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COMMERCIAL CAP. v. GIOVANNETTI
Factual and Procedural Background
Commercial Capital Resources, LLC ("CCR") and Leslie Gross, individually and as Trustee of various "Leslie Jay Gross Trusts," were business partners with Paul Giovannetti in CCR, a licensed mortgage lender. After a falling out, Gross sued Giovannetti alleging misappropriation of business assets. Giovannetti counterclaimed, alleging Gross breached fiduciary duties. Prior to trial, the parties entered into a confidential settlement agreement whereby Giovannetti agreed to sell his interest in CCR to Gross for $1,000,000, and both parties agreed to exchange general releases. Paragraph 7 of the settlement agreement contained provisions regarding releases and Gross’s obligations as trustee not to initiate or solicit lawsuits against Giovannetti, with a requirement to resign as trustee if such a lawsuit was brought.
The trial court approved the settlement, dismissed claims with prejudice, and retained jurisdiction to enforce the agreement. A dispute arose over the scope of the releases Gross was required to execute as trustee. Giovannetti moved to enforce the agreement, asserting Gross must execute a broad release waiving all claims by the trusts and investors. Gross contended the agreement did not require such a broad release and anticipated that trusts and investors could bring claims, with Gross barred only from soliciting such claims and required to resign if claims were brought.
After a non-evidentiary hearing, the trial court granted Giovannetti’s motion to enforce, finding the language clear and unambiguous. Gross appealed, arguing the settlement agreement was ambiguous and that the court erred by deciding the issue without an evidentiary hearing.
Legal Issues Presented
- Whether the terms of the settlement agreement, specifically paragraph 7, are clear and unambiguous or ambiguous regarding the scope of the general release Gross must execute as trustee.
- Whether the trial court erred in granting the motion to enforce the settlement agreement without holding an evidentiary hearing to determine the parties' intent given the alleged ambiguity.
Arguments of the Parties
Appellee's (Giovannetti's) Arguments
- The language of paragraph 7 is clear and unambiguous, requiring Gross to execute a general release in his capacity as trustee waiving all claims held by the trusts and investors.
- Gross’s refusal to provide such release violates the settlement agreement, justifying enforcement without further hearing.
Appellants' (Gross and CCR's) Arguments
- The settlement agreement’s language is ambiguous and susceptible to more than one reasonable interpretation.
- Paragraph 7 expressly contemplates that the trusts and investors could bring claims against Giovannetti, since Gross is only prohibited from soliciting such claims and must resign as trustee if claims are brought.
- The trial court erred by resolving the dispute as a matter of law without an evidentiary hearing to determine the parties’ intent.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Barone v. Rogers, 930 So.2d 761 (Fla. 4th DCA 2006) | Settlement agreements are contracts governed by contract law; ambiguous contract language requires evidentiary hearing. | Supported the conclusion that ambiguous settlement agreement language precludes summary enforcement and requires a hearing. |
| Cadle Co. v. Schecter, 602 So.2d 984 (Fla. 3d DCA 1992) | Settlement agreements are contractual in nature and interpreted under contract law principles. | Confirmed the contractual framework for interpreting the settlement agreement. |
| Miller v. Kase, 789 So.2d 1095 (Fla. 4th DCA 2001) | Contract construction is a question of law if language is clear; ambiguity requires factual inquiry. | Applied the standard that ambiguity requires evidentiary hearing and reversed summary enforcement. |
| Gray v. D J Indus. Inc., 875 So.2d 683 (Fla. 3d DCA 2004) | Contract construction is a question of law when language is clear and unambiguous. | Reinforced the principle that clear language controls; ambiguity triggers factual determination. |
| Sec. Ins. Co. of Hartford v. Puig, 728 So.2d 292 (Fla. 3d DCA 1999) | Court must enforce the express terms of a clear and unambiguous settlement agreement. | Supported enforcing clear terms but distinguished from the present ambiguous case. |
| Okeelanta Corp. v. Bygrave, 660 So.2d 743 (Fla. 4th DCA 1995) | Where parties each claim a different "only reasonable interpretation," ambiguity exists. | Used to demonstrate that conflicting reasonable interpretations create ambiguity requiring evidentiary hearing. |
| Royal Am. Realty, Inc. v. Bank of Palm Beach Trust Co., 215 So.2d 336 (Fla. 4th DCA 1968) | Supports the principle that conflicting interpretations of contract language create an ambiguity. | Quoted in support of finding ambiguity given conflicting reasonable interpretations. |
Court's Reasoning and Analysis
The court recognized that settlement agreements are contracts governed by contract law and that contract interpretation is a question of law when the language is clear and unambiguous. The court reviewed the language of paragraph 7 of the settlement agreement de novo and found it susceptible to more than one reasonable interpretation. Specifically, one interpretation, advanced by Giovannetti, viewed the language as requiring Gross to execute a broad release as trustee waiving all claims by the trusts and investors. The opposing interpretation, advanced by Gross, viewed the language as permitting claims by the trusts and investors and only restricting Gross from soliciting such claims.
Because the parties each asserted a different "only reasonable interpretation," the court found the language ambiguous. Under established precedent, ambiguity in a contract precludes summary enforcement and requires an evidentiary hearing to determine the parties' intent. The trial court erred by granting enforcement without such a hearing. Accordingly, the court reversed and remanded for an evidentiary hearing to resolve the ambiguity based on relevant evidence.
Holding and Implications
REVERSED and REMANDED.
The court reversed the trial court’s order enforcing the settlement agreement and remanded for an evidentiary hearing to resolve the ambiguity in the contract language. The decision requires the lower court to determine the parties’ intent through factual inquiry rather than resolving the dispute as a matter of law. This ruling affects only the parties by requiring further proceedings and does not establish new precedent beyond reaffirming established principles governing ambiguous contracts.
ROTHENBERG, Judge.
The appellants, Commercial Capital Resources, LLC ("CCR") and Leslie Gross ("Gross"), individually and as Trustee of the Various "Leslie Jay Gross Trusts," appeal an order of the trial court enforcing a confidential settlement agreement ("settlement agreement") entered into by CCR, Gross, and the appellee, Paul Giovannetti ("Giovannetti"). Because we find that the terms of the settlement agreement are ambiguous, we reverse and remand.
Gross and Giovannetti were business partners who founded CCR, a licensed mortgage lender that provides financing for the acquisition and development of real estate projects. The business partners ultimately had a falling out and in late 2005, Gross, individually and derivatively on behalf of CCR, sued Giovannetti, alleging that Giovannetti had been wasting and misappropriating CCR's business assets and opportunities. In response, Giovannetti filed derivative counterclaims against Gross, both in Gross' individual capacity and in his capacity as Trustee of Various "Leslie Jay Gross Trusts," alleging that Gross breached his fiduciary duties to Giovannetti and to CCR. Prior to trial, however, Gross and Giovannetti executed a settlement agreement, wherein Giovannetti agreed to sell his member interest in CCR to Gross in exchange for $1,000,000.00. Both Giovannetti and Gross agreed to exchange general releases and other related documents as per the terms of the settlement agreement. Paragraph 7 of the settlement agreement states, in pertinent part, that:
[Gross], CCR . . . and all other named parties and defendants joined in the pending litigation will execute general releases in favor of [Giovannetti]. . . . [Giovannetti] . . . will execute general releases in favor of [Gross], CCR . . . and all other named parties and defendants joined in the pending litigation. . . . [Gross] agrees that in his capacity as "trustee" of any trust . . . without prejudice to his fiduciary obligations or duty to provide proper and necessary notice and disclosures to investors, that he will refrain from taking any action [sic] initiate or to solicit the investors to initiate a law suit against [Giovannetti], and that if any such action is brought against [Giovannetti], [Gross] will resign as trustee from any trust involved in or bringing the action.
Subsequently, pursuant to the parties' joint motion, the trial court approved the settlement agreement, dismissed the pending claims with prejudice, and retained jurisdiction to enforce the terms of the settlement agreement. Gross and Giovannetti were, however, unable to agree on the language of the releases required under the settlement agreement. Specifically, the dispute concerned Gross' refusal to execute a general release in his capacity as trustee waiving all claims held by the trusts and its investors. Giovannetti filed a motion to enforce the settlement agreement, alleging that pursuant to the clear and unambiguous terms of paragraph 7 of the settlement agreement, Gross was required to execute a general release in his capacity as trustee of the trusts, without limitation in scope, including any and all claims held by the trusts and its investors. Conversely, Gross argued that the plain and unambiguous language of the settlement agreement did not require a release of the trusts' and its investors' claims. Gross argued that in fact, paragraph 7 clearly and expressly anticipates that the trusts and its investors could bring claims against Giovannetti since Gross is prohibited from soliciting such claims and is required to resign as trustee of any trust that brings such claim.
After a non-evidentiary hearing, the trial court, apparently agreeing with Giovannetti that the plain and unambiguous language of the settlement agreement requires that Gross provide a general release in his capacity as trustee waiving any and all claims held by the trusts and its investors, granted Giovannetti's motion to enforce the settlement agreement. Gross appeals this order, alleging, in pertinent part, that as the language in the settlement agreement is susceptible to more than one reasonable meaning, it is ambiguous, and consequently, the trial court erred in resolving Giovannetti's motion as a matter of law without holding an evidentiary hearing to determine the intention of the parties. We agree.
Settlement agreements are contractual in nature and are therefore, interpreted and governed by contract law. Barone v. Rogers, 930 So.2d 761, 763-64 (Fla. 4th DCA 2006); Cadle Co. v. Schecter, 602 So.2d 984, 985 (Fla. 3d DCA 1992). Construction of contractual terms is a question of law, which we review de novo, "provided that the language is clear and unambiguous and free of conflicting inferences." Miller v. Kase, 789 So.2d 1095, 1097 (Fla. 4th DCA 2001); see also Gray v. D J Indus. Inc., 875 So.2d 683, 683 (Fla. 3d DCA 2004)("The construction of a contract is a question of law for the courts to determine where the language used in the written contract is clear, unambiguous, and susceptible to only one interpretation."). Where the contractual language is clear and unambiguous, "courts may not indulge in construction or modification and the express terms of the settlement agreement control." Sec. Ins. Co. of Hartford v. Puig, 728 So.2d 292, 294 (Fla. 3d DCA 1999). However, where the wording of an agreement is ambiguous, its interpretation involves questions of fact, precluding summary disposition and requiring an evidentiary hearing. Barone, 930 So.2d at 764.
Where a contract is susceptible to two different interpretations, each one of which is reasonably inferred from the terms of the contract, the agreement is ambiguous. Miller, 789 So.2d at 1097-98. In this instance, each side asserts that the terms of the settlement agreement are clear and unambiguous, albeit "the `only reasonable interpretation' as seen by the appellant[s] is materially different from the `only reasonable interpretation' advocated by the appellee." Okeelanta Corp. v. Bygrave, 660 So.2d 743, 747 (Fla. 4th DCA 1995) (quoting Royal Am. Realty, Inc. v. Bank of Palm Beach Trust Co., 215 So.2d 336, 338 (Fla. 4th DCA 1968)). Based on our de novo review of the settlement agreement, we find that the terms thereof are susceptible to more than one reasonable interpretation, thereby rendering the settlement agreement ambiguous. We therefore conclude that the trial court erred in granting Giovannetti's motion to enforce the settlement agreement without holding an evidentiary hearing to determine the intent of the parties. Accordingly, we reverse and remand to the trial court for an evidentiary hearing to resolve the ambiguity based on all of the relevant evidence bearing on the issue.
REVERSED and REMANDED.
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