Friwat v. Koo

Filed 4/13/06 Friwat v. Koo CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Michael M. Anello, Judge. Affirmed.

AFM Petroleum, Inc. (AFM) and Joseph Friwat (collectively, the AFM Parties) appeal the trial court's grant of summary judgment on their breach of contract and related claims against James Koo and Yon Sook Koo (the Koos). The AFM Parties contend that the trial court: (i) erroneously interpreted the contract on which their breach of contract claim is based to include a condition precedent to the Koos' obligations that was never satisfied; and (ii) failed to recognize issues of material fact with respect to their claim that the Koos fraudulently entered into the contracts while never intending to perform. Our evaluation of the AFM Parties' contentions reveals them to be without merit. Consequently, we affirm the judgment.

FACTS

In August 2000, the Koos owned one acre of real property at 680 West San Marcos Boulevard, San Marcos, California (the Koo Property). At that time, Friwat, on behalf of AFM, and James Koo signed a three-page agreement (the Lease/Purchase Agreement) that outlined terms for AFM to lease the Koo Property. The Lease/Purchase Agreement contemplated that AFM would tear down the existing nightclub on the property and construct and operate a gas station and market on the site. Among the terms of the Lease/Purchase Agreement, AFM received a five-year "first right to purchase" the Koo Property at a price of $1,660,000. Paragraph 4 of the Lease/Purchase Agreement provided that the transaction would not become final for 45 days while AFM conducted due diligence, and that the transaction was contingent upon "AFM's successful negotiation with a major oil company for a supply agreement."

After the Lease/Purchase Agreement was signed, AFM sought to obtain a loan to finance its construction of the gas station on the Koo Property. AFM subsequently notified James Koo that AFM's bank would require a security interest in the underlying Koo Property, to which the Koos' interest would be subordinated. In May 2001, the Koos and AFM entered into a 45-page "Ground Lease." The initial recital in the Ground Lease states that the purpose of the Lease/Purchase Agreement was to enable AFM to lease the Koo Property "for the purpose of constructing a gas station, convenience store, [and] quick service restaurant . . . as set forth in this Lease." The Ground Lease contains the following subordination provision (the Subordination Provision):

"The landlord [the Koos] hereby agrees to subordinate his interest in the lease and his fee title to a new first trust deed in any form required by the tenant's lender in an amount not to exceed 100% of all the costs of the improvements and construction for the term of the loan. The landlord understands that this loan will encumber not only the improvements but also the fee title of the land."

The AFM Parties contend that after entering into these agreements, the Koos refused to subordinate their interest in the property as required by AFM's bank; offered to sell the Koo Property to a third party; and later sold the Koo Property to another purchaser.^[1]

At the same time that AFM was negotiating with the Koos, it was also negotiating with the ARCO Products Company (ARCO) to build the proposed gas station on the Koo Property. In September 2002, the AFM Parties and ARCO became embroiled in a legal dispute regarding their respective obligations with respect to these negotiations. In August 2003, the AFM Parties consolidated their various disputes into the instant lawsuit, filing suit against ARCO (named in the lawsuit as BP West Coast Products, LLC), the Koos, and a number of other individuals involved in the various transactions. With respect to the Koos, the AFM Parties alleged causes of action for breach of contract (eighth cause of action), fraud (ninth cause of action), negligent misrepresentation (tenth cause of action), specific performance (eleventh cause of action), and declaratory relief (twelfth cause of action). The Koos moved for summary judgment in June 2004. The trial court granted the Koos' motion and entered judgment in their favor.

DISCUSSION

The AFM Parties challenge the trial court's grant of the Koos' motion for summary judgment with respect to their causes of action for breach of contract, specific performance, fraud and negligent misrepresentation. We consider each of the AFM Parties' contentions below after setting out the appropriate standard of review.

I

Summary Judgment Standards

Under section 437c of the Code of Civil Procedure, a defendant may move for summary judgment by presenting evidence that one or more elements of the plaintiff's cause of action cannot be established. If the defendant makes "a prima facie showing" to this effect, it "causes a shift, and the [plaintiff] is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) To meet that burden, the plaintiff " 'may not rely upon the mere allegations or denials' of [its] 'pleadings . . . but, instead,' must 'set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .' " (Id. at p. 849.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Id. at p. 850.) " 'When opposition to a motion for summary judgment is based on inferences, those inferences must be reasonably deducible from the evidence, and not such as are derived from speculation, conjecture, imagination, or guesswork.' " (Waschek v. Department of Motor Vehicles (1997) 59 Cal.App.4th 640, 647 (Waschek).)

While we review a grant of summary judgment de novo, "de novo review does not obligate us to cull the record for the benefit of the appellant in order to attempt to uncover the requisite triable issues. As with an appeal from any judgment, it is the appellant's responsibility to affirmatively demonstrate error and, therefore, to point out the triable issues the appellant claims are present by citation to the record and any supporting authority." (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 116.) Further, we will not entertain arguments on appeal that were not raised before the trial court. " '[U]nless they were factually presented, fully developed and argued to the trial court, potential theories which could theoretically create "triable issues of material fact" may not be raised or considered on appeal.' " (Peart v. Ferro (2004) 119 Cal.App.4th 60, 70.)

When a ruling on summary judgment concerns the proper interpretation of a contract, that question is a matter of law determined in the first instance by the trial court and de novo by the reviewing court. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866 (Parsons).) Only "[w]here the interpretation of contractual language turns on a question of the credibility of conflicting extrinsic evidence" does it become "the jury's responsibility to resolve any conflict in the extrinsic evidence properly admitted to interpret the language of a contract," precluding summary judgment. (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912-913; 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 741, pp. 827-829.)

II

The Trial Court Did Not Err in Granting Summary Judgment on the AFM Parties'

Breach of Contract and Specific Performance Causes of Action

The trial court granted summary judgment in favor of the Koos on the AFM Parties' contract claims (the eighth and eleventh causes of action), ruling that AFM failed to satisfy a condition precedent to the Lease/Purchase Agreement, and therefore the Koos' obligations under that agreement never became operative.^[2] In reaching this conclusion, the court focused on paragraph 4 of the Lease/Purchase Agreement, which reads:

"Close of escrow shall be contingent upon AFM's successful completion of a forty[-]five (45) day 'free look' due diligence period, to investigate, among other things, city and county preliminary project approval (including CUP [conditional use permit]), Department of ABC [Alcohol and Beverage Control] license approval, financial feasibility, and AFM's successful negotiation with a major oil company for a supply agreement. Both parties are aware that building department and ABC license approvals from the city, county or other agency may take 6 months or longer." (Italics added.)

The AFM Parties challenge the trial court's ruling on two grounds, arguing: (i) that the contractual condition cited by the trial court -- "AFM's successful negotiation with a major oil company for a supply agreement" -- was a due diligence right AFM possessed, not an obligation (i.e., condition precedent) AFM had to perform; and (ii) even assuming such a condition precedent existed, AFM satisfied the condition.^[3]

A. Applicable Principles of Contract Law

The parties do not dispute the applicable principles of contract law. "Under the law of contracts, parties may expressly agree that a right or duty is conditional upon the occurrence or nonoccurrence of an act or event." (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313, citing Civ. Code, § 1434; see also Civ. Code, § 1439 ["Before any party to an obligation can require another party to perform any act under it, he must fulfill all conditions precedent thereto imposed upon himself"].) Such a condition is referred to as a "condition precedent," which "must be performed . . . before the contractual right accrues or the contractual duty arises." (Platt Pacific, at p. 313.) Generally, a party's failure to perform a condition precedent will preclude an action for breach of contract or specific performance of the contract. (Realmuto v. Gagnard (2003) 110 Cal.App.4th 193, 205 (Realmuto) [seller's failure to perform condition precedent "precludes this action against the buyers for specific performance and breach of contract"].) "The existence of a condition precedent normally depends upon the intent of the parties as determined from the words they have employed in the contract." (Ibid.)

B. AFM's Interpretation of the Disputed Language in Paragraph 4 as Merely

Permissive Is an Unreasonable Reading of the Contract Language

The AFM Parties first contend that paragraph 4 does not establish a condition precedent, but merely provides AFM with a series of rights, including the right to cancel the Lease/Purchase Agreement if it had not "successful[ly] complet[ed]" a 45-day due diligence period in which it was "to investigate," among other things, its own "successful negotiation with a major oil company for a supply agreement."

We clarify at the outset that in their appellate briefing, the AFM Parties do not cite or reference any extrinsic evidence in the record to support their interpretation of paragraph 4, contending instead that the issue should be resolved solely by reference to the words of the Lease/Purchase Agreement.^[4] Thus, as there is no contention that interpretation of the contract requires reference to extrinsic evidence, our determination of whether paragraph 4 creates a condition precedent is a pure question of law, as "[i]t is . . . solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence." (Parsons, supra, 62 Cal.2d at p. 865.)

Applying this standard of review, we reject the AFM Parties' interpretation of paragraph 4 on two related grounds of contract interpretation. First, the AFM Parties' reading strains the ordinary meaning of the words used, making the contested provision read in an unnatural and virtually unintelligible manner. (Civ. Code, § 1644 ["The words of a contract are to be understood in their ordinary and popular sense"]; Jenkins v. Valley Oil Co. (1964) 226 Cal.App.2d 41, 45 (Jenkins) ["In California the rule is that 'The terms of a writing are presumed to have been used in their primary and general acceptation,' " quoting Code Civ. Proc., § 1861]; Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 851-852 [" 'A contract must receive such an interpretation as will make it . . . reasonable . . . if it can be done without violating the intention of the parties,' " quoting Civ. Code, § 1643].)^[5]

Second, the AFM Parties' reading of the disputed language renders that language almost entirely meaningless surplusage. (1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 745, 750, pp. 833, 840 [" 'an interpretation [of a contract] which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful or of no effect' "]; Civ. Code, § 1641 ["The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other"].) The AFM Parties' reading, that the provision simply allows AFM to investigate the viability of obtaining a supply agreement, renders many of the terms used (e.g., "successful negotiation" and "major oil company") without significance. In addition, paragraph 4 already includes the broad phrase "financial feasibility" among the matters that AFM was permitted to investigate as part of its due diligence process. Given the inclusion in the Lease/Purchase Agreement of the explicit phrase "financial feasibility," it is unclear why the parties would believe that AFM needed a further contractual provision to allow it to investigate a subset of "financial feasibility" -- a viable supply agreement.^[6]

In stark contrast to the AFM Parties' strained reading of paragraph 4, the trial court's reading -- that "[c]lose of escrow shall be contingent upon AFM's successful completion of a forty[-]five (45) day 'free look' due diligence period . . . and AFM's successful negotiation with a major oil company for a supply agreement" (italics added) -- allows each of the contract terms to assume their "ordinary and popular" meaning and renders none as surplusage. (Civ. Code, § 1644; 1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 745, 750, pp. 833, 840.) Consequently, we agree with the trial court's interpretation of paragraph 4, and reject that urged by the AFM Parties.

At oral argument, counsel for the AFM Parties contended for the first time that paragraph 4 is ambiguous and must be interpreted by reference to extrinsic evidence. Specifically, counsel cited a May 2003 letter in which the Koos offered AFM an opportunity to purchase the Koo Property, as well as unspecified industry practice. As the AFM Parties did not argue this point in their appellate briefing, we deem the contention forfeited. (Kinney v. Vaccari (1980) 27 Cal.3d 348, 356-357, fn. 6 ["An appellate court is not required to consider any point made for the first time at oral argument, and it will be deemed waived"].) Forfeiture is especially appropriate here because the AFM Parties' brief not only does not argue this point, but actually relies on the extrinsic evidence cited to make a contrary contention.^[7]

In sum, because the AFM Parties did not properly present any extrinsic evidence to support their interpretation of paragraph 4, but instead argued that the meaning must be determined solely by reference to the words of the Lease/Purchase Agreement, the interpretation of the language is a pure question of law. (Parsons, supra, 62 Cal.2d at p. 865.) Required to choose between (1) the AFM Parties' interpretation: that the paragraph creates a due diligence right and (2) the Koos' interpretation: that it creates an obligation, we agree with the trial court that the more reasonable interpretation is the latter.

C. There Was No Triable Issue of Fact Regarding Whether AFM Performed the

Condition Precedent

AFM next argues that even if the language regarding a supply agreement in paragraph 4 created a condition precedent, the AFM Parties presented evidence that created an issue of material fact as to whether AFM satisfied that condition. AFM argues that its evidence "demonstrated that Friwat did indeed negotiate with several major oil companies to obtain an oil supply contract." The AFM Parties insist that, contrary to the trial court's reading of the Lease/Purchase Agreement, this negotiation was all that the Lease/Purchase Agreement required.

The AFM Parties' argument relies on inaccurately quoting the contested contract language: The AFM Parties' state that paragraph 4 required only that the AFM Parties " 'successful[ly] negotiate with a major oil company for a supply agreement.' " (Alteration in appellate brief.) In fact, the contract reads that the transaction is contingent upon "AFM's successful negotiation with a major oil company for a supply agreement." (Italics added.) In light of this language, we reject AFM's argument and agree with the trial court that the contract term "successful negotiation" entails something more than simply the initiation of negotiations. To the contrary, the use of the term "successful" to qualify "negotiation" demonstrates the intent of the parties to require AFM to obtain an agreement with a major oil supplier. (Jenkins, supra, 226 Cal.App.2d at p. 45.)

Friwat conceded in his deposition that he never obtained a supply agreement for the proposed station,^[8] a concession that is implicit in the AFM Parties' arguments on appeal. The AFM Parties nevertheless list, without analysis, a handful of "example[s]" of evidence that they assert create an issue of material fact on this question, but none of these items support a reasonable inference that AFM conducted a "successful negotiation with a major oil company for a supply agreement." (Italics added.) (See Waschek, supra, 59 Cal.App.4th at p. 647 [opposition to motion for summary judgment must rely on inferences " 'reasonably deducible from the evidence' "]; see also Williams, supra, 16 Cal.4th at p. 215 [contentions " 'perfunctorily asserted without argument in support' " are not properly before the appellate court].)^[9]

In sum, we conclude there is no merit to the AFM Parties' arguments that: (i) the trial court erred in determining that the Lease/Purchase Agreement contained a condition precedent to the Koos' contractual obligations; or (ii) the trial court erred in determining that no issue of material fact remained with respect to whether AFM satisfied that condition precedent. Therefore, we reject the AFM Parties' challenge to the trial court's grant of summary judgment on the eighth cause of action.^[10]

D. Summary Judgment Was Proper with Respect to the Eleventh Cause of Action

for Specific Performance

As we conclude that summary judgment was properly granted with respect to AFM's breach of contract claim, it follows that summary judgment was also proper with respect to the AFM Parties' eleventh cause of action, the request for specific performance on that contract. (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 49 ["specific performance is a remedy for breach of contract, a cause of action which requires proof the contract was breached"]; Realmuto, supra, 110 Cal.App.4th at p. 204 [noting general rule that " '[a] plaintiff may not obtain specific performance unless he has performed, or offered to perform, all of the conditions precedent required of him by the terms of the contract' "], quoting Evarts v. Johnston (1949) 34 Cal.2d 6, 9.)

III

The Trial Court Did Not Err in Granting Summary Judgment on the AFM Parties'

Fraud/Misrepresentation Claims (Ninth and Tenth Causes of Action)

The AFM Parties next contend that the trial court erred in granting the Koos' motion for summary judgment with respect to the ninth and tenth causes of action for fraud and negligent misrepresentation. The AFM Parties argue that the trial court erred in concluding that no triable issue of material fact existed as to the allegation that the Koos not only failed to perform their contractual obligations, but never intended to perform those obligations -- thereby committing fraud and/or negligent misrepresentation. We conclude that the trial court did not err.

The AFM Parties' fraud/misrepresentation claims mirror their contract claims. The AFM Parties contend that the Koos' alleged breach of the Lease/Purchase Agreement and the related Subordination Provision demonstrate that "[James] Koo did not intend to perform when he made his promise[s]."^[11]

Where, as here, a fraud or misrepresentation claim is predicated on a failure to perform contractual obligations, " 'something more than nonperformance is required to prove the defendant's intent not to perform his promise.' " (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30-31 (Tenzer); Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 481 ["A promise of future conduct is actionable as fraud only if made without a present intent to perform"].)^[12]

The AFM Parties claim to have shown "more than mere nonperformance" by producing evidence that James Koo met with another prospective buyer in an effort to sell the Koo Property in December 2001. As the trial court stated, however, even if this evidence supports an inference that the Koos intended to break their contractual promises in December 2001, that is merely evidence of nonperformance. This evidence says nothing about the Koos' intent at the time they made the contractual promises seven months earlier in May 2001 – the Subordination Provision, or 16 months earlier in August 2000 – the Lease/Purchase Agreement. (Building Permit Consultants, Inc. v. Mazur (2004) 122 Cal.App.4th 1400, 1414 [" 'The mere failure to perform a promise made in good faith does not constitute fraud' "]; Kaylor v. Crown Zellerbach, Inc. (9th Cir. 1981) 643 F.2d 1362, 1368 [affirming grant of summary judgment; under California law, while "fraud may be inferred from an immediate failure to perform a promise," initial compliance with agreement "negates any possible inference of fraud," italics added].)

That the Koos' actions in December 2001 do not support a reasonable inference of fraudulent intent seven months earlier is further established by the fact that significant events transpired during the seven months between the contractual promise and the alleged December 2001 meeting. (Edmunds v. Valley Circle Estates (1993) 16 Cal.App.4th 1290, 1301 [no fraud where nonperformance of promise "evolved naturally from" circumstances].) Specifically, in November 2001, two of the three principals of AFM withdrew from the company and the project, apparently because the City of San Marcos was requiring over $500,000 in additional fees for a permit approving a gas station on the Koo Property. Consequently, the AFM Parties contention that the Koos contracted fraudulently, or without a reasonable belief that they would perform their obligations, relies not on any reasonable inference, but rather on inferences " 'derived from speculation, conjecture, imagination, or guesswork,' " which are insufficient to defeat a motion for summary judgment. (Waschek, supra, 59 Cal.App.4th at p. 647.)^[13]

In sum, because the AFM Parties failed to identify any evidence beyond the Koos' nonperformance many months after the allegedly fraudulent commitment was made, the AFM Parties did not meet their burden of identifying " 'specific facts showing that a triable issue of material fact exists' " on their fraud and negligent misrepresentation claims. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 477; Tenzer, supra, 39 Cal.3d at p. 31 [a fraud claim based on a contractual promise fails "if plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance"].) Consequently, the trial court did not err in granting summary judgment on the ninth and tenth causes of action.

IV

The Trial Court Was Not Required to Grant the AFM Parties' Request for a

Continuance to Pursue Additional Discovery

The AFM Parties' final contention is that the trial court erred in denying their motion for a continuance of the summary judgment hearing. The AFM Parties contend that the trial court was required to grant the motion under Code of Civil Procedure section 437c, subdivision (h) (section 437c(h)).

On September 28, 2004, the AFM Parties filed an ex parte application to continue the summary judgment hearing scheduled for October 8 "pursuant to [s]ection 437c(h)." In this application, the AFM Parties sought extra time to obtain further discovery from the Koos in order to respond to their summary judgment motion. The trial court denied the motion.

The AFM Parties contend that because the affidavits filed in support of its ex parte application for a continuance satisfied the requisite substantive elements of section 437c(h), "a continuance [wa]s mandatory." (See Wachs v. Curry (1993) 13 Cal.App.4th 616, 623.)^[14] While the AFM Parties may be correct that their affidavits satisfied the substantive elements of the section, a continuance was not mandatory under section 437c(h), because the AFM Parties' request did not satisfy the procedural prerequisites of that section.

Under section 437c(h), the trial court shall grant a request for a continuance "[i]f it appears from the affidavits submitted in opposition to a motion for summary judgment . . . that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented . . . ." Under the rule, an "application to continue the motion to obtain necessary discovery may also be made by ex parte motion at any time on or before the date the opposition response to the motion is due." (Ibid., italics added.)

The AFM Parties' request for a continuance did not fall within section 437c(h) because it was not made in the "affidavits submitted in opposition to a motion for summary judgment" or "by ex parte motion at any time on or before the date the opposition response to the motion is due." (See Tilley v. CZ Master Assn. (2005) 131 Cal.App.4th 464, 490-491 [§ 437c(h) does not apply to request for continuance of summary judgment hearing made after due date of opposition to motion]; Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1083 ["the trial court was not required to continue the summary judgment motion under . . . section 437c[(h)], because plaintiffs' continuance request was not included in timely filed opposition to the summary judgment motion"].) Rather, the AFM Parties' request was made by ex parte motion over three weeks after its response to the motion for summary judgment had been filed.^[15] In fact, not only was the AFM Parties' response due prior to its belated request for a continuance, but were it not for the trial court's continuing the summary judgment hearing on its own motion on September 16, 2004 (the day before that hearing was then scheduled), the AFM Parties' request for a continuance would have come 12 days after the hearing itself. As the AFM Parties' section 437c(h) motion was procedurally defective, the trial court properly denied the motion.

DISPOSITION

Affirmed.

IRION, J.

WE CONCUR:

McDONALD, Acting P. J.

McINTYRE, J.

^[1] The record is ambiguous as to the exact breach of contract alleged by the AFM Parties. At oral argument, counsel for the AFM Parties clarified that the breach they allege is specified in their Separate Statement of Facts filed in the trial court, which states "Koo rejected Friwat's exercise of his 'First Right to Purchase' [in the Lease/Purchase Agreement] for $1,660,000." According to the AFM Parties, Friwat received a letter from the Koos in May 2003 which "demand[ed] that he exercise the right to purchase included in the Lease/Purchase [A]greement" by June 30, 2003, and informed Friwat that "Koo had unilaterally terminated the Lease/Purchase [A]greement." The AFM Parties contend that the Koos breached the Lease/Purchase Agreement by this letter and/or by failing to honor AFM's June 26 response to this letter, which announced that AFM was "exercising its first right to purchase under the Lease/Purchase [A]greement."

^[2] The trial court also ruled that Friwat (as opposed to AFM) did not have standing to sue for breach of the Lease/Purchase Agreement, because he signed the Lease/Purchase Agreement on behalf of AFM, not as an individual. Although Friwat's brief includes a table of contents subheading that states "Friwat Raised Triable Issues of Material Fact Concerning His Standing," the brief does not contain any corresponding argument section or any argument on this issue, and therefore any such claim is forfeited. (People v. Williams (1997) 16 Cal.4th 153, 215 (Williams) [contentions " 'perfunctorily asserted without argument in support' " are not properly before appellate court].)

^[3] The breach alleged by the AFM Parties against the Koos in their complaint is that the Koos "breached the [Lease/Purchase A]greement by failing to subordinate" to "AFM's[] new financing." Both in the trial court and on appeal, however, the parties briefed and argued the case, and the trial court ruled, as if the breach pled was a breach of the Lease/Purchase Agreement's "first right to purchase" the Koo Property. Therefore, the Koos have forfeited any argument that the AFM Parties failed to properly allege a breach of the Lease/Purchase Agreement's purchase provision, and we address the contractual breach briefed by the parties as if properly pled. (See Stalnaker v. Boeing Co. (1986) 186 Cal.App.3d 1291, 1302.)

^[4] The AFM Parties contend that "the words the parties used in Paragraph 4 reasonably suggest only a single meaning"; "[t]he words that the parties to the Lease/Purchase [A]greement employed in the contract do not support the trial court's interpretation of Paragraph 4 as conditions precedent to the Koo's performance"; and that "[t]he trial court read Paragraph 4 in an illogical manner that was clearly inconsistent with the intent of the parties as expressed in the writing."

^[5] AFM presents no argument that the terms "investigate" or "successful negotiation" as used in the Lease/Purchase Agreement have a technical meaning not apparent from the context of the Lease/Purchase Agreement itself. (See Code Civ. Proc., § 1861.)

^[6] We also note that the AFM Parties' contention that paragraph 4 granted AFM a series of rights without obligations is inconsistent with their position in the trial court, where they acknowledged that the language created a supply agreement obligation, but argued that they fulfilled that obligation. (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 29 [party who opposed summary judgment on one ground may not appeal on a different ground as it "would be manifestly unjust to the opposing parties, unfair to the trial court, and contrary to judicial economy to permit a change of theory on appeal"]; People v. Pijal (1973) 33 Cal.App.3d 682, 697.) Specifically, the AFM Parties contended in their opposition to the Koos' summary judgment motion that: "The [Lease/Purchase A]greement is very simple and only states that [AFM] would have to successfully negotiate a supply agreement with a major oil company." (Italics added.) This argument tracked the language of Friwat's declaration regarding the meaning of paragraph 4.

^[7] While counsel for the AFM Parties contended at oral argument that the May 2003 letter provided evidence that the Koos themselves thought the Lease/Purchase Agreement was still in effect despite AFM's purported failure to perform the condition precedent, the AFM Parties' appellate briefing contends the opposite -- that the May 2003 letter evidenced the Koos' unilateral repudiation ("unilateral[] terminat[ion]") of the Lease/Purchase Agreement.

^[8] In this testimony, excerpted in the trial court's order granting summary judgment, Friwat concedes that he never obtained a supply agreement for the station, and explains that he did not want such an agreement because without a supply agreement, he would be "free to buy from whoever I want," a flexibility that would enable him to obtain a better price than if he were locked into an agreement with any one supplier.

^[9] Despite the AFM Parties' failure to explain the significance of the evidence they reference, we have independently reviewed the documents cited -- which the AFM Parties refer to as a "franchise agreement" Friwat signed with ARCO, a "loan commitment" from ARCO, and a "supply proposal" from Valero. As the trial court ruled, the only documents among the evidence cited that could arguably support a contention that AFM successfully negotiated a supply agreement are dated months after the instant litigation was commenced, and thus do not create a triable issue of fact with respect to whether the AFM Parties satisfied the condition precedent prior to the contract breach alleged.

^[10] As we rule that the trial court properly granted summary judgment with respect to AFM's failure to satisfy the condition precedent related to the supply contract, we do not address the parties' arguments with respect to other asserted conditions precedent, or the Koos' alternative arguments with respect to the eleventh cause of action, the claim for specific performance.

^[11] In support of his motion for summary judgment, the Koos submitted James Koo's declaration stating that he intended to perform his obligations under the contracts at the time he entered into those contracts, thus creating a prima facie showing that, contrary to the AFM Parties' contentions, the Koos did not commit fraud or negligent misrepresentation. This shifted the burden of production to the AFM Parties to produce evidence that the Koos did not intend to perform, creating a triable issue of material fact. (Aguilar, supra, 25 Cal.4th at p. 850; Terry v. Atlantic Richfield Co. (1977) 72 Cal.App.3d 962, 971 ["summary judgment is proper if the declarations of the moving party state facts which justify a judgment in his favor and the counterdeclarations do not supply evidence to create a triable issue of fact"].)

^[12] More generally, the elements of a fraud claim are: false representation as to a material fact, knowledge of its falsity, intent to defraud, justifiable reliance and resulting damage. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331, citing Gonsalves v. Hodgson (1951) 38 Cal.2d 91, 100-101.) These same elements comprise a cause of action for negligent misrepresentation, except that for a negligent misrepresentation claim, the defendant need not have made the false statement knowing it to be false, as long as it was made without reasonable grounds for a belief in its truth. (Century Surety Co. v. Crosby Ins., Inc. (2004) 124 Cal.App.4th 116, 129.)

^[13] On appeal, the AFM Parties also allude to a February 2002 meeting to support their contentions. According to Friwat's declaration (the cited source of the evidence regarding this meeting), James Koo and Friwat reached agreement on the terms of subordination (which had been left out of the initial Lease/Purchase Agreement) at this meeting but disagreed about the collateral required and so did not reach ultimate agreement. The AFM Parties fail to explain how this meeting, which took place nine months after James Koo signed the Subordination Provision and at which there was apparently some progress made on subordination, supports an inference that "[James] Koo did not intend to honor his commitment to subordinate when he made the commitment."

^[14] Section 437c(h) states: "If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just. The application to continue the motion to obtain necessary discovery may also be made by ex parte motion at any time on or before the date the opposition response to the motion is due."

^[15] The AFM Parties do not respond to the Koos' argument that the continuance motion was untimely under section 437c(h). This is reason enough to reject the AFM Parties' contentions on this issue. (See Paterno v. State of California (1999) 74 Cal.App.4th 68, 102) [appellant is not permitted "to place upon the court the burden of discovering without assistance from appellant any weakness in the arguments of the respondent"].)