ABSENT AMBIGUITY PLAIN MEANING GOVERNS
By: Michael E. Stearns, Esq., Stearns, Roberts & Guttentag, LLC
The best contracts clearly and unambiguously spell out the rights and responsibilities of the parties. Where contract language is susceptible of more than one interpretation, however, courts are charged with the responsibility of determining the intent of the parties. Where language is not ambiguous, courts generally will not go beyond the language of the contract itself to determine the meaning of the contract language. Where language is found to be ambiguous, however, courts allow evidence outside of the contract called “parol” evidence to determine the intent of the parties.
Gibney v. Pillifant, 2010 WL 1728874 (Fla. 2 nd DCA) involved a contract for the purchase of a new home under construction. The purchaser, Gibney, concerned that property values may drop during construction of the home, insisted on adding a provision in the contract that the contract was “contingent upon this property appraising for no less than $620,000.00 to be conducted by a local appraiser.” The provision did not state who would obtain the appraisal or what should occur in the event there were alternate proposals, one higher and one lower then the threshold price. When the home was close to being completed, the purchaser obtained an appraisal of $560,000.00 for the home and refused to close. In response, the seller obtained an alternative proposal of $635,000.00 and sued the purchaser for breach of contract.
At trial, the seller contended that the contract provision was ambiguous because it did not spell out the parties’ respective rights and duties in obtaining the proposal(s). Since the provision was drafted by the purchaser, the seller also correctly argued that it was well settled under Florida law that a contract provision that is ambiguous must be construed against the drafter of the provision. The trial court found the provision to be ambiguous and allowed “parol evidence” in the form of testimony from the parties as to their intent and conduct relating to the contingency provision and ultimately ruled in favor of the seller. Purchaser appealed.
On appeal, the Second District Court of Appeal disagreed with the trial court’s threshold finding that the clause in question was ambiguous. The Second District found that the language, while inartfully drafted, was not ambiguous. It found that the provision allowed the purchaser to withdraw from the contract if any legitimate appraisal valued the property at less than the threshold price. Since the Second District found that the provision was unambiguous, it also ruled that the trial court had admitted error in allowing the parol evidence. The Second District apparently thought that the provision in question was someone one sided as it closed its opinion with the oft cited rule that courts should not re-write parties’ contracts or substitute their judgment for that of the parties in order to relieve one party from the apparent hardship of an improvident bargain.
This case illustrates the general rules of contract construction that 1) outside or “parol” evidence will not be allowed to attempt to alter the meaning of an unambiguous contract provision, 2) contract provisions that are ambiguous will be construed against the drafter of the language and 3) courts will not intervene to protect one party from the effect of entering into a bad bargain.
About the Author Michael E. Stearns has practiced exclusively in the area of Construction Law since 1996 and was designated as a Board Certified expert in construction law by the Florida Bar in 2005, the first year this designation was available. Mr. Stearns is “AV” rated by Martindale Hubble – the highest professional peer rating for legal ability and ethical standards. He is listed among the “Best Lawyers In America”, “Florida Super Lawyers” and “South Florida’s Top Lawyers”. Mr. Stearns got his start in the construction industry working as a carpenter while attending the University of Florida’s M.E. Rinker College of Building Construction where he earned a Bachelor’s Degree in Building Construction. He has held a Florida State Certified Building Contractor’s license since 1989 and directed multi-million dollar construction projects as a project manager before attending law school and embarking on his legal career.