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MARTIN & MARTIN v. BRADLEY ENTERPRISES


MARTIN & MARTIN v.
BRADLEY ENTERPRISES


September 18, 1998
Record No. 972378

MARTIN & MARTIN, INC.

v.

BRADLEY ENTERPRISES, INC., ET AL.

OPINION BY JUSTICE LEROY R. HASSELL, SR.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
M. Langhorne Keith, Judge

Present: All the Justices

The primary issue that we consider in this appeal is whether the
trial court erred in refusing to permit the plaintiff to use
parol evidence to explain a purported ambiguity in a contract.
Plaintiff, Martin & Martin, Inc., filed an amended motion for
judgment against Bradley Enterprises, Inc., and its president,
Robert J. Bradley, Jr. The plaintiff, a Virginia corporation,
alleged in its amended motion that the defendants breached a
contract, described as an asset purchase agreement, and that the
defendants fraudulently induced the plaintiff to execute that
agreement.
The following facts are relevant to our disposition of this
appeal. The plaintiff executed an asset purchase agreement with
the defendants, in which Bradley Enterprises agreed to sell,
transfer, and deliver to the plaintiff a retail frozen yogurt
store in Fredericksburg for a price of $59,500. Bradley
Enterprises had sold frozen yogurt at the store, and the
plaintiff intended to continue to operate a retail frozen yogurt
business.
The asset purchase agreement contained the following provisions
which are pertinent in this appeal:
"Section 2. Indemnifications and Warrants [sic].
"2.1. Seller covenants and agrees to indemnify and hold
harmless the Buyer from and against any loss, claim, liability,
obligation or expense (including reasonable attorneys’ fees) a)
incurred or sustained by Buyer on account of any
misrepresentation or breach of any warranty, covenant, or
agreement of Seller contained in this Agreement or made in
connection herewith . . . .

 . . . .

"Section 3. Entire Agreement
"The exhibit hereto is an integral part of this
agreement. All understandings and agreements between the parties
are merged into this Agreement which fully and completely
expresses their agreements and supersedes any prior agreement of
understanding relating to the subject matter, and no party has
made any representations or warranties, expressed or implied, not
herein expressly set forth. This Agreement shall not be changed
or terminated except by written amendment signed by the parties
hereto."

Judith A. Martin, president of Martin & Martin, Inc., signed
the agreement on behalf of the plaintiff, and Robert Bradley
executed the agreement on behalf of Bradley Enterprises.
Judith Martin testified at trial that Robert Bradley had
represented to her, before she executed the contract, that the
store had annual gross sales of approximately $168,000. Mrs.
Martin stated that she relied upon this sales figure when Martin
& Martin, Inc., decided to acquire the store. After the
plaintiff began to operate the store, Mrs. Martin became
concerned because of the low gross sales volume. Subsequently,
Mrs. Martin obtained a report from the Virginia Department of
Taxation which revealed that the store’s annual gross sales were
significantly lower than $168,000. Mr. Bradley testified that he
informed Mrs. Martin and her husband, before the asset purchase
agreement was executed, that the store generated between $70,000
and $80,000 in annual gross sales.
At trial, the plaintiff sought to introduce parol evidence of an
express warranty through Mr. Bradley’s purported statement that
the store had annual gross sales of $168,000. The trial court
refused to permit the plaintiff to present such evidence and,
consequently, struck the plaintiff’s breach of contract claim
because, without the parol evidence, the plaintiff could not
establish a contractual duty that the defendants could have
breached. The trial court also refused to permit a witness to
testify on behalf of the plaintiff. The case proceeded to the
jury on the fraud claim, and the jury returned a verdict in favor
of the defendants, which was confirmed by the trial court. The
plaintiff appeals.
The plaintiff asserts that Mr. Bradley’s representations to Mrs.
Martin constituted a warranty of the gross sales revenue.
Continuing, the plaintiff says that the language in the asset
purchase agreement is ambiguous because Section 2 of the
agreement requires the defendant Bradley Enterprises to indemnify
the plaintiff for losses incurred because of any breach of
warranty, but Section 3 of the agreement limits this defendant’s
liability to breaches of warranties that are actually expressed
in the agreement. The plaintiff contends that it was entitled to
present parol evidence to establish the terms of the warranty
because of this purported ambiguity, and that the trial court
failed to give effect to Section 2 of the agreement.
Responding, the defendants argue that if an ambiguity exists in
the agreement, such ambiguity must be resolved in their favor
because the plaintiff drafted the purportedly ambiguous
provisions. We agree with the defendants.
The plaintiff drafted the asset purchase agreement. We "must
give effect to the intention of the parties as expressed in the
language of their contract." Rash v. Hilb, Rogal
& Hamilton Co.
, 251 Va. 281, 286, 467 S.E.2d 791, 794
(1996); Foti v. Cook, 220 Va. 800, 805, 263 S.E.2d
430, 433 (1980); accord Worrie v. Boze, 191
Va. 916, 925, 62 S.E.2d 876, 880 (1951). In the event of an
ambiguity in the written contract, such ambiguity must be
construed against the drafter of the agreement. Mahoney v.
NationsBank of Virginia, 249 Va. 216, 222, 455 S.E.2d 5, 9
(1995); Winn v. Aleda Constr. Co., 227 Va. 304,
307, 315 S.E.2d 193, 195 (1984).
Applying these principles, we hold that the trial court did not
err by refusing to permit the plaintiff to present parol
evidence. Section 3 of the agreement, which must be construed in
favor of the defendants, states that all understandings and
agreements between the parties are merged in the agreement and
that no party has made representations or warranties that are not
expressly set forth in the agreement. The agreement does not
contain a warranty of the amount of gross sales that the store
generated annually, and, thus, the plaintiff may not seek to
establish such warranty with parol evidence.
Next, the plaintiff argues that the trial court erred in refusing
to permit her husband, James R. Martin, to testify as a witness
at trial. Mr. Martin would have testified that he heard Mr.
Bradley state to Mrs. Martin that the store had annual sales of
$168,000.
On the morning before the trial commenced, the defendants made a
motion in limine to exclude Mr. Martin’s testimony.
According to representations of counsel, upon which the trial
court relied without objection, the following events occurred.
The defendants filed a notice to take the discovery depositions
of Mr. and Mrs. Martin. Before the depositions began, plaintiff’s
counsel informed defendants’ counsel that "Mr. Martin would
prefer to go on a business matter; that he had business to
attend; and furthermore that he was not a material witness in the
case; and there was no reason for him to be deposed."
The defendants’ counsel replied that he had "no problem with
excusing [Mr. Martin] for that deposition so long as [counsel] could rely on that assurance." Defendants’ counsel conducted
the discovery deposition of Mrs. Martin, and, during that
deposition, she was asked: "is your husband a player or
participant in Martin & Martin and its operations?" She
responded: "He comes in and mops the floors occasionally
but, other than that, no. He has other work." Additionally,
Mrs. Martin was asked: "Apart from your testimony today,
does your husband, if you know, have any knowledge that bears on
the issues before the court in this litigation?" She
responded: "Not really. He gets his information from me. He
does not deal directly with any of the business matters. I confer
with him. You know, we decide things together but the actual
dealing with Mr. Bradley or any other, he does not participate on
that level."
After the expiration of a discovery cut-off date, which had been
established by a court order, the plaintiff submitted to the
defendants a late answer to interrogatories that had been
propounded timely by the defendants. The plaintiff’s answer to an
interrogatory stated that Mr. Martin may have knowledge of facts
relevant to this litigation. Additionally, the plaintiff stated,
in another interrogatory answer which was also filed after the
discovery cut-off date, that Mr. Martin may have witnessed
fraudulent representations made by Mr. Bradley.
The trial court refused to permit Mr. Martin to testify. The
trial court, explaining its ruling, stated: "I sustain the
objection. I think the defendants have been misled if we let Mr.
Martin testify."[1]
The plaintiff contends that the trial court abused its discretion
in excluding Mr. Martin’s testimony. We disagree. The decision to
exclude Mr. Martin’s testimony is within the sound discretion of
the trial court, and the record simply fails to disclose that the
trial court abused its discretion. The plaintiff also argues that
when Mrs. Martin testified during her deposition, she was not the
designated representative of the plaintiff corporation and,
therefore, her responses could not bind the corporation. We do
not consider this argument because it was not raised in the trial
court. Rule 5:25.
Accordingly, we will affirm the judgment of the trial court.
Affirmed.

 

FOOTNOTES:

[1] The trial court’s ruling,
however, may have been based, in part, upon an inaccurate
representation concerning the sequence of events during the
discovery process. During oral argument on the motion in limine
to exclude Mr. Martin’s testimony, the defendants advised the
trial court that the plaintiff had filed its answers to
interrogatories prior to the deposition of Mrs. Martin and that
one of the purposes of the subsequent deposition was to
"clear up" any matters left uncertain or ambiguous by
the interrogatory answers. However, the defendants deposed Mrs.
Martin on April 23, 1997, and the plaintiff filed its answers to
interrogatories on July 17, 1997, almost three months after
Mrs. Martin’s deposition. We conclude that the trial court did
not abuse its discretion in excluding Mr. Martin’s testimony
because the plaintiff did not object or point out to the trial
court that the deposition of Mrs. Martin had, in fact, occurred
before the plaintiff answered the interrogatories.

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