Of course, as alluded to above, the primary objective in construing an agreement is to give effect to the parties' intent. Home Ins. Co. v. Chicago & Northwestern Transp. Co., 56 F.3d 763, 767 (7th Cir. 1995). Generally speaking, if the language of the agreement is ambiguous or incomplete, the court should consider extrinsic evidence to determine the parties' intent. Id.
Here, the appeal bond agreement is unclear or incomplete and thus, intrinsically ambiguous. Id. at 768. The letter does state that it is an agreement between Hyman and Ramco. But, if Hyman and Ramco were the only parties to this agreement, how could paragraph three of the agreement grant Hyman the right to withhold amounts due to Ramco under any agreement between Ramco and Hyman/Mortenson? There is something more going on here. Clearly, Hyman/Mortenson, was, in some manner, a part of this agreement.
Magistrate Judge Bobrick concluded that the appeal bond agreement's reference to Hyman/Mortenson evidenced an assignment of some interest to Hyman or Hyman/Mortenson. The Court respectfully disagrees with that conclusion. The plain-language of the appeal bond agreement cannot be read to support any form of an assignment.
Unfortunately, the Court does not believe that there is enough extrinsic evidence in the record for it to ascertain the parties' intent. See Lumpkin v. Envirodyne Indus., Inc., 933 F.2d 449, 457 (7th Cir. 1991). There is an affidavit from Ramco's president where he attests to his belief that the appeal bond agreement was between Hyman and Ramco, not Hyman/Mortenson. But, once again, if that was the parties' understanding, how could the appeal bond agreement allow Hyman to withhold amounts due to Ramco under any agreement between Ramco and Hyman/Mortenson? There is also an affidavit from Mortenson's project manager. But, as noted by Magistrate Judge Bobrick, the affidavit adds virtually nothing to the analysis, it merely restates Hyman/Mortenson's position regarding the interpretation of the appeal bond agreement.
Accordingly, the Court remands this matter for the parties to submit extrinsic evidence in support of their respective interpretations of the appeal bond agreement--the extrinsic evidence in the appellate record is simply inadequate to conclusively determine the effect of the agreement.
See id. ("There may well be extrinsic evidence outside the record on appeal that bears upon the proper determination of the parties' intent."). The findings of fact made by Magistrate Judge Bobrick regarding the extrinsic evidence will determine the next step in this matter. For instance, if the parties did in fact intend the agreement to be a modification of the Convention Center contract, does UCC § 9-318(2) even apply? Or, was the agreement intended to be a separate three party contract between Hyman, Hyman/Mortenson, and Ramco? If so, does Southwest's security interest take priority over Hyman/Mortenson's rights under the separate contract--particularly, since Hyman/Mortenson was not on notice of Southwest's security interest at the time of the appeal bond agreement?
2. Punitive Damages
Magistrate Judge Bobrick concluded that Southwest's claim for punitive damages failed since it neglected to come forward with supporting evidence, but instead, argued that the issue should be reserved for trial. The purpose of summary judgment is to determine if there are genuine issues of material fact in dispute that can be resolved only by resorting to a trial. Of course, to determine if genuine material factual disputes exist, one must present his evidence in support of his position. Southwest failed to present any evidence in support of its punitive damages claim. Accordingly, summary judgment was properly granted against it.
The Court affirms Magistrate Judge Bobrick's decision regarding punitive damages, but reverses and remands with respect to Southwest's conversion claim which, as noted, involves an interpretation of the appeal bond agreement. Extrinsic evidence must be considered to determine the parties' intent for entering into the agreement.
Date: OCT 16 1996
JAMES H. ALESIA
United States District Judge