Modis, Inc v. Net Matrix Solutions, Inc.
14-14-00238-CV
| Tex. App. | Mar 16, 2015Background
- Net Matrix Solutions, Inc. (appellee) and Modis Inc. contracted under a Modis-drafted Subcontractor Agreement; dispute concerns the meaning of paragraph 8F (protection of Net Matrix) and related paragraphs 8C/8D.
- Paragraph 8F uses the term "hire" in a protection provision; Modis and the Court read that provision as applying only to "direct" hires.
- The factual context: the contested placement/hire occurred through a subcontractor relationship (common in IT consulting), and Modis’ only contractual placement with Net Matrix was that subcontract.
- Deposition testimony and party conduct indicate Modis employees represented they had "hired" Net Matrix’s employee; appellee contends the parties themselves treated "hire" broadly.
- Net Matrix argues the contract contains no definition of "hire," the ordinary dictionary meaning includes indirect/subcontractor hiring, and because Modis drafted the form any ambiguity should be construed against Modis (contra proferentem).
- Net Matrix moved for rehearing after the Court issued an opinion construing "hire" narrowly (as "hire directly"), arguing that construction renders paragraph 8F largely meaningless in the parties’ commercial context.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does "hire" in ¶8F include indirect/subcontractor hires? | "Hire" has its ordinary meaning; includes indirect/subcontractor hires; dictionary and party conduct support broad reading. | Court and Modis read "hire" narrowly as "hire directly," relying on differing language elsewhere (¶8C/8D). | Court construed "hire" as "hire directly"; Net Matrix seeks rehearing. |
| If contract language is ambiguous, should ambiguities be construed against the drafter? | Yes; Modis drafted the standard form, so any ambiguity should be resolved against Modis. | Modis relies on specific terms in other paragraphs to support narrow reading. | Court adopted the drafter-favored narrow interpretation; appellee argues this conflicts with contra proferentem principles. |
| May courts consult dictionary/extrinsic evidence to determine plain meaning? | Yes; dictionary definitions and parties' course of dealing/understanding support inclusive meaning of "hire." | Implicit: rely on contract text and specific language contrasts to limit meaning. | Court favored textual comparison over broad dictionary/extrinsic usage; appellee urges reconsideration and use of extrinsic evidence. |
| Is ¶8F rendered meaningless by limiting "hire" to direct hires given the parties’ commercial practice? | Yes; because consulting companies hire via subcontractors and that was the actual relationship here, a direct-only reading emasculates ¶8F. | Modis and the Court treated the specific phrasing in other paragraphs as demonstrating a different, narrower intended scope. | Court adopted the narrower construction; Net Matrix requests rehearing to restore effect to ¶8F. |
Key Cases Cited
- Dahl‑Eimers v. Mut. Life Ins. Co. of N.Y., 986 F.2d 1382 (11th Cir. 1993) (ambiguities cannot be created by the drafter then given a narrow, favorable interpretation)
- Roberson v. United Servs. Auto. Ass'n, 330 So.2d 745 (Fla. Dist. Ct. App. 1976) (rejecting narrow interpretation proposed by drafter)
- Nat'l Merck Co., Inc. v. United Servs. Auto. Ass'n, 400 So.2d 526 (Fla. Dist. Ct. App. 1981) (give effect to plain language; construe ambiguities against drafter)
- Mid‑Continent Cas. Co. v. Basdeo, 742 F. Supp. 2d 1293 (S.D. Fla. 2010) (ambiguities in insurance/contracts construed against drafter)
- Bowen v. Cullman Bros., Inc., 414 F.2d 739 (5th Cir. 1969) (rejected drafter's narrow contract interpretation)
- Winn‑Dixie Stores, Inc. v. Dolgencorp, LLC, 746 F.3d 1008 (11th Cir. 2014) (courts may consult dictionary definitions to determine contract term meaning)