Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Tulare County, Super. Ct. No. VCU210456. Paul A. Vortmann, Judge.
Law Office of Alex J. Aretakis and Alex J. Aretakis for Defendant, Cross-complainant and Appellant.
Kimball, MacMichael & Upton, Steven D. McGee and Mary Ann Bluhm for Plaintiff, Cross-defendant and Respondent.
OPINION
DAWSON, J.
Appellant Hispanic Bakersfield, LLC (HB) appeals from a judgment entered in favor of Valley Public Television, Inc. (VPT) after a bench trial. HB contends that the trial court erred by determining that (1) its promissory note to VPT was payable on demand instead of payable on February 12, 2007, and (2) VPT owed HB no additional compensation for VPT’s last seven months of use of KAZB Channel 19 (Channel 19).
HB contends that the only reasonable interpretation of the promissory note is that it had a term of five years. We conclude this is not the sole reasonable interpretation of the promissory note because, among other things, it violates a canon of contract construction known as the last antecedent rule. Consequently, we conclude the promissory note is ambiguous and the trial court properly admitted parol evidence to aid in its interpretation. Because the parol evidence was in conflict and the trial court made credibility findings, our review is based on the substantial evidence rule. Under that rule, sufficient evidence supports the trial court’s interpretation of the promissory note as payable on demand.
In addition, we conclude that the findings of fact made by the trial court in denying HB’s cross-complaint for additional compensation are based on substantial evidence.
Accordingly, the judgment will be affirmed.
FACTS
VPT is a California public benefit corporation with its principal place of business in Fresno County. VPT is licensed to operate KVPT Channel 18, which televises public programming throughout the San Joaquin Valley.
HB is a Delaware limited liability company, which was known previously as Azteca Bakersfield, LLC. HB is the licensee, owner, and operator of Channel 19, which is located in Bakersfield and broadcasts television programming in Kern County and surrounding areas.
Harry J. Pappas is not a party to this litigation, but controls HB. He has an extensive background in the telecasting business and is the owner, chief executive officer, and chairman of the board of Pappas Telecasting Companies.
Pappas was a long-time supporter of VPT, once holding a telethon on his own television station to raise money VPT needed to qualify for the initial construction and operating grants for KMTF, which was the predecessor station of KVPT. As a result of this and other support, Pappas ranks among the top five donors to VPT during its 30-year history. Pappas also served on VPT’s board of directors.
Prior to 2000, VPT held a license to broadcast on K65EY (Channel 65), a low-power television station in Bakersfield, California. VPT transmitted public programming on Channel 65. In the 1990’s, the Federal Communications Commission (FCC) adopted a plan to recover a portion of the broadcast spectrum allotted to television so that it could be used for other purposes. (See 62 Fed.Reg. 26684-01 (May 14, 1997) [adoption of final rule intended to establish a plan for recovery of spectrum].) The FCC pursued early nationwide recovery of the spectrum allotted to UHF television channels 60 through 69.
As a result of the FCC’s plan to recover broadcast spectrum, VPT was faced with losing its authorization to broadcast on Channel 65. VPT searched for a replacement channel and discovered that the FCC was making Channel 19 available through an auction process. VPT, having been displaced from broadcasting on Channel 65, was qualified to bid for Channel 19. VPT did not have the financial resources to acquire Channel 19 in the auction. Pappas agreed to back VPT’s attempt to acquire Channel 19. VPT’s bid of $893,000 was successful.
The trial court noted that Pappas and the entities he controlled did not qualify to bid at the auction.
The FCC issued VPT a construction permit on July 14, 2000, which required construction of Channel 19 to be completed within 36 months. VPT was able to pay the bid amount by obtaining a $893,000 loan from Pappas. VPT still lacked the financial resources to construct Channel 19, which were estimated at approximately $500,000. Also, Channel 19 was a low-power station and VPT preferred a more powerful station to discourage other public television stations from entering the market. As a result, VPT intended to sell its rights to Channel 19 and use the profit to acquire rights in Channel 39, a more powerful station that was designated as a noncommercial educational television station. At the time, the rights to Channel 39 were held by the Kern Educational Telecommunication Consortium (Consortium), which had not begun construction.
VPT and Pappas agreed that VPT would sell the Channel 19 construction permit to Pappas’s nominee at fair market value. As a result of this agreement, HB paid VPT $1.4 million in exchange for the rights to Channel 65 and the Channel 19 construction permit. In September 2000, the parties executed an assignment agreement to document the transaction.
Notwithstanding the profit that VPT made by selling the rights to Channel 19, the transaction proved beneficial to HB as well. Pappas valued Channel 19 at between $4 million to $5 million, after investing the $1.4 million purchase price and approximately $500,000 in construction, engineering, and station development.
Subsequently, on February 12, 2002, the parties executed three documents that are significant in this lawsuit—an amendment to the assignment agreement concerning Channels 65 and 19, a promissory note in the principal amount of $488,794.83, and a time brokerage agreement.
The amendment to assignment agreement set forth the terms under which HB would pay the $1.4 million purchase price. First, the $893,000 that Pappas loaned VPT to acquire Channel 19 was treated as a credit against the purchase price. Second, HB agreed to pay attorney fees incurred by VPT in connection with Channel 19, and that payment was treated as a credit against the purchase price. Third, HB agreed to pay the remaining balance of the purchase price by issuing a promissory note to VPT in the principal amount of $488,794.83.
The promissory note was dated February 12, 2002, and was signed by Pappas, president of Azteca America Stations Group, LLC, managing member of HB. The provisions of the promissory note are set forth in part II.B.2, post.
Pappas and Phyllis Brotherton, the senior vice president and chief financial officer of VPT, had discussions regarding the terms of the promissory note. Their testimony regarding discussions about the payment terms of the promissory note are set forth in parts II.C.2 and II.C.3, post.
The time brokerage agreement dated February 12, 2002, identified HB as the licensee of Channel 65 and the holder of a displacement construction permit issued by the FCC for Channel 19. HB agreed to make broadcasting facilities available to VPT for up to 24 hours per day, seven days per week, with a reservation of two hours per week to broadcast its own public affairs programming. The time brokerage agreement stated that its initial term continued until July 1, 2003.
The payments that VPT owed to HB as compensation for the right to broadcast were addressed in paragraph 2 of the time brokerage agreement, which stated:
“As compensation for the right to broadcast the programs pursuant to this agreement, [VPT] hereby agrees to reimburse [HB] for all operating and maintenance expenses of the Station incurred by [HB] in connection with the operation of the Station and the employment of personnel at the Station’s main studio. Payment of such expenses shall be made promptly upon submission of invoices, receipts, or other written documentation to [VPT] by [HB].”
VPT received its first invoice from HB under the time brokerage agreement on March 1, 2002. The invoice was dated February 28, 2002, numbered HB01, concerned payroll for the period ending February 15, 2002, and was in the amount of $965.90. VPT paid the invoice with a check dated March 8, 2002.
The last invoice VPT received before the time brokerage agreement’s July 1, 2003, expiration date was dated June 16, 2003, and concerned the June payment of the tower site lease ($1,200) and May postage ($1.11).
The next invoice VPT received was dated July 28, 2003, numbered HB37, and concerned the July payment of the tower site lease ($1,200) and June postage ($5.21). Invoice HB38, dated August 31, 2003, billed VPT for payroll ending August 15, 2003 ($1,291.45), tower site lease ($1,200) and July postage ($2.96). The last invoice VPT received for expense reimbursement was numbered HB54 and dated February 9, 2004.
All of the invoices that VPT received after the July 1, 2003, expiration date still included the underscored heading “Time Brokerage Agreement” in the Date-Description-Detail box of the invoice form. With respect to the invoices, the trial court found:
“The testimony of Pappas Telecasting Accounting Supervisor Terry Beckler established that she prepared the invoices for [HB] to VPT based on the provision of paragraph 2 of the time brokerage agreement and that the invoices represented the amount of the hard costs. She was not advised to change the billing practice at the end of the initial term of the time brokerage agreement.”
Colin Dougherty, VPT’s general manager until August 2003, was concerned about what would happen in July 2003 when the deadline set in the construction permit for Channel 19 was reached and the initial term of the time brokerage agreement expired. On several occasions, Pappas told Dougherty not to worry, “‘we’ll work with you.’” When asked if Pappas ever said to him that VPT would be responsible to pay the fair market value for Channel 19 if they continued to broadcast on Channel 19, Dougherty said: “I don’t recall those words.”
Dougherty communicated his understanding of the situation to VPT’s board in a memorandum dated January 10, 2003. The memorandum updated the board members about the status of operations in Bakersfield by stating in part:
“Channels 65 and 19 are ‘intertwined’, since 19 is the displacement channel for 65, which the FCC will be taking back. Since the sale of Channel 19 to Mr. Pappas, KVPT has continued to broadcast on Channel 65 without being charged. Pappas Telecommunications has until July 14, 2003 to build and activate Channel 19. When it is activated, Channel 65 will go off the air.
“Unless Channel 39 is constructed by then, or unless Mr. Pappas constructs Channel 19 and leases time to KVPT to maintain broadcast, [VPT] will cease to operate in Kern County.”
Dougherty left VPT and his position as general manager in August 2003.
After Dougherty left, Paula Castadio was promoted to the position of president and chief executive officer of VPT. In November 2003, Castadio sent an e-mail to Pappas “to find out where we stood with the lease arrangement on channel 19” and to address issues relating to the negotiations with the Consortium regarding Channel 39. As Castadio understood the arrangement, VPT was covering costs of roughly $5,000 per month.
Castadio’s e-mail led to a lunch meeting in December 2003, which was attended by VPT personnel, Pappas, and someone who worked for him. At that meeting, someone from VPT asked Pappas what the cost would be for VPT to continue leasing Channel 19. Castadio testified that she was shocked when Pappas “took a piece of paper and threw it down on the table and said that he had given that some thought and that he thought that the rent was worth $28,000 a month, and in fact, felt that [VPT] owed him back rent on the channel as to the date [the time brokerage agreement expired.]”
After the meeting, VPT took steps to get off Channel 19. VPT was able to enter a lease for Channel 34 and began using it on February 1, 2004. The original lease payments for Channel 34 were $5,000 a month.
On January 20, 2004, VPT sent a letter to HB stating that the negotiations with the Consortium regarding Channel 39 had ended without an agreement and, therefore, the promissory note was due and payable. VPT characterized the letter as a formal written request for payment of the $488,794.83 owed under the promissory note.
HB responded by sending a letter to VPT requesting the immediate tender to HB of $196,000, a figure equal to $28,000 per month for use of Channel 19 times seven months. HB stated it was willing to offset the $196,000 against the principal due under the promissory note.
Counsel for VPT replied to HB’s letter by asserting that (1) there was no legal basis for paying the additional $196,000 to HB and (2) it could not acknowledge such a liability without violating its obligations as a public benefit corporation.
PROCEEDINGS
The parties were not able to resolve their differences. As a result, on June 21, 2004, VPT filed a complaint against HB alleging that the promissory note became payable on January 20, 2004, and that HB was in default of its payment obligation. VPT requested judgment in the amount of $488,794.83, plus interest at the legal rate from January 20, 2004, and attorney fees and costs.
On August 5, 2004, HB filed a cross-complaint seeking additional compensation for VPT’s use of Channel 19 from July 1, 2003, through January 31, 2004. HB alleged that VPT should pay at least $28,000 per month for such use, which was at the lower end of the range of fair market value. The cross-complaint contained causes of action labeled (1) declaratory relief, (2) unjust enrichment and (3) quantum meruit.
VPT answered the cross-complaint by denying liability and contending that it fully discharged its obligation to pay for its use of Channel 19 by making payments in accordance with HB’s invoices and the written terms of the time brokerage agreement.
After a court trial held between September 25 and October 4, 2006, the trial court filed a nine-page intended decision. The intended decision stated that VPT was entitled to payment of the face amount of the promissory note and prejudgment interest from January 20, 2004, at the legal rate of 10 percent, as well as attorney fees. It also stated HB was entitled to no further compensation for VPT’s use of Channel 19.
On July 9, 2007, after further briefing and argument, the trial court filed a statement of decision and a judgment in favor of VPT. On August 28, 2007, the court filed an amended nunc pro tunc judgment in the amount of $660,687.74, which did not include costs or attorney fees. The new amount reflected prejudgment interest through the July 9, 2007, entry of judgment.
HB filed a timely notice of appeal.
DISCUSSION
I. Standard of Review
In this case, the trial court issued a statement of decision to support the judgment entered. “Under the general rules applicable to a trial court’s statement of decision, an appellate court independently reviews questions of law and applies the substantial evidence standard to findings of fact. [Citations.]” (Central Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501, 513.)
II. Meaning of the Promissory Note
The parties dispute when the promissory note became payable. VPT asserts the trial court properly determined that the promissory note was payable on demand and that such a demand was made on January 20, 2004. In contrast, Hispanic Bakersfield contends that the promissory note had a definite term of five years and, therefore, was not payable until February 12, 2007.
A. Applicable Standard of Review
1. Contentions of the parties
VPT contends that (1) the trial court properly admitted parol evidence to aid in the interpretation of the promissory note and (2) the trial court’s interpretation is reasonable and supported by substantial evidence.
HB contends that the determination of the meaning of the promissory note is subject to de novo review and cites cases where de novo review was applied to an insurance policy, an arbitration agreement, and a settlement agreement. HB also contends that whether the promissory note’s language is susceptible to more than one reasonable interpretation—that is, whether it is ambiguous—is a question of law subject to independent review.
2. Principles of law
“[A]ppellate review of th[e trial] court’s interpretation of a contract or other writing is governed by three rules: (1) Where extrinsic evidence has been properly admitted and the evidence is in conflict, any reasonable construction by the trial judge will be upheld under the general rule of conflicting evidence. (2) Where no competent extrinsic evidence has been introduced, the interpretation is derived solely from the terms of the instrument, the question is one of law, and the appellate court will give the writing its own independent interpretation. (3) Where competent extrinsic evidence has been introduced but it is not in conflict, the trial judge’s inferences from it are not binding on the appellate court; as in the second situation, supra, the appellate court will make an independent determination of the meaning.” (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 741, p. 828.)
In this case, extrinsic evidence regarding the meaning of the promissory note was admitted. Therefore, this court must consider two questions to determine which standard of review applies. First, was the extrinsic evidence properly admitted? Second, if extrinsic evidence was admitted properly, was it in conflict?
3. Parol evidence rule
Parol evidence is admissible to aid the interpretation of a written instrument when the language of the instrument is ambiguous. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) In this context, “ambiguous” means reasonably susceptible to more than one interpretation. (Ibid.)
To determine whether an instrument is ambiguous, “the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions .…” (Winet v. Price, supra, 4 Cal.App.4th at p. 1165.) The court evaluates the instrument’s language and the extrinsic evidence and decides whether, in light of the extrinsic evidence, the language is “reasonably susceptible” to the interpretations urged. (Ibid.) If the instrument is reasonably susceptible to more than one interpretation, then the extrinsic evidence is admitted to aid in interpreting the instrument. (Ibid.)
The determination of ambiguity is a question of law subject to independent review on appeal. (Winet v. Price, supra, 4 Cal.App.4th at p. 1165.)
B. Ambiguity of the Promissory Note
1. Statutory provisions regarding time of payment
Commercial Code section 3108 governs when promissory notes are payable on demand and when they are payable at a definite time. Section 3108 provides in full:
“(a) A promise or order is ‘payable on demand’ if it (1) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (2) does not state any time of payment.
“(b) A promise or order is ‘payable at a definite time’ if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (1) prepayment, (2) acceleration, (3) extension at the option of the holder, or (4) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event.
“(c) If an instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.”
2. Provisions of the promissory note
The promissory note was dated February 12, 2002, and its first paragraph provided:
“FOR VALUE RECEIVED, the undersigned (‘Maker’) promises to pay to the order of [VPT] (‘Holder’), or order, the sum of [$488,794.83] lawful money of the United States of America, at Visalia, California, bearing interest at the rate of nine percent (9%) per annum over the period of five years.”
The second paragraph of the promissory note addressed how the promissory note would be paid in two alternate situations. The first alternative contemplated payments in the form of installment drawdowns if VPT entered an agreement to acquire an interest in Channel 39 and began construction. The drawdown payments were to be made promptly by HB upon presentation of invoices for expenses incurred by VPT in the construction of the facility authorized by the FCC’s construction permit. Upon completion of the construction, the remaining balance of the promissory note, if any, was to be due and payable.
The second alternative, which is the alternative that became operative in this case, provided: “In the event that [VPT] does not enter into a Channel 39 Agreement, then the principal amount of this Promissory Note shall be paid in cash, or by certified or cashier’s check, or by wire transfer; provided that any accrued interest shall be forgiven, and no interest shall be due or payable under such circumstances.”
The third paragraph of the promissory note gave HB “the right to prepay this Note in whole or in part at any time without penalty.” The fourth and last paragraph of the promissory note authorized a court to award attorney fees and costs.
3. Analysis of language used in promissory note
The terms of the promissory note do not state that it is payable on demand, payable at sight, or payable at the will of the holder. Therefore, the only statutory basis for concluding that the promissory note is a demand note is if it “does not state any time of payment.” (Com. Code, § 3108, subd. (a).) The parties take different positions on the question whether the promissory note stated a time of payment.
The prepositional phrase “over the period of five years” at the end of the first sentence of the promissory note provides the basis for HB’s contention that the promissory note had a definite term of five years. HB argues that “[t]he language ‘over the period of five years’ modifies the interest terms in addition to the terms ‘the undersigned (“Maker”) promises to pay .…’” Thus, HB contends the language of the note can be fit together to read that it “promise[d] to pay [VPT] the sum of [$488,794.83] … over the period of five years.” HB then asserts this language means that the note was “payable on elapse of a definite period of time” as that phrase is used in Commercial Code section 3108.
We reject HB’s position that the promissory note unambiguously provides that it is payable at the end of a five-year term.
First, we are not convinced that the preposition “over” can be interpreted only to mean “on the elapse of,” “at the end of,” “after” or an equivalent term or phrase. Indeed, Webster’s Third New International Dictionary (1986) defines the preposition “over” to mean “6 a: throughout, during.” (Id. at p. 1606.) If these definitions are substituted for “over,” HB would have promised to pay VPT a sum throughout or during the period of five years. These synonyms of “over” suggest the parties contemplated a series of payments or installments during the five-year period rather than a single payment at the end of a five-year period. Therefore, we conclude that the promissory note is reasonably susceptible to an interpretation that allows for multiple payments. Furthermore, we conclude that the times that these payments were due under the second payment alternative were not “readily ascertainable at the time the promise … [wa]s issued .…” (Com. Code, § 3108, subd. (b).) In summary, the use of the preposition “over” renders the promissory note susceptible to an interpretation other than HB’s view that it is payable at the end of a five-year term.
Second, HB’s position that the prepositional phrase “over the period of five years” limits both the accrual of interest and the promise to pay is contrary to the last antecedent rule of contract interpretation. (See People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 529-531 (R.J. Reynolds).) Under that rule, prepositional phrases are read to modify the preceding term or phrase and are not construed to qualify more remote terms or phrases. (R.J. Reynolds, at p. 529.) Thus, if the last antecedent rule were applied in this case, the prepositional phrase “over the period of five years” would modify only the language concerning the accrual of interest and would not modify the language regarding the payment of the principal.
The use of a comma to separate the qualifying phrase from the antecedents indicates an intention to apply the qualifying phrase to all antecedents. (In re Phelps (2001) 93 Cal.App.4th 451, 456.) In this case, the prepositional phrase “over the period of five years” was not preceded by a comma.
We recognize that the last antecedent rule merely aids in construing contracts and should not be applied rigidly in all cases. (R.J. Reynolds, supra, 107 Cal.App.4th at p. 530.) Despite the flexible nature of the rule, we cannot ignore the interpretation generated by its application to the promissory note. Under that interpretation, the promissory note does not specify when payments are due under the second payment alternative. Consequently, the promissory note would be payable on demand. (Com. Code, § 3108, subd. (a) [note is payable on demand if it “does not state any time of payment”].) We conclude that the promissory note is reasonably susceptible to the interpretation that results from applying the last antecedent rule. Stated otherwise, we cannot conclude that an interpretation that violates the last antecedent rule is the only reasonable interpretation of the promissory note.
For purposes of this opinion, we will assume that the interpretation urged by HB also is reasonable and, as a result, the promissory note was ambiguous. Accordingly, parol evidence properly was admitted to explain its meaning.
C. Interpretation of Provisions Regarding Time for Payment
The parol evidence introduced at trial included testimony by Pappas and Brotherton about conversations they had before the promissory note was signed. The parties take different positions regarding how Brotherton’s testimony should be interpreted.
1. Contentions of the parties
HB’s opening appellate brief contends that “Brotherton testified that Mr. Pappas explained to her that the Note would be paid at the end of the five year period if [VPT] did not enter into an agreement for Channel 39.” VPT’s appellate brief quotes this contention and asserts that Brotherton’s “testimony was just the opposite—Pappas never gave her such an explanation.”
2. Brotherton’s testimony
Brotherton testified on direct examination by HB’s counsel about the promissory note and discussions held prior to its execution. Brotherton testified that she had reviewed the promissory note and was very familiar with it.
“Q And there’s also a reference there at the end of [the first paragraph of the promissory note] where it says over the period of five years. You see that?
“A Yes.
“Q Okay. Do you recall during the course of these discussions you had that led up to the assignment and the promissory note any discussions whatsoever as it related to that five-year language?
“A I recall—I questioned some things with regard to this note, primarily in my mind the middle paragraph was essentially what we had agreed to. How it’s paid, with or without 39, if this happens, then this, and if this doesn’t happen, then that. [¶] With regard to the five years, I did ask someone before this note was executed, and I believe it was Harry, ‘what’s the five years about?’
“Q Harry who?
“A Harry Pappas.
“Q And when was that, I mean, was it—let me back up. [¶] First, was this a phone conversation or face-to-face meeting? What was it?
“A Well I don’t totally recall. I don’t think it was a face-to-face because I very seldom, except in the negotiations with [the Consortium], did I meet with Harry face-to-face, and during the period just prior to February 12th, 2002, there was just a flurry of activity of phone calls back and forth between our attorneys and also with Harry, and usually on—on any phone conversations were usually in a conference call with Harry and Colin and I were there in which we would ask questions. [¶] So my recollection is that it was—I asked—I posed the question on a phone call to Harry.
“Q What question did you pose?
“A I didn’t understand the purpose of the five years.
“Q All right. And what did he say?
“A Well, he mentioned that—that he had to give—what I recall is he mentioned he had to give us a deadline to construct, and he couldn’t let this thing go on forever.
“Q A deadline to construct the channel 39?
“A Yes. To build out channel 39, because we had to not only build out, but the first thing we had to do was get channel 39, which was gonna take some time, and then we were going to build out channel 39, so he mentioned to me that—that he just wanted to put a firm time frame to push us to get the 39 deal done and to construct.
“My reaction to that, I didn’t really totally understand that thought—that theory, simply because if the—first of all, we—it was—it would behoove us to finish construction very quickly, as soon as we got 39. We wanted to be on 39. We needed to be. And we knew we’d have to be off of Harry’s channel. And what would happen at the end of the five years is that he would owe us the balance. So I didn’t understand what difference it made, but, at any rate, it caused me to think oh, well, that’s not an issue. We’ll be done.” (Italics added.)
Later, Brotherton was asked whether there was any discussion to the effect that, if the Channel 39 deal did not go through, VPT would have to wait five years for its money. Brotherton answered, “No.”
The parties disagree about the meaning of Brotherton’s statement that “what would happen at the end of five years is that he would owe us the balance.” HB argues that the statement was intended to describe what would happen under either payment alternative. Therefore, HB concludes that the statement means that if the Channel 39 deal did not happen, the note was payable at the end of five years.
The trial court, however, rejected this interpretation of Brotherton’s testimony. We find the trial court’s interpretation of the testimony is reasonable because the statement was made in the context of a discussion that assumed the Channel 39 deal would occur. Furthermore, the trial court’s interpretation is consistent with Brotherton’s subsequent testimony about not being told VPT would have to wait five years for payment if the Channel 39 deal did not go through.
3. Pappas’s testimony
On Tuesday, September 26, 2006, VPT’s counsel asked Pappas the following questions on direct examination.
“Q My question, again, is at the time that you entered into this Amendment to Assignment Agreement in February of 2002, did you tell anyone at [VPT] that if the channel 39 deal did not go through, that they would not get their money from you until 2007?
“A I didn’t need to tell them. It was understood because that was part of the giving paradigm.
“Q So I’ll take that as a no, that you did not tell them?
“A I did not need to tell them. I don’t ordinarily have to tell people anything in a peremptory fashion if it’s already understood, sir.
“Mr. McGee: Your Honor, I’m going to move to strike as non-responsive. I didn’t ask what he needed to do.
“The Court: The objection’s sustained. Motion to strike is granted.
“By Mr. McGee:
“Q Did you tell them that they were gonna have to wait until February of 2007 to get their money?
“A It was written into the document. I didn’t need to tell them.
“Q So the answer is no?
“A That’s correct.”
Later in the trial, when HB presented its case, Pappas testified during direct examination about the discussions concerning the promissory note and what he told Brotherton and other members of VPT’s board about when the money would be due. Pappas first described how the payment provisions would work if VPT obtained rights to Channel 39. Then he testified:
“Alternatively, if no arrangement was made with the Consortium [regarding channel 39], and if instead the efforts there failed, then at the end of five years, February of ’07, the sums would be paid over to [VPT] for their use on unrestricted basis. This is what I referred to when Mr. McGee asked me about it last week, as was described to the board and to others, there was a heads you win, tails you win situation.”
4. Trial court’s findings and interpretation
The trial court’s statement of decision addressed the parol evidence introduced at trial, including the testimony of Brotherton and Pappas:
“The extrinsic evidence the court considered includes, without limitation, the testimony of Colin Dougherty, Phyllis Brotherton, and the early testimony of Pappas, all of which the court finds to be more credible than the later contradictory testimony of Pappas. Pappas initially testified, as did Dougherty and Brotherton, that Pappas never told anyone at VPT that if there were no agreement with [the Consortium regarding channel 39], then VPT would have to wait until 2007 to receive payment under the Promissory Note. When Pappas changed his testimony later in the trial by stating that he told VPT that if no agreement were made with [the Consortium regarding channel 39], then the Promissory Note would be due in February 2007, no other witnesses corroborated his later version of the facts. After considering the contradictory evidence, the court finds that Pappas never informed VPT that the Promissory Note would not be due until 2007 until after VPT filed suit in 2005.”
Based on the testimony and other extrinsic evidence presented, the trial court concluded “that the intent of the parties was for the Promissory Note to become a demand note when it became clear an interest in a construction permit in Bakersfield [for a new television station] could not be obtained.” The court subsequently restated this conclusion as follows:
“In summary, on the alternative basis that the Promissory Note is ambiguous, the court finds, based on the language of the Promissory Note and the extrinsic evidence presented, that the Promissory Note became a note payable on demand possibly earlier than but no later than January 20, 2004, when Pappas no longer had an obligation to pay interest.”
5. Analysis
First, the trial court correctly identified an internal conflict in the testimony presented by Pappas.
Second, the trial court’s determination as to which version of Pappas’s testimony was more credible is supported by substantial evidence. That evidence includes Brotherton’s testimony and Pappas’s own testimony of September 26, 2006. Both Brotherton’s testimony and Pappas’s early testimony indicated that Pappas did not tell anyone at VPT that VPT would have to wait until February 2007 for payment if the Channel 39 deal fell through. Accordingly, as a court of review, we must accept the trial court’s credibility finding. (Bradley v. Perrodin (2003) 106 Cal.App.4th 1153, 1166 [it is the exclusive province of the trier of fact to determine issues of credibility of witnesses].)
Third, based on our assumption that the promissory note was ambiguous and the admission of competent extrinsic evidence that was in conflict, we conclude that our review of the trial court’s interpretation of the promissory note must use the substantial evidence standard. (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1267 [appellate court applies substantial evidence test when parol evidence is in conflict and trial court is required to resolve issues of credibility].)
Lastly, we conclude that substantial evidence supports the trial court’s interpretation of the language in the promissory note. The trial court concluded that the phrase “over the period of five years” related only to the payment of interest, and we agree with this interpretation. As noted earlier, this interpretation is consistent with the last antecedent rule. Also, the use of the preposition “over” suggests multiple payments or installments. Under the note, installment payments were to be made only in the event that interest was payable—that is, if VPT acquired a construction permit for a new television station. In contrast, interpreting a promise to pay a principal sum over the period of five years to mean that a single payment is due at the end of five years is a less natural interpretation. Consequently, we conclude that the trial court chose the most likely interpretation of the promissory note.
III. VPT’s Liability for Use of Channel 19
HB contends that VPT owes it more money for VPT’s last seven months of broadcasting over Channel 19. Specifically, HB’s cross-complaint alleged that the fair market value of VPT’s use of Channel 19 from July 1, 2003, through January 31, 2004, was between $196,000 and $385,000. This seven-month period of use occurred after the July 1, 2003, expiration date set by the time brokerage agreement.
HB’s cross-complaint contained three causes of action labeled as declaratory relief, unjust enrichment, and quantum meruit.
Under the unjust enrichment theory of recovery, HB asserts that VPT “wrongfully retained possession and use of Channel 19, the personal property at issue, following the expiration of the [time brokerage agreement].” HB contends this wrongful retention “equates to conversion” and requests damages under Civil Code section 3336, which sets forth the remedies for wrongful conversion of personal property.
HB’s quantum meruit theory of liability is based on the premise that VPT’s silence in the face of HB’s offer “to permit [VPT] to continue broadcasting Channel 19 for lease payments equivalent to the fair market value of $28,000 per month” plus expenses should be regarded as an acceptance of HB’s offer.
A. Contentions of the Parties
1. HB’s theory of error
HB argues on appeal that (1) a de novo standard of appellate review applies because the parties do not dispute the essential facts and (2) this court can determine as a matter of law that HB is entitled to the fair market value of VPT’s use of Channel 19.
HB’s opening appellate brief relies on the factual assertion that Dougherty “testified that Pappas informed him that VPT was going to be required to pay the fair market value for [its] use of Channel 19 following the expiration of the [time brokerage agreement] for Channel 65. (See RR at pgs. 372-386)”
HB also asserts that Dougherty’s January 10, 2003, memorandum informed VPT’s board “of the need to find another station once the Channel 65 [time brokerage agreement] expired otherwise VPT would have to pay [HB] rent to use Channel 19. (See RR at pgs. 372-386)”
2. VPT’s contentions
VPT contends that, after the expiration of the initial term of the time brokerage agreement, HB and VPT continued their relationship by mutual consent and, therefore, the same payment terms continued to apply during the seven-month period. Under VPT’s version of the facts, HB never proposed a change in the terms of the time brokerage agreement.
With respect to the standard of review, VPT contends that its version of the facts is supported by substantial evidence.
In short, VPT’s position on appeal is not compatible with HB’s assertion that the essential facts are not in dispute.
B. Trial Court’s Findings
The trial court evaluated the testimony about the discussions between Pappas and Dougherty concerning the fair market value of Channel 19 and made the following finding:
“Although Pappas had a conversation with Colin Dougherty about Pappas’s belief as to the reasonable value of Channel 19 (but not the payment that [HB] intended to charge VPT), no persuasive evidence was presented to establish that [HB] seasonably gave notice to VPT that it must pay $28,000 per month or any other increased amount to continue the relationship.”
The trial court also found that HB “expressly or impliedly consented to VPT’s continued use of the television station on the same terms” as set forth in the time brokerage agreement. Based on this finding, the trial court concluded that VPT only owed the payment fixed by the written terms of the time brokerage agreement and was not liable for the reasonable value of the use of Channel 19. In effect, the trial court treated VPT like a tenant that had held over with the landlord’s consent.
In the context of the formation of a contractual relationship, consent is a question of fact. (Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141.)
C. Applicable Standard of Review
The applicable standard of review is determined by the question whether the essential facts are disputed. If the facts are undisputed, we need not consider the sufficiency of the evidence and can conduct an independent review of the questions of law presented by HB. (See Central Valley General Hosp. v. Smith, supra, 162 Cal.App.4th at p. 513 [appellate court independently reviews questions of law and applies substantial evidence standard to findings of fact].)
Consequently, deciding the applicable standard of review requires (1) identifying the facts essential to HB’s legal theories of error and (2) determining whether those facts are undisputed.
1. Quantum meruit and silence as consent
The factual foundation of HB’s quantum meruit claim includes the assertion that HB “offered to permit [VPT] to continue broadcasting Channel 19 for lease payments equivalent to the fair market value of $28,000 per month .…” The evidentiary basis for this factual assertion includes (1) Dougherty’s January 10, 2003, memorandum to VPT’s board, (2) Dougherty’s testimony, and (3) Pappas’s testimony.
First, the relevant sentence of the Dougherty’s January 10, 2003, memorandum states in full: “Unless Channel 39 is constructed by then, or unless Mr. Pappas constructs Channel 19 and leases time to KVPT to maintain broadcast, [VPT] will cease to operate in Kern County.” Based on the language about the construction and leasing of Channel 19, HB has inferred that Dougherty was informed that VPT would be required to pay fair market value for using Channel 19. In effect, HB has interpreted Dougherty’s use of the verb “leases” to mean “pays rent at fair market value.”
Second, HB’s opening appellate brief states that Dougherty “testified that Pappas informed him that VPT was going to be required to pay the fair market value for their use of Channel 19 following the expiration of the [time brokerage agreement] for Channel 65. (See RR at pgs. 372-386)”
We note that HB’s use of a block citation to the reporter’s transcript is not appropriate. California Rules of Court, rule 8.204(a)(1)(C) has been interpreted to require exact page citations—a requirement that is not satisfied by citation of a block of pages. (E.g., Bernard v. Hartford Fire Ins. Co. (1991) 226 Cal.App.3d 1203, 1205 [interpreting a predecessor of rule 8.204].)
We conclude that the facts upon which HB bases its quantum meruit claim were disputed.
The language in Dougherty’s January 10, 2003, memorandum does not necessarily support a finding that Pappas informed Dougherty that VPT would be required to pay fair market value for using Channel 19. The memorandum uses the term “leases,” which is broad enough to include both an arrangement that calls for fair market value rent and an arrangement that calls for payment only of out-of-pocket operating expenses.
Also, HB’s description of Dougherty’s testimony is not accurate. We have reviewed pages 372 through 386 of the reporter’s transcript and Dougherty did not say that Pappas informed him that VPT was going to be required to pay the fair market value for its use of Channel 19. Furthermore, if HB’s block citation is interpreted to mean that its factual assertion is based on inferences drawn from the testimony on those pages of the reporter’s transcript, we conclude that HB’s inferences are not the only inferences that a reasonable trier of fact could draw. Indeed, the trial court’s explicit finding regarding Dougherty’s discussion with Pappas, which is set forth in the indented quote in part III.B, ante, contradicts HB’s description of Dougherty’s testimony.
Stated otherwise, HB’s inferences are not compelled as a matter of law.
Accordingly, we must reject HB’s contention that the facts essential to its quantum meruit claim are undisputed.
2. Unjust enrichment and conversion
HB’s claim that VPT wrongfully retained possession of Channel 19 contradicts the trial court’s finding that HB consented to VPT’s continued use of Channel 19. In other words, VPT’s possession cannot be wrongful if HB consented.
Therefore, we reject HB’s contention that the essential facts relevant to the unjust enrichment claim are undisputed.
3. Conclusion
The trial court’s finding that HB “expressly or impliedly consented to VPT’s continued use of the television station on the same terms,” if correct, necessarily precludes the theories of quantum meruit and unjust enrichment that HB presented on appeal. This and other findings of the trial court conflict with HB’s view of the essential facts. It follows that the de novo appellate review adopted by HB is not appropriate. Instead, we must apply the substantial evidence standard of review.
D. Application of the Substantial Evidence Rule
The arguments in HB’s opening appellate brief were based on a de novo standard of review. That brief did not present any argument that reversible error existed if the substantial evidence standard of review applied. In addition, HB’s appellant’s reply brief did not argue that error existed under the substantial evidence standard despite references to that standard in VPT’s respondent’s brief.
Because HB has presented no argument regarding the sufficiency of the evidence, we need not set forth a lengthy discussion demonstrating that the appellate record contains substantial evidence supporting the trial court’s finding. It is enough to note that substantial evidence exists in the form of Dougherty’s testimony and HB’s conduct.
Dougherty testified that, during their discussions concerning the impending termination date of the time brokerage agreement, Pappas told him a number of times “‘Colin, don’t worry about, I’ll work with you.’” Dougherty also testified that he did not agree that VPT would pay fair market value or any other rate for the period after the initial term of the time brokerage agreement. To support this testimony, Dougherty explained that it would have been irresponsible for him to agree to pay $28,000 per month because VPT was collecting only about $7,000 per month in donations from the Bakersfield market.
The conduct of HB that supports the inference that HB consented to VPT continuing to broadcast on the same terms that applied before July 1, 2003, included HB’s submission of invoices after July 1, 2003, that referenced the time brokerage agreement and only billed VPT for the same expenses of operating the station that had been billed earlier.
Accordingly, we conclude that HB has not demonstrated the trial court committed reversible error in finding that HB consented to VPT’s continued use of Channel 19 after July 1, 2003. Thus, the trial court’s conclusion that VPT was not liable for the reasonable value of its use of Channel 19 from July 1, 2003, through January 31, 2004, must be upheld.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
WE CONCUR: GOMES, Acting P.J., HILL, J.
Pappas, who was a member of VPT’s board at that time, abstained from voting on the approval of the sale.