Opinion ID: 2982880
Heading Depth: 2
Heading Rank: 2

Heading: New Trial for GTW

Text: GTW argues it is entitled to a new trial because the testimony of former GTW Vice President David Wilson and former General Manager of Contracts for Conrail Paul Carey was improper parol evidence. After considering GTW’s motions in limine to exclude the testimony, the district court allowed Wilson and Carey to testify regarding their understandings of the meaning of “Trenton Steel Warehouse,” allowed Wilson to testify to his understanding of the scope of the arbitration proceedings and agreement, and allowed Carey to testify about his understanding of the TRA itself. GTW maintains that because the TRA was unambiguous, no extrinsic evidence should have been permitted. Moreover, GTW contends that even if the TRA is ambiguous, Michigan’s objective theory of contract interpretation would preclude the admission of such subjective intent. Under Michigan contract law, “[i]t is well established that where a written contract is clear and unambiguous, parol evidence of prior negotiations and representations cannot be adduced to. . .vary the terms of the contract.” Salzman v. Maldaver, 24 N.W.2d 161, 164 (Mich. 1946). There are two types of ambiguity in contracts, patent and latent: A patent ambiguity is one that clearly appears on the face of a document, arising from the language itself. Accordingly, resort to extrinsic evidence is unnecessary to detect a patent ambiguity. A latent ambiguity, however, is one that does not readily appear in the language of a document, but instead arises from a collateral matter when the document's terms are applied or executed. Because the detection of a latent ambiguity requires a consideration of factors outside the instrument itself, TRA adopted the 1994 definition. Second, even if the TRA did adopt the 1994 definition, that definition is also unclear, and could be understood to refer only to HVS’s actual warehouse, or alternatively, to those facilities belonging to HVS, including the HVS private industry track. 15 No. 13–2269, Consolidated Rail Corp. v. Grand Trunk W. R.R. Co. extrinsic evidence is obviously admissible to prove the existence of the ambiguity, as well as to resolve any ambiguity proven to exist. City of Grosse Pointe Park v. Michigan Mun. Liab. & Prop. Pool, 702 N.W.2d 106, 113 (Mich. 2005) (internal citations and quotations omitted). Here, the district court found the term “Trenton Steel Warehouse” latently ambiguous, as the ambiguity it creates “arises not upon the words of the will, deed or other instrument, as looked at in themselves, but upon those words when applied to the object or to the subject which they describe.” Shay v. Aldrich, 790 N.W.2d 629, 641 (Mich. 2010) (internal citations and quotations omitted). Given that the term “Trenton Steel Warehouse” does not, when considering the property and the circumstances of the agreement, have one clear meaning, the district court properly admitted the testimony of the drafters in order to shed light on the meaning of this term. “The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties. To this rule all others are subordinate.” McIntosh v. Groomes, 198 N.W. 954, 955 (Mich. 1924). GTW further argues that even if extrinsic evidence is admissible, the testimony admitted was improper in light of Michigan’s “objective theory” of contract interpretation. Michigan does employ an objective test, “looking to the expressed words of the parties and their visible acts.” Goldman v. Century Ins. Co., 93 N.W.2d 240 (Mich. 1958); Stark v. Kent Prods., Inc., 233 N.W.2d 643 (Mich. Ct. App. 1975). However, “[i]t is proper to consider the circumstances at the time the asserted contracts were made to determine the intent of the parties.” Dumas v. Auto Club Ins. Ass’n, 473 N.W.2d 652, 661 (Mich. 1991). Moreover, “[w]here a written contract is ambiguous. . .the fact finder must interpret the contract’s terms, in light of the apparent purpose of the contract as a whole, the rules of contract construction, and extrinsic evidence of intent and 16 No. 13–2269, Consolidated Rail Corp. v. Grand Trunk W. R.R. Co. meaning.” Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447, 454 (Mich. 2003) (internal quotations and citations omitted). The evidence admitted and considered by the district court was necessary to clarify the TRA’s ambiguity, and did not represent the unexpressed subjective intent of the parties. Accordingly, the district court did not abuse its discretion.