Opinion ID: 1830503
Heading Depth: 1
Heading Rank: 3

Heading: Interpretation of Contractual Language

Text: In interpreting contracts, we are guided by the general rules contained in articles 2045-2057 of the Louisiana Civil Code. The interpretation of a contract is the determination of the common intent of the parties with courts giving the contractual words their generally prevailing meaning unless the words have acquired a technical meaning. La. Civ.Code arts. 2045, 2047; see e.g., Louisiana Ins. Guar. Ass'n v. Interstate Fire & Casualty Co., 93-0911 (La. 1994), 630 So.2d 759, 763. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the intent of the parties. La. Civ.Code art. 2046. Parol or extrinsic evidence is generally inadmissible to vary the terms of a written contract unless the written expression of the common intention of the parties is ambiguous. Ortego v. State, Through the Dep't of Trans. & Develop., 96-1322 (La.2/25/97), 689 So.2d 1358. A contract is considered ambiguous on the issue of intent when either it lacks a provision bearing on that issue, the terms of a written contract are susceptible to more than one interpretation, there is uncertainty or ambiguity as to its provisions, or the intent of the parties cannot be ascertained from the language employed. La. Civ.Code art. 1848 (formerly La. Civ.Code art. 2276); Brown v. Drillers, Inc., 93-1019 (La.1/14/94), 630 So.2d 741, 748; Dixie Campers, Inc. v. Vesely Co., 398 So.2d 1087 (La.1981); Rudman v. Dupuis, 206 La. 1061, 20 So.2d 363 (La.1944). Contract interpretation of ambiguous terms requires construction against the contract's drafter. See La. Civ.Code art. 2056. [5] Melton argues that the plain language of the contract prevents the admittance of parol evidence to prove contractual intent. Melton argues that the  additional provisions  clause is susceptible of only one reasonable interpretation: that upon presentation for repairs, Melton may choose to make the repairs, else the sale is null and void. Melton suggests that the purchaser had a choice: either to accept the property as is by remaining silent, or to reject by anything other than silence. In response, the Campbells argue that it was proper to consider the parties' subjective intent because the contract had internal conflicts due to the inartful drawing of the  additional provisions  clause. The Campbells assert that because the parties interpretations are adverse, subjective intent is necessary to resolve their differences. The Campbells suggest that Melton's own trial testimony constituted an admission that the parties' subjective intent should prevail. Finally, the Campbells assert that the right to terminate the contract was theirs but was a right they never exercised. The trial court agreed with the Campbells, and found that the contract provision was inartfully drafted by Roos. Although the trial court never made an express finding that the contract provision in question was ambiguous, the trial court allowed the Campbells to testify regarding their intent when drafting the provision, over the defendant's continuing objection to the admission of parol evidence. On appeal, both Melton and Campbell continued to frame their arguments around the interpretation of the second sentence of the  additional provisions  clause, i.e., which party had the option to nullify the contract under certain circumstances. Under Melton's interpretation, it was Campbell's presentation of over $2000 in repairs which gave him the option to nullify the contract. The Second Circuit found that under this reading of the clause, Melton could exit the agreement even when Campbell chose to pay for the repairs, and concluded that such an interpretation violated not only the overall intent of the parties, i.e., the sale of the house for $400,000, but led to absurd consequences. However, the Second Circuit declined to address whether the clause was ambiguous by finding that a demand for repairs sufficient to invoke the clause had never been made. The  additional provisions  clause states that any single mechanical item repair that exceeds $2,000.00 the Seller has the option to repair or the contract will be null & void. Both parties clung to characterizing the  additional provisions  clause as a form of option contract. More accurately, the clause is a resolutory condition within a contract. Article 1767 of the Louisiana Civil Code provides: A conditional obligation is one dependent on an uncertain event. If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive. If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory. When viewed as a resolutory condition, the clause clearly states that the contract would terminate upon the happening of a condition, namely the discovery of a mechanical item that exceeded $2,000 to repair. Thus, an option to terminate did not exist and thus could not belong to either Melton or the Campbells. Rather, a plain reading of the unambiguous clause reveals that once the condition was fulfilled, the contract became null and void unless Melton opted to make the repairs. The lower courts, while not stating as much, began their analysis as if the clause in question imposed a condition, but then deviated by considering the intent and conduct of the parties beyond whether they successfully invoked the fulfillment of the condition. The rules of construction do not authorize a perversion of the words or the exercise of inventive powers to create an ambiguity where none exists or the making of new contract when the terms express with sufficient clearness the parties' intent. Peterson v. Schimek, 2000-2644 (La.9/18/00), 767 So.2d 707; Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180, 1183. The fact that one party may create a dispute about the meaning of a contractual provision does not render the provision ambiguous. See Slocum-Stevens Ins. Agency, Inc. v. International Risk Consultants, Inc., 27,353 (La.App. 2 Cir. 12/11/95), 666 So.2d 352, writ denied, 96-0102 (La.3/8/96), 669 So.2d 399. However inartfully drawn, a plain reading of the contract clause is clear. While the parties may now regret the finality of the clause's efficient operation, neither party dispute that they signed the contract. The fact that the clause may have operated differently than typical real estate transactions by terminating automatically once the resolutory condition was proven does not render the clause ambiguous. The difficult facts of this case underscore how the lower courts erred in weighing those facts. There was no reason to decide this bitter dispute by becoming mired in the oftentimes disappointing conduct of all parties. Instead, the case turned on a legal question. The parties acknowledged the existence of the contract. Therefore, inquiry into the minds of the parties by the lower courts to interpret the  additional provisions  clause was unnecessary and in error. The only real question became whether the contract was terminated by presentation of any single mechanical item requiring repairs that exceeded $2,000.