Opinion
NOT TO BE PUBLISHED
Super. Ct. No. YCSCCVCV060000612
HULL, J.Plaintiff Jim K. Elliott sold a portion of his property to defendant Gilbert Retail Holdings. When plaintiff subsequently encountered difficulties in developing his remaining parcel, he sued defendant for breach of contract and declaratory relief, asserting defendant failed to perform as their agreement required. The trial court sustained defendant’s demurrer without leave to amend and entered judgment in defendant’s favor. Plaintiff appeals, asserting his complaint states valid causes of action. We affirm the judgment.
Standard of Review
“When reviewing a judgment dismissing a complaint after the granting of a demurrer without leave to amend, courts must assume the truth of the complaint’s properly pleaded or implied factual allegations. [Citation.] Courts must also consider judicially noticed matters. [Citation.] In addition, we give the complaint a reasonable interpretation, and read it in context. [Citation.] If the trial court has sustained the demurrer, we determine whether the complaint states facts sufficient to state a cause of action.” (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) “In making this determination, we are not bound by the trial court’s construction but instead make our own independent judgment as to the sufficiency of the complaint.” (Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, 1038-1039.)
“If the court sustained the demurrer without leave to amend, as here, we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect.” (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
“However, when a complaint contains allegations that are fatal to a cause of action, a plaintiff cannot avoid those defects simply by filing an amended complaint that omits the problematic facts or pleads facts inconsistent with those alleged earlier. [Citations.] Absent an explanation for the inconsistency, a court will read the original defect into the amended complaint, rendering it vulnerable to demurrer again. [Citations.] Facts appearing in exhibits attached to a complaint will also be accepted as true and will be given precedence over any contrary allegations in the pleading.” (Banis Restaurant Design, Inc. v. Serrano, supra, 134 Cal.App.4th at pp. 1044-1045.)
Facts and Proceedings
The following facts are derived from plaintiff’s verified complaint, first amended complaint, and exhibits to the pleadings:
Defendant, the developer of a subdivision, was required to construct new water treatment facilities and provide property for the use of the local fire district. Defendant entered into negotiations with plaintiff, who owned 6.7 acres of nearby land, to buy a portion of this property. The parties signed a lease with an option to purchase, with the aim of obtaining approval for subdividing the property. The lease itself was to run no more than six months, beginning September 1, 2004. The option could be exercised anytime between January 1, 2005 and February 1, 2005.
The lease specified that “during the term of this Lease, [defendant] intends to develop, construct and improve all or a portion of the Premises, (including the construction of a Water Treatment Plant)[.]” Title to these improvements was to vest in defendant unless the lease expired or terminated without defendant having exercised the purchase option, in which case the improvements were to become the property of plaintiff without any compensation.
The purchase option was in fact exercised, and in September 2004, the parties entered into a purchase agreement (the agreement) for the subject property, with plaintiff to retain slightly over two acres of the land and the rest sold to defendant. Defendant paid a $10,000 nonrefundable deposit, with the remainder of the purchase price due when escrow closed. In the event of any breach or material default by defendant, the earnest money deposit would serve as liquidated damages.
Paragraph 26 of the agreement outlined certain obligations of defendant. It stated: “Prior to the Close of Escrow, [defendant] . . . shall provide, to the Retained Parcel, two (2) sewer lines, stubbed to the property line of the Retained Parcel, and two (2), two inch (2”) water line stubbed to the property line of the Retained Parcel. [Defendant] shall, during construction, as described herein, and during any period of time in which [defendant] is leasing the Property, provide sewer and water to the existing buildings and tenants. Prior to the Close of Escrow, [defendant] . . . shall utilize its best efforts to obtain, from the Olivehurst Public Utility District (“OPUD”) a waiver of all sewer and water connections mentioned herein for the Retained Parcel. In the event [defendant] . . . does not receive said waiver of the sewer and water connections from OPUD, [defendant] will pay said fees to [plaintiff] and [defendant] shall receive, on a pro-rata basis, reimbursement from North Plumas Lake Owners Group.”
Paragraph 2 of the agreement provided in relevant part: “On or prior to the Closing, subject to the satisfaction of the conditions to [defendant’s] obligations stated herein, [plaintiff] and [defendant] shall execute and deliver such documents and perform such acts as are provided for herein, or as are necessary, to consummate the sale contemplated herein.”
The parties also included an integration clause in paragraph 22 as follows: “This Agreement supersedes all previous agreements or discussions between the parties concerning the sale of the Property, constitutes an integrated and complete statement of the Agreement, and may only be amended by a written amendment executed by both parties.”
On January 20, 2005, defendant asked OPUD to waive the water and sewer connection fees for the parcel retained by plaintiff. OPUD approved a one-year waiver for two residential two-inch water lines and two sewer connections.
On January 28, 2005, escrow closed and plaintiff executed grant deeds conveying the parcels for the water treatment plant and fire station.
Sometime in early 2006, plaintiff sought to obtain water and sewer service for his retained parcel but OPUD refused to provide it because the parcel was outside the service district. Plaintiff asked defendant to assist him with an application to annex the property to the OPUD service district but defendant refused.
Plaintiff filed a verified complaint for breach of contract, asserting defendant failed to perform the obligations required by paragraph 26 of the agreement. Defendant demurred, and the court sustained the demurrer with leave to amend.
Plaintiff then filed a first amended complaint for breach of contract and declaratory relief, and it is this complaint that is at issue in this appeal. He asserted that defendant “had and continues to have a duty under the Agreement to do what is necessary to provide commercial water and sewer service to [plaintiff’s] Retained Parcel, to prevent any interruption of water and sewer service to the existing buildings and tenants, and obtain unconditional waivers of all connection fees for two commercial water lines and two sewer lines.” (Fn. omitted.) He alleged: “[Defendant] failed to perform paragraph 26 of the Agreement in that it has failed to obtain unconditional connection fee waivers for two commercial water lines and two sewer lines, has failed to otherwise provide two commercial water lines and two sewer lines that [plaintiff] is able to utilize, and has failed to provide continuous sewer and water service to the existing buildings and tenants on [plaintiff’s] Retained Parcel.”
Plaintiff’s second cause of action for declaratory relief centered on whether damages were limited to the $10,000 described in the liquidated damages provision of the agreement, or whether plaintiff could recover his claimed damages of at least $120,000. Plaintiff acknowledged that this cause of action was relevant only if there was in fact a breach of contract.
Defendant demurred to the complaint, asserting that no cause of action for breach of contract could be stated. It argued that the obligations outlined in paragraph 26 were to be performed before escrow closed, that it had performed all of these obligations, and that plaintiff in fact closed escrow. It asserted that plaintiff was trying to reformulate and add new terms to the parties’ agreement. The trial court agreed, sustained the demurrer without leave to amend, and entered judgment in favor of defendant.
This appeal followed.
Discussion
Plaintiff’s complaint claims that plaintiff breached the parties’ agreement by failing to perform obligations required under paragraph 26 of the agreement. Plaintiff asserts that his complaint states a proper cause of action for breach of contract and therefore the trial court erred in sustaining defendant’s demurrer. We do not agree.
Paragraph 26 required defendant to provide “two (2) sewer lines, stubbed to the property line of the Retained Parcel, and two (2), two inch (2”) water line[s] stubbed to the property line of the Retained Parcel,” and to use its best efforts to obtain a fee waiver for these lines. Plaintiff’s complaint asserts that defendant breached this obligation by failing to obtain fee waivers for commercial water lines. Nothing in the agreement specified that the water lines were to be commercial rather than residential. The only obligation was to provide and seek fee waivers for “two (2), two inch (2”) water line[s].”
Plaintiff asserts he should have been allowed to introduce extrinsic evidence to demonstrate that the reference to two-inch lines necessarily meant commercial lines. This claim is unpersuasive for several reasons.
First, extrinsic evidence is not appropriate under these circumstances. The parties entered into an integrated agreement. Paragraph 22 provided: “This Agreement supersedes all previous agreements or discussions between the parties concerning the sale of the Property, constitutes an integrated and complete statement of the Agreement, and may only be amended by a written amendment executed by both parties.”
“When the parties to an agreement incorporate the complete and final terms of the agreement in a writing, such an integration in fact becomes the complete and final contract between the parties. Such a contract may not be contradicted by evidence of purportedly collateral agreements. As a matter of law, the writing is the agreement.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 14.)
Courts seek to enforce the intention of the contracting parties, and it is this “outward expression of the agreement, rather than a party’s unexpressed intention, which the court will enforce.” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1166.) Consequently, the parol evidence rule generally prohibits the introduction of extrinsic evidence to vary, alter or add to the terms of an integrated agreement. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343; see Civ. Code, § 1625; Code Civ. Proc., § 1856.)
However, extrinsic evidence may be introduced to explain the written meaning of the contract if the meaning is one to which the contract terms are reasonably susceptible. (Casa Herrera, Inc. v. Beydoun, supra, 32 Cal.4th at p. 343.) But “[p]arol evidence cannot be admitted to show intention independent of an unambiguous written instrument.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc., supra, 18 Cal.App.4th at p. 15.) As we recently summarized, well-established case law “makes clear . . . that ‘extrinsic evidence is not admissible to add to, detract from, or vary the terms of a written [integrated] contract,’ but only to interpret the terms in the contract.” (Bernard v. State Farm Mutual Automobile Ins. Co. (2007) 158 Cal.App.4th 304, 309.)
Here, there is nothing ambiguous or uncertain about the contract provisions requiring defendant to provide two, two-inch water lines and seek fee waivers for these lines. “Two-inch water lines” mean exactly that. These terms are not susceptible to any other meaning, and therefore extrinsic evidence cannot be introduced on this point. Plaintiff cannot rely on extrinsic evidence to transform defendant’s obligations under the contract into different obligations plaintiff might prefer.
Plaintiff insists that two-inch lines are necessarily commercial lines and extrinsic evidence should be admitted to establish this fact. (See generally Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1241 [extrinsic evidence admissible both to explain an obvious ambiguity and to expose a latent ambiguity].) However, plaintiff’s own pleadings refute his claim. The first amended complaint alleges that OPUD “waived the connection fees for two ‘residential’ water services.” But in his original verified complaint, plaintiff specifically stated that OPUD approved the waiving of two ‘residential’ 2 inch water services.” (Italics added.) According to plaintiff’s own pleadings, two-inch lines are not necessarily commercial: OPUD approved two-inch residential lines. Plaintiff cannot escape the allegations of his original complaint by filing an amended complaint that omits the problematic fact that the OPUD approved waivers for two-inch residential water lines for plaintiff’s parcel. (Banis Restaurant Design, Inc. v. Serrano, supra, 134 Cal.App.4th at pp. 1044-1045.)
Perhaps even more importantly, the terms of the agreement demonstrate that defendant performed his obligations to plaintiff’s satisfaction. Paragraph 2 of the agreement provided in relevant part: “On or prior to the Closing, subject to the satisfaction of the conditions to [defendant’s] obligations stated herein, [plaintiff] and [defendant] shall execute and deliver such documents and perform such acts as are provided for herein, or as are necessary to consummate the sale contemplated herein.” (Italics added.)
Plaintiff’s complaint states that plaintiff executed the deeds and that escrow closed. By consummating the sale, plaintiff implicitly acknowledged that defendant had satisfied his obligations under the contract. That fact alone dooms plaintiff’s complaint.
This brings us to the underlying problem with plaintiff’s case. Defendant’s obligations under paragraph 26 all related to obligations to be performed before the close of escrow: defendant was to run water and sewer lines to defendant’s retained parcel, provide water and sewer to existing buildings and tenants “during any period of time in which [defendant] is leasing the Property,” and use its best efforts to obtain a waiver from OPUD of all sewer and water connections. Only upon the satisfaction of these obligations was escrow to close.
If these obligations were not met during the escrow period, plaintiff was free to cancel the agreement and keep the $10,000 earnest money deposit. Plaintiff did not do that. He closed escrow, something that according to the parties’ agreement was to occur upon satisfaction of defendant’s obligations. (See generally Fin. Code, § 17003, subd. (a) [defining “escrow” as a transaction in which a third party holds an item of value “until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered”].) The language of the contract defeats plaintiff’s claims: if plaintiff closed escrow, plaintiff must have been satisfied with defendant’s efforts in meeting its obligations under paragraph 26. Plaintiff was not entitled to close escrow and then file a complaint more than 18 months later alleging violations of preclosing obligations.
The same analysis applies to plaintiff’s other allegations of breach of contract, as we briefly explain.
Plaintiff suggests that because OPUD granted only a one-year waiver for the water and sewer lines, defendant did not obtain “unconditional” fee waivers as required by the contract. Paragraph 26 required defendant to use his best efforts to obtain “a waiver of all sewer and water connections.” If he was unsuccessful, defendant was to pay these fees to plaintiff and receive reimbursement from a third party.
Plaintiff’s complaint states that OPUD granted a one-year waiver on January 20, 2005, more than one week before escrow closed. Again, plaintiff knew that the district had granted only a one-year waiver but nonetheless closed escrow. Nothing in the contract required defendant to obtain a waiver that would last for perpetuity. If plaintiff had concerns on this point, he could have cancelled the agreement. By closing escrow, plaintiff acknowledged that defendant’s obligations were met.
Plaintiff also misreads defendant’s obligations for providing sewer and water service for the existing buildings and tenants on the retained parcel. Paragraph 26 refers to such an obligation as lasting “during construction, as described herein, and during any period of time in which [defendant] is leasing the Property.” There is no description of construction in the agreement. However, the lease describes construction that will occur “during the term of this Lease,” i.e., beginning September 1, 2004 and ending no later than February 1, 2005. Again, by closing escrow, plaintiff acknowledged that defendant had met his obligations under the agreement.
While plaintiff is understandably unhappy that he must annex his property to OPUD in order now to obtain service, that is no fault of defendant’s and does not reflect a breach of defendant’s obligations under paragraph 26.
The trial court properly concluded that plaintiff’s complaint did not state a claim for breach of contract, and sustained defendant’s demurrer. This conclusion also disposed of plaintiff’s second cause of action for declaratory relief, which focused on the proper measure of damages for any breach.
Disposition
The judgment is affirmed. Defendant is awarded its costs on appeal.
We concur: BLEASE, Acting P.J., ROBIE, J.