Opinion ID: 692067
Heading Depth: 2
Heading Rank: 2

Heading: Directed Verdict on Conversion9

Text: 35 To prove damages against the Guarantors for breach of contract the Pension Fund had the burden of proving the amount of the Guarantors' obligation under the Loan Agreement. The Guarantors' liability limit during the construction loan was $10.6 million, but only $2.12 million after conversion to the permanent loan. Therefore, in order to claim $10.6 million, rather than $2.12 million, the Pension Fund had to show that the loan did not convert from a construction to a permanent loan. The Pension Fund argued that the loan had not converted because construction was not substantially complete, and because a required unconditional certificate of occupancy had not been obtained. 36 There was overwhelming evidence presented at trial that the construction was substantially complete. The Loan Agreement defines the construction completion date or completion date of the project in terms of the completion of the building shell. Tom Head and William Clark, an architect contracted by MIG to do site inspections of the Oaks, testified that the building shell was completed by October of 1986. Certificates of completion had been obtained from the city of Melbourne for the entire complex, indicating that the shell was completed, inspected and signed off by the city. Moreover, both Clark and the plaintiffs' architect had certified that the shell was completed in compliance with the Loan Agreement. 37 The Fund argues that the shell was not complete because part of the slab 10 had not been poured and some of the store fronts had not been installed. As Clark and others testified, it is standard practice to leave a slab unpoured where, as here, the space was intended for a restaurant that might require extensive underground plumbing, electric wiring and air conditioning. Similarly, the store fronts were left unfinished in order to accommodate the requirements of future tenants. Clark testified that the slab and the store fronts were not part of the shell, but part of the tenant improvement package and, therefore, the fact that these items were not completed did not affect his conclusion that the center was substantially complete in October of 1986. We conclude as a matter of law that the shell was substantially complete. The Fund adduced no evidence from which a reasonable jury could conclude otherwise. 11 38 The Fund further argues that the loan did not convert because the plaintiffs did not obtain an unconditional certificate of occupancy, a condition precedent for conversion from a construction loan to a permanent loan. The Fund maintains that an unconditional certificate of occupancy indicates more than completion of the building shell, but also that all of the tenant improvements are completed and all tenant spaces are ready for occupancy. The plaintiffs, on the other hand, argue that the loan was to convert on substantial completion of the shell, not upon completion of all tenant improvements, and that the certificates of completion already obtained from the city of Melbourne are equivalent to the required unconditional certificate of occupancy. 39 The paragraph of the Loan Agreement detailing the conversion requirements refers only to an unconditional certificate of occupancy, and no document with this title has been procured by the plaintiffs. However, other sections of the Loan Agreement refer to the same certificate as an unconditional certificate of occupancy for the building shell  (emphasis added). See McGhee Interests v. Alexander Nat'l Bank, 102 Fla. 140, 135 So. 545 (1931) (a written contract must be construed as a whole). Moreover, by its terms, the Loan was to convert on the completion date provided that all of the conditions of conversion were met, and completion date refers to the completion of the building shell. Although the language of the Loan Agreement as a whole is probably best read to mean that the unconditional certificate of occupancy certifies completion of the building shell, there may be some ambiguity in that regard. 40 The cardinal rule of contract law is that a court should strive to effectuate the intent of the parties. Hughes v. Professional Ins. Corp., 140 So.2d 340, 345 (Fla. 1st Dist.Ct.App.), cert. denied, 146 So.2d 377 (1962). When a contract term is clear and unambiguous, the best evidence of this intent is the term itself, and a court may not give such term meaning beyond that clearly expressed in the four corners of the document. Fecteau v. Southeast Bank, N.A., 585 So.2d 1005, 1007 (Fla. 4th Dist.Ct.App.1991). However, when a contract term is ambiguous, the best evidence of the parties' intent is the construction the parties themselves put on the agreement through their conduct. Orlando Orange Groves Co. v. Hale, 119 Fla. 159, 161 So. 284, 295 (1935); Mayflower Corp., Crawford & Co. v. Davis, No. 93-3953, 1994 WL 716784, at  3, --- So.2d ----, ---- (Fla. 1st Dist.Ct.App. Dec. 29, 1994). While the district court apparently talked about the conduct of the parties in terms of waiver, we believe that the substance of the court's decision was that the contract was ambiguous, that the conduct of the parties was relevant to determine their intent, and that such conduct clearly indicated that the conversion to permanent loan status did occur. 41 Generally, the proper construction of an ambiguous contract term is a question of fact which should be reserved to the jury. Fecteau, 585 So.2d at 1007. However, based on the evidence of the parties' conduct adduced at trial, the district court appropriately concluded that no reasonable juror could conclude that the Fund's construction of unconditional certificate of occupancy was correct, and that the loan had not converted. Two of the Pension Fund's own witnesses admitted that the loan had converted. First, Edwin Wayman, Chairman of the Board of MIG, testified, on both direct and cross examination, that the loan had converted from a construction to a permanent loan. Second, in a March 25 1988 letter, James Ogorek, Vice President and Chief Financial Officer of MIG, wrote to the Pension Fund that under the Modification the Guarantor's liability will be reduced from $2,120,000 to $1,000,000. This letter, which was admitted into evidence, is effectively an admission that the loan had converted, and that the Guarantor's liability at the time of the Modification was under the Permanent Loan rather than the Construction Loan. 42 Ordinarily the right to determine the credibility of witnesses belongs to the jury and, therefore, it is inappropriate to take an issue from the jury when resolution of that issue requires the court to weigh the credibility of witnesses. Kridler v. Bituminous Cas. Corp., 409 F.2d 88, 91 (5th Cir.1969). 12 However, Wayman and Ogorek's credibility on the issue of whether the loan had converted was not questioned. Moreover, the Pension Fund did not introduce evidence from which a juror might infer that Wayman and Ogorek, two interested defense witnesses, were lying or mistaken on this point. In fact, the Fund relied on the testimony of both of these witnesses to establish the terms of the Loan Agreement and Modification. Under all of the evidence, especially the unimpeached testimony of these two witnesses directly in opposition to their interests, no reasonable juror could conclude that the loan had not converted. Therefore, the district court did not err in interpreting the ambiguous conversion provision of the loan agreement consistent with the behavior of the parties, and thus holding as a matter of law that the loan had converted to a permanent loan.