Rampage Vineyard v. Hat

Filed 11/21/07 Rampage Vineyard v. Hat 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Madera County. James E. Oakley, Judge.

Glynn & Finley, Clement L. Glynn, James M. Hanlon, Jr.; Luce, Forward, Hamilton & Scripps and Charles A. Bird for Plaintiff and Appellant.

Herum Crabtree Brown, James Belford Brown and Jennifer L. Spaletta for Defendant and Respondent.

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Rampage Vineyard, LLC (Rampage), contends interpretation of contractual provisions is a judicial function and the trial court erred in permitting the jury to construe disputed contract provisions. Rampage also contends the trial court erred in its award of attorney fees to Michael Hat. We will affirm the judgment.

FACTUAL AND PROCEDURAL SUMMARY

Hat is the lessee under a commercial lease; Rampage is the lessor. The subject of the lease is 1,100 acres of farm land, primarily used for vineyards. The lease had a 15-year term beginning December 1, 2003.

On November 17, 2005, Hat tendered rent in the amount of $145,986.09 for the 2005 crop year. Hat included a cover letter indicating that he expected to receive additional income in December 2005 from the sale of Merlot grapes, which would be included in the next crop years rent calculations.

Rampage did not notify Hat that it disputed the rent calculation. Instead, Rampage had a consultant gather information about Hats winery contracts. Rampage issued a statutory three-day notice to Hat demanding an additional $330,711.96 in rent. The three-day notice did not contain a calculation of how Rampage determined the additional sum was due. Upon receipt of the notice, Hat requested that Rampage explain the calculation. Rampage did not respond directly; instead, it filed an unlawful detainer action against Hat.

Hat denied the allegations of the unlawful detainer complaint and alleged affirmative defenses. Rampage filed for summary judgment. The summary judgment motion was denied on the grounds there were material disputed factual issues regarding the rent formula. Hat filed a motion to consolidate the unlawful detainer with a related civil action. Apparently, the motion to consolidate was denied.

Section 3.1 of the lease governs the calculation and payment of rent. Section 3.1 requires Hat to pay rent equal to 50 percent of the gross revenue, minus the base amount per acre, which is set forth in a table. The base amount per acre for 2005 was $1,230. A literal reading of the rent provision requires the rent payment to be calculated by taking 50 percent of the gross revenue and then subtracting the entire base amount for the 1,100 acres, which would require the gross revenues from a given crop year to be more than double the base amount before a rent payment would be due.

Rampage sought to exclude parol evidence. Ultimately, however, the trial court permitted testimony on the parties understanding of the rent provision in the lease.

At trial, both parties apparently agreed that a literal reading of section 3.1 of the lease agreement was not intended by either party, and the rent due was to be calculated by the following formula:

2005 Crop Year Rent = 50% x (Gross Revenue ($1,230 x Acres)).

Although there was apparent agreement on the formula to be used to calculate rent, there was not agreement on the meaning of the terms gross revenue or acres. Hat maintained that gross revenue included all income actually received during the December 1, 2004, to November 30, 2005, crop year and that acres referred to all 1,100 acres under the lease.

Rampage contended that the term gross revenue included revenue from sale of crops and revenue anticipated to be received in December 2005 (the Merlot crop sale), but excluded revenue received from the sale of root crop. Rampage also asserted that the term acres did not refer to the acreage under lease, but was a variable that referred to the number of farmed acres and excluded the acreage dedicated to roads or ditches.

Rampage objected to the jury instructions regarding contract interpretation and the proposed special verdict forms, arguing that the trial court should interpret the lease provision, not the jury.

The special verdict form asked the jury to determine the amount of rent due from Hat to Rampage for the 2005 crop year and whether any rent remained due and owing at the time the three-day notice was served. If the jury found additional rent due and owing, it was to proceed to answer other questions; if not, no further questions were to be answered.

The jury decided that Hat owed Rampage $145, 986.09 for the 2005 crop year and that no rent was due and owing when the three-day notice was served. The trial court entered a judgment in favor of Hat based upon the jurys verdict.

After entry of the judgment, Hat requested costs and attorney fees pursuant to the lease agreement. Hat sought $274,209.50 in attorney fees incurred prior to the filing of the motion, $4,305 in fees incurred subsequent to the filing of the motion, and $27,212.43 in costs. Rampage opposed the request.

The trial court awarded $278,514.50 in attorney fees, plus other costs of $22,047.75, and directed that the judgment on the unlawful detainer be amended nunc pro tunc to include an award of costs of suit in the amount of $300,562.25 payable to Hat from Rampage.

Rampage appeals from the unlawful detainer judgment and separately appeals the order taxing costs. On motion of this court, the two appeals were consolidated on October 3, 2007.

DISCUSSION

I. Standard of Review

It is the general rule that when a contract is reduced to writing, the intent of the parties is to be ascertained from the writing itself, if possible. (Civ. Code,  1639.) As this court has held, interpretation of a written instrument where extrinsic evidence is unnecessary is a question of law for the trial court to determine. When the meaning of contractual language is uncertain, however, or subject to differing interpretations, and parol evidence is used to ascertain the true meaning, interpretation of the contract provision is a question of fact. (Horsemens Benevolent & Protective Assn. v. Valley Racing Assn. (1992) 4 Cal.App.4th 1538, 1559 (Horsemens).) If the intent of a contractual provision is dependent upon an interpretation of facts, the interpretation of the contract is a matter for the jury to decide. (Id. at p. 1560.)

A trial courts initial determination that a provision or term is ambiguous is a question of law, subject to independent review. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) If parol evidence is admitted, and if that evidence is in conflict, then we apply the substantial evidence rule. (De Anza Enterprises v. Johnson (2002) 104 Cal.App.4th 1307, 1315.) Where the issue presented rests only on the interpretation of a written document and there is no need to consider conflicting extrinsic evidence regarding the proper interpretation, the issue is a question of law and the correct standard of review is de novo. (Southern Pacific Land Co. v. Westlake Farms, Inc. (1987) 188 Cal.App.3d 807, 817; Morey v. Vannucci (1998) 64 Cal.App.4th 904, 913.)

II. Interpretation of Contractual Provisions

Rampage argues that the trial court had the duty to interpret the contractual provisions, despite receiving disputed parol evidence, and that Horsemens is inapplicable. Rampages argument is essentially that its interpretation of the contract is the only possible interpretation and therefore the trial court erred in submitting the issue to the jury.

The parol evidence rule generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument. An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. (Rest.2d Contracts,  209, subd. 1; see Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 21-23.) In California, the rule is embodied in Code of Civil Procedure section 1856, which states in relevant part:

(a) Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.

(b) The terms set forth in a writing described by subdivision (a) may be explained or supplemented by evidence of consistent additional terms unless the writing is intended also as a complete and exclusive statement of the terms of the agreement.

(c) The terms set forth in a writing described in subdivision (a) may be explained or supplemented by course of dealing or usage of trade or by course of performance.

(d) The court shall determine whether the writing is intended by the parties as a final expression of their agreement with respect to such terms as are included therein and whether the writing is intended also as a complete and exclusive statement of the terms of the agreement.

The parol evidence rule is not merely a rule of evidence concerned with the method of proving an agreement; it is a principle of substantive law. (Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433.) The rule derives from the concept of an integrated contract. When the parties to an agreement incorporate the complete and final terms of the agreement in a writing, such an integration becomes the complete and final contract between the parties. (Id. at p. 1434.) Extrinsic evidence is excluded because it cannot serve to prove what the agreement was, this being determined as a matter of law to be the writing itself. The rule comes into operation when there is a single and final memorial of the understanding of the parties. When that takes place, prior and contemporaneous negotiations, both oral and written, are excluded. (Ibid.)

The determination of whether the agreement in question is integrated, that is, intended by the parties as a final, complete and exclusive statement of their agreement, is a question of law to be determined by the trial court. Parol evidence, however, may be admitted to explain the meaning of a writing when the meaning urged is one to which the written contract term is reasonably susceptible or when the contract is ambiguous. (Sunniland Fruit, Inc. v. Verni (1991) 233 Cal.App.3d 892, 898.)

The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meaning to which the language is reasonably susceptible. [Citation.] (Winet v. Price, supra, 4 Cal.App.4th at p. 1165.)

Generally speaking, words in a contract are to be construed according to their plain, ordinary, popular or legal meaning, as the case may be. Particular expressions may, however, by trade usage, acquire a different meaning in reference to the subject matter of a contract. Parol evidence is admissible to establish the trade usage even though the words in their ordinary or legal meaning are entirely unambiguous. That is because the words are used by the parties in a different sense. The basis of this rule is to accomplish a purpose of paramount importance in interpretation of documents, to ascertain the true intent of the parties. Usage evidence does not alter the contract of the parties. Rather, it gives effect to the words as intended by the parties. The usage becomes a part of the contract in aid of its correct interpretation. (Paramount Television Productions, Inc. v. Bill Derman Productions (1968) 258 Cal.App.2d 1, 10-11.)

Usage is a uniform practice or course of conduct followed in certain lines of business or professions, or in some procedure or phase of a business or profession. When an established usage is known to the parties to a transaction, it becomes a rule of law that the courts will recognize in determining the rights of parties whose relations come within the usage, absent a controlling statute. (Turner v. Donovan (1935) 3 Cal.App.2d 485, 487-488.) Evidence of usage is admissible, whether or not it has been pleaded, on the theory it must be presumed the parties, being specialists in the field, knew of the trade usage or custom. (Asso. Lathing etc. Co. v. Louis C. Dunn, Inc. (1955) 135 Cal.App.2d 40, 48-49.)

Analysis

We first conclude that the trial court did not err in determining the contract was ambiguous; therefore, it was not error to admit parol evidence.

The critical issue before the trial court was the calculation of rent due under the lease for the 2005 crop year. The parties apparently agreed that rent was to be calculated by the following formula:

2005 Crop Year Rent = 50% x (Gross Revenue ($1,230 x Acres)).

As the terms gross revenue and acres were not specifically defined in the agreement, however, parol evidence was needed to define these terms. This factual situation is substantially similar to the facts in Horsemens, where the trial court properly admitted parol evidence to ascertain the meaning of the term based on in an agreement relating to the purse from a horse race. (Horsemens, supra, 4 Cal.App.4th at p. 1560.)

Having concluded that the trial court properly admitted parol evidence to determine the meaning of the terms gross revenue and acres, we next determine whether the evidence was conflicting. Clearly, it was.

Hat argued that gross revenue meant all revenue received during the 12‑month crop year and that acres meant all acreage under the lease, a total of 1,100 acres. Rampage contended that the term gross revenue also included estimated or anticipated revenues not yet received by Hat, such as certain crop and winery revenue, but that the term excluded other revenue received, such as rootstock revenue received by Hat. Rampage also contended the term acres did not describe the full acreage under the lease, but a lesser figure of 1,004 acres.

Rampage contends that the trial court erred in submitting to the jury the issue of interpretation of the contract provision regarding calculation of lease payments. We disagree. The extrinsic evidence was in conflict, with each party presenting evidence to which the language of the contract was reasonably susceptible. Where the meaning of contractual language is uncertain and parol evidence is introduced to aid in its interpretation, the contractual provision is a factual matter for the jury to decide. (Horsemens, supra, 4 Cal.App.4th at p. 1560.) Our decision in Horsemens specifically stated that the trial court in that case did not err in submitting to the jury the issue of interpretation of the critical contested term of the agreement. (Id. at p. 1562.)

Furthermore, we decline to adopt Rampages contention that as a matter of law its interpretation of the contract provision is the only reasonable interpretation. We do not consider it unreasonable as a matter of law to define gross revenue as actual revenue received rather than including estimated revenues that may or may not be received at some point in the future. (See Horsemens, supra, 4 Cal.App.4th at p. 1558.) Nor do we consider it unreasonable as matter of law to define acres as all acreage under the lease rather than making an annual determination of what acreage is planted with crops that are harvested each year, as opposed to being used to produce rootstock, and excluding acreage dedicated to roads and ditches.

We need not discuss at length Rampages contention that the jury should have been given special interrogatories concerning credibility rather than being asked to decide how much rent was owed for 2005. As noted ante, the jury properly was asked to interpret the contract terms. Regardless, once the jury properly resolved the factual dispute surrounding the method of calculating rent, the determination of rent owed for 2005 was simply a function of a mathematical calculation. Any procedural errors in the verdict form are immaterial to the result.

III. Attorney Fees

Rampage contends the attorney fees award should be reversed or modified because it includes an award for fees that are not reasonable. Specifically, Rampage maintains that the attorney fees incurred by Hat in preparing and unsuccessfully presenting a cross-complaint in the unlawful detainer action should not have been awarded by the trial court.

We review for abuse of discretion a trial courts determination of the amount of an award of statutory attorney fees. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095; Serrano v. Priest (1977) 20 Cal.3d 25, 49 (Serrano); Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440, 447 (Vo); Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1176 (Weeks).)

A party who succeeds with respect to any significant issue in the litigation, achieving some of the benefit the party sought, is a prevailing party. (Hensley v. Eckerhart (1983) 461 U.S. 424, 433; Maria P. v. Riles (1987) 43 Cal.3d 1281, 1292.) There is no doubt in this case that Hat was a prevailing party. Hats inability to pursue a cross-complaint in an unlawful detainer action, however, is relevant to a determination of the appropriateness of the award of fees. (Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1345-1346.)

The trial court begins its analysis by determining the hours spent by counsel on the litigation and a reasonable hourly fee. After considering a variety of factors, the trial court may then augment or reduce the fee. (Serrano, supra, 20 Cal.3d at pp. 48-49; Vo, supra, 79 Cal.App.4th at pp. 445-446; Weeks, supra, 63 Cal.App.4th at pp. 1171-1172.) The purpose of augmenting or reducing the fee is to arrive at a reasonable figure that encourages litigation of meritorious claims without encouraging litigation of claims that have little value. (Weeks, supra, 63 Cal.App.4th at pp. 1171-1172.)

Limited success is among the factors the trial court should consider as a basis for awarding a reduced fee, especially where the plaintiff failed to obtain a substantial part of the relief he or she sought. (Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 249-250; Feminist Womens Health Center v. Blythe (1995) 32 Cal.App.4th 1641, 1674; Bingham v. Obledo (1983) 147 Cal.App.3d 401, 407.) In the end, a party who qualifies for a fee should recover for all hours reasonably spent unless special circumstances would render an award unjust. (Vo, supra, 79 Cal.App.4th at p. 446.)

In reviewing the trial courts application of these standards, we apply a deferential standard of review. The experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong. (Serrano, supra, 20 Cal.3d at p. 49; Weeks, supra, 63 Cal.App.4th at p. 1176; see also Vo, supra, 79 Cal.App.4th at pp. 447-448.)

Rampage argued that Hat attempted to introduce a cross-complaint into an unlawful detainer action; therefore, attorney fees associated with the preparation of this cross-complaint should be denied. Hat responded to the argument by pointing out that he had filed a motion to consolidate the unlawful detainer with a related civil action and, in conjunction with the filing of the motion to consolidate, attached a copy of the cross-complaint. The trial court then expressed the opinion that even though Hats motion to consolidate ultimately was denied, in the early stages of a case a party has to take whatever actions are necessary to achieve the ultimate result, which I believe in this case it was reasonably calculated to -- to keep Mr. Hat in possession of the premise[s].

In this case, it is clear from the record that the trial court understood the full extent of its discretion. At the hearing on the motion to tax costs, the trial court stated, Hats defense was to do that which would cause him not to be displaced from the property. And the Court cannot say that any of the acts that were or actions taken in the legal cases  were not reasonably calculated to achieve his goal of maintaining possession of the property. The trial court acknowledged that it had the discretion to award attorney fees in an amount less than that requested, but it declined to do so in this case. The trial court went on to indicate that it was going to allow the attorney fees as requested, but it was denying several thousand dollars worth of other costs requested by Hat.

We see nothing in the record that renders clearly wrong (Serrano, supra, 20 Cal.3d at p. 49) the trial courts discretionary decision to decline to reduce the fee award. The trial court clearly was aware of the appropriate standards and exercised its discretion within those standards.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to Michael Hat.

_____________________

CORNELL, J.

WE CONCUR:

_____________________

VARTABEDIAN, Acting P.J.

_____________________

DAWSON, J.

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