Opinion ID: 780622
Heading Depth: 3
Heading Rank: 2

Heading: legal standard for contract interpretation under tennessee law

Text: 14 A federal court sitting in diversity must, pursuant to the doctrine enunciated in Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), apply the substantive law of the forum state, including conflict of law rules. The general conflicts rule in Tennessee governing contracts is that the law of the state in which the contract was made governs unless the parties express the intent that another state's law applies. Boatland, Inc. v. Brunswick Corp., 558 F.2d 818, 821 (6th Cir.1977); Davison Specialty Chemical Co. v. S & H Erectors, Inc., 621 F.Supp. 783, 785 (E.D.Tenn.1985). Here, the contracts were issued in Tennessee and the parties are in agreement that Tennessee law governs this dispute. 15 The resolution of this case ultimately turns on the interpretation of a term in the insurance policy. Under Tennessee law, in reviewing a contract for ambiguities, the court should consider the contract as a whole. Williamson County Broadcasting Co. Inc. v. Intermedia Partners, 987 S.W.2d 550, 552 (Tenn.Ct.App. 1998); Gredig v. Tennessee Farmers Mut. Ins. Co., 891 S.W.2d 909, 912 (Tenn.Ct. App.1994). The language of the contract should be understood in its plain and ordinary meaning. See American Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 814 (Tenn.2000). [A] contract is ambiguous only when it is of uncertain meaning and may fairly be understood in more ways than one. A strained construction may not be placed on the language used to find ambiguity where none exists. Farmers-Peoples Bank v. Clemmer, 519 S.W.2d 801, 805 (Tenn.1975). A contract is not rendered ambiguous simply because the parties disagree as to the interpretation of one or more of its provisions. International Flight Ctr. v. City of Murfreesboro, 45 S.W.3d 565, 570 n. 5 (Tenn.Ct.App. 2001). Nor is a contract rendered ambiguous simply by virtue of language which happens to be technical or complex to the layman. Blaylock and Brown Constr. v. AIU Ins. Co., 796 S.W.2d 146, 149 (Tenn. Ct.App.1990). 16 Interpretation of an unambiguous contract is a question of law for the court to decide. Hamblen County v. City of Morristown, 656 S.W.2d 331 (Tenn. 1983). Where a contract is clear and unambiguous, parties' intentions are to be determined from the four corners of the contract. Pierce v. Flynn, 656 S.W.2d 42 (Tenn.Ct.App.1983); Bokor v. Holder, 722 S.W.2d 676, 679 (Tenn.Ct.App.1986). However, even when the agreement is unambiguous, the court may consider the situation of the parties and the accompanying circumstances at the time it was entered into — not for the purpose of modifying or enlarging or curtailing its terms, but to aid in determining the contract's meaning. Hamblen, supra, 656 S.W.2d at 334 (quoting Restatement of Contracts § 235(d) and Comment). 17 The Court will apply the foregoing standards in deciding Vencor's appeal of the District Court's determination with respect to the insurance contracts at issue in this case. 18