• June 21, 2016

letter-1347387_1920Update (June 21, 2016): In the case described recently, below, where a litigant argued that the entire case hinged on the meaning of “asset” with a “small a” in a contract, U.S. District Court Judge Susan R. Nelson (D. Minn.)  denied the defendant’s request for “interlocutory appeal” this week. (Think of requests for “interlocutory appeals” as special requests for the dessert course to be served before the salad course. Or think of them as requests to “cut in line” due to extenuating circumstances. Such requests are almost always denied because we put dessert at the end and have people keep their places in lines for good reasons and if we make too many exceptions, then everyone will want their “just desserts” right away.)

Original post (June 6, 2016): Imagine tackling this enigma: “Where the first letter of a defined term in a contract is in upper case, how should a court interpret the same word elsewhere in the contract in the lower case?”

Minnesota Litigator readers who do not know conventions in legal documents (hereinafter “You”), You need to know this: almost all complex legal documents (such as contracts) include an introductory “Definitions” section that defines parties and terms, for example: “You,” “the Company,” “the Contract,” “the Territory,” and the like.

Then, throughout the document, defined terms are to be capitalized. This is why You see Legal Documents with what appear to be Orthographic Errors or Olde Englishe Style or Something. But this is merely a way to signal that, if You find a Term to be Ambiguous in the Contract, You should refer back to the document’s Definitions section.

A recent Minnesota Litigator post highlighted the paradox of a lot of lawyers’ work: it can be dust dull and high stakes drama at the same time. A recent motion in a case about the ambiguity of “A vs. a” is a fine example of a simultaneously trivial and multi-million dollar lawyer-fight.

Impac Funding (“Impac”) bought the mortgage loan assets of Pinnacle Financial. In the asset purchase agreement (the “APA”), Impac expressly excluded, “[a]ny Liability related to or rising from the Loan Origination Platform…” (the “LOP”).

Then another company, RFC, sued Impac for liability arising from the LOP. Impac, of course, sought summary judgment in its favor, arguing that, under the APA, it was not responsible for the liability of the earlier company, Pinnacle Financial, arising from the LOP.

According to Impac, U.S. District Court Judge Susan R. Nelson (D. Minn.) rejected Impac’s argument because RFC was suing under a 2001 Contract, an “Asset” that Impac acquired from Pinnacle Financial, rather than asserting liability arising out of an LOP “asset” — the distinction being that “asset” ≠ “Asset.”

It is possible that multiple millions of dollars will swing on the resolution of the “big A/little a” puzzle.

Understandably, Impac seeks review by the U.S. Court of Appeals for the Eighth Circuit of Judge Nelson’s decision asap and before the whole case is litigated to final judgment. If an asset were deemed an Asset at the Outset, Impac might be able to walk away from this costly litigation….

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