Court Describes Contract Language as “Gibberish”

The reader who goes by the name A. Wright Burke, M. Phil., told me about this article by Edmund H. Mahoney in the Hartford Courant. It describes how in Pac. Employers Ins. Co. v. Travelers Cas. & Sur. Co., 3:11CV924 MRK, 2012 WL 3202934 (D. Conn. Aug. 3, 2012) (PDF copy here), the judge describes as “gibberish” the insurance-policy provision at issue in a multimillion-dollar lawsuit. An insurance policy is a contract , and insurance policies issued to businesses resemble business contracts more than they do consumer contacts, so I pricked up my ears.

Here’s the language at issue, from “Special Endorsement No. 1” to the policy:

B. The Company’s obligation under the policy shall be limited to reimbursement of the insured:

2. For all reasonable expense incurred in connection with the investigation, settlement, or defense of such claims or suits and the Company’s reimbursement obligation for the settlement of all damages imposed on and expenses incurred by the insured shall be limited to the amount stated in the policy as the applicable limit of the Company’s Liability for damages that the Company may, at its discretion, participate, in, in the defense or settlement of such claim or suit.

And here’s what the court said:

The Court remains unconvinced. For one thing, Travelers’ reading runs up against the fact that Special Endorsement No. 1, specifically Section B.2, is written in gibberish. Were there a period after “Liability” in B.2, the provision would be comprehensible: the Company would be obliged to reimburse the insured for reasonable defense expenses up to the applicable policy limit. However, in place of a period, the Endorsement goes on to speak of “damages that the Company may, at its discretion, participate, in, in the defense or settlement of such claim or suit.” The Court has no idea what it would mean for the Company to participate in damages, and not even Travelers itself has claimed that it may exercise discretion over whether to pay for the defense or settlement of claims covered by its policies. The repeated “, in, in” is more mysterious still. Suffice it to say that the Connecticut Supreme Court must not have encountered Special Endorsement No. 1 when it observed, in reference to insurance contracts, that “parties ordinarily do not insert meaningless provisions in their agreements.” R.T. Vanderbilt Co. v. Cont’l Cas. Co., 273 Conn. 448, 468, 870 A.2d 1048 (2005).

The notion of a contract containing “gibberish” is hardly shocking. Dilbert expresses that very notion in this strip. And in my dark nights of the soul, “gibberish” seems an apt description for much of what I encounter.

But normally, the problem is that drafters think they’re saying X, whereas they’re saying Y, or are saying X in a way that makes X an ordeal to read.

In this case, however, I suspect that we’re dealing with someone’s copy-and-paste screw-up: after compiling paragraph 2, the drafter forgot to delete the extraneous raw material after “Liability.” It appears to consist of three components: “for damages,” “that the Company may, at its discretion, participate in the defense or settlement of such claim or suit,” and a superfluous “in,” with offsetting commas. And  no one noticed: when it’s lurking in the midst of the usual sort of gibberish, it’s hard to spot editing-mishap gibberish.

But I’m prepared to have someone tell me that, no, Special Endorsement No. 1 does in fact make complete sense.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.