NMSBPCSLDHB v. First Mortgage Corp

Filed 6/2/06 NMSBPCSLDHB v. First Mortgage Corp. 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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, Ronald L. Styn, Judge. Affirmed.

In this action for breach of an amended commercial lease agreement, plaintiff NMSBPCSLDHB, a California limited partnership (hereafter NMSB) appeals a judgment in favor of defendant lessee First Mortgage Corporation (First Mortgage). The original lease contained a provision in paragraph 22.21 that granted to First Mortgage a conditional right to early termination of the tenancy during the second year of the two-year lease term that ended on August 31, 2003. The parties entered into an agreement to amend the lease to "extend" the lease term by an additional two years and to increase the amount of First Mortgage's monthly rent payment. The amendment also contained a provision, which is the primary subject of this appeal, that stated, "[except as] provided herein, all terms, provisions and conditions of the Lease and Amendments shall remain the same and continue to be in full force and effect." (Italics added.) Construing this provision to mean that it had the right to terminate the tenancy early after the original two-year lease term had expired, First Mortgage attempted to exercise that right in early 2004 by tendering the early termination fee and vacating the premises. NMSB took the position that First Mortgage's contractual right to terminate the tenancy early expired when the original two-year lease term ended on August 31, 2003, and sued First Mortgage for breach of contract. Following a bench trial, the court found the provision in question was ambiguous; made a finding that at the time the parties negotiated the lease amendment they intended to continue during the two-year extension of the lease term First Mortgage's right to early termination of the tenancy; and entered judgment in favor of First Mortgage.

NMSB contends that neither paragraph 22.21 of the original lease nor the disputed provision of the amendment to the lease was ambiguous, and the court improperly interpreted a contractual term in the lease that was clear, explicit, and unambiguous on its face. We conclude the court did not err as a matter of law in determining that the disputed provision was ambiguous, and substantial evidence supports the court's reasonable finding that at the time the parties negotiated the lease amendment, they intended to continue First Mortgage's right to early termination of their tenancy during the two-year extension of the lease term.

FACTUAL AND PROCEDURAL BACKGROUND

NMSB is a California limited partnership that owns and operates a commercial office complex known as the Clock Tower Office Plaza in the Rancho Bernardo area of San Diego.

A. Lease

On August 20, 2001, NMSB and First Mortgage entered into a written lease agreement (the lease or original lease) whereby NMSB leased a 775 square foot office suite (No. 318) to First Mortgage for an initial term of two years commencing on September 1, 2001 and ending on August 31, 2003, and obligating First Mortgage to pay NMSB monthly rent in the amount of $1,317.50.

Paragraph 22.21 of the lease, which granted First Mortgage a conditional right to early termination of the lease "during the second year of the term," provided:

"22.21. Early Termination. [First Mortgage] shall have the right to terminate the Lease early during the second year of the term provided [First Mortgage] provides advance written notice and remits an early termination fee equal to three months rent." (Italics added.)

B. Lease Amendment

On August 12, 2003, before the initial two-year lease term expired on August 31 of that year, First Mortgage and NMSB negotiated and entered into a written first amendment to the lease (the lease amendment), which (1) provided that the "[l]ease term shall be extended" for an additional two years from the original expiration date of August 31, 2003 to August 31, 2005, (2) increased the monthly rental payment from $1,317.50 to $1,433.33 effective September 2003, and (3) contained the following clause that is the principal subject of the lease interpretation dispute at issue in this appeal:

"EXCEPT AS provided herein, all terms, provisions and conditions of the Lease and Amendments shall remain the same and continue to be in full force and effect." ^[1]

C. Alleged Breach of the Lease and NMSB's Amended Complaint

In February 2004, during the first year of the two-year lease term extension, First Mortgage provided written notice to NMSB of its intention to terminate the tenancy early and tendered to NMSB the termination fee of three months' rent under paragraph 22.21 of the lease. NMSB rejected that notice and returned the termination fee.

In early March 2004 First Mortgage's attorney again provided written notice of early termination of the tenancy, tendered the termination fee, and informed NMSB that it had vacated the premises, stating that remittance of the fee satisfied its obligations under the lease. The notice also stated that First Mortgage "[does] not agree with [NMSB's] contention that the right of early termination was only intended to apply to the second year of the lease. The provision specifically mentions the second year to make clear we could not terminate the lease during the first year. The original term of the lease was only two years, so the mention of the second year was merely to differentiate from the first year. We never intended to forfeit all rights of early termination by extending the term of the lease. With the exception of the extended term, all other aspects of the lease remained unchanged following the extension. At the time of the creation of the extension we had the right to terminate and that right continued unchanged."

NMSB's attorney again returned the termination fee to First Mortgage, and in the written response asserted that First Mortgage's "understanding of the terms of the lease agreement is at odds with the clear and explicit language of [paragraph 22.21] and is of no consequence. [Citation.] I am returning your client's check. [¶] The lease remains in full force and effect. Please ascertain that your client remains current in its lease payments."

NMSB thereafter filed an amended complaint against First Mortgage seeking damages in the amount of $26,088 for breach of the lease.

D. Trial

First Mortgage's trial brief indicated that the principal issue to be litigated at trial was whether First Mortgage's early termination rights under paragraph 22.21 of the lease applied only to the second year of the original lease term, which expired on August 31, 2003, or continued in force and effect during the two-year extension of the lease term. First Mortgage argued that the phrase "during the second year" contained in the paragraph 22.21 early termination clause "became ambiguous, once the term of the lease was extended." First Mortgage argued that the evidence at trial would show "that both parties were aware that First Mortgage always intended, and that [NMSB] agreed that [First Mortgage] could exercise its right to early termination anytime after the first year, and that [First Mortgage] did not intend . . . to waive the 'early termination' terms for which it had originally negotiated." First Mortgage also argued that "[i]f [NMSB] contend[ed] that the term 'during the second[] year' was restrictive and a limitation of [First Mortgage's early termination] rights, then it [was] clear the court [could] consider such language as 'ambiguous' . . . ."

In its trial brief, NMSB argued that paragraph 22.21 unambiguously provided that First Mortgage had the contractual right to terminate the lease early only during the second year of the original two-year lease term, which ended on August 31, 2003, and First Mortgage waited until March 2004─"in the 30th month of the lease" after the second year of the original year lease term "had already passed"─to terminate the lease. NMSB asserted that the lease amendment "[did] not redefine the lease term or commence a new lease term, but rather explicitly 'extend[ed]' the existing term for 24 months beyond the initial termination date of August 31, 2003." NMSB also maintained that neither parol evidence nor the parties' subjective intent was relevant to the interpretation of paragraph 22.21.

Despite the position that it took in its trial brief, NMSB presented extrinsic evidence of the parties' intent by calling as its first witness Greg Eger, who drafted the original lease on behalf of NMSB. On direct examination, Eger testified to his subjective intent when he drafted the early termination clause in paragraph 22.21 of the lease:

"Q. Did you actually draft the language for paragraph 22.21?

"A. Yes.

"Q: And in drafting that what was your intent in connection with that provision?

"A. Is [sic] they could have a buyout during the second [year] of the lease term provided that they gave us written notice and paid the three months' rent. [¶] . . .

"Q: You testified a minute ago that your intent in drafting paragraph 22.21 was to give them an opportunity to buy out during the second year of the term; is that correct?

"A. Yes.

"Q: Okay. And so that would have been only the period from September 1st, 2002, to August 31st of 2003, correct?

"A. Correct.

"Q. Okay. And as you understood it, the provision that you drafted, paragraph 22.21, embodied your intent?

"A: Correct."

NMSB's counsel also asked Eger whether he would have accepted a lease provision that allowed First Mortgage to terminate the lease early "any time after the first year":

"Q. At any time during the negotiations, did anyone from First Mortgage ask you to include a provision in the lease that allowed them to terminate any time after the first year?

"A. No.

"Q. Okay. If they had asked you to do that, would you have agreed to do it?

"A. I only agreed to do it during the second year of the term but not -- it was not something forever.

"Q. Okay. And you wouldn't have agreed to do it at -- forever at any time during the term of the lease?

"A. No."

Eger also testified that he drafted the lease amendment that extended the lease term for an additional two years. NMSB's counsel then asked Eger about the parties' subjective intent as it related to early termination rights when they entered into the lease amendment:

"Q. Did anyone from First Mortgage . . . indicate to you that it was First Mortgage's intent that the [lease amendment] provide for a contractual right to terminate early, to terminate the lease early?

"A. No.

"Q. During your conversations regarding the [lease amendment], did anyone at First Mortgage indicate to you that it was their intent that the [lease amendment] start a new term for the lease?

"A. No.

"Q. . . . [Y]ou've testified that their only intent was to extend the term of the lease; is that correct?

"A. That's correct.

"Q. Did the [lease amendment] alter -- in your mind alter any other terms of the original lease?

"A. Just extended the term and it changed the rental rate."

Raymond Schmidt testified on behalf of First Mortgage. Schmidt stated that although he was not involved in the negotiation of the original lease, he participated in the negotiation of the lease amendment. Schmidt testified that First Mortgage had a policy of attempting to negotiate early buyout provisions in its leasing agreements, and he was aware of the early termination clause (par. 22.21) in the original lease. Without objection from NMSB's counsel, First Mortgage's counsel asked Schmidt about his state of mind as to the effect of the lease amendment on First Mortgage's early termination rights:

"Q. And what was your state of mind concerning whether or not the early buyout provision expired, died or stayed the same at the time of the amendment?

"A. I believe it was intact in going forward."

On cross-examination, Schmidt stated that the lease amendment changed the rental rate and the lease term, but all of the other provisions of the original lease "[r]emained in force." On redirect examination, Schmidt testified that the phrase "all other terms to remain in full force and effect" contained in the lease amendment left "in force" the "buyout provision."

E. Trial Court's Written Ruling and Judgment

The court issued a written ruling in favor of First Mortgage. Indicating that it had found persuasive the testimony of First Mortgage's witness, Schmidt, the court found that the parties intended to continue First Mortgage's right to early termination of the lease when they entered into the lease amendment:

"The Court finds the intent was to continue to allow early termination. Mr. Schmidt testified that 'all terms remain the same' meant a continuation of the buyout[;] the Court finds this testimony is persuasive. [¶] Mr. Eger's testimony that [NMSB] would not have agreed to termination at any time after the first year is not persuasive because [NMSB] agreed to termination after the first year when the term was two years, the rent on the extension was higher than the asking rent, suite 318 was less desirable than some of the other units in the building, and the building had a high vacancy rate."

The court awarded reasonable attorney fees and costs to First Mortgage in the amount of $21,554.65 and entered judgment in First Mortgage's favor on condition that it pay to NMSB the early termination fee in the amount of three months' rent as specified in paragraph 22.21 of the lease. NMSB's appeal followed.

STANDARDS OF REVIEW AND PRINCIPLES

OF CONTRACT INTERPRETATION

The trial court's written ruling, upon which the judgment in favor of First Mortgage was based, contains findings of fact and is based, as NMSB acknowledges in its reply brief, upon a conclusion of law that the lease amendment was ambiguous with respect to First Mortgage's right to early termination of the tenancy.^[2]

In ASP Properties Group v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266 (ASP Properties Group), this court recently explained that "'[w]e review the trial court's findings of fact to determine whether they are supported by substantial evidence. [Citation.] To the extent the trial court drew conclusions of law based upon its findings of fact, we review those conclusions of law de novo. [Citation.]' [Citation.] Under the substantial evidence standard of review, 'we must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.] [¶] It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment. Even in cases where the evidence is undisputed or uncontradicted, if two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact, which must resolve such conflicting inferences in the absence of a rule of law specifying the inference to be drawn. . . . [Citations.]' [Citation.] To be substantial, the evidence must be of ponderable legal significance, reasonable in nature, credible, and of solid value. [Citations.] However, substantial evidence is not synonymous with any evidence. [Citations.] 'The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record.' [Citation.]"

We must apply an independent, or de novo, standard of review to the court's conclusions of law regarding interpretation of the lease and lease amendment, including the court's conclusion that the lease amendment was ambiguous with respect to First Mortgage's early termination rights. (See ASP Properties Group, supra, 133 Cal.App.4th at p. 1266..)

In ASP Properties Group, this court also explained the principles of contract interpretation that apply here. "'The precise meaning of any contract, including a lease, depends upon the parties' expressed intent, using an objective standard. [Citations.] When there is ambiguity in the contract language, extrinsic evidence may be considered to ascertain a meaning to which the instrument's language is reasonably susceptible. [Citation.] . . . [¶] We review the agreement and the extrinsic evidence de novo, even if the evidence is susceptible to multiple interpretations, unless the interpretation depends upon credibility. [Citation.] If it does, we must accept any reasonable interpretation adopted by the trial court. [Citation.]' [Citation.] '[W]here . . . the extrinsic evidence is not in conflict, construction of the agreement is a question of law for our independent review. [Citation.]' [Citations.] In contrast, '[i]f the parol evidence is in conflict, requiring the resolution of credibility issues, we would be guided by the substantial evidence test. [Citation.]' [Citation.] However, extrinsic evidence is not admissible to ascribe a meaning to an agreement to which it is not reasonably susceptible. [Citation.]" (ASP Properties Group, supra, 133 Cal.App.4th at pp. 1266-1267.)

Thus, in this case as in ASP Properties Group, "extrinsic evidence on the parties' intended meaning of language in the [lease and lease amendment] was ultimately admissible only if it was relevant to show a meaning to which that language is reasonably susceptible." (ASP Properties Group, supra, 133 Cal.App.4th at p. 1267, citing Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37 & Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.)

In Winet, this court explained that "[t]he decision whether to admit parol [or extrinsic] evidence involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning 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. [Citation.] [¶] Different standards of appellate review may be applicable to each of these two steps, depending upon the context in which an issue arises. The trial court's ruling on the threshold determination of 'ambiguity' (i.e., whether the proffered evidence is relevant to prove a meaning to which the language is reasonably susceptible) is a question of law, not of fact. [Citation.] Thus the threshold determination of ambiguity is subject to independent review. [Citation.] [¶] The second step─the ultimate construction placed upon the ambiguous language─may call for differing standards of review, depending upon the parol evidence used to construe the contract." (Winet v. Price, supra, 4 Cal.App.4th at pp. 1165-1166.)

"Credibility is an issue for the fact finder." (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622 (Johnson).) Appellate courts "do not reweigh evidence or reassess the credibility of witnesses. [Citation.]" (Ibid.) The testimony of a single credible witness may constitute substantial evidence sufficient to support a verdict. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614.) Evidence will be disregarded on appeal for credibility reasons only if it is inherently improbable, i.e., it must appear that the truth of the testimony was physically impossible or its falsity must be apparent without resorting to inferences or deductions. (Evje v. City Title Ins. Co. (1953) 120 Cal.App.2d 488, 492; Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2004) ¶ 8:53, p. 8-21 (rev. #1 2004).)

"'[W]e may affirm a trial court judgment on any [correct] basis presented by the record whether or not relied upon by the trial court. [Citation.]' [Citation.] 'No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason. If right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion.' [Citation.]" (ASP Properties Group, supra, 133 Cal.App.4th at p. 1268.)

DISCUSSION

NMSB contends the phrase "during the second year of the term" in the early termination clause set forth in paragraph 22.21 of the original lease unambiguously meant that First Mortgage lost the right to early termination of the lease under that paragraph when the second year of the original two-year lease term expired; and thus the court erred in interpreting the lease and the August 2003 lease amendment (which extended the lease term by two years) as granting First Mortgage the right to terminate the extended lease early under paragraph 22.21 in March 2004. Specifically, NMSB claims the court erroneously found the lease amendment was ambiguous, and states that "the early termination period set out in [paragraph] 22.21 of the lease expired on August 31, 2003, . . . even though the lease term itself was extended to August 31, 2005," and thus the court "should have given effect to the agreement of the parties as embodied in [paragraph] 22.21." NMSB also asserts the court "had no need to reach an interpretation of the [lease amendment] at all, much less one that disregarded the written agreements of the parties and resorted to extrinsic evidence." We reject NMSB's contentions.

A. Background

1. Paragraph 22.21

Paragraph 22.21 (Early Termination) of the original lease expressly granted to First Mortgage "the right to terminate the Lease early during the second year of the term provided [First Mortgage] provides advance written notice and remits an early termination fee equal to three months['] rent." (Italics added.) It is undisputed that under paragraph 1.5 of the lease,^[3] the second year of the original two-year term of the lease commenced on September 1, 2002, and ended on August 31, 2003.

2. Lease amendment

On August 12, 2003, before the initial two-year lease term expired at the end of that month, First Mortgage and NMSB entered into the lease amendment, which contained three provisions: (1) a two-year extension of the lease term (from the original expiration date of August 31, 2003 through August 31, 2005); (2) an increase in First Mortgage's monthly rental payment from $1,317.50 to $1,433.33, and (3) the clause at issue in this appeal (the third provision of the lease amendment) which states that "[except as] provided herein, all terms, provisions and conditions of the Lease and Amendments shall remain the same and continue to be in full force and effect." (Italics added.)

B. Analysis

Upon de novo review, we first conclude the court did not err when it determined that the third provision of the lease amendment was ambiguous. Paragraph 22.21 of the original lease was clear on its face when read in isolation. It unambiguously provided that First Mortgage's contractual right to terminate the lease early was limited to "the second year of the term," which ended on August 31, 2003. It is undisputed that First Mortgage did not exercise the right to early termination during that second year of the original two-year lease term.

An ambiguity regarding First Mortgage's contractual right to early termination of the tenancy after the expiration of the second year of the original two-year lease term was created, however, when the parties entered into the lease amendment. The phrase "[except as] provided herein" clearly refers to the first two lease amendment provisions: the two-year extension of the lease term, and the increase in First Mortgage's monthly rental payment. The rest of the sentence─"all terms, provisions and conditions of the Lease and Amendments shall remain the same and continue to be in full force and effect"─is ambiguous because it is reasonably susceptible to the interpretations offered by both parties.

Under NMSB's interpretation, First Mortgage's right to early termination expired on August 31, 2003, pursuant to the unambiguous language in paragraph 22.21, even though the lease term itself was extended by two years to August 31, 2005, and thus paragraph 22.21 had "exactly the same meaning" after the parties entered into the lease amendment as it had before: First Mortgage could terminate the lease early only during the second year of the lease, which expired on August 31, 2003. The third provision of the lease amendment is reasonably susceptible to this interpretation. Thus, if First Mortgage's failure to exercise its paragraph 22.21 right to early termination during the second year of the original two-year lease term resulted in the extinguishment of that right and the lapsing of paragraph 22.21, as NMSB claims, and if paragraph 22.21 remained the same after the parties entered into the lease amendment, then a reasonable inference could be drawn that First Mortgage's right to early termination was not revived or reinstated as a result of the lease amendment because the right to early termination of the lease no longer existed.

Under First Mortgage's interpretation, the third provision of the lease amendment carried over the paragraph 22.21 right to early termination into the extended lease term. That lease amendment provision is reasonably susceptible to such an interpretation. (Italics added.) Under this interpretation, the paragraph 22.21 right to early termination was part of the original lease, and for that paragraph to "continue to be in full force and effect" under the lease amendment, it would have to be in "full force and effect" beyond the expiration of the second year of the original two-year term on August 31, 2003.

Because the language of the third provision of the lease amendment, when read together with paragraph 22.21 of the original lease, is reasonably susceptible to the interpretations offered by both NMSB and First Mortgage, we conclude as a matter of law that the court did not err by determining that the lease amendment created an ambiguity with respect to First Mortgage's claimed right to terminate the amended lease in March 2004, after the original two-year lease term expired on August 31, 2003. Accordingly, we also conclude that the court did not err by admitting extrinsic evidence both for the threshold purpose of determining whether the language of that lease amendment provision was "reasonably susceptible" to the contradictory interpretations urged by the parties and as an aid in the process of construing the ambiguous language and interpreting the lease amendment. (See ASP Properties Group, supra, 133 Cal.App.4th at p. 1267.)

We also conclude that substantial evidence supports the court's factual findings. Indicating that the testimony of First Mortgage's witness, Schmidt, was persuasive, the court found that the parties intended to continue First Mortgage's right to early termination of the lease when they entered into the lease amendment and agreed to extend the lease term. The court found unpersuasive the testimony of NMSB's principal witness, Egers, that NMSB would not have agreed to First Mortgage's termination of the tenancy any time after the expiration of the first year of the original two-year lease term. The court found that Eger's testimony was not persuasive because NMSB had agreed to termination after the first year of the lease, First Mortgage's monthly rent obligation during the extended lease term was "higher than the asking rent," the leased premises were "less desirable than some of the other units in the building," and the building had a "high vacancy rate."

Substantial evidence supports these findings. Schmidt testified he was aware of the early termination clause (par. 22.21) in the original lease when he participated with Eger in the negotiation of the lease amendment. When First Mortgage's counsel asked Schmidt about his state of mind as to the effect of the lease amendment on First Mortgage's early termination rights, Schmidt stated, "I believe it was intact in going forward." On cross-examination, Schmidt testified that the lease amendment changed the rental rate and the lease term, but all of the other provisions of the original lease remained in force. On redirect examination, Schmidt stated that the phrase "all other terms to remain in full force and effect" in the lease amendment left in force the buyout provision. He also indicated that First Mortgage had a policy of trying to negotiate early buyout provisions in its lease agreements.

We will not disturb the court's credibility findings that Schmidt's testimony was persuasive and Eger's was not. As already discussed, "[c]redibility is an issue for the fact finder," and appellate courts "do not reweigh evidence or reassess the credibility of witnesses." (Johnson, supra, 28 Cal.App.4th at p. 622.)

Substantial evidence supports the court's finding that NMSB granted First Mortgage the conditional right to terminate the extended lease term early after the first year of the original lease term expired. Specifically, substantial evidence shows that the leased premises were less desirable than some of the other units at Clock Tower Office Plaza, creating a reasonable inference that NMSB was willing to extend or continue the paragraph 22.21 right to early termination as a contractual inducement to First Mortgage to continue leasing a less desirable unit. NMSB's manager Sandra Barhoum testified that suite 318 was less desirable because "[it's] on the freeway side, west side of the building, so it faces the freeway. It's on the third floor of a building. Maybe the configuration doesn't lend itself to some prospects in the layout of the space." Barhoum also testified that suite 318 was noisier than some other units in the building complex, but not noisier than the two units next to it that were vacant.

Barhoum's testimony also supports the court's finding that the building in which suite 318 was located had a high vacancy rate. She stated that seven out of the 30 offices in that building were vacant and that building had the highest vacancy rate among the five buildings at Clock Tower Office Plaza.

In any event, the ambiguity created by the third provision of the lease amendment should be construed against NMSB, the party who drafted the lease amendment. (Civ. Code, § 1654 ["In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist"].) Here, Eger testified that he drafted on behalf of NMSB both the original lease and the lease amendment.

In sum, we conclude the court did not err by determining that the lease amendment created an ambiguity with respect to First Mortgage's right to early termination of the tenancy, and substantial evidence supports the court's reasonable finding that at the time the parties negotiated the lease amendment, they intended to continue during the two-year extension of the lease First Mortgage's right to early termination of the tenancy. Accordingly, we affirm the judgment in favor of First Mortgage.

DISPOSITION

The judgment is affirmed. First Mortgage shall recover its reasonable costs on appeal from NMSB.

NARES, J.

WE CONCUR:

BENKE, Acting P. J.

HALLER, J.

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Analysis and review provided by Santee Apartment Manager Lawyers.

^[1] The lease amendment provided in part: "THIS FIRST AMENDMENT TO LEASE is entered into this 12th day of August 2003 by and between [NMSB], a California Limited Partnership . . . and [First Mortgage.] [¶] WHEREAS [NMSB] and [First Mortgage] have entered into that certain Lease originally dated August 20, 2001, for space located at 16486 Bernardo Center Drive, Suite 318, San Diego, California 92128. [¶]WHEREAS [NMSB] and [First Mortgage] desire to amend the Lease as hereinafter provided and accordingly [NMSB] and [First Mortgage] hereby agree as follows: [¶] Lease term shall be extended to August 31, 2005. [¶] Monthly Base Rent shall be adjusted to [$1,443.33] effective September, 2003. [¶] EXCEPT AS provided herein, all terms, provisions and conditions of the Lease and Amendments shall remain the same and continue to be in full force and effect." (Italics added.)

^[2] Although the court did not expressly conclude that the lease amendment was ambiguous with respect to First Mortgage's right to early termination of the tenancy, its reference to the extrinsic evidence presented at trial demonstrates, and the parties do not dispute, that it made such a determination.

^[3] Paragraph 1.5 of the lease provides: "1.5 Term. [¶] Twenty[-four] (24) months: commencing September 1, 2001 . . . and ending August 31, 2003."