Opinion ID: 2634389
Heading Depth: 3
Heading Rank: 3

Heading: Jury instruction on resolving uncertainty in contract language

Text: The trial court gave the jury a series of instructions on the rules governing contract interpretation. The last of these instructions stated: If, after considering the evidence in light of the foregoing rules of interpretation, there remains an uncertainty in the language of the contract, that language must be interpreted against the party who caused the uncertainty to exist. Genentech contends that the trial court erred in giving this jury instruction because the rule it states does not apply to contracts that are the result of negotiations, as was the contract between Genentech and City of Hope. Genentech relies on this statement from a 1962 Court of Appeal decision: The contract ... here is not like an insurance policy to be construed against one party. Rather, its terms were admittedly arrived at by negotiations between two parties. ( Inalenco, Inc. v. Evans (1962) 201 Cal.App.2d 369, 375, 20 Cal.Rptr. 90.) Genentech reads too much into the quoted statement. Because the insurer typically drafts policy language, leaving the insured little or no meaningful opportunity or ability to bargain for modifications, ambiguities in policy provisions are generally resolved against the insurer and in favor of coverage. ( AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822, 274 Cal.Rptr. 820, 799 P.2d 1253.) The statement that a negotiated agreement is not like an insurance policy to be construed against one party ( Indenco, Inc. v. Evans, supra, 201 Cal.App.2d at p. 375, 20 Cal.Rptr. 90) simply means that special construction rules for insurance policies or similar types of adhesion contracts are not applicable to other type of agreements, and that instead the general rules of contract interpretation are to be used. The challenged jury instruction at issue here is taken almost verbatim from Civil Code section 1654, which provides: In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist. The trial court's instruction thus embodies a general rule of contract interpretation that was applicable to the negotiated agreement between Genentech and City of Hope. It may well be that in a particular situation the discussions and exchanges between the parties in the negotiation process may make it difficult or even impossible for the jury to determine which party caused a particular contractual ambiguity to exist, but this added complexity does not make the underlying rule irrelevant or inappropriate for a jury instruction. We conclude, accordingly, that the trial court here did not err in instructing the jury on Civil Code section 1654's general rule of contract interpretation.