Plaintiff appeals a judgment for defendants in a contract action. He assigns error to the trial court’s grant of summary judgment to defendants based on its conclusion that the parties’ contract was unambiguous. We conclude that the disputed contract term is ambiguous and that there is a genuine issue of material fact about its meaning. Hence, the trial court erred in granting summary judgment to defendants. We reverse.
In an appeal of a summary judgment, we review the facts in the light most favorable to the nonmoving party to determine whether the moving party is entitled to judgment as a matter of law. ORCP 47 C;
Jones v. General Motors Corp.,
On December 16,1997, plaintiff faxed a revised draft to Kight from a New York hotel. His revisions included proposed additional paragraphs 13, 14, and 15. Paragraph 13 was handwritten entirely in printed capital letters and read:
“AS PART OF AGREEMENT TO REDUCTION OF PURCHASE AND REDEMPTION FROM [$]3,900,000 TO [$]2,203,500, I.E., [$]1,6965,000 [sic], IT IS AGREED J.C. MILNE SHALL HAVE AVAILABLE AT NO CHARGE PERSONAL OFFICE SPACE FOR HIM AND SECRETARIAL SERVICE WITH PARKING IN MILNE CONSTR OFFICE AT HIS OPTION AT NO CHARGE [sic] UNTIL RETAINED EARNINGS HAVE INCREASED BY [$] 1,696,500 OVER DEC. 31 RETAINED EARNINGS.”
Kight was upset about plaintiff’s last minute edits. 2 Into the following day, she conferred with the lawyer, and they decided to return a new draft to plaintiff with paragraphs 13, 14, and 15 typed in but lined out on the ground that,
“we, speaking from Lou [Bortolin]’s standpoint and from Milne Construction’s standpoint, as a party to the contract We don’t like any of these changes. This is the way we’d like to have it.’ ”
Kight also annotated the resulting draft to record that it was “as approved by LB.” Plaintiffs receipt of a draft with his changes lined out precipitated an acrimonious phone call between Kight and plaintiff on December 17. Based on that phone call, Kight concluded that rejecting plaintiff s proposed paragraphs 13,14, and 15 would be a deal breaker.
*386 Later that evening, Right faxed to Bortolin at his Milne Canada office a memorandum about her phone call with plaintiff. The opening words of her memorandum were:
“I just got off a 1-1/2 hour phone conversation with [plaintiff]. After a lot of unpleasantness, * * * I told him that I definitely had the impression that he didn’t want to let go and that was why he included the paragraph about having the office here. He assured me that he did want to sell and that if he had an office in this building, he would be completely separate from the operations of the Milne Company, even if policies were changed to policies that he didn’t like. Basically, I think that he is used to coming here, is comfortable here, and will need someplace to go. He said several times that he wouldn’t interfere and wouldn’t suck up my time on his personal business. Based on this conversation, although I’m still not really happy with the idea, I could deal with it. It appears that his tying in the office space with ‘recouping the $1.6 million lost’ is just an example of his normal nasty sarcasm.”
In concluding the memorandum, Right wrote:
“Anyway, if the office thing is the only real sticking point, I don’t want to cause any problems. As I said above, I can live with it. * * *
“After our conversation, I had the impression that he basically does want to sell the company to you and does want to get out. A part of him doesn’t want to let go, but I think it is a smaller part than I would have thought previously.
“If you think you can deal with him as he is, * * * [b]asically, it’s a good deal, and if the buyout can occur as soon as possible, you will be able to do things your way in the relatively near future.”
According to Right’s deposition, at the time of these events, she thought that plaintiffs proposed paragraph 13 referred to the 16th Avenue building, because she and plaintiff had always worked for MCC at that location and moving MCC did not occur to her. She recalls that plaintiff s proposed paragraphs 13, 14, and 15 were the only issues remaining open. Negotiations then concluded quickly based on phone calls, of which there are no details in the record, between Bortolin in Canada and plaintiff in New York. On December *387 19, plaintiff, Bortolin, MCC, and Milne Construction (Australia) PTY Ltd. executed the contract revision, including a set of paragraphs numbered 13, 14, and 15. The now-disputed final paragraph 13 provides:
“13. It is agreed that [plaintiff] shall have available, at no charge, personal office space and secretarial services in the Milne Construction Co. Office, with parking, at his option.” 3
In December 1998, the parties completed the sale of MCC to Bortolin under the 1990 contract as amended, and MCC and plaintiff thereafter co-occupied the 16th Avenue building for more than four years. MCC had a month-to-month tenancy. Plaintiff retired upon his sale of MCC, but he continued to go to the office regularly to work on interests and affairs that he developed after selling the company. In accord with the dictates of paragraph 13, MCC made personal office space, parking, and secretarial services available to plaintiff at no cost.
In 2003, MCC moved its Portland operations to S.W. Macadam Avenue and discontinued providing plaintiff's office space, parking, and secretarial services at the 16th Avenue building by refusing to reimburse him for their cost. Instead, MCC offered plaintiff replacement accouterments and services at its new location. Plaintiff brought this action, contending that the commitment in paragraph 13 to provide *388 him with “personal office space and secretarial services in the Milne Construction Co. Office, with parking, at his option” requires defendants to maintain his office space and services in the 16th Avenue building. In response, defendants claim that they are merely obligated to provide an office, parking, and secretarial support wherever MCC decides to locate its offices.
The trial court granted summary judgment to defendants because it concluded that the phrase, “the Milne Construction Co. Office,” is unambiguous and means an office at which MCC chooses to conducts its business. The court stated that the parol evidence rule prevented consideration of any extrinsic evidence. On appeal, plaintiff renews his argument that his interpretation of paragraph 13 is plausible and, as a matter of law, establishes an ambiguity that presents a triable issue of material fact. Plaintiff argues that the trial court should have considered parol or other extrinsic evidence, including the circumstances underlying the formation of the contract, to identify the ambiguity. Defendants argue that the trial court correctly granted summary judgment because the court may only construe the contract within its four corners, and that defendants’ interpretation of the disputed term is the only plausible interpretation.
In a contract dispute, a party will be entitled to summary judgment only if the governing terms of the contract are unambiguous.
Hauge v. Vanderhave,
“In determining whether a contract is ambiguous, parol evidence is admissible to explain the circumstances under which it was made. Although the evidence may not vary the terms of the written agreement, it can place the judge ‘in the position of those whose language is being interpreted.’ ”
*389
Id.
at 317 (citations omitted);
see also Abercrombie v. Hayden Corp.,
Based on our review of the circumstances of contract formation in the record, we hold that the trial court erred in granting summary judgment because the disputed paragraph 13 is ambiguous. The trial court misinterpreted the limitations of Oregon’s parol evidence rule and thus failed to give due consideration to the plausibility of plaintiffs interpretation. As we have noted, “the trial court can properly consider the text of the provision in the context of the agreement as a whole and in light of the circumstances underlying the formation of the contract.”
Batzer,
First, we cannot presume that “Office” has a generic meaning in the contract merely because it is a simple, commonplace word. A review of Oregon case law involving contract interpretation shows that we have often concluded that a commonplace word or phrase is ambiguous in context.
See, e.g., Arlington Ed. Assn. v. Arlington Sch. Dist. No.
3,
We start our analysis with the text of the disputed term. Similar to the term “cost” that we recently considered in
Batzer,
“a place where a particular kind of business is transacted or a service is supplied: as * * * b: the directing headquarters of an enterprise or operation, [or] c: the place where a professional man (as a physician or lawyer) conducts his professional business.”
Webster’s Third New Int’l Dictionary
1567 (unabridged ed 2002). Those meanings are so flexible that they lend nothing conclusive to our analysis. On the one hand, nothing in the dictionary definitions suggests other than that “an office” is “a place” that would move in tandem with a relocation of
*391
where business is transacted, headquarters are located, or the professional person conducts his business. On the other hand, the definition concerns
“a
place,” which does not preclude that the parties wrote
“the
Milne Construction Co. Office” because they specifically meant MCC’s
then-current
location in Portland. “[T]he definite article 'the’ functions as an adjective that denotes a particular, specified thing, not a general, unspecified class of things
.” Arlington Ed. Assn.,
We turn next to the context of the disputed term within the agreement. The disputed phrase is in a single-sentence paragraph that was of secondary consideration to both the purpose of the 1990 contract — to sell MCC to defendant Bortolin and the purpose of the amendment — to reduce the selling price. Neither the contract nor the amendment defines “Office,” even though the term is capitalized; “Office” is not used elsewhere, which might have provided clarification; and the final version of paragraph 13 has no illuminating dependencies on other conditions of the 1990 contract or the 1997 amendment. However, in the context of the amendment, a lifetime commitment of office services for a retired plaintiff, in business since 1953, at the office location known to him since 1964, was not an unreasonable tradeoff for a 44 percent reduction in the sales price for the company, with the Australian subsidiary included in the new price. We note that use of the phrase, “at his option,” which seems to define plaintiffs unilateral right to choose whether to have the services, could plausibly mean that defendants did not have a *392 commensurate right to unilaterally change the place where they provided the services.
Defendants argue that plaintiffs interpretation violates the statutory maxim that a judge may not “insert what has been omitted” into contractual language. ORS 42.230. They claim that plaintiff needed to add at least one of the following: the specific address at 16th Avenue, a lease commitment, or an express condition that plaintiff could remain in the old location if MCC moved. However, neither party prevails on a single plausible interpretation of paragraph 13 without adding some clarifying language. Plaintiff need only have expanded the phrase to read “the then-current Milne Construction Co. Office” to have avoided ambiguity. Defendants also needed to add or change language in their favor, e.g., “a Milne Construction Co. Office in Portland,” considering that there were various company office locations and at least some were not intended to qualify. Furthermore, no lease commitment is required to support plaintiffs interpretation because plaintiff owns the building. Rather, the phrase “at his option” in paragraph 13 might both define and limit plaintiffs ability to oblige defendants to afford him office space in the 16th Avenue building. As long as plaintiff owns the building, it is plausible that plaintiff could remain there and defendants could cover the fair market cost of his space even after MCC chose to relocate.
Defendants also contend that plaintiffs construction of the disputed language must be shown to conflict with other terms of the agreement in order to establish that the disputed language is ambiguous. Mutually inconsistent language can demonstrate a patent ambiguity, but here we are concerned with a latent, or extrinsic, ambiguity that is particular to the meaning that the parties gave to their terms at contract formation. Inconsistency is a sufficient but not a necessary condition for ambiguity,
see Miller v. Miller,
We next consider whether extrinsic evidence of the circumstances of contract formation precludes plaintiffs claimed ambiguity. The mere presentation of plaintiffs *393 handwritten draft paragraph 13, all in capital letters and without the definite article to moderate “OFFICE,” does not establish a particular meaning for the word “Office” in the final paragraph 13. The content of plaintiffs draft, however, is extrinsic evidence circumstantial to contract formation that adds information. Plaintiffs original proposal included quid pro quos: “as part of [the] agreement to reduction of purchase and redemption * * * until retained earnings have increased by [$] 1,696,500.” That language arguably suggests a purpose to paragraph 13; framed as a trade-off for the price reduction, a meaning that is favorable to plaintiff s work habits is plausible. Eight’s testimony and contemporaneous writing to defendant Bortolin reinforce the parties’ understanding of that tradeoff but also amplify the ambiguity. She wrote that he wants “the office here,” “in this building,” and “is used to coming here, is comfortable here, and will need someplace to go.” If the “office thing” was the only issue, she could deal with it and the tradeoff was still a good deal. Eight recalls understanding at the time that plaintiff meant the 16th Avenue building. On the other hand, she wrote that she discounted his tie-in of office space to the price reduction as an example of plaintiffs “normal sarcasm.”
Plaintiffs proposed paragraph 13 also specified a time constraint: Defendants were to provide the services to plaintiff until MCC added about $1.7 million to its retained earnings. In the course of final negotiations that are not known from the record, the parties eliminated the time constraint on services to plaintiff and added the definite article to the phrase “the Milne Construction Co. Office.” Those changes, reflecting unknown negotiations and interim drafts, seem to work in plaintiffs favor. The record available to us does not reveal any compensating edits to the amendment as trade-offs in defendants’ favor. The extrinsic evidence at least makes plausible an understanding that paragraph 13 was meant solely to operate in plaintiffs favor.
Various other aspects of the circumstances surrounding contract formation also make plaintiffs interpretation plausible. When the amendment was in negotiation, MCC’s headquarters and sole Portland office had been at 16th Avenue for at least 33 years, MCC was the sole occupant, and the building displayed the company name. The *394 transaction participants were long-time company employees and their corporate attorney. Bortolin’s primary office location was at Milne Canada, and the parties agree that they did not mean plaintiff would ever have to work from MCC’s Canadian office, or in Australia. It is therefore plausible that such knowledgeable parties meant a proper name for the physical building in Portland when they referred to “the Milne Construction Company Office.” Right’s testimony and notes suggest that Bortolin approved her initial response to the proposed paragraph 13, and that the other interested parties all wanted to draft against plaintiff. Defendant Bortolin had the personal knowledge and the incentive to add language to clarify MCC’s right to move plaintiffs services to a location different from MCC’s long-standing location, if that were the parties’ intent.
Finally, plaintiffs proposal of paragraphs 13 to 15 was a last minute change. Plaintiff was traveling in New York, Right typed drafting changes in Portland, defendant Bortolin communicated from his office in Canada, and the final language was negotiated by phone calls between plaintiff and Bortolin that did not include Right. This extrinsic evidence reinforces that the participants’ assumptions, based on long-term relationships, the speed of final negotiations, and the distance involved, at the very least could generate a latent ambiguity not considered by the parties at the time.
The meaning of “the Milne Construction Co. Office” in this contract is ambiguous. Plaintiff has raised a genuine issue as to that material fact, and hence the trial court erred in granting summary judgment to defendants.
Reversed and remanded.
Notes
Plaintiff has sued MCC and Bortolin, now president of MCC. To clearly present the facts, we refer by proper name to Bortolin and to MCC. Where we use the term “defendants” in the opinion, we refer to both Bortolin and MCC.
Eight’s account comes from her deposition and documents submitted in affidavits of defendants’ and plaintiffs attorneys in connection with defendants’ summary judgment motion. Defendants moved to strike portions of Eight’s deposition and certain documents as “subjective musings,” irrelevant, or lacking foundation. The trial court ruled after it granted defendants’ summary judgment motion that the motion to strike was moot, and defendants do not challenge that ruling on appeal. Accordingly, the trial court’s ruling leaves the materials in the record for our consideration.
Defendants made some attempt in the record to suggest that the clause, “at his option,” refers only to parking services. We draw the inference favorable to plaintiff that he meant a unilateral right to the full complement of services, in part based on the structure of the original language in plaintiffs draft, where the phrasing is “PERSONAL OFFICE SPACE FOR HIM AND SECRETARIAL SERVICE WITH PARKING IN MILNE CONSTRUCTION] OFFICE AT HIS OPTION AT NO CHARGE.” (Emphasis added.) In the draft, “at his option” modifies the entire clause, “office space * * * in Milne Construction Office,” by the doctrine of the last antecedent as an aid to discovery of meaning.
Analysis of the final paragraph 13 by the doctrine of the last antecedent also supports this inference. By the basic doctrine, “a proviso usually is construed to apply to the provision or clause immediately preceding it,” but the rule as it is expanded to account for commas states that “[e]vidence that a qualifying phrase is supposed to apply to all antecedents instead of only to the immediately preceding one may be found in the fact that it is separated from the antecedents by a comma.”
State v. Webb,
ORS 42.220 provides:
“In construing an instrument, the circumstances under which it was made, including the situation of the subject and of the parties, may be shown so that the judge is placed in the position of those whose language the judge is interpreting.”
ORS 41.740, which codifies Oregon’s parol evidence rule, provides, in part:
“When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing * * *. However this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in ORS 42.220[.]”