Golding v. Floyd

PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Kinser, and
Lemons, JJ., and Stephenson, S.J.

BILLIE A. GOLDING, t/a GOLDING APPRAISAL COMPANY
OPINION BY
v. Record No. 000142 SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
January 12, 2001
ROBERT K. FLOYD, JR., ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
Paul F. Sheridan, Judge Designate

This appeal presents the question whether there exists

between the parties to an underlying action at law a binding

contract to settle the action.

I

The underlying law action involved the sale of an appraisal

business. Robert K. Floyd, Jr., and Richard J. Varney were to

purchase the business through Floyd & Varney, L.L.C.

(collectively, Floyd and Varney) from Billie A. Golding. When

the sale failed to transpire, Floyd and Varney opened their own

appraisal business, and Golding filed suit.

The parties agreed to mediate their dispute, and, on

December 10, 1998, a mediation conference was conducted. At the

conclusion of the conference, the parties signed a handwritten

document entitled "Settlement Agreement Memorandum" (the

Memorandum). The Memorandum contains 14 paragraphs, and the

final paragraph reads as follows:
 14. This memo of settlement agreement contains
the highlights of the terms and conditions and the
parties agree to execute is subject to execution of a
formal agreement consistent with the terms herein.

(Emphasis added.) Thereafter, further negotiations failed, and

a formal agreement was never executed.

Floyd and Varney filed a motion to confirm the settlement

agreement and to dismiss the action. In response, Golding moved

for summary judgment, contending that the Memorandum was not a

binding agreement because, by its plain language, it was

"subject to" the execution of a formal agreement.

The trial court rejected Golding's contention and concluded

that an evidentiary hearing was required in order to determine

the intent of the parties. Following an evidentiary hearing,

the court ruled that a binding settlement had been reached when

the parties signed the Memorandum. Thereupon, the court

dismissed Golding's action with prejudice. We awarded Golding

this appeal.

II

It is firmly established that, when the terms of a contract

are clear and unambiguous, a court is required to construe the

terms according to their plain meaning. Bridgestone/Firestone

v. Prince William Square, 250 Va. 402, 407, 463 S.E.2d 661, 664

(1995); Foods First, Inc. v. Gables Associates, 244 Va. 180,

182, 418 S.E.2d 888, 889 (1992); Winn v. Aleda Const. Co., 227

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Va. 304, 307, 315 S.E.2d 193, 194-95 (1984). "The guiding light

. . . is the intention of the parties as expressed by them in

the words they have used, and courts are bound to say that the

parties intended what the written instrument plainly declares."

Magann Corp. v. Electrical Works, 203 Va. 259, 264, 123 S.E.2d

377, 381 (1962). Thus, if the intent of the parties can be

determined from the language they employ in their contract,

parol evidence respecting their intent is inadmissible. Amos v.

Coffey, 228 Va. 88, 91-92, 320 S.E.2d 335, 337 (1984). " 'An

ambiguity exists when language admits of being understood in

more than one way or refers to two or more things at the same

time.' " Id. at 92, 320 S.E.2d at 337 (quoting Renner Plumbing

v. Renner, 225 Va. 508, 515, 303 S.E.2d 894, 898 (1983)).

III

Golding contends, inter alia, that, "[a]s a matter of law,

the language in [the] Memorandum making [the] settlement

'subject to execution of a formal agreement' clearly and

unambiguously created a condition precedent and barred extrinsic

evidence." Floyd and Varney, on the other hand, contend that

the words, "subject to execution of a formal agreement," do not,

as a matter of law, mandate a finding that the Memorandum was

non-binding. They assert that the trial court correctly

considered extrinsic evidence to discern the intent of the

parties.

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 Boisseau v. Fuller, 96 Va. 45, 30 S.E. 457 (1898), is

strikingly similar to the present case. In Boisseau, the

parties signed a document respecting the leasing of certain

property. The document designated the property to be leased,

the amount of rent to be paid, and the term of the lease.

However, the last sentence of the document stated the following:

"The above to be covered by a regular lease subject to approval

by all parties." Id. at 46, 30 S.E. at 457.

We held, in Boisseau, that, due to the document's last

sentence, there could not be a binding contract "until the

formal writing, contemplated by the language used, has been

prepared, approved, and executed, in accordance with the

intention of the parties." Id. at 48, 30 S.E. at 458. In so

holding, we stated the following:

"It comes, therefore, to this, that where you have a
proposal or agreement made in writing expressed to be
subject to a formal contract being prepared, it means
what it says; it is subject to and dependent upon a
formal contract being prepared. Where it is not
expressly stated to be subject to a formal contract it
becomes a question of construction whether the parties
intended that the terms agreed on should merely be put
into form, or whether they should be subject to a new
agreement, the terms of which are not expressed in
detail."

Id. at 47, 30 S.E. at 458 (quoting Winn v. Bull, 7 Ch. Div. 29-

32); accord Manss-Owens Co. v. Owens & Son, 129 Va. 183, 196,

105 S.E. 543, 547 (1921); Adams v. Hazen, 123 Va. 304, 320, 96

S.E. 741, 745 (1918).

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 Since Boisseau and until the present case, we are unaware

of any Virginia cases involving a writing that was expressly

"subject to" the execution of a formal contract. On the other

hand, we have found binding agreements, both oral and written,

where the parties' intention to be bound is objectively

manifested even though a subsequent formal agreement is

contemplated. See, e.g., Snyder-Falkinham v. Stockburger, 249

Va. 376, 457 S.E.2d 36 (1995); North American Mgrs. v. Reinach,

177 Va. 116, 12 S.E.2d 806 (1941); Agostini v. Consolvo, 154 Va.

203, 153 S.E. 676 (1930).

In Snyder-Falkinham, we affirmed the trial court's finding

that the plaintiff had orally agreed to a binding settlement,

and we concluded that her intention to compromise had been

objectively manifested. 249 Va. at 385, 457 S.E.2d at 41. We

reached this conclusion "even though [the] parties contemplated

that a formal, written 'Mutual Release and Settlement Agreement'

memorializing the compromise would be executed." Id. We also

noted that "'the mere fact that a later formal writing is

contemplated will not vitiate the agreement.'" Id. (quoting

Reinach, 177 Va. at 121, 12 S.E.2d at 808).

The distinction between Snyder-Falkinham and the present

case is apparent. In Snyder-Falkinham, the parties had fully

agreed, and the later formal writing was contemplated only as a

mere formality. In the present case, like Boisseau, the initial

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writing was made subject to and was dependent upon the execution

of a formal contract.

IV

We conclude, therefore, that the Memorandum in the present

case is clear and unambiguous, and no extrinsic evidence is

required, or even allowed, to ascertain the intention of the

parties as objectively manifested. Indeed, the Memorandum was

amended before the parties signed it by striking the language,

"the parties agree to execute" a formal agreement, and inserting

in its place the language that the Memorandum "is subject to

execution of" a formal agreement. The execution of a formal

agreement, therefore, was a condition precedent to the existence

of a binding contract. A formal contract was never executed; as

a result, no contract exists.

Thus, we hold that the trial court erred in finding the

existence of a binding contract and in dismissing the underlying

action. Accordingly, we will reverse and vacate the trial

court's judgment, reinstate Golding's cause of action, and

remand the case for further proceedings.

Reversed and remanded.

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