ECB USA, Inc. v. Chubb Insurance Co. of New Jersey: More Comma Sadness

If there’s one thing I’ve learned, it’s that you’d have to look far and wide to find a judge who has a clue about commas.

Thanks to the opinion in ECB USA, Inc. v. Chubb Insurance Co. of New Jersey, No. 20-20569-CIV, 2021 WL 5989230 (S.D. Fla. Dec. 17, 2021) (PDF here), we have further reason for despair in that department.

Here, the court states the language at issue, from an insurance policy:

In relevant part, the 2017-18 Policy provided coverage for claims related to “Management consulting services,” which are defined as “services directed toward expertise in banking finance, accounting, risk and systems analysis, design and implementation, asset recovery and strategy planning for financial institutions.”

The question was whether the policy covers only management consulting services for financial institutions. In other words, does “for financial institutions” modify just “asset recovery and strategic planning,” or does it modify the entire list? (In other words, we’re dealing with syntactic ambiguity, which involves confusion over what modifies what.) This confusion matters because everyone agreed that the litigation didn’t concern accounting services for a financial institution.

The court summarized each party’s position (citations omitted):

The Defendants argue that covered accounting services must be provided to a financial institution, pointing to the series-qualifier canon, which holds that a modifier (here, “for financial institutions”) at the end of a series of nouns or verbs “normally applies to the entire series.” The Plaintiffs argue that the series-qualifier canon only applies where there is a comma before the modifier—therefore, as there is no comma before “for financial institutions,” the Plaintiffs argue that clause only qualifies the phrase immediately preceding it (namely, “asset recovery and strategy planning”).

And here’s what the court held:

The Court finds that the phrase “for financial institutions” modifies the entire series, meaning that “management consulting services” is defined as the provision of “services directed towards expertise in … accounting … for financial institutions.”

Here’s my take:

We can ignore the defendants’ position. Here’s what I say about the “series-qualifier canon” in this August 2020 post:

Regarding the series-qualifier canon, I defer to Neal Goldfarb, who says, in this tweet, “The most serious problem is that the Series-Qualifier Canon is made up. There was no such canon previously.” According to Goldfarb, it was made up by Scalia and Garner in Reading Law: The Interpretation of Legal Texts. See his blog post on the subject here.

And we can ignore the plaintiffs’ position too. They’re in effect invoking what I call “the comma test” under the canon of construction known as the rule of the last antecedent. I cheerfully demolished that notion in this 2015 law-review article. Early in ECB USA, the judge says how insurance can result in disputes over wording “where, as here, the meaning of one phrase and the placement (or omission) of one comma can make the difference between coverage and nothing.” I challenge you to find a halfway-competent writer who thinks putting a comma before “for financial institutions” would accomplish anything.

That leaves us with the judge’s holding. He makes no attempt to explain his decision. Perhaps he tossed a coin. So instead, here’s my take.

Consider this:

“Retail Services” means services relating to expertise in sale of food, vitamins, grooming equipment, clothing, and beds for dogs.

Like one of the litigants in ECB USA, I could claim that “for dogs” modifies just “beds”. But it would be odd to have a retail operation that sells food, vitamins, grooming equipment, and clothing for all sorts of users but for some reason sells beds only for dogs. So the more sensible reading is that everything is for dogs. I think the same logic applies in ECB USA. Is that a sufficient basis for resolving a dispute? Dunno. I leave that to others.

But drafters—by all that is holy, don’t create syntactic ambiguity! To see what a nuisance it is, go here and marvel at all the fights it causes. The fix is for you to consult the chapter on syntactic ambiguity in A Manual of Style for Contract Drafting. And wouldn’t you know it, thanks to WordRake, you can download a PDF of that chapter by going here. Ain’t life grand!

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.