In a ruling applauded by advocates of a new Family Court building in Center City, a federal bankruptcy judge found Friday that $6 million in architectural drawings were no longer part of a bankruptcy proceeding filed by developer Donald B. Pulver’s firm.
The ruling by Judge Eric L. Frank increased the chances that the state would be able to start construction on the facility at 15th and Arch Streets before Gov. Rendell leaves office in January.
Pulver filed for bankruptcy, hoping to maintain his developer’s role and the architectural drawings, after his plan to develop the Family Court facility with lawyer Jeffrey B. Rotwitt was terminated by Pennsylvania Chief Justice Ronald D. Castille, who had been personally overseeing the project.
A copy of Judge Frank’s order is available here. In terms of policy, it’s great news: Philadelphia needs a new Family Court building, and, for better or worse, those plans and that property are the best shot we have at getting one within this decade.
More to the point, though, the ruling is undoubtedly right on the law.
In short, the development plans called for those architecture plans to move from EwingCole, the architect, to Northwest 15th Street Associates, the owner of the property, at some point while the design progressed. The question was when — one sentence in the agreement provided for that transfer after a certain point that has already passed, while the next sentence in the agreement provided for that transfer after a certain point that has not yet happened. The result was a conflict between the two sentences, a patent ambiguity on the face of the agreement.
But here’s the kicker: both sentences were requested and drafted by Northwest 15th Street Associates. Thus, as Judge Frank ruled:
In Pennsylvania, the doctrine of confra proferentem [construe against the drafter] is a rule of policy, not one of contract interpretation:
The rule is not actually one of interpretation, because its application does not assist in determining the meaning that the two parties gave to the words, or even the meaning that a reasonable person would have assigned to the language used. It is chiefly a rule of policy, generally favoring the underdog. It directs the court to choose between two or more possible reasonable meanings on the basis of their legal operation, Le., whether they favor the drafter or the other party.
Stuart, 402 B.R. at 132 (quoting 5 Arthur L. Corbin & Margaret N. Kniffin, Corbin on Confracts §24.27 (rev. ed. 2007)).
The Pennsylvania Supreme Court has cautioned that the doctrine is to be applied only in limited situations.
[T]he rule is not intended as a talismanic solution to the construction of ambiguous language…. Where a document is found to be ambiguous, inquiry should always be made into the circumstances surrounding the execution of the document in an effort to clarify the meaning that the parties sought to express in the language which they chose. It is only when such an inquiry fails to clarify the ambiguity that the rule of construction relied upon by the chancellor should be used to conclude the matter against that party responsible for the ambiguity, the drafter of the document.
Stuart, 402 B.R. at 133 (quoting Bums Mfg. Co. v. Boehm, 356 A.2d 763, 767 n.3 (Pa. 1976) (citations omitted)). For the reasons expressed in Boehm, the doctrine also has been described as a “rule of last resort” or a “tie breaker,” invoked when no other sound basis exists for choosing one contract interpretation over another. Stuart, 402 B.R. at 133 (quoting Gardiner, Kamya & Assocs. P.C. v. Jackson, 467 F.3d 1348,1353 (Fed. Cir. 2006)).
Thus, since Northwest 15th Street Associates had drafted both terms — terms that on their face were ambiguous — the terms were construed against him, and the term that was less favorable to him prevailed.
Pulver can, as is his right, appeal to the District Court, but it’s hard to see how that would help him. A bankruptcy court has wide discretion to enter or lift “stays” relating to bankruptcy estate property, and the ruling here isn’t a final disposition of the plans, just a decision to let the project go forward and make Pulver pursue monetary, rather than injunctive, remedies in the future.