Opinion ID: 1057781
Heading Depth: 2
Heading Rank: 3

Heading: Alternative Theory of Severance Benefits

Text: As noted at the outset of Part II above, whether the language of a contract is ambiguous is a question of law that is reviewed de novo. Preferred Sys. Solutions, 284 Va. at 391, 732 S.E.2d 676. We have also held that contract language is 21 ambiguous when it may be understood in more than one way or when it refers to two or more things at the same time. Id.
The language of paragraph 1 of the Severance Agreement states that [f]or terminations prior to the Protected Period, the severance benefits that are payable to the participant are as set forth in the Company's Severance Pay Policy in effect on 8 the date of execution of this Agreement. The phrase are payable has a mandatory connotation. The benefits referenced in the Severance Pay Policy (Severance Policy) are discretionary, as the Severance Policy states, [s]everance pay and benefits are available for eligible employees in the event of an involuntary separation, not cause-related, to provide salary and benefit continuation to ease the employee's transition. Severance eligibility is determined by Executive Management. The Severance Policy also stated that all of its components were subject to change without prior notice and as appropriate to reflect the current business and financial conditions of the company. ORC argues that the Severance Agreement does not supersede the Severance Policy, but merely references the Severance Policy as a secondary means of requesting severance if a change of 8 The Severance Agreement and the Severance Pay Policy are two different documents. 22 control has not occurred. Lawlor asserts that the language the severance benefits that are payable clearly renders severance under the Severance Pay Policy mandatory rather than discretionary. It appears that both of these possible interpretations of the Severance Agreement are reasonable. Because there is more than one reasonable way to understand this language, the language is ambiguous. Accordingly, the circuit court did not err in holding that it was ambiguous and in permitting Lawlor to introduce extrinsic evidence to support his position.