Avoiding Pitfalls When Using Lists in Legal Documents
In their Financing column, Jeffrey B. Steiner and Jason R. Goldstein discuss the potential for unintended consequences resulting from the misuse of list-qualifying phrases such as "i.e." "e.g." and "including," and advise legal drafters to use caution before using them in legal documents.
January 16, 2018 at 01:22 PM
7 minute read
Legal drafting can be a tricky business and care must always be taken to avoid unintended consequences. One area that is ripe for potential mistakes is the inclusion of lists within legal documents. In each case, drafters should be sure to understand the terms they use to qualify such lists, many of which terms are derived from Latin, and be thoughtful about which terms they employ in different circumstances.
Two widely utilized Latin phrases in the context of qualifying lists within legal documents are “id est” (abbreviated as “i.e.”) and “exempli gratia” (abbreviated as “e.g.”). According to Black's Law Dictionary, “id est” means “that is,” which implies a complete list. “Exempli gratia,” on the other hand, means “for example,” which implies a partial list. Thus, in general, qualifying a list with “i.e.” means that the list is exhaustive and leaves no room for other examples, whereas qualifying a list with “e.g.” means that the list is incomplete and leaves room for other examples that are not specifically listed.
In the real estate finance industry, for example, loan agreements typically contain restrictions on borrowers' ability to transfer collateral, and much negotiation occurs around the language used to implement these restrictions. One exception to the generally restrictive rule is the ability, without the consent of the lender, to permit a transfer to “an immediate family member (i.e., parents, spouses, siblings, children or grandchildren).” Lenders amenable to allowing borrowers some latitude with respect to a borrower's estate planning need to carefully circumscribe any such exception. In the foregoing quoted example, the use of “i.e.” in such context defines with particularity the entire universe of people who constitute immediate family members. If “e.g.” were used instead, a borrower could potentially transfer, in the estate planning context, to a more-distant relative (such as a cousin) whose identity the lender was previously unaware and whom lender had not vetted.
Deemed Consent Provisions
Real estate lenders also often agree to include deemed consent provisions in their loan agreements allowing a borrower to proceed with an action that would otherwise require lender's affirmative approval (such as entering into a lease) if lender fails to respond to within a specified number of days. A common example of a such a provision may state that if a lender “does not provide a substantive response (e.g., approval, denial or request for clarification or more information) to such request for approval in writing within ten (10) days, then lender's approval shall be deemed granted.” In this example, “e.g.” denotes an incomplete list, leaving open the possibility that the lender could provide another type of response that is not necessarily listed (such as a conditional approval requiring the borrower to cure a default or make certain repairs at the subject property that may be related to the lease at issue) to avoid the effect of a lender's failure to respond. If the provision used “i.e.” here instead of “e.g.,” the lender could be limited in the universe of responses it could make to such a request if it wanted to avoid the granting of deemed consent.
“i.e.” v. ”e.g.”
Unfortunately, “i.e.” and “e.g.” are often misused, which can lead to ligation between the parties. In Dibble v. Fenimore, 545 F.3d 208 (2008), the U.S. Court of Appeals for the Second Circuit noted that “[a]n unfortunate fact of modern American linguistic practice is that many Americans confuse 'i.e.' and 'e.g.'” In that case, the court decided, based on examinations of the context of the provision at issue, that the use of “e.g.” instead of “i.e.” in their fact pattern “was merely a slip,” and the court effectively replaced “e.g.” with “i.e.” to effectuate what it deemed to be the drafters' true intent. Courts have reached similar results in the other direction, broadening the meaning of “i.e.” to reflect “e.g.” instead. In Rubenstein Bros. v. Ole of 34th Street, 101 Misc.2d 563 (1979), for example, the New York City Civil Court held that “[t]he 'i.e.' (id est) in context has to be given the broader meaning of 'e.g.' (exempli gratia)” in connection with its interpretation of a use restriction within a lease.
While some courts, like those that decided Dibble and Rubenstein have found ways to correct drafting errors involving the misuse of “i.e.” and “e.g.” through tortured interpretations that actually give these terms the opposite meanings, it would behoove all drafters to understand and implement these terms correctly because not all courts have come down on the side of helping drafters out of their mistakes. In Federal Trade Commission v. EDebitPay, 695 F.3d 938 (2012), for example, the U.S. Court of Appeals for the Ninth Circuit rejected defendants' argument that the use of “e.g.” in a stipulated final order was intended to limit a list to only the specifically-identified examples and affirmed the district court's decision to apply such order to an unlisted situation.
“Including”
Another list-qualifying concept that is pervasive in legal drafting is the use of the decidedly less Latin word, “including.” A common understanding of this term is that it indicates an incomplete list of examples, and the cannon of ejusdem generis, which, according to Black's Law Dictionary, means “of the same kind or class,” has been used by courts to interpret lists qualified by the word “including” as being limited to the listed items and items that have similar characteristics to those listed. For example, the court in In re Enron Creditors Recovery Corp., 370 B.R. 64 (2007), in consideration the definition of “corporation” within a 1987 indenture, which provided that the term corporation “includes” a list of organizational forms that followed, ruled that “[t]he use of the term 'includes' often operates as a nonrestrictive modifier which indicates that the list that follows is not exhaustive but, rather, illustrative of the types of items intended to be included.” However, the court in Schauf v. City of New York, 23 Misc.2d 585 (1960), granted defendants' motion to dismiss plaintiff's claim of negligence associated with the lack of a handrail in the area where plaintiff fell and injured herself. In considering whether defendants had a duty to install handrails, the Schauf court determined that the definition of “stair” within the Multiple Dwellings Law, which stated “[a] 'stair' includes the stair landings, and those portions of a public hall through which it is necessary to pass in going between the entrance floor and the roof,” that “[t]he word 'includes' must be construed as eliminating any other area,” including handrails.
As a result, drafters who intend their lists to be expansive in nature often prefer to use further-qualifying phrases like “including without limitation” in an attempt to avoid having a court impose a restrictive interpretation on their use of the word “including.” In Greathouse v. JHS Security, 2015 WL 7142850 (2015), the U.S. District Court for the Southern District of New York disagreed with the U.S. Court of Appeals for the Eleventh Circuit's restrictive interpretation of a statutory list based on ejusdem generis even though it contained the words “including without limitation,” stating “[w]e respectfully disagree with [Snapp v. Unlimited Concepts, 208 F.3d 298 (2000)] as we believe it… accords too much weight to the principle of ejusdem generis given the statute's reference to the forms of relief listed as being 'without limitation.'”
Conclusion
Given the potential for unintended consequences resulting from misuse of these list-qualifying phrases, legal drafters should always use caution and be sure to fully-understand their meanings (and local courts' treatment) before using them in legal documents.
Jeffrey B. Steiner and Jason R. Goldstein are members of DLA Piper. Sean S. Thorsen, an associate at the firm, assisted in the preparation of this article.
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