presented for plaintiff's signature in February, 1979, was to be effective prospectively for the 11 year balance of plaintiff's employment term, and retrospectively for the year 1978.
According to plaintiff's June 27, 1980 affidavit, he called Morris Hariton, defendant's accountant, to determine the effect of this alteration and was told that for calendar year 1978 it meant that instead of receiving a percentage profit share of approximately $ 52,000, he would receive approximately $ 26,000 under the new contract. Plaintiff's affidavit further states that when he told defendant William Norwitz on March 1, 1979 that he had not made a decision whether or not to sign the new contract, he was fired. On March 6, 1980 defendants gave plaintiff a check for $ 3,689.50, representing $ 5,000 severance pay pursuant to Clause 3 of the employment contract, less withholding and FICA taxes.
On June 1, 1979 plaintiff Kass began working for Universal Bindery, Inc. (Universal), a bindery located in Tuxedo, Maryland.
Invoking this court's jurisdiction under 28 U.S.C. § 1332(a), diversity of citizenship, plaintiff on November 14, 1979 filed the present complaint consisting of five counts against defendant William Norwitz and William Norwitz Company, Inc. Count I alleges defendants have wrongfully withheld payment of plaintiff's percentage share of profits for calendar year 1978, and seeks $ 52,002.12 plus interest, costs and attorney's fees. Count II alleges breach of contract resulting in plaintiff losing salary, additional compensation, and other benefits under the contract until December 31, 1989, and seeks $ 815,730, plus interest, costs, and attorney's fees. Count III alleges defendants have wrongfully withheld plaintiff's percentage share of profits earned as a result of his employment in January and February, 1979, and seeks $ 8,667.02 in estimated profits. Count IV alleges tortious wrongful discharge and seeks compensatory and punitive damages. Count V alleges defendant William Norwitz wrongfully interfered with plaintiff's contractual relationship with defendant corporation, and seeks compensatory and punitive damages.
Defendants responded on December 11, 1979 with a counterclaim
against plaintiff for breach of contract, alleging that plaintiff sought and accepted employment with Universal Bindery, Inc. in violation of Clause 5 of the employment contract, which restricts plaintiff's employment with a competitor while the contract is in effect and for three years afterward. Defendants also allege that plaintiff has wrongfully solicited the customers and clients of defendant Norwitz Company to transfer their business to Universal and has wrongfully diverted the business of defendants' customers and clients to Universal.
Defendants also counterclaimed against plaintiff for $ 80,000 allegedly overpaid plaintiff because the percentage share of profits paid to plaintiff each year since 1971 was based on a calculation in which income taxes payable by the corporation were not deducted from profits to arrive at "net profits," as defendants allege should have been done under a proper reading of the employment contract.
To round out this action, plaintiff has filed a counterclaim against defendants. The first count of the counterclaim alleges that defendants have failed to conduct an annual audit for the years 1971 through 1978, as required by Clause 3 of the contract in order to determine the "net profits" for purposes of calculating plaintiff's percentage share. Plaintiff thus seeks an audit for the years 1971 through 1978, to be conducted at defendants' expense.
Count II of the counterclaim seeks compensatory and punitive damages for defendants allegedly tortious interference with plaintiff's business relationship with Universal by bringing suit against Universal with the intent to jeopardize plaintiff's present employment.
This action is now before us on cross-motions for summary judgment. Plaintiff has moved for summary judgment on Count I of the complaint ("net profits" for 1978) and for partial summary judgment on Count II (breach of contract for a definite term). Defendants have moved for summary judgment on Counts II, IV and V of the complaint and Count II of plaintiff's counterclaim.
We are presented with questions requiring us to interpret a contract. In doing so, the parties assume, and we agree,
that we are bound by the law of the District of Columbia in this diversity action. It is appropriate to first discuss in some detail the legal standards we must apply to the facts before us.
The construction of unambiguous contractual provisions is a matter of law to be determined by the court rather than by the jury. Clayman v. Goodman Properties, Inc., supra; Battista v. Horton, Myers & Raymond, 76 U.S. App. D.C. 1, 128 F.2d 29 (D.C.Cir.1942); McReynolds v. Mortgage & Acceptance Corp., 56 App. D.C. 342, 13 F.2d 313 (D.C.Cir.1926); Turner v. Mertz, 55 App. D.C. 177, 3 F.2d 348 (D.C.Cir.1925); Cowal v. Hopkins, 229 A.2d 452 (D.C.App.1967); Rich v. Sills, 130 A.2d 920 (D.C.Mun.App.1957); Arsenault v. Angle, 43 A.2d 709 (D.C.Mun.App.1945). Resort to extrinsic evidence, and its assessment by a jury depends upon the existence of an ambiguity in the contract. Clayman v. Goodman Properties, Inc., supra; Vakas v. Manuel, 114 U.S. App. D.C. 368, 316 F.2d 369 (D.C.Cir.1963); H. Herfurth, Jr., Inc. v. United States, 66 App. D.C. 220, 85 F.2d 719 (D.C.Cir.1936); International Brotherhood of Painters and Allied Trades v. Hartford Accident and Indemnity Co., 388 A.2d 36 (D.C.App.1978); 1901 Wyoming Avenue Cooperative Association v. Lee, 345 A.2d 456 (D.C.App.1975). Whether or not a contract or its provisions is ambiguous is a question of law first to be determined by the court. Clayman v. Goodman Properties, Inc., supra; Dixon v. Wilson, 192 A.2d 289 (D.C.App.1963); Friedman v. Thomas J. Fisher & Co., 88 A.2d 321 (D.C.Mun.App.1952). A contract is not ambiguous merely because the parties to a contract later disagree on its meaning. Clayman v. Goodman Properties, Inc., supra; Burbridge v. Howard University, 305 A.2d 245 (D.C.App.1973); Dixon v. Wilson, supra; Friedman v. Thomas J. Fisher & Co., supra.
Under the law of the District of Columbia, a contract is ambiguous when it is reasonably susceptible of different constructions or interpretations, or of two or more different meanings. As the District of Columbia Court of Appeals has said:
(A) contract is ambiguous when, and only when, it is, or the provisions in controversy are, reasonably or fairly susceptible of different constructions or interpretations, or of two or more different meanings, and it is not ambiguous where the court can determine its meaning without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends ....
. . . .
Burbridge v. Howard University, supra, at 247, quoting 17A C.J.S. Contracts § 294 at 34-35 (1963). See also 1901 Wyoming Avenue Cooperative Association v. Lee, supra; Lee v. Flintkote Co., 193 U.S. App. D.C. 121, 593 F.2d 1275 (D.C.Cir.1979). An ambiguity in a contract raises a genuine issue of material fact, precluding summary judgment. 1901 Wyoming Avenue Cooperative Association v. Lee, supra, at 461.
To determine whether the provisions at issue in the instant action are ambiguous, the parties have urged on us several of the rules of construction courts normally use in such circumstances. For example, in determining whether an ambiguity exists, courts usually read the contract as a whole, interpreting all parts of the contract together.
Where there is an inconsistency between a general provision and a specific provision, the latter will normally qualify the former,
and an interpretation is preferred which gives all provisions a reasonable, lawful and/or effective meaning.
Other rules of construction include the rule that the conduct of the parties pursuant to a disputed provision of an agreement can be taken by the court to indicate the proper interpretation of that provision,
and the rule that a contract is to be construed most strongly against its drafter.
Our analysis of District of Columbia case law, however, leads us to conclude that we are unable to apply these rules of construction to reach the conclusion that the contract at issue is unambiguous.
In 1901 Wyoming Avenue Cooperative Association v. Lee, supra, the District of Columbia Court of Appeals held that a contract provision stating that a member of an apartment cooperative "shall be responsible for all interior repairs" was ambiguous on its face, requiring reversal of the lower court's grant of partial summary judgment. In doing so, the court said:
Appellant asserts that the contract here at issue was ambiguous on its face and we agree. The meaning of the word "interior' as used in the contract was clearly open to several reasonable interpretations. A genuine issue of material fact was thus presented and the grant of summary judgment was improper.