## Facts

- Entergy Services, Inc. and Entergy Arkansas, Inc. operated two Arkansas coal-fired power plants designed to burn low-sulfur coal shipped from the Powder River Basin in Wyoming and Montana.
- After changes in rail operations following the Union Pacific–Missouri Pacific merger, Entergy and Union Pacific Railroad entered long-term Rail Transportation Agreements for shipment of specified coal volumes to Entergy’s plants.
- The agreements required Entergy to provide monthly forecasts and shipping orders and required Union Pacific to transport agreed quantities.
- The agreements included a make-up mechanism requiring delivery shortfalls to be cured within a defined period (generally three months).
- The agreements also included a liquidated-damages clause stating that if Union Pacific failed to deliver as required, it would pay liquidated damages calculated by a contractual formula; the clause did not state liquidated damages were the sole or exclusive remedy.
- Entergy alleged Union Pacific repeatedly failed to deliver required quantities within the contractual time and make-up limits, forcing Entergy to seek alternatives and incurring additional operational losses.
- Entergy sued for breach of contract seeking liquidated damages and additional damages; a separate good-faith claim was deferred to later proceedings.
- The case came on cross-motions for summary judgment limited to Phase I contract-interpretation questions, including breach and whether liquidated damages were exclusive.

## Issues

1. Whether Union Pacific’s failure to deliver required coal quantities within the contracts’ timing and make-up provisions constituted breach as a matter of law.
2. Whether the contracts’ liquidated-damages clause barred recovery of additional (including consequential) damages by operating as Entergy’s exclusive remedy.

## Decision

- The court held Union Pacific breached the Rail Transportation Agreements by failing to deliver required coal quantities within the contractual time and make-up constraints.
- The court held the liquidated-damages provision did not provide an exclusive remedy because the contracts did not clearly and expressly limit Entergy to liquidated damages.
- The court granted Entergy’s motion for partial summary judgment on breach and on non-exclusivity of liquidated damages.
- The court denied Union Pacific’s motion to the extent it sought judgment that liquidated damages were the exclusive remedy or that no breach occurred as a matter of law.
- The court left the amount and proof of consequential damages, and other deferred claims (including good faith), for later proceedings.

## Legal Principles

- Under Nebraska contract law, parties may limit remedies by contract, but exclusivity must be stated clearly; it will not be inferred from a liquidated-damages clause alone.
- A liquidated-damages clause requiring a breaching party to pay a specified amount does not, without explicit “sole” or “exclusive remedy” language, waive or eliminate other otherwise-available contract damages.
- Mandatory payment wording (e.g., “shall pay”) establishes an obligation to pay liquidated damages upon breach but does not itself convert the clause into a remedy limitation.
- When liquidated damages are non-exclusive, the nonbreaching party may seek liquidated damages and also pursue additional damages subject to ordinary limits (causation, foreseeability, and proof).

## Conclusion

The court ruled that Union Pacific breached its coal-transportation agreements with Entergy and that the contracts’ liquidated-damages clause did not restrict Entergy to that remedy because it lacked clear exclusivity language, allowing Entergy to pursue additional consequential damages subject to later proof.


Entergy Servs., Inc. v. Union Pac. R.R. Co., 35 F. Supp. 2d 746 (D. Neb. 1999)