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Businesses involved in breach of contract cases will often dispute the meaning of contract terms.  A contract that may seem clear pre-dispute can often be interpreted differently after a dispute has arisen.  Litigation concerning whether a disputed contract term is ambiguous can be critical in how a case will ultimately be decided.  A business that can show to the court that an important contract term favors the business and is not ambiguous can potentially prevail on summary judgment without the time and expense of a trial.  On the other hand, a business which can show that a contract term is ambiguous can avoid summary judgment and provide “parol” evidence at trial to support the defendant’s interpretation of the contract term. Peter Mavrick is a Miami business litigation attorney, and also represents clients in business litigation in Miami and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

When the meaning of a contract term is clear, the Judge can interpret the contract without hearing evidence about what the parties believe the meaning of the term is.  “Under Florida law, courts must give effect to the plain language of contracts when that language is clear and unambiguous.” Homes & Land Affiliates, LLC v. Homes & Loans Magazine, LLC, 598 F. Supp. 2d 1248 (M.D. Fla. 2009).  “Whether a contract provision is ambiguous is a question of law, to be determined by the […] court.” Hancock v. Brumer, Cohen, Logan, Kandell & Kaufman, 580 So. 2d 782 (Fla. 3d DCA 1991).

“An agreement is ambiguous if as a whole or by its terms and conditions it can reasonably be interpreted in more than one way.” Haggin v. Allstate Invs., Inc., 264 So. 3d 951 (Fla. 4th DCA 2019); Hancock v. Brumer, Cohen, Logan, Kandell & Kaufman, 580 So. 2d 782 (Fla. 3d DCA 1991) (“An ‘ambiguous’ word or phrase in a contract has been defined as ‘susceptible of interpretation in opposite ways’ or ‘reasonably or fairly susceptible to different constructions’”).

Courts employ rules of contract interpretation to evaluate whether a contract term is ambiguous.  When evaluating whether a contract term is subject to different interpretations, Judges will consider the context of a disputed term within the contract as a whole.  “In construing a contract, the legal effect of its provisions should be determined from the words of the entire contract.” Sugar Cane Growers Co-op. of Fla., Inc. v. Pinnock, 735 So. 2d 530 (Fla. 4th DCA 1999); Talbott v. First Bank Fla., FSB, 59 So. 3d 243 (Fla. 4th DCA 2011) (“A contract should be read as a whole”);  Alamo Fin., L.P. v. Mazoff, 112 So. 3d 626 (Fla. 4th DCA 2013) (“[T]he intention of the parties must be determined from an examination of the entire contract and not from separate phrases or paragraphs”).

In business litigation, Judges will generally presume that a contract that uses particular wording in multiple parts of the contract intends that wording to be interpreted the same way throughout the contract.  Thus, “the use of different language in different contractual provisions strongly implies that a different meaning was intended.” Beach Towing Servs., Inc. v. Sunset Land Assocs., LLC, 278 So. 3d 857 (Fla. 3d DCA 2019).

In addition, courts generally interpret business contracts within the context of the industry.  “Language used in business documents […] should be interpreted as reasonable persons, knowledgeable about the business or industry, would likely interpret them.” Hussmann Corp. v. UPS Truck Leasing, Inc., 549 So. 2d 215 (Fla. 5th DCA 1989).

In the recent case, Hillcrest Country Club Ltd. P’ship v. Zyscovich, Inc., 288 So. 3d 1265 (Fla. 4th DCA 2020), Florida’s Fourth District Court of Appeal evaluated whether a contract was ambiguous. The Hillcrest plaintiff was an architect that performed services for a golf course in exchange for compensation.  At issue was the provision of the contract requiring that the defendant golf course pay a bonus upon a certain condition being met.  There was no dispute as to what occurred between the parties; the only dispute was the meaning of the word “permits” in the contract.  If the plaintiff architect’s interpretation was unambiguously correct, then he would have been entitled to the bonus compensation.  If the defendant golf course’s interpretation was unambiguously correct, then the plaintiff architect would recover nothing.

The trial court previously entered summary judgment in favor of the golf course.  The appellate court overruled the trial court, holding that summary judgment should not have been entered against either party because the contract term was ambiguous.   “The arguments which each side has presented are both reasonable, and we can discern no reason to favor one rule of construction over the others in this case.”  The appellate court ordered that the case be remanded for a trial to allow both parties to present evidence as to the meaning of the contract term in dispute.

Hillcrest illustrates how a court’s evaluation of whether a contract term is ambiguous can be critically important to the outcome of a dispute.  Peter Mavrick is a Miami business litigation lawyer who also practices business litigation in Fort Lauderdale and Palm Beach.  This article does not serve as a substitute for legal advice tailored to a particular situation.

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