W.P. Associates v. Forcier, Inc.

• Decision Date: 09 February 1994
• Docket Number: No. 92-653-A,92-653-A
• Citation: 637 A.2d 353
• Parties: W.P. ASSOCIATES, v. FORCIER, INC. ppeal.
• Court: Rhode Island Supreme Court

Page 353

637 A.2d 353

W.P. ASSOCIATES, v. FORCIER, INC.

No. 92-653-Appeal.

Supreme Court of Rhode Island.

Feb. 9, 1994.

William Landry, Karen Pelczarski, Blish & Cavanagh, Providence, for plaintiff.

Patricia Rocha, W. James McKay, Adler, Pollock & Sheehan, Providence, for defendant.

OPINION

LEDERBERG, Justice.

A Superior Court declaratory judgment determined that the Release and Indemnification Agreement between Forcier, Inc. (Forcier), and W.P. Associates (Associates) unambiguously discharged the outstanding balance of a promissory note executed by Associates to Forcier. Forcier appealed. We affirm.

I Facts

In April 1989, Associates exercised an option to purchase from Forcier two adjacent parcels of land in the town of Coventry. One parcel was known as the Washington Village Golf Course (golf course); the second parcel was slated for a residential condominium project (condominium parcel), at which site construction had already begun as of the date of the closing. The total purchase price of these parcels was $2,625,000: $1.5 million was paid in cash at the closing and $750,000 in the form of an unsecured promissory note, payable as condominium units were sold; and $375,000 for five off-site improvements, three of which were to benefit the golf course. ¹ At the closing Forcier delivered to Associates a warranty deed to the condominium parcel. The warranty deed to the golf course was delivered to escrow agents pursuant to an agreement that required completion of the off-site improvements before release of the deed. ²

Numerous disputes delayed completion of the project and led Associates to claim damages against Forcier. One problem arose after project plans were converted from the originally proposed six- and eight-unit condominium buildings to four- and six-unit buildings. Associates alleged that engineering errors and omissions in the plans prepared by Forcier necessitated the reconstruction of leaching fields that otherwise would have encroached on wetlands and precluded approval from the Department of Environmental Management (DEM). Associates argued that the new plans not only resulted in additional costs, but also caused delays in the completion of the septic systems. As a result, Associates was forced to pay hotel lodging expenses for purchasers of the condominium units while the work was being completed.

Associates also claimed damages resulting from actions taken by the Hopkins family, which continued to operate the golf course after the May 1989 closing pursuant to an agreement with Forcier. According to testimony at trial, the Hopkinses created potential vicarious liabilities by serving liquor at the golf course's clubhouse even though they did not have liquor-liability insurance, and it was alleged that the Hopkinses had failed to pay taxes on the property.

In addition, after becoming aware of a possible wetlands violation caused by the Hopkinses' removal of trees from wetland areas on the golf course, Associates hired a landscaping firm to restore those protected areas. According to Lawrence LeBlanc (LeBlanc), a general partner of Associates, these occurrences collectively had resulted in damages to Associates of "at least a half million dollars." LeBlanc further worried that the balance Associates owed Forcier on the promissory note--continuously decreasing as each condominium unit was sold--would fall below the level of Associates's rapidly increasing claim of damages against Forcier.

The release of the golf course deed from escrow was delayed in part by a dispute over the cost of off-site improvements. Title to the property therefore remained with Forcier, who became concerned about potential liabilities from the golf course and the Hopkins family.

Eventually Forcier and Associates began negotiations to settle the disputes that arose from their initially amicable business deal. After a March 1991 private meeting between Robert R. Forcier, president of Forcier, Inc., and LeBlanc, both parties came away believing that all their disputes would be resolved through a Release and Indemnification Agreement (agreement). Associates's attorney, Paul Plourde, relying on LeBlanc's recollection of the meeting, drafted the first version of the agreement. The parties thereafter exchanged a total of three or four drafts of the agreement before the final version was accepted and signed by the parties.

Instead of resolving all the disputed issues, the agreement created another: Was the promissory note, executed as part of the closing and carrying a balance of approximately $413,000, included in the agreement? Associates filed a complaint in Superior Court, seeking a declaratory judgment that the promissory note was discharged by the clear and unambiguous language of the agreement. The Superior Court, sitting without a jury, declared inter alia that the note had been discharged by the clear intent of the parties as evidenced in the plain language of paragraph 6 of the agreement. In response, Forcier filed the instant appeal.

II Discussion

Paragraph 6 of the agreement reads:

"6. Forcier, Inc. and the Guarantors hereby agree to release, indemnify and hold harmless, Associates and its partners, and their respective heirs, executors, administrators, personal representative, successors and assigns, from any and all manner of action or actions, cause or causes of action, suits, debts, demands, sums of money (including reasonable attorneys' fees) and all other claims and demands whatsoever, in law or in equity, which Forcier, Inc. or the Guarantors have, for or by reason or means of any matter or thing from the beginning of the world to the day of the date of these presents, against Associates and its partners, or any of them, arising out of or relating to any and all actions taken or not taken by Associates in connection with the Condominium Parcel, Improvements, Golf Course Parcel or the operation * * * of the Golf Course Parcel and Clubhouse."

On appeal, Forcier maintained that the trial justice erroneously concluded that the agreement clearly and unambiguously discharged Associates's obligation under the note because the broad language at the beginning of paragraph 6 is self-limited by the specific terms that conclude the paragraph. Forcier contends, alternatively, that the omission of the promissory note from the specific, defined terms of the agreement gave rise to an ambiguity that should have been resolved by extrinsic evidence. This extrinsic evidence, according to Forcier, would have clearly demonstrated the parties' intent not to include the note within the terms of the agreement.

Associates predictably supports the trial court's finding that the agreement clearly and unambiguously discharged the note. Associates argues, alternatively, that even if the agreement were ambiguous, the trial justice correctly found that the parties intended to discharge the note.

In reviewing the instant appeal, we are guided by well-settled rules on the interpretation of contracts. In particular, a...