Context-Driven Ambiguity Under Pennsylvania Contract Law: “Retail Store” and “Store Door Delivery” Can Encompass Automated Fulfillment Centers

I. Introduction

In Walter Davis v. Bimbo Foods Bakeries Distribution, LLC (4th Cir. Jan. 8, 2026) (unpublished), the Fourth Circuit—applying Pennsylvania law per the parties’ choice-of-law clause—addressed whether an automated grocery fulfillment center located within an exclusive distribution territory fell within a distributor’s contractual rights. Walter R. Davis (the distributor) sued Bimbo Foods Bakeries Distribution, LLC (the manufacturer’s distribution entity) after learning Bimbo intended to use a different distributor to service Kroger’s first Maryland automated fulfillment center.

The central question was whether the fulfillment center qualified as an “Outlet” under the parties’ 2011 Distribution Agreement. That turned on two undefined contractual terms: whether the center was a “retail store,” and whether it purchased products by “store door delivery.”

II. Summary of the Opinion

The majority (Judge Thacker, joined by Judge Rushing) affirmed the district court after a bench trial. The court held:

Under Pennsylvania law, contractual ambiguity is assessed in context—i.e., whether a term is reasonably susceptible to more than one meaning when applied to the particular facts.
Given the fulfillment-center model and the parties’ competing, reasonable readings, “retail store” (and effectively “store door delivery”) could be treated as ambiguous, permitting consideration of parol evidence (industry custom, course of performance, and other extrinsic sources).
The district court did not clearly err in finding the fulfillment center is a “retail store” and that deliveries to its dock qualify as “store door delivery,” making it an “Outlet” within Davis’s exclusive territory.

Judge Rushing concurred, suggesting “retail store” may be unambiguous but broad enough to include the center; she agreed “store door delivery” was ambiguous and properly resolved with parol evidence. Chief Judge Diaz dissented, arguing “retail store” is unambiguous and plainly excludes a warehouse-like automated fulfillment center whose primary function is storage and shipping rather than selling to ultimate consumers.

III. Analysis

A. Precedents Cited

1) Standards of review in the Fourth Circuit

Harrell v. DeLuca, 97 F.4th 180, 189 (4th Cir. 2024): Confirmed de novo review of contract interpretation generally, and clear-error review of factual findings after a bench trial.
In re Parker, 141 F.4th 583, 587 (4th Cir. 2025): Reiterated the “definite and firm conviction” formulation for clear error.
Brown v. Baltimore & Ohio R. Co., 805 F.2d 1133, 1140-41 (4th Cir. 1986): Used to support the key Pennsylvania-law linkage that once ambiguity is found, interpreting the ambiguous term becomes a fact question reviewed for clear error on appeal.

2) Pennsylvania contract interpretation: intent, ambiguity, and parol evidence

Com. ex rel. Kane v. UPMC, 129 A.3d 441, 463 (Pa. 2015): Set the foundational rule that parties’ intent controls; unambiguous terms are enforced as written; ambiguity permits parol evidence.
Trizechahn Gateway LLC v. Titus, 976 A.2d 474, 483 (Pa. 2009): Confirmed that whether a term is ambiguous is a question of law, while the meaning of an ambiguous term is for the factfinder.
Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 390 (Pa. 1986): Cited for the proposition that ambiguity determination is a legal question.
Commonwealth by Shapiro v. UPMC, 208 A.3d 898, 909-10 (Pa. 2019); Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418, 429 (Pa. 2001); Madison Const. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999); Pines Plaza Bowling, Inc. v. Rossview, Inc., 145 A.2d 672, 676 (Pa. 1958): Deployed collectively to underscore the majority’s thesis that ambiguity is evaluated by asking whether competing interpretations are reasonable as applied to the case’s facts.
Insurance Adjustment Bureau, Inc. v. Allstate Insurance Co., 905 A.2d 462, 481 (Pa. 2006): Quoted for the admissibility of parol evidence to resolve ambiguities, whether patent or latent; also for the “reasonably susceptible of different constructions” formulation.

3) The dissent’s plain-meaning line of cases and the majority’s distinction

Steuart v. McChesney, 444 A.2d 659, 661-62 (Pa. 1982): The dissent invoked this to emphasize four-corners review for unambiguous contracts and to warn against rewriting agreements through construction.
Willison v. Consolidation Coal Co., 637 A.2d 979, 982 (Pa. 1994): Cited for “accepted and plain meaning” when a term is unambiguous.
Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 897 (Pa. 2006) (quoting 401 Fourth Street v. Investors Ins. Co., 879 A.2d 166, 170 (Pa. 2005)): The dissent relied on these for the rule that words of common usage are construed in their natural, plain, and ordinary sense, and for insurance-policy canons.

The majority did not reject plain meaning as a concept; rather, it emphasized Pennsylvania Supreme Court statements that “context” includes the factual application, and it criticized the dissent’s reliance on insurance-policy cases as a “special subset of contracts” with interpretive rules (e.g., construe ambiguities in favor of insureds).

B. Legal Reasoning

1) The “contextual ambiguity” pivot

The opinion’s most consequential move is methodological: it frames ambiguity as arising not only from text in the abstract, but from applying the text to a novel commercial setting. Because “retail store” and “store door delivery” were undefined and dictionary definitions did not “clearly foreclose” either side’s reading, the district court treated both as ambiguous and admitted parol evidence. The Fourth Circuit approved this approach as consistent with Pennsylvania law’s repeated formulation—ambiguity exists when a term has more than one reasonable interpretation as applied to the particular facts.

2) “Retail store” as applied to a closed-to-the-public fulfillment center

Bimbo argued a retail store requires in-person consumer access and point-of-sale exchange at the facility. Davis countered that the facility “sells” by fulfilling direct-to-consumer orders: consumers purchase online, but the retailer’s goods are sold from wherever they are stored and shipped to complete the transaction.

Rather than decide the issue solely by an abstract definition, the district court credited testimony from multiple former Bimbo employees and the broker present when the agreement was executed, supporting an industry understanding broad enough to include facilities that sell to final consumers through online order fulfillment. The district court also discredited Bimbo’s narrower reading as “contrived” for litigation. On appeal, the majority held there was no clear error in that finding.

3) “Store door delivery” and the attempt to import merchandising duties

Bimbo’s key interpretive effort was to treat “store door delivery” as a composite service necessarily including the merchandising/promotion tasks listed in Section 4.1 (stocking shelves, rotating product, promotional materials). The majority labeled this construction “nonsensical,” noting it would produce an illogical set/subset problem (some Outlets would be both Outlets and non-Outlets) and would ignore that Schedule B’s excluded examples (street vendors, concessions, vending machines) share a practical feature: they lack “doors.”

On the evidence, the district court adopted the more literal and trade-usage-consistent meaning: delivery to the consignee’s place of business—here, the loading dock—without requiring that the distributor be allowed into the facility or perform shelf-stocking tasks (tasks that outlets may refuse in any event). The majority found that interpretation well supported, including by the Dictionary of International Trade definition introduced at trial and by testimony that “store door delivery” could occur without Section 4.1 services.

4) Appellate posture mattered: ambiguity transforms “meaning” into a fact issue

A major practical feature of the decision is procedural: once ambiguity is found, the district court’s resolution of meaning—based on weighing parol evidence—receives clear-error deference. That deference, reinforced by Trizechahn Gateway LLC v. Titus and Brown v. Baltimore & Ohio R. Co., is what allowed the majority to affirm even while the concurrence and dissent debated whether “retail store” should have been deemed unambiguous at the threshold.

C. Impact

Distribution and franchise disputes in the logistics era: The case signals that legacy channel-language (“retail store,” “store door delivery”) may extend to e-commerce infrastructure (automated fulfillment centers) when the evidence supports that the facility functions as a consumer-sales node through order fulfillment.
Drafting pressure: Manufacturers and distributors who intend to exclude (or include) fulfillment centers, dark stores, micro-fulfillment hubs, and ship-from-store models should define terms expressly (e.g., “warehouse,” “fulfillment center,” “direct-to-consumer orders,” “dock delivery,” “no in-store merchandising required”).
Litigation strategy and proof: The outcome turned heavily on parol evidence—especially testimony from individuals tied to contract formation and industry practice—suggesting future litigants will invest early in developing trade usage and course-of-performance records.
Limited precedential weight but persuasive reasoning: Because the opinion is unpublished, it is not binding in the Fourth Circuit. Still, it provides a detailed roadmap for applying Pennsylvania’s contextual ambiguity doctrine to modern retail/fulfillment structures.

IV. Complex Concepts Simplified

Parol evidence: Evidence outside the written contract (e.g., industry custom, course of performance, formation history) used to determine the parties’ intended meaning when contract language is ambiguous.
Patent vs. latent ambiguity: A patent ambiguity appears from the text alone; a latent ambiguity emerges only when the text is applied to real-world facts (e.g., a contract written before automated fulfillment centers became central to grocery retail).
Course of performance: How the parties actually performed the agreement over time; it can reveal what both sides understood terms to mean.
Trade usage / industry custom: Specialized meaning commonly understood in a particular industry, which can help interpret undefined terms.
Clear error review: A deferential appellate standard. If the trial court’s finding is plausible in light of the record, the appellate court will not reverse merely because it might have weighed evidence differently.

V. Conclusion

The majority’s core contribution is a disciplined, context-forward application of Pennsylvania contract law: terms may be “clear” in the abstract yet reasonably contestable when applied to new commercial facts, and that contextual ambiguity opens the door to parol evidence. On the record developed at trial, the Fourth Circuit held it was not clearly erroneous to treat an automated grocery fulfillment center as a “retail store” receiving product by “store door delivery,” thereby placing it within the distributor’s exclusive “Outlets.”

Even as the dissent warns against reengineering plain meaning to fit unforeseen business models, the decision illustrates how Pennsylvania’s “applied-to-facts” ambiguity inquiry can adapt older distribution agreements to modern retail logistics—especially where the factfinder credits industry evidence that selling to consumers can occur through fulfillment rather than foot traffic.