Opinion ID: 2306077
Heading Depth: 2
Heading Rank: 1

Heading: Ambiguity & Unconscionability

Text: As to the contention that the penalties imposed under the Agreement amount to a compounded interest payment of 120 percent per annum and that the penalty provisions are, therefore, (a) ambiguous and (b) unconscionable, we are unable to agree. Appellee contends that both of these arguments are not properly before us because appellant did not explicitly argue ambiguity at the trial level and because appellant never pleaded unconscionability as an affirmative defense. We do not decide these points because appellant is wrong on the merits of each. [9] Only where a contract is reasonably or fairly susceptible to different constructions or interpretations ... is [it] ambiguous. Debnam v. Crane Co., 976 A.2d 193, 197 (D.C.2009). In determining whether a contract is ambiguous, we examine the document on its face, giving the language used its plain meaning. Id. As we held in Washington Props., Inc. v. Chin, Inc., 760 A.2d 546, 548 (D.C.2000): A contract is not ambiguous merely because the parties disagree over its meaning, and courts are enjoined not to create ambiguity where none exists.... Rather, a contract is ambiguous when, and only when, it is, or the provisions in controversy are, reasonably or fairly susceptible of different constructions or interpretations, or of two or more different meanings, and it is not ambiguous where the court can determine its meaning without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends.... Accordingly, [t]he first step in contract interpretation is determining what a reasonable person in the position of the parties would have thought the disputed language meant. (Internal citations and quotation marks omitted.) Our determination of whether the Agreement was ambiguous is a question of law that we review de novo. 1836 S Street Tenants Ass'n, Inc. v. Estate of B. Battle, 965 A.2d 832, 837 (D.C.2009). Paragraph 3.4 of the Agreement states: If the Husband's monthly child support payment is made after the fifteenth (15th) day of any month, for each such late payment the Husband shall owe an additional One Hundred Dollars ($100.00) for his child support obligation for the next month. In addition, paragraph 3.5 of the Agreement provides: If the Husband fails to make a monthly child support payment, the Husband shall owe the Wife, as child support, an additional One Hundred Dollars ($100.00) per month for each and every month for which he fails to make the payment. Appellant argues that paragraph 3.5 can be interpreted as either (1) a one-time penalty of $100 for each late payment, regardless of how much time passes before appellant pays the arrearage, or (2) a penalty of $100 on each late payment for each month that passes before appellant pays the arrearage. According to appellant, under the second interpretation, after twelve months of non-payment on one monthly child support obligation, he would owe $2300 ($1000 base support + $100 late fee + $1200 in compounded monthly penalties) under paragraphs 3.4 and 3.5 of the Agreement, resulting in a total penalty of 130% (10% for lateness and 120% for non-payment). The language in the Agreement belies appellant's argument that paragraph 3.5 is subject to two distinct interpretations. Paragraph 3.5 expressly states that appellant owes $100  per month for each and every month  in which he fails to pay. Rather than an explosive interpretation that results in compound like interest, as appellant argues, the provision applies a penalty to each missed monthly obligation for each month that appellant fails to pay. Appellee correctly notes that adopting appellant's alternative interpretation of these provisions leads to absurd results: Nonpayment of a month's child support, no matter that it persists for one month or five years, brings about the same $100 late fee[.] Because we `can determine [their] meaning without any other guide than a knowledge of the simple facts on which, from the nature of language in general, [their] meaning depends,' the Agreement is not ambiguous. 1836 S Street Tenants Ass'n, supra, 965 A.2d at 837 (quoting Tillery v. District of Columbia Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)). Next, appellant claims that paragraph 3.5 of the Agreement is unconscionable because it constitutes a disguised penalty of hundreds of thousands of dollars in excess of his basic support obligation. A party seeking to avoid a contract because of unconscionability must prove two elements: an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Urban Invs., Inc. v. Branham, 464 A.2d 93, 99 (D.C.1983) (quoting Williams v. Walker-Thomas Furniture Co., 121 U.S.App. D.C. 315, 319, 350 F.2d 445, 449 (1965)). The court determines unconscionability as a matter of law.' Id. at 100 n. 8 (citing Patterson v. Walker-Thomas Furniture Co., 277 A.2d 111, 114 (D.C.1971)). Even if appellant properly pleaded unconscionability, [10] appellant has failed to demonstrate that he lacked a meaningful choice. Although appellant was not represented by a lawyer, and although he claims that he did not read the Agreement or understand it, appellant initialed every page and signed the agreement before a notary public. Even if appellant did not read the Agreement, he should have done so: As a rule, one who signs a contract has a duty to read it and is obligated according to its terms. Pers Travel, Inc. v. Canal Square Assocs., 804 A.2d 1108, 1110-11 (D.C.2002) (citation omitted). See also RESTATEMENT (SECOND) OF CONTRACTS § 157, cmt. b (Generally, one who assents to a writing is presumed to know its contents and cannot escape being bound by its terms merely by contending that he did not read them; his assent is deemed to cover unknown as well as known terms.). Tauber v. Quan, 938 A.2d 724, 732 n. 29 (D.C.2007). See also RICHARD A. LORD, 2 WILLISTON ON CONTRACTS § 6:44, at 616 (4th ed. 2007) ([O]ne who signs a receipt or other document cannot generally avoid it on grounds of a voluntary failure to read it.). In addition, the Agreement contained provisions averring that each party sought independent legal advice, that each party read and understood the Agreement, and that each party entered the Agreement freely and voluntarily. Appellant cannot now claim that he lacked meaningful choice. [11]