by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
randolphp@umkc.edu

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:

"3. The term of [each of] the [twenty two] Leases is amended so that . . . the initial and all renewal terms will aggregate to 27 years from the date of this Amendment.

4. Notwithstanding any conflicting or inconsistent provisions of the Leases or this Agreement, including specifically paragraph 3 hereof, the term of each of the Leases and all renewal terms shall automatically terminate at the date that is eighteen months after the date of this Amendment."

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.

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