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Woodall v. Woodall

California Court of Appeals, Sixth District
Mar 27, 2008
No. H031465 (Cal. Ct. App. Mar. 27, 2008)

Opinion


ZHENGNING CHEN WOODALL, Plaintiff, Cross-defendant and Respondent, v. VINCENT WOODALL, AS EXECUTOR, ETC., Defendant, Cross-complainant and Appellant. H031465 California Court of Appeal, Sixth District March 27, 2008

NOT TO BE PUBLISHED

Super. Ct. No. CV153227

Mihara, J.

The deceased’s widow brought a successful action against his estate for breach of a premarital agreement. On appeal, the estate claims that her entire action was barred because the creditor’s claim she filed against the estate was invalid. The estate also contends that the trial court violated the parol evidence rule in receiving extrinsic evidence regarding the meaning of three sections of the premarital agreement. We conclude that the creditor’s claim was valid and the trial court did not violate the parol evidence rule. We affirm the judgment.

I. Factual Background

Yaping Chen (Yaping), who was married and lived in Palo Alto, met George Woodall (George) in 1994 or 1995. In 1998, George asked her to introduce him to a Chinese girlfriend her age. None of Yaping’s local friends was single, but George saw a picture of Yaping’s sister, Zhengning Chen (Zhengning), who lived in China, and asked Yaping to introduce him to Zhengning. Yaping introduced them, and George and Zhengning began corresponding by mail, although Zhengning had very limited English skills and George did not understand Chinese. George also called Zhengning on the telephone twice, once with Yaping translating for them. George wanted to meet Zhengning and possibly marry her, so he asked Yaping to bring Zhengning to California.

In 1999, Yaping and her husband went to China and arranged for Zhengning to come visit them for the summer. In July 1999, 33-year-old Zhengning came to the United States. Two weeks after her arrival, 74-year-old George was anxious to marry her. Zhengning, who was divorced, was concerned about marrying George because she had a secure job for life as a teacher in China and had “very poor” English skills. If she gave up her job in China, she would never be able to regain it. She was worried that she would not be able to survive in the United States.

After Zhengning had been in the United States for a month, she agreed to marry George. However, George wanted a premarital agreement to provide that his children would get his house. This concerned Zhengning because she would have no place to live if George died or divorced her. Yaping negotiated with George on Zhengning’s behalf about ways to protect Zhengning.

Yaping and George discussed having George purchase life insurance to protect Zhengning in case he died. The intent was for the life insurance to finance a down payment on a “good house in downtown Santa Cruz.” They also discussed George financing Zhengning’s education so that she could obtain a teaching job if necessary. The aim was to permit Zhengning to obtain a junior college teaching credential. George told Yaping and Zhengning that Zhengning would receive $2,000 a month in pension benefits for her lifetime if he died.

This extrinsic evidence of the parties’ intent was admitted at trial through Yaping’s testimony over George’s estate’s parol evidence objection.

George’s attorney prepared a 17-page premarital agreement (the agreement). George told Yaping that she and Zhengning had to consult an attorney in order to validate the agreement. He found them an attorney and paid for the consultation. The attorney did not explain the agreement to them. On September 2, 1999, Zhengning and George signed the agreement. The agreement provided, with several significant exceptions, that George and Zhengning waived their rights to each other’s property and estate. The exceptions were set forth in Articles XI, XIII, and XXII of the agreement.

Article XI of the agreement addressed George’s retirement and employee benefit plans. George agreed: “as soon as possible after the marriage, to: (1) designate ZHENGNING as a beneficiary of his current medical/dental plan with Blue Cross of Canada, or any other HMO affiliated with the University of Toronto, which shall include survivor’s benefits; (2) designate ZHENGNING as the surviving beneficiary of his Canada Pension; (3) designate ZHENGNING as the lifetime beneficiary of his U.S. Social Security entitlements; and (4) designate ZHENGNING as the recipient of the survivor’s benefits under his pension plan with the University of Toronto. The total pension benefits which ZHENGNING would receive under the foregoing plans is approximately $1800 U.S. All of the above benefits shall be in effect as long as the parties’ marriage remains intact.”

Article XIII was entitled “LIFE INSURANCE BENEFITS.” “As soon as possible after the marriage, GEORGE shall acquire a life insurance policy under the terms of which, in the event of his accidental death, ZHENGNING shall receive, as the sole beneficiary of that policy, a sum of not less than THREE HUNDRED THOUSAND DOLLARS ($300,000). However, should the premium payments for any such policy exceed ONE HUNDRED DOLLARS ($100) per month, then GEORGE shall have the option of either: (a) paying such additional premiums or; (b) maintaining a policy in the face amount of not less than ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000), and providing in his estate plan provisions whereby, upon his death, ZHENGNING will receive, from his estate, an amount of property whose then-fair market value is not less than the difference between the net proceeds payable under the accidental life policy and THREE HUNDRED THOUSAND DOLLARS ($300,000).”

Article XXII was entitled “EDUCATION.” “GEORGE shall provide ZHENGNING with the funds sufficient for her to acquire those credits necessary to obtain a California Teaching Credential, up to the junior college level, or to pursue any other course of education whose total costs are not significantly greater than those associated with the acquisition of the California Teaching Credential described above. In any event, GEORGE’S obligation to provide educational funds shall be limited to the amounts specified in the California resident fee schedule for tuition and related course expenses.”

Article XXIV, the final section of the agreement, was entitled “GENERAL PROVISIONS.” “This Agreement shall be binding upon the parties hereto, as well as their respective heirs, executors, administrators, representatives, assigns, and any other successors in interest.” “This Agreement contains the entire understanding and agreement of the undersigned parties. There have been no promises, representations, warranties or undertakings by either party to the other, oral or written, of any character or nature, except as set forth herein.” “This Agreement may be modified, altered, amended or revoked only by an instrument in writing expressly referring to this Agreement, which is executed, signed and acknowledged by the parties hereto, and by no other means. Each of the parties hereby waives the right to claim, contend, or asse[r]t, at any time in the future, that this Agreement was modified, altered, amended, superceded, changed or revoked, by an oral agreement, course of conduct, or estoppel.” “The captions of the various Articles set forth herein are for reference only, are not intended to be a part of the text of this Agreement, and shall be of no legal significance in construing any provision of this Agreement.”

Zhengning understood the agreement to say that she would receive $1,800 per month in pension payments if George died. She also understood the agreement to provide that she would receive life insurance benefits if George died. Zhengning believed the agreement guaranteed that she could go to college.

George and Zhengning married on September 4, 1999. After they were married, George refused to finance Zhengning’s education because she had not obtained a green card yet and therefore was not yet eligible to pay the lower resident fees. It took a long time for Zhengning to obtain a green card because George could not locate any evidence that he had divorced his first wife. In the meantime, during 1999 and 2000, Zhengning attended adult school classes to improve her English skills and took massage classes. Zhengning acquired only rudimentary English skills.

In September 2000, George told Yaping that Zhengning did not have to worry about getting an education or a job because he would provide for her in the future. He gave Yaping a copy of a document entitled “Information and Instructions For Emergency Purposes.” This unsigned document, dated September 7, 2000, discussed the pension benefits, life insurance benefits and educational expenses that Zhengning had been promised in the agreement. Under the heading “THE WILL,” this document stated: “Zhengning, the wife of George Woodall will be added to the will and will be entitled to share a fair and significant percentage of the estate in the event of the death of George Woodall.” The document went on to say that it would be the responsibility of the executors “to administer the estate in such a way that the heirs of the estate receive shares in accordance with the wishes of George Woodall and that Zhengning Chen Woodall, the wife of George Woodall is provided for so that she does not have to work unless she chooses. . . . Zhengning’s share could be enough to finance or pay cash to purchase a good home in downtown Santa Cruz or elsewhere. The thinking here, is that the accidental death (award) insurance policy on George Woodall is being reduced (because of the new age category and new policies by insurance companies) and may have to be phased out and that a share in the estate would provide more and would be more secure and less liable to fluctuations in the insurance industry.”

George’s estate objected to the admission of this document on parol evidence grounds. The court conditionally admitted the document as a statement of a party for the purpose of explaining the terms of the agreement.

In September 2000, George executed a third codicil to his will in which he incorporated into his will the third amendment to his trust, executed the same day. The third amendment to the trust provided that Zhengning would receive 18 percent of the residue of his trust estate. George told Yaping that he had provided for Zhengning in his will so there was no need for him to finance her education or buy life insurance. Zhengning believed that George had substituted a $150,000 share in his estate for the life insurance that he had failed to obtain. However, in February 2001, George executed a fourth codicil in which he incorporated into his will the fourth amendment to his trust, executed that same day. The fourth amendment to the trust eliminated the provision that Zhengning would receive any part of George’s trust estate.

Zhengning did not obtain her green card until September 2002. George refused to finance her education at that time because he said he did not have enough money due to the decline in the stock market.

George died on August 8, 2004 of natural causes. There was no life insurance policy, and George had never financed Zhengning’s education. The only pension Zhengning received was $117 a month from George’s Canadian social security. She also received a single payment of $255 from George’s United States social security. Zhengning continued to live in George’s house until July 2005, when she moved out. She did not pay the mortgage or any other household expenses during that time period. The mortgage and other expenses amounted to $25,233 during the period of her residency, and George’s estate paid this amount.

II. Procedural Background

George’s son, Vincent Woodall (Vincent) was appointed executor of George’s estate and issued “Letters Testamentary” on August 11, 2005. On October 26, 2005, Zhengning filed a creditor’s claim against George’s estate based on the premarital agreement. Her claim bore the case No. “PR 043381.” Case No. PR 43381 was a trust case filed by Vincent that had been dismissed in June 2005. Zhengning’s October 2005 creditor’s claim was filed in Santa Cruz County Superior Court and served by mail on Vincent’s trial counsel.

Zhengning apparently never received a Probate Code section 9050 notice of administration of the estate, although Vincent had been aware since at least April 2005 that she was a creditor of the estate.

On November 10, 2005, Vincent filed a rejection of Zhengning’s claim. The rejection was filed in case No. PR 43555, which was the estate case. The rejection stated that Zhengning’s “claim was filed on . . . October 23, 2005.”

On December 22, 2005, Zhengning filed a verified complaint based on her creditor’s claim against the estate. In January 2006, Vincent, acting as the executor of George’s estate, demurred to the complaint and moved to strike it. Vincent asserted that Zhengning’s October 2005 creditor’s claim did not comply with Probate Code section 9150, subdivision (d) because it was filed in case No. PR 43381 rather than in case No. PR 43555.

On February 10, 2006, Zhengning’s trial counsel, Robert H. Darrow, filed an affidavit under Code of Civil Procedure section 473, subdivision (b) asserting that it was “entirely my fault” that the wrong case number had been “[i]nadvertently” placed on the October 2005 creditor’s claim. Darrow declared that he did not discover that the wrong case number was on the claim until Vincent pointed it out in his demurrer.

On May 16, 2006, Darrow filed another virtually identical affidavit under Code of Civil Procedure section 473, subdivision (b) asserting that it was “entirely my fault” that the wrong case number had been “[i]nadvertently” placed on the October 2005 creditor’s claim.

On February 6, 2006, Zhengning filed a second creditor’s claim that bore case No. PR 43555 but was otherwise identical to her October 2005 creditor’s claim. This claim was also filed in court and served on Vincent’s trial counsel.

In March 2006, Zhengning filed a verified amended complaint. Her amended complaint asserted that Vincent should be estopped from asserting that the creditor’s claim was improperly filed because he had filed his rejection of the claim in the correct case number and Zhengning and her trial counsel had been unaware that it had been originally filed in the wrong case number until Vincent filed his demurrer.

Vincent again demurred and moved to strike the amended complaint. The court sustained the demurrer to the amended complaint with leave to amend, and it accepted the filing of Zhengning’s second verified amended complaint, which was substantively the same as her amended complaint. Vincent again demurred and moved to strike the second amended complaint. In June 2006, the superior court overruled Vincent’s demurrer and denied his motion to strike. Vincent filed an answer in which he asserted as an affirmative defense that Zhengning’s claims were barred by the two-year, three-year, and four-year limitations periods set forth in Code of Civil Procedure sections 337 [four years], 338 [three years], 339 [two years], and 343 [four years]. Vincent also filed a cross-complaint against Zhengning for breach of contract and common counts. He alleged that she had failed to pay $30,748.62 in mortgage payments and other household expenses as required by the premarital agreement while she was residing in George’s home during the year following his death. Zhengning filed an answer generally denying the allegations in the cross-complaint.

In its order, the court asserted that Zhengning was entitled to relief from the error of placing the incorrect case number on her October 2005 creditor’s claim.

The parties agreed to a court trial. Zhengning tried the case as an action to enforce the premarital agreement. Zhengning’s expert testified at trial that Zhengning would require six to eight years of education to obtain a junior college teaching credential at a cost for tuition, fees, books, and supplies of $35,776. The expert also testified that the present cash value of the future lost pension income stream ($1,800 per month promised less $117 per month provided) was $638,774.

George’s will and codicils, his trust agreement and its amendments, and a final inventory and appraisal of George’s estate were admitted into evidence at trial over Vincent’s relevance objections. The final inventory and appraisal stated that George’s estate was appraised at $934,353.61, of which $900,000 was attributable to the value of his residence.

George’s 1992 will and his two 1997 codicils preceded his marriage to Zhengning. Only the third and fourth codicils to the will and the third and fourth amendments to George’s trust were executed after his marriage to Zhenging.

The court issued a statement of decision. It concluded that Vincent was “estopped” to assert that Zhengning’s October 2005 creditor’s claim was invalid because he had responded to it by filing his rejection of it in the correct case number, an act upon which Zhengning relied. The court ruled that Zhengning’s cause of action did not accrue until George died, so it was not barred by the statute of limitations.

On the claim that George breached the agreement by failing to purchase a life insurance policy, the court awarded Zhengning $168,183.64. The court calculated this amount by taking 18 percent of the $934,353.61 appraised value of George’s estate. It did this because George had repudiated his agreement to provide a life insurance policy in favor of leaving Zhengning 18 percent of his estate and then reneged on that by entirely excluding her from his estate. The court cited Civil Code section 1692, which deals with rescission of a contract, to support this decision.

The court ruled in Zhengning’s favor on her claim for the promised pension benefits. It concluded that she was due $1,683 per month for the rest of her life, and imposed a constructive trust on the estate’s assets, after the payment of the other sums due Zhengning, for $638,774, the present cash value of that stream of income. The court found that the intent of the parties to the agreement was that Zhengning would be provided with $1,800 per month after George’s death. The court viewed this award as specific performance of the contractual obligation.

The court found that Zhengning’s education would cost $35,736 and awarded her this sum, as promised in the agreement. On the cross-complaint, the court awarded Vincent $25,233 for the payments due during Zhengning’s occupancy of George’s house after his death. This was to be an offset from the sums due Zhengning. Vincent filed a timely notice of appeal.

III. Discussion

Vincent raises two issues on appeal. He maintains that Zhengning’s entire action was precluded because her October 2005 creditor’s claim was improperly filed in the trust case rather than in the estate case. Vincent also contends that the parol evidence rule “[b]arred” Zhengning’s pension and life insurance benefits claims.

A. Zhengning’s October 2005 Creditor’s Claim

The Probate Code bars an action against a decedent’s personal representative unless a claim has been timely filed and served on the decedent’s personal representative. Vincent claims that Zhengning’s claim did not comply with the applicable Probate Code provisions.

“An action may not be commenced against a decedent’s personal representative on a cause of action against the decedent unless a claim is first filed as provided in this part and the claim is rejected in whole or in part.” (Prob. Code, § 9351.) A “claim” is “a demand for payment for any of the following, whether due, not due, accrued or not accrued, or contingent, and whether liquidated or unliquidated: [¶] (1) Liability of the decedent, whether arising in contract, tort, or otherwise.” (Prob. Code, § 9000, subd. (a).) “All claims shall be filed in the manner and within the time provided in this part,” and “[a] claim that is not filed as provided in this part is barred.” (Prob. Code, § 9002.)

Zhengning properly filed her action within three months after the rejection of her claim. (Prob. Code, § 9353.)

The claim “shall be filed with the court and a copy shall be served on the personal representative,” and service must occur “within the later of 30 days of the filing of the claim or four months after letters issue to a personal representative with general powers. . . . [¶] (d) If the creditor does not file the claim with the court and serve the claim on the personal representative as provided in this section, the claim shall be invalid.” (Prob. Code, § 9150.)

“A creditor shall file a claim before expiration of the later of the following times: [¶] (1) Four months after the date letters are first issued to a general personal representative. [¶] (2) Sixty days after the date notice of administration is given to the creditor. Nothing in this paragraph extends the time provided in Section 366.2 of the Code of Civil Procedure.” (Former Prob. Code, § 9100, subd. (a).)

Vincent does not contend that Zhengning’s October 2005 creditor’s claim was improper in any respect other than the fact that it was filed in the trust case rather than estate case. Yet he fails to identify exactly how her claim failed to comply with the applicable statutes. The Probate Code requires a creditor’s claim to be a “demand for payment” that is “filed with the court” and served on the personal representative. Zhengning’s creditor’s claim was an explicit demand for payment that was “filed with the court,” and served on Vincent, the estate’s personal representative. The statute does not require more than that the claim be “filed with the court,” so the filing of the claim in the wrong case was not a violation of any specific Probate Code requirement. The Probate Code requires the filing of the claim and the service of the claim on the personal representative to occur within four months after the date that letters are first issued, which in this case was on August 11, 2005. Zhengning’s October 2005 claim was filed with the court and served on Vincent well within that four-month period, which did not expire until December 11, 2005.

The filing of the claim in the trust case rather than the estate case was a truly insignificant mistake which had no impact whatsoever in this case. Zhengning timely served the claim on Vincent, so he could not have been misled by the fact that the claim was filed in the wrong case. The claim itself stated that it was being filed against the estate, so Vincent could not have thought it related to the trust rather than the estate, particularly since the trust case had long since been dismissed. Vincent explicitly acknowledged his understanding that the claim was intended to be filed in the estate case by filing his rejection of the claim in a timely fashion in the estate case.

The statute governing rejection of a claim, like the statute governing the making of a claim, merely requires that the rejection be filed with the court. “(a) When a claim is filed, the personal representative shall allow or reject the claim in whole or in part. [¶] (b) The allowance or rejection shall be in writing. The personal representative shall file the allowance or rejection with the court clerk and give notice to the creditor as provided in Part 2 (commencing with Section 1200) of Division 3, together with a copy of the allowance or rejection.” (Prob. Code, § 9250.)

Vincent’s claim that Zhengning’s claim was invalid is based on Nathanson v. Superior Court (1974) 12 Cal.3d 355 (Nathanson). In Nathanson, the decedent’s former wife filed a petition for a family allowance in the estate proceedings. In her petition, which was filed within the period for filing a creditor’s claim, she stated that she “anticipated” filing a creditor’s claim seeking delinquent child support and life insurance proceeds due under a marital settlement agreement. She did not file a creditor’s claim within the statutory period. (Nathanson, at pp. 358-359.) After her petition for a family allowance was granted and the statutory period for filing a creditor’s claim had expired, the decedent’s former wife filed a creditor’s claim and a petition seeking to have the lateness of the claim excused under Code of Civil Procedure section 473 (section 473). (Nathanson, at pp. 359-360.)

The California Supreme Court held that section 473 could not be utilized to permit the filing of the decedent’s former wife’s late creditor’s claim. The mere fact that the executor had notice of the underlying bases for her claim, because she had mentioned those bases in her petition for a family allowance, did not excuse her failure to present a timely claim. (Nathanson, supra, 12 Cal.3d at p. 364.) Although a timely creditor’s claim could be amended after the expiration of the statutory period, this was only true where the timely filed claim itself stated a “demand against the estate in some form sufficient to apprise the representative of the underlying debt or injury.” (Nathanson, at p. 366.) As the decedent’s former wife’s petition for a family allowance was not itself a demand against the estate for anything other than the family allowance, it was not in a form sufficient to constitute a claim and therefore could not be transformed into a claim by amendment. (Nathanson, at pp. 368-369.) The court distinguished a case in which a timely claim had been presented, but the claim had lacked the required verification. (Nathanson, at p. 368.)

Nathanson is readily distinguishable. Zhengning’s October 2005 claim, unlike the decedent’s former wife’s petition in Nathanson, was indisputably a “demand against the estate in [a] form sufficient to apprise the representative of the underlying debt or injury.” (Nathanson, supra, 12 Cal.3d at p. 366.) Zhengning’s October 2005 claim was timely filed, so there was no need to excuse any lateness. In fact, Zhengning’s claim did not fail to comply with any of the procedural requirements set forth in the Probate Code. While her claim was inadvertently filed in the trust case rather than the estate case, this mistake was of no consequence and had no impact at all.

Consequently, it is not necessary for us to consider whether Zhengning properly amended her claim under former Probate Code section 9104 , whether Vincent was estopped from challenging the validity of Zhengning’s October 2005 claim because she reasonably relied on his November 2005 rejection, or whether Zhengning was entitled to relief under section 473. Zhengning’s October 2005 creditor’s claim was not invalid.

“(a) Subject to subdivision (b), if a claim is filed within the time provided in this chapter, the creditor may later amend or revise the claim. The amendment or revision shall be filed in the same manner as the claim. [¶] (b) An amendment or revision may not be made to increase the amount of the claim after the time for filing a claim has expired. An amendment or revision to specify the amount of a claim that, at the time of filing, was not due, was contingent, or was not yet ascertainable, is not an increase in the amount of the claim within the meaning of this subdivision. [¶] (c) An amendment or revision may not be made for any purpose after the earlier of the following times: [¶] (1) The time the court makes an order for final distribution of the estate. [¶] (2) One year after letters are first issued to a general personal representative.” (Former Prob. Code, § 9104.)

B. Parol Evidence

The trial court admitted both testimonial and documentary extrinsic evidence to aid in its interpretation of the agreement. Vincent contends that the admission of this extrinsic evidence was erroneous because “any evidence beyond the four corners of [the agreement] was barred by the parol evidence rule.”

It is undisputed that the agreement was fully integrated. The agreement explicitly stated that it was “the entire understanding and agreement of the undersigned parties.” “When the parties to a written contract have agreed to it as an ‘integration’—a complete and final embodiment of the terms of an agreement—parol evidence cannot be used to add to or vary its terms.” (Masterson v. Sine (1968) 68 Cal.2d 222, 225, italics added.) “In contract law, ‘integration’ means the extent to which a writing constitutes the parties’ final expression of their agreement. To the extent a contract is integrated, the parol evidence rule precludes the admission of evidence of the parties’ prior or contemporaneous oral statements to contradict the terms of the writing, although parol evidence is always admissible to interpret the written agreement.” (Esbensen v. Userware Internat., Inc. (1992) 11 Cal.App.4th 631, 636-637, italics added.) “[The parol evidence rule] generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument. The rule does not, however, prohibit the introduction of extrinsic evidence to explain the meaning of a written contract . . . [if] the meaning urged is one to which the written contract terms are reasonably susceptible.” (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343, internal quotation marks and citation omitted, italics added; Code Civ. Proc., § 1856.)

Thus, although parol evidence may not be admitted to vary or add to the terms of a fully integrated agreement, parol evidence is nevertheless admissible to interpret and explain the terms of a fully integrated contract. “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is . . . whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37 (PG&E), italics added.) “If the court decides, after considering [the extrinsic] evidence, that the language of the contract, in the light of all the circumstances, ‘is fairly susceptible of either one of the two interpretations contended for . . .’, extrinsic evidence relevant to prove either of such meanings is admissible.” (PG&E, at p. 40, internal citations omitted.) “Where any doubt exists as to the purport of the parties’ dealings as expressed in the wording of their contract, the court may look to the circumstances surrounding its execution—including the object, nature and subject matter of the agreement—as well as to subsequent acts or declarations of the parties ‘shedding light upon the question of their mutual intention at the time of contracting.’” (Barham v. Barham (1949) 33 Cal.2d 416, 423, internal citations omitted [interpretation of premarital agreement]; (Code Civ. Proc., § 1860 [court may admit evidence of circumstances under which contract was made to aid in interpreting contract].)

“[E]ven if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible. The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 391 (Dore), internal quotation marks and citations omitted.) “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.” (Dore, at p. 393, internal quotation marks omitted.)

1. Pension Benefits

Vincent challenges the trial court’s admission of extrinsic evidence to explain and aid in its interpreting of the section of the agreement relating to George’s retirement and employee benefit plans. This section, Article XI of the agreement, specifically obligated George to “(2) designate ZHENGNING as the surviving beneficiary of his Canada Pension; (3) designate ZHENGNING as the lifetime beneficiary of his U.S. Social Security entitlements; and (4) designate ZHENGNING as the recipient of the survivor’s benefits under his pension plan with the University of Toronto. The total pension benefits which ZHENGNING would receive under the foregoing plans is approximately $1800 U.S.”

Zhengning sought the admission of extrinsic evidence to demonstrate that the “total pension benefits . . . is approximately $1800 U.S.” language in the agreement was reasonably susceptible to an interpretation that it referred to a “total” of the monthly benefit amounts rather than the “total” of single lump sum payments, and that the parties in fact intended this language to refer to a monthly benefit amount. The extrinsic evidence she offered established both that George had told Yaping and Zhengning that Zhengning would receive a total of $2,000 per month in pension benefits for her lifetime if he died, and that Zhengning had understood the agreement to promise that she would receive a total of $1,800 per month in pension payments if George died. She also offered as extrinsic evidence the September 2000 document given by George to Yaping which stated that “Zhengning would have about $1500 per month coming from the Canadian and US pensions” after his death. (Italics added.)

Interestingly, Vincent’s demurrer referred to Article XI as “stat[ing] that the pension benefit is approximately $1,800.00 per month .” (Underline omitted and bold italics added.) He apparently revised his litigation position later.

The trial court did not err in admitting extrinsic evidence to show that George and Zhengning’s agreement was referring to total monthly pension benefits. The language of the agreement did not explicitly say whether the “total pension benefits” from the combination of George’s two pensions and his social security benefits referred to the “total” monthly amount or the “total” lump sum. None of the agreement’s language was inconsistent with an interpretation that the agreement was referring to a monthly total, and the language was facially reasonably susceptible to such an interpretation. The extrinsic evidence was not in conflict, and it demonstrated that both George and Zhengning understood this language to refer to a monthly total rather than a lump sum.

Since the extrinsic evidence was relevant to explain and interpret a term of the agreement in a manner to which the language of the agreement was reasonably susceptible, and the extrinsic evidence demonstrated that the agreement was intended to refer to a monthly total, the trial court’s admission of this evidence and interpretation of the agreement utilizing it was not erroneous.

2. Insurance/Death Benefits

Vincent also claims that the trial court erred in admitting parol evidence to aid in interpreting Article XIII of the agreement. Article XIII required George to “acquire a life insurance policy under the terms of which, in the event of his accidental death, ZHENGNING shall receive, as the sole beneficiary of that policy, a sum of not less than THREE HUNDRED THOUSAND DOLLARS ($300,000).” The agreement went on to provide that, “should the premium payments for any such policy exceed ONE HUNDRED DOLLARS ($100) per month, then GEORGE shall have the option of either: (a) paying such additional premiums or; (b) maintaining a policy in the face amount of not less than ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000), and providing in his estate plan provisions whereby, upon his death, ZHENGNING will receive, from his estate, an amount of property whose then-fair market value is not less than the difference between the net proceeds payable under the accidental life policy and THREE HUNDRED THOUSAND DOLLARS ($300,000).”

Zhengning sought to establish that this section was intended to provide that she would receive $300,000 in the event of George’s death, either entirely from a life insurance policy or partially from a life insurance policy and partially from his estate, and she offered extrinsic evidence to show that this was the parties’ intent. The extrinsic evidence showed that the purpose of this section of the agreement was to provide Zhengning with the funds for a down payment on a “good house in downtown Santa Cruz” in the event of George’s death, since otherwise she would be homeless. Zhengning understood this section to provide that she would receive life insurance benefits if George died. After they executed the agreement, George said he had provided for Zhengning in his will so there was no need for him to buy life insurance, and Zhengning believed that George had substituted a $150,000 share in his estate for the life insurance he had agreed to provide but had failed to obtain.

The September 2000 document said that Zhengning would receive “a fair and significant percentage of the estate in the event of the death of George Woodall.” It went on to say that it would be the responsibility of the executors “to administer the estate in such a way that the heirs of the estate receive shares in accordance with the wishes of George Woodall and that Zhengning Chen Woodall, the wife of George Woodall is provided for so that she does not have to work unless she chooses. . . . Zhengning’s share could be enough to finance or pay cash to purchase a good home in downtown Santa Cruz or elsewhere. The thinking here, is that the accidental death (award) insurance policy on George Woodall is being reduced (because of the new age category and new policies by insurance companies) and may have to be phased out and that a share in the estate would provide more and would be more secure and less liable to fluctuations in the insurance industry.”

Vincent argues that this extrinsic evidence was not admissible to prove the meaning of the language in the agreement because the agreement’s reference to “accidental death” unambiguously established that there was no intent to provide any benefits for Zhengning if George did not die an “accidental death.” We disagree.

Article XIII refers to both a “life insurance policy” and an “accidental life policy,” although it is clear that it contemplates only a single policy. It also inconsistently provides, at one point, that Zhengning shall receive benefits “in the event of [George’s] accidental death” and, at another point, that Zhengning shall receive alternative benefits “upon [George’s] death.” These inconsistencies in the language of Article XIII created a patent ambiguity. When a contract contains an ambiguity, the ambiguity is ordinarily “interpreted most strongly against the party who caused the uncertainty to exist.” (Civ. Code, § 1654.) In this case, George’s attorney drafted the agreement, so George is responsible for the uncertainty in the agreement and the ambiguity should be interpreted “most strongly” against him. Resolution of the ambiguity against George would result in an interpretation that George was obligated to obtain a life insurance policy providing Zhengning with the specified benefits in the event of his death.

The trial court did not simply interpret the ambiguity against George. Instead, it considered all of the extrinsic evidence of the parties’ intent and concluded that the parties had intended for George to either provide a life insurance policy that would pay Zhengning $300,000 in the event of his death or, alternatively, provide that Zhengning would receive a similar amount from his estate upon his death.

Vincent’s claim that Article XIII was not reasonably susceptible to such an interpretation is premised on his refusal to consider either the inconsistent language in Article XIII itself or the extrinsic evidence that the parties intended to provide Zhengning with the means to purchase a home in the event of George’s death. In light of the ambiguous language in Article XIII and the extrinsic evidence, it cannot be reasonably concluded that the parties intended for Zhengning’s ability to purchase a home after George’s death to depend on the cause of George’s death. Neither the extrinsic evidence nor the ambiguous language of Article XIII supports such a conclusion.

Vincent also complains that the trial court admitted evidence of George’s will, codicils, trust, and trust amendments, and the final inventory and appraisal of his estate. The admission of this evidence was proper. Article XIII permitted George to substitute a share of his estate plus a $150,000 life insurance policy for the $300,000 life insurance policy. Evidence of George’s estate plans was necessary for Zhengning to prove that George had not provided for her in his estate plan as a partial or full substitute for the promised $300,000 life insurance policy. If George had provided for Zhengning to receive $300,000 from his estate, she would have had a difficult time establishing that she had been damaged by his failure to provide the promised life insurance.

It is true that the amount awarded by the trial court on this claim appeared to be based on the amount that George had briefly provided for Zhengning to receive from his estate, rather than on the $300,000 that he had promised to provide for her in the event of his death. Yet Zhengning has not appealed from the trial court’s judgment and does not claim that the trial court’s damages award on this claim was inadequate. We resolve only Vincent’s claim that the trial court erred in admitting and considering extrinsic evidence in interpreting Article XIII. Zhengning’s decision not to challenge the trial court’s damages award may have been strategic or simply magnanimous. Whatever the case, we have no cause to consider the issue.

C. Other Issues

Vincent contends that Zhengning’s action was barred by the statutes of limitations in Code of Civil Procedure sections 366.2 and 366.3. Vincent never pleaded either of these statutes of limitations below. “The general rule is firmly established that if a statute of limitation is not pleaded it is waived.” (Hall v. Chamberlain (1948) 31 Cal.2d 673, 679.) Vincent waived these statute of limitations arguments, so we need not address them.

In the midst of his discussion of the parol evidence issue in his opening appellate brief, Vincent devoted three paragraphs to a discussion of the statute of limitations set forth in Code of Civil Procedure section 366.3 . The only separately headed issues addressed in Vincent’s opening appellate brief were his contention regarding the filing of the creditor’s claim and his argument that the trial court erred in admitting parol evidence. There was no separate heading for his short discussion of Code of Civil Procedure section 366.3. His opening brief contained no other argument regarding the statute of limitations and no reference at all to the statute of limitations set forth in Code of Civil Procedure section 366.2 . In his appellant’s reply brief, Vincent devoted 16 pages to his statute of limitations arguments, including a 12-page section devoted exclusively to Code of Civil Procedure section 366.2 .

At various points in his parol evidence argument, Vincent contends that some of the language in the September 2000 document introduced by Zhengning as extrinsic evidence of the parties’ intent actually supported his position. “[W]here extrinsic evidence has been properly admitted as an aid to the interpretation of a contract and the evidence conflicts, a reasonable construction of the agreement by the trial court which is supported by substantial evidence will be upheld.” (In re Marriage of Fonstein (1976) 17 Cal.3d 738, 746-747.) Any conflicts in the extrinsic evidence were resolved by the trial court in Zhengning’s favor, and we must uphold the trial court’s resolution since it is reasonable and supported by substantial evidence.

IV. Disposition

The judgment is affirmed.

WE CONCUR: Bamattre-Manoukian, Acting P.J., Duffy, J.

Vincent’s failure to state his statute of limitations issue under a separate heading in his opening brief violates the appellate rules. (Cal. Rules of Court, rule 8.204(a)(1)(B) [brief must “[s]tate each point under a separate heading or subheading”].) And his failure to raise his assertion regarding Code of Civil Procedure section 366.2 in his opening brief would justify our refusal to entertain it. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-766 [appellate courts decline to address new issues that are raised for the first time in an appellant’s reply brief unless the appellant makes an exceptional showing of good cause for failing to raise those issues earlier].)


Summaries of

Woodall v. Woodall

California Court of Appeals, Sixth District
Mar 27, 2008
No. H031465 (Cal. Ct. App. Mar. 27, 2008)
Case details for

Woodall v. Woodall

Case Details

Full title:ZHENGNING CHEN WOODALL, Plaintiff, Cross-defendant and Respondent, v…

Court:California Court of Appeals, Sixth District

Date published: Mar 27, 2008

Citations

No. H031465 (Cal. Ct. App. Mar. 27, 2008)