Title: Black Diamond Development, Inc. v. Patrick G. Thompson
Citation: N/A
Docket Number: 1060334
State: Alabama
Issuer: Alabama Supreme Court
Date: August 10, 2007

REL: 8/10/07
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 SPECIAL TERM, 2007
_________________________
1060334
_________________________
Black Diamond Development, Inc.
v.
Patrick G. Thompson
Appeal from Jefferson Circuit Court
(CV-04-4523)
WOODALL, Justice.
Black Diamond Development, Inc. ("BDD"), appeals from a
judgment in favor of Patrick G. Thompson, in Thompson's
breach-of-contract action against BDD.  We affirm.
1060334
2
I. Factual Background
On May 19, 1997, the parties in this case executed a
document purporting to be an "Agreement for Purchase of
Interest" in a condominium "development project in Mt. Crested
Butte, Colorado," which BDD was contemplating at that time
(hereinafter referred to as "the sell-back agreement").  The
sell-back agreement stated, in pertinent part:
"In consideration of cash value received from
Patrick G. Thompson ... in the amount of $38,000.00,
... Black Diamond Development, Inc., does hereby
sell a two percent (2) interest of the net proceeds
or profit from the condominium project to be built
in Mt. Crested Butte, Co.  In the event the
purchaser desires to sell-back his interest, during
the construction process, he may do so by giving a
thirty day written notice and will receive his
principle [sic] investment, plus fifteen percent
interest (15% APR) calculated from the date of this
agreement."
(Emphasis added.) The sell-back agreement was signed by
Thompson and by Steve McCay, as president of BDD.  
The next day, Thompson sent BDD $38,000 (hereinafter
referred to as "the first installment").  McCay used the money
to reimburse himself for his expenditures in procuring
engineering 
reports, 
soil 
tests, 
and 
plans 
and 
specifications,
and in traveling in connection with the contemplated
condominium-development project.  On July 8, 1997, Thompson
1060334
3
sent BDD an additional $62,000 (hereinafter referred to as
"the second installment").  McCay used the money from the
second installment in a manner similar to the first
installment.  Both transactions were brokered by Gordon
Berlant, who is not a party in this case.
In conjunction with the second installment, Thompson and
BDD executed a second document purporting to evidence the
parties' agreement as to their respective rights and
responsibilities arising out of BDD's receipt and use of the
$62,000 (hereinafter referred to as "the July document").  The
parties have been unable to produce the original of the July
document, or even a legible copy of the original.  In the only
copy produced in this case, approximately one-third of the
text is illegible.
BDD never broke ground on the condominium project.
According to McCay, the project was ultimately abandoned when
another developer purchased property in Mt. Crested Butte that
BDD considered key to the financial success of the project.
On April 8, 2004, Thompson wrote a letter to McCay; that
letter stated, in pertinent part:
"Promise was made on agreements dated May 19, 1997,
for an investment in the amount of $38,000.00 and an
1060334
4
additional installment in the amount of $62,000.00
dated July 8, 1997, which totaling $100,000.00,
would ... culminate into owning 5.5% interest in the
Mt. Crested Butte, Co., project.  I hereby request
to have my principal investment of $100,000.00 plus
15% interest per year (15% APR) calculated from the
date of the agreement to be returned to me.  You
have 30 days to fulfill your obligation based on the
term[s] of the agreement."
(Emphasis added.)  On July 27, 2004, Thompson sued BDD,
alleging breach of contract and seeking damages in the amount
of $206,259.96.  Specifically, he sought the return of the
$100,000 principal, plus interest at the rate of 15%.  The
case was tried without a jury on the basis of documentary
evidence and oral testimony.  
At trial, counsel for BDD objected to introduction of the
July document, arguing that, because of its illegibility, it
had no probative value.  More specifically, he stated: 
"When I received the complaint, my first
response was, I sent him a letter asking him for a
better copy because I could not read it.  And if you
look at [it], you cannot read it either.  I cannot
tell whether -- I cannot tell who is -- or who would
owe who, or if it was only supposed to be repayment
in the event the project took off or made any money.
You cannot tell.   You can see bits and pieces of
it, but you cannot tell from that [document] what
happened."
The trial court stated: "I will overrule your objection and
accept it for whatever it is worth.  Whether I can read it or
1060334
5
not remains to be seen, I suppose."  (Emphasis added.)
Ultimately, the trial court awarded Thompson $235,950, which
included the principal and interest thereon at the rate of 15%
through the date of the judgment, and  BDD appealed.  
As BDD frames the issues on appeal, this Court is faced
with two issues. The threshold issue concerns the construction
of a key phrase in the sell-back agreement relating
specifically to the first installment.  An issue regarding
recovery of the second installment arises only if the phrase
in the sell-back agreement is construed adversely to BDD.
II. Construction of the Sell-Back Agreement
It is undisputed that the parties agreed that Thompson
would be entitled to repayment of his first installment of
$38,000, plus interest at the rate of 15%, if his request for
repayment was made "during the construction process."  In
other words, it is undisputed that Thompson would be entitled
to repayment of his first installment at 15% interest if the
sell-back agreement was triggered by BDD's work in procuring
engineering 
reports, 
soil 
tests, 
and 
plans 
and 
specifications,
and in traveling in connection with the contemplated
condominium-development project.  BDD, however, contends that
1060334
6
the sell-back agreement was never triggered, because, it
insists, "construction" on the project was never begun.
According 
to 
BDD, 
the 
phrase 
"during the construction process"
does not include such activities as procuring engineering
reports, soil tests, and plans and specifications, and
traveling.  The resolution of this issue thus involves a
matter of contract construction.
"'[W]e apply a de novo review to a trial court's
determination of whether a [written] contract is ambiguous and
to a trial court's determination of the legal effect of an
unambiguous contract term.'"  Young v. Pimperl, 882 So. 2d
828, 830 (Ala. 2003)(quoting Winkleblack v. Murphy, 811 So. 2d
521, 525-26 (2001)).  "[A] contract is not ambiguous simply
'"because the parties allege different constructions of
[it]."'"  Avis Rent A Car Systems, Inc. v. Heilman,  876 So.
2d 1111, 1122 (Ala. 2003) (quoting Ex parte University of
South Alabama, 812 So. 2d 341, 345 (Ala. 2001), quoting in
turn Yu v. Stephens, 591 So. 2d 858, 859 (Ala. 1991)). A
contract is ambiguous only if it is "susceptible of more than
one reasonable meaning," FabArc Steel Supply, Inc. v.
Composite Constr. Sys., Inc., 914 So. 2d 344, 357 (Ala. 2005)
1060334
7
(emphasis added), and "'it is presumed that parties intend to
make reasonable contracts.'"  BellSouth Mobility, Inc. v.
Cellulink, Inc., 814 So. 2d 203, 216 (Ala. 2001) (quoting
Weathers v. Weathers, 508 So. 2d 272, 274 (Ala. Civ. App.
1987) (emphasis added in Cellulink)).
According to BDD, the phrase is not ambiguous, and we
agree, although we disagree with BDD's interpretation of it.
BDD argues that the verb "construct" means "'to form by
assembling or combining parts; build.'" BDD's brief, at 18
(quoting The American Heritage Dictionary 394 (4th ed. 2006)).
Because no ground was ever broken on the condominium-
development project, BDD insists, construction never began;
therefore, BDD argues, the sell-back agreement was never
triggered.
However, BDD ignores the second word in the phrase,
"process," which The American Heritage Dictionary defines as
"[a] series of actions, changes, or functions bringing about
a result."  Id. at 1398.  The parties did not use the phrase
"during construction," or even "during the construction
phase"; they used the phrase "during the construction
process."  (Emphasis added.)  See generally Kweku Bentil,
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8
Fundamentals of the Construction Process 6 (1989) (the
"construction process" is ordinarily composed of five phases,
including (1) "pre-bid," (2) "contract procurement," (3)
"contract 
award," 
(4) 
actual 
"construction," 
and 
(5)
"operating and maintenance"). The word "process" must be
regarded as adding something of substance to the phrase.
Courts will not presume that the parties "make use of words in
their contracts to which no meaning is attached by them."
McGoldrick v. Lou Ana Foods, Inc., 649 So. 2d 455, 458 (La.
Ct. App. 1994).  In other words, "parties to a contract will
not be imputed with using language that is meaningless or
without effect."  Id.  See also Royal Ins. Co. of America v.
Thomas, 879 So. 2d 1144, 1154 (Ala. 2003) ("'It being presumed
that every condition was intended to accomplish some purpose,
it is not to be considered that idle provisions were inserted.
Each word is deemed to have some meaning, and none should be
assumed to be superfluous.'"(quoting Hall v. American Indem.
Group, 648 So. 2d 556, 559 (Ala. 1994)).  The use of the word
"process" broadens the scope of the phrase in the sell-back
agreement.
1060334
9
Indeed, courts have stated that the term "construction
process includes more than bricks and mortar," and that "the
term 'construction delays' ... is broad enough to include
design, planning, and other facets of bringing the [project]
to fruition."  Brewhouse, Ltd. v. New Orleans Pub. Serv.,
Inc., 614 So. 2d 118, 124 (La. Ct. App. 1993).  For example,
acquiring a "'permanent first mortgage loan'" is an essential
part of the "'construction process, because it finances a
substantial 
proportion, 
if 
not 
all, 
of 
the 
cost 
of
development, including site preparation and sometimes the
actual cost of acquiring the raw land.'"  Bonniecrest Dev. Co.
v. Carroll, 478 A.2d 555, 559 n.5 (R.I. 1984) (quoting
Hershman, 
Permanent 
Financing, 
1 
Modern 
Real 
Estate
Transactions, 455-56 (4th ed. 1983) (emphasis added)).  Had
the parties intended to tie the provision in the sell-back
agreement to the actual construction phase of the condominium-
development project, they could easily have said so.
Adopting BDD's litigation position would lead to the
result that BDD, having received $38,000 from Thompson --
whether as a loan, as Thompson regards it, or as an
investment, as BDD does -- could simply abandon work on the
1060334
10
project prior to commencement of actual construction and keep
the $38,000 without any liability to Thompson.  Nothing in the
sell-back agreement suggests that the parties intended such an
unreasonable result.  Thus, we agree with Thompson that the
sell-back agreement encompasses the earlier phases of the
"construction 
process," 
including 
the 
procurement 
of
engineering reports, soil tests, and plans and specifications,
and travel in connection with the contemplated condominium-
development project.  Consequently, the trial court did not
err in holding that Thompson was entitled to recover the
amount of his first installment with interest at the rate of
15%.
III. The Second Installment 
Judgment for the entire $100,000 paid under both
installments was proper only if, as the trial court evidently
found, the parties had agreed that Thompson could recover the
$62,000 he paid in the second installment under the same terms
as the first installment.  As we previously noted, however,
payment of the second installment was accompanied by a writing
that is substantially illegible.
1060334
11
Ordinarily, "the best evidence of [the] intent [of the
parties] is the [written] contract itself; if an agreement is
'complete, clear and unambiguous on its face[, it] must be
enforced according to the plain meaning of its terms.'"
Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of
N.Y., 375 F.3d 168, 177-78 (2d Cir. 2004) (quoting  Greenfield
v. Philles Records, Inc., 98 N.Y.2d 562, 569, 750 N.Y.S.2d
565, 780 N.E.2d 166, 170 (2002)).  However, "'[w]hen the
parties undertake to put their agreement in writing and
express its crucial terms by characters or symbols so
illegible that the tribunal established to try the facts
cannot determine the signification of that which is on the
paper, then no contract in writing has been made.'"  11
Richard A. Lord, Williston on Contracts § 31:13 (4th ed. 1999)
(quoting Aradalou v. New York, N.H. & H.R.R., 225 Mass. 235,
240, 114 N.E. 297, 299 (1916) (emphasis added)).
In this case, as we have already stated, approximately
one third of the July document is illegible, and BDD contested
its very admission on that ground.  In fact, at least three
lines of crucial text are virtually nonexistent. 
1060334
12
Neither party disputes the existence of a contract
between 
BDD 
and 
Thompson 
in 
relation 
to 
the 
second
installment.  Nor is there any dispute as to its essential
terms.  The parties agree, for example, that Thompson paid
$62,000 in return for an additional 3.5% interest in the
condominium-development project.  The parties disagree only as
to whether Thompson could elect to recover his payment under
the same terms as those expressed in the sell-back agreement.
Thus, the second installment involved essentially an oral
contract.
"The terms of an oral contract can be established through
[parol] evidence, and a determination of those terms is for
the trier of fact."  Comstock Constr., Inc. v. Sheyenne
Disposal, Inc., 651 N.W.2d 656, 661 (N.D. 2002) (emphasis
added).  See Linton v. E.C. Cates Agency, Inc., 113 P.3d 26,
30 (Wyo. 2005) ("The terms and conditions of [an] oral
contract and the intent of the parties are generally questions
of fact.").  To resolve the disputed sell-back issue relating
to the second installment, the trial court was required to,
and did, receive oral testimony as to the intent of the
parties.  
1060334
13
It is well established that "[w]hen a trial court hears
ore tenus testimony 'its findings on disputed facts are
presumed correct and its judgment based on those findings will
not be reversed unless the judgment is palpably erroneous or
manifestly unjust.'"  New Props., L.L.C. v. Stewart, 905 So.
2d 797, 799 (Ala. 2004) (quoting Philpot v. State, 843 So. 2d
122, 125 (Ala. 2002)).  
The trial court's judgment comports with this rule.
Thompson testified that the $62,000 payment was the second
part of a two-part loan he was making to BDD.  He testified
that the "contract stipulated" that he was entitled to a
return of $100,000 at 15% interest.  McCay himself testified
that he understood he was receiving the second installment
"under the same terms" as the first installment.  (Emphasis
added.) 
BDD contends that the first installment and the second
installment relate to entirely separate agreements and argues
that "the parties ... could have included the sell-back
provision in the [July document] if that was their intention."
BDD's brief, at 39.  We do not agree with this argument about
what the July document does not contain.  In fact, because of
1060334
14
the condition of that document, no assertion as to what it
does or does not contain can be verified.  Under the disputed
facts as developed in the trial of this case, the judgment was
not "palpably erroneous or manifestly unjust."
In conclusion, the sell-back agreement was unambiguously
triggered by the procurement of engineering reports, soil
tests, and plans and specifications, and travel in connection
with 
the 
contemplated 
condominium-development 
project.
Thompson was clearly entitled to recover the $38,000 first
installment with interest at the rate of 15% under that
written agreement.  Also, BDD has not demonstrated that the
trial court erred in awarding the $62,000 second installment
with interest at the rate of 15%.  For these reasons, the
judgment is affirmed.
AFFIRMED.
Cobb, C.J., and See, Smith, and Parker, JJ., concur.