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WebBank v. American General Annuity Service Corp.8/16/2002
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Specifically in the context of whether a particular agreement should be considered a secured transaction for purposes of Article 9 of the UCC, however, we have extended the notion of ambiguity in contracts to include instances where, despite the lack of ambiguity in the terms and provisions of the contract themselves, an ambiguity exists as to the nature and character of the contract or transaction as a whole. See Colonial Leasing Co. of New England, Inc. v. Larsen Bros. Constr. Co., 731 P.2d 483, 487 (Utah 1986).
"Whether an ambiguity exists in a contract is a question of law." Winegar, 813 P.2d at 108; see also Sunrider Corp., 2002 UT 43 at 14; Dixon, 1999 UT 89 at 14. "When ambiguity exists, the intent of the parties becomes a question of fact." SME Indus., Inc., 2001 UT 54 at 14; see also Plateau Mining Co., 802 P.2d at 725. " motion for summary judgment may not be granted if a legal conclusion is reached that an ambiguity exists in the contract and there is a factual issue as to what the parties intended." Faulkner v. Farnsworth, 665 P.2d 1292, 1293 (Utah 1983); see also Sunrider Corp., 2002 UT 43 at 14; Winegar, 813 P.2d at 108. "Therefore, in considering a motion for summary judgment, ' ailure to resolve an ambiguity by determining the parties' intent from parol evidence is error.'" SME Indus., Inc., 2001 UT 54 at 14 (alteration in original) (quoting Plateau Mining Co., 802 P.2d at 725).
In the case at hand, the trial court determined as a matter of law based upon the security agreement and promissory note composing the financial transaction and the undisputed facts that WebBank and Soliz had executed a secured transaction in the form of a loan secured by Soliz's right to receive future structured settlement payments. In making this determination, the trial court implicitly determined that there was no ambiguity in the security agreement that would have required extrinsic evidence to resolve and that would have precluded summary judgment.
WebBank argues, in accordance with our established rules of contract interpretation and construction, that the language of the security agreement is clear and unambiguous, and that the trial court was therefore correct in determining from the four corners of the security agreement that WebBank and Soliz intended to create a secured transaction and that the financial transaction was a loan. We disagree.
We consider this case to be sufficiently similar to Colonial Leasing to be governed by it. In Colonial Leasing, the plaintiff transferred possession of a piece of construction equipment to the defendant pursuant to a document called a "lease." Id. at 484. The defendant defaulted on the payments required under the agreement, and the plaintiff sued for damages. The defendant argued that the terms of the agreement indicated that the contract was meant not as a true lease, but instead as a security agreement for the sale of the construction equipment. Id. at 487. The plaintiff argued that the agreement was plainly a lease on its face and according to its terms. Faced with this situation, we held:
In some cases, such a judgment [as to whether the parties intended an agreement to constitute a lease or security agreement] may be apparent from the face of the document, but in other cases, the basic nature of the agreement, judging solely from its contents, may be ambiguous. It is the general rule that if an agreement is ambiguous because of a lack of clarity in the meaning of particular terms, it is subject to parol evidence as to what the parties intended with respect to those terms. We hold that that rule also applies where the character of the written agreement itself is ambiguous even though
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