Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, Ct. No. BC386212, Zaven V. Sinanian, Judge.
Moon & Yang, Seung Yang and Kane Moon for Defendant, Cross-complainants and Appellants.
Lurie & Park, Daniel E. Park and Lisa M. Lawrence for Plaintiffs, Cross defendants and Respondents.
KRIEGLER, J.
This appeal arises out of a series of disputes concerning the operation and sale of a business, Le Prive Dinner Club, located in the Los Angeles neighborhood known as Koreatown. We summarize the nature of the parties and the underlying transactions in order to place the appellate claims in context.
Plaintiffs, cross-defendants, and respondents Linda Hong and Howard Kea originally built and ran Le Prive. Although divorced, the two lived and worked together. They formed Zoo Entertainment, LLC (Zoo) as a California limited liability company to own the club until it was eventually sold to a third party, 22 Wilshire Center Investment. In 2003, defendant, cross-complainant, and appellant Jung Ho Park purchased a 50 percent interest in Zoo. The following year, Park purchased another 40 percent interest in Zoo and became the managing owner of Le Prive, with Hong retaining the remaining 10 percent interest in the business. All of those transactions were conducted through written contracts, including the February 2005 modification agreement providing that upon sale of Le Prive to a third party, Park would pay Hong $200,000 for her remaining interest in Zoo. Subsequently, by a written agreement of January 2007, Park was guaranteed a payment of $900,000 following consummation of the anticipated sale of the club. A few days later, by a separate agreement and unbeknownst to Park, Kea entered into a consulting agreement with 22 Wilshire whereby Kea would receive $600,000 upon close of escrow for the purpose of helping 22 Wilshire obtain the permits necessary to run the club.
The jury was instructed that Hong and Kea were each other’s agents with regard to the underlying transactions and their interests were deemed to be the same for purposes of this lawsuit.
Plaintiffs and Park sued on behalf of Zoo as a named party, based on the parties’ various ownership interests.
Some months after the sale, Hong and Kea sued Park for a variety of claims, including (1) unjust enrichment based on allegations that Park and his parents subsequently encumbered the parcels of Korean real property originally transferred by Park’s parents to Hong and Kea as part of the consideration for Park’s purchase of the 40 percent interest in Zoo, thereby preventing Hong and Kea from developing or selling the properties; (2) breach of contract based in part on Park’s failure to make the $200,000 payment to Hong required by the February 2005 modification agreement; and (3) breach of fiduciary duty for failing to pay Hong and Kea their full 10 percent share of the club’s profits during the time Park was the 90 percent owner. Park filed a cross-complaint alleging a variety of claims, including that Hong and Kea breached the January 2007 contract by paying him only $640,000 of the $900,000 guaranteed by that agreement.
During trial, Hong and Kea dismissed their other claims.
Following a trial, the jury awarded a total of $1,519,970 to Hong and Kea, specially finding that Park was unjustly enriched in the amount of $1,050,000, based on the encumbrances Park’s parents placed on the Korean properties; Park was liable for $200,000 for breach of the February 2005 modification agreement; and he was liable for $269,015 for breaching his fiduciary duty. The jury also awarded Hong and Kea a 10 percent share of the money remaining in the escrow account for the sale of the club to 22 Wilshire. On the cross-complaint, the jury awarded $268,591.40 to Park plus his 90 percent share of the remaining escrow funds based on Hong and Kea’s failure to pay Park the entire $900,000 in guaranteed sales proceeds as promised in the January 2007 contract.
The jury specifically rejected the claims that Hong and Kea defrauded Park in the sale of the interests in Zoo by concealing that the club had been cited by government authorities for various violations of its conditional use permit; that Hong and Kea breached their fiduciary duty to Park by overcharging Park for his interests in the club; that Hong and Kea breached their fiduciary duty to Zoo by failing to disclose the $600,000 payment to Kea upon close of escrow of the sale of the club to 22 Wilshire. It also rejected the claims for punitive damages by both sides.
In his timely appeal, Park contends (1) the restitution award for unjust enrichment is legally invalid because there was no breach of the contract on which the claim is based or, alternatively, the award was a disguised double recovery of restitution on the contract, which requires Hong and Kea to convey the Korean properties to him as a condition of recovery; (2) Zoo is entitled to judgment on its claim for breach of fiduciary duty as a matter of law because Kea was Zoo’s agent at the time he entered into the undisclosed consulting agreement with 22 Wilshire; and (3) Hong and Kea cannot recover for Park’s breach of the February 2005 modification agreement because that contract was superseded by the January 2007 agreement.
We affirm.
STATEMENT OF FACTS
In a written agreement dated July 31, 2003, Park purchased a 50 percent interest in Le Prive for $925,000. Park understood he would receive half of the business’s profits. Park soon decided he wanted to increase his ownership interest. Park’s father frequently met with Kea concerning his son’s investment in the club and was actively involved in the negotiation and revision of the agreement that made Park the 90 percent owner of the business. A written agreement of October 15, 2004, contained the terms for Park’s acquisition of 90 percent of the ownership, with Hong retaining 10 percent. Park would run the business and Kea would be a consultant. There was an option for Park to buy the remaining 10 percent one year after the agreement’s date for $200,000.
Crucial for purposes of this appeal, the agreement provided that part of the purchase price would be paid with parcels of Korean properties owned by Park’s parents. Specifically, $1,050,000 of the total $1,375,000 purchase price would be paid for by transfer of nine properties in Korea “free and clear from all liens and encumbrances.” Park’s father travelled to Los Angeles from Korea to meet with Kea prior to the completion of the sale. As promised, Kea and Hong received the nine parcels of Korean land from Park’s parents “free and clear” of liens, along with the monetary payment of $325,000. Pursuant to the agreement, Park would be entitled to 90 percent of the profits.
Through the subsequent Modification of Sales and Purchase Agreement dated February 15, 2005, Park and Hong agreed to various modifications of the October 2004 sales agreement. Significantly, paragraph 1 eliminated Park’s option to purchase Hong’s remaining 10 percent interest in Zoo. Paragraph 4 provided that when Zoo “permanently closes or sells Le Prive Restaurant to a third party, PARK agrees to pay $200,000 for HONG’s then entire interest in Zoo Entertainment.” Park admitted that he did not make that payment upon the subsequent sale to 22 Wilshire. He explained that he relied on his attorney, Heesok Park, who advised him that the payment was due upon sale of the company (Zoo) rather than upon sale of the club.
Kea testified that in 2006 the parties came to believe it would be best to sell Le Prive. The decision to look for a buyer for the club was largely driven by the fact that the club’s conditional use permit (C.U.P.) expired due to Park’s failure to file for a renewal, despite repeated notice by mail. Kea learned about the expiration of the C.U.P. in May 2006, when a club manager showed him a letter saying all the licenses would expire on April 30, 2006. As a result of the expired C.U.P., Le Prive could not operate as a dance club. Park testified that it made sense to sell the club because it needed extensive renovations and renewing the C.U.P. would also be expensive and time consuming—and the owners would be responsible for paying rent during the time the club was closed. In the meantime, Zoo applied to renew the C.U.P., which was approved on February 7, 2008, on behalf of 22 Wilshire.
On January 26, 2007, Park and Hong entered into a written agreement in contemplation of the third party sale for approximately $1.2 million. Park granted to Hong (and implicitly Kea) an irrevocable power of attorney to “undertake all acts and execute all documents” deemed necessary to sell the business as contemplated by the agreements. The proceeds of the anticipated sale were to be applied first to the costs, fees, and expenses incurred in the sale, and second to the payment of taxes, with $300,000 of the proceeds reserved for those purposes. “All remaining amounts from the sale proceeds shall be paid to Park. As compensation for Park’s interest, Park shall receive a minimum of $900,000 (the ‘minimum amount’) and in the event the remainder of the proceeds are [sic] less than the Minimum Amount, Hong shall make up the difference in order to assure that Park receives the Minimum Amount.”
The anticipated sale was eventually consummated, with 22 Wilshire buying Le Prive for $1.2 million. Park, however, received only $640,000 in sale proceeds, instead of the guaranteed $900,000. Neither Kea nor Hong received any proceeds from the sale proceeds. After distribution for cost, expenses, liabilities, and taxes, there were not enough proceeds to pay Park his promised $900,000. Neither Kea nor Hong received the $200,000 payment for the 10 percent interest in the business, pursuant to the February 2005 agreement.
Without Park’s knowledge, Kea and 22 Wilshire entered into a written consulting agreement, whereby Kea would assist 22 Wilshire in buying Le Prive. The contract provided that Kea would receive $600,000 if the sale closed within the escrow period with the buyer receiving transfer of the liquor license. Kea understood that he was being paid to help the buyer obtain the licensing needed to operate the club. The agreement was prepared by Zoo counsel Heesok Park, who also represented Zoo in the sale of Le Prive to 22 Wilshire. Kea received the entire $600,000 in two payments. He paid his own consultants to assist him in reviving the C.U.P. and made substantial efforts of his own to that end. On advice of Heesok Park, Kea understood the agreement would be kept confidential and not disclosed to Park on request of the buyer. Later, upon reflection, Kea believed it was morally, if not legally, wrong not to disclose the consulting agreement to Park.
In December 2007, Park’s parents sued Kea and Hong in a Korean court, placing a lien on the properties that they had deeded to Kea and Hong as part of the consideration for the sale of the 40 percent interest in Zoo that made Park the 90 percent owner. Although the trial testimony referred to the property encumbrances as “liens, ” Park correctly points out that a translated version of the underlying Korean order was an exhibit at trial—that document, issued by the Soowon District Court on July 3, 2007, states that a temporary injunction was imposed against Kea concerning the subject properties, which proscribed Kea from selling, donating, leasing, mortgaging, taking occupancy, or disposing of the real estate in any other manner, pending resolution of the “Right to Claim for Erasures of the Ownership Transfer Recordings.” This encumbrance was in place at the time of trial and Kea did not know when it would be lifted. At the time Park’s parents encumbered the Korean properties, Kea discovered a subway station would be built close to those properties.
Park denied instigating that Korean lawsuit, testifying that he first learned about it when Kea and Hong sued him. According to Park, his parents took legal action to encumber the properties because Park had not received all the proceeds due him following the sale of Le Prive to 22 Wilshire and because Kea had not paid Park’s father for “development rights” as to those properties. Through the lawsuit, Park’s parents tried to “cancel” those property conveyances.
An expert in appraisals of real property in Korea reviewed Korean appraisals of the nine properties transferred by Park’s parents to Kea as part of the sale agreement, which indicated that the properties approximately doubled in value from January 1, 2005, to January 1, 2009, because a subway station opened near those properties on December 27, 2007. The total appraised value for the nine properties as of 2009 was approximately $2.1 million.
Accountant Stephen Alan Henson offered expert testimony concerning the profits realized while Park was the 90 percent owner and manager of Le Prive. His review of financial records showed Le Prive’s revenues from October 15, 2004, to December 31, 2006, were comprised 50 percent of cash sales. His analysis determined that there were $2,750,149 in cash sales during that period that were not reported in the records of Zoo—approximately $100,000 per month. Using an analysis with a 40 percent cash sales basis, there would have been $1.6 million in unreported cash sales. Taking into account the club’s operating expenses for the 2004 period were $212,000, Henson determined that 10 percent of the unreported cash sales would be $269,015.
DISCUSSION
Unjust Enrichment and Restitution Award
Park contends the $1,050,000 restitution award for unjust enrichment is improper as a matter of law because it amounts to a disguised contractual recovery for the consideration paid under the October 2004 contract—without a finding of contractual breach. As we explain, however, the jury’s special verdict was based on a legally sound instruction as to restitution for unjust enrichment and the facts adduced at trial provide substantial evidentiary support for the award under that theory.
As a general matter, unjust enrichment and breach of contract are exclusive theories of recovery. (See, e.g., F.D.I.C. v. Dintino (2008) 167 Cal.App.4th 333, 346-347.) However, it does not follow from the existence of a contract between the parties that all disputes arising out of that agreement must be contractual, rather than equitable or quasi-contractual in nature. The governing law is well settled. “Under the law of restitution, an individual may be required to make restitution if he is unjustly enriched at the expense of another. (Rest., Restitution, § 1, p. 12.) A person is enriched if he receives a benefit at another’s expense. (Id., com. a, p. 12.) The term ‘benefit’ ‘denotes any form of advantage.’ (Id., com. b, p. 12.) Thus, a benefit is conferred not only when one adds to the property of another, but also when one saves the other from expense or loss. Even when a person has received a benefit from another, he is required to make restitution ‘only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.’ (Id., com. c, p. 13.)” (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51; F.D.I.C. v. Dintino, supra, at pp. 346-347.)
As such, “a cause of action for unjust enrichment is not based on, and does not otherwise arise out of, a written contract. Rather, unjust enrichment is a common law obligation implied by law based on the equities of a particular case and not on any contractual obligation. [Citation.] Whether termed unjust enrichment, quasi-contract, or quantum meruit, the equitable remedy of restitution when unjust enrichment has occurred ‘is an obligation (not a true contract [citation]) created by the law without regard to the intention of the parties, and is designed to restore the aggrieved party to his or her former position by return of the thing or its equivalent in money.’ (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 1013, p. 1102.) ‘The so-called “contract implied in law” in reality is not a contract.’ [Citations.] “Quasi-contracts, unlike true contracts, are not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. They are obligations created by law for reasons of justice.” [Citation.]’ (Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 794.)” (F.D.I.C. v. Dintino, supra, 167 Cal.App.4th at p. 346.)
Here, although plaintiffs’ claim for unjust enrichment had its genesis in the parties’ contractual relations, it was not an attempt to recover for a breach of any material term thereof. It focused instead on Park’s improper post-contractual acts to deprive plaintiffs of their property, while profiting from the benefits he had received. Plaintiffs’ consistent theory of recovery for unjust enrichment as set forth in the pleadings and argued at trial was that Park received a benefit from plaintiffs in the form of the transfer of the 40 percent interest in Zoo that entitled him to realize 90 percent of the business’s profits, which he did. However, after the initial transfer of the Korean properties and performance of the October 2004 contract, Park and his parents colluded to deprive Kea of the value of that consideration by taking legal action in Korea that prevented Kea exercising any beneficial interest in the properties.
In Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726, the appellate court rejected an analogous argument to the effect that an unjust enrichment claim arising out of a dispute between the parties to an letter of credit was “an impermissible attempt to enforce indirectly a letter of credit by resort to equity.” As the appellate court explained, “The focus of Lectrodryer’s case was on what happened to the proceeds of the sale of the sieve dryer after the letter of credit expired.... Evidence also supported the conclusion that Lectrodryer satisfied the elements for a claim of unjust enrichment: receipt of a benefit and unjust retention of the benefit at the expense of another.” (Ibid.)
Significantly, in this case, the special jury instruction as to the elements of unjust enrichment—Park’s receipt of a benefit from plaintiffs and his unjust retention of those benefits at plaintiffs’ expense—was consistent with California law under the Ghirardo v. Antonioli, supra, and F.D.I.C. v. Dintino, supra, line of authority. Nevertheless, Park argues that because the “benefit” for unjust enrichment purposes was the consideration he bargained for under the October 2004 contract and the restitution award was the same as the contractual valuation of the real properties under that same agreement, the recovery must have been contractual. As such, his argument runs, Park’s retention of bargained-for consideration cannot be deemed unjust enrichment. While that assertion has some surface appeal, review of the authorities on which it is based points to its underlying flaw. In Buss v. Superior Court (1997) 16 Cal.4th 35, 49-50 (Buss), our Supreme Court held an insurer may not rely on the theory of unjust enrichment to obtain restitution for its defense costs as to claims it was obliged to defend under the terms of the insurance policy: “Under the law of restitution, a right of this sort runs against the person who benefits from ‘unjust enrichment’ and in favor of the person who suffers loss thereby. [Citations.] Any ‘enrichment’ of the insured by the insurer through the insurer’s bearing of bargained-for defense costs is consistent with the insurer’s obligation under the policy and therefore cannot be deemed ‘unjust.’”
The jury instructions were not included in the record originally prepared by the parties. In response to an inquiry from this court, Park filed an unopposed motion to augment the record on appeal, which attached a copy of the instructions. We hereby grant that motion.
Plaintiffs in this case, however, did not seek to impose and recover on a quasi-contractual obligation that was inconsistent with the terms of the parties’ contract. Rather as we have explained, plaintiffs’ theory of unjust enrichment was that Park initially performed his contractual obligations but later unfairly impaired the use of the Korean properties, while continuing to realize increased profits from the business.
Finally, Park contends the restitution award was improper as a matter of law because plaintiffs received the cash value of the Korean properties while retaining title to those properties. In order to avoid improper double recovery, Park argues, plaintiffs much be ordered to convey the properties to Park as a condition of retaining the damages award. This argument fails because the jury’s award did not necessarily entail double recovery, but was consistent with the legal requirements for restitution arising out of unjust enrichment under the facts presented at trial.
With Park’s acquiescence and implicit agreement, the jury was specially instructed that “[t]he remedy for unjust enrichment is restitution, ” which was defined as “the restoration of the status quo by the giving back of something to its rightful owner or the awarding of an amount that would put the Plaintiffs in as good a position as they would have been in absent [sic] any wrongdoing by Defendant. [¶] Here, Plaintiffs seek restitution for the value of the Korean Properties. Plaintiffs are entitled to restitution in this amount if you find that Defendant... was unjustly enriched at the expense of Plaintiffs.”
The parties agree that the trial court’s definition was consistent with California law. “[T]he measure of damages to which appellant is entitled for unjust enrichment ‘is synonymous with restitution.’ (Dinosaur Development, Inc. v. White [(1989)]216 Cal.App.3d [1310, ] 1314.) Restitution is defined ‘as restoration of the status quo by the awarding of an “amount which would put plaintiff in as good a position as he would have been if no contract had been made and restores to plaintiff value of what he parted with in performing the contract.”...’ (People v. Martinson (1986) 188 Cal.App.3d 894, 900, citation omitted.) ‘“In modern legal usage, its meaning has frequently been extended to include not only the restoration or giving back of something to its rightful owner, but also compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another.”’ (Dinosaur Development, Inc. v. White, supra, at p. 1315.)” (Dunkin v. Boskey (2000) 82 Cal.App.4th 171, 198-199.)
Under this well settled authority, there is nothing improper in plaintiffs’ recovery for compensation or reparation for the loss they suffered by Park’s collusion with his parents to deprive them from using the Korean properties.
Certainly, equitable principles also recognize that “‘a party seeking restitution “must generally return any benefit” that it has received. (Rest. 2d, Contracts, § 376, com. a, § 384, com. a.)’ (California Federal Bank v. Matreyek (1992) 8 Cal.App.4th 125, 134.)” (Dunkin v. Boskey, supra, 82 Cal.App.4th at p. 198.) Thus, where an order of specific restitution conveys to the plaintiffs a property they had sold to the defendant, it is error not to condition delivery of that property upon the repayment by the plaintiffs of the monetary consideration they received. (Alder v. Drudis (1947) 30 Cal.2d 372, 384-385.) Here, however, the evidence presented at trial does not establish the awarding of double recovery as a matter of law. It was uncontested that the value of the Korean properties was $1,050,000 at the time the parties entered into the October 2004 contract and that those properties had an appraised value of approximately $2.1 million at the time of trial. Nor was it disputed that by virtue of the Korean lawsuits, a temporary injunction proscribed Kea from using or disposing those properties in any manner, pending resolution of whether the deeds to Kea would be cancelled, thereby causing the properties to revert to Park’s parents. That injunction was in effect at the time of trial and there was no evidence as to when or if the injunction would be lifted.
Under these facts, it cannot be said the jury necessarily awarded plaintiffs the full monetary value of the properties while allowing them to retain title to them. From the jurors’ perspective, title to the properties was in dispute and might ultimately be resolved in favor of Park’s parents. In the meantime, plaintiffs had lost the right to use or dispose of the properties. Park presented no evidence to dispute the valuations presented by plaintiffs, nor did he present any evidence as to status of the Korean litigation or its likely resolution. To the contrary, the parties stipulated that the jury “was not to consider the lawsuit in Korea and how this... verdict may or may not have an impact on that proceeding.” Thus, an award of the properties’ value at the time of contracting, rather than its current value, was perfectly consistent with a legally proper measure of restitutionary damages as compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another. (Dunkin v. Boskey, supra, 82 Cal.App.4th at pp. 198-199; Dinosaur Development, Inc. v. White, supra, 216 Cal.App.3d at p. 1315.)
To the extent that error might have resulted due to the failure of the special instructions on restitution to mention the possibility of double recovery, Park invited such error by agreeing with the special instruction and failing to request any modification. (See, e.g., Geffcken v. D’Andrea (2006) 137 Cal.App.4th 1298, 1312 [the invited error doctrine is an application of the estoppel principle that where a party by his or her conduct induces the commission of error, he or she is estopped from asserting it as a ground for reversal on appeal]; Mayes v. Bryan (2006) 139 Cal.App.4th 1075, 1090 [the invited error doctrine applies with particular force in the area of jury instructions].)
Breach of Fiduciary Duty Claim
The gravamen of Park’s claim for breach of fiduciary duty, as alleged in the operative pleading and as presented to the jury, was that Kea and Hong owed Zoo a fiduciary duty in connection with the sale of Le Prive to 22 Wilshire, and Kea breached that duty by retaining the $600,000 payment arising out of the consulting agreement. The jury found no such breach. On appeal, Park contends Zoo was entitled to judgment because Kea’s duty of loyalty existed as a matter of law and the $600,000 payment amounted to a “secret profit” on the sale to 22 Wilshire. His contention fails, even assuming the existence of that duty, because there was a substantial factual basis on which the jury could find the payment fair and reasonable under the circumstances.
“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. [Citation.] Whether a fiduciary duty exists is generally a question of law. [Citation.] Whether the defendant breached that duty towards the plaintiff is a question of fact. [Citation.]” (Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1599.) “‘The determination of the particular factual circumstances under which a fiduciary takes business opportunities for himself and the application of the ethical standards of fairness and good faith required from a fiduciary to said set of facts is mainly for the trier of facts.’” (Mueller v. Macban (1976) 62 Cal.App.3d 258, 276, quoting Industrial Indem. Co. v. Golden State Co. (1953) 117 Cal.App.2d 519, 534.) The trier of fact assesses “both the good faith of the transaction and its inherent fairness from the viewpoint of the corporation and those interested therein.” (Mueller v. Macban, supra, at p. 277; see also Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 32 [The determination whether a transaction is “fair and reasonable involves determination of the particular factual circumstances of the agreement, and application of the standards of fairness and good faith required of a fiduciary to these facts. These are functions mainly for the trier of facts.”].) “As in other claims of lack of evidence, the question is ‘whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’ (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.)” (David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 890.)
The mere existence of a fiduciary relationship does not obviate the factual issue of whether the challenged action qualified as a breach. For purposes of this appeal, therefore, the issue is whether the facts can only be reconciled with a finding that Kea’s fee under the consulting agreement was a “secret profit” or “kickback, ” or whether it could be viewed as fair compensation for Kea’s efforts in obtaining the licensing the buyer required in order to consummate a sale that was beneficial to all concerned. Certainly, Park presented strong evidence from which the jury could have found the consulting agreement amounted to self-dealing on Kea’s part. However, from the evidence that 22 Wilshire would not have entered into the sales agreement absent Kea’s active assistance in obtaining the necessary licensing and that Kea expended money and expertise to that end, the jury had a reasonable basis for finding his efforts were ultimately made for the good of Zoo.
Breach of Contract
Finally, Park contends Hong and Kea had no right to recover the $200,000 award based on Park’s breach of the February 2005 modification agreement because that contract was superseded by the January 2007 agreement, whereby Le Prive was sold to 22 Wilshire. More specifically, he asserts the subsequent sales agreement implicitly eliminated the prior contract’s requirement that he pay Hong $200,000 upon sale of the club. We disagree. The latter contract does not reference the prior obligation and nothing in that 2007 agreement indicates an intent to cancel the obligation. Further, consideration of extrinsic evidence fails to support such an implied intent.
“‘The basic goal of contract interpretation is to give effect to the parties’ mutual intent at the time of contracting. (Civ. Code, § 1636; Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.) When a contract is reduced to writing, the parties’ intention is determined from the writing alone, if possible. (Civ. Code, § 1639.)’ (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 (Founding Members).) ‘The words of a contract are to be understood in their ordinary and popular sense, ...’ (Civ. Code, § 1644.)” (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 979.)
If the parties dispute the meaning of contractual language, “‘the first question to be decided is whether the language is “reasonably susceptible” to the interpretation urged by the party. If it is not, the case is over. [Citation.] If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean?’ [Citations.] Whether the contract is reasonably susceptible to a party’s interpretation can be determined from the language of the contract itself or from extrinsic evidence of the parties’ intent. [Citation.] Extrinsic evidence can include the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. [Citations.] When no extrinsic evidence is introduced or the extrinsic evidence was not relied on by the trial court or is not in conflict, we independently construe the contract. [Citation.]” (Cedars-Sinai Medical Center v. Shewry, supra, 137 Cal.App.4th at pp. 979-980.) Importantly for this appeal, “[w]here there is an inconsistency between two agreements both of which are executed by all of the parties, the later contract supersedes the former.” (Frangipani v. Boecker (1998) 64 Cal.App.4th 860, 863.)
Our independent review of the contracts reveals no inconsistency. The October 2004 contract contained the terms for Park’s acquisition of 90 percent of the ownership of Zoo, with Hong retaining 10 percent. It also contained an option for Park to buy the remaining 10 percent one year after the agreement’s date for $200,000. The modification agreement of February 2005, specifically referenced the relevant provisions of the prior agreement. Paragraph 1 eliminated Park’s option to purchase Hong’s remaining 10 percent interest in Zoo, and paragraph 4 provided that when Zoo “permanently closes or sells Le Prive Restaurant to a third party, PARK agrees to pay $200,000 for HONG’s then entire interest in Zoo Entertainment.”
The January 2007 sale agreement contains no merger clause and makes no reference to Park’s obligation to make the $200,000 payment upon sale of the club. Instead, he attempts to find an inconsistency and implicit elimination of that obligation by virtue of the fact that 2007 contract does not allocate any of the sale proceeds to satisfaction of that prior obligation. Under the subsequent agreement, the proceeds of the anticipated sale were to be applied first to the costs, fees, and expenses incurred in the sale, and second to the payment of taxes. “All remaining amounts from the sale proceeds shall be paid to Park. As compensation for Park’s interest, Park shall receive a minimum of $900,000 (the ‘minimum amount’) and in the event the remainder of the proceeds are [sic] less than the Minimum Amount, Hong shall make up the difference in order to assure that Park receives the Minimum Amount.”
Our independent analysis discloses neither an inconsistency nor any intent to cancel the prior obligation. The 2007 agreement dealt with allocation of the sales proceeds from the third party buyer to Park with provision for expenses incurred in the sale process. It did not purport to deal with, much less resolve, the ownership interests in Zoo, as between Park and Hong.
Consideration of extrinsic evidence is entirely consistent with this interpretation. At trial, Park admitted that he did not make the $200,000 payment upon the subsequent sale to 22 Wilshire, but he did not rely on an understanding that the 2007 agreement eliminated his payment obligation. Rather, he explained that he relied on his attorney’s advice that the payment was due upon sale of the company, Zoo, rather than upon sale of the club. Further, the fact that the 2005 modification agreement itself made specific reference to the provisions in the prior agreement that they desired to change shows a course of dealing inconsistent with the one now urged.
Park’s reliance on Steelduct Co. v. Henger-Seltzer Co. (1942) 50 Cal.App.2d 475 is misplaced. There, a manufacturer’s original contract granting an agent the exclusive right to sell its products gave both parties the right to cancel on ten days’ written notice. The manufacturer sent a letter “urg[ing] that a new contract be made, as their investment in the agency was heavy and they might find themselves ‘out on a limb’ if in due course there was a change in the office personnel of appellant.” (Id. at p. 476.) The agent responded with a new letter agreement to the effect that the agency agreement would be in effect “for a period of five years” and that “[t]he purpose of this agreement is to continue the mutually satisfactory relationship we have had with each other for some years with an understanding for a definite period of time which we hope may be further extended at the end of this period.” (Id. at pp. 476-477.) The appellate court held the agent was not justified in attempting to rely on the prior agreement’s ten-day cancellation provision. “It is abundantly clear from the letter of respondents, which induced appellant to execute the letter contract, that respondents desired a definite term contract without a right of cancellation. A contract that was to endure for a term of five years with a right of cancellation on ten days written notice with or without cause, would have left them ‘out on a limb’, exactly as they felt they were by the terms of the [prior] contract.” (Id. at p. 477.) In stark contrast, Park can point to nothing in the record indicating that the 2007 sale agreement was drafted with the intention of eliminating his prior payment obligation.
DISPOSITION
The judgment is affirmed. Plaintiffs, cross-defendants, and respondents Linda Hong and Howard Kea are to recover their costs on appeal.
We concur: ARMSTRONG, Acting P. J., KUMAR, J.
Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.