Opinion ID: 1060237
Heading Depth: 1
Heading Rank: 3

Heading: construction of the contracts

Text: Although the parties stipulated that parol and other extrinsic evidence could be adduced as to the meaning of the disputed parts of the contracts, neither the trial court, nor this Court, is thereby precluded from examining the contracts first, following the usual rules of contract construction. See Whitt v. Godwin, 205 Va. 797, 802, 139 S.E.2d 841, 845 (1965). The mere fact that terms of a contract are in dispute is not evidence that the language is not clear and explicit and requires extrinsic evidence to aid in its construction. If the terms of the parties' agreement are contained in a clear and explicit writing, that writing is the sole memorial of the contract and the sole evidence of the agreement. In that event, parol evidence cannot be used to explain the written contractual terms. See Amos v. Coffey, 228 Va. 88, 91-92, 320 S.E.2d 335, 337 (1984). Similarly, parol evidence cannot be considered to explain a patent ambiguity, that is, to supply the understanding that the parties could have reasonably been expected to reach where the language of an instrument reflects no understanding. Zehler v. E.L. Bruce Co., Inc., 208 Va. 796, 799, 160 S.E.2d 786, 789 (1968); see also City of Roanoke v. Blair, 107 Va. 639, 641, 60 S.E. 75, 76 (1908). Only where the ambiguity is not self-evident from the writing, that is, where there is a latent ambiguity, is the use of parol and other extrinsic evidence permissible to aid the trier of fact in determining the intention of the parties. Portsmouth Gas Co. v. Shebar, 209 Va. 250, 253, 163 S.E.2d 205, 208 (1968). An ambiguity exists when language is of doubtful import, admits of being understood in more than one way, admits of two or more meanings, or refers to two or more things at the same time. Allen v. Green, 229 Va. 588, 592, 331 S.E.2d 472, 475 (1985); see also Renner Plumbing, Heating & Air Conditioning, Inc. v. Renner, 225 Va. 508, 515, 303 S.E.2d 894, 898 (1983). Ambiguity is created by the [d]oubtfulness [or] doubleness of meaning ... of an expression used in a written instrument. Berry v. Klinger, 225 Va. 201, 207, 300 S.E.2d 792, 796 (1983). Here, as in Dyer, the terms in paragraphs 11.3 and 12.1, respectively, deal with the amount, time, and method of payment to the subcontractor by the contractor, without regard to possible insolvency of the owner. As such, they are essential provisions in any construction subcontract. Unlike the facts in Dyer, however, there is no additional language here which would permit us to find that the parties contemplated payment within a reasonable time. Likewise, nothing in the contracts would permit us to find, as in Gilbane, that the parties clearly understood these terms to assert a condition precedent on payment. Moreover, the contracts are completely devoid of any unequivocal terms dealing with the possible insolvency of Rowe to show that the subcontractors assumed the risk of that insolvency. Thus, the language of the contracts is not patently ambiguous; the latent ambiguity in the contracts was exposed only after the default of the owner brought the issue into focus. Thus, we conclude that the phrases after the Contractor receives payment from the Owner and has received payment from the Owner constitute latent ambiguities in the contracts. That is, the phrases, while appearing perfectly clear at the time the contracts were formed, because of subsequently discovered or developed facts, may reasonably be interpreted in either of two ways. See Zehler, 208 Va. at 799 n. 5, 160 S.E.2d at 789 n. 5. Here, the contracts in question could be interpreted to require Galloway to pay a subcontractor only if it received a payment demanded from Rowe identifiable with the progress or completion of a subcontract, or merely to provide for a reasonable time to pay after such demand was made to Rowe. Because this ambiguity was not patently evident on the face of the contract, the trial court was permitted to look beyond the contract and determine the intent of the parties using parol and other extrinsic evidence.