Opinion ID: 2197807
Heading Depth: 2
Heading Rank: 1

Heading: interpretation of section xviii.a

Text: The first issue  the meaning of economic position as found in Section XVIII.A  requires us to consider the language of that section. Because this involve[s] the interpretation of contract language, [it is a] question of law that this Court reviews de novo for legal error. [27] But, [t]o the extent the trial court's interpretation of the contract rests upon findings extrinsic to the contract, or upon inferences drawn from those findings, our review requires us to defer to the trial court's findings, unless the findings are not supported by the record or unless the inferences drawn from those findings are not the product of an orderly or logical deductive reasoning process. [28] In his opinion, the Vice Chancellor interpreted Section XVIII.A under Delaware law. In their brief on appeal, however, plaintiffs-appellees argue that Colorado law governs the 1994 Plan. [29] The plaintiffs-appellees never raised this argument before the Vice Chancellor. Indeed, in their briefs to the Vice Chancellor, plaintiffs-appellees cited extensively to Delaware contract law. Under Supreme Court Rule 8, only questions fairly presented to the trial court may be presented for review, unless the interest of justice requires its consideration. Accordingly, plaintiffs-appellees have waived the argument that Colorado law governs the dispute, and we interpret the contract according to Delaware law. Under Delaware law, when interpreting a contract, the role of a court is to effectuate the parties' intent. In doing so, we are constrained by a combination of the parties' words and the plain meaning of those words where no special meaning is intended. [30] Clear and unambiguous language ... should be given its ordinary and usual meaning. Absent some ambiguity, Delaware courts will not destroy or twist [contract] language under the guise of construing it. When the language of a... contract is clear and unequivocal, a party will be bound by its plain meaning because creating an ambiguity where none exists could, in effect, create a new contract with rights, liabilities and duties to which the parties had not assented.... A contract is not rendered ambiguous simply because the parties do not agree upon its proper construction. Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings. Ambiguity does not exist where a court can determine the meaning of a contract without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends. Courts will not torture contractual terms to impart ambiguity where ordinary meaning leaves no room for uncertainty. The true test is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant. [31] However, [i]f there is more than one reasonable interpretation of a disputed contract term, consideration of extrinsic evidence is required to determine the meanings the parties intended. [32] The Vice Chancellor found the term economic position in Section XVIII.A to be ambiguous. He reasoned that the [e]vidence at trial, including searches of SEC filings databases, showed that neither side could find another agreement that used the term `economic position.' [33] Therefore, because the term economic position may be sui generis ... [t]he court is left to infer the meaning of `economic position' from extrinsic evidence. [34] We note that, in previous cases involving other contracts, Delaware courts have found other terms, undefined by the contract and undefined under Delaware law, to be unambiguous. In Monsanto Co. v. Aetna Cas. & Sur. Co., the trial judge interpreted the term suit in an insurance contract. The dispute focused on whether suit included administrative proceeding and claims. [35] The parties offered competing dictionary definitions of suit and various legal authorities supporting their respective definitions. [36] Rather than resorting to extrinsic evidence, the trial judge used reasoned judgment to determine that Monsanto's interpretation was not supported by its own proffered dictionary text, and accepted defendant's definition because it comported with the Eighth Circuit Court of Appeals definition of suit. [37] Similarly in E.I. du Pont de Nemours & Co. v. Admiral Ins. Co., the parties disputed the term sudden in an insurance policy. [38] There, the trial judge specifically found that the term sudden unambiguously meant abrupt rather than unexpected, despite conflicting support for each respective definition. [39] Accordingly, I will consider the language of the exclusion within the context of the entire policy without resorting to conflicting dictionary definitions, inapposite treatise definitions, judicial disagreement or drafting history. [40] Our task on de novo review, then, is to determine what a reasonable person in the position of the parties would have thought the term economic position meant. [41] Plaintiffs-appellees assert that economic position means full economic value. Plaintiffs-appellees maintain that, in this context, full economic value means that the options' time value must be preserved. On the other hand, AT & T contends that economic position simply refers to the intrinsic value of the options immediately prior to a cash out merger. The language of Section XVIII.A protects the economic position of plaintiffs-appellees' options immediately prior to a merger. The important question, here, is: what exactly was plaintiffs-appellees' economic position in the face of an impending cash out merger? On the one hand, a stock option's worth can increase substantially over time. It therefore is logical that the economic position of the stock option might include time value. On the other hand, at the point of time immediately prior to a cash out merger, the economic position of the stock options retains no time value because the options will be immediately exchanged for the right to receive a cash sum. In light of the impending cash out merger, there is no prospect that the option will ever be worth anything more than that exact cash sum. Thus, the economic position of the stock option might relate only to the cash sum for which the option will be exchanged. We find both interpretations of Section XVIII.A to be reasonable. Therefore, the Vice Chancellor appropriately found the term economic position to be ambiguous and properly considered extrinsic evidence.