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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