Pelopidas, LLC v. Keller: An Opinion Showing How Courts and Litigators Might Use “A Manual of Style for Contract Drafting”

Yesterday I learned of an opinion—hot off the presses—of the Missouri Court of Appeals, Eastern District, Division One, by Judge Kelly C. Broniec. The case is Pelopidas, LLC v. Keller, No. ED 109395, 2021 WL 3501988 (Mo. Ct. App. 10 Aug. 2021) (PDF here).

This opinion concerns Keller’s appeal of a lower court decision interpreting the following sentence from a settlement agreement:

Plaintiff’s stock shall be surrendered/sold, escrowed and pledged back to plaintiff.

In granting summary judgment against Keller, the lower court held that Keller had transferred the stock on the date of the settlement agreement. On appeal, Keller contended that the sentence at issue provides for transfer at some future date. (So this is another case involving that classic source of uncertainty, whether a transfer took place when the contract was signed or was to take place at some point in the future. I did this blog post just a few days ago about another case raising that issue.)

In addressing this question, the court began as follows:

In her briefing to this Court, Keller primarily relied on the A.B.A’s A Manual of Style for Contract Drafting, a highly regarded authority on contract drafting. See Kenneth A. Adams, A Manual of Style of Contract Drafting (4th ed. 2017) [hereinafter Manual of Style].

The court then devoted more than 300 words to MSCD‘s treatment of language of performance and language of obligation and the role of shall, before turning to caselaw and dictionaries. Concluding that Keller’s interpretation was the correct one, the court reversed the lower court’s decision.

This all seems straightforward enough, except it’s the first time a court has cited in any detail MSCD‘s categories-of-contract-language analysis. And more generally, this might be the first time a court has so clearly shown that it has relied on MSCD. My work has been cited by courts, notably by the Delaware Chancery Court (see for example this 2020 blog post), but without getting into much detail.

For many issues relating to the building blocks of contract language, most notably verb structures and the many forms of ambiguity, MSCD offers the only systematic analysis. For courts, the choice is between relying on MSCD and more or less winging it. It’s clear which is the better choice, but I suspect that most courts aren’t aware they have a choice because they aren’t aware of MSCD. So we see textual interpretation train wrecks of the sort I describe in this 2020 blog post.

If courts don’t cite MSCD as much as they should, a likely contributing factor is that most litigators aren’t aware of it either and so don’t consult it when trying to make sense of confusing contract language and don’t cite it in their pleadings.

Why don’t courts and litigators know more about MSCD? Probably because the transactional world and the world of litigation don’t mix much. And MSCD isn’t on any of the online services, ruling them out as a source of chance encounters with MSCD. I’m out there spreading the word as much as I can, and people often remark that it’s hard to google basic contract language without having my stuff show up, but evidently that gets you only so far.

Given that all this makes Pelopidas, LLC v. Keller noteworthy for me, I got in touch with the lawyer who represented Keller—John Kingston, a partner in the St. Louis, Missouri, office of Thompson Coburn LLP. Here’s what he said in an email to me:

I’m happy to sing your book’s praises. Your email message is great because a partner of mine was asking yesterday where I came up with the notion of relying on your book. I’d expect more Missouri citations. Big picture: I think your book fills a gap for secondary sources on contract fights. Dictionaries help with words and the Restatements help with principles of law; your book really helps with interpreting based on structure and syntax.

I’m a litigator so I don’t draft many contracts. But I do occasionally draft some contracts and I fight about lots. I have had a copy of an old version of your book on my shelves for years. I actually got the new one specifically for this appeal because your discussion of language of performance versus language of obligation perfectly illustrated one of our arguments here. My honest view is that your book is not as well known as it should be. It’s super helpful. It’s clear from the opinion that the court referred to its own copy as well.

So John’s views match my own: courts and litigators would find MSCD helpful, but most are unaware of it. In the 2020 blog post on textual interpretation that I link to above, I suggest programs to train court personnel and litigators in textual interpretation. That might require applying for grants or getting sponsorship.

Meanwhile, I’m happy to regard Pelopidas, LLC v. Keller as a promising sign. I tip my hat to Judge Broniec and John Kingston for their imagination.