Court Opinion

ID: 8422019
Source: CourtListenerOpinion
Date Created: 2022-11-03 22:13:34.743791+00
Date Added: 2024-06-11T16:48:25.415688
License: Public Domain

RYAN, Circuit Judge,
dissenting.
In my judgment, the district court erred in failing to recognize that there is an ambiguity in the parties’ final settlement agreement, which required the district court to hold an evidentiary hearing to determine what the parties intended, so that the terms of their agreement, not the courts’, might be enforced.
As my colleagues have recognized, the settlement agreement consists of two documents: the Stipulation and Modified Exhibit A.
In Ohio, an “[ajmbiguity exists ... where contract language is susceptible to two or more reasonable interpretations.” Potti v. Duramed Pharms., Inc., 938 F.2d 641, 647 (6th Cir.1991) (citing Wells v. Am. Elec. Power Co., 48 Ohio App.3d 95, 548 N.E.2d 995 (1988)).
Here, the settlement agreement is indeed “susceptible to two ... reasonable interpretations.” Id. The Stipulation provides, in relevant part, that Hocking Valley *552Community Hospital (Hocking) may not hold spouses jointly liable for charges attributable to one of them, without the written consent of both. Modified Exhibit A, on the other hand, provides, in relevant part, that Hocking may hold spouses jointly liable for some (necessary) medical care charges attributable to one of them, without the written consent of both. Aside from other difficulties, this ambiguity produces a manifestly absurd result, in that, by the terms of the agreement, the hospital may not pursue joint spousal liability without approval, but must notify its patients that it has the right to pursue joint spousal liability without approval. The operative rule of logic here, is that a thing cannot be and not be at the same time. The operative rule of Ohio law is that an ambiguity regarding a material term in a settlement agreement must be resolved, if at all, following an evidentiary hearing. Rulli v. Fan Co., 79 Ohio St.3d 374, 683 N.E.2d 337, 339 (1997).
The district court held that the obvious conflict between the Stipulation and Modified Exhibit A of the settlement agreement does not render the agreement ambiguous, because the phrase “to the extent possible” in Modified Exhibit A, if construed as meaning “to the extent possible under law,” makes Hocking’s right to pursue joint spousal liability under Ohio law subject to whatever preemptive effect federal law might have. Quite aside from the illogic of finding the agreement unambiguous because it can be construed into unambiguousness, the district court’s holding is completely nonresponsive to Hocking’s ambiguity arguments.
The district court’s approach to the problem was mistaken from the outset. In finding the contract to be unambiguous based on its interpretation of the phrase “to the extent possible” in Modified Exhibit A, the district court departed dramatically from basic rules of contract law, including the fundamental principle that ambiguity is to be determined by reference to the plain meaning of the terms of the agreement, see Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 509 N.E.2d 411, 413 (1987), and that judicial interpretation of contract terms is permissible only in the presence of ambiguity, Logsdon v. Fifth Third Bank, 100 Ohio App.3d 333, 654 N.E.2d 115, 118 (1994).
Because there is an ambiguity in the contract, and maybe more than one, and because the contract is a settlement agreement, the district court should have held an evidentiary hearing, Rulli, 683 N.E.2d at 339, rather than an ad hoc interpretation of the phrase “to the extent possible.” Extrinsic evidence would have been admissible at this hearing to establish the parties’ true intent or otherwise demonstrate that a mutual or unilateral mistake occurred in amending the agreement.
Moreover, the court derived its interpretation of “to the extent possible” entirely from plaintiff Ruth Edwards’s attorney’s assertion, at oral argument, that the parties intended that phrase to mean “to the extent possible under law.” Nothing within the four comers of the agreement supports that interpretation, and Edwards did not even proffer that possible interpretation in her written response to Hocking’s motion to withdraw the settlement agreement. Moreover, the interpretation is not particularly plausible given the facts of the underlying lawsuit.
According to both parties, the change made to the original Exhibit A was intended to reflect Ohio Rev.Code § 3103.03, as interpreted in Ohio State University Hospital v. Kinkaid, 48 Ohio St.3d 78, 549 N.E.2d 517, 519 (1990). Indeed, Modified Exhibit A cites Ohio Rev.Code § 3103.03. That statutory provision states, in part: “If a married person is unable to do so, the *553spouse of the married person must assist in the support so far as the spouse is able.” Ohio Rev.Code § 3103.03(A) (emphasis added). Kinkaid, in turn, explains: “Where a husband is unable to provide for his own support, pursuant to R.C. 3103.03 a wife must aid in the support of her husband to the extent that she is able.” 549 N.E.2d at 519 (emphasis added). Given the conceded fact that the parties tried to incorporate these authorities into Modified Exhibit A, it seems likely that they intended “to the extent possible” to mean “to the extent the spouse is able,” not “to the extent possible under law.” The parties may have intended either of these things, or something else, but this at least highlights one of the flaws in the district court’s analysis. Not only did the court determine that no ambiguity existed by relying on an extrinsic submission of one party, it also totally ignored a more plausible, text-based interpretation of the agreement.
But perhaps most strikingly, the court’s unauthorized construction of the phrase “to the extent possible” fails to resolve the ambiguity identified by Hocking. It seems apparent that the court misunderstood Hocking’s claim of ambiguity. The opinion states several times that the purported inconsistency lies between the “original” agreement and the “amended” agreement. Then, when the opinion attempts to quote the specific text at issue, it reproduces two sentences, both of which appear in Modified Exhibit A. Thus, the opinion suggests that Hocking’s claim rests either on an inconsistency between the original and amended agreements or on an inconsistency within the text of Modified Exhibit A itself. Both views are wrong. Hocking is complaining about an internal inconsistency within the amended agreement, between the language of the Stipulation and the language of Modified Exhibit A.
Perhaps as a result of this misconception, the court concluded that it could resolve any ambiguity in the agreement by interpreting “to the extent possible” to mean “to the extent possible under [federal] law.” This construction simply misses the point!
The question is not whether one can read Modified Exhibit A to be consistent with federal law; rather, the question is whether one can read Modified Exhibit A to be consistent with the text of the Stipulation. One cannot. Therefore, an evidentiary hearing is necessary to determine what the parties intended with respect to Hocking’s principal obligation when they amended the settlement agreement by adopting Modified Exhibit A. As written, the agreement does not clearly express the parties’ intent regarding Hocking’s authority to impose spousal joint liability.
I would reverse and remand for an evidentiary hearing.