Facilities Cost Mgmt. Group v. Otoe Cty. Sch. Dist. ( 2015 )

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Nebraska A dvance Sheets
291 Nebraska R eports
FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
Facilities Cost M anagement Group, LLC,
appellee and cross-appellant, v. Otoe County
School District 66-0111, also known as
Nebraska City Public Schools,
appellant and cross-appellee.
___ N.W.2d ___
Filed August 21, 2015. No. S-14-380.
1. Summary Judgment. An appellate court will affirm a lower court’s
grant of summary judgment if the pleadings and admitted evidence show
that there is no genuine issue as to any material facts or as to the ulti-
mate inferences that may be drawn from the facts and that the moving
party is entitled to judgment as a matter of law.
2. Contracts. The meaning of a contract and whether a contract is ambigu-
ous are questions of law.
3. Judgments: Appeal and Error. When reviewing questions of law, an
appellate court has an obligation to resolve the questions independently
of the conclusion reached by the trial court.
4. Jury Instructions: Appeal and Error. Whether a jury instruction is
correct is a question of law, which an appellate court independently
decides.
5. Contracts. In interpreting a contract, a court must first determine, as a
matter of law, whether the contract is ambiguous.
6. ____. A contract written in clear and unambiguous language is not sub-
ject to interpretation or construction and must be enforced according to
its terms.
7. Contracts: Words and Phrases. A contract is ambiguous when a word,
phrase, or provision in the contract has, or is susceptible of, at least two
reasonable but conflicting interpretations or meanings.
8. Contracts. The meaning of an ambiguous contract is generally a ques-
tion of fact.
9. ____. Extrinsic evidence is not permitted to explain the terms of a con-
tract that is not ambiguous.
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
10. Contracts: Intent. When a contract is unambiguous, the intentions of
the parties must be determined from the contract itself.
11. Contracts. A court is not free to rewrite a contract or to speculate as to
terms of the contract which the parties have not seen fit to include.
12. ____. When a court has determined that ambiguity exits in a document,
an interpretive meaning for the ambiguous word, phrase, or provision in
the document is a question of fact for the fact finder.
13. Contracts: Parol Evidence. A written instrument is open to explanation
by parol evidence when its terms are susceptible to two constructions or
where the language employed is vague or ambiguous.
14. Jury Instructions: Proof: Appeal and Error. In an appeal based on
a claim of an erroneous jury instruction, the appellant has the burden
to show that the questioned instruction was prejudicial or otherwise
adversely affected a substantial right of the appellant.
Appeal from the District Court for Douglas County:
J. Michael Coffey, Judge. Reversed and remanded for a
new trial.
Larry E. Welch, Sr., Larry E. Welch, Jr., and Damien J.
Wright, of Welch Law Firm, P.C., for appellant.
Steven E. Achelpohl and John A. Svoboda, of Gross &
Welch, P.C., L.L.O., for appellee.
Heavican, C.J., Wright, Connolly, McCormack, Miller-
Lerman, and Cassel, JJ.
Miller-Lerman, J.
NATURE OF CASE
Otoe County School District 66-0111, also known as
Nebraska City Public Schools (the District), and Facilities
Cost Management Group, LLC (FCMG), entered into a con-
tract wherein FCMG would provide architectural, represent­
ative, and managerial services in connection with the con-
struction and renovation of three schools within the District.
FCMG filed an amended complaint in the district court for
Douglas County against the District, alleging that the District
had breached the contract by failing to pay the full amount
due under the contract, and FCMG sought approximately
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
$2 million in damages. The parties filed cross-motions for
partial summary judgment; the District generally argued that
the contract was ambiguous, specifically sections 11.2 and
12.7, and FCMG generally argued that the contract was not
ambiguous. The district court granted FCMG’s motion and
denied the District’s motion based upon its determinations
that sections 11.2 and 12.7 were not ambiguous due to their
language and the parties’ course of dealings.
After a jury trial, the district court entered judgment on the
jury’s verdict for FCMG in the amount of $1,972,993. The
district court denied the District’s motion for judgment not-
withstanding the verdict or for new trial. The District appeals,
and FCMG cross-appeals. We determine that the district court
did not err when it determined that section 12.7 of the contract
is not ambiguous, but it erred when it determined that section
11.2 is not ambiguous. Accordingly, the court committed preju-
dicial error when it gave jury instruction No. 2, which stated
that “the contract in this case is not ambiguous.” As explained
below, we reverse, and remand for a new trial.
STATEMENT OF FACTS
The threshold issue presented in this appeal is whether
sections 11.2 and 12.7 of the contract are ambiguous. The
contract is based on a 1987 version of the American Institute
of Architects’ “Standard Form of Agreement Between Owner
and Architect.” As the Court of Special Appeals of Maryland
has observed:
The standard form contracts drafted by the [American
Institute of Architects (AIA)] are widely used. One
author has stated that the AIA documents are the most
widely used standard form contracts in the construction
industry. See 1 Steven G.M. Stein, Construction Law,
¶ 3.02[1][b] (Matthew Bender 1999)(footnote omitted)
(stating that AIA forms “have the longest history and
are the most widely used and well known of the stan-
dard forms.”).
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Nebraska A dvance Sheets
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
Notre Dame v. Morabito, 132 Md. App. 158, 174, 752 A.2d
265, 273-74 (2000). However, the parties customized some
sections of the contract, including sections 11.2 and 12.7 at
issue in this case. The contract defines the District as the
“Owner” and FCMG as the “Architect” even though the activi-
ties of FCMG were not limited to architectural services.
Pertinent sections of the contract are quoted below. Section
11.2, one of the customized provisions of the contract, is titled
“BASIC COMPENSATION,” and it provides:
Fees shall be as outlined in the attached Recommended
Compensation schedule as applicable to each component
facility of the Project and shall be included in various
categories of the Project Budget for Basic Services for
Site and Construction work, Master Planning, Equipment,
Additional Services for Remodeling and Additions,
and Contingency allowances. Corresponding Project
Reimbursable Expenses and costs for [the District’s]
Representative/Project Management services shall also
be paid as included in the Project Budget. These fees and
costs are intended to be converted to Lump Sum amounts
with the initial approval by the [District] and [FCMG] of
the Project Scope, Budget, and concept to be advanced
for funding. Lump Sum amounts and inclusions shall
remain effective for the duration of the Project(s), except
in the event of approved changes in the scope of work or
alternatives to be bid adding two percent or more to the
scope. In such event the Lump Sum fees and costs shall
be increased proportionately to reflect the full percentage
of changes.
A grid is attached to most copies of the contract in the record.
The grid appears to be a schedule of fees for various services.
Section 12.7, another customized provision of the contract,
is titled “RESPONSE TO DISTRICT’S REQUEST FOR
PROPOSAL,” and it provides:
The Architect’s Response to the District’s Request
for Proposal is attached to this Agreement for general
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
reference purposes including overviews of projects and
serv­ices. [The District’s] approvals following execution
of this Agreement and related to the scope of work on
the individual projects and corresponding portions of
Project Budgets during the various Phases shall incor-
porate applicable adjustments through the projects [sic]
development.
The “Architect’s Response to the District’s Request for
Proposal” referred to in section 12.7 is not attached to any
copy of the contract in the record, and there is no such docu-
ment bearing the title “Architect’s Response to the District’s
Request for Proposal.” The parties may have been referring to
exhibit 72, which is FCMG’s 72-page proposal submitted in
response to the District’s request for proposals, and possibly
in addition, exhibit 19, which is 21 pages of questions and
answers exchanged between the parties.
With respect to the background facts of this case, in March
2007, the District issued a request for proposals in connec-
tion with the construction and renovation of three schools
within its school district. In response to the District’s request
for proposals, FCMG submitted its proposal dated March 29,
2007. FCMG’s proposal is in the record as exhibit 72. In its
proposal, FCMG stated that it was to serve as the project’s
architect, the District’s representative, and the project’s man-
ager. Specifically, the proposal stated:
FCMG is not a traditional architectural firm. We spe-
cialize as independent Owner’s Representatives for pro-
gram and project development and management services.
From this independent perspective, we offer your District
an opportunity to better control the costs, extended func-
tion, and flexibility within the proposed facilities. We
have the unique ability to offer guaranteed maximum cost
options to assure that the bonds requested and approved
by the voters will do the job . . . so that they know before
they vote what they will receive . . . and also know that
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
the quality will be consistent with today’s version of the
Middle School success.
With respect to rates for the project, FCMG’s proposal
stated:
FCMG negotiates its fees with its clients in order
to provide the best value for the dollar and to respond
directly to the nature of the actual projects selected to be
funded or further developed. We utilize Lump Sum fees
which are incorporated in the projects [sic] budgets. The
examples in this Response each include allowances for all
fees and expenses.
....
We guarantee that the aggregate fees of our firm
together with the Technical Services Consultants will
not exceed typically published guidelines for full Basic
Services of the entire professionals [sic] team.
....
We encourage you to consider fees on a cost per square
foot basis rather than simple percentage. Because our
projects are typically 15% or more less in construction
costs, technical fees typically follow suit and are less per
square foot. Again, we encourage lump sum fees that pro-
duce the lowest bottom line at project completion.
After receiving FCMG’s proposal, the board of directors
of the District sent FCMG a series of written questions con-
cerning the proposal, and FCMG provided its answers in a
document dated June 22, 2007. These questions and answers
are in the record as exhibit 19. In response to the question
“[d]o you have a guaranteed maximum price for the project,”
FCMG stated:
Yes. The $20.76 million figure provided the Board
in our proposal response is an example of a guaran-
teed maximum funding equal or greater in square foot-
age and quality to that which the District had proposed
in its recent study. Another alternative, one which pro-
vided very substantially improved flexibility and square
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
footage for educational delivery was also provided at a
much lower cost than the recent study by others.
Guaranteed maximum price options are clearly avail-
able to the District in our planning approach. Following
establishment of the exact scope of the work by the Board
as it assesses various options and alternatives, we can be
in a position to set maximum required bond proceeds and
related funding for the group of projects.
....
The budgets offering a nearly $4 million savings which
FCMG presented to [the District] represents a guaranteed
maximum price approach matched to input provided by
the District through its previous study for equivalent or
greater footage and quality for the group of projects.
The District and FCMG entered into the contract, dated
July 18, 2007, of which pertinent sections are quoted above.
A bond to fund the project successfully passed in the fall of
2007, and the project subsequently commenced. During com-
pletion of the project, the board of the District made various
changes to the project. FCMG at various times presented the
District’s board with budget grids regarding the project, and
FCMG regularly sent invoices to the District. The invoices
were for work performed by various contractors and FCMG’s
fees. The District paid the invoices from March 2008 until
May 2009, when it stopped paying the invoices because it
learned that the project was almost $2 million over budget.
The parties seem to agree that contractors were paid and that
the subject matter of this case is limited to amounts claimed
by FCMG.
On June 29, 2012, FCMG filed its complaint against the
District alleging breach of contract and seeking $2,016,747.52
in damages plus interest, attorney fees, and costs. FCMG filed
an amended complaint on February 11, 2013, in which it added
its claim of unjust enrichment. The District filed its answer
to the amended complaint on March 13, in which it gener-
ally denied FCMG’s allegations, raised various affirmative
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
defenses, and brought counterclaims which it later abandoned.
The unjust enrichment claim was abandoned at trial.
The parties filed cross-motions for partial summary judg-
ment on the issue of whether the contract was ambiguous,
specifically sections 11.2 and 12.7, quoted above. The District
reads the contract as providing for a guaranteed maximum
price; but failing that interpretation, the District argued that
the contract was ambiguous as to whether the parties intended
to fix a guaranteed maximum price for the budget and, in the
event increases were permitted, the method as to how to cal-
culate FCMG’s fees for increases to the scope of the project.
FCMG argued that the contract was not ambiguous, based
on the language of the contract. FCMG further argued that
the parties’ conduct during performance of the contract indi-
cated the true intent of the parties as to the payment of costs
and fees.
After a hearing, the district court concluded that neither
section 11.2 nor section 12.7 was ambiguous. The district
court filed its order on February 11, 2014, in which it granted
FCMG’s motion for partial summary judgment and denied the
District’s motion for partial summary judgment. In its order,
with regard to section 12.7, the court stated that “[o]ne issue
is the effect to be given to [FCMG’s response] submitted . . .
in response to questions from the [District] regarding the proj-
ect.” The court quoted section 12.7 of the contract and found
that “while the words ‘for general reference purposes’ are pos-
sibly ambiguous they do not equate to incorporating [FCMG’s
response] into the terms of the contract between [FCMG] and
[the District] and, therefore, cannot be a basis to determine
fees and costs pursuant to the contract.” With respect to sec-
tion 11.2, the district court stated that the District routinely
paid invoices submitted by FCMG from March 2008 through
May 2009, and that therefore, “there was a course in dealing
between the parties which evidences a lack of ambiguity in
[section 11.2 of] the contract.” Accordingly, the court granted
FCMG’s motion and denied the District’s motion for partial
summary judgment.
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Nebraska A dvance Sheets
291 Nebraska R eports
FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
A jury trial was held February 10 through 14, 2014. When
FCMG rested its case, the District moved for directed verdict,
which the district court denied. At the close of all the evidence,
both parties moved for directed verdict, and the court denied
both motions. The case was submitted to the jury, and jury
instruction No. 2 provided in pertinent part:
The Court has determined as a matter of law that
the following facts exist and that you must accept them
as true:
1. That the parties entered into a contract related to
the construction/remodeling of three facilities for the
[District] on August 9, 2007.
2. That the Court has determined that the contract in
this case is not ambiguous.
(Emphasis supplied.)
After trial, the jury returned a verdict in favor of FCMG
in the amount of $1,972,993, and by order filed February 19,
2014, the district court accepted the jury’s verdict and entered
judgment for FCMG and against the District in the amount of
$1,972,993. On February 27, the District filed its motion for
judgment notwithstanding the verdict or, in the alternative, for
new trial. The district court denied the District’s motion in an
order filed April 1.
The District appeals, and FCMG cross-appeals.
ASSIGNMENTS OF ERROR
The District claims 10 assignments of error on appeal,
and FCMG claims one assignment of error on cross-appeal;
however, we restate only those assignments of error of the
District that are necessary for the disposition of this case.
See Gray v. Kenney, 290 Neb. 888, 863 N.W.2d 127 (2015)
(stating appellate court is not obligated to engage in analy-
sis that is not necessary to adjudicate case and controversy
before it). The District claims the district court erred when it
granted FCMG’s motion for partial summary judgment based
upon the court’s determinations that sections 11.2 and 12.7
of the contract are not ambiguous and that the concept of
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
Cite as 291 Neb. 642
a guaranteed maximum price was not incorporated into the
contract. The District also claims that the district court erred
when it gave jury instruction No. 2, which stated that the con-
tract was not ambiguous.
On cross-appeal, FCMG raises an issue pertaining to interest
allegedly owed to it by the District. Given our disposition of
the District’s appeal, we need not reach the issue raised in the
cross-appeal.
STANDARDS OF REVIEW
[1] An appellate court will affirm a lower court’s grant of
summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from the
facts and that the moving party is entitled to judgment as a
matter of law. Neun v. Ewing, 290 Neb. 963, 863 N.W.2d
187 (2015).
[2,3] The meaning of a contract and whether a contract is
ambiguous are questions of law. David Fiala, Ltd. v. Harrison,
290 Neb. 418, 860 N.W.2d 391 (2015). When reviewing ques-
tions of law, an appellate court has an obligation to resolve the
questions independently of the conclusion reached by the trial
court. Id.
[4] Whether a jury instruction is correct is a question of
law, which an appellate court independently decides. Warner v.
Simmons, 288 Neb. 472, 849 N.W.2d 475 (2014).
ANALYSIS
The District claims that the district court erred when it
determined that both section 11.2 and section 12.7 of the con-
tract were not ambiguous. The District therefore argues that
the court erred when it denied the District’s motion for partial
summary judgment and granted FCMG’s motion for partial
summary judgment. The District further claims that the court
erred when it gave jury instruction No. 2, which states that
“the contract in this case is not ambiguous.” As a matter of
law, we conclude that section 12.7 is not ambiguous but that
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
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section 11.2 is ambiguous. That is, the court did not err when
it determined that section 12.7 is not ambiguous, but it erred
when it determined that section 11.2 is not ambiguous. As a
result, the court erred when it entirely denied the District’s
motion for partial summary judgment and entirely granted
FCMG’s motion for partial summary judgment. Furthermore,
based upon our determination that section 11.2 is ambiguous,
the court erred when it gave jury instruction No. 2, which
stated that the contract in this case as a whole is not ambigu-
ous. The errors identified above require that we reverse, and
remand for a new trial.
[5-8] The rules of law applicable to this contract case are
familiar. In interpreting a contract, a court must first deter-
mine, as a matter of law, whether the contract is ambiguous.
David Fiala, Ltd. v. Harrison, supra. A contract written in
clear and unambiguous language is not subject to interpretation
or construction and must be enforced according to its terms.
Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb.
615, 780 N.W.2d 416 (2010). A contract is ambiguous when
a word, phrase, or provision in the contract has, or is sus-
ceptible of, at least two reasonable but conflicting interpreta-
tions or meanings. David Fiala, Ltd. v. Harrison, supra. The
meaning of an ambiguous contract is generally a question of
fact. Gary’s Implement v. Bridgeport Tractor Parts, 270 Neb.
286, 702 N.W.2d 355 (2005). See, also, David Fiala, Ltd. v.
Harrison, supra.
Section 12.7 Is Not Ambiguous.
The District would prefer that the contract be read as pro-
viding a guaranteed maximum price and that it owes nothing
further to FCMG. On appeal, the District argues that section
12.7 of the contract is ambiguous, that exhibits 19 and 72
are incorporated into the contract via section 12.7, and that
by incorporating exhibits 19 and 72, the contract provides a
guaranteed maximum price. The District challenges the district
court’s ruling to the contrary. We reject this argument.
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FACILITIES COST MGMT. GROUP v. OTOE CTY. SCH. DIST.
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In describing a guaranteed maximum price contract, the
Indiana Court of Appeals has stated that “[a] guaranteed max-
imum price provides a cap on a party’s financial obligations.
It is the greatest amount a party is required to pay for the
contracted services.” TRW, Inc. v. Fox Development Corp.,
604 N.E.2d 626, 630 (Ind. App. 1992).
Section 12.7 is a provision customized by the parties, and
it provides:
The Architect’s Response to the District’s Request
for Proposal is attached to this Agreement for general
reference purposes including overviews of projects and
services. [The District’s] approvals following execution
of this Agreement and related to the scope of work on
the individual projects and corresponding portions of
Project Budgets during the various Phases shall incor-
porate applicable adjustments through the projects [sic]
development.
No copy of the contract in the record bears an attachment
labeled “Architect’s Response to the District’s Request for
Proposal” referred to in section 12.7, and there is no such
document bearing that title in the record. The reference may be
to exhibit 72 and/or exhibit 19.
In its February 11, 2014, order, in which the district court
granted partial summary judgment in favor of FCMG, the
district court rejected the District’s argument that section 12.7
was ambiguous. The court stated that “while the words ‘for
general reference purposes’ are possibly ambiguous they do
not equate to incorporating [FCMG’s responses] into the terms
of the contract between [FCMG] and [the District] and, there-
fore, cannot be a basis to determine fees and costs pursuant to
the contract.”
We agree with the district court that section 12.7 does not
incorporate FCMG’s responses and the precontract negotia-
tions into the contract. The expression “for general reference
purposes,” interesting though it may be, contrasts with a pro-
vision, common in contract law, which incorporates another
document by reference. Compare Baker’s Supermarkets v.
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Feldman, 243 Neb. 684, 688, 502 N.W.2d 428, 432 (1993)
(reading original lease and supplemental agreement as inte-
grated where supplemental agreement stated that original
lease was “‘by this reference deemed incorporated’”). Section
12.7 simply does not incorporate FCMG’s responses into
the contract.
The District’s suggestion that section 12.7 is ambiguous
and establishes a guaranteed maximum price is belied by other
contract language. The standard language of section 5.2.2 pro-
vides: “No fixed limit of Construction Cost shall be established
as a condition of this Agreement by the furnishing, proposal
or establishment of a Project budget, unless such fixed limit
has been agreed upon in writing and signed by the parties
hereto.” In Anderzhon/Architects v. 57 Oxbow II Partnership,
250 Neb. 768, 553 N.W.2d 157 (1996), we examined a contract
that contained the exact standard language of section 5.2.2. In
Anderzhon/Architects, the parties entered into the contract for
the design and construction of a residential apartment complex.
The parties had anticipated that the construction costs of the
project would be approximately $27,000 to $30,000 per unit,
but ultimately, the costs of construction were approximately
$39,000 to $43,000 per unit. We noted that there was no writ-
ten term in the contract which established a construction bud-
get constraint and stated that “[s]ection 5.2.2 of the contract
specifies that construction costs are not a condition of the
agreement unless such a condition is made by the parties in
writing.” Id. at 775, 553 N.W.2d at 161. We then noted that
the record did not contain any evidence that the parties made a
writing with respect to a fixed limit of construction costs, and
we stated that the parties “intended the contract to be a final
expression of the terms it contains with regard to the project
budget limitations.” Id.
Similarly, in the present case, there is no language in the
contract that the parties intended there to be a fixed budget
with respect to construction costs or otherwise. As deter-
mined above, section 12.7 is not ambiguous and does not
incorporate any documents that would establish a guaranteed
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maximum price. Accordingly, we conclude that section 12.7 is
not ambiguous and does not incorporate a guaranteed maxi-
mum price into the contract and that therefore, the district
court did not err when it so determined.
Section 11.2 Is Ambiguous.
The District also argues that section 11.2 of the contract
dealing with increased charges is ambiguous and claims that
the district court erred when it determined that it was not
ambiguous in its order granting partial summary judgment in
favor of FCMG. We agree with the District that section 11.2
is ambiguous; the district court’s ruling to the contrary was
reversible error.
As stated above, section 11.2 is a provision customized by
the parties and it provides:
Fees shall be as outlined in the attached Recommended
Compensation schedule as applicable to each component
facility of the Project and shall be included in various
categories of the Project Budget for Basic Services for
Site and Construction work, Master Planning, Equipment,
Additional Services for Remodeling and Additions,
and Contingency allowances. Corresponding Project
Reimbursable Expenses and costs for [the District’s]
Representative/Project Management services shall also
be paid as included in the Project Budget. These fees and
costs are intended to be converted to Lump Sum amounts
with the initial approval by the [District] and [FCMG] of
the Project Scope, Budget, and concept to be advanced
for funding. Lump Sum amounts and inclusions shall
remain effective for the duration of the Project(s), except
in the event of approved changes in the scope of work or
alternatives to be bid adding two percent or more to the
scope. In such event the Lump Sum fees and costs shall
be increased proportionately to reflect the full percentage
of changes.
In its February 11, 2014, order, the district court deter-
mined that section 11.2 is not ambiguous. In reaching its
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determination, the court looked to the parties’ course of deal-
ing. The court noted that FCMG met with the board of the
District in March 2008 to review the billing process and that
the board continued to pay invoices submitted by FCMG
through May 2009. The court then pointed to the parties’
course of dealing “[a]s evidence of the manner in which fees
on increases in the scope of the project were calculated . . . .”
As an example demonstrating the basis for its ruling, the
court noted invoice No. 29-1006, dated November 30, 2008,
which stated that the original project area was 69,000 square
feet and that 5,619 square feet had been added to the original
area. The court stated that the additional square footage was
billed at $9.22 per square foot, which was calculated based
on the square footage cost of the original project area. The
court observed that invoice No. 29-1006 was paid in full by
the District, and that “[t]hus, there was a course in dealing
between the parties which evidences a lack of ambiguity in the
contract.” The district court erred in employing the foregoing
approach to reaching its determination regarding ambiguity
and, as a matter of law, erred in its result.
[9,10] We have previously stated that extrinsic evidence
is not permitted to explain the terms of a contract that is not
ambiguous. Gary’s Implement v. Bridgeport Tractor Parts, 270
Neb. 286, 702 N.W.2d 355 (2005); Spanish Oaks v. Hy-Vee,
265 Neb. 133, 655 N.W.2d 390 (2003). When a contract is
unambiguous, the intentions of the parties must be deter-
mined from the contract itself. Spanish Oaks v. Hy-Vee, supra.
Accordingly, if section 11.2 of the contract was not ambigu-
ous, as the district court determined, then it was not appropri-
ate for the district court to look to extrinsic evidence, such as
the parties’ course of dealings, to so conclude.
The District contends that the language of section 11.2 is
ambiguous because it is not clear how the “scope of work” is
to be determined, which in turn serves as a basis for increased
fees and costs which, in the language of the contract, “shall be
increased proportionately.”
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“[S]cope of work” is not a defined term in the contract. It
is not clear what is encompassed by “scope of work.” There
is some suggestion that square footage may be one way that
scope of work may be determined, but there are arguably
other ways to determine the scope of work under the contract.
For example, FCMG asserts that the contract provides that
“not only square footage increases, but increases relating to
non-square footage items such as equipment and Owner’s
Representative fees” are included in scope of work. Brief
for appellee at 8. We conclude as a matter of law that sec-
tion 11.2, and in particular “scope of work,” is ambiguous
and that the district court erred when it determined that sec-
tion 11.2 is not ambiguous and entered summary judgment
orders accordingly.
Jury Instruction No. 2 Was
Prejudicial Error.
The District claims that the district court erred when it
gave jury instruction No. 2 because, inter alia, the contract
was ambiguous and instruction No. 2 stated to the contrary.
We understand, in addition, that the District believes jury
instruction No. 2 was erroneous because it is confusing. In this
regard, we note that during its deliberations, the jury sent out
a note asking the court: “If we were to decide for [FCMG],
are we allowed to reduce the amount of the award? And, if so,
do we need to show how we calculated the reduced amount?”
We determine that jury instruction No. 2 constituted prejudi-
cial error.
[11-13] We have stated that a court is not free to rewrite
a contract or to speculate as to terms of the contract which
the parties have not seen fit to include. Bedore v. Ranch Oil
Co., 282 Neb. 553, 805 N.W.2d 68 (2011). Rather, when a
court has determined that ambiguity exits in a document, an
interpretive meaning for the ambiguous word, phrase, or pro-
vision in the document is a question of fact for the fact finder.
David Fiala, Ltd. v. Harrison, 290 Neb. 418, 860 N.W.2d 391
(2015). In this regard, we have stated in a jury case that when
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the terms of the contract are in dispute and the real intentions
of the parties cannot be determined from the words used,
the jury, not the court, should determine the issue from all
the facts and circumstances. Gary’s Implement v. Bridgeport
Tractor Parts, 270 Neb. 286, 702 N.W.2d 355 (2005). A
written instrument is open to explanation by parol evidence
when its terms are susceptible to two constructions or where
the language employed is vague or ambiguous. Davenport
Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb. 615, 780
N.W.2d 416 (2010).
Because section 11.2 is ambiguous, parol evidence should
have been permitted at trial and the court should have given
the issue of the meaning of the ambiguous contract to the jury.
However, in this case, the district court instructed the jury
as follows:
The Court has determined as a matter of law that
the following facts exist and that you must accept them
as true:
1. That the parties entered into a contract related to
the construction/remodeling of three facilities for the
[District] on August 9, 2007.
2. That the Court has determined that the contract in
this case is not ambiguous.
(Emphasis supplied.) We determine it was error for the court to
instruct the jury that the contract in this case is not ambiguous.
Rather, the court should have instructed the jury that section
11.2 of the contract was ambiguous and that the jury was to
determine its meaning.
[14] Whether a jury instruction is correct is a question of
law, which an appellate court independently decides. Warner
v. Simmons, 288 Neb. 472, 849 N.W.2d 475 (2014). In an
appeal based on a claim of an erroneous jury instruction, the
appellant has the burden to show that the questioned instruc-
tion was prejudicial or otherwise adversely affected a substan-
tial right of the appellant. Id.
We conclude that the district court’s error in the giving
of jury instruction No. 2 was prejudicial and constitutes
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reversible error. Had the court not erroneously determined
that section 11.2 was unambiguous and granted partial sum-
mary judgment in favor of FCMG based upon this deter-
mination, the parties could have presented evidence at trial
with respect to the meaning of section 11.2, specifically the
meaning of “scope of work.” The parties could have framed
their arguments differently at trial to address the meaning of
section 11.2 and how they believed the jury should interpret it
and award damages, if any. Therefore, we determine that jury
instruction No. 2, which stated that “the contract in this case
is not ambiguous,” is prejudicial error, and we reverse, and
remand for a new trial.
Because we conclude that a new trial is required, we do not
reach the District’s remaining assignments of error or FCMG’s
assignment of error on cross-appeal. See Gray v. Kenney, 290
Neb. 888, 863 N.W.2d 127 (2015) (stating appellate court is
not obligated to engage in analysis that is not necessary to
adjudicate case and controversy before it).
CONCLUSION
We determine that the district court did not err when it
determined that section 12.7 of the contract was not ambigu-
ous, but did err when it determined that section 11.2 of the
contract was not ambiguous. Accordingly, the district court
prejudicially erred when it gave jury instruction No. 2, which
stated that the contract in this case is not ambiguous. For
the reasons explained above, we reverse, and remand for a
new trial.
R eversed and remanded for a new trial.
Stephan, J., not participating.