What is Commercial Litigation?
I am a commercial litigator and occasionally I’m asked, what does commercial litigation mean? In its simplest form: disputes over contracts. Here’s a case we handled recently at Maselli Warren, P.C. that illustrates commercial litigation. Names have been changed to insure client confidentiality.
Our client, Mr. D, was sued by a large company (“Big Company “) on a lease for a copy machine used in Mr. D’s business. Like many small companies, Mr. D’s business leased their copier.
When Mr. D turned 77, he retired and closed his small business. When he retired, the lease term had a few years of monthly payments remaining, amounting to over $140,000. The copy machine was returned to Big Company, after which Big Company sued the business and Mr. D personally for the remaining payments. Although Mr. D had signed the lease as president of his corporation (which would shield him from being personally liable for acts of the corporation), Big Company claimed that 22 years ago, Mr. D signed a personal guarantee on another copier lease and that it was still effective. In the years since that guarantee was signed, the copier under the guarantee was returned and there had been 12 different copiers leased every few years under 12 different leases without personal guarantees signed. Big Company argued the 22 year old personal guarantee was a continuing guarantee that Mr. D had never cancelled and was still in effect for the 2019 lease.
We filed a motion in which we asked the court to dismiss the suit against Mr. D. Big Company opposed our motion and both sides appeared in court to argue the law before a judge.
On behalf of our client, we pointed out that two contracts were before the court with conflicting terms; 1.) the 22 year old lease with the continuing personal guarantee; and 2.) the newest lease with a blank, unsigned personal guarantee.
Statutory law and case law instruct what happens when there are conflicting terms in a contract, and what terms will apply. When a contract has ambiguous terms, the contract will be construed against the party who wrote the contract. Big Company wrote these leases and therefore, the terms would be construed against it. The leases also contained an integration clause, which provides that the contract terms are the entire agreement between the parties. When a contract has an integration clause, the law states that no other evidence can be considered in interpreting the contract, and the court’s examination is limited to the “four corners” of the document.
These were our arguments and we were successful – the court dismissed all of Big Company’s claims against Mr. D.
And that, my friends, is what commercial litigation is.