Martin & Martin, Inc. v. Bradley Enterprises, Inc.

Present:     All the Justices

MARTIN & MARTIN, INC.
                       OPINION BY JUSTICE LEROY R. HASSELL, SR.
v.   Record No. 972378              September 18, 1998

BRADLEY ENTERPRISES, INC., ET AL.

                FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                        M. Langhorne Keith, Judge

      The primary issue that we consider in this appeal is whether

the trial court erred in refusing to permit the plaintiff to use

parol evidence to explain a purported ambiguity in a contract.

      Plaintiff, Martin & Martin, Inc., filed an amended motion for

judgment against Bradley Enterprises, Inc., and its president,

Robert J. Bradley, Jr.   The plaintiff, a Virginia corporation,

alleged in its amended motion that the defendants breached a

contract, described as an asset purchase agreement, and that the

defendants fraudulently induced the plaintiff to execute that

agreement.

      The following facts are relevant to our disposition of this

appeal.    The plaintiff executed an asset purchase agreement with

the defendants, in which Bradley Enterprises agreed to sell,

transfer, and deliver to the plaintiff a retail frozen yogurt store

in Fredericksburg for a price of $59,500.   Bradley Enterprises had

sold frozen yogurt at the store, and the plaintiff intended to

continue to operate a retail frozen yogurt business.
     The asset purchase agreement contained the following

provisions which are pertinent in this appeal:

     "Section 2. Indemnifications and Warrants [sic].
          "2.1. Seller covenants and agrees to indemnify and
     hold harmless the Buyer from and against any loss, claim,
     liability, obligation or expense (including reasonable
     attorneys' fees) a) incurred or sustained by Buyer on
     account of any misrepresentation or breach of any
     warranty, covenant, or agreement of Seller contained in
     this Agreement or made in connection herewith . . . .
                               . . . .
     "Section 3. Entire Agreement
          "The exhibit hereto is an integral part of this
     agreement. All understandings and agreements between the
     parties are merged into this Agreement which fully and
     completely expresses their agreements and supersedes any
     prior agreement of understanding relating to the subject
     matter, and no party has made any representations or
     warranties, expressed or implied, not herein expressly
     set forth. This Agreement shall not be changed or
     terminated except by written amendment signed by the
     parties hereto."

Judith A. Martin, president of Martin & Martin, Inc., signed the

agreement on behalf of the plaintiff, and Robert Bradley executed

the agreement on behalf of Bradley Enterprises.

     Judith Martin testified at trial that Robert Bradley had

represented to her, before she executed the contract, that the

store had annual gross sales of approximately $168,000.   Mrs.

Martin stated that she relied upon this sales figure when Martin &

Martin, Inc., decided to acquire the store.   After the plaintiff

began to operate the store,   Mrs. Martin became concerned because

of the low gross sales volume.   Subsequently, Mrs. Martin obtained

a report from the Virginia Department of Taxation which revealed



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that the store's annual gross sales were significantly lower than

$168,000.   Mr. Bradley testified that he informed Mrs. Martin and

her husband, before the asset purchase agreement was executed, that

the store generated between $70,000 and $80,000 in annual gross

sales.

     At trial, the plaintiff sought to introduce parol evidence of

an express warranty through Mr. Bradley's purported statement that

the store had annual gross sales of $168,000.   The trial court

refused to permit the plaintiff to present such evidence and,

consequently, struck the plaintiff's breach of contract claim

because, without the parol evidence, the plaintiff could not

establish a contractual duty that the defendants could have

breached.   The trial court also refused to permit a witness to

testify on behalf of the plaintiff.   The case proceeded to the jury

on the fraud claim, and the jury returned a verdict in favor of the

defendants, which was confirmed by the trial court.   The plaintiff

appeals.

     The plaintiff asserts that Mr. Bradley's representations to

Mrs. Martin constituted a warranty of the gross sales revenue.

Continuing, the plaintiff says that the language in the asset

purchase agreement is ambiguous because Section 2 of the agreement

requires the defendant Bradley Enterprises to indemnify the

plaintiff for losses incurred because of any breach of warranty,

but Section 3 of the agreement limits this defendant's liability to


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breaches of warranties that are actually expressed in the

agreement.   The plaintiff contends that it was entitled to present

parol evidence to establish the terms of the warranty because of

this purported ambiguity, and that the trial court failed to give

effect to Section 2 of the agreement.

     Responding, the defendants argue that if an ambiguity exists

in the agreement, such ambiguity must be resolved in their favor

because the plaintiff drafted the purportedly ambiguous provisions.

We agree with the defendants.

     The plaintiff drafted the asset purchase agreement.    We "must

give effect to the intention of the parties as expressed in the

language of their contract."    Rash v. Hilb, Rogal & Hamilton Co.,

251 Va. 281, 286, 467 S.E.2d 791, 794 (1996); Foti v. Cook, 220 Va.

800, 805, 263 S.E.2d 430, 433 (1980); accord Worrie v. Boze, 191

Va. 916, 925, 62 S.E.2d 876, 880 (1951).   In the event of an

ambiguity in the written contract, such ambiguity must be construed

against the drafter of the agreement.    Mahoney v. NationsBank of

Virginia, 249 Va. 216, 222, 455 S.E.2d 5, 9 (1995); Winn v. Aleda

Constr. Co., 227 Va. 304, 307, 315 S.E.2d 193, 195 (1984).

     Applying these principles, we hold that the trial court did

not err by refusing to permit the plaintiff to present parol

evidence.    Section 3 of the agreement, which must be construed in

favor of the defendants, states that all understandings and

agreements between the parties are merged in the agreement and that


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no party has made representations or warranties that are not

expressly set forth in the agreement.   The agreement does not

contain a warranty of the amount of gross sales that the store

generated annually, and, thus, the plaintiff may not seek to

establish such warranty with parol evidence.

     Next, the plaintiff argues that the trial court erred in

refusing to permit her husband, James R. Martin, to testify as a

witness at trial.   Mr. Martin would have testified that he heard

Mr. Bradley state to Mrs. Martin that the store had annual sales of

$168,000.

     On the morning before the trial commenced, the defendants made

a motion in limine to exclude Mr. Martin's testimony.   According to

representations of counsel, upon which the trial court relied

without objection, the following events occurred.   The defendants

filed a notice to take the discovery depositions of Mr. and Mrs.

Martin.   Before the depositions began, plaintiff's counsel informed

defendants' counsel that "Mr. Martin would prefer to go on a

business matter; that he had business to attend; and furthermore

that he was not a material witness in the case; and there was no

reason for him to be deposed."

     The defendants' counsel replied that he had "no problem with

excusing [Mr. Martin] for that deposition so long as [counsel]

could rely on that assurance."   Defendants' counsel conducted the

discovery deposition of Mrs. Martin, and, during that deposition,


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she was asked:   "is your husband a player or participant in Martin

& Martin and its operations?"   She responded:   "He comes in and

mops the floors occasionally but, other than that, no.    He has

other work."   Additionally, Mrs. Martin was asked:   "Apart from

your testimony today, does your husband, if you know, have any

knowledge that bears on the issues before the court in this

litigation?"   She responded:   "Not really.   He gets his information

from me.   He does not deal directly with any of the business

matters.   I confer with him.   You know, we decide things together

but the actual dealing with Mr. Bradley or any other, he does not

participate on that level."

     After the expiration of a discovery cut-off date, which had

been established by a court order, the plaintiff submitted to the

defendants a late answer to interrogatories that had been

propounded timely by the defendants.   The plaintiff's answer to an

interrogatory stated that Mr. Martin may have knowledge of facts

relevant to this litigation.    Additionally, the plaintiff stated,

in another interrogatory answer which was also filed after the

discovery cut-off date, that Mr. Martin may have witnessed

fraudulent representations made by Mr. Bradley.

     The trial court refused to permit Mr. Martin to testify.       The

trial court, explaining its ruling, stated:    "I sustain the




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objection.   I think the defendants have been misled if we let Mr.

Martin testify." *

     The plaintiff contends that the trial court abused its

discretion in excluding Mr. Martin's testimony.   We disagree.   The

decision to exclude Mr. Martin's testimony is within the sound

discretion of the trial court, and the record simply fails to

disclose that the trial court abused its discretion.   The plaintiff

also argues that when Mrs. Martin testified during her deposition,

she was not the designated representative of the plaintiff

corporation and, therefore, her responses could not bind the

corporation.   We do not consider this argument because it was not

raised in the trial court.   Rule 5:25.

     Accordingly, we will affirm the judgment of the trial court.

                                                              Affirmed.



     *
      The trial court’s ruling, however, may have been based, in
part, upon an inaccurate representation concerning the sequence of
events during the discovery process. During oral argument on the
motion in limine to exclude Mr. Martin’s testimony, the defendants
advised the trial court that the plaintiff had filed its answers to
interrogatories prior to the deposition of Mrs. Martin and that one
of the purposes of the subsequent deposition was to "clear up" any
matters left uncertain or ambiguous by the interrogatory answers.
However, the defendants deposed Mrs. Martin on April 23, 1997, and
the plaintiff filed its answers to interrogatories on July 17,
1997, almost three months after Mrs. Martin’s deposition. We
conclude that the trial court did not abuse its discretion in
excluding Mr. Martin’s testimony because the plaintiff did not
object or point out to the trial court that the deposition of Mrs.
Martin had, in fact, occurred before the plaintiff answered the
interrogatories.



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