Tuesday, August 2, 2011

MSJ involving a contract: Unambiguous vs. ambiguous contracts

Whether enforcement of contract terms via summary judgment is appropriate depends on whether the contract is unambiguous or ambiguous, and whether consequently it can be construed as a matter of law.


Contract construction as a question of law vs. resolution of fact issues with the aid of extrinsic evidence by the fact finder   

The interpretation of an unambiguous contract is a question of law, which we review de novo. See MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650-51 (Tex. 1999). When the parties disagree over the meaning of an unambiguous contract, the court must determine the parties' intent by examining and considering the entire writing in an effort to give effect to the parties' intentions as expressed in the contract. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); Nicol v. Gonzales, 127 S.W.3d 390, 394 (Tex. App.-Dallas 2004, no pet.).

The parties' intent must be taken from the agreement itself, and the agreement must be enforced as written. Wells Fargo Bank, Minn., N.A. v. N. Cent. Plaza I, L.L.P., 194 S.W.3d 723, 726 (Tex. App.-Dallas 2006, pet. denied); Nicol, 127 S.W.3d at 394; see also Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (only where contract is first determined to be ambiguous may courts consider parties' interpretation or admit extraneous evidence to determine true meaning of instrument). Further, under the “Four Corners Rule,” the parties' intent must be “ascertained from the instrument as a whole and not from isolated parts thereof.” Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.-Dallas 2005, no pet.).

All writings that pertain to the same transaction will be considered together, even if they were executed at different times. DeWitt Cnty. Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999). Unless the agreement shows that the parties used a term in a technical or different sense, we give the terms their plain, ordinary, and generally accepted meaning. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). “Courts will not declare a forfeiture unless they are compelled to do so by language which can be construed in no other way.” Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).

When a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue. See Harris v. Rowe, 593 S.W.2d 303, 306 (Tex. 1979). If a written instrument is so worded that it can be given “a certain or definite legal meaning or interpretation,” then it is not ambiguous. Coker, 650 S.W.2d at 394. “A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation.” Las Colinas Obstetrics-Gynecology-Infertility Ass'n, P.A. v. Villalba, 324 S.W.3d 634, 640 (Tex. App.-Dallas 2010, no pet.); accord Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). A disagreement over the meaning of a contract provision does not render the provision ambiguous. See Nicol, 127 S.W.3d at 394. The question of whether a contract is ambiguous is a question of law, which is reviewed de novo. See MCI Telecomms. Corp., 995 S.W.2d at 650.

SOURCE: Dallas Court of Appeals - 05-09-00962-CV - 8/2/11

An appellate court reviews a trial court’s construction of an unambiguous contract de novo. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). In performing a de novo review, we exercise our own judgment and redetermine each legal issue. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1999). When construing a written contract, courts ascertain the intent of the parties as expressed in the instrument. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Courts examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). If there is no ambiguity in the instrument, its construction is a question of law for the court. See id. Interpretation of a contract becomes a fact issue, to be resolved by extrinsic evidence, only when application of pertinent rules of construction leaves a genuine uncertainty as to which of two meanings is proper. Id. at 393-94.

SOURCE: Tyler Court of Appeals - 12-10-00342-CV - 7/29/11

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