Opinion ID: 4521884
Heading Depth: 2
Heading Rank: 2

Heading: Royalty Provision

Text: [¶12] Chimani also challenges the court’s interpretation of the contract’s royalty provision, which it addressed on the parties’ cross-motions for summary judgment. “We review a ruling on cross-motions for summary judgment de novo, reviewing the trial court’s decision for errors of law and It is difficult to “clearly manifest[]”an intention to plead an affirmative defense without explicitly 2 invoking that defense, Graffam v. Geronda, 304 A.2d 76, 78 (Me. 1973), because the factual underpinnings of particular affirmative defenses, see M.R. Civ. P. 8(c), will typically converge with a defendant’s general assertions of blamelessness and divergent facts, and will therefore fail to put the plaintiff on notice that a more specific affirmative defense is being asserted. As we discussed above, in Graffam, by contrast, the defendant “clearly and unmistakably” manifested an intent to plead the affirmative defense of accord and satisfaction—which requires a defendant to prove both a clear agreement and the execution of that agreement to satisfy an obligation—by stating facts that could be interpreted only as going to the elements of that defense: (1) that he delivered a check to the plaintiff, (2) that the check stated that it was for full and final payment of the defendant’s obligations, and (3) that the plaintiff cashed the check. 304 A.2d at 77-79. For this reason, Graffam is the exception, not the rule, and is best confined to its facts. 3Because Chimani waived its equitable estoppel defense, we need not—despite Chimani’s urging—address the merits of that defense. 8 considering the evidence in the light most favorable to the party against whom the judgment has been granted in order to determine whether there is a genuine issue of material fact.” Scott, 2019 ME 50, ¶ 5, 206 A.3d 307. [¶13] The parties do not dispute the existence or language of the contract, but hotly contest the proper interpretation of the royalty provision. The interpretation of a contract, “including whether or not its terms are ambiguous,” presents a question of law that we review de novo. Id. ¶ 6 (quotation marks omitted). If a contract’s terms are unambiguous, it must be interpreted in accordance with those terms. Travelers Indem. Co. v. Bryant, 2012 ME 38, ¶ 9, 38 A.3d 1267. If the contract language is ambiguous, however, then the proper interpretation “becomes a question of fact for the factfinder,” Scott, 2019 ME 50, ¶ 6, 206 A.3d 307, and summary judgment is inappropriate unless “the record . . . completely eliminate[s] the possibility of an issue of material fact concerning the intent of the parties,” Tondreau v. Sherwin-Williams Co., 638 A.2d 728, 730 (Me. 1994). A contract’s language is “ambiguous if it is reasonably susceptible to different interpretations.” Scott, 2019 ME 50, ¶ 6, 206 A.3d 307 (quotation marks omitted). [¶14] The parties’ disagreement about the royalty provision’s meaning is easily distilled: InfoBridge argues that the $150,000 cap constitutes the 9 maximum amount of royalties to which it is entitled, and Chimani counters that $150,000 is the maximum amount of “Net Revenue” on which royalties are to be assessed. The contract provides an unambiguous method for calculating royalties (14.5% “of the Net Revenue from each sale and download of the Program”), which is followed by a cap on something (“up to a total amount of $150,000”)—but what? [¶15] The royalty provision is remarkably unclear on this question; either interpretation would be reasonable. See id. The parties advance various grammatical rules and canons of construction to support their respective interpretations, but these explanatory aids can shed only so much light on a sentence this jam-packed with modifying and qualifying phrases. See Univ. of Chicago Press, Chicago Manual of Style § 5.28 (17th ed. 2017) (noting that “[m]iscues and ambiguity commonly arise from” missing antecedents, the presence of multiple antecedents, and the presence of multiple pronouns and antecedents in the same sentence). Any attempt to reverse-engineer the parties’ intent—which is, after all, the touchstone of our inquiry, see Tondreau, 638 A.2d at 730—solely from the four corners of this contract would be in vain. This is an ambiguous contract and its true meaning is therefore a question of fact. See Scott, 2019 ME 50, ¶ 6, 206 A.3d 307. 10 [¶16] The summary judgment record, moreover, does not “completely eliminate the possibility of an issue of material fact concerning” the royalty provision’s meaning. Tondreau, 638 A.2d at 730. The parties dispute a number of factual details regarding the course of the contract negotiations as well as the inferences to be drawn from those contested facts, all of which bear directly on whether they intended to cap royalties at $150,000 or at 14.5% of $150,000. Neither party, in short, presents undisputed facts that “would necessarily be determinative of the meaning of the contract.” Id. at 731. [¶17] Because the royalty provision is ambiguous and the summary judgment record does not permit us to determine its meaning as a matter of law, we have no choice but to vacate the judgment. Id. at 730. The entry is: The order denying Chimani’s cross-motion for summary judgment on the equitable estoppel issue is affirmed. The order granting InfoBridge’s motion for partial summary judgment, interpreting the royalty provision, is vacated. Remanded for further proceedings consistent with this opinion. 11 Maureen M. Sturtevant, Esq. (orally), and John F. Lambert Jr., Esq., Lambert Coffin, Portland, for Appellant Chimani, Inc. Timothy J. Bryant, Esq. (orally), and Jonathan G. Mermin, Esq., Preti Flaherty Beliveau & Pachios, LLP, Portland, for appellee Infobridge, LLC Cumberland County Superior Court docket number CV-2016-427 FOR CLERK REFERENCE ONLY