Wards Co., Inc. v. Stamford Ridgeway Associates

• Decision Date: 03 May 1985
• Docket Number: No. 896,D,896
• Citation: 761 F.2d 117
• Parties: WARDS COMPANY, INC., Plaintiff-Appellee, v. STAMFORD RIDGEWAY ASSOCIATES and Trim Fashions, Inc., Defendants, Stamford Ridgeway Associates, Defendant-Appellant. ocket 84-9004.
• Court: U.S. Court of Appeals — Second Circuit

Page 117

761 F.2d 117

WARDS COMPANY, INC., Plaintiff-Appellee, v. STAMFORD RIDGEWAY ASSOCIATES and Trim Fashions, Inc., Defendants, Stamford Ridgeway Associates, Defendant-Appellant.

No. 896, Docket 84-9004.

United States Court of Appeals,

Second Circuit.

Argued March 14, 1985.

Decided May 3, 1985.

David M. Cohen, Stamford, Conn. (Wofsey Rosen Kweskin & Kuriansky, Stamford, Conn., Stephen A. Finn, Stamford, Conn., on brief), for defendant-appellant.

Gregory W. Nye, Hartford, Conn. (Hebb & Gitlin, Hartford, Conn., Alan Robert Baker, Hartford, Conn., of counsel), for plaintiff-appellee.

Before KAUFMAN and CARDAMONE, Circuit Judges, and TENNEY, District Judge. ^*

IRVING R. KAUFMAN, Circuit Judge:

At its best, the written word provides an excellent means of communicating information. At its worst, language can obfuscate the very meaning sought to be conveyed. In the hands of some lawyers, it seems, words tend more often to confuse than clarify simply thoughts. Alas, this is nothing new. The insightful (if fictitious) Lemuel Gulliver, in describing the profession of law, explained: "There was a society of men among us, bred up from their youth in the act of proving, by words multiplied for the purpose, that white is black and black is white." J. Swift, Gullivers Travels: Houghnhnms, ch. 5.

Today, we are again called upon to dissect the work of an unknown draftsman, and to decide whether a certain contractual term is "wholly unambiguous" within the meaning of Heyman v. Commerce & Industry Ins. Co., 524 F.2d 1317, 1320 (2d Cir.1975). Because that task requires some familiarity with the broader transaction, we set forth the relevant facts before turning to the ultimate legal issue.

I. BACKGROUND

The Ridgeway Shopping Center, located in Stamford, Connecticut, is owned by appellant Stamford Ridgeway Associates ("Ridgeway"), a partnership organized under the laws of the State of New York. In 1972, Ridgeway's predecessor leased premises in the shopping center to Lafayette Radio Electronics of Stamford, Inc. ("Lafayette") for use as a retail electronics store. The lease covered an initial sixteen-year term, together with two five-year option periods. Pursuant to its terms, Lafayette was obligated to pay Ridgeway $26,900 annually in fixed rent until June 1988. Thereafter, it was to pay annual fixed rent of $29,235 and $31,400, respectively, during each of the two five-year option periods.

In January 1980, Lafayette filed a petition with the United States Bankruptcy Court for reorganization pursuant to Chapter 11 of the Bankruptcy Code. Under the court's supervision, Lafayette continued to operate as debtor-in-possession. In April, John Winter, Ridgeway's General Manager, approached Robert Crimmins, Lafayette's director of real estate. He inquired whether Lafayette would be willing to assign its interest in the lease to Trim Fashions, Inc., another tenant in the shopping center that had expressed a desire to occupy Lafayette's premises. Rather than sell its interest outright, Lafayette proposed to sublet the space to Trim Fashions. After a period of negotiation between the two retailers, a sublease was conditionally executed in June 1980. Immediately thereafter, the document, which was conditioned upon the consent of the lessor, was delivered to Ridgeway, and on July 9, 1980, Ridgeway executed its consent.

Under the terms of the sublease, Lafayette was to receive fixed minimum rent of $55,680 annually during the base term of the prime lease, increasing to $78,880 annually and $102,080, respectively, during each of the two five-year option periods. Accordingly, Lafayette, as lessee under the prime lease and lessor under the sublease, was to profit in the amount of the differential between the fixed minimum rents provided by those documents, i.e., $26,926 annually through July 1988, and $45,950 annually and $68,990 annually, respectively, during the two five-year option periods.

In August 1980, the Bankruptcy Court authorized Lafayette to assume the prime lease and approved the executed sublease. On September 1, 1980, the sublease term commenced and Trim Fashions began payment to Lafayette of fixed minimum rent at the rate of $55,680 annually. Lafayette continued to pay Rideway the rent due under the prime lease, i.e., $26,900 annually.

In June 1981, Lafayette was merged into Wards Company, Inc. ("Wards"), which assumed possession of Lafayette's assets and liabilities--including its interests in the prime lease and sublease. Subsequent to the merger Trim Fashions continued to pay Wards the rent due under the sublease, and Wards continued to pay Ridgeway the rent due under the prime lease. Wards, of course, retained the rent differential of $26,926 per year.

On August 13, 1982, Ridgeway first made demand upon Wards for one-half of the accrued rent differential for the period from September 1980 (when the sublease term commenced). Ridgeway's demand, which forms the basis of the instant dispute, was premised upon paragraph 52(c) of the prime lease ("paragraph 52(c)"). That provision, reprinted infra at pp. 120 - 121, sets forth the rights of the parties in the event the premises are sublet.

After making its demand, Ridgeway threatened legal action to terminate the lease for nonpayment of one-half of the differential. To avoid a possible forfeiture of the lease, Wards agreed--conditionally and under protest--to pay Ridgeway the sum of $32,377.59 (representing the arrearages since September 1980 as calculated by Ridgeway) plus one-half of the differential each month. Wards then commenced this action in the United States District Court for the District of Connecticut, seeking a declaratory judgment determining whether one-half of the rent differential is indeed owed to Ridgeway pursuant to paragraph 52(c). ¹ After Ridgeway filed its answer, Wards moved for summary judgment pursuant to Fed.R.Civ.P. 56. Following the filing of pleadings and completion and completion of limited discovery, the motion was argued before Judge Burns. In August 1984, the district court granted the motion, finding that the terms of paragraph 52(c) were "wholly unambiguous" within the meaning of this Court's holding in Heyman, supra, 524 F.2d at 1320, and that Wards was not obligated to remit any part of the rent differential to Ridgeway pursuant to that paragraph. Judgment was entered, and Ridgeway appealed.

II. DISCUSSION

The standards for granting summary judgment are sufficiently clear in this Circuit that we need spend little time reiterating them. In an action on a contract--such as the one before us--summary judgment is perforce improper unless the terms of the agreement are "wholly unambiguous." Heyman, supra, 524 F.2d at 1320; see Schering Corp. v. Home Ins. Co., 712 F.2d 4, 10 (2d Cir.1983). This standard comports with the scheme propounded by the drafters of the Federal Rules of Civil Procedure. See Kaplan, Amendments of the Federal Rules of Civil Procedure, 1961-63 (II), 77 Harv.L.Rev. 801, 825-28 (1964). Focusing on the language of Rule 56, we have held that "the key is issue-finding, not issue-resolution." United States v. One Tintoretto Painting Entitled "The Holy Family with Saint Catherine and Honored Donor", 691 F.2d 603, 606 (2d Cir.1982). Accordingly, unless the moving party can establish tht contractual language is not "susceptible of at least two fairly reasonable meanings," Schering, supra, 712 F.2d at 9, a material issue exists concerning the parties' intent, and the non-moving party has a right to present extrinsic evidence regarding the meaning of the contested term. See Heyman, supra, 524 F.2d at 1320; Home Ins. Co. v. Aetna Casualty & Surety Co., 528 F.2d 1388, 1390 (2d Cir.1976).

We stress that the meaning urged by the non-moving party must be "fairly reasonable," for, indeed, it is the rare sentence that cannot be read in more than one way if the reader is willing either to suspend the rules of common English usage or ignore the conventions of a given commercial setting. "A Court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings." Downs v. National Casualty Co., 146 Conn. 490, 494, 152 A.2d 316, 319 (1959). Contorted semanticism must not be permitted to create an issue where none exists. Yet, where the text of an agreement reasonably allows for varying interpretations--whether by the inadvertence or design of the draftsman--the need for judicial construction cannot, and may not, be avoided. Grand Union Co. v. Cord Meyer Development Corp., 735 F.2d 714, 717 (2d Cir.1984); see Schering, supra, 712 F.2d at 9.

With these principles firmly in mind, we turn to examine paragraph 52(c) of the prime lease. Because our discussion is meaningful only by reference to its precise language, we set forth the paragraph in its entirety:

(c) In the event Lessee wishes to sublet the demised premises, Lessee shall give Lessor written notice thereof and Lessor shall have the right for a period of sixty (60) days thereafter to recapture possession of the demised premises and cancel this lease by giving notice to said effect to Lessee within said...