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LEXSEE 207 CAL. APP 2D 61

CHARES J. BENTON, Plaintiff and Appellant, v. HOFMANN PLASTERING COMPANY et al., Defendants and Respondents
Civ. No. 19713

Court of Appeal of California, First Appellate District, Division One
207 CaL. App. 2d 61; 24 CaL. Rptr. 268; 1962 CaL. App. LEXIS 1882

August 21,1962

PRIOR mSTORY: (***1) APPEAL from a judgment of the Superior Cour of Alameda County. Joseph A. Murhy, Judge.
Action for declaratory relief, to recover certain moneys advanced under contracts assigned to plaintiff and to
foreclose a trst deed.

does not preclude the assignent of money due or to
become due under such contract.

(4) Id.--Rights Assignable--Stipulations Against Assignment. --By appropriate words used in a contract, the

parties may effectively provide that the contract or
money due thereunder shall not be assignable.

DISPOSITION: Afffrmed. Judgment denying plaintiff most of the relief sought by him, affrmed.
signment. --Clauses in a contract relattng to nonassignability are for the benefft of the obligor, and do not

(5) Id.--Rights Assignable--Stipulations. Against As-

HEADNOTES

prevent the assignee from acquiring rights ag~inst t~e

CALIFORNIA NOTES

OFFICIAL

REPORTS

HEAD-

assignor, where the transfer works no substanttal detriment to the rights of the other part to the contract.
(6) Id.--Rights Assignable--Stipulatio~s Against. As-

(1) Assignments--Construction. --An agreem~nt
whereby a lathig contractor assigned to one advancing

money to him on lathing contracts the proceeds of all contracts entered into or to be entered into by the contractor for the performnce of which the lender advanced or would advance money to the contractor, and which provided for repayment of each advance from the proceeds of the partcular contract on which the advance had been made, with any deffciency to be paid out of the proceeds of other lathing contracts, and any surlus to be divided between the parties, constituted a loan agreement
under which the loans were to be repaid solely from the

signment. --Although limitations on assignments will be strictly constred by the cours, explicit language used by the parties wil be followed.
(7) Id.--Rights Assignable -- Stipulations Against Assignment--Waiver. --A prohibition against assignent of a contract is ineffective if it has been waived or if all
that remains to be done under the contract is the payment
of

money.

(8) Id.--Rights Assignable--Stipulations Agai~st Assignment. --Where a prohibition against assignment
relates not only to the contract but also to the money due or to become due there-under, and there is no waiver of the prohibition by the obligor, it wil be enforced in his favor, since his rights to the moneys due under the contract are superior to those of the assignee.
(9) Id.--Rights and Liabilties .of Parties--Defen~es Against Assignees. --Where by vIre of a comprommse

proceeds of the assigned contracts, not a loan agreement to be repaid generally at all events.

(2) Id.--Rights Assignable--Stipulations Against Assignment. --Where the parties have used language which clearly expresses their intention, a provision in a
contract against the assignment of the debts represented
thereby is effective.

agreement between a subcontractor-assignor, the obligor,

(3) Id.--Rights Assignable--Stipulations Against Assignment. --A contract provision against assignment

imd the county for which work was defectively performed under a contract, the parties waived any right to

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receive payment in consideration of the acceptance by
the county of the work defectively performed, and the

Coelho, and to foreclose a deed of trst executed by

Coelho and wife to Benton to secure advances.

assignee, when asked if he had any objection to the compromise, made no reply, the assignee's rights under the assignment were inferior to the rights of the obligor, because of the former's acquiescence by silence in the compromise agreement.
(10) Pleading--Answer--Suffciency. --An answer

Hofmnn cross-complained claiming Coelho and
Benton were parters, and sought damages for a (***2)

breach of two lathing contracts by Coelho and for defective performnce of a third.

Coelho then cross-complained i against Benton
claiming partership between him and Benton, seeking
dissolution of partership, appointment of receiver, and
cancellation of deed of trst for lack of delivery and exe-

amended to conform to the proof, alleging that there was

either no consideration for a deed of trst or, if consideration was given, there was a failure of consideration,
supported a finding that plaintiff made a false promise to
the defendant which induced the execution of the instr-

cution, and coercion.
1 This cross-complaint was dismissed by

ment.

Coelho.

motion to amend is granted at the trial, the lack of a formal ffing of the amended pleading may not be made the ground for complaint after the case is tried as if the amendment had been made.

(11) Id.--Amendment -- At Trial -- Filng. --Where a

Plaintiff appeals from the denial of most of the relief sought by him.
Questions Presented

Although there were many issues presented by the
pleadings, the partes at tral limited the issues to be de-

(12) Appeal--Questions of Law and Fact--Findings on Conflcting Evidence. --The trial cour's determnation, supported by substantial evidence, is binding on an appellate cour, although the evidence is conflcting.
Deeds -- Foreclosure. --Even a partial failure of considof trst.

termned. They were:

(13) Mortgages -- Foreclosure -- Defenses: Trust
eration is a defense to foreclosure of a mortgage or deed

1. The character of the Benton-Coelho agreement as to whether it was an agreement for advances to be repaid only from proceeds of contracts or for advances under a contiuing obligation on Coelho's part to repay all moneys advanced.
2. Whether the assignents of proceeds from the

Coelho-Hofmann contracts to Benton prevailed over their assignments to Hofmann.

COUNSEL: Francis T. Cornsh for Plaintiff and Appellant.

3. Is plaintiff bound by the settlement of the Eden Offce Building (***3) contract?
4. The validity of the deed of trst from Coelho to Benton.
5. Findings.

Lindsay & Pettis, Warren G. Reid, Merrill, Commons,
Hooper & Miler, Alan A. Lindsay and Wayne M.

Hooper for Defendants and Respondents.

JUGES: Bray, P. J. Sullivan, 1., and Agee, 1., . con-

(*64) 1. The Benton-Coelho Agreement.

cured.
* Assigned by Chairn of Judicial CounciL.

(1) Defendant Coelho was engaged in the business of installing lathing in connection with various building
contracts. Benton had advanced him money to aid in the

OPINION BY: BRAY

OPINION
Hofmann Plastering Company and Coelho in declaratory

ffnancing of many of these projects. There is a dispute as to whether the money so advanced constituted a loan or an investment. Weare not concerned with that question other than as an aid in interpreting the agreement

(*63) (**270) Plaintiff Benton sued defendants

which Benton and Coelho entered into December 21, 1953. It provided that in consideration of past and futue
advances by Benton, Coelho assigned to Benton the proceeds of all contracts which Coelho had entered into and which he might enter into for the performance of which contracts Benton had advanced or would advance moneys to Coelho. Coelho agreed that upon all jobs financed

relief and for judgment against Hofmann for moneys advanced to defendant Coelho to enable Coelho to perform certain lathing contracts with Hofmann, to recover from Hofmann proceeds paid to Coelho under contracts

assigned to plaintiff, to recover certain sums from

by Benton, Coelho would impress upon the invoices on

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such jobs a rubber stamp provided by Benton which read

Over the period involved Benton advanced some $
73,000 which was not paid back to him. On occasion

"Moneys due under the withn job are assigned to
Charles J. Benton pursuant to agreement evidenced by
forml writing dated December, 1953." Apparently

funds advanced by Benton for a particular job were used by Coelho, unkown to Benton, to pay indebtedness on
other jobs for which Benton was providing the ffnancing.
Benton contends that the contract constituted a loan

this condition was met.

The agreement (***4) provided: "The signed imprint of said stamp upon any invoice shall conclusively establish as between the parties. . . that Benton has advanced money to Coelho to ffnance him in the performance of the job represented by the invoice so imprinted,

agreement requiring repayment of all moneys advanced. Coelho contends 2 and the cour found, that the contract was a loan agreement, repayment to be made solely from

and that said advances have been made pursuant to the
formula set forth in this memorandum of agreement.

the proceeds of the lathing contracts. We adopt the
statement of the trial judge, Honorable Joseph A. Murphy, in holding that the intent of the agreement was that repayment of advances should come solely from the lathing contracts. "The agreement provides that Benton shall advance certain funds to Coelho on contracts which are then assigned to Benton, and, in the event that there is a
loss on the contracts, such loss may be recouped from
any subsequent contracts. This phase of the agreement,

"Upon making any advance such as Benton. . . shall
hereafter make to Coelho to enable Coelho to ffnance any lathing job, all moneys due to Coelho or thereafter to

become due to Coelho by virte of (**271) the contract to which said advance relates are by vire of any such advance assigned by Coelho to Benton. Upon request from Benton, Coelho shall execute any formal document
appropriate to evidence the assignment."

in the opinon of the cour, indicates that each advance

was, in fact, a debt due from Coelho to Benton because of the fact that either part could cancel the agreement at

The parties agreed that the advances should be repaid as follows: "After all expenses for labor and materials used in the performnce of each lathing job have been paid, as much of said proceeds advanced by Benton or paid for said lathing job as remain shall be paid to Benton until Benton shall have received the full amount of
all advances on that contract. Should said proceeds be

any time, and, conformng to (***7) the intent of the
agreement if it were cancelled, Coelho's obligation to
Benton for any losses up to the time of cancellation

would automatically termate. (*66) This is also borne
out by the fact that Benton set up a reserve account

insuffcient for that purose, any (***5) deficiency
shall be paid to Benton out of

against individual contracts, indicating that it was his intent that such reserve would liquidate not only the con-

tract from which the reserve was drawn, but also any
futue contracts. This is also supported to some extent

the proceeds of other lathing jobs until Benton shall have received the entire prin-

cipal advanced on each lathing job completed. (Emphasis added.)

by the admssion of Benton that be (he) made considerable proffts on prior contracts and that at the outset he

told Coelho he would like to get into the business to
'make a fast buck.' All of the circumstances and dealings would indicate that it was purely speculative. . . . 2 Coelho originally contended that the agreement was one of partership between Benton and himself. This contention was abandoned at the

paid and Benton has been reimbursed all moneys he has advanced to finance all lathing jobs completed, and any of the proceeds from any completed lathing job shall remain, Coelho shall be paid from said proceeds remaining up to an amount equal to 7% of the gross contract price charged by Coelho for that job. The balance thereafter remaining shall be divided equally between Benton
and Coelho.

(*65) "If after all labor and materials have been

triaL.

"There was testimony that Coelho made certain mis-

"The partes hereby expressly confir that on all
jobs heretofore performed by Coelho, whether settlement
has been heretofore effected or whether settlement re-

representations to Benton prior (**272) to November 22, 1957, and on the basis thereof (***8) procured advances from Benton. The evidence, however, is susceptible to a fuher inference; namely, that, while the funds
advanced were not used on the particular job noted in the
assignent, they were used on other jobs which had pre-

mains to be made, the advances by Benton have been on the basis outlined in this memorandum of agreement and on no other basis." (Emphasis added.)

Plaintiff advanced Coelho moneys on jobs started before the above-mentioned contract was entered into as
well as after. All of the jobs were under contracts be-

viously been ffnanced by Benton; hence, the question of fraud is speculative and not proved by a preponderance of evidence. It is also to be noted that after discovery of
the fraud, Benton continued to make advances to Coelho. "

tween Hofmann and Coelho. Hofmnn was a plastering
contractor who sublet the lathing (***6) to Coelho.

The agreement provides for repayment of the loans out of the proceeds of present contracts, and if these are

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insuffcient, out of futue contracts. There is no provi-

for the partes to show by apt words that rights created by

sion expressly relating to repayment of the loans in the
event that both of these sources should prove insufffcient. On the face of the contract, it appears that the parties provided with particularity for the sources of repayment of the loans, thereby indicating that the parties intended those sources to be the sole method of repayment.

the contract shall not be assignable."
The cour also relies upon the holding in Fairbanks

v. Crump Irr. etc. Co., Inc. (1930) 108 Cal.App. 197,205 (291 (***11) P. 629, 292 P. 529). In Fairbanks the cour held that a provision that money due under a contract
might be assigned with the permssion of the obligor, is

As the contract is ambiguous, the cour looked behind it
to the evidence, and concluded from both the contract and the evidence what the intent of the partes was. Ben-

the same as a provision that it may not be assigned without such permssion and that such a provision should be

ton contends that the fact that the deed of trst executed

(***9) by Coelho and wife was to secure to Benton
"payment of indebtedness in the sum of any deffciency

given effect. Parkinson concurs in this conclusion. (See also 37 A.L.R.2d 1251,1253.)
a contract and an assignment (**273) of

arising through beneffciary having ffnanced Alvin George Coelho in purchasing and installing lathng. . ."
conclusively shows that the loans were to be fully repaid. The cour apparently believed the testimony of both Coelho and his wife that they were persuaded by Benton to execute the deed of trst to protect their home from Coelho's creditors. Therefore the cour's ffnding that Benton is not entitled to recover from Coelho the unpaid

(3) There is a distiction between an assignment of the proceeds of

provision in a contract against assignent does not preclude the assignment of money due or to become due
under the contract. (4) However, here the prohibition was against assigning either the contract or the moneys
to become due thereunder. Such a prohibition is proper.
(See 4 Corbin on Contracts, pp. 482, 486, 494.) (*68)

the contract. See Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335,339 (182 P.2d 182), holding that a

balance of the moneys advanced by Benton should be

affired.
2. Assignments.
As stated hereinbefore, the Benton-Coelho agree-

Trubowitch also implies that the parties may effectively so provide by the use of appropriate language.
(5) Section 176 of the Restatement of Contracts

ment provided that all proceeds of lathing contracts for

which Benton (*67) made advances were assigned to Benton. While the record is not clear as to whether all the Hofmann-Coelho contracts under which Coelho did
the lathing jobs contained the same provisions as to non-

provides: "A prohibition in a contract of the assignment of rights thereunder is for the benefft of the obligor, and

assignability of the moneys to become due thereon, or whether they all contained nonassignability clauses, the
partes have assumed they all had the following clause or

does (***12) not prevent the assignee from acquirng rights against the assignor by the assignent or the obligor from discharging his duty under the contract in any way permssible if there were no such prohibition." That provision is in accord with the statement in 5 Californa Jurisprudence 2d 292, which states: "It appears that the
cours wil generally refuse to enforce nonassignability

one similar to it: "That no assignent of this Subcontract, nor of any money due or (*** 10) which may become due hereunder shall be made without the written
consent of

clauses, at least as between the assignor and assignee and

those claimig under them, where the transfer works no
substantial detriment to the rights of the other part to

the Contractor (Hofmann)."

the contract. (Citing 35 Cal.L.Rev. 577.) Thus, it is ruled

(2) The cour found that "provisions of the Hofmann-Coelho agreements against assignment of money
due or to become due by vire of said agreements did

not, under the law of this State, prevent the assignent

by defendant Coelho of such moneys to plaintiff, and therefore plaintiff, as Coelho's assignee, is entitled to
judgment for the following sum. ..."

that clauses restrcting assignability are for the benefft of the obligor, and do not prevent the assignee from acquiring rights against the assignor by an assignment apparently prohibited by the term of the contract."

In the instant case it is the obligor who will apparently suffer if

the assignment is held valid as against him.

The cour was in error in its statement, which, in effect, declared that the law of Californa considered nonassignability clauses of this kind ineffective. In Parkinson v. Caldwell (1954) 126 Cal.App.2d 548, 552 (272

The validity of the assignment does not aid plaintiff in seeking recovery against Coelho, as his rights against
Coelho exist independently of the assignent. The only

question is one of set-off and priority as between Hofmann and plaintiff.
(6) The area (***13) of

P.2d 934), the cour stated: "Where the language is clear an agreement not to assign a debt is effective." The cour, after referring to a New York decision, relies upon language in 4 Corbin on Contracts, section 872, page 486,
where the author stated: "In any case, it is quite possible

limitations on assignments

is, of course, one in which the cours strictly constre
such restrictions just as they jealously guard the right to
transfer propert in general. However, explicit language

wil be followed in cases of this kind. (7) The cour in

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Thomas v. Thomas (1961) 192 Cal.App.2d 771,779 (13
Cal.Rptr. 872), after quoting from Fairbanks v. Crump, supra, 108 Cal.App. 197, and Parkinson v. Caldwell,
supra, 126 Cal.App.2d 548, notes, "The cours, of
course, have placed certain limits on nonassignment

is a conflict in the evidence as to whether the fault was that of Coelho or of Hofmann, although there is strong evidence that the fault was Coelho's. It is not necessary
to discuss this evidence for the reason that in a meeting
at which Benton was present, with Coelho, Hofmann,

clauses -- there is strong policy in favor of the free trans-

ferability of all tyes of propert ( Farmland Irrigation
Co. v. Dopplmaier, 48 Cal.2d 208, 222 (308 P.2d 732)); accordingly, where the restriction against assignability is waived, rights may be transferred despite the prohibition ( Trubowitch v. Riverbank Canning Co., 30 Cal.2d 335,
342 (182 P.2d 182)), and the prohibition does not apply

and representatives of the county and of the general contractor, Hofmnn and Coelho waived any right to receive
additional payments in consideration of acceptance of

the

defective building by the county. At this meetig, when
asked if he had any objections to the compromise, (***16) Benton made no reply. (*70) The cour con-

where all that remains to do under the contract is the payment of money. (Butler v. San Francisco Gas &
Elec. Co., 168 Cal. 32,41 (141 P. 818).) Here, it is con-

cluded that this compromise agreement "was in effect a
new contract between the partes, and that the so-called

'frits' of the contract never became due to Hofmnn or
to Coelho, hence plaintiff, as assignee of Coelho, is entitled to recover nothig" from the Eden Offce Building job.

ceded, there has been no waiver by Edison as (*69)
obligor; (***14) also, the Fairbanks case, quoted from

Parkinson v. Caldwell, supra, would seem to support the view that where the prohibition against assignment relates to money due under a contract, it wil be enforced where the prohibition in question is explicit." (Emphasis
added. )
(8) Here there is no question of waiver by Hof-

The cour's conclusion must be affired for two reasons: (1) As we have heretofore shown, the assignment of the proceeds of the contract by Coelho to Hofmann is
superior to the assignent to Benton. Hence Hofmann had the right to make the compromise. An obligor who

mann. The prohibition in the lathg contracts extends
not merely to the contracts themselves but to the money
due or to become due thereunder as welL. The nonassignment provisions are valid and should be enforced.

has accepted an assignment of the money due under a constrction contract may settle a claim under the contract by accepting a lesser sum in settlement. The "anticipatory debtor may . . . do whatever reasonably ap-

pears to be necessary to enable the assignor to perform

Hofmnn's right to the moneys under the Coelho-

Hofmann lathing contracts is superior to that of Benton, as assignee. However, as Hofmann did not appeal from that porton of the judgment awarding Benton $ 4,415.80 against Hofmann, such award must stand.
Although the cour's ffnding that Hofmann was entitled against Benton to the proceeds of the "Capwell Store" Hofmann-Coelho lathng contract was based upon
a different theory than the nonassignability of the mon-

the contract." ( Peden Iron & Steel Co. v. McKnight (1910) 60 Tex.Civ.App. 45 (128 S.W. 156). (2) Even if the assignment by Coelho to Benton granted the latter
any interest in the proceeds of the Eden contract, Ben-

ton's acquiescence, by silence, in the compromise bars

him from now contending that he is not barred by
(***17) it. Benton had a great interest in Coelho's contiued solvency. Without a compromise of this tye, Coelho was faced with a lawsuit to prove that the defective work was not his fault, or with considerable expense
to repair the work, neither of which Coelho could afford. Although Benton contends that he had no duty to reply when asked if he had any objections to the compromise,

eys under that contract, and such (**274) theory may
have been incorrect, the result was correct, as, because of the nonassignability clause, Hofmnn had the superior right to those moneys.

his conduct led Coelho and Hofmann into a trap, and
they reasonably had the right to assume and did assume
that Benton's silence constituted consent. Both Coelho

(***15) For the same reason the question of the appropriateness of the cour's allowing certain set-offs
against Benton in favor of Hofmann of moneys it found due from Coelho to Hofmann, has become moot.
3. The Eden Offce Building.

and Hofmann acted to their detriment in reliance upon Benton's failure to object. Thereby, by his failure to ob-

ject, Benton waived any objection that he might have
had.
4. The Deed of

(9) On what is known as the Eden Offfce Building, upon which Coelho did the lathing under a subcontract with Hofmann, there was a balance unpaid to Coelho of

Trust.

$ 6,617.89. This balance Hofmann refused to pay because the County of Alameda for whom the work was
being done claimed that the plastering did not comply

(10) On November 14, 1957, Coelho and his wife
signed a deed of trst conveying to a title company, as

with the speciffcations, and refused to pay the general contractor, who in tu refused to pay Hofmann. There

trstee, certain real propert in Alameda County as security for the advances made by Benton under the December 21, 1953, Benton-Coelho agreement. The cour

found "that plaintiff represented and promised defen-

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dants Alvin G. Coelho and Anita K. Coelho that if the
said deed of trst were executed and delivered to plain-

tiff, plaintiff would continue to finance (***18) Coelho
on his lathing jobs; that it is also tre that at the time of making said representation and promise, plaintiff did not
intend to keep his promise and did not intend to continue

(*72) (12) Turng to the evidence, while the testimony of Benton to the effect that the deed of trst was given him to secure the advances he had made, conficts
with that of the Coelhos, the cour apparently believed

the latter and resolved the conflict in their favor. We are
bound by that determnation, as there is substantial evidence to support it. According to Mrs. Coelho, Benton

(*71) financing Coelho and (**275) that shortly thereafter plaintiff refused to continue financing Coelho." In its conclusions, the cour stated "that the execution and delivery of the deed of trst were vitiated by plaintiffs
false promise and plaintiff is not entitled to foreclose said deed of trst."

threatened to termnate his financial backing of the lathing contracts if she did not sign the deed of trst. Benton
told her he only wanted it to prevent creditors from

Benton contends that neither the pleadings nor the
evidence supports these findings. Both contentions are

reachig the Coelho home. He stated to her, "if I didn't sign it, he wouldn't go on, but, if I signed, then he would go on and continue to finance until the jobs were pulled

unfounded. In the Coelho cross-complaint Coelho alleged "that there was no proper execution acknowledge-

out." (Emphasis added.) The other testimony in general relates to Benton's (***21) statements that he would not
finance the lathng contracts if Mrs. Coelho refused to

ment or delivery of said instrment and further that said defendants were coerced into signing said instrment by said plaintif" (Emphasis added.) The cour, both in its pretrial order and in its findings of fact, found that there was due execution and delivery of the instrment. It is the consideration for its execution and delivery with
which we are concerned. In addition to the allegation in the cross-complaint that the instrment was obtained by

sign. The quoted statement alone is suffcient to support the findings. Mrs. Coelho testified that she would not
have signed the deed of trst without such representa-

tions and promises. It is admtted that Benton ceased

financing Coelho shortly thereafter.

While there is no direct evidence that Benton, at the time of his representations to the Coelhos, did not intend
to carr out his promises, the cour was entitled reasona-

coercion, the pretral order (***19) states, "There is the fuher issue of the validity of the deed of trst." During the trial, the cour granted Coelho's motion to amend to conform to the proof "in that there was either no consideration given by plaintiff Benton for the Deed of Trust, or if consideration was given there was a failure of consideration by Plaintiff Benton." Thus it is clear that the
pleadings support the findings.

bly to infer from all the facts and circumstances that he had no intention of doing so. A promisor who does not mean what he says seldom reveals his tre state of mind.

That must be determed by the (**276) trer of fact
from what the promisor does under all the circumstances
of the case. (See Cox v. Klatte (1938) 29 Cal.App.2d

150 (84 P .2d 290). Benton received profits from the
Coelho lathing contracts until January 1958. At that time Benton ceased advancing money to Coelho, although several jobs were still in progress and required financing

(11) Benton points out that while the cour granted leave to amend, no formal amended pleadings were ffed, and contends that therefore the amendment allowed may
not be considered. His contention is hypertechncal and

is not supported by the decisions. The Supreme Cour
stated in Campagna v. Market St. Ry. Co. (1944) 24

in order to be completed. There is evidence that both Benton's and Coelho's losses on the entie transaction were (***22) due to Benton's ceasing to advance fuher
moneys, and Coelho's inability to otherwise finance himself. Coelho, in several instances, was forced to abandon his lathing contracts for this reason.

Cal.2d 304,308 (149 P.2d 281): "As a general rule, an order granting leave to amend is not an amendment, and in the absence of a written statement of facts concernng the issue, it is not properly pleaded. (Central Cal. Creditors' Assn. v. Seeley, 91 Cal.App. 327 (267 P. 138).) But when such a motion is granted during the trial, and the case is tried as if the amendment had been made,

(13) Even partial failure of consideration is a defense to foreclosure of a mortgage or deed of trst. (

Briggs v. Crawford (1912) 162 Cal. 124, 129 (121 P.
381).)

a part may not later complain that no forml amendment was ffed. (Citations.)"

Benton interprets the findings and conclusion above mentioned as findings of fraud and claims that no fraud was alleged and hence these findings are improper.
Techncally, Benton may be correct in that the findings might be susceptible to such interpretation. However, the facts upon which (*73) they are based show, and the findings and conclusion may reasonably be interpreted as determng, that there was a failure of consideration for

(***20) The cour in Campagna commented on the wide discretion which a trial cour has to allow amendments to conform to proof, and in view of the presence
of the issue of the validity of the deed of trst in the pre-

trial order, this discretion was wisely exercised in the
instant case, and the issue of failure of consideration

(continued financing) was properly before the trial cour.

the execution of the deed of trst. As Judge Murhy said in his memorandum opinion, "Benton represented to the

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Coelhos, and particularly Mrs. Coelho, that if

the deed of

of

payroll fuished to various lathing jobs from moneys

trst were executed and delivered, he would continue to

finance Coelho on his jobs. With a short time thereafter he refused to continue financing Coelho and Coelho

advanced by plaintiff."

was compelled to abandon his business as a lathing (***23) contractor."
5. Findings.
Benton objects to finding II dealing with the nith

Benton's objection to the first part of this finding is that the cour failed to find either that there was or was
not an agreement, implied by law, that Coelho would
repay all advances. Such a finding was unnecessary.

cause of action, the count in which Benton sought recovery from Coelho of $ 72,194.83 and foreclosure of the
deed of trst. This finding is to the effect that under the

Where, as here, the cour found that there was an express agreement as to the method of payment, the law cannot imply a contract in the face of such express agreement.

As to the second part of the finding, it is tre that at times Coelho used moneys advanced by Benton for a
particular lathing contract to pay debts incured on another contract, or other contracts. The trial judge's opin-

term of the agreement between Benton and Coelho,

Benton agreed to finance Coelho in the performnce of
the lathng contracts. Actually, as Benton points out,

there is no promise made by Benton to make advances, in the agreement, the agreement being unilateral in that
respect. However, such finding is immateriaL. The cour nowhere bases its judgment upon any assumption that

ion gives the reason for (*74) finding that in so acting Coelho did not intend to defraud Benton. Under the agreement any losses Benton suffered were to be recouped from other jobs. The instances in which Coelho

Benton was required under the contract to contiue mak-

ing advances. It did find that the deed of trst was obtained under representations by Benton that he would
continue to finance Coelho. There is no conflict between
the two findings and the fact that the first finding is unsupported is immateriaL.

used moneys from one job to offset losses on another, caused no net loss to Benton on the total for all the jobs.
Moreover, that Benton acquiesced in ths tye of action

is shown, as stated by the cour, by the fact that he contiued for approximtely two to three months (***25)

after (**277) knowledge, to finance the jobs. The cour made no finding as to the amounts of the payments in
ths category. In view of the cour's determnation of the

Finding XII is to the effect that the Benton-Coelho agreement did not provide for a continuing obligation on the part of Coelho to repay all moneys advanced, and that "it is not tre that defendant Coelho acted with intent to defraud plaintiff with respect (***24) to the amounts

subject, there is no necessity for such a finding, as the
amount of such advances is immateriaL.

The other findings or their subject matter objected to by Benton have been discussed elsewhere herein.
The judgment is affired.

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LEX

SEE 70 CAL. APP 4TH 1358

CHRISTINA BIONGHI, Plaintiff, Cross-defendant and Appellant, v. METROPOLIT AN WATER DISTRICT OF SOUTHERN CALIFORNIA et aI., Defendants, Cross-complainants and Respondents.
No. B119890.

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION FIVE
70 CaI. App. 4th 1358; 83 Cal. Rptr. 2d 388; 1999 CaI. App. LEXIS 260; 99 Cal. Daily Op. Service 2293; 99 Daily Journal DAR 3030

March 30, 1999, Decided

NOTICE: cation. .

(***1) Opinon certfied for partal publi-

fendant. (Superior Cour of Los Angeles County, No. BC146354, John W. Ouderkik, Judge.)

* Pursuant to Californa Rules of Cour, rules

976(b) and 976.1, this opinon is certfied for
publication with the exception of

parts II and iv.

The Cour of Appeal affired. The cour held that the tral cour did not err in grantig summary adjudication to defendant on plaintiffs breach of contract action,
based on the contract's notice provision, which was clear and unambiguous and allowed termation with or with-

SUBSEQUENT HISTORY: Rehearing Denied April 19, 1999. Review Denied June 30, 1999, Reported at:
1999 Cal. LEXIS 4533.
PRIOR HISTORY: APPEAL from a judgment of

out cause. The cour fuher held that the trial cour did
not err in ruling inadmissible extrinsic evidence prof-

fered by plaintiff to show that the contract required good
the
cause for termation, since the agreement included an

Superior Cour of Los Angeles County. Super. Ct. No. BC146354. John W. Ouderkik, Judge.

integration clause. The cour also held that the extrinsic

DISPOSITION: The judgment is affrmed.
SUMMARY:

evidence offered by plaintiff did not show that the language of the contract was reasonably susceptible to an interpretation that added a requirement of good cause.

The cour also held that the trial cour did not err in
granting summry adjudication to defendant on plaintiffs
cause of action for breach of the implied covenant of

CALIFORNIA OFFICIAL REPORTS SUMMARY

After a water district termnated its contract with a company that provided the district with temporary employees, the company brought an action against the district for breach of contract and breach of the implied covenant of good faith and fair dealing found in the contract. The contract included an integration clause, and provided that the agreement could be termnated by the district 30 days after notice in writing. The district gave
the company 30 days' notice and termnated the contract.

good faith and fair dealing, since plaintiffs claim for breach of the implied covenant relied on the same acts, and sought the same damages, as its claim for breach of contract, and defendant did not breach the contract by

termnating it. (Opinon by Artrong, 1., with Tumer,
P. 1., and Godoy Perez, J., concurg.)
HEADNOTES

CALIFORNIA OFFICIAL REPORTS HEADNOTES Classified to Californa Digest of Offcial Reports
(la) (lb) (lc) Contracts § 51--Actions--Integrated

The trial cour found the contract could not reasonably be interpreted to mean that good cause was required for termnation, and thus extrinsic evidence proffered by plaintiff to establish that requirement was inadmssible, and granted summary adjudication and judgment to de-

Contract Providing for Termination on Specifed Notice--Admissibilty of Extrinsic Evidence of Requirement of Good Cause. --In a breach of contract action brought against a water district by a company that had

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contracted to provide the district with temporary employees after the district gave the company 30 days' no-

tice and termnated the contract, the trial cour did not err in granting summary adjudication to defendant, based on the contract's provision that the agreement could be terminated by the district 30 days after notice in writing. The termnation clause was clear and unambiguous, and allowed termation with or without cause. Furhermore, the trial cour did not err in ruling inadmissible extrinsic evidence proffered by plaintiff to show that the contract required good cause for termnation, since the agreement
included an integration clause. In addition, the extrinsic

themselves at the time of contracting. If the cour determines that the contract is reasonably susceptible of the meanings urged, extrinsic evidence relevant to prove the
meaning agreed to by the partes is admissible.

(4) Contracts § 23.1--Construction and Interpretation--Good Faith and Fair Dealing--Application in Breach of Contract Action. --In an action for breach of

the implied covenant of good faith and fair dealing
brought against a water district by a company that had contracted to provide the district with temporary employees after the district gave the company 30 days' no-

evidence offered by plaintiff did not show that the language of the contract was reasonably susceptible to an interpretation that added a requirement of good cause. A contract that provides that it may be termnated on specified notice allows termnation with or without good

tice and termnated the contract, the trial cour did not err in granting summary adjudication to defendant, since

defendant did not breach the contract by termating it.
Plaintiffs claim for breach of the implied covenant relied

on the same acts, and sought the same damages, as its
claim for breach of contract. Furher, tort recovery for

cause.
(See 2 Witkin, CaL. Evidence (3d ed. 1986) § 960 et

seq.)
(2) Evidence § 61--Documentary Evidence--Parol

breach of the covenant is available only in limited circumtances, generally involving a special relationship between the contracting partes, and there was no special
relationship between these pares.

Evidence Rule. --The parol evidence rule generally prohibits the introduction of any extrnsic evidence to vary or contradict the term of an integrated wrtten instrment (Code Civ. Proc., § 1856). It is based upon the

COUNSEL: Pilsbury, Madison & Sutro, Kenneth R.
Chiate, Kent B. Goss and Leanna B. Einbinder for Plaintiff, Cross-defendant and Appellant.

premise that the written instrment is the agreement of the parties. Its application involves a two-part analysis:
was the writing intended to be an integration, i.e., a complete and final expression of the partes' agreement, precluding any evidence of collateral agreements; and is the agreement susceptible of the meaning contended for by
the part offering the evidence?

N. Gregory Taylor; Marcia Scully; Carlsmith Ball and
Albert H. Ebright for Defendants, Cross-complainants

and Respondents.

JUGES: Opinon by Artrong, 1., with Tumer, P. 1., and Godoy Perez, J., concurg.
OPINION BY: ARMSTRONG

(3) Evidence § 64--Documentary Evidence--Parol

Evidence Rule--Exceptions--Evidence in Aid of Interpretation. --Although extrinsic evidence is not admissi-

OPINION

ble to add to, detract from, or vary the term of a written contract, these term must first be determned before it can be decided whether or not extrinsic evidence is being
offered for a prohibited purose. The fact that the term

(*1361) (**390) ARSTRONG, J.
Christina Bionghi, doing business as Abacus Technical (Abacus), entered into an integrated contract with respondent Metropolitan Water District of Southern Cali-

of an instrment appear clear to a judge does not preclude the possibility that the parties chose the language
of the instrment to express different term. That possi-

bility is not limited to contracts whose term have acquired a particular meaning by trade usage, but exists whenever the partes' understanding of the words used may have differed from the judge's understanding. Accordingly, rational interpretation requires at least a preliminary consideration of all credible evidence offered to prove the intention of the parties. Such evidence includes testimony as to the circumstances surounding the mak-

forna (MWD). The MWD later termnated the contract. Abacus sued for breach of contract and breach of the implied (***2) covenant of good faith and fair dealing
found in the contract. In additional causes of action,

Abacus contended that the MWD had wrongfully interfered with its contractual relations and prospective economic advantage when it informed the Ralph M. Parsons Company that Abacus could no longer work on MWD projects. The MWD moved for summary adjudication of each cause of action.

ing of the agreement including the object, natue, and subject matter of the writing so that the cour can place itself in the same situation in which the parties found

In the published portion of ths opinon, we consider whether the contract, which provides that the MWD may

termnate on 30 days' notice to Abacus, is reasonably

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susceptible to an interpretation requiring the MWD to

have good cause for termation. After a prelimiary consideration of the plain language of the termation
clause, we conclude that the language used by the parties
is not reasonably susceptible to that interpretation. How-

appearance of a conflict of interest. This conflict existed because Ralph M. Parsons provided management services to the MWD on the MWD's Eastside Reservoir
Project, and Christina Bionghi's husband, Hossein (***5) Bionghi, a Parsons employee, was the lead cost engineer on that project. Parsons employees on the project were

ever, we recognize, as we are required to under Pacifc Gas & E. Co. v. G. W Thomas Drayage etc. Co. (1968)
69 Cal. 2d 33 (69 Cal. Rptr. 561, 442 P.2d 641, 40

fully integrated with MWD personnel and acted as an extension of MWD staff. Hossein Bionghi worked at
MWD headquarters as part of a management team. Further, Parsons had subcontracted with Abacus (**391)

A.L.R.3d 1373), that the parties may have ascribed such a meaning to the words they used. We therefore consider whether the evidence offered by Abacus establishes that

the parties intended a good cause limit (***3) on the
MWD's right to termnate the contract. We conclude that it does not. We also conclude that under Masterson v. Sine (1968) 68 Cal. 2d 222 (65 Cal. Rptr. 545, 436 P.2d 561), extrinsic evidence was not admssible to prove the existence of a collateral agreement that good cause was
required, since ths was an integrated contract. We thus

on one MWD contract relating to the project and had
proposed Abacus as a subcontractor on two other MWD projects, one of which was related to the Eastside Reservoir Project. The MWD believed that the situation created the appearance of a conflct of interest, since Aba-

cus appeared to have "an inside track" on informtion
about the Eastside Reservoir Project, and work could be directed to Abacus by Mr. Bionghi.

conclude that summry adjudication was correctly
granted on the breach of contract causes of action.

In an unpublished porton of this opinon, we also
find that summary adjudication was correctly granted on

the remainng causes of action. We thus affir the trial
cour's grant of

Abacus contended that the MWD's real reason for termnating the contract was not the relationship between the Bionghis, which the MWD had long been aware of, but offce politics, a desire to favor other consultants, and
prejudice against individuals of Persian descent, such as

judgment to the MWD.

Mr. Bionghi, which extended to their spouses.

FACTUAL AND PROCEDURAL SUMMARY

On May 2, 1995, the MWD inormed Parsons that it
intended to termate its contract with Abacus because of

Abacus was a temporary employment agency owned
by Chrstina Bionghi. In November of 1993, Abacus

entered into a consultant contract with the MWD. Under

the contract, Abacus would be paid up to $ 200,000 a
year for providing temporary employees for the MWD's

the appearance of a conflict of (***6) interest. In a letter and in a meeting, the MWD detailed its concerns about confict of interest, asked Parsons to "correct the situation" as to its subcontract with Abacus on the Eastside

engineering division. The contract included the provision

that "The Agreement may be termated by (the MWD) hereto 30 days after notice in writing to Consultant of
such (*1362) termnation. (MWD's) only obligation in
the event (***4) of termation shall be payment for

Reservoir Project, inormed Parsons that it would not authorize Abacus as a subcontractor in the proposals submitted, and gave (*1363) Parsons a copy of an August 1994 letter from the City of Los Angeles denying
Abacus's application for certification as women-owned business enterprise (WBE). i

services provided by Consultant up to and including the effective date of termnation." The contract was amended effective January 1, 1995, to increase the maximum allowable annual fee to $ 1,250,000. The amendment did
not change the termation clause in the original contract.

1 At summary judgment, Abacus presented evidence that it had been certfied as a WBE by an organiation which was acceptable to the MWD.
On May 5, 1995, Parsons termnated its subcontract with Abacus and informed Abacus that it would not be used on the two other MWD projects. Parsons's letter to Abacus stated "These actions are being taken out of a concern that Abacus participation in these projects presents the appearance of impropriety and conflict of interest because of your relationship to a Parsons employee.
In addition, (***7) we are aware that Abacus Techni-

Both the original and amended contracts included integration clauses. In the original agreement, the clause read "It is understood that no alteration or variation of the term of this Agreement shall be valid unless made in writing and signed by the parties hereto and that no oral
understanding or agreements not incorporated herein
shall be binding on any of the partes hereto." The

amended agreement included a similar clause, and futher provided that "Both partes have partcipated in the
draftg of this Agreement."

cal's standing as a qualified WBE has been challenged."

On May 4, 1995, the MWD gave Abacus 30 days'
notice of termnation of the contract. According to the

MWD, the reason for termnating the contract was the

Abacus sued the MWD, bringing causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, interference with contractual relations, and interference with prospective business ad-

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vantage. Other causes of action were disposed of by demurer. The MWD moved for summary adjudication on each cause of action. The motion was granted and judgmentwas entered for the MWD.

dence to vary or contradict the term of an integrated

written instrment. ( Code Civ. Proc., § 1856.) It is based

upon the premise that the written instrment is the
agreement of the parties. (Citation.) Its application involves a two-part analysis: 1) was the writing intended to be an integration, i.e., a complete and final expression of
the parties' agreement, precluding any evidence of col1ateral agreements ( Masterson v. Sine (1968) 68 CaL. 2d

DISCUSSION

i. The cause of action for breach of contract

(la) The contract between Abacus and the MWD
provided that (**392) "The Agreement may be term-

nated by (the MWD) hereto 30 days after notice in writing to Consultant of such termnation. (MWD's) only obligation in the event of termnation shall be payment
for services provided by Consultant up to and including

222 (65 CaL. Rptr. 545,436 P.2d 561)); (***10) and 2) is the agreement susceptible of the meaning contended for by the part offering the evidence? ( Pacifc Gas &
E. Co. v. G. W Thomas Drayage etc. Co. (1968) 69 CaL.

2d 33 (69 CaL. Rptr. 561, 442 P.2d 641, 40 A.L.R.3d

the effective date of termation." Based on ths language, the MWD alleged that it was undisputed the contract could be termnated on 30 days' notice, and that such notice was given.
Abacus did not dispute notice, but proffered extrin-

1373)." ( Gerdlund v. Electronic Dispensers International (1987) 190 CaL. App. 3d 263, 270 (235 CaL. Rptr.

279), italics omitted.)
(1

b) Here, the agreement was integrated. Since

there is no dispute about that fact, we tu to the second

sic evidence which it contended established that the con-

tract also required good (***8) cause for termation. Citing Pacifc Gas & E. Co. v. G. W Thomas Drayage
etc. Co., supra, 69 CaL. 2d 33 (Pacifc Gas & Electric);
Wallis v. Farmers Group, Inc. (1990) 220 CaL. App. 3d 718 (269 CaL. Rptr. 299); and Sherman v. Mutual Benefit

part of the analysis: is the agreement reasonably susceptible of the meaning contended for by the part offering the evidence? This analysis is explained in Pacifc Gas &
Electric, supra, 69 CaL. 2d 33, which Abacus relies on here.

Life Ins. Co. (9th Cir. 1980) 633 F.2d 782, Abacus argued that the termation clause was reasonably suscep-

tible of meaning that good cause was required for termnation, and thus that its proffered extrsic evidence was admssible. In response, the MWD argued that since the contract was integrated, extrinsic evidence was not admissible to vary the term by adding a requirement of good cause for termnation.

though extrinsic evidence is not admssible to add to, detract from, or vary the term of a written contract, these term must first be determed before it can be de-

(3) In that case, the Supreme Cour held that "Al-

cided whether or not extrnsic evidence is being offered for a prohibited purose. The fact that the term of an
instrent appear clear to a judge does not preclude the

(*1364) The cour found that the contract was not
reasonably susceptible to the meaning Abacus urged, and that parol evidence was thus not admissible, and granted summary adjudication to the MWD. We agree with the

trial cour. The termnation clause is clear and unambiguous. With the words "The Agreement may be term-

possibility that the partes chose the language of the instrment to express (***11) different term. That possibility is not limited to contracts whose term have acquired a partcular meaning by trade usage, but exists whenever the partes' understanding of the words used may have differed from the judge's understanding. (P) Accordingly, rational interpretation requires at (*1365)
least a prelimiary consideration of al1 credible evidence

nated by (the MWD) hereto 30 days after notice in writing," it provides that the only condition for termnation is

offered to prove the intention of the parties. (Citations.)

Such evidence includes testimony as to the 'circum-

30 days' notice, and allows termation with (***9) or
without cause. 2

stances surounding the making of the agreement. . . including the object, natue and subject matter of the
writing. . .' so that the cour can 'place itself in the same situation in which the parties found themselves at the

2 Furher, as to contracts such as this one, "contemplating continuing performance for an indefinite time, the general rule is that such contracts

time of contracting.' (Citations.) If the cour decides, after considerig this evidence, that the language of a
contract, in the light of all the circumstances, 'is fairly
susceptible of either one of the two interpretations con-

are termnable at wil by either part. (Citations.)" ( Zimco Restaurants v. Bartenders Union
(1958) 165 CaL. App. 2d 235, 240 (331 P.2d

tended for. . .' (citations), extrinsic evidence relevant to
prove either of such meanings is admissible." (69 CaL. 2d

789).
Furher, the extrinsic evidence proffered by Abacus
was not admissible here. (2) "The parol evidence rule

at pp. 39-40, fns. omitted.)

generally prohibits the introduction of any extrinsic evi-

The facts of Pacifc Gas & Electric fuher explicate before the Supreme (***12) Cour included a clause in which the defendant agreed to inthe rule. The contract

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demnify the plaintiff for injury to propert arising out of or connected with the performance of the contract. The trial cour agreed with the defendant that the clause could
be read to cover only injury to the propert of thid par-

3d 27, 49-50 (106 Cal. Rptr. 424) (where parties contended that" '. . . we are free to termnate our agreement
within 30 days,' " meant either 30 days from the agree-

ment or 30 days after decision to termnate, evidence of

ties, but interpreted the clause otherwse, and refused to admt extrinsic evidence which contradicted its interpretation. The Supreme Cour found error in the exclusion

what those words meant to the parties was admissible).
Instead, Abacus offered no reason why "the Agree-

of evidence, holding that "Although that evidence was not necessary to show that the indemnty clause was rea-

ment may be termnated by (the MWD) . . . 30 days after notice in writing," would or could, on its face, be inter-

sonably susceptible of the meaning contended for by
defendant, it was nevertheless relevant and admissible on

preted to mean that the MWD could termate the contract only if it had good cause to do so.

that issue. Moreover, since that clause was reasonably susceptible of that meaning, the offered evidence was
also admissible to prove that the clause had that meaning

Under Pacifc Gas & (***15) Electric, ". . . the
ambiguity may be exposed by extrinsic evidence that
reveals more than one possible meaning." (Pacifc Gas & Electric, supra, 69 Cal. 2d at p. 40, fn. 8.) When Abacus's extrinsic evidence is considered as part of this pre-

and did not cover injuries to plaintiffs (**393) propert." (69 Cal. 2d at pp. 40-41, 69 Cal. Rptr. 561, 442

P.2d 641.)

liminary step, the conclusion we draw from the face of
the contract does not change. With that evidence, Abacus did not expose any ambiguity, or establish that the words of the contract were reasonably susceptible to the meaning it urged.

Pacifc Gas & Electric is thus not a cloak under which a part can smuggle extrinsic evidence to add a
term to an integrated contract, in defeat of the parol evi-

dence rule. Instead, it calls for a two-step process. First,
the cour must determne (***13) whether the language

of the contract is reasonably susceptible to the meanings urged by the parties. In so doing, the cour must give
consideration to any evidence offered to show that the

Abacus's evidence consisted of statements made by Ahmad Hassani, who was prircipal engineer of a branch

of the MWD for which Abacus supplied employees,
MWD manuals, and other MWD contracts. We summarie: before Bionghi signed the 1993 contract, she asked

partes' understanding of words used differed from the
common understanding. If the cour determnes that the

contract is reasonably susceptible of the meanings urged, extrinsic evidence relevant to prove the meaning agreed to by the parties is admissible.

Hassani what would cause the MWD to termate the
contract. He said that no one had ever been termnated, and that as long as she did her job well there was nothing
to worr about. Before Bionghi signed the 1995 contract,

As Brawthen v. H & R Block, Inc. (1972) 28 Cal. App. 3d 131 (104 Cal. Rptr. 486), explains, the rule of Pacifc Gas & Electric "must be restrcted to its stated
bounds; it does no more than allow extrsic evidence of

Hassani told her "not to worr," and that "as long as you
provide your resumes, as long as your employees are

happy, and as long as you don't have tax problems, I don't see any reason for us to cancel your contract."

the parties' understanding and intended meaning of the
words used in their written agreement. While it allows
parol evidence for this purose, it is unconcerned with

extrinsic collateral agreements." ( Brawthen, supra, 28
Cal. App. 3d at p. 136, italics in originaL.) (*1366)

The policy manuals (***16) set fort the procedures for termnation of consultant agreements, and either provide that the termnation notice must indicate the reason
for termation or set fort procedures to be followed

(lc) When we examine the case before us in light of
those rules, we find that summary adjudication was

when a WBE (*1367) consultant is in noncompliance with the MWD's Business Outreach Program Policies
and Procedures (**394) ManuaL. 3 The other MWD

properly granted. As the trial cour found, the termnation clause is not on its face reasonably susceptible

contracts cited expressly permt termnation "with or
without cause."

(***14) to meaning that there can be no termnation
except on good cause. This is not a case where, for example, a part contended that the words "30 days" were

3 Abacus contends that the manual provides that

a WBE consultant which is not in compliance
with a contract must be given an opportty to

reasonably susceptible of meanig either "30 business
days" or "30 calendar days," or that, in the examples

given in Pacifc Gas & Electric, the term "United King-

dom" in a motion pictue distribution contract included
Ireland, or that the word "ton" in a lease meant a long ton

cure the noncompliance. In fact, the manual provides that such a consultant wil be considered in material breach, but that the MWD may allow the
consultant time to comply.

or 2,240 pounds and not the statutory ton of 2,000
pounds. (Pacifc Gas & Electric, supra, 69 Cal. 2d at p.
39, fn. 6; Aronowicz v. Nalley's, Inc. (1972) 30 Cal. App.

Abacus did not proffer any facts which would estab-

lish that Bionghi read or relied on the manuals or the
other contracts when Abacus entered into either contract,

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4 and no evidence that Hassani, who did not negotiate or sign either contract, had a position at the MWD which meant that (***17) he could express the MWD's intent, or the meaning it ascribed to words.

Abacus contends, however, that Walls v. Farmers
Group, Inc., supra, 220 CaL. App. 3d 718 establishes that a contract termnation clause which does not specify whether good cause is required is, as a matter of law,
reasonably susceptible of either meaning, so that extrinsic evidence is always admssible to prove the tre term

4 Abacus contends that the business outreach
manual, which references the termnation procedures manual, was incorporated into the 1995 contract. We do not so read the contract. Instead,
the only relevant incorporation is of a require-

of the contract. We do not find the case persuasive, and it does not change our conclusion here.
Wallis considered an insurance agency contract
which allowed termation on thee months' notice. The

ment that the consultant support MWD policy encouraging the participation of minority-and

women-owned businesses.

plaintiff alleged in her complaint and contended on appeal that extrinsic evidence established that there was an
express oral agreement and an implied-in-fact (***20)
agreement, under Pugh v. See's Candies, Inc. (1988) 203

The evidence offered by Abacus did not concern the

" 'circumstances surounding the making of the agreement' " or allow a cour to " 'place itself in the same situation in which the parties found themselves at the
time of contracting.' " ( Pacifc Gas & Electric, supra, 69 CaL. 2d at p. 40.) Abacus did not offer evidence concern-

CaL. App. 3d 743 (250 CaL. Rptr. 195), that she would not be fired without good cause. The Cour of Appeal

found that the contract was integrated on the subject of
termnation. Without explanation, the cour then found that since the termnation clause was "silent" on the subject of good cause, the agreement was reasonably suscep-

ing either the negotiations which took place before the contract was executed or the drafting process. There was
thus no evidence of the positions of the parties durng the

tible of meanig that there was an express oral (**395)
agreement, or an implied-in-fact agreement, that the con-

negotiations, their differences and agreements, or the way in which they selected (***18) words and phrases
to express the term agreed on. There was no evidence of

tract could be termated only for cause. The cour determned that extrsic evidence was admissible to de-

the partes' discussion of the meanig of the termation
clause as it is found in the contract, either of the notice

termne whether such an agreement existed. 6 ( Walls v. Farmers Group, supra, 220 Cal. App. 3d 718 at pp. 730-

requirement or the provision that the MWD's only obligation in the event of termnation was payment of

amounts due, or evidence that the parties discussed a good cause requirement, or indeed of what the parties believed could constitute good cause for termation.
There was, in sum, no evidence of the situation the par-

731.) By so doing, Walls permtted evidence of a collateral agreement to be introduced to add a term to an integrated contract, under the guise of Pacifc Gas & Electric, contrary to the holding of Masterson v. Sine, supra,
68 CaL. 2d 222. 7

ties were in at the time of contractig.
None of the evidence which was offered by Abacus

6 We note, too, that numerous cases have held
where there is a written employment contract

which provides for termnation on timely notice,

indicates that the words or phrases of the termation
clause are ambiguous. In fact, Abacus did not proffer this evidence for the trial cour's consideration as part of Pacifc Gas & Electric's preliminary step, to show that "the

the Pugh factors have no relevance, since" ,
"(t)here cannot be a valid express contract and an implied contract, each embracing the same subject, but requiring different results." (Citation.)' " ( Halvorsen v. Aramark Uniform Services, Inc.
(1998) 65 CaL. App. 4th 1383, 1388 (77 CaL.

partes' understanding of the words used. . . differed
from the judge's understanding." ( Pacifc Gas & Electric, supra, 69 Cal. 2d at p. 39.) Rather, the evidence was offered to establish a collateral agreement or additional contract term providing that good cause was required before the MWD could termnate the (*1368) contract. Since (***19) the contract was integrated, extrinsic evidence is not admissible for this purose. 5 ( Masterson v.
Sine, supra, 68 CaL. 2d 222.)

Rptr. 2d 383). (***21) 7 Brawthen v. H & R Block Inc., supra, 28 Cal. App. 3d 131; and Bert G. Gianelli Distributing Co. v. Beck & Co. (1985) 172 Cal. App. 3d 1020
(219 CaL. Rptr. 203), cited by Walls (220 CaL.

App. 3d at p. 731, fn. 8), both concerned nonintegrated contracts. In those cases, parol evidence

5 As we have noted, Abacus failed to offer evidence that at the time the contract was executed, the parties intended that g