Prospect Partners v. Apple Annie’s Porterville
Filed
7/10/13 Henderson Prospect Partners v.
Apple Annie’s Porterville CA5
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
HENDERSON PROSPECT PARTNERS,
L.P.,
Plaintiff and
Appellant,
v.
APPLE ANNIE’S PORTERVILLE, INC.
et al.,
Defendants and
Respondents.
F064203
(Super.
Ct. No. 10-235927)
APPEAL from
a judgment of the Superior Court of
County. Paul A. Vortmann, Judge.
Caswell,
Bell & Hillison, Robert K. Hillison and Kimberly L. Mayhew for Plaintiff
and Appellant.
Horswill,
Mederos & Soares and Joseph F. Soares for Defendants and Respondents.
-ooOoo-
Appellant
Henderson Prospect Partners, L.P., challenges the trial court’s ruling that
respondents, C. Mark Anderson and Charles Zandberg, were not personally liable
for performance of a lease entered into by appellant and Apple Annie’s of
Porterville, Inc., a corporate tenant.
This lease was signed by four individuals on behalf of Apple Annie’s,
William T. Brown, as president, Paul D. Beilstein, as secretary, and Anderson
and Zandberg. Because Anderson and
Zandberg did not identify themselves as agents of the corporation, appellant
contends that they are personally liable under the lease. Appellant further argues that the lease is
unambiguous and therefore the trial court erred in admitting
and Zandberg’s capacity.
Contrary to
appellant’s position, the signatures on the lease were ambiguous. Therefore, the extrinsic evidence was
admissible. Further, the trial court’s
finding that Anderson and Zandberg signed the lease on behalf of the
corporation is supported by substantial evidence. Accordingly, the judgment will be affirmed.
BACKGROUND
In 2002,
William Brown, the owner and operator of Apple Annie’s Restaurant in Tulare,
contacted appellant’s general partner, David Paynter, regarding restaurant
space in Porterville. The two eventually
reached an oral agreement. Thereafter,
Brown formed Apple Annie’s of Porterville, Inc. (Apple Annie’s), to enter into
a lease with appellant. The corporate
directors were Brown, Paul Beilstein, Anderson, Zandberg and Jose Perdamo.
A lease
agreement “by and between Henderson-Prospect Partners, L.P., a California
limited partnership (‘Landlord’), and Apple Annie’s Porterville, Inc.
(‘Tenant’)†was prepared by David Paynter’s wife, Robyn Paynter. The signature block on the lease designates
the landlord as Henderson-Prospect Partners, L.P. with a signature line below
for David H. Paynter, general partner.
The tenant is identified as Apple Annie’s Porterville, Inc. with
signature lines below set out in two columns.
Directly below are signature lines for Brown and Beilstein and below and
to the right are signature lines for Anderson and Zandberg. Under the signature block the lease states:
“If Tenant shall be a CORPORATION, the authorized
officers must sign on behalf of the Corporation and indicate the capacity in
which they are signing. This Lease must
be executed by the president or Vice-President and the Secretary or
Assistant Secretary unless the Bylaws, or a resolution of the Board of
Directors, shall otherwise provide, in which event the Bylaws or a certified
copy of the resolution, as the case may be, must be attached to this
Lease. ALSO, the appropriate
corporate seal must be affixed.â€
Robyn
Paynter sent the lease to Brown for signature.
Brown signed the lease and forwarded it to Anderson, Beilstein and
Zandberg, with instructions that the last of them to sign was to send the lease
back to appellant. Handwritten after
Brown’s name was “President†and handwritten after Beilstein’s name was
“Secretary.â€
The lease
also had an addendum setting forth additional terms of the tenancy. The addendum was signed by the same
individuals who signed the lease but the signatures on behalf of Apple Annie’s
did not indicate the capacity of Brown and Beilstein as president and
secretary.
Before the
executed lease was returned to appellant, Robyn Paynter prepared a document
that revised portions of appellant’s standard lease form. These proposed modifications reflected minor
changes to the lease that did not affect the economic terms. This modification did not include the first
page of the lease setting forth the fundamental lease provision, the addendum
or the exhibits. It did, however,
include the same signature block. Robyn
Paynter instructed Brown to make the revisions to the lease that he already had
in his possession and return it for final signature by appellant.
Because
Brown had already forwarded the lease to the others for signature, he called
Robyn Paynter and asked what he should do.
Robyn Paynter told Brown to go ahead and sign the modification and
return it. Brown testified that, when he
asked for clarification as to signatures, Robyn Paynter indicated that, because
Apple Annie’s was a corporation, only the president and secretary were required
to sign.
After
receiving the executed lease from Apple Annie’s, David Paynter signed the lease
on behalf of appellant on November 15, 2002.
The trial court found that the proposed modified lease, which was signed
only by Brown and Beilstein, was also returned to appellant. However, appellant never executed this
proposed lease.
In November
2008, Apple Annie’s breached the lease.
Appellant filed a complaint seeking damages from Apple Annie’s, Anderson
and Zandberg. Appellant alleged that
Anderson and Zandberg were personally liable on the lease.
Following a
court trial, the court ruled in favor of appellant against Apple Annie’s. However, the court also found in favor of
Anderson and Zandberg. The court
concluded that Anderson and Zandberg signed the lease as agents for Apple
Annie’s and therefore were not personally liable for breach of that lease. In reaching this decision, the court
determined that the signature block was uncertain and thus admitted parol
evidence to interpret the lease.
DISCUSSION
The issue
in this case is whether the trial court correctly interpreted the lease to find
that Anderson and Zandberg were not personally liable for breach and, in making
this finding, properly admitted parol evidence.
The precise meaning of a lease
depends on the parties’ expressed intent, using an objective standard. (Golden
West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 21.) If the lease is ambiguous, parol or extrinsic
evidence is admissible to ascertain this intent. (WYDA
Associates v. Merner (1996) 42 Cal.App.4th 1702, 1710 (WYDA Associates).)
In deciding whether to admit parol
evidence, the court engages in a two-step process. (Appleton
v. Waessil (1994) 27 Cal.App.4th 551, 554.)
The court first reviews the proffered material regarding the parties’
intentions to determine “‘ambiguity,’ i.e., whether the language is ‘reasonably
susceptible’ to the interpretation urged by a party. If in light of the extrinsic evidence the
court decides the language is ‘reasonably susceptible’ to the interpretation
urged, the extrinsic evidence is then admitted to aid in the second
step—interpreting the contract.†(
1159, 1165 (Winet).)
The trial
court’s ruling on whether an ambiguity exists is a question of law and thus is
subject to independent review. The trial
court’s construction of the ambiguity is also a question of law if either no
parol evidence is admitted or the parol evidence is not in conflict. (WYDA
Associates, supra, 42 Cal.App.4th at p. 1710.) However, when the parol evidence is in
conflict, any reasonable construction of the writing will be upheld as long as
it is supported by substantial evidence.
(Winet, supra, 4 Cal.App.4th
at p. 1166.)
evidence.
In general,
an officer or director of a corporation who signs a contract in his or her own
name, without qualification and without disclosing the existence of the
corporation, is personally liable on such contract. (Otis
Elevator Co. v. Berry (1938) 28 Cal.App.2d 430, 432 (Otis Elevator); Carlesimo v.
Schwebel (1948) 87 Cal.App.2d 482, 486 (Carlesimo).) In this situation, extrinsic evidence is not
admissible to prove that the officer or director acted solely as agent and was
not a party to the contract. (
p. 432.) “‘When one makes a written
contract, intending to act therein as the agent of another, and to bind his
principal, it is necessary that it should appear in the contract itself, that
he acts as such agent.’†(
539.)
However,
where the contract itself contains some phrase or provision that shows that an
agent, who has signed his or her own name unqualifiedly, was acting in a
representative capacity, the agent may introduce extrinsic evidence to show
that he or she is not a party to the contract.
(Carlesimo, supra, 87 Cal.App.2d
at p. 487.) This situation may arise
based on the arrangement of names on the contract. (Id.
at p. 489.) For example, where the
document discloses that the corporation is a party to the contract and where
the unqualified signature of the agent is directly below the corporate name, it
would appear that the agent was signing for the corporation. At a minimum, the signature is ambiguous and
therefore parol evidence is admissible to explain it. (Id.
at p. 488.)
Here, it is
clear from the lease that Apple Annie’s was a party. Apple Annie’s is identified as the
tenant. The only other party named in
the lease is appellant. Further, the
arrangement of the names on the lease indicates that the individuals, including
Anderson and Zandberg, were signing for Apple Annie’s. The four signature lines are below “Apple
Annie’s Porterville, Inc.†Although the
signature lines for Anderson and Zandberg are below and to the right of the
corporate name instead of directly below, that placement does not, in and of
itself, demonstrate that Anderson and Zandberg were parties to the lease. Rather, at the very least, these signatures
are ambiguous. Accordingly, the trial
court properly admitted parol evidence.
3. Substantial
evidence supports the trial court’s finding that Anderson and Zandberg are not
personally liable under the lease.
As noted
above, the parties’ expressed intent
determines the meaning of a lease. David
Paynter testified that it was his intent, on behalf of appellant, that all four
individuals who signed the lease would be personally liable. Both Anderson and
Zandberg testified that they believed they were signing the lease on behalf of
the corporation. However, David Paynter
had no contact with either Anderson or Zandberg. Moreover, based on Apple Annie’s being the
sole tenant under the lease and the signatures of the four individuals being
below the corporate name, the lease itself is unclear on this issue. There is nothing expressed in the body of the
lease indicating the intent to bind any party other than Apple Annie’s. Accordingly, the undisclosed intents
testified to by Paynter, Anderson and Zandberg are not determinative. (Roden
v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 629.)
When Robyn
Paynter drafted the lease on behalf of appellant, she did not include the
corporate capacities for the individuals she listed under Apple Annie’s
Porterville, Inc. However, it is clear
from the lease that the corporation was the contracting party. Further, the lease requires that, if the
tenant is a corporation, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. Thus, Brown and Beilstein hand wrote their
corporate capacities of president and secretary.
It is
unclear from the face of the lease why Anderson and Zandberg were included in
the signature block. Only two signatures
were required to bind Apple Annie’s.
Thus, Anderson and Zandberg’s signatures were included either to hold
them personally liable, as asserted by appellant, or they were merely
surplusage. To answer this question, the
trial court looked to the circumstances surrounding the proposed lease
modification.
As outlined
above, before the lease was fully executed, Robyn Paynter prepared a document
that revised portions of appellant’s standard lease form. Although this modification did not include
the first page of the lease setting forth the fundamental lease provision, the
addendum or the exhibits, it did include the body of the lease and the same
signature block. When Brown received the
modification and called Robyn Paynter for instructions, she told him to sign
the modification and return it. Brown
testified that, when he asked for clarification as to signatures, Robyn Paynter
indicated that, because Apple Annie’s was a corporation, only the president and
secretary were required to sign. Thus,
Brown returned the proposed modified lease to appellant without Anderson and
Zandberg’s signatures. Robyn Paynter
testified that she did not recall this conversation with Brown.
Although
appellant never executed the proposed modified lease and thus it did not
supersede the original lease, it can be reasonably inferred that Robyn Paynter,
on behalf of appellant, intended the proposed modification to become the operative
lease. Further, while Robyn Paynter did
not recall instructing Brown that only the president and secretary were
required to sign the lease, the court found Brown’s testimony in this regard
was credible. The fact that Anderson and
Zandberg’s signatures were not required on the proposed modified lease supports
the trial court’s finding that there was no intent to hold Anderson and
Zandberg personally liable.
In sum, considering that the
corporation is the only tenant under the lease, the signatures for the tenant
are below the corporate name, and appellant did not require Anderson and
Zandberg’s signatures on the proposed modified lease, the trial court’s
construction of the lease is both reasonable and supported by
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondents.
_____________________
LEVY, J.
WE CONCUR:
_____________________
WISEMAN, Acting P.J.
_____________________
DETJEN, J.
name="_ftn1" title="">[1] Appellant
contends that the trial court erred by not engaging in the two-step process,
i.e., reviewing the proffered evidence of the parties’ intent before admitting
the parol evidence. However, the trial
court concluded the lease was ambiguous on its face with regard to Anderson and
Zandberg’s capacity. Therefore, this two-step
process was unnecessary.
