Merced County Sheriff’s Employees Association v. County of Merced

California Court of Appeal · Contracts

ContractsMutual assentAmbiguityInterpretation of written agreementsmutual assentobjective theoryambiguitymeeting of the minds

Facts

The County negotiated separate MOUs with the Sheriffs Association and the Firefighters' Association concerning salary increases over three years beginning July 1, 1985. In the Sheriffs MOU, paragraph 7c referred to percentages and stated that those percentages were to be applied to the actual differential determined by the survey; the Sheriffs Association understood this to mean percentages of the difference between Merced salaries and the survey average, while the County believed the percentages applied to the survey average itself. Evidence showed County negotiator Wellman calculated a projected raise using 90 percent of the salary differential, and County counsel Gnass approved the final written language drafted by the Sheriffs Association. The Firefighters MOU copied the same first sentence but added three sentences stating the engineers' salary range would approximate stated percentages of the Deputy Sheriff II average in the survey area, creating a direct conflict within paragraph 7d, while discussions also reflected an intent that firefighters remain 5 percent behind deputies.

Issue

Whether the Sheriffs MOU and the Firefighters MOU contained enforceable salary provisions despite disputed meanings. Specifically, the court had to decide whether the Sheriffs salary formula should be enforced according to the Sheriffs Association's interpretation, and whether the Firefighters salary formula was enforceable despite contradictory language.

Rule

Mutual assent is determined objectively by the parties' outward manifestations rather than their unexpressed subjective intent. If parties attach materially different meanings to their manifestations and neither party knows or has reason to know the other's meaning, or both do, no contract is formed; but if one party has no reason to know of the other's meaning and the other has reason to know of the first party's meaning, the contract is operative according to the first party's meaning. Interpretation of a written instrument is a judicial function unless it turns on credibility conflicts in extrinsic evidence.

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In Sacramento, North Valley Transit Authority and the Metro Operators Guild signed a wage memorandum providing that raises would be 80%, 90%, and 100% of “said average,” followed by a clause stating that those percentages were “to be applied to the actual differential shown by the regional survey.” During bargaining, the authority’s lead negotiator worked out an example by multiplying the current pay gap by 80%, but later the authority claimed it meant 80% of the survey average itself.

If the union seeks enforcement, how should a court most likely rule?

Explanation. Mutual assent is judged objectively from outward manifestations, not hidden intent. Even if the language were ambiguous, the contract is operative according to one party’s meaning when that party had no reason to know of a different meaning and the other party had reason to know the first party’s meaning. Here, the express reference to applying percentages to the “actual differential” plus the negotiator’s worked example gave the authority reason to know the union’s meaning, while the authority’s internal understanding was not communicated. (Derived from Merced County Sheriff’s Employees Association v. County of Merced (n.d.).)