Opinion ID: 2833120
Heading Depth: 2
Heading Rank: 2

Heading: Construction of the ADR Policy

Text: Under the guise of a de novo review of the trial court = s legal interpretation of the agreement, the Court may not create an agreement for the parties that is different from the one they entered. But, the Court attempts to do just that. The ADR Policy expressly reserves Davidson = s right to A unilaterally abolish or modify any personnel policy without prior notice. @ The Court raises ambiguity as an issue sua sponte and concludes that this unilateral termination provision in the ADR Policy is ambiguous because A it is not possible to determine from the document itself whether the unilateral termination right applies to the parties = agreement to arbitrate, or only to > personnel policies = concerning the at-will employment relationship. @ __ S.W.3d __. But neither Webster, Davidson, the trial court, nor the Court of Appeals have suggested the language quoted above is ambiguous. I would hold that this language regarding the unilateral termination right unambiguously applies to the entire agreement, including the agreement to arbitrate. Although ultimately the contract fails for lack of consideration (see discussion below), it cannot be said that the ADR Policy is ambiguous.
There are several reasons why the document can be unambiguously read so that the universal termination right language applies to the entire document. First, the document is entitled A Alternative Dispute Resolution Policy, @ which suggests that the unilateral termination right contained within it would apply to arbitration, as the title would be applicable to the entire document. See e.g. Neece v. A.A.A . Realty Co., 322 S.W.2d 597, 606 (Tex. 1959) (Calvert, J., dissenting) (recognizing that the title of an agreement can have the legal effect of importing words into the contract). Secondly, the unilateral termination right applies to A any personnel policy, @ and it is reasonable to conclude that an arbitration policy would fall under the category of a personnel policy. Arbitration agreements are often a part of employee manuals or personnel policies. See e.g., In re Tenet Healthcare Ltd., 84 S.W.3d 760, 763 (Tex. App . B Houston [1st Dist.] 2002, orig. proceeding) (analyzing a legally binding arbitration agreement appearing in an employee handbook containing personnel policies). Moreover, the ADR Policy was provided by an employer to be signed by an employee, suggesting it is a personnel policy. It is not only reasonable to believe the arbitration provision is a personnel policy of the company, it is unreasonable to reach any other conclusion. The Court seems to suggest that the A personnel policy @ must be one or the other B either a policy, or an agreement. Surely a reasonable interpretation is that it could be both. Webster even promises to abide by all of Davidson = s A policies @ in the ADR Policy, and it is reasonable to conclude that Davidson wanted to retain the right to unilaterally terminate all parts of the ADR Policy because the policy did not specifically exempt the arbitration agreement from the unilateral termination right. Finally, neither Davidson nor Webster have ever argued that the unilateral termination right did not apply to the arbitration agreement. The actions of both the parties throughout their litigation reflect the belief that the arbitration policy is a personnel policy. They both came to the Motion to Compel Arbitration hearing arguing about several issues, none of which ever raised the question of whether the arbitration policy was a personnel policy. All of their actions throughout the litigation are consistent with the notion that the right to unilaterally terminate applied to the arbitration policy. Webster and Davidson do offer different interpretations of the unilateral termination clause. But their differences have nothing to do with factual issues; rather, they differ in the legal significance of the arbitration policy. Nevertheless, the fact that their explanations differ does not render the contract ambiguous. See Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996) (noting that an ambiguity does not arise simply because parties offer conflicting interpretations of the contract). For an ambiguity to exist, both explanations must be reasonable. Id. Conversely, a contract is ambiguous if its language is subject to two or more reasonable interpretations. See Monsanto v. Boustany , 73 S.W.3d 225, 229 (Tex. 2002). Here, there is only one reasonable interpretation of the ADR Policy, and the Court = s insistence that it is ambiguous flies in the face of well-established rules of construction.
One of the basic tenets of contract interpretation is the assumption that the parties intend every part of an agreement to mean something. When construing a written contract, we are to 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); 718 Assocs., Ltd. v. Sunwest N.O.P ., Inc., 1 S.W.3d 355, 360 (Tex. App . B Waco 1999, pet. denied) (courts will enforce an A unambiguous instrument as written, and ordinarily, the writing alone will be deemed to express the parties intentions @ ). Contracts are to be read as a whole, and an interpretation that gives effect to every part of the agreement is favored so that no provision is rendered meaningless or as surplusage . See Westwind Exploration Inc. v. Homestate Savings Ass = n., 696 S.W.2d 378, 382 ( Tex. 1985). The Court ignores these well-settled principles of contract interpretation when it concludes the agreement is ambiguous. Davidson = s right to unilaterally abolish or modify any personnel policy without prior notice must be given its plain and ordinary meaning. Thus, the unilateral termination language must mean that Davidson can cancel or alter any personnel policy without informing Webster. Although I ultimately conclude that the ADR Policy is not binding because it is illusory, the agreement is not ambiguous.