Court Opinion

ID: 5158000
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:27:26.010595+00
Date Added: 2024-06-11T08:25:28.777810
License: Public Domain

JUSTICE COATS,
dissenting.
{24 Because I agree entirely with the court of appeals resolution of the borrower's claims currently pending before us, I would affirm its judgment to reverse and remand for a new trial on those claims. I therefore respectfully dissent.
25 Unlike either the trial court or court of appeals, the majority avoids the central question of the case-whether the Colorado Credit Agreement Act's so-called statute of frauds provision would bar the admission of extrinsic evidence to resolve an ambiguity in the written contract-by simply holding that the subject contract contained no ambiguity permitting the admission of extrinsic evidence in any event. The majority develops no coherent rationale in terms of accepted rules of interpretation supporting this conclusion, but the hints it does offer suggest either a misunderstanding of the provisions of and relationships among the various change agreements or what I consider to be a fundamental misunderstanding of the law governing contract construction.
(26 As the intermediate appellate court carefully pointed out, the original loan agreement in this case contained no separate default interest rate provision whatsoever. The first change agreement contained such a provision, but that provision did not effectuate any operational change because it set the default rate at the note rate. The second change agreement, however, included a special default interest rate of 36 percent, appearing several paragraphs after a provision entitled, - DESCRIPTION - OF - THE CHANGES, which not only failed to mention the new default provision but in fact expressly represented that "[alll other terms and conditions remain the same." Like the see-ond change agreement, the third again included the 36 percent special default interest rate, after once more omitting any mention of this special default interest rate in its description-of-changes provision and after once more expressly confirming that "[alll other terms and conditions remain the same."
{27 The majority does not appear to dispute the well-accepted proposition that ambiguity in a written contract may be resolved by looking to extrinsic evidence demonstrating the intent of the parties. It is similarly well-accepted, both in and outside this jurisdiction, that an ambiguity permitting resort to extrinsic evidence is established where different provisions of a contract are in irree-oncilable conflict. See Ryan v. Fitzpatrick Drilling Co., 139 Colo. 471, 342 P.2d 1040 (1959); see also People v. Johnson, 618 P.2d 262, 266 (Colo.1980); see generally 11 Richard A. Lord, Williston on Contracts § 30:4, *941at 46 (4th ed. 1999) (hereafter "Williston"); 5 Margaret N. Kiffin, Corbin on Contracts § 24.23, at 252 (Joseph M. Perillo ed., 1998) (citing Ryan). While consideration of the contract as a whole in light of various interpretative aids may help to determine that an apparent conflict between individual words or provisions of the contract does not present an actual conflict at all, if apparently conflicting provisions are not reconcilable by the language of the contract itself, then there exists a facial ambiguity. We have previously held not only that onee a court determines a document to be ambiguous, it may consider extrinsic evidence bearing on the intent of the parties, but also that extrinsic evidence may be conditionally admitted to determine whether the contract is actually ambiguous in the first place. See E. Ridge of Fort Collings, L.L.C. v. Larimer & Weld Irrigation Co., 109 P.3d 969, 974 (Colo.2005).
128 If believed by the trier of fact, the extrinsic evidence offered by Fisher would not only have been powerful on the question of the parties' understanding; it would have been virtually dispositive. The excluded evidence included a handwritten statement on an official loan committee document that all prior terms and conditions (other than a referenced change to the standard interest rate) remained unchanged by the second change agreement; a bank official's deposition testimony that this statement was meant to signal the only change intended in the change agreement; and evidence that the 86 percent default rate was inserted automatically by new bank software without the loan officer's knowledge.
129 The majority does not suggest that the two disputed provisions of the third change agreement are reconcilable, much less present a coherent rationale for finding that they do not conflict. As best I can determine, the majority opinion does, however, imply two alternate, and inconsistent, theories for finding that the court of appeals erred. First, it appears to believe the court of appeals erred in finding a conflict, and therefore an ambiguity, in the third change agreement by considering the terms of that agreement in light of the change agreements that preceded it,. Second, it appears to believe that it can avoid any conflict by choosing, as a matter of law, which of the conflicting provisions will control. I believe both to be clearly erroneous.
1 30 With regard to the first theory, in its footnote 2, maj. op. T11, the majority reproaches the court of appeals for violating what it refers to as a fundamental rule of contract interpretation that the latest iteration of contractual terms controls. To suggest the applicability of this rule to the reasoning of the court of appeals is little short of absurd. The series of change agreements at issue clearly incorporate prior agreements by reference, affirmatively stating that the latest agreement makes no changes from the former, other than those enumerated. To suggest that such a provision does not conflict with the subsequent addition of an unin-cluded new term because it is impermissible to consult the terms of the prior agreement to tell whether the condition at issue is a change flies in the face of reason.
131 Although the majority does not further develop it, this criticism of the court of appeals is also suggestive of a more complex, but equally unavailing, argument that was advanced by the Bank but rejected by the court of appeals,. The Bank argued that the two provisions at issue in the third and final change agreement were not in conflict at all because the addition of a 36 percent special default rate had actually occurred in the second change agreement, making the assertion of no additional changes in the third change agreement accurate. Like the court of appeals, I (as perhaps does even the majority) consider this argument-that the identical conflict in the second change agreement somehow vanishes by being repeated in the third change agreement-to border upon sophistry. I agree with the court of appeals that this reasoning simply begs the question whether the default rate was ever validly changed to 36 percent.
132 With regard to the second theory or rationale, the majority offers no reasoning for its conclusion other than to note the clarity of the 386 percent default rate provision; the sophistication of Fisher; and the less than noteworthy proposition that a contract must be interpreted as a whole. On the *942basis of these observations, however, it somehow chooses the 86 percent rate provision as controlling and announces, as a matter of law, that there is therefore no ambiguity to be resolved by extrinsic evidence of the parties' intent. Although unstated, the clear implication of this conclusion is that despite an irreconcilable conflict in a written contract, potentially dispositive extrinsic evidence of the intent of the parties may be excluded from the trier of fact and disregarded altogether in favor of a legal determination that one or the other of the conflicting provisions should control. If that is the majority's intention, as I believe its opinion necessarily implies, perhaps the proposition remains unstated for the very reason that it would be unsupported by the law of contract interpretation.
1 33 There will undoubtedly forever remain close questions concerning the proper articulation and application of the rules of contract interpretation, as well as debates about the point at which interpretation has crossed over into construction, but I do not believe there can be any serious question that irree-oncilable conflicts in a contract amount to an ambiguity in the contract, which must be resolved according to the intent of the contracting parties. One (if not the) primary source for ascertaining the intent of the parties is extrinsic evidence of the circumstances surrounding the execution of the contract. See generally Williston § 82:7, at 484-89. Rather than attempting to determine the intent of the parties with regard to inclusion of the special default interest rate, I believe the majority simply imposes its own preference, effectively punishing Fisher for relying on an express provision of the change agreement ensuring him that, having read and understood the original contract, he need read no further.
{34 Because I not only agree with the court of appeals' resolution of this case but also fear the implications of the majority opinion, I respectfully dissent.