Opinion ID: 2626065
Heading Depth: 1
Heading Rank: 5

Heading: The Meaning of the Contract

Text: [¶ 13] M & M asserts summary judgment was not appropriate because the parties' agreement was ambiguous. M & M points to the following language: FFI will perform all collection activities on accounts including but not limited to telephone collections and dunning when appropriate. [2] (Emphasis added). M & M contends FFI treated collection activities to mean several telephone calls to delinquent customers, while M & M understood the language required FFI to make a good faith effort to undertake those industry recognized standards necessary to realize upon these inherently risky accounts receivable. M & M contends this ambiguity in what the term collection activities meant was a factual question precluding summary judgment. [¶ 14] FFI responds that when placed in context with the other provisions of the agreement and the surrounding circumstances, the term collection activities is not ambiguous. FFI points to the fact that the contract is referred to as Full Recourse, meaning M & M guaranteed its customers' performance and, in the event they failed to perform, agreed to pay FFI the amounts owing within 30 days. When placed in this context, FFI contends, the collection provision simply identified which of the parties was responsible for performing the collection activities. It did not impose any conditions or requirements for how FFI was to go about those activities, but left that to FFI's discretion. [¶ 15] The law governing judicial interpretation of contracts is well-settled: In considering the meaning of a contract, we focus on the parties' intent. If possible, we determine their intent from the language used in the agreement. Where the language is clear and unambiguous, we limit our inquiry to the four corners of the document, giving the words contained therein their ordinary meaning. The parties are free to incorporate within their agreement whatever lawful terms they desire, and we are not at liberty, under the guise of judicial construction, to rewrite the agreement. It is only when a contract is ambiguous that we construe the document by resorting to rules of construction. A contract is ambiguous if indefiniteness of expression or double meaning obscures the parties' intent. Christensen v. Christensen, 2008 WY 10, ¶ 13, 176 P.3d 626, 629 (Wyo.2008), citing Cathcart v. State Farm Mut. Auto. Ins. Co., 2005 WY 154, ¶ 18, 123 P.3d 579, 587 (Wyo. 2005). [¶ 16] In its entirety, the special Full Recourse paper-buying program agreement provided: &lhblk; FFI will purchase contracts, with terms not to exceed 36 months, at 75% of the principal balance due at the date of funding, upon completing customer interview and issuing an approval. &lhblk; [Annual percentage rate] on all contracts must be 21%. &lhblk; M & M must send the following documents for each contract to FFI for funding: original security agreement, original credit application, and lienholder copy of warrant[y] if one is purchased by the consumer. &lhblk; M & M must fill out [the] assignment section on the original security agreement, sign, and write the following statement Full Recourse To Dealer for Life Of Note or fill in the Recourse provision on the Security Agreement. (Emphasis in original). &lhblk; M & M will not make payments on behalf of the consumer. &lhblk; FFI will perform all collection activities on accounts including but not limited to telephone collection and dunning when appropriate. All collection costs, excluding repossession, are paid entirely by FFI. &lhblk; FFI will advise dealer of any problem collection accounts, their status when they become a problem, and will exercise its Full Recourse option after discussing the account with M & M. &lhblk; Full Recourse amount due by M & M to FFI will be the funding amount by FFI less any principal received on the account. M & M to pay off all designated recourse accounts within 30 days. &lhblk; FFI will present a monthly report to M & M that analyzes this portfolio from a loss perspective. M & M to provide to FFI a reconciliation report on each repossession as to the income and expenses associated with the disposal of the vehicle. The reconciliation report will be incorporated in the FFI monthly report to M & M to assist in a more accurate loss percentage of FFI funding amounts. &lhblk; FFI will not enter into any full recourse relationship with other dealers in Casper, Douglas, Sheridan, Gillette, Riverton, or Lander as long as M & M sells over [$]2 million worth of paper to FFI annually. &lhblk; FFI will offer good standing M & M customers returning to FFI an upgrade program. The payoff to dealer will be a regular payoff amount less 15%. FFI must receive the discounted payoff amount from M & M before funding the new deal. &lhblk; FFI will offer a mechanical unwind program to M & M for customers returning to FFI. The program allows M & M to use a trade in value of the buyback amount (funding amount by FFI less any principal received). This program is offered only for 90 days from the original contract date. FFI must receive the buyback amount from M & M before funding the new deal. &lhblk; M & M to provide a dedicated employee to FFI to assist in all collection and title issues. &lhblk; M & M to provide an outlet for FFI to sell all vehicles that do not fall under this agreement as a result of repossession. (Emphasis added). [¶ 17] From the four corners of the agreement, it is clear the parties intended the agreement to be a full recourse agreement in which FFI would purchase from M & M the loans M & M made to its customers, M & M's customers would then make payments on the loans directly to FFI and FFI, at its expense, was responsible for collection activities, except for repossession expenses. In interpreting the words collection activities as used in this agreement, our task is to determine the parties' intent by giving the words their plain and ordinary meaning. Christensen, ¶ 13, 176 P.3d at 629. Plain meaning is that meaning which [the] language would convey to reasonable persons at the time and place of its use. Hickman v. Groves, 2003 WY 76, ¶ 6, 71 P.3d 256, 258 (Wyo.2003) (citation omitted). [¶ 18] The ordinary meaning of the word collect as used in the context of this agreement is: to present as due and receive payment for. Websters Third New Int'l Dictionary 444 (2002). The ordinary meaning of the word activity is the quality or state of being active. Id. at 22. Giving the phrase collection activities its ordinary meaning, the agreement required FFI to pursue payments due before advising M & M of any problem collection accounts and exercising its Full Recourse option. It is undisputed that FFI pursued payments due from the customers before advising M & M that there were problem accounts for which it was seeking full recourse. M & M contends, however, that FFI did not do enough in its collection efforts. [¶ 19] Relying on Ms. Gray's affidavit, M & M asserts the term collection activities as generally used in the used car financing business means doing much more than making a few telephone calls. M & M contends, in the context of the used car financing business, the phrase required FFI to make several telephone calls per day for 30 days, conduct skip tracing, repossess the vehicle at issue, turn the account over to a reputable collection agency, file a claim in small claims court or hire an attorney if the amount owed was within the jurisdictional limit of the district court. Given this meaning of collection activities, M & M contends a genuine issue of fact existed precluding summary judgment. [¶ 20] Wyoming precedent demands that we look to the language of the agreement and, when appropriate, to the facts and circumstances surrounding its execution to determine the parties' intent. Ecosystem Resources, L.C. v. Broadbent Land & Resources, L.L.C, 2007 WY 87, ¶ 35, 158 P.3d 685, 694 (Wyo.2007). Relevant circumstances considered in determining the parties' intent may include the relationship of the parties, the subject matter of the contract, and the parties' purpose in making the contract. Id., ¶ 10, 158 P.3d at 688. Evidence of trade usage may also be relevant in determining the parties' intent. As we said in Hickman: [W]hile words in a contract are ordinarily to be construed according to their plain, ordinary, popular or legal meaning, as the case may be, if in reference to the subject matter of the contract, particular expressions have by trade usage acquired a different meaning, and both parties are engaged in that trade, the parties to the contract are considered to have used them according to their different and peculiar sense as shown by such trade usage. Parol evidence is admissible to establish the trade usage, and that is true even though the words are in their ordinary or legal meaning entirely unambiguous, since, by reason of the usage, the words are used by the parties in a different sense. Id., ¶ 13, 71 P.3d at 261, quoting 12 Samuel Williston, A Treatise on the Law of Contracts, § 34.5 (4th ed. 1999) (footnotes omitted). On the basis of this principle, we reversed a summary judgment ruling in Hickman because the parties submitted evidence creating a genuine issue of material fact as to the meaning of the words oil rights as used in a warranty deed and whether those words were intended to include both oil and gas rights, or only oil with no attendant gas rights. Hickman, ¶ 14, 71 P.3d at 261. [¶ 21] The difficulty with M & M's argument in the present case is that the parties are really not disputing what the term collection activities means. There is no disagreement that FFI was required to pursue full payment from the customer on the outstanding loans. The disagreement concerns the lengths to which FFI was required to go in collecting payments, and that is something the agreement simply does not address. M & M does not claim that FFI failed to assume responsibility for collecting on the accounts, but claims instead that FFI did not take the steps to collect that M & M wanted it to take. It may be that Ms. Gray is correct that where a recourse agreement like this one is involved, a used car dealer typically wants the finance company to use every possible collection technique before seeking recourse. However, the agreement in this case did not specify the techniques FFI was required to use and we are not willing to conclude that every recourse agreement in which a finance company assumes responsibility for collection activities requires repossession as one of those activities before recourse can be sought. [¶ 22] Additionally, the record demonstrates that M & M and FFI began their business relationship in 1999; thus, the parties had dealings with each other for several years before entering into the agreement at issue here. The record also reflects that both parties had extensive experience in used car financing. M & M sold used cars throughout the State of Wyoming and had experience in sub-prime financing, which Mr. Smith defined as providing credit for less than credit worthy individuals. M & M financed the vehicles it sold by holding installment contracts itself or selling them to finance companies such as FFI. FFI was only one of the finance companies with which M & M did business. M & M had experience with both recourse and non-recourse contracts and knew the difference between the two. Mr. Smith testified that recourse agreements gave M & M freedom to explore more potential car deals than it could in transactions involving non-recourse agreements. FFI's general manager attested that FFI made a business decision to pay a premium for the accounts in question so that it would have the contractual right to full recourse. Mr. Smith, testifying by deposition on behalf of M & M, stated that the 2003 agreement gave FFI complete discretion as to how to go about collecting on the delinquent accounts. There is no evidence in the record that M & M took issue with FFI's collection activities until after FFI filed its complaint. In fact, contemporaneous documents reflect the complete absence of any complaints by M & M. [¶ 23] In light of these surrounding circumstances and giving the language used in the agreement its plain and ordinary meaning, we are not persuaded the parties' intent at the time they executed the agreement was for FFI to go to the lengths described in Ms. Gray's affidavit to collect on the delinquent accounts. The agreement itself contains no indication that the parties intended collection activities to establish the standard of performance M & M suggests. The language in the agreement stating that collection activities include but are not limited to telephone collections and dunning likewise does not suggest the parties intended FFI to take particular steps such as repossessing vehicles, utilizing collection agencies, filing court claims or hiring lawyers. If M & M desired FFI's collection efforts to include these specific activities, it was free to incorporate those terms in the agreement. It did not, and under the circumstances presented here, we will not rewrite the agreement under the guise of judicial construction. We uphold the district court's ruling that the meaning of the parties' agreement was clear and unambiguous.