Opinion ID: 551498
Heading Depth: 2
Heading Rank: 2

Heading: Acquisition Agreement

Text: 12 Paragraph 13.6 of the Acquisition Agreement required Sun to fund the Suntide Plan as of the Closing Date with an amount of money specified in two formulas based on agreed actuarial assumptions. Koch asserts that this provision required Sun to pay, in addition to this amount, an amount representing the time value of money between the closing date of the agreement and the date that Sun actually transferred the money. The relevant language of Paragraph 13.6 reads: 13 As of the Closing Date, the Suntide Plan will provide benefits, and shall be funded by [Sun] from whatever source it chooses, with an amount equal to: (i) the present value of the Accrued Benefit accrued by the Transferred Employees as of the Closing Date ... plus (ii) the present value of a cost of living adjustment to the Accrued Benefit set forth in (i) above, equal to 6 3/4%, compounded annually from the Closing Date.... 14 According to the agreement, it is to be construed in accordance with the laws of Texas. Under Texas law, if there is no ambiguity, the construction of the written instrument is a question of law for the court. Westwind Exploration, Inc. v. Homestate Savings Ass'n, 696 S.W.2d 378, 381 (Tex.1985) (quoting City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.1968)). At trial, both parties agreed, and the district court held, that paragraph 13.6 was not ambiguous. The parties' positions have not changed on appeal. We also find it appropriate to construe the Acquisition Agreement as a matter of law. 15 In construing the agreement, certain canons of construction are to be borne in mind. The court's role is to effectuate the intent of the parties. In so doing, we assume that the language the parties used explains their intent. Extrinsic evidence of the facts and circumstances surrounding the making of the agreement may be used to interpret the contract in light of the parties' true intentions. Benson v. Jones, 578 S.W.2d 480, 484 (Tex.Civ.App.1979). Language should be given its plain grammatical meaning unless it definitely appears that the intention of the parties would thereby be defeated. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex.1987). Finally, courts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). 16 Admittedly, the placement of commas in that part of Paragraph 13.6 quoted above that precedes the colon is infelicitous. We disagree with Sun's contention that because of these commas, the initial phrase As of the closing date modifies only the immediately following clause the Suntide Plan will provide benefits. Grammatically, it makes more sense that as of the Closing Date also modifies the following clause shall be funded by [Sun] from whatever source it chooses. This disagreement does not, however, fully undermine Sun's interpretation of the contract language. 17 The isolated portion of the sentence relevant to our analysis reads as follows: 18 As of the Closing Date, the Suntide Plan will provide benefits, and shall be funded by [Sun] from whatever source it chooses, with an amount equal to [the following elaborate formula]. 19 Koch's entire argument hinges on the paraphrased wording, As of the Closing Date, the Suntide Plan ... shall be funded by [Sun].... Koch contends that this language required Sun to fund the Suntide Plan in such amount as if it were funded on the Closing Date, 2 thus including interest for the time-value of the fund between the actual Closing Date and the date of transfer of the money several months later. Although this construction would be plausible in isolation, it does not fit the entirety of the sentence or the parties' intention when they signed the agreement. 20 Two facts compel a different reading of Paragraph 13.6. First, the parties knew at the time they signed the agreement that Sun could not literally fund the Suntide Plan for some weeks after the Closing Date because the data were not available to calculate the proper sums. Second, despite that knowledge, the parties drafted a funding provision, embodied in the rest of paragraph 13.6, that specifies in detail Sun's monetary obligation in present-value terms without providing for a time-differential between the Closing Date and the date of actual funding. Given the multi-million dollar amounts in issue, it is highly unlikely that Sun and Koch would have intentionally expressed in very complex and specific terms how much Sun must contribute in present value terms to fund future benefits, while intentionally leaving completely unexpressed a potential six-figure liability for interest. Koch's advocacy of a ten percent (10%) interest rate, wholly unsupported by the contract language, reflects the frailty of its argument. Finally, Koch's argument that the initial clause of paragraph 13.6 required the factoring of interest until the actual date of Sun's transfer of funds overlaps, at least in part, with the parties' calculation of present values based on the Closing Date. As the district court said, Koch could have achieved its desired result by explicitly basing the present-value calculations as of the transfer date. That it did not do so suggests that the parties had no such agreement. 21 The more plausible reading of Paragraph 13.6 is that urged by Sun. Under that construction, the Suntide Plan became responsible for providing benefits As of the Closing Date, and Sun's funding obligation As of the Closing Date included the present value of future benfits to the claimants plus a 6 3/4% annual cost of living adjustment to those benefits. The parties did not insist upon actual funding As of the Closing Date, nor could they specify a precise transfer date for the funds. 3 Without doing violence to grammar and word usage, and taking the surrounding circumstances into account, Sun's funding As of the Closing Date meant only to state the intent that Sun's contribution to the Suntide Plan would be relied on from and after that date to pay benefits. Thus, if a former Sun employee reached retirement between the Closing Date and the date of transfer of Sun's funds, Koch could presumably begin to pay him without having contributed to the plan's funding; that is, Koch could later recapture that amount from the Sun contribution. 22 Remembering the last above-cited canon of construction, we reject Koch's argument that the foregoing interpretation of paragraph 13.6 conflicts with the language of paragraph 13.8, which provides: Sellers shall transfer the account balances maintained on behalf of the Transferred Employees in Sellers' Savings Plan as of the Closing Date to Buyer's Savings Plan. Koch asserts that Sun interpreted this language in the same way that Koch has asked us to interpret the language of paragraph 13.6. That is, Sun took into consideration earnings on funds in its savings plan from the Closing Date until the transfer date. The two paragraphs do not, however, have parallel grammar. Paragraph 13.8 requires transfer of account balances maintained ... as of the Closing Date. But more important, the account balances were owned neither by Sun nor by Koch, but by the account holders; the accounts held either shares of stock, the value of which is self-adjusting, or dollars earning interest at a specified rate no matter who maintained the accounts. The account holders had a right to continue receiving whatever return they had chosen regardless of when the savings plan funds were transferred. 23 Because Koch has not proven its claims against Sun for breach of the Acquisition Agreement or breach of ERISA obligations, we affirm the district court's judgment on the pension fund issue.