Opinion ID: 31258
Heading Depth: 3
Heading Rank: 1

Heading: Substantive Claim

Text: LER contends that, by the plain terms of the Contract, the district court erred in granting summary judgment to Mothers regarding eighteen stores, and judgment as a matter of law following a bench trial regarding three stores, with respect to overpaid charges that it discovered regarding all of the twentyone stores. LER contends that the plain terms of the Contract entitle it to compensation for discovered overcharges, regardless -5- of whether Mothers actually recovered any of the overpayments. Mothers responds that the district court properly held that the Contract unambiguously assigns LER a 50% interest only in those overpaid charges that are actually recovered. Two sections of the Contract are particularly relevant to this dispute: Article 1, Section 1.2, FEES. In consideration of the services rendered and to be rendered to the Client by LER, the Client does hereby assign, transfer and convey to LER as compensation herein, a fifty percent (50%) undivided interest in all overpaid Charges relating to each and every lease, including any other amounts recovered relating thereto, that: (a) are actually recovered in cash, check or the like by Client; (b) are recovered in the form of a credit to Client’s account with any landlord pursuant to any lease; and, (c) are otherwise recovered by Client. All compensation herein as stated in Sections 1.2(a) through 1.2(c) shall herein together constitute “LER Fees.” LER Fees shall be paid to LER by Client within ten (10) days of Client’s receipt of overpaid Charges on any lease, or the credit thereof. ... Article 2, Section 2.1, TERMINATION. LER or Client may terminate this Agreement upon fifteen (15) days prior written notice by delivering said notice to Client. Said termination shall not affect the right of LER to collect LER Fees for any overpaid Charges either discovered or recovered as of the date of termination of this Agreement. Under all circumstances LER’s right to collect LER Fees shall survive the expiration or termination of this Agreement. The terms of the Contract unambiguously entitle LER to compensation only for those overpayments discovered by LER that -6- Mothers actually recovers. While Article 1, Section 1.2 (hereinafter “Compensation Provision”) states that LER is entitled to a fifty percent interest in all overpaid Charges, that right is subject to the satisfaction of subsections (a), (b), or (c), each of which require the Charges to be “recovered.” We find without merit LER’s contention that the three subsections were intended to relate solely to the phrase “including any other amounts recovered relating thereto,” particularly given the placement of a comma (inserted by LER itself, as the drafter), following the word “thereto.” The presence of the comma indicates that both the phrase “including any other amounts recovered relating thereto” and the earlier phrase “all overpaid Charges relating to each and every lease” are subject to the condition of recovery noted in subsections (a), (b) and (c). Nor does Article II, Section 2.1 (hereinafter “Termination Provision”), support LER’s argument that it is entitled to compensation for charges that Mothers has not recovered. The Termination Provision was clearly intended to preserve LER’s right to compensation as described in the Compensation Provision, as reflected by its use of the term “LER Fees.” The Compensation Provision unambiguously requires that Mothers actually recover on the discovered overpayments. By implication, the parties intended the Termination Provision to protect LER’s right to compensation upon termination to the same degree. The phrase -7- “discovered or recovered” in the Termination Provision was merely intended to protect LER’s entitlement to compensation for overpaid charges that it discovered before termination, but were not recovered until after termination. LER’s proposed interpretation of the Termination Provision, which would entitle it to compensation upon termination for overcharges merely discovered or recovered, is not only contrary to the plain meaning of the Contract, but would create a perverse incentive for LER to prematurely terminate the contract in order to avoid the recovery requirement under the Compensation Provision. The district court properly granted Mothers judgment on this issue.1