary judgment for NorthWestern Corporation in a contract pricing dispute involving a power purchase agreement with Boulder Hydro LP. The court held that the discontinuation of the Dow Jones Mid-C index voided only the specific pricing term, not the entire agreement, and that a reasonable replacement index could be used. The court also concluded that Boulder unreasonably withheld agreement to substitute the ICE index.
Topics
Practice areas
Questions Presented
- Whether the District Court erred in granting summary judgment to NorthWestern by holding that discontinuation of the Mid-C Dow Jones index made only that pricing term void rather than invalidating the power purchase agreement or permitting Boulder to select a new pricing option.
- Whether the parties' power purchase agreement permitted replacement of the discontinued index with a reasonable market-rate reporting substitute.
Holdings
- When the exclusive contractual method for determining consideration becomes impossible to execute, the pricing provision becomes void, but the invalidity of that provision does not invalidate the entire power purchase agreement.
- Summary judgment for NorthWestern was proper because there was no genuine dispute of material fact on the relevant contract-interpretation issue, and NorthWestern was entitled to judgment as a matter of law.
- Under Article 20 of the power purchase agreement, Boulder unreasonably withheld agreement to replacing the discontinued Dow Jones index with the ICE index after the District Court determined that ICE was a reasonable substitute.
Key quotations
“"Where a contract provides an exclusive method by which its consideration is to be ascertained, which method appears possible on its face but in fact is or becomes impossible of execution, such provision only is void."” (252)
Factual background
Boulder and NorthWestern entered into a 2007 power purchase agreement under which Boulder selected a 15-year market-based pricing option using the Mid-C Dow Jones index. The Dow Jones stopped publishing the relevant Mid-C index in September 2013, after which NorthWestern proposed replacing it with the ICE or Powerdex index. Boulder argued that discontinuation of the index eliminated a material bargained-for term and entitled it to select a different pricing option or rescind the agreement. The District Court held that a reasonable replacement index could be used and later found the ICE index reasonable.
Procedural history
Boulder filed the action in May 2016. The parties cross-moved for summary judgment on legal issues, and the District Court granted NorthWestern summary judgment, holding Boulder to the 15-year market-rate power purchase agreement and concluding that the discontinued Dow Jones index should be replaced by a reasonable market-rate reporting substitute. After a bench trial, the District Court found that the ICE index was a reasonable replacement; neither party appealed that ruling. Boulder appealed only the summary-judgment order, and the Montana Supreme Court affirmed.