Disagreement About the Meaning of a Term in the Shared-Fee-Agreement Did Not Render the Contract Ambiguous—No Need for Interpretation of the Term by the Court

The First Department, in an extensive decision, over a two-justice partial dissent, determined the shared-fee arrangements among attorneys were unambiguous and must be enforced as written, without reference to extrinsic evidence. The underlying personal injury case eventually settled for $8 million.  Along the way, plaintiff’s attorney, Menkes, entered into agreements with two attorneys for assistance with the case. Most of the decision addresses the agreement with an attorney, Golomb, concerning mediation and settlement negotiations. If the mediation resulted in a settlement, Golomb was entitled to 12% of the attorney’s fees.  If further work, beyond the mediation, were required, Golomb was entitled to 40% of the attorney’s fees. Menkes argued that, although the mediation session did not result in a settlement, the mediation was a “process” which continued beyond the initial session culminating in a settlement. The majority held that the term “mediation,” pursuant to the language of the contract, encompassed only the one session.  Once that session ended without a settlement, the 40% shared-fee-arrangement kicked in:

The issue before us is one of simple contract interpretation. Under well established precedent, agreements are to be generally construed in accord with the parties’ intent … . The best evidence of the parties’ intent is “what they say in their writing” … . “[W]hen parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms” … . This rule is particularly applicable where the parties are sophisticated and are negotiating at arm’s length … . Language in a written agreement is deemed to be clear and unambiguous where it is reasonably susceptible of only one meaning or interpretation … . Finally, “[e]xtrinsic evidence may not be introduced to create an ambiguity in an otherwise clear document” … .

Here, as the dissent agrees, the language of the contract is unambiguous. Menkes argues that she interpreted the term “mediation” to constitute an ongoing process that would not be limited to a single session but rather would continue until an impasse or other termination had occurred. However, the assertion by a party to a contract that its terms mean something to him or her “where it is otherwise clear, unequivocal and understandable when read in connection with the whole contract” is not sufficient to make a contract ambiguous so as to require a court to divine its meaning … . The specific fee language that Menkes now claims supports her position was added to the agreement at her request. She takes the untenable position that she was never advised that the mediation reached an impasse or had been terminated. Yet despite the fact that the agreement went through several revisions, neither party saw fit to add any language to that effect. Both parties to the agreement are attorneys and thus know the importance of precision in the words used … . These clear terms, under these circumstances, need no interpretation by the court. Marin v Constitution Realty, LLC, 2015 NY Slip Op 04225, 1st Dept 5-19-15