News & Noteworthy

Authored - NJ Contract Law Update - Parish v. Parish: The Paradigm of an Ambiguity
JULY 12, 2012 | Windels Marx - Commercial Litigation

Matrimonial cases are often sui generis, even when they implicate other areas of the law. (This will come as no surprise to any experienced practitioner.) Contract-interpretation cases arising out of the matrimonial area must therefore be taken with a grain of salt. There are times when they are fully applicable to the commercial arena1; other times, less so.

Even with this caveat in mind, Parish v. Parish, 2012 WL 2136157 (N.J.App.Div. June 14, 2012), is nonetheless instructive in providing the paradigm of an ambiguity; and in bringing to mind why such ambiguities may arise in general2.

Even those of us who do not practice matrimonial law have heard mention of Lepis v. Lepis, 83 N.J. 39 (1980); which requires at least a prima facie showing of "changed circumstances" in order to revisit certain matrimonial agreements or rulings. The question that arose in Parish was whether the simple phrase, "This alimony award shall be reviewable in seven (7) years", was enough to warrant a substantive review of the alimony award without the need for the prima facie Lepis showing.

The narrow question before the Court was whether the Lepis proof burden still applied in light of the quoted phrase; and even more narrowly, whether the quoted phrase constituted an ambiguity in terms of the intent of the parties to have implicitly bargained away the need for the threshold Lepis showing. The key issue, thus, was the implicit nature of the 'contracting away'--since it would have been simplicity itself to have stated in the contract that the Lepis burden was intended to be eliminated seven years hence.

The Parish Court was left grasping for contextual clues to determine not only what the language meant, but whether in fact there was a sufficient ambiguity to warrant a plenary hearing. The contract did not on its face describe the burden inherent in such review. The strongest contextual clue was that "[t]he seven-year time-frame coincides with husband's reaching sixty-five years old and normal retirement opportunities." Id. at *3.

Deeming the quoted contract phrase as potentially evincing an intent to eliminate the Lepis burden, the Court noted:

  • As husband argues, the prospect of future determination of his alimony obligation without such an initial showing may have been fairly bargained for in the settlement agreement in exchange for other considerations. [Id.]

Parish tells us two things:

  1. Courts may very well strain to find that a clause has an unexpressed meaning--even though doing so may conceivably violate the heart of the parol evidence rule--if the clause seems to have no other substantive significance, and perhaps was inartfully drafted. Such courts will say for the parties what they neglected to say for themselves. In a case like Parish, this instinctively seems to make sense; but in other cases, the court's intervention may seem like the regretted phrase, "judicial activism".
  2. There are circumstances in contract negotiations where a party consciously settles for language it knows to be ambiguous. The party realizes the clause is less than crystal clear; but because it does not believe it can obtain better language through further negotiation--and in fact probably believes that a request for clarification could cause the issue to be reexamined, and the beneficial language extinguished altogether in further negotiations, rather than clarified beneficially--the party lets the unclear clause remain as is, and gambles on the issue never arising or being decided positively.

In the theoretical sense, almost any clause can be clarified to the advantage of the party benefited by the clause. But time and again, we see clauses not so clarified--not necessarily because of any oversight, but often because of the dynamics noted above.

What To Do

If such an ambiguity is litigated, counsel should: (1) consider everything in the 'back and forth' of the negotiations that might support the desired interpretation (including the purpose of the clause, in addition to clues as to exactly what the language means); (2) and point out that the clause would have little meaning if not interpreted the way you suggest. On the defense side, point out the court's limited powers to go beyond a contract's clear language (the Parish clause arguably could be so characterized--clear, though impotent), while mindful that New Jersey law expansively allows parol evidence in almost any circumstances. See, e.g., Odatalla v. Odatalla, 355 N.J.Super. 305, 313 (App.Div.2002); Garden State Plaza v. S.S. Kresge Co., 78 N.J.Super. 485, 496 (App.Div.1963).

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 See, e.g., the discussion of Pacifico in my earlier article, "Construing Language Against the Drafter", April 17, 2012).

2 Whether or not that consideration was present in Parish cannot be discerned from that Opinion.

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