In legal drafting, precision isn’t just preferred—it’s pivotal. A recent decision from the Fifth Circuit Court of Appeals in Paloma Resources v. Axis Insurance Company reminds us that even the smallest grammatical choices can reshape the outcome of a case. The culprit? A single determiner: “the.”
The Case: Insurance Coverage Hinges on Grammar
Paloma Resources sought coverage from Axis Insurance for defense and settlement costs related to a suit alleging theft of confidential information. Axis denied coverage based on an intellectual property exclusion clause. The clause listed excluded claims, including “any actual or alleged infringement of copyright, patent, trademark… or the misappropriation of ideas or trade secrets, or the unauthorized disclosure of or access to confidential information.”
Paloma argued that the insertion of “the” before “misappropriation of ideas” broke the grammatical series, invoking the series-qualifier canon. This canon holds that adjectives like “actual or alleged” only change items in a series if there are no intervening modifiers. The Fifth Circuit agreed, finding the provision ambiguous and remanding the case.
Why It Matters for Contract Drafters
This isn’t just a grammar lesson—it’s a cautionary tale. The court’s ruling highlights how determiners like “the,” “a,” or “an” can change the scope of contractual obligations. Here, the ambiguity favored the insured, illustrating the principle that unclear language is construed against the drafter. When drafting contracts, this decision reinforces the need to use bullet points or formatting to clarify intent.
Practical Takeaway for Massachusetts Businesses
Whether you’re negotiating a commercial lease, insurance policy, or vendor agreement, don’t underestimate the power of small words. A well-placed article can protect—or jeopardize—your rights. Make sure your contracts say what you mean—clearly, consistently, and grammatically.