by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
CONTRACTS; INTERPRETATION; PAROLE EVIDENCE: Where instrument provides that one clause will apply "notwithstanding any conflicting or inconsistent provisions . . . including specifically paragraph 3," but provision appears in paragraph 4 and is totally repugnant to paragraph 3, court will treat parties' intent as ambiguous and will admit parole evidence to permit jury to ascertain meaning of agreement.
Land O'Sun Realty v. REWJB Gas Inv., 685 So. 2d 870 (Fla. App. 1997)
The parties, sophisticated real estate investors, executed an agreement amending a group of 27 leases. The critical paragraphs read as follows:
The tenants sought a declaratory judgment that the remaining term available under the leases was 27 years, and the landlords, not surprisingly, argued that the lease provided specifically that the leases ended after 18 months. The trial court ruled the document internally consistent and ambiguous, and pemitted parole evidence to be submitted to the jury, which found for the tenants. The tenants argued, apparently convincingly, that paragraph 4 was inserted to permit the landlords to "frighten" a mortgagee into agreeing to loan concessions by leading the mortgagee to believe that rent flow under the leases would soon end. The jury found for tenants and the trial court entered the declaratory judgment.
On appeal: held: affirmed. The language "notwithstanding" and the specific reference to paragraph three do not necessarily carry the parties intent when the two paragraphs in the agreement would thus become "mutually repugnant."
A dissenter, apparently the only sane person in the room, pointed out that these were sophisticated investors who used this language, which has clear and accepted meaning, advisedly and pointedly, and ought to live with their language.
Comment: This case is a strong candidate for the "worst decision of the year" award. Where there was no fraud and complete knowledge of the words, these sophisticated investors should have been left to simmer in the soup they had made.
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or firstname.lastname@example.org
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.