Contract Interpretation: The Language of Lists
In this article, we take a brief look at two judicial concepts with respect to how California courts interpret complex business contracts. Both concepts, ejusdem generis and expressio unius est exclusion alterus, relate to how courts interpret the use of lists in a contract.
In general, when interpreting a contract, San Diego and California courts will attempt to give effect to the intent of the parties. The first general rule is to read the contract and apply the so-called “four corners rule.” This is the simple idea that within the “four corners” of the contract, the courts should be able to discern the meaning of the contract and the intent of the parties. The second general rule is to give the words used their “plain meaning” or their “ordinary meaning” (unless there is some reason to give the words a technical, historical, scientific, or non-ordinary meaning).
These general rules of interpretation are among the many reasons for having written contracts and why it is important to have your business contracts drafted by an experienced and skilled San Diego corporate attorney. Careful wording is important so that the intent is clear.
With respect to lists that might be used in a contract, as noted, there are two rules of interpretation. In Latin, “ejusdem generis” means “of the same kind” and, under this doctrine of construction, if there is a list of items AND a “catchall” phrase, then generally it is assumed that the parties to the contract intended to include other things that might be similar to the items on the list. At the same time, things NOT similar to the items on the list are presumed to be excluded. As an example, imagine an insurance contract that bars coverage for “… battery, assault, theft and other intentional criminal conduct.” Under the doctrine of ejusdem generis, California courts would “add” to the list other crimes like murder and embezzlement because those are forms of “intentional criminal conduct.” The words “other intentional criminal conduct” are the “catchall” words and they are key to application of the ejusdem generis doctrine.
By contrast, if there is no catchall phrase, then it is assumed that the parties intended only the items on the list to be applicable. This is the doctrine of expressio unius est exclusion alterus which, in Latin, means roughly “the expression of one thing is the exclusion of the others.” So, in our example, if the insurance policy bars coverage for “… battery, assault and theft,” California courts would not “add” to the list. Because there is no “catchall” language, the assumption is that the parties meant to limit the list to the items written and other items were intended to be excluded.
A good case example is found in Huverserian v. Catalina Scuba Luv, Inc., 184 Cal. App. 4th 1462 (Cal. App. 2nd Dist. 2010). That case involved a claim for wrongful death involving scuba diving and gear rental. Prior to the rental, the diver signed a Release and Waiver of Claims which stated that the rental company was not liable for injury or death resulting from “… boat dives or multiple day rentals.” In Huverserian, the decedent and his son rented various dive equipment and then went to the Casino Point Dive Park in Avalon, California. The two men then entered the water from the beach — not from a boat — and proceeded to descend into the water. The elder Mr. Huverserian ran out of air at a depth of 60 feet and, while he and his son successfully reached the beach, he went into cardiac arrest and died the next day at the hospital.
A wrongful death lawsuit was eventually filed by Mr. Huverserian’s family. In response, the dive equipment company argued that the Release and Waiver made them not liable. In the litigation, the rental company argued that, even though the diving equipment was not used during a “boat dive” or for a “multiple day rental,” the doctrine of ejusdem generis should apply to “add” a “from-the-beach -dive” to the liability exclusion. The company argued that “from-a-beach-dive” was “of the same kind” as the “boat dive.”
The trial court agreed and dismissed the case against the equipment rental company. However, the Court of Appeals reversed. The court held that the contract would be interpreted based on its plain meaning and the words used. According to the court, if the equipment rental company had intended to exclude liability for a “from-the-beach-dive,” it could have added that language or added a “catchall” phrase. Since no such language was in the contract, the doctrine of ejusdem generis was not applicable. The plain reading of the liability exclusion contract did not exclude “from-the-beach-dives” and, as such, the wrongful death case was allowed to proceed.
As the case example shows, business contracts must be carefully written to fully protect your business.
Contact San Diego Corporate Law
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides legal services related to business law, contracts, corporate entity formations and maintenance, private securities offerings/sales, the sale/purchase of a business, and mergers and acquisitions. Mr. Leonard can be reached at (858) 483-9200 or via email.