SCOTx: Disagreement Between the Parties—or their Lawyers—Does Not Equal Ambiguity

U.S. Polyco, Inc. v. Texas Central Business Lines Corp.

Supreme Court of Texas, No. 22-0901 (November 3, 2023)

Per Curiam Opinion (linked here)

U.S. Polyco and Texas Central disputed the meaning of their land-improvement contract. The Supreme Court of Texas took that as an opportunity to reinforce its repeated admonitions that (1) a court’s “‘primary objective’ when construing private legal instruments … ‘is to ascertain and give effect to the parties’ intent as expressed in the instrument,’” and (2) “[i]n the usual case, the instrument alone will be deemed to express the intention of the parties.” These “principles of contract interpretation,” it emphasized, “are well established and of fundamental importance.”

Here, the parties disagreed about whether certain items were encompassed by the defined term, “TCP Infrastructure Improvements.” The pertinent contractual provision listed some specific items to be included within that definition, but it concluded with, “and other items in or adjacent to the Designated Areas as are agreed upon by [the parties] in writing.” The question, of course, was whether the qualifier—“as are agreed upon by [the parties] in writing”—applied to all items in the series or only to the last entry.

Both the trial court and the court of appeals considered dueling canons of construction to unravel the parties’ dispute: “the series-qualifier canon and the last-antecedent canon.” Because of the absence of a comma before the phrase “as are agreed upon by [the parties] in writing,” both courts concluded the “last antecedent canon” controlled—an analysis and conclusion with which the Supreme Court agreed. But, while the trial court then found the contract to be unambiguous and enforced its interpretation as a matter of law, the appeals court held that, “[t]he record demonstrates that the parties strongly disagree about the intent of [the contractual provision] and its application,” and it therefore “conclude[d] that [the contract] is ambiguous and cannot be construed as a matter of law.”

Without hearing oral argument, the Supreme Court granted the Petition for Review and reversed the court of appeals. “[L]ike all other considerations beyond the contract’s language and structure,” it said, “parties’ ‘disagreement’ about their intent is irrelevant to whether that text is ambiguous.” “If lawyerly disagreement about text meant that a legal instrument’s disputed meaning must be resolved as a matter of fact,” the Court warned, “it would be a poor advocate who could not obtain a jury trial to interpret the text.” Instead, “[c]oncluding that a legal instrument is insolubly ambiguous must always come after a court has exhausted all the traditional tools of interpretation and still cannot reach a definitive conclusion about the meaning conveyed by the text.”