Opinion
E037242
12-12-2006
RICHLAND PINEHURST, L.P. et. al., Plaintiffs and Appellants, v. CITY OF CHINO HILLS et. al., Defendants and Respondents.
John S. Peterson Law Corporation and John S. Peterson for Plaintiffs and Appellants. Burke, Williams & Sorensen and Joseph P. Buchman for Defendants and Respondents.
I. SUMMARY
In this case, we are called upon to determine whether the trial court correctly interpreted the language in a contract. Rejecting parol evidence, the trial court found that the language in the contract was clear. Given such language, we agree that parol evidence is not necessary; however, we disagree with the trial courts interpretation. Based on our reading of the contract in its entirety and in consideration of the context in which it was entered, we conclude that the trial court erred by narrowly interpreting the words "reimbursement" and "construction costs." For the reasons discussed in this opinion, we reverse the judgment.
II. INTRODUCTION
Plaintiffs, Richland Pinehurst, L.P. ("Richland"), Chino Heights, LLC, ("Chino Heights"), and Hunters Hill, L.P. ("Hunters Hill"), appeal from the trial courts judgment in favor of the City of Chino Hills ("City"), Chino Hills City Council ("Council"), Community Facilities District No. 5 ("District 5"), Community Facilities District No. 8 ("District 8"), and Community Facilities District No. 9 ("District 9"). Richland, Chino Heights, and Hunters Hill shall collectively be referred to as "Plaintiffs." The City, Council, District 5, District 8, and District 9 shall collectively be referred to as "Defendants."
Plaintiffs sued Defendants based upon a contract between the parties which governed the financing and construction of public infrastructure improvements ("Facilities") for Districts 5 and 8. At the time, Districts 5 and 8 were obligated to construct backbone infrastructure but were unable to finance such construction. Thus, the contract between the parties, the Facilities Improvement Agreement ("Agreement"), was entered into to allow the County of San Bernardino ("County") to finance the construction of the Facilities for Districts 5 and 8 by creating a new district, District 9, and issuing bonds secured by Plaintiffs undeveloped real property, which was located in the District 9 area.
By participating in the creation of District 9, Plaintiffs voluntarily encumbered their own property as security for the issuance of bonds. As such, the funds necessary to build the Facilities in Districts 5 and 8 came from the bonds that were secured by Plaintiffs real property in District 9. Most of the Facilities in Districts 5 and 8 have been constructed and are being used by the public.
In exchange for their agreement to allow their property to be encumbered as security for repayment of the bonds, Plaintiffs received various credits for construction of the required infrastructure in District 9. Additionally, the Agreement provided that to the extent the funds made available by this financing device were used to construct the Facilities for Districts 5 and 8 (which were previously obligations of Districts 5 and 8), such amounts would be reimbursed to Plaintiffs when funds became available. As a result of the Agreement and subsequent construction of Facilities for Districts 5 and 8, Plaintiffs claim they are entitled to $4,763,144 in unreimbursed advances. According to Plaintiffs, the funds became available; however, the City refused to reimburse any part of the $4,763,144. Thus, Plaintiffs filed suit, alleging the following causes of action: (1) Inverse Condemnation; (2) Equitable Estoppel; (3) Declaratory Relief; (4) Anticipatory Breach; and (5) Injunctive Relief.
A nonjury trial was held. The trial court issued a Statement of Decision that found in favor of the Defendants. According to the trial court, there are five basic provisions in the Agreement that relate to Plaintiffs claim for reimbursement. After considering each of these provisions, the court found that none of them provides for "reimbursement of costs never spent by developers/[P]laintiffs." Because the court found that Plaintiffs were not entitled to the reimbursement sought, it concluded that the Agreement had not been breached.
Plaintiffs appeal, contending, "the case centers around [sic] the interpretation of certain words, specifically the words `reimbursement and `construction costs." According to Plaintiffs, the trial courts "interpretation of both are entirely too restrictive when the contract is read as a whole as it should be." Plaintiffs raise the following two issues on appeal: (1) Does the Agreement provide that Plaintiffs will be reimbursed for their costs associated with the construction of Facilities for Nos. 5 and 8 and resulting from the issuance of bonds which encumbered Plaintiffs properties; and (2) Do the facts support a recovery in Inverse Condemnation?
III. FACTS
Plaintiffs accept the trial courts recitation of the pertinent facts in its detailed Statement of Decision with the exception of the amount claimed. Namely, Plaintiffs claim the amount is $4,763,144, whereas, the trial court noted the amount to be $4,477,002. Thus, the following is an adapted summary of the trial courts statement of facts.
In the 1980s, the County earmarked the once unincorporated area known as Chino Hills for future development. At that time, the County formed Districts 5 and 8, pursuant to the Mello-Roos Community Facilities Act of 1982 (Govt Code, §§ 53311, et seq.) for the purpose of providing funds for the necessary Facilities or public infrastructure, such as roads, schools, parks, water, and sewers. Such districts permit the properties within them to be taxed or assessed in such manner as to facilitate the financing of and provision for public improvements. However, before sufficient assessments could be collected to pay for the public improvements in Districts 5 and 8, it was necessary that more homes be built and sold to individuals.
In 1991, Chino Hills Associates, Ltd., Sterling Builders, Inc. and Hunters Hill owned property which they wished to develop and which was located in the vicinity of Districts 5 and 8. Following two years of negotiations, they entered into the Agreement with the County, the Chino Hills Managers Office, the County Waterworks District No. 8, District 5 and District 8. Chino Heights is the successor in interest of Sterling Builders, Inc. Richland is the successor-in-interest of Chino Hills Associates, Ltd. The City was incorporated in 1991, and succeeded to the interests of the County and all of the other public entities who were party to the Agreement.
Under the Agreement, Plaintiffs property was to be included in a new district, District 9. Upon Plaintiffs permission, District 9 could issue bonds, which were secured by Plaintiffs property. The money raised from the bonds financed the improvements for District 9, District 5, and District 8. Section 3 of the Agreement is entitled, "FEES, CREDITS AND REIMBURSEMENTS." Section 3.3 specifically addressed "Community Facilities Districts (CFD)" and it, in relevant part, provides, "Developers [i.e., Plaintiffs] shall construct the [District] Facilities identified in Exhibit `B hereto in accordance with applicable laws. . . . Developers shall be entitled to a [District] reimbursement, but only from [District] revenues or bond proceeds secured by such revenues and from no other source, equal to the construction costs of the [District] Facilities . . . . ." (Bold and italics added.)
The Agreement also provides:
"3.3.3 If Developer constructs all or any portion of the [District] [F]acilities, the construction costs incurred by Developers shall be reimbursed as set forth in this Section 3.3.3. Developers shall be reimbursed their pro rata shares of the construction costs of the [District] Facilities, . . . from 20 percent of the [District] special tax revenues collected within [District 5] and [District 8] and from bond proceeds. . . . [District 5] and [District 8], as the case may be, shall make available to the Developers on an annual basis an accounting of all special taxes collected within the [D]istrict. [District 5] and [District 8] retain the right to determine priorities for expenditure of the local facility funds from [District 5] and [District 8], over and above the twenty percent (20%) pledged pursuant to this paragraph, and allocate them to projects or this Agreement or other similar agreements as [District 5] and [District 8] deem reasonable. . . .
"Upon bond counsel and a financial advisor chosen by the Agencies, having opined that the sale of bonds is legal and financially reasonable, the Agencies shall make every effort to issue bonds to repay Developers unreimbursed construction costs pursuant to this Section 3.3.3." (Bold and italics added.)
At oral argument, Defendants counsel pointed out that section 3.3.4 describes the process that must be followed in order for the Developer to be reimbursed its actual construction costs incurred.
Regarding District 9, section 3.6 of the Agreement states:
"The proceeds of the Bonds shall be reserved for and allocated to the construction and acquisition of the Facilities . . . and reimbursement of costs according to the priorities set forth in Exhibit `J. To the extent that a Developers share of the costs of some or all of the Facilities . . . are financed from the proceeds of the [District 9] Bonds, the amount of such Developers share of such proceeds shall be available as credit or reimbursement pursuant to this Section 3 or Section 4 below . . . ."
Ultimately, as the trial court noted, District 9 was formed and was authorized to finance the acquisition and construction of all of the Facilities through the proceeds of bonds and the levy of special taxes within District 9. District 9 issued two series of bonds ("Series A" and "Series B") in 1991, totaling $ 22.5 million. The amount of the Series A bonds ($5,435,000) was the maximum amount that could be repaid with the anticipated revenue stream from District 9 Special Tax "B" collections when all of the homes within the District were built and sold. The proceeds available from Series A bonds for construction totaled $4,477,002.02. The amount of the "Series B" bonds ($17,065,000) was the maximum amount of additional bonds that could be supported given the County requirement for a minimum 3:1 property value-to-lien ratio for any District bond issue.
The issuance of bonds for the purpose of raising money to be used for the Facilities was recognized in the Agreement at sections 2.8 and 2.8.1. Section 2 is entitled, "DESIGN AND CONSTRUCTION OF THE FACILITIES." Section 2.8, in relevant part, provides that "[i]n lieu of the Developers providing private financing for the construction of Facilities and related costs, . . . County and Waterworks agree that construction of the Facilities . . . and related costs may be financed through . . . [District 9], the authorization of special taxes and the issuance of bonds or other public debt . . . secured by the levy of such special taxes by [District 9]." Section 2.8.1 provides, "Sterling has commenced the construction of certain of the Facilities, and in the future, the Developers may construct certain of the Facilities . . . . Upon the issuance of the Bonds, and to the extent of available proceeds, County shall reimburse Sterling and the other Developers, if applicable, out of the proceeds of such Bonds for the audited and approved construction costs incurred by Sterling and the other [Developers], if applicable, in connection with the design and construction of the Acquisition Facilities. . . . [¶] Developers shall be reimbursed out of the proceeds of the Bonds for Developers expenses incurred in designing the Facilities, including all applicable plan checking and other fees paid by Developers. Developers shall also be reimbursed out of the proceeds of the Bonds Developers costs and expenses incurred which are related to the establishment of the [District] and the issuance of the Bonds including, without limitation, the expended portion of the $100,000 previously advanced to the County by Developers to cover the Countys costs of establishing the [District]. Any unexpended portion of the $100,000 advance shall be returned to Developers immediately upon issuance of the Bonds. [¶] The amounts to be reimbursed to Developers pursuant to this Section 2.8.1 for the Acquisition Facilities, the design and engineering work, and the right-of-way shall not exceed the cost of such work and property. Review and approval of such costs shall be in accordance with the process and time periods set forth in Section 3.2.8 of this Agreement. Payment of approved reimbursement costs shall occur within forty-five (45) calendar days of the later of (i) Countys receipt of the proceeds of the Bonds, or (ii) the Countys approval of such costs." (Bold and italics added.)
In our tentative opinion, we did not cite the entire last paragraph of section 2.8.1. Defendants counsel argued that the entire language of that paragraph is relevant. Although we have added the entire language, we question its relevance. Clearly, Section 2.8.1 establishes three types of costs or expenses for which Plaintiffs may be reimbursed, namely, (1) "the audited and approved construction costs incurred by [Developers], . . . if applicable, in connection with the design and construction of the Acquisition Facilities [and] . . . the acquisition of certain right-of-way required for a portion of the Facilities[,]" (2) "Developers expenses incurred in designing the Facilities[,]" and (3) "Developers costs and expenses incurred which are related to the establishment of the CFD and the issuance of the Bonds including, without limitation, the expended portion of the $100,000 previously advanced to the County by Developers to cover the Countys costs of establishing the CFD." However, the last paragraph of section 2.8.1 identifies the first cost only, yet Plaintiffs are emphasizing their right to reimbursement, not only for their construction costs, but also for the costs associated with their role as "financiers of public improvements."
Two annual special taxes were authorized to be levied within District 9 to pay the debt service on the District 9 bonds. Special Tax "B" is an annual special tax triggered upon issuance of a certificate of occupancy for each dwelling unit and paid by the homeowners within the District for 25 years currently (2003/2004) in the amount of $445.60 per unit per year, escalating at 2% per year. Special Tax "C" is authorized to be levied to pay debt service on District 9 bonds and is levied on all undeveloped property within the District. The County required Special Tax "C" to be discharged or prepaid in a lump sum payment at the close of escrow for each home within District 9. The discharge payments are applied to redeem the District 9 bonds. Plaintiffs have paid a total of $3,673,271.13 for Special Tax "C."
The various Facilities were constructed in each of the Districts. Of the funds advanced by Plaintiffs through bond proceeds generated by District 9, Plaintiffs claim that some $4,763,144 was used to pay for public improvements in Districts 5 and 8. Plaintiffs demanded that Defendants pay this amount, which they claim represented funds generated directly and solely from the proceeds of District 9 bonds which was made possible by Plaintiffs willingness to burden their property to the full amount of the bond proceeds. According to Plaintiffs, this burden required, among other things, servicing of the bonds through the payment of assessments and incurring substantial expenditures to pay for the bonds before Plaintiffs would otherwise be obligated to do so. Because Defendants refused to pay the amount demanded by Plaintiffs, Plaintiffs initiated this action.
The matter was tried before the court. The heart of the matter was whether or not Plaintiffs were entitled to be reimbursed for the $4,763,144 which they claimed they incurred because of the construction of Facilities in Districts 5 and 8. The trial court noted that the word "reimbursement" was not defined in the Agreement. Finding that the word was "a general word," the trial court therefore ruled that its meaning would be defined by Blacks Law Dictionary. Thus, the trial court refused to allow any parol evidence regarding how to interpret the Agreement even though the court admitted that the Agreement did not spell out "that [Plaintiffs] should be reimbursed for the type of things that [they were] actually talking about." After hearing the evidence, the trial court found in favor of Defendants, concluding that because Plaintiffs right to reimbursement was limited to actually expended construction costs, and such costs were paid out of the bond proceeds, Plaintiffs were not entitled to the reimbursement that they sought. Plaintiffs appeal.
At oral argument, Defendants counsel referenced this language, stating that this court appears to conclude that the Agreement is ambiguous. Further, Defendants suggest that this court is relying on parol evidence to support its decision. Regarding the trial courts language, we note that it was the trial court that spoke the words suggesting ambiguity, we merely repeated them. As for the claim that we are relying on parol evidence, we reject such claim. Although we, like the trial court, ascertain the intention of the parties from the Agreement alone (Civ. Code, § 1639), the Agreement may be explained "by reference to the circumstances under which it was made, and the matter to which it relates." (Civ. Code, § 1647).
IV. DOES THE AGREEMENT PROVIDE FOR REIMBURSEMENT OF PLAINTIFFS COSTS ASSOCIATED WITH THE CONSTRUCTION OF FACILITIES IN DISTRICTS 5 AND 8 AND RESULTING FROM THE ISSUANCE OF BONDS?
"`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.)
"`When a dispute arises over the meaning of contract 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? (Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 847 . . . ; Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1448 . . . .) Whether the contract is reasonably susceptible to a partys interpretation can be determined from the language of the contract itself or from extrinsic evidence of the parties intent. (Southern Cal. Edison Co. v. Superior Court, supra, at p. 848.) 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. (Civ.Code, § 1647; Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912 . . . .) 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. (Founding Members, supra, 109 Cal.App.4th at p. 955.)
"`California recognizes the objective theory of contracts [citation], under which "[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation." (Founding Members, supra, 109 Cal.App.4th at p. 956.) `The parties undisclosed intent or understanding is irrelevant to contract interpretation. (Ibid.)" (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 979-980.)
With the above in mind, we turn to the instant case. According to Plaintiffs, the trial courts statement of decision "concentrates on an analysis of the meaning of certain terms in the [Agreement] such as `reimbursement and `costs." Plaintiffs challenge the trial courts interpretation of these words on the grounds that it "is a constricted reading of an innovative agreement, which by reason of that very innovation should be more liberally construed." For example, the trial court used Blacks Law Dictionary definition of the word "reimbursement" which provides, "To pay back, to make restoration, to repay that expended; to indemnify, or make whole." Given such definition, Plaintiffs contend the court used a narrow interpretation, i.e., to repay out-of-pocket expenditures. Plaintiffs argue that the "proper reading in light of the stated purpose of the contract is that the term reimburse is used in the broader sense of `to make whole." Plaintiffs point out, "the ordinary dictionary definition includes `to make restoration of an equivalent to"; thus, Plaintiffs claim that they are "entitled to be made whole which includes all of the detriment sustained by them for the benefit of the City and the public."
Likewise, Plaintiffs complain that the trial court "gave an excessively narrow interpretation to the words `construction costs." While the trial court found that the construction costs had to be expended out of pocket, Plaintiffs argue that there is no such specification in the Agreement. Instead, Plaintiffs contend "[w]hen viewed in light of the overall intent of the parties as expressed in the Recitals to the [Agreement] . . . simply that `reimbursements for costs expended towards the Facilities would be made, the more reasonable interpretation is that the parties intended the term costs in its broadest sense."
In response, Defendants adhere to their position, as adopted by the trial court, that Plaintiffs were only entitled to be reimbursed their actual construction costs. After considering the record before this court, we find Plaintiffs arguments to be more persuasive.
Turning to the trial courts statement of decision, we note that it chose to take a very narrow approach to interpreting the Agreement. Although the trial court quoted the language in sections 2.8.1 and 3.6, it interpreted these sections as follows:
"1. 2.8.1 provides for reimbursement of construction costs for developers expenses incurred in designing the facilities, including all applicable plan checking and other fees paid by developers.
"1a. FINDINGS — There was no evidence presented to this Court in regards to this section, therefore they are not entitled to reimbursement for these items.
". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"4. Section 3.6 provides that if the construction costs are financed by Bonds, then the developers share of the proceeds of the Bonds shall be available either (1) as a credit against the costs so that the developer would not have to pay the cost in the first instance, or, (2) as a reimbursement if the developer had paid the cost before the proceeds of the Bonds became available.
"4a. FINDINGS — This section does not provide for reimbursement of costs never spent by developers/plaintiffs."
The trial courts interpretation of section 2.8.1 is limited because it failed to consider all of the costs identified in that section for which Plaintiffs were entitled to be reimbursed. As we noted in footnote 1, there are three types of reimbursable costs: (1) "the audited and approved construction costs incurred by [Developers], . . . if applicable, in connection with the design and construction of the Acquisition Facilities [and] . . . the acquisition of certain right-of-way required for a portion of the Facilities[,]" (2) "Developers expenses incurred in designing the Facilities[,]" and (3) "Developers costs and expenses incurred which are related to the establishment of the CFD and the issuance of the Bonds including, without limitation, the expended portion of the $ 100,000 previously advanced to the County by Developers to cover the Countys costs of establishing the CFD." However, the trial court limited its interpretation to "reimbursement of construction costs for developers expenses incurred in designing the facilities, including all applicable plan checking and other fees paid by developers."
Likewise, in interpreting section 3.6, the trial court focused solely on the costs attributed to construction, disregarding the costs associated with acquisition, and those identified in exhibit "J." Section 3.6, in relevant part, provides, "The proceeds of the Bonds shall be reserved for and allocated to the construction and acquisition of the Facilities and the Traffic Mitigation Facilities and Services and reimbursement of costs according to the priorities set forth in Exhibit `J." The first cost referenced in exhibit "J" is the $100,000 associated with the formation of District 9. Nonetheless, the trial court found that this section did not provide for reimbursement of costs never expended out-of-pocket by Plaintiffs.
Clearly, the trial courts interpretation of these sections fails to consider the general intent of the Agreement which is derived from the contract itself (Civ. Code, § 1639) as explained by reference to the circumstances under which it was made and the matter to which it relates. (Civ. Code, § 1647). According to the testimony, when Plaintiffs "began the negotiations, it was [their] intent to . . . find a source of private financing for all their obligations under the [Agreement]." The negotiations began in 1989; however, "the real estate market began to go into decline for various reasons. . . . Savings and loans which were a huge lender to the development community dried up as a source of finance for infrastructure. So as we got towards the end of these negotiations, it became clear that for the developers to fulfill them, they were going to have to use a land-secured financing vehicle like [District] 9. [¶] The difference between [District] 9 and [Districts] 5 and 8 is the developers agreed to subject their property not only to much more debt on a per-unit basis than 5 and 8 would allow with the $350 tax a year, but also to pay an undeveloped land tax, tax on their undeveloped property between the time bonds were issued and the time someone moved into the house you could take over at least the small portion of that debt." Thus, "the understanding under [District] 9 was that the [Plaintiffs] would be paying a tax in advance of selling the home." The solution was the Agreement.
At oral argument, Defendants counsel cited Mission Valley East, Inc. v. County of Kern (1981) 120 Cal.App.3d 89, 98, for the proposition that "evidence of the parties undisclosed subjective intent is not relevant to interpreting the meaning of the language in the [contract]." Apparently, counsel believes that this court relies upon parol evidence to support its decision. This belief is misplaced. As we previously noted, extrinsic evidence of the surrounding circumstances under which the parties negotiated or entered into the Agreement, the object, nature and subject matter of the Agreement, and the subsequent conduct of the parties is admissible as to the parties intent. (Cedars-Sinai Medical Center v. Shewry, supra, 137 Cal.App.4th at pp. 980, 981-984.) Clearly, the trial court considered the extrinsic evidence in reaching its decision. Given our standard of review, we do the same.
Regardless of the above testimony, the intent of the parties was clearly noted in the "RECITALS" section of the Agreement. By entering into the Agreement, Plaintiffs and Defendants "desire[d] to provide for the financing and construction of the Facilities" for Districts 5, 8 and 9 under specific terms and conditions. (Bold and italics added) "In order to provide the initial financing for construction of the Facilities, [Plaintiffs] require assurances (1) that they will thereby satisfy their respective Projects off-site infrastructure obligations; (2) that they will receive appropriate credits against their fee obligations; (3) that completion of the Projects will not be unreasonably hindered; and (4) that they will receive reimbursements for costs expended towards the Facilities ." (Bold and italics added.) As Plaintiffs contend, and the language in the Agreement supports, "this was not an ordinary agreement between a public agency and a property owner/developer." Instead, it was a creative financing arrangement because Plaintiffs were not only acting as developers; they were also financiers in that their property was used as security for the bonds. Thus, the reimbursement guaranteed by Defendants included Plaintiffs construction costs, as well as, the " costs expended towards the Facilities ." (Bold and italics added.)
"[N]one of the other [agreements similar to the Agreement] in the county at that time would have been [sic] dealt with this kind of financing mechanism."
Plaintiffs were servicing the bonds with the special taxes on their undeveloped property.
While Defendants emphasize those portions of the Agreement that discuss the construction of the Facilities and the costs associated with such construction, they fail to acknowledge the other portions of the Agreement that discuss the costs associated with the actual financing of the construction of such Facilities. Specifically, section 2.8 is entitled "Alternative Construction Financing." It provides, "In lieu of the [Plaintiffs] providing private financing for the construction of Facilities and related costs, . . . [Defendants] agree that construction of the Facilities . . . and related costs may be financed through . . . [District 9], the authorization of special taxes and the issuance of bonds or other public debt . . . secured by the levy of such special taxes by [District] 9." Section 2.8.1, entitled "Acquisition of Facilities and Reimbursement," provides, [D]efendants "shall reimburse . . . [Plaintiffs], if applicable, out of the proceeds of such Bonds for the audited and approved construction costs incurred by [them] . . . in connection with the design and construction of the . . . Facilities." Furthermore, this section provides that Plaintiffs " shall also be reimbursed out of the proceeds of the Bonds [their] costs and expenses incurred which are related to the establishment of the [District] and the issuance of the Bonds including, without limitation, the expended portion of the $ 100,000 previously advanced to the County by [Plaintiffs] to cover the Countys costs of establishing the [District]." "[T]he financing provided by the developers in the form of a bond financing enabled those facilities to be constructed."
When the whole of the Agreement is taken together, the general intent of the contract was to insure that Plaintiffs would be reimbursed for all of their costs, construction and financing. As Plaintiffs note, "[t]he stipulations, the recitals in the [Agreement] and the uncontradicted testimony makes [sic] it clear that the parties were negotiating a contract that was broader than just a mechanism for repayment of what amount[s] to progress payment[s] in an ordinary construction contract." We agree, noting the trial testimony that explained the surrounding circumstances under which the parties negotiated section 3.6: "[M]y particular concern was that someone would come back later in any of these categories, take the fee credits for example, and say well you didnt construct, developer, you didnt pay, you didnt write checks to a contractor to build that road, therefore you dont get the fee credits that are provided for in this agreement. Because technically [District] 9 constructed or paid for it. We wanted to make sure there wouldnt be that argument. That is why we wrote section 3.6."
Based on the above, we conclude that the trial court erred in interpreting the Agreement and finding that Plaintiffs were not entitled to reimbursement of costs other than actual construction costs. It thus follows that the court also erred in failing to find a breach of contract on the part of Defendants. Accordingly, we reverse the judgment and remand the matter for further proceedings on the issue of damages resulting from Defendants breach.
At oral argument, Defendants counsel requested that, in the event we find in favor of Plaintiffs, this court provide the trial court with direction in the award of damages. We deny such request on the grounds that we will not presume that the trial court needs such direction.
Having found for Plaintiffs on their breach of contract issue, we need not consider whether the facts support a recovery in inverse condemnation.
V. DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings on the issue of damages. Plaintiffs to recover their costs on appeal.
We concur:
RAMIREZ, P.J.
MILLER, J.