Opinion ID: 2446622
Heading Depth: 1
Heading Rank: 5

Heading: The Forbearance Agreement Precludes DLY from Preventing WMI's Use of the Alleyway

Text: Despite WMI's failure to reserve a right to use the alleyway, we agree with the trial court that the forbearance agreement constitutes a covenant not to sue, which prevents DLY from taking any action whatsoever that would restrict WMI's business. [17] DLY challenges this conclusion, arguing that the trial court inconsistently construed documents which were contemporaneously executed as part of the same transaction, [18] that the trial court did not interpret the forbearance agreement in a way that reasonable persons in the parties' positions would have, [19] and that such an interpretation of the forbearance agreement leads to absurd results. [20] In essence, DLY contends that the trial court's interpretation of the forbearance agreement effectively grants WMI the easement which the court initially found was absent from the transaction documents. We recognize the seeming incongruence of the conclusion that DLY owns the alleyway and possesses sole rights over the alleyway, but cannot assert those rights. Nonetheless, DLY, as a sophisticated commercial party on an equal playing field with WMI and a party to the drafting of the documents, cannot challenge the plain reading of the forbearance agreement simply because it does not like its effect. The forbearance agreement provided that DLY shall not take any direct or indirect action that would create, cause or otherwise result in any restriction on, or a curtailment or cessation of [WMI's] operation of its solid waste facility ... for so long as [WMI] determines in its sole discretion to operate that solid waste facility on that property. We find these terms plain and unambiguous, and we decline to refer to extrinsic evidence to determine what DLY may have intended when it signed this agreement. [21] We disagree that a reasonable person in DLY's position would not have expected this result. [22] As the trial court found: At the time the contract was made, the parties already had a long history during which Galich and DLY made various types of efforts to curtail and restrict WMI's business. A reasonable person would conclude that this is precisely the reason the language in the Forbearance Letter was drafted so broadly. A reasonable person would also conclude that the use of the alleyway as exactly the type of contingency against which WMI sought to protect itself when it asked Galich and DLY to sign the Forbearance Letter. Moreover, both parties acknowledged at the time of drafting and signing the transaction documents that the forbearance agreement was a concession by DLY. In exchange, WMI agreed to pay DLY $500 every month in consideration. In agreeing to the broad language of the forbearance agreement which expressly applied to current and future disputes, DLY assumed the risk that unanticipated disputes would arise and that they would be prevented from bringing suit. Finally, the trial court's interpretation of the forbearance agreement was not inconsistent with its interpretation of the restrictive covenant. The judge observed that covenants not to sue are often drafted in broad, vague terms because they are intended to cover both present and future conflicts between the parties, [23] while land agreements are required to meet specific and well-defined requirements. Thus, it is not contradictory to read the same language narrowly with regards to property rights and read it broadly with regards to the right to sue.