Opinion ID: 594404
Heading Depth: 2
Heading Rank: 3

Heading: Appropriateness of the District Court's Interpretation of the SSA

Text: 38 The district court, relying on our decision in Freeman v. Continental Gin Co., 381 F.2d 459 (5th Cir.1967), 8 adopted the interpretation of the SSA advanced by Occidental and held that the language of that agreement bars Wausau's cross-claim as a matter of law. The district court first found the language in the SSA to be clear and unambiguous. The district court further found that Wausau and the American Underwriters waived their right to bring this cross[-]claim unless there was a finding by the court in the liability action that there was a lack of due diligence on the part of HVIDE, as manager of the vessel. Because no such lack of due diligence finding was ever made, the district court reasoned, the cross-claim is barred. 39 The district court's grant of summary judgment on this ground is premised on the conclusion that the language of the SSA is unambiguous. A conclusion that a contract is ambiguous--as the district court recognized--is a question of law. Thus, we review the district court's determination de novo. First Nat'l Bank of Jackson v. Pursue Energy Corp., 799 F.2d 149, 151 (5th Cir.1986). 40 In our view, the SSA is not clear and unambiguous. First, it is unclear what the parties intended by the last clause of paragraph three, which states that Wausau and Occidental agree not to assert any cause of action, except as permitted by paragraph 4 below, against each other with respect to the subject matter of the consolidated actions. (emphasis added). Because the SSA does not define what is meant by the subject matter of the consolidated actions, we cannot determine whether Wausau and the American Underwriters' cross-claim against Occidental is included within the terms of that clause. Furthermore, although the provisions relied on by Occidental and the district court in paragraph four--when read out of context--appear clear and unambiguous, those provisions are unclear and ambiguous when read in the context of the entire paragraph. If Wausau and the American Underwriters were absolutely precluded from bringing any subsequent action against Occidental absent a finding that Hvide was negligent in its capacity as manager of the vessel, it would have been unnecessary to include the last two sentences of paragraph four. We think that the last two sentences in paragraph four, which speak in terms of a broad reservation of rights, render the meaning of the first two sentences in the paragraph ambiguous. 41 In sum, we are unable to determine from the language of the SSA what the parties intended by paragraphs three and four. The interpretation advanced by Occidental--that the paragraphs represent a broad waiver of rights with a narrow reservation--is a reasonable one. However, the interpretation advanced by Wausau--that the paragraphs represent a broad reservation of rights with a narrow waiver--is also reasonable. There is a fact issue concerning the parties' intent. Accordingly, the district court erred in granting summary judgment in favor of Occidental on the basis of the SSA. 42