The Minnesota Supreme Court decided two fundamental questions related to how breach of contract claims are tried to a jury in Staffing Specifix, Inc. v. Tempworks Management Services, Inc., 913 N.W.2d 687 (Minn. 2018). The dispute between two staffing companies arose regarding the calculation of a buy-out fee. The district court ruled in a motion that the contract was ambiguous and the case was tried to a jury.
The court instructed the jury “[i]if you find the contract is ambiguous, you should determine the intent of the parties.” The Court also instructed the jury that “[w]hen contract language is reasonably susceptible to more than one interpretation, the ambiguous terms are to be construed against the drafter.” The latter instruction reflects what is known as the canon of “contra proferentem” The jury found for Staffing Specifix, Inc. (“Staffing“) and awarded damages of $451,732.77. Tempworks Management Services, Inc. (“Tempworks“) objected to the use of both instructions before and after trial and appealed to the Minnesota Court of Appeals which reversed. Staffing appealed that decision to the Supreme Court which affirmed the intermediate court.
Minnesota’s highest court held that the trial court should not have directed the jury to determine whether the contracts were ambiguous but instead should have instructed that they were ambiguous, thus allowing extrinsic evidence including parol evidence regarding the intention of the parties. The Supreme Court also held that the doctrine of contra proferentem is more appropriate for one-sided contracts (referred to as “contracts of adhesion”) such as insurance policies and should not be applied except as a “rule of last resort” in cases where each party has relatively similar bargaining power and sophistication. The Court therefore affirmed the directive to send the case back for a new trial.
The Staffing Specifix decision clarifies how juries should be instructed in a breach of contract claim under Minnesota law and the use of extrinsic or parol evidence if the court determines that a contract is ambiguous. It also clarifies the circumstances under which contracts should be construed against the drafting party. It is an important case for any civil litigator in Minnesota. If you have questions about a breach of contract case, contact the litigation attorneys at Trepanier MacGillis Battina P.A.
Trepanier MacGillis Battina P.A. is a civil litigation law firm located in Minneapolis, Minnesota. Their litigation attorneys can be reached at 612.455.0500.