Court Opinion

ID: 8959833
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:34:48.825245+00
Date Added: 2024-06-11T17:10:10.165749
License: Public Domain

KEARSE, Circuit Judge,
dissenting:
While I could perhaps agree that we should not reverse a ruling that as a matter of fact the agreement between defendant Baltimore Gas & Electric Co. (“BG & E” or the “Company”) and the plaintiff owners of BG & E stock did not allow the repurchase of shares attempted by BG & E here, I respectfully dissent from the majority’s decision that the district court properly reached that conclusion as a matter of law.
I have no disagreement with the abstract legal principles invoked by the majority. It is well established that the objective of contract interpretation is to give effect to the expressed intentions of the parties. E.g., Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir.1985) (reversing grant of summary judgment), and that where the language of the contract is unambiguous and reasonable persons could not differ as to its meaning, the question of interpretation is one of law to be answered by the court. Id. However, “ ‘[wjhere contractual language is susceptible of at least two fairly reasonable interpretations, this presents a triable issue of fact, and summary judgment [is] improper.’ ” Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975) (quoting Aetna Casualty & Surety Co. v. Giesow, 412 F.2d 468, 471 (2d Cir.1969)). The latter principle is the one that should govern here, for the pertinent part of the con*53tract at issue is ambiguous and is susceptible to at least two reasonable interpretations.
The indemnity and repurchase provisions are set forth in ¶ 6.2 of the parties’ agreement. That paragraph, an 1,800-word provision running four single-spaced pages, was aptly described by the district court as a provision of “stupefying legal density,” with its key phrase lying “entombed in a single sentence of 82 typed lines which turns tormentedly upon itself like a wounded animal.” Memorandum Opinion and Order dated May 20, 1987, at 3. Stripped of much that is not germane to the present dispute, 1162 reads in part as follows:
If under any circumstances or for any reason whatsoever [the Owner] ... shall lose the benefit of, lose the right to claim or suffer disallowance with respect to, all or any part of the Dividends Received Deduction ... with respect to the Stock (any such treatment, loss or disallowance being hereinafter called a “Loss”), then ... the Company shall pay to such Owner, not later than 60 days following written notice to the Company by such Owner of such Loss, such sums as ... shall be required ... to cause such Owner’s effective after-tax yield ... to be 11.172000% per annum ...; provided, however, that if ... the Company shall have received any such written notice of Loss or if the Company shall have made a good faith determination that there is substantial risk that it would be required to make any indemnity payments pursuant to this Section 6.2 (regardless of whether the Company shall have received any such written notice of Loss), then, in lieu of making any indemnity payments ..., the Company ... shall have the right to purchase ... all the 1981 Series A Stock or 1981 Series B Stock, as the case may be, then owned by all Owners....
I regard the language of the proviso, and in particular that part which refers to a substantial risk that the Company “would” be required to make any indemnity payments, as being susceptible to at least one reasonable interpretation other than that adopted by the district court and the majority.
The majority and the district court interpret this part of the agreement as providing that the Company may repurchase only if there is a substantial risk that an owner “will,” majority opinion ante at 51, send the Company a notice of loss and as requiring the Company to determine whether the owners will in fact make such demands, id. at 51-52. The agreement itself, however, does not say this. Nor does it use the word “will”.
Rather, the proviso allows the Company to repurchase if it has made a good faith determination that there is a substantial risk that it “would” be required to make any indemnity payments. What makes the proviso inherently ambiguous is its use of the word “would” — plainly a subjunctive here — and its failure to specify what condition or conditions (if, indeed, any were intended other than an event of loss) were intended to trigger the subjunctive obligation to indemnify. Given the use of the subjunctive and the lack of specificity as to trigger, I think it not unreasonable to read the proviso as meaning that the parties intended that the Company might repurchase upon its good faith determination that an event had occurred which, if any owner so chose, would trigger the Company’s obligation to indemnify. Such an interpretation seems especially reasonable in light of the proviso’s explicit indication that the Company could determine that it “would” be required to make such payments “regardless of whether” it had received written notice of loss from an owner. Further, the fact that if the Company determines in accordance with 116.2 that it would be liable to any owner, it has the right to repurchase from all owners would seem to make it less reasonable to infer, as the majority does, that the parties intended to require the Company to determine that any single owner “will” give notice of loss, than to infer, as I think permissible, that they intended it to determine simply whether it “would” be liable if any single owner chose to give such notice.
*54Regardless of which interpretation should be chosen, however, the meaning of the agreement should not have been decided by the district court as a matter of law, and this Court should not affirm the granting of summary judgment.