Opinion ID: 31525
Heading Depth: 3
Heading Rank: 2

Heading: Provision X

Text: 17 ISP contends that the district court's grant of summary judgment holding it liable under the Agreement ignores the impact of Provision X, and thus violates the rule of construction that requires each provision of a contract to be given effect. See In re El Paso Refinery, LP, 302 F.3d 343, 352 (5th Cir.2002); Int'l Turbine Serv., 278 F.3d at 497. 18 ISP argues that Provision X, which states, Contractor acknowledges that client is acting as agent for an [sic] on behalf of certain vessels, vessel owners and/or Charterers, effectively substituted International Shipping, as agent for its principals for the term Client everywhere that Client appears in the Agreement. In doing so, continues ISP, Provision X clarified that ISP would not only purchase services from Instone as an agent for vessel owners, but also signed the Agreement itself in its capacity as an agent for vessel owners. Thus, ISP concludes, the vessel owners on whose behalf it signed the Agreement are bound by its terms — not ISP. 19 ISP's interpretation of Provision X, however, requires two cognitive leaps that stretch the plain meaning of the provision a bit too far. First, if ISP intended the term Client to mean, ISP, as agent for its principals, then why did it not simply redefine the meaning of Client in Provision X instead of cryptically stating Contractor acknowledges that client is acting as agent ...? Alternatively, why did ISP not insert as agent for its principals next to its name in the blank that defines the meaning of Client in the first sentence of the Agreement? 20 Second, ISP's contention that Instone's acknowledgment of its status as an agent releases it from liability presupposes that an agent is necessarily not liable on a contract where the other party is aware that it is acting as an agent. The case law does not support such an argument. 3 Tex. Jur.3d § 186 (An agent may be personally liable on contracts made for the benefit of his or her principal ... even where the principal is disclosed.). See Nagle v. Duncan, 570 S.W.2d 116, 117-18 (Tex.Civ.App.1978) (holding attorney liable for fees due court reporter despite court reporter's knowledge that the transcript had been ordered for the client that the attorney represented); Mediacomp, Inc. v. Capital Cities Communication, Inc., 698 S.W.2d 207, 209-211 (Tex.App.1985) (holding media buyer liable to radio station for airtime purchased on behalf of disclosed client); Kaiser Aluminum & Chemical Corp. v. M/V Zephyros, 1994 WL 589711, -2 (E.D.La.1994)(rejecting agent's argument that as a disclosed agent, it was not liable for the debts of its principal). As previously noted, the general rule that an agent is not liable for those contracts that it enters on behalf of a disclosed principal is overcome when the agent expressly or implicitly accepts liability. See infra at n. 4. There is thus nothing inconsistent about the district court's decision to hold ISP liable under the Agreement in the face of Provision X's clear statement of ISP's status as an agent. See Kaiser Aluminum & Chemical Corp. v. M/V Zephyros, 1994 WL 589711, -2 (E.D.La.1994)(rejecting agent's argument that as a disclosed agent, it did not become a party to the contract for services that were provided at its request for the principal). Holding ISP liable on the Agreement does not deny that ISP entered the Agreement as an agent for vessel owners, and thus does not render Provision X meaningless. 21 While we applaud ISP for its creativity, we do not find its interpretation of Provision X persuasive. Had ISP intended to sign the Agreement on behalf of its clients, there were myriad other, more direct methods of doing so than through the language of Provision X. ISP's status as an agent, alone, is insufficient to override the indicia of liability that pervade the Agreement. The district court did not err in finding that ISP bound itself in the Agreement to reimburse Instone for the tickets that it purchased on behalf of Premier. 22 2. Is the contract ambiguous? 23 ISP contends that because its interpretations of Provisions VI.A. and X are reasonable, the Agreement was ambiguous regarding its liability, and summary judgment was inappropriate. 7 See In re El Paso Refinery, LP, 302 F.3d at 352 (noting that if a contract is ambiguous, a fact issue remains regarding the parties' intent). Instone responds that summary judgment was properly granted because the district court's interpretation of the provisions, and its ultimate conclusion that the Agreement requires ISP to reimburse Instone, was the only reasonable interpretation in the absence of inadmissible parol evidence. 24 Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered into. In re El Paso Refinery, LP, 302 F.3d at 353 (5th Cir.2002); Friendswood Development Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex.1996). If the contract terms are susceptible to only one reasonable construction, the contract is unambiguous and will be enforced as written. Guaranty Nat. Ins. Co. v. Azrock Industries Inc., 211 F.3d 239, 243 (5th Cir.2000). [A] contract is ambiguous only when the application of the applicable rules of interpretation to the instrument leave it genuinely uncertain which one of the two meanings is the proper meaning .... R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex.1980). A contract is not ambiguous because it suffers from mere uncertainty or lack of clarity. Madera Prod. Co. v. Atlantic Richfield Co., 1998 WL 292872,  (N.D.Tex.1998). The failure to include more express language of the parties' intent does not create an ambiguity when only one reasonable interpretation exists. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 591 (Tex.1996). 25 We find that the district court's interpretation of Provisions VI.A. and X is the only plausible interpretation. The first two pages of the Agreement between Instone and ISP are concerned with ensuring that the Client's (ISP's) account is credit-worthy and properly managed. In the final provision of the contract, Provision X, the Contractor acknowledges that the client is acting as an agent. These provisions are unambiguous on their face. Any claimed ambiguity in the document must therefore be latent. See Constitution State Ins. Co., 61 F.3d at 408 (explaining the difference between patent and latent ambiguities). A latent ambiguity must become evident when the contract is applied to the surrounding circumstances. National Union Fire Ins. Co. v. CBI Indus., Inc., 38 Tex.Sup.Ct.J. 332, 1995 WL 92215,  (Tex.1995). Parol evidence of intent may not be admitted to create an ambiguity. Id; Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 408 (5th Cir.1995). 26 ISP points to the following as circumstances surrounding the contract's execution that support the reasonableness of its interpretation, and thus the ambiguity of the contract with respect to its liability: (1) Prior to contract execution, ISP notified Instone that Instone would not receive payment until ISP received payment from the vessel owners; (2) Instone asked for, and ISP provided, a list of the shipowners who would be paying the invoices; 8 (3) In prior dealings, ISP had instructed Instone that it acted as an agent and did not advance money or guarantee payments on behalf of its principals; and (4) Instone's representative acknowledged that he understood that ISP did not advance money or guarantee payments on behalf of its principals. 9 These are not circumstances surrounding the contract's execution, but parol evidence. See, e.g., Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 591 (Tex.1996) (noting that the fact that a huge volume of gas would be deregulated on a particular date was a circumstance of the contract that could be properly considered in determining whether a gas contract was ambiguous). 27 Parol evidence is defined as evidence given orally. Black's Law Dictionary 579 (7th ed.1999). Seeing that ISP has not provided the court with any written documentation regarding the asserted circumstances, we presume that they relate to oral exchanges between the parties. These assertions should therefore not be considered in determining whether the contract is ambiguous with respect to ISP's liability. See 36 Tex. Jur.3d § 351 (Absent fraud, accident, or mistake, the intent of the parties to a written agreement that is clear and unambiguous on its face must ordinarily be ascertained from the instrument alone, without the aid of extrinsic evidence); American Petrofina Co. of Texas v. Bryan, 519 S.W.2d 484, 487 (Tex.Civ.App.1975) (Even if we assume that the Appellees were crying to the heavens that they would not be bound individually by the guaranty ... the exclusionary rule controls as to this instrument.). But see Mobil Exploration and Producing U.S., Inc. v. Dover Energy Exploration, L.L.C., 56 S.W.3d 772, 776 (Tex. App.2001) (considering prior negotiations, the testimony of negotiators, and all other relevant incidents bearing on the intent of the parties, while claiming fidelity to the rule barring consideration of parol evidence in determining the question of ambiguity). Doing otherwise would nullify the requirement that parol evidence not be used to create an ambiguity, but only to resolve an acknowledged ambiguity. Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 741 (Tex.1998); Standard Constructors, Inc. v. Chevron Chem. Co., Inc., 101 S.W.3d 619, 624 (Tex.Ct.App. 2003). 28 When properly confined to the four corners of the document, ISP's interpretation that Provision X releases it from liability under the Agreement is not reasonable. ISP's construction of Provision X's impact upon the remainder of the contract stretches the meaning of the phrase Contractor acknowledges that client is acting as agent beyond the logical import of the words. The Agreement unambiguously holds ISP responsible for the cost of all of the goods that it ordered, regardless of whether it did so on behalf of others. The district court properly granted Instone summary judgment on this basis.