Opinion ID: 482896
Heading Depth: 2
Heading Rank: 2

Heading: Paragraph 23 Claims

Text: 11 Among other things, the Sales Agreements between Ford and DLM provide that when Ford or the dealer terminates or fails to renew the dealership, the dealer is entitled to receive certain benefits. These benefits include Ford's willingness to buy back the current inventory of automobiles and parts from the dealer. But in consideration of agreeing to buy back the inventory, the Sales Agreements provide in relevant part of paragraph 23 that the dealer will release Ford from liability except with respect to claims arising under paragraphs 19(f), 21, and 22 of the Sales Agreements: 12 [U]pon the Dealer's demand of any such benefits upon any termination or nonrenewal by the Dealer, the Company shall be released from any and all other liability to the Dealer with respect to all relationships and actions between the Dealer and the Company, however claimed to arise, except any liability that the Company may have under subparagraph 19(f) and said paragraphs 21 and 22, and except for such amounts as the Company may have agreed in writing to pay to the Dealer. Simultaneously with the receipt of any benefits so elected or demanded, the Dealer shall execute and deliver to the Company a general release with exceptions, as above described, satisfactory to the Company. (emphasis added)
13 Plaintiffs argue that paragraph 23's release of liability is ambiguous. Under Michigan law a contractual provision is ambiguous if the language of a written contract is subject to two or more reasonable interpretations or is inconsistent on its face. Petovello v. Murray, 139 Mich.App. 639, 362 N.W.2d 857, 858 (1984). Plaintiffs argue paragraph 23 is ambiguous because it is subject to at least two interpretations. They contend that the requirement of a written general release by the dealer at the time benefits are received modifies the earlier nebulous release granted by the dealer at the time benefits are demanded. If the initial release is automatic and absolutely effective at the time the dealer makes the demand, plaintiffs ask, why does paragraph 23 discuss the requirement of a written release in the very next sentence? See McIntosh v. Groomes, 227 Mich. 215, 198 N.W. 954, 955 (1924) ( 'Every word in the agreement must be taken to have been used for a purpose, and no word should be rejected as mere surplusage if the court can discover any reasonable purpose thereof which can be gathered from the whole instrument.' ) (quoting 6 R.C.L. 838). 14 Such a conundrum, plaintiffs contend, renders paragraph 23 ambiguous and necessarily requires the court to do one of two things. First, it requires the court to construe paragraph 23 against Ford and in favor of DLM. This result follows from the canon of construction, honored in Michigan, that a written agreement is construed against its drafter. Lichnovsky v. Ziebart International Corp., 414 Mich. 228, 324 N.W.2d 732, 738 (1982); Petovello v. Murray, 139 Mich.App. 639, 362 N.W.2d 857, 858 (1984); accord Advance Process Supply Co. v. Litton Industries Credit Corp., 745 F.2d 1076, 1079 (7th Cir.1984). Or second, it requires the court to resolve factual issues in determining the intent of both DLM and Ford with respect to paragraph 23. Barner v. City of Lansing, 27 Mich.App. 669, 183 N.W.2d 877 (1970). And if factual issues exist, which require resolution, the district court cannot grant summary judgment. Peoples Outfitting Co. v. General Electric Credit Corp., 549 F.2d 42, 46 (7th Cir.1977). 15 Defendants contend, on the other hand, and the district judge agreed, that paragraph 23 is unambiguous under Michigan law. They argue that plaintiffs' interpretation of paragraph 23 is unreasonable and that paragraph 23 is not inconsistent on its face. Defendants explain that the initial release is controlling as to any and all liability on Ford's part. It is absolute in its effect. Any subsequent written release executed by the dealer merely memorializes the initial release and reminds the parties of their respective obligations. In reaching this conclusion, defendants and the district judge relied on the only relevant precedent that seems to be available with respect to this particular release clause. 1 After this lawsuit was initiated, a district court in the Western District of Virginia held unambiguous the release clause of paragraph 23 of the standard Ford Sales and Service Agreement. That court explained: 16 The court can find no ambiguity in Paragraph 23 of the Agreement which unequivocally states that Ford shall be released  upon the date plaintiffs elect to accept the benefits provided for in the Standard Provisions.... Ford is released upon Plaintiffs' election to accept the offered benefits, then an executed release is only required upon the Dealer's receipt of benefits so elected.... Accordingly, the court agrees with defendant's position that the written release of January 8, 1982 serves only as a memorialization of the event which automatically triggered the general release of Ford. 17