Court Reviews Law Governing Contract Interpretation on Summary Judgment

On August 6, 2018, Justice Schecter of the New York County Commercial Division issued a decision in Cast Iron Co., LLC v. Cast Iron Corp., 2018 NY Slip Op. 31881(U), discussing contract interpretation on a summary judgment motion:

Contracts are construed in accord with the parties' intent, the best evidence of which is the language of the contract itself, read as a whole. Thus: a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms. A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the agreement itself, and concerning which there is no reasonable basis for a difference of opinion. Moreover, provisions in a contract are not ambiguous merely because the parties interpret them differently. Extrinsic or parol evidence-evidence outside the four corners of the document-is admissible only if a court finds an ambiguity in the contract.

As a general rule, if the court finds that a contract is ambiguous, it cannot be construed as a matter of law on a motion for summary judgment. An exception, exists, however, when the documentary evidence submitted on summary judgment resolves the ambiguity. Conversely, if the extrinsic evidence in the record is insufficient to resolve the ambiguity, the parties' intent must be determined at trial.

(Internal quotations and citations omitted). The court went on to hold that the contract did not unambiguously support the movant's position and denied the motion for summary judgment.

Under New York law, the starting point of contract interpretation is the words of the contract. As this decision shows, sometimes those words, without context, may be insufficient to establish what the parties intended. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.