Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG06-269294
Haerle, Acting P.J.
I. INTRODUCTION
This is an appeal from a declaratory judgment concerning the interpretation of a Non-Exclusive Preferential Assignment Agreement (the Agreement) between defendant and respondent, City of Oakland, and plaintiff and appellant, Total Terminals International, LLC (Total Terminals).
Total Terminals argues that the trial court erred in finding that the Agreement was ambiguous as to the manner in which certain rate increases would be calculated and, therefore, erred in admitting extrinsic evidence of the parties’ intentions with regard to the Agreement provisions governing this issue. We conclude that the Agreement provisions at issue are reasonably susceptible to more than one interpretation. Therefore, the trial court did not err in admitting extrinsic evidence to aid it in construing the ambiguous Agreement language. We further conclude that substantial evidence supports the trial court’s interpretation of the Agreement. The judgment is, therefore, affirmed, as is the accompanying cost award.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. The Agreement
The Agreement with which this appeal is concerned was entered into on October 9, 2000, after several years of negotiations between the Port of Oakland and Hanjin Shipping Company. Entitled a “Non-Exclusive Preferential Assignment Agreement, ” the Agreement essentially involved the lease by the Port of a new shipping terminal, also referred to as Berth 55/56, to Hanjin, a shipping company. Table 4.2 attached to the Agreement, and a copy of which is attached hereto, set out the base rates Hanjin agreed to pay the Port. Section 4.3 memorialized the parties’ formula for increasing those base rates.
We refer, for the sake of clarity, to defendant and respondent City of Oakland as the “Port” and appellant and plaintiff Total Terminals, LLC, Hanjin’s assignee and partially owned subsidiary, as “Hanjin” because the parties who negotiated and executed this agreement identified themselves consistently as the “Port” and “Hanjin.”
With regard to the base rates described in Table 4.2, the parties agreed that rates would be determined by how much of Hanjin’s cargo passed through the leased terminals. Cargo is measured in “units.” One “unit” of cargo is equivalent to a 20-foot cargo container and is referred to as a “twenty-foot equivalent unit” or “TEU”. Hanjin agreed that, in each year of the Agreement, it would pay the Port a set rate for each unit of cargo handled at the terminal. This rate is referred to as an “all-inclusive throughput rate.” This rate structure represented a departure from the Port’s usual method of levying tariffs for cargo. These tariffs included charges for dockage, wharfage, demurrage, storage and crane rental.
Hanjin also agreed to guarantee that a minimum number of TEU’s would pass through the terminal, thus setting a minimum payment to the Port. This minimum is referred to as a “minimum annual guarantee” or “MAG, ” which the parties also designated as the “break point level” or “BPU.” Under the Agreement, the Port could expect Hanjin to pay, at the very least in any given year, the MAG multiplied by the basic all-inclusive throughput rate.
The parties further agreed that payment for any TEU that exceeded the break point level, or minimum annual guarantee, would be multiplied by a specific rate, which the parties designated the “overage all-inclusive throughput rate (without IPI guarantee).” Finally, the parties agreed that Hanjin could reduce its per unit costs by guaranteeing a certain volume of IPI traffic. The rates to be paid in the event Hanjin made such a guarantee are referenced in Table 4.2 as those “with IPI guarantee.”
One concept essential to setting the rates Hanjin would pay the Port was the parties’ general agreement that rates would be relatively low in the first five years of the Agreement (which the parties refer to as Contract Years 1 through 5), and then would significantly increase in the sixth through tenth year and in the years to follow. This rate structure was designed to accommodate Hanjin’s need for time to “ramp-up” its operations. and the Port’s need to compensate for its losses during this “ramp-up” phase.
The parties also agreed that the rates set out in Table 4.2 would be subject to increases as tariff rates increased. Table 4.2 specified in dollar amounts the rates to be paid through Year 10 of the Agreement. However, the table also notes that the basic all-inclusive throughput rate as well as the overage all-inclusive throughput rate, both with or without IPI guarantees, would be determined pursuant to “section 4.3.”
Section 4.3 describes these rate increases as follows in its third paragraph. “Each of the rates set forth in Table 4.2 hereof shall be subject to increases as follows: Said rates shall be subject to future increases based upon a weighted average factor for Port Tariff increases from the Term Commencement Date to the subsequent effective date of the Port Tariff increases in dockage, wharfage, wharf demurrage, wharf storage and crane rental rates. The weighted average factor that shall be applied shall be determined in accordance with the letter dated October 5, 1999, from the Port to Assignee, a copy of which is on file with the Secretary of the Board of Port Commissioners.”
The next paragraph of section 4.3 reads: “Notwithstanding the immediately preceding paragraph, in no event shall Assignee be obligated to pay to the Port (a) for primary use activity in a subject Contract Year that portion of a rate increase which for the subject Contact [sic] Year would increase by more than two percent (2%) the amount of the rate payable by Assignee for primary use activity in the immediately preceding Contract Year, or (b) for primary use activity in any Contract year within a successive 5-Contract Year period (i.e., Contract Years 1-5, 6-10, 11-15, etc.) that portion of a rate increase which would increase the rate payable by Assignee for such Contract year by more than 6% of the rate payable by Assignee at the beginning of said 5-Contract Year period.”
The Agreement commenced on April 1, 2001. There were no rate increases in 2002 or 2003. On December 3, 2003, the Port notified Hanjin that “[o]n December 2, 2003, the Board of Port Commissioners approved a 5% increase” in tariffs, an increase that was effective January 1, 2004. On June 16, 2005, the Port notified Hanjin of another 5 percent increase, effective July 1, 2005.
The Port adjusted the rates in Contract Years 3-5. Under section 4.3’s cap on rates, the Port increased the basic throughput rate in Contract Year 3 by.5 percent-from $66.50 to $66.83. In Contract Year 4, the Port increased that $66.83 rate by 2 percent, raising the basic throughput rates in Contract Year 4 to $68.17. In Contract Year 5, the Port increased that $68.17 rate by a final 2 percent, i.e., to $69.53, for a total increase in years 1-5 of 4.5 percent.
The Port also carried forward these increases to the Contract Years beyond Contract Year 5. The result, therefore, was that in Contract Year 6 the basic throughput rate was 4.5 percent higher than the original amount set forth in Table 4.2, or $73.72. Hanjin did not object to this methodology or to these rate increases.
However, on June 16, 2005, the Port notified Hanjin that it was increasing Contract Year 6 rates by 2 percent-from $73.72 to $75.19. It did so based on its understanding that, in Contract Year 6, which was the first year of the second five-year contract period, the Agreement permitted a total of 6 percent in increases during that five-year contract period, to be spread out by no more than 2 percent in any year during that five-year contract period. Because the rate payable in Contract Year 6 was $73.72, after the previous years’ rate increases were carried forward, the Port reasoned that it was entitled to a 2 percent increase, or an increase to $75.19.
The Port initially assessed an increase in Contract Year 6 Rates that totaled $75.14. However, a 2 percent addition to $73.72 equals $75.19, not $75.14. It turns out that the Port employee who performed the original calculation erred. At trial, he testified to this effect and noted that the correct calculation should have been $75.19. Although the amount seems small, because the amount of cargo coming through the terminal is so large, this five cent error is actually quite significant. In its briefs, the Port corrects the amount payable to $75.19; Hanjin points out the error, but continues to use the $75.14 rate. We will use the $75.19 rate, given that the evidence in the record is that the original demand was in error.
At this point, Hanjin objected. In a letter dated November 14, 2005, it notified the Port that, in its view, the Agreement did not permit a 2 percent increase in Year 6. Hanjin’s position was that such an increase resulted in a basic throughput rate that was more than 2 percent of the rates to be paid in the previous year, namely Contract Year 5. The Contract Year 5 rate was $69.53 and, therefore, the increase to $75.19 represented an increase of a little more than 8 percent. Therefore, under Hanjin’s interpretation of the Agreement, no rate increase was permissible.
Hanjin paid the rate increase under protest while the parties attempted to settle the dispute. Unable to reach an agreement, Hanjin filed a claim for declaratory relief on May 11, 2006. After a five-day court trial that began on April 22, 2008, the trial court, in a Statement of Decision, granted relief to the Port.
In an Amended Statement of Decision, the court found that the Agreement provision was ambiguous. It therefore admitted extrinsic evidence of the parties’ intent and found that “[t]he language of Paragraph 4.3 of the agreement does not limit the total increase between Contract Year 5 and Contract Year 6. It only limits to 2 percent the amount of a rate increase that can be applied to the Table 4.2 rates, as those rates had already been adjusted by prior years’ increases during any given contract year, here Contract Year 6.”
This timely appeal followed.
III. DISCUSSION
A. General Principles of Contract Interpretation.
We interpret a contract in such a way as to “ ‘protect the reasonable expectations of the parties’ (Ben-Zvi v. Edmar Co. (1995) 40 Cal.App.4th 468, 475 at the time the contract is formed. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) ‘[L]anguage in a contract must be interpreted as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in the abstract. [Citation.] Courts will not strain to create an ambiguity where none exists.’ (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18-19” (Kashmiri v. Regents of University of California (2007) 156 Cal.App.4th 809, 842 (Kashmiri).)
“The interpretation of a contract ‘must be fair and reasonable, not leading to absurd conclusions.’ (Transamerica Ins. Co. v. Sayble (1987) 193 Cal.App.3d 1562, 1566.) ‘A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.’ (Civ. Code, § 1643.)” (Kashmiri, supra, 156 Cal.App.4th at p. 842.)
“ ‘If the contract is capable of more than one reasonable interpretation, it is ambiguous [citations], and it is the court’s task to determine the ultimate construction to be placed on the ambiguous language by applying the standard rules of interpretation in order to give effect to the mutual intention of the parties [citation].’ (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 798.) ‘If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it.’ (Civ. Code, § 1649.)” (Kashmiri, supra, 156 Cal.App.4th at pp. 842-843.)
An ambiguity in a contract may be revealed through extrinsic evidence. (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 40, fn. 8 (PG&E).) Extrinsic evidence is admissible to explain the meaning of a written contract if the proffered evidence is relevant to prove a meaning to which the language of the contract is reasonably susceptible, regardless of whether the meaning of the contract appears to be plain and unambiguous on its face. (Id. at p. 37.)
The trial court may err if it refuses to consider extrinsic evidence to show whether the contract was intended to be interpreted in a particular manner. (See, e.g., PG&E, supra, 69 Cal.2d at p. 40.) This extrinsic evidence must be provisionally received if it is relevant to the issue of whether the contract is reasonably susceptible to a particular meaning. (See Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912; Winet v. Price (1992) 4 Cal.App.4th 1159, 1165; Appleton v. Waessil (1994) 27 Cal.App.4th 551, 554-555.) However, this extrinsic evidence is not admissible to interpret a contract if the contract language is not reasonably susceptible to the argued interpretation. (PG&E, supra, 69 Cal.2d at p. 40.)
Finally, should the court determine that a contract or contract term is ambiguous, it may admit extrinsic evidence in order to assist in interpreting the ambiguity. It may not use extrinsic evidence to add to or vary the meaning of an unambiguous contract. Therefore, before admitting extrinsic evidence, a trial court must make a threshold determination as to whether a contract is ambiguous. (Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 625 (Roden).)
B. Contract Ambiguity
The trial court found that section 4.3 of the Agreement was ambiguous because it was “reasonably susceptible of different interpretations.” This determination is a finding of law subject to independent appellate review. (Roden, supra, 107 Cal.App.4th at p. 625.)
We note, preliminarily, that the trial court’s finding was based on both the language of the Agreement and on extrinsic evidence that it held was admissible “to explain the agreement and resolve the latent ambiguity. Hanjin argues that the court erred in provisionally admitting evidence of the Agreement’s negotiating history and the Port’s understanding of the meaning of the terms contained in the Agreement. It is incorrect.
In general, all credible evidence concerning the issue of whether contract language is “reasonably susceptible” to a party’s interpretation must be provisionally admitted by the court. (Morey v. Vannucci, supra, 64 Cal.App.4th at p. 912; Winet v. Price, supra, 4 Cal.App.4th at p. 1165; Appleton v. Waessil, supra, 27 Cal.App.4th at pp. 554-555.) As the court explained in PG&E, supra, 69 Cal.2d at page 37, the test of whether parol evidence is admissible to construe an ambiguity “is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meaning to which the language is ‘reasonably susceptible.’ ”
Hanjin, however, argues that our Supreme Court’s decision in PG&E is incorrect to the extent that “it sanctions the use of extrinsic evidence to interpret unambiguous integrated agreements.” Hanjin also recognizes, as it must, that we cannot disregard our Supreme Court’s rulings. In any event, the court here did not admit extrinsic evidence in order to interpret an unambiguous agreement. Rather, it provisionally admitted extrinsic evidence to determine whether the Agreement was reasonably susceptible of the Port’s interpretation. Therefore, the trial court did not err, as Hanjin argues, in receiving extrinsic evidence of the parties’ negotiating history and the Port’s understanding of the language of the agreement.
We turn now to the Agreement itself and the issue of whether the provisions at issue are ambiguous. Table 4.2 provides that all rates set out in the table are “subject to adjustment per Section[] 4.3.” Section 4.3, which is entitled “All-Inclusive Throughput Rate for Primary Use, Dockage, Wharfage, Wharf Demurrage, Wharf Storage and Crane Rental Compensation” provides: “Each of the rates set forth in Table 4.2... shall be subject to future increases” under a calculation agreed upon by the parties. This calculation takes into account increases in the Port’s tariffs for dockage, wharfage, etc. The increase was to be assessed using a “weighted average factor” of the Port’s increased tariffs. The application of this weighted average factor was further described in a letter dated October 5, 1999, which was made part of the Agreement.
Finally, the third paragraph of section 4.3 provides as follows: “[I]n no event shall Assignee be obligated to pay to the Port (a) for primary use activity in a subject Contract Year that portion of a rate increase which for the subject Contact [sic] Year would increase by more than two percent (2%) the amount of the rate payable by Assignee for primary use activity in the immediately preceding Contract Year, or (b) for primary use activity in any Contract year within a successive 5-Contract Year period (i.e., Contract Years 1-5, 6-10, 11-15, etc.) that portion of a rate increase which would increase the rate payable by Assignee for such Contract year by more than 6% of the rate payable by Assignee at the beginning of said 5-Contract Year period.”
Having reviewed the Agreement and the record, we conclude, as a matter of law, that the Agreement is reasonably susceptible of more than one interpretation and, therefore, is ambiguous.
Section 4.3 could reasonably mean, as Hanjin asserts and the Port concedes, that the Port is not permitted to increase rates in any contract year by more than 2 percent paid in the previous year. Under this interpretation, the Contract Year 6 rate could increase by no more than 2 percent of the rate assessed in Contract Year 5. Therefore, because the Contract Year 5 rate was $69.53, after the Port’s earlier increases were carried forward to Contract Year 5, the Port could only increase the Contract Year 6 rate by 2 percent of Year 5’s $69.53 rate, or to $70.92. Under this interpretation, the Port’s requested increase of 2 percent of the then-Contract Year 6 rate of $73.72 to $75.19 was impermissible because this amount would be eight percent higher than the Contract Year 5 rate of $69.53. Therefore, according to Hanjin, the maximum it could be assessed in Contract Year 6, the year the parties had agreed would see a large jump in rates payable, was $70.92, or $.42 more than the Contract Year 5 rate, the rate agreed upon by the parties at the beginning of the Agreement. In sum, Hanjin argues that a reasonable interpretation of the Agreement is one in which the 2 percent per year cap on rate increases applies to the rate paid in the previous year and without any reference to the five-year increments to which the 6 percent cap applies.
Although the Port concedes that Hanjin’s interpretation is reasonable, it argues that its own reading of the Agreement is equally reasonable. We agree.
First, the Port argues that the Agreement, on its face, could reasonably be construed as providing that both clauses (a) and (b) of the third paragraph of paragraph 4.3 of the Agreement apply caps to rate increases within each five-year period. Clause (b) caps rates at a total of 6 percent within each five-year increment and specifically provides that this cap should be applied to each “5-Contract Year period.”
Although clause (a) of section 4.3 does not mention the five-contract-year period, its rate cap of 2 percent from year to year could reasonably be read as the parties’ method for spreading out, within each five-year period, the 6 percent rate cap applicable to each of the contract’s five-year periods. Clause (b) of section 4.3, however, provides that, in no five-year period, can the Port increase rates by more than 6 percent. Clause (a), therefore, could be construed as limiting yearly rate increases within the same five-year period to which clause (b) is applicable. This reading is also consistent with the parties’ general method of determining rates in five-year blocks of time.
Therefore, under the Port’s reading, in Contract Years 6-10, the starting point for applying caps in the next five-year period would be the rate set forth in Contract Year 6, rather than Contract Year 5, as Hanjin argues. This reading of the Agreement treats section 4.3 as a whole, and takes into account not only clause (a) but clause (b) of the third paragraph of that section in such a way as to make them consistent with each other. (Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633 [“We must view the language of a contract as a whole, avoiding a piecemeal, strict construction approach.”].)
In addition, the extrinsic evidence provisionally admitted by the court makes it clear that the Port’s interpretation of section 4.3 is reasonable. Raymond Boyle, a port negotiator, explained at trial that the year-to-year cap within each five-year period of the Agreement was designed to allay Hanjin’s concern that the Port would “front load” rate increases within the five-year period by assessing the entire tariff one year early in the contract period and, therefore, maximizing the amount owed to the Port. The year-to-year cap within the five-year period was designed to address this concern by ensuring that rate increases were spread out over the five-year period.
Similarly, Sal DiGrande, another Port negotiator, testified that his understanding of section 4.3 at the time the Agreement was negotiated was that it provided for “a 6 percent cap for all of the rates, again, no exceptions, within the table for Contract years 1 through 10 of, again, 6 percent in each five-year period and further capped by 2 percent within each five-year period per year.”
We conclude that the Port’s interpretation of section 4.3 is reasonable because it is consistent with two key elements of the Agreement: First, that each tariff increase would be added to each subsequent rate (“compounding”) and, second, that there would be a minimum of a 6-14 percent increase in rates from Contract Year 5 to Contract Year 6. We agree with the port that its interpretation is reasonable because it “give[s] effect to every provision of the contract” (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 526.)
Hanjin, however, contends that the Agreement was never intended to accomplish either of these two key elements identified by the Port and, therefore, the Port’s interpretation of section 4.3 to give effect to these elements is not helpful to it. We disagree.
The language of section 4.3, which refers to increases to “each” of the rates in Table 4.2 could reasonably be construed as applying rate increases forward, to each rate set out in the table. Moreover, the Port’s provisionally admitted extrinsic evidence supports this interpretation. For example, Raymond Boyle testified that, during negotiations, the Port informed Hanjin “that the all-inclusive throughput rates that we were proposing would each increase every time we changed the tariff.” Boyle explained that, under the Port’s understanding of the contract during negotiations, “in Contract Year 3, there was a.5 percent tariff increase applied. What that meant is that rate then increased by.5 percent, but also, the rate in Years 6 through 10 would increase the same amount, to maintain parity.”
In addition, in a “model scenario” requested from the Port by Hanjin in order to demonstrate how the Port would calculate further rate increases, the Port used-without objection by Hanjin-a method for projecting future rate increases that depended on carrying forward tariff increases from Contract Years 1 through 5 to Contract Years 6 through 11. Hanjin’s assertion that this document does not explicitly state that this methodology is being employed is unconvincing, particularly in light of the testimony of the Port’s negotiator that the results of the Port’s calculations reflected the Port’s understanding that “all of the rates... would move up simultaneously.”
The Port also points out that its interpretation of the contract is reasonable because it preserves the significant rate differential (from 6 to 14 percent) between Contract Years 5 and 6 that was a crucial part of the Agreement. Under the Port’s interpretation of the contract, this differential is preserved.
Hanjin, however, contends that the language in section 4.3 that sets out the method for capping rate increases begins with the word “notwithstanding” and the use of this word relieves Hanjin of any obligation to pay future rate increases. We cannot agree that this word, which is commonly used to mean “in spite of, ” carries that much weight, particularly in light of the Port’s reasonable construction of section 4.3.
Hanjin also makes several other arguments in support of its contention that the Port’s interpretation of the Agreement is unreasonable. None of these arguments is convincing. First, Hanjin and the Port discuss at some length the significance of the meaning of the phrase “rate payable” as that phrase is used in section 4.3. Hanjin points to a demonstrative exhibit proffered by the Port at trial as evidence that the Port’s interpretation of the contract is unreasonable because it requires that the court “insert in the contract language which one of the parties now wishes were there.” (Levi Straus & Co. v. Aetna Casualty & Surety Co. (1986) 184 Cal.App.3d 1479, 1486.) The Port responds that this exhibit was simply intended to clarify the meaning of the language used in section 4.3. In our view, this focus on the meaning of the word “payable” as it is used in section 4.3, does not establish that the Port’s interpretation of section 4.3 is unreasonable, particularly in light of the many reasons we have discussed that establish it is quite reasonable.
Second, Hanjin asserts that, under the Port’s interpretation of the Agreement, it will be impossible to calculate the starting point for Contract Year 11 and, therefore, the Port’s interpretation cannot be reasonable. We disagree.
Table 4.2 does not, as it did for the previous 10 years, specify any particular base rates. Rather, it provides that such rates are to be determined under section 4.3. Under the Port’s construction of that section, the rates specified in Table 4.2 for Contract Years 1-10 are carried forward into Contract Years 11 through 25 and increased as tariff rates are increased. Thus, the rates in Contract Years 11 through 25 will, under the Port’s construction of the Agreement, be amenable to calculation.
In sum, we conclude that neither Hanjin nor the Port’s construction of the Agreement is inherently unreasonable. Therefore, the trial court properly admitted extrinsic evidence to assist it in determining the intent of the parties.
C. Extrinsic Evidence
Because the court found the Agreement ambiguous, it admitted extrinsic evidence to aid it in giving effect to the mutual intention of the parties. The court ultimately found that the Port’s interpretation of the agreement was more reasonable than Hanjin’s because it gave effect to the mutual intention of the parties. When that finding is challenged, we affirm it as long as it is supported by substantial evidence. (Roden v. Bergen Brunswig Corp, supra, 107 Cal.App.4th at pp. 624-625; De Anza Enterprises v. Johnson (2002) 104 Cal.App.4th 1307, 1315.)
Hanjin, however, does not challenge this finding. In its opening brief, Hanjin devotes no attention to the issue of whether there is substantial evidence in the record to support the trial court’s conclusion that the extrinsic evidence supports the Port’s interpretation of the Agreement. In fact, at no point in Hanjin’s opening brief is the phrase “substantial evidence” even used. Instead, Hanjin’s single argument on appeal, which contains numerous subparts, was that the “judgment should be reversed because the agreement unambiguously caps rate increases at two percent of the previous year’s rates.” Hanjin’s focus is entirely on its argument that the Agreement is unambiguous and, therefore, no extrinsic evidence should have been admitted, either provisionally in order to determine whether there was an ambiguity, or following the finding of ambiguity in order to ascertain the parties’ intentions.
Hanjin appears to have abandoned the substantial evidence issue by failing to raise it in its opening brief. (Padilla v. Rodas (2008) 160 Cal.App.4th 742.) Perhaps this is so because of the overwhelming nature of the evidence that supports the Port’s view of the Agreement. However, even were we to find that this issue was not abandoned by Hanjin’s failure to raise it in its opening brief, we would still conclude that no error occurred because substantial evidence supports the court’s decision.
In its respondent’s brief, the Port states that substantial evidence supports the court’s interpretation of the Agreement. It then describes the substantial evidence in the record. In its reply brief, Hanjin belatedly addresses the substantial evidence issue and generally argues that the Port’s evidence is not substantial because it does not establish the parties’ understanding of the Agreement. We have reviewed these arguments and reject them.
The Port understood that Hanjin was aware that the “2 percent cap in any given year” provision applied within each five-year period and that this provision was designed to protect Hanjin from the Port “front-loading” tariff increases within a five-year period. Further, Hanjin was aware that there would be a significant rate differential between Contract Years 5 and 6 and that any increase in tariff rates would be applied to every other tariff rate set out in Table 4.2. Finally, the Pro Forma provided by the Port to Hanjin to demonstrate the way in which rates would be increased is evidence that Hanjin understood that increases provided for in section 4.3 would be applied to all rates in Table 4.2 every time a tariff was adjusted. Hanjin made written calculations on this document, which indicate that Hanjin was aware that this was the method by which rate increases would be applied.
The trial court thus had before it substantial evidence that the Port’s interpretation of section 4.3 was consistent with the mutual intent of Hanjin and the Port at the time they executed the Agreement and, therefore, “the agreement is reasonably susceptible to the Port’s interpretation....”
IV. DISPOSITION
The judgment and the post-trial order awarding costs to the Port are affirmed. Costs on appeal are awarded to respondent.
We concur: Lambden, J., Richman, J.