O'LEARY, ACTING P. J.
Juanita M. Madole appeals from a judgment in favor of Executive Information Services and Investment Group, LLC ("EIS"), in her action against EIS alleging it breached a contract to repurchase her interest in EIS. She contends the trial court incorrectly interpreted the contract as a matter of law and erred by refusing to allow her a jury trial to consider extrinsic evidence in interpreting the contract. We reject Madole's contentions and affirm the judgment.
In September 2007, Madole and EIS entered into a purchase agreement and mutual release (the Purchase Agreement), concerning Madole's ownership interest in EIS. The Purchase Agreement began with three recitals. As relevant here, the first recital explained that in 2003 Madole and EIS entered into an agreement (the "EIS Agreement") pursuant to which Madole invested a total of $648,000 in EIS; and the second, "recital B," stated, "It is the intent of the parties that pursuant to this Purchase Agreement, EIS[] shall purchase and acquire from Madole, fully and completely, all right, title and interests acquired by Madole pursuant to her investments in [EIS]." The terms of the Purchase Agreement followed, and we set forth verbatim those that are relevant to the dispute:
Additionally, paragraph 5 of the Purchase Agreement provided, "Upon full compliance with, and subject to the terms and conditions as set forth herein, [Madole] hereby covenants not to bring or prosecute any action now or in the future in any way related to the litigation against EIS, or any related persons or entities." Paragraph 7 contained the parties' mutual releases of claims against each other arising out of the EIS Agreement. And paragraph 21 contained an integration clause which provided, "This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom any waiver, change, amendment modification or discharge is sought."
At trial, the parties stipulated to the following facts: EIS paid Madole the $200,000 referred to in paragraph 2 of the Purchase Agreement, but it did not pay Madole the $720,000.
On November 21, 2008, Madole filed the instant breach of contract action against EIS alleging it breached the Purchase Agreement by not paying the $720,000 by July 31, 2008. A jury trial was set for June 7, 2010. On May 28, Madole filed a motion in limine asking the court to interpret the terms of the Purchase Agreement as a matter of law, which Madole asserted would be dispositive of all issues and eliminate the need for a jury trial. In her trial brief, Madole argued the Purchase Agreement was clear and unambiguous: In short, EIS was obligated to pay her the full $720,000 by the dates specified in the agreement. Madole argued extrinsic evidence was inadmissible to contradict any portion of the Purchase Agreement.
In its trial brief, EIS similarly asserted the contract was clear and unambiguous, and no extrinsic evidence was needed to interpret it: EIS in essence paid Madole $200,000 for an option to purchase her entire interest in EIS upon payment of an additional $720,000, but EIS was not obligated to pay the $720,000 and if it failed to do so, Madole got to keep all her shares and keep the $200,000.
At the beginning of trial on June 7, Madole again advised the court she wanted the court to interpret the Purchase Agreement as a matter of law and if the court agreed it was unambiguous, no extrinsic evidence was admissible to interpret the Purchase Agreement and no jury trial was necessary. The parties argued their positions concerning the correct legal interpretation of the Purchase Agreement, and the court took the matter under submission, noting that once it ruled on what the terms of the contract were, there might be further jury issues such as damages. The court also noted that if it concluded the Purchase Agreement terms were ambiguous, then there might be further jury issues concerning contract interpretation.
On July 2, the trial court issued its ruling on the bifurcated issue of the legal interpretation of the Purchase Agreement's terms. It noted the parties had made no claims there were any ambiguities in the contract that required admissibility of extrinsic evidence. The court concluded the Purchase Agreement contained the following terms: "[EIS] agreed to pay $920,000 as follows: [¶] $200,000 immediately upon execution. [¶] The remaining $720,000 would hopefully be paid shortly before the end of 2007 from the Victorville Construction Loan, if it funded. [¶] If the loan did not fund, [EIS] would have until July 31, 2008, to pay all or part of the remaining $720,000, but would be liable from January 1, 2008, onward for 9% interest on the unpaid balance. [¶] If [EIS] did not pay all of the remaining $720,000 by the end of July, it could pay an additional $9,000 for a 30[-]day extension and could do that twice, extending the deadline to, at the latest, September 30. [¶] The contract does not contain any provision for further extensions. [¶] Failure to pay the full contract amount by the end of July, or any extensions, entitled Madole to keep the $200,000. [¶] If [EIS], before the end of July or expiration of any extensions, paid any more than $200,000 to Madole, but less than the total amount due, Madole would have to transfer that proportion of her interest in [EIS]. [¶] Madole would not have to transfer an interest in [EIS] corresponding to the $200,000 if she was not paid in full by the end of July or any extensions. [¶] Madole was not obligated to transfer or convey any of her interest in [EIS] back to [EIS] until either: [¶] [EIS] paid the full $920,000, or [¶] [EIS] paid some amount above $200,000, and [¶] [d]id either before July 31 or any extensions. [¶] Madole would also be entitled to interest from January 1, 2008, and any money paid for extensions, without giving up any interest in [EIG]."
At the continued trial on July 13, Madole asked the court for a jury trial on contract interpretation. In short, she asserted that in view of the court's ruling in EIS's favor concerning the correct interpretation of the terms of the Purchase Agreement, she should be allowed to introduce extrinsic evidence that would show her interpretation of the Purchase Agreement was reasonable, making interpretation of the contract a jury question.
After extensive argument concerning whether Madole's request was appropriate (in view of her prior request the court interpret the contract as a matter of law, her assertion there was no ambiguity in the contract, and her insistence extrinsic evidence was not necessary or admissible), the court allowed Madole to make an offer of proof and provisionally admitted the evidence. Madole offered that the attorney who represented her in drafting the Purchase Agreement would testify the parties' intention was that the obligation to pay the $720,000 was absolute, and Madole could sue to enforce that payment obligation. Madole was to keep title to her shares as security for full payment.
Madole further offered that a May 1, 2007, e-mail from EIS's attorney to Madole's transactional attorney confirmed Madole's interpretation of the contract. Madole represented the e-mail read, "The issue is that the way the agreement reads . . . Madole gets to keep her interest in EIS, plus [$]200k in the event of default. In addition, she is entitled to enforce the note for the balance due under the agreement (up to $720k), and this is a lien against the assets of EIS. In other words she gets to keep her EIS interest plus the $920k." When the court pressed Madole's attorney to point to specific language in the Purchase Agreement she believed was either ambiguous or reasonably susceptible to two different meanings, he could not, replying "It is difficult for me to answer it the way you have presented the question."
The court ruled the extrinsic evidence offered by Madole did not tend to establish an interpretation of the Purchase Agreement to which it was reasonably susceptible. It further concluded the proposed construction of the contract Madole urged was supported by the extrinsic evidence was contrary to the plain terms of the contract, and thus was inadmissible. The court found the only reasonable interpretation of the contract was the one the court had already given to it.
The court subsequently issued its statement of decision, which was consistent with its prior ruling. It concluded EIS had not breached the Purchase Agreement. Under the plain language of the Purchase Agreement, if EIS did not pay the $720,000 by the date provided for in the Purchase Agreement, Madole was to retain the $200,000 payment, plus any amount paid for extensions, and her entire ownership interest in EIS. "There is no breach of the contract if the contract is fulfilled by performance. The contract provides two alternative methods of performance. Since one method has been fully executed by all parties, [EIS] has not breached the agreement." The court subsequently entered a judgment in favor of EIS.
Madole raises two arguments. First, she contends that if the Purchase Agreement is properly interpreted as a question of law, the trial court incorrectly interpreted the contract. Second, she contends that if the court's legal interpretation of the contract was reasonable, it erred by not admitting extrinsic evidence that would have also supported her reasonable interpretation and submitting the question to a jury. We reject both contentions.
"The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.] When a contract is reduced to writing, the parties' intention is determined from the writing alone, if possible. [Citation.]" (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 (Founding Members).) "Unless the parties have indicated a special meaning, the contract's words are to be understood in their ordinary and popular sense. [Citations.]" (Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 552.) "Effect is to be given to the parties' mutual intent [citation], as ascertained from the contract's language if it is clear and explicit [citation]." (Ibid.)
"`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.' [Citation.] To the extent practicable, the meaning of a contract must be derived from reading the whole of the contract, with individual provisions interpreted together, in order to give effect to all provisions and to avoid rendering some meaningless. [Citations.]" (Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027.) "California recognizes the objective theory of contracts [citation], under which `[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation' [citation]. The parties' undisclosed intent or understanding is irrelevant to contract interpretation. [Citations.]" (Founding Members, supra, 109 Cal.App.4th at p. 956.)
"Extrinsic evidence is admissible to prove a meaning to which the contract is reasonably susceptible. [Citations.] If the trial court decides, after receiving the extrinsic evidence, the language of the contract is reasonably susceptible to the interpretation urged, the evidence is admitted to aid in interpreting the contract. [Citations.] Thus, `[t]he test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.' [Citation.] [¶] The threshold issue of whether to admit the extrinsic evidence—that is, whether the contract is reasonably susceptible to the interpretation urged—is a question of law subject to de novo review. [Citations.] [¶] The ultimate construction placed on the contract might call for different standards of review. When no extrinsic evidence is introduced, or when the competent extrinsic evidence is not in conflict, the appellate court independently construes the contract. [Citations.] When the competent extrinsic evidence is in conflict, and thus requires resolution of credibility issues, any reasonable construction will be upheld if it is supported by substantial evidence." (Founding Members, supra, 109 Cal.App.4th at pp. 955-956.)
Madole contends the trial court incorrectly interpreted the contract's terms. She argues there is only one reasonable construction of the terms of the Purchase Agreement: EIS unconditionally promised to pay Madole $920,000 in exchange for all of her shares in EIS. EIS was required to make a down payment of $200,000 when the contract was signed. It was required to pay the $720,000 by December 31, 2007, with two possible extensions, but no later than by July 31, 2008. If the full $720,000 was not paid by December 31, 2007, interest would accrue on any remaining balance at 9 percent. If the full $720,000 was not paid by July 31, 2008, paragraph 3 of the Purchase Agreement gave Madole the option of retaining the $200,000 and keeping her entire interest in EIS, or of suing EIS for the balance due (i.e., $720,000 plus interest).
"The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (Civ. Code, § 1638.) We conclude the trial court correctly interpreted the Purchase Agreement's terms.
While certainly it is clear from the four corners of the Purchase Agreement the parties' goal was for EIS to reacquire Madole's entire interest, it is also apparent from the contract EIS's ability to fully fund that acquisition was not a given and hinged on the anticipated closing of a loan by December 31, 2007, for financing a construction project in Victorville. In paragraph 1, the parties agreed to the purchase price: $920,000 for Madole's entire interest. In paragraph 2, they agreed to the timing: $200,000 upon execution, $720,000, within 10 days of the construction loan closing, hopefully by December 31, 2007, but no later than July 31, 2008, with the potential for two 30-day extensions. But while paragraphs 1 and 2 standing alone appear to be unconditional, they must be read in conjunction with paragraph 3, which plainly envisioned EIS might not be able to fully fund the purchase and provided for that eventuality. Paragraph 3 provided that if the $720,000 was not paid by the due date, Madole "shall be entitled to retain the sums paid, in an amount not to exceed $200,000, in addition to [her] interest under the EIS Agreement, except that any amounts paid in excess of $200,000, shall constitute payment for redemption of [her] interest in an amount proportionate to the total amount to be paid under this Agreement ($920,000). Upon payment in full of all amounts due and owing under this Agreement, [Madole] shall transfer and assign to [EIS] all of her right, title and interest in [EIS], however such interest is denominated." In other words, if EIS did not pay the entire remainder ($720,000) of the purchase price ($920,000) by the due date, Madole would retain the $200,000 and would not have to transfer her interest in EIS corresponding to that $200,000. If EIS paid something but not all of the remaining $720,000, Madole was obligated to transfer only the proportion of her interest as that sum related to the full purchase price (i.e., x/920,000). Only if EIS paid the full purchase price of $920,000 was Madole required to convey all of her ownership interest.
Madole contends the trial court's interpretation of the Purchase Agreement is unreasonable in view of the title of the agreement (i.e., Purchase Agreement), paragraphs 1 and 2 and recital B of the Purchase Agreement, which indicate the parties' goal was to transfer Madole's entire ownership interest back to EIS, and paragraphs 7 and 8, in which Madole releases all claims against EIS upon its full performance of the Purchase Agreement. Madole further argues the Purchase Agreement's provision for interest to accrue on the remaining $720,000 of the purchase price if not paid by December 31, 2007, further demonstrates the obligation to pay the full purchase price was unconditional. But as already noted, there is nothing inherently incongruous about having a stated goal or desire of the parties being tempered by economic realities. If Madole's position were correct, it would make no sense for the parties to include a provision specifically providing for what would happen if the $720,000 was not paid. Madole's contention paragraph 3 was merely a device to give her security for full payment cannot be squared with the unambiguous language of that paragraph providing that if less than the full amount was paid, she kept the $200,000 and her interest in EIS, and she was required to convey to EIS only the proportionate ownership interest it paid for.
Madole also contends the trial court improperly found the Purchase Agreement was an option contract, i.e., that EIS paid her $200,000 for the right to purchase her interest in EIS for $720,000, because "the [Purchase Agreement] does not have any of the elements of an option [c]ontract."
Madole contends the trial court erred by disallowing her proffered extrinsic evidence after provisionally considering it. We find no error.
Preliminarily, we need not belabor EIS's contention Madole is estopped to assert extrinsic evidence should have been admitted in view of her original position that the Purchase Agreement should be interpreted as a matter of law without resort to extrinsic evidence.
Madole argues the court should have admitted the May 1, 2007, e-mail sent by EIS's attorney to Madole's transactional attorney during negotiations. She argued the e-mail confirmed her interpretation of the contract, i.e., that pursuant to paragraph 3, if EIS did not pay in full, she could enforce the obligation for the full balance due.
At trial (and in her appellate briefs) Madole represented the e-mail read, "The issue is that the way the agreement reads . . . Madole gets to keep her interest in EIS, plus [$]200k in the event of default. In addition, she is entitled to enforce the note for the balance due under the agreement (up to $720k), and this is a lien against the assets of EIS. In other words she gets to keep her EIS interest plus the $920k." But she has taken the e-mail out of context. Read in context, it is apparent EIS's attorney was objecting to language in an earlier draft of the Purchase Agreement, not confirming Madole's interpretation of the agreement that was signed. The full e-mail read: "Hi Ricardo [Madole's attorney]. Attached is the latest draft of the agreement in which I [EIS's attorney] have attempted to incorporate the changes we discussed. [EIS] has not yet finished reviewing the agreement, but I wanted to send it to you now anyway. I have some concerns about the lien provision, but left it as it is for now. The issue is that the way the agreement reads, . . . Madole gets to keep her interest in EIS, plus [$]200k in the event of default. In addition, she is entitled to enforce the note for the balance due under the agreement (up to $720k), and this is a lien against the assets of EIS. In other words she gets to keep her EIS interest plus the $920k. Please call me to discuss this issue and any others you may have concerning the agreement." The e-mail was sent four months before the Purchase Agreement was finalized, and there was no offer as to how the Purchase Agreement was revised after this e-mail. The court correctly concluded it did not support a different reasonable interpretation of the contract terms.
Madole also argues the court should have allowed testimony from her transactional attorney to the effect EIS never said it wanted an option agreement, the goal was a complete repurchase of Madole's shares, and paragraph 3 was intended to provide Madole security in the event EIS failed to pay the complete purchase price. But Madole has not demonstrated how that testimony supports a different meaning of the otherwise unambiguous wording of the Purchase Agreement. The trial court did not err by excluding Madole's extrinsic evidence.
The judgment is affirmed. Respondent is awarded its costs on appeal.
MOORE, J. and FYBEL, J., concurs.
