Court Opinion

ID: 9789863
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:43:10.603037+00
Date Added: 2024-06-11T07:37:24.778371
License: Public Domain

*78ARMSTRONG, J.,
concurring in part and dissenting in part.
I agree with the majority that the trial court properly denied defendant’s motion for a directed verdict. I respectfully disagree with its conclusion that the parties’ contract unambiguously provides that plaintiffs compensation is based on a percentage of the amounts that defendant receives for plaintiffs pathological services, as opposed to the amounts that it bills for those services.
The language at issue is the third sentence of paragraph 4 of the contract. It provides:
“On or before September 15 of each year, Hospital shall pay to Pathologist the amount, if any, by which 90 percent of the professional fee for pathological services received by the Hospital exceeds $138,889.00 per year.”
Plaintiff contends that, without additional information, it cannot be determined whether the phrase “received by the Hospital” modifies “the professional fee” or “pathological services.” In other words, he contends that one cannot tell whether the sentence means that his additional compensation is based on the “fees received by the Hospital for pathological services” or on the “fees for pathological services received by the Hospital.” If it is the former, plaintiffs compensation is based on defendant’s annual receipts for plaintiffs professional services. If the latter, it is based on defendant’s annual billings for those services.
Plaintiff contends, therefore, that the court erred in holding that the sentence unambiguously establishes that the compensation due him is measured by the professional fees that defendant received. He argues, instead, that the proposal on which the contract was based, the representations by defendant’s president during the negotiation of the contract, and the course of performance by those involved in the contract’s negotiation demonstrate that the third sentence was intended to mean that billings, rather than receipts, determine the compensation due.
We review a ruling on whether contractual language is ambiguous for errors of law. Hauge v. Vanderhave, 121 Or *79App 221, 224, 854 P2d 1002, rev den 317 Or 583 (1993). A contract provision is ambiguous if it has no definite significance or if it is capable of more than one sensible and reasonable interpretation; it is unambiguous if its meaning is so clear as to preclude doubt by a reasonable person. May v. Chicago Insurance Co., 260 Or 285, 292-93, 490 P2d 150 (1971). Parol evidence is admissible to explain the circumstances under which a written contract was made, but that evidence cannot vary the terms of the contract. Deerfield Commodities v. Nerco, Inc., 72 Or App 305, 317, 696 P2d 1096, rev den 299 Or 314 (1985).
The phrase “received by the Hospital” is critical to the amount of damages that plaintiff can recover, and each party’s interpretation of that phrase is plausible. The phrase can be read to modify only “pathological services,” which immediately precedes it. Under that reading, plaintiffs compensation would be based on billings rather than receipts. That reading is bolstered by the fact that paragraph 4 requires defendant to give plaintiff monthly reports of its billing of plaintiffs professional fees, not of its receipt of those fees, which suggests that the additional compensation due plaintiff also is based on billings, not receipts. Plaintiff also presented evidence to the court that, during negotiations, he and another pathologist were told by defendant’s then-CEO that the pathologists’ annual compensation would be based on billings rather than receipts.
In fact, in order for the third sentence to read unambiguously the way the majority says that it does, the parties would have had to write it differently than they did. Instead of providing that plaintiffs compensation would be based on “the professional fee for pathological services received by the Hospital,” the sentence should have been written to provide that his compensation would be based on “the professional fees received by the Hospital for pathological services.” As phrased, the sentence is inherently ambiguous, as plaintiff contends.1
*80Moreover, contrary to defendant’s contention, the construction for which plaintiff contends is unremarkable. Under plaintiffs construction, he is paid based on the amount of work that he does, which is measured by the billable services that he provides to defendant. That arrangement is no different from that of a contract attorney who provides legal services to a law firm based on the number of billable hours that the attorney works. If the attorney does more work, the attorney is paid more money, without regard to whether the firm collects the fees represented by that work.
Although plaintiffs interpretation of the third sentence is a plausible interpretation, it is not conclusive. Under paragraph 4, the phrase “for pathological services” modifies “the professional fee.” Thus, the parties could have intended the phrase “received by the Hospital” to modify “the professional fee for pathological services,” as defendant contends. Because the sentence is ambiguous, the court erred in granting defendant’s motion to limit evidence of the parties’ intent regarding it. See Interstate Fire v. Archdiocese of Portland, 318 Or 110, 118, 864 P2d 346 (1993) (award of summary judgment might be inappropriate if ambiguity in meaning of insurance policy left factual issue of parties’ intent). The majority errs in concluding otherwise.

 The majority disagrees, contending that it is obvious that defendant receives fees and not pathological services, so the disputed sentence in paragraph 4 cannot be understood to mean what plaintiff says it means. In fact, the contract provides that defendant
“does hereby retain the services of [plaintiff] for the provision of nuclear medicine and pathology services to the Hospital."
*80(Emphasis supplied.) Given that language, which states that the pathological services that are the subject of the contract are services that plaintiff provides to defendant, plaintiffs reading of the disputed sentence in paragraph 4 is not unreasonable.