Opinion ID: 51139
Heading Depth: 3
Heading Rank: 3

Heading: Ambiguity and Inconsistency

Text: In Davis’s second argument, he contends that the arbitration provision of the Agreement is unenforceable due to ambiguities and inconsistencies in the Agreement. Because of these ambiguities and inconsistencies, Davis asserts, EGL cannot prove as a matter of law that Davis’s claims fall under the scope of the arbitration provision. We address each of Davis’s ambiguity arguments in turn. Whether a contract is ambiguous is a question of law decided by the court. D. Wilson Const. Co., 196 S.W.3d at 781. In construing contract language, the primary objective is to discern 9 the true intention of the parties. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). Ambiguity in a contract exists where the agreement “is subject to two or more reasonable interpretations after applying the pertinent rules of construction.” Id. If, however, a contract can be “given a definite or certain legal meaning,” no ambiguity exists. Id. First, Davis contends that Section 6.07 of the Agreement, the arbitration provision, conflicts with Appendix II of the Agreement, which lists deductions from Davis’s compensation. Section 6.07 of the Agreement states that “any claim or controversy arising out of or relating to this Agreement, or the breach thereof . . . shall be determined and settled in accordance with the Commercial Arbitration Rules of The American Arbitration Association.” Appendix II, on the other hand, enumerates the expenses which EGL may deduct from Davis’s compensation. In essence, Davis argues that while the arbitration provision requires “any claim or controversy” to be arbitrated, Appendix II inconsistently permits EGL to take self-help remedies for a variety of claims under the contract. Contrary to Davis’s assessment, we find only one reasonable interpretation and no inconsistency. Appendix II, rather than containing a list of claims, merely contains an agreed list of expenses that EGL may deduct from Davis’s settlement payments. The intent and effect of Appendix II is simply to allocate onto Davis 10 the initial payment of Davis’s contractual expenses and the risk of a mistake. Any claim or controversy involving the deductions, for example a disagreement over the value, must still be arbitrated according to Section 6.07 of the Agreement, albeit at Davis’s request rather than EGL’s. Such an arrangement is analogous to the typical employment compensation arrangement: the employer pays what the employer believes to be the correct compensation; any mistake in pay must be challenged by the employee. Therefore, we conclude that no ambiguity or inconsistency exists between these two provisions. Second, Davis alleges that the Agreement contains ambiguous and inconsistent notification requirements. Section 6.07(a) provides: “Written notice of a demand for arbitration must be mailed to the other party . . . within ninety (90) days of the occurrence of the claimed breach or other event giving rise to the controversy or claim.” Thus, the provision places on both parties a ninety-day notice requirement of a demand for arbitration. Section 4.07 of the Agreement states: “Contractor will not make any claim or bring any action against EGL for additional settlement monies unless Contractor notifies EGL in writing by certified mail of any discrepancies or additional claims within fifteen (15) days of settlement.” This section requires Davis to notify EGL of any alleged settlement errors within fifteen days of the settlement payment as a prerequisite to bringing a claim on the disputed 11 settlement. Again, we conclude that only a single reasonable interpretation exists for these two provisions. Section 4.07 requires notice of erroneous settlement payments prior to demanding arbitration, while Section 6.07(a) requires notice of a demand for arbitration. It is clear that Davis must comply with both provisions to have a claim for settlement monies arbitrated. Although Davis may regard the notice requirement for arbitration as unnecessarily duplicative in light of the notice requirement for incorrect settlements, the two provisions are not ambiguous or inconsistent. Given that there is only one reasonable interpretation of the Agreement and that its provisions do not conflict, we hold that Davis has not shown any ambiguity or inconsistency in the Agreement.