Opinion ID: 488038
Heading Depth: 2
Heading Rank: 1

Heading: The denial of Breuer's summary judgment motion

Text: 16 Breuer first contends that Judge Carter erred in denying its motion for summary judgment. Breuer asserts that the meaning of adverse market conditions in the underwriting agreement is clear and unambiguous, and encompasses any unfavorable decline in securities markets. According to Breuer's interpretation, the 25 point drop in the Dow between January 18-23, 1984, coupled with the decline in value of Walk-In stock, entitled Breuer to terminate the underwriting agreement as a matter of law. 17 Judge Carter did not agree that the phrase adverse market conditions was clear and unambiguous. Indeed, he denied Breuer's motion for summary judgment on the ground that the phrase was ambiguous, and that its meaning had to be decided by the trier of fact. 18 An ambiguous word or phrase is one capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business. 19 Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F.Supp. 987, 994 (S.D.N.Y.1968) (citations omitted). 20 The determination of whether a contract term is ambiguous is a threshold question of law for the court. See Tokio Marine and Fire Insurance Co. v. McDonnell Douglas Corp., 617 F.2d 936, 940 (2d Cir.1980); Sutton v. East River Savings Bank, 55 N.Y.2d 550, 554, 435 N.E.2d 1075, 1077, 450 N.Y.S.2d 460, 462 (1982). Therefore, we are not constrained by the clearly erroneous standard in reviewing Judge Carter's conclusion, and we review his determination de novo. We nevertheless conclude that the phrase adverse market conditions is susceptible of more than one reasonable interpretation, for the same reasons Judge Carter outlined in his decision. 21 Breuer, in support of its contention that adverse market conditions refers to any unfavorable market decline, cited Funk & Wagnalls New Comprehensive Dictionary of the English Language, which defined adverse as unpropitious or detrimental. Walk-In, on the other hand, argued that adverse market conditions meant an unforseeable and extraordinary decline in securities markets, citing Webster's New International Dictionary, which defined adverse as calamitous. 22 Judge Carter correctly observed that Breuer's proposed interpretation of adverse market conditions was reasonable, because it accorded with the literal meaning of adverse. He also was correct in determining that, in the context of the entire underwriting agreement, Walk-In's interpretation was reasonable. The other six market outs listed in p 10(b) refer to very serious disruptions either in the securities markets in general or in Walk-In's own business. If adverse market conditions were interpreted to mean any unfavorable market decline, all the market outs except for 10(b)(vi), which concerns the status of Walk-In only, would be encompassed by 10(b)(vii), and there would have been no need to enumerate them. Moreover, if Breuer were entitled to terminate the agreement due to any unfavorable market decline, the concept of a firm commitment underwriting would be rendered illusory. 23 Because the term adverse market conditions was susceptible of at least two reasonable interpretations, Judge Carter correctly determined that the term's meaning was a genuine issue of fact, and properly denied Breuer's motion for summary judgment. See Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975).