Filed 8/18/20
                       CERTIFIED FOR PUBLICATION

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                 DIVISION FIVE

 OAKLAND-ALAMEDA COUNTY                      A157688
 COLISEUM AUTHORITY,
          Plaintiff and Respondent,          (San Francisco County Super.
                                             Ct. No. CPF-19-516542)
 v.
 GOLDEN STATE WARRIORS,
 LLC,
          Defendant and Appellant.


        Appellant Golden State Warriors, LLC (GSW) challenges the trial
court’s judgment confirming an arbitration award. The arbitration concerned
the meaning of the word “terminates” in section 6.4 of the agreement
governing the basketball team’s use of the Oracle Arena in Oakland,
California (the License Agreement). On appeal, GSW argues that “allowing
[the] contract to expire by its own terms is [not] the same as terminating the
agreement.” Oakland-Alameda County Coliseum Authority (the Authority)
responds that the parties intended section 6.4 of the agreement to include a
“termination by nonrenewal.”
        GSW allowed the contract to expire. If section 6.4 applies in this
circumstance, then GSW must continue servicing the debt incurred to
renovate the arena until 2027. In her award, the arbitrator found that GSW
terminated the License Agreement by failing to exercise its option to renew it
and, therefore, GSW must continue servicing the debt. The trial court



                                        1
confirmed the arbitration award and entered judgment in favor of the
Authority. GSW appeals. We affirm the judgment.
                 FACTUAL AND PROCEDURAL HISTORY
      In accordance with long-settled authority, the arbitrator provisionally
received extrinsic evidence to determine if the word “terminates” in section
6.4 of the License Agreement was ambiguous or reasonably susceptible to the
parties’ competing interpretations. (Pacific Gas & E. Co. v. G.W. Thomas
Drayage etc. Co. (1968) 69 Cal.2d 33, 37–40 (PG&E).) We begin by setting
forth the undisputed extrinsic evidence.
      Since 1986, the Warriors NBA basketball team played their home
games at an arena in Oakland pursuant to an agreement that ended in 1996.
In 1995, the team’s owner began negotiations to renew the agreement in
exchange for a renovated arena.
      I.    The Memorandum of Understanding
      On February 21, 1996, a number of entities, including the basketball
team’s owner, entered into a Memorandum of Understanding (MOU)
regarding a new license agreement that was to take effect when the existing
agreement ended.1 The purpose of the MOU was “to outline the material
terms to be incorporated in certain definitive agreements providing for the
construction of the New Arena and . . . the occupancy of the New Arena . . . by
the Warriors (the ‘Definitive Agreements’). . . . The parties acknowledge that


      1In 1996, CC Partners owned and operated the Warriors basketball
franchise, and CCE, Inc. was its managing general partner. Chris Cohan was
president of CCE, Inc. The arbitration award states that, in 2010, the team
was sold to GSW Sports, LLC. The parties do not explain the relationship
between this entity and the appellant, GSW. We presume the difference, if
any, between GSW and GSW Sports, LLC, is immaterial to the issues
addressed in this appeal.


                                      2
there have been extensive negotiations concerning the substantive terms of
this MOU and that it is their intention . . . to be bound by the substantive
terms set forth herein.”
      The MOU provides the City of Oakland (the City) and the County of
Alameda (the County) would finance the renovation by, among other things,
issuing bonds. It provides the Warriors would be required to pay rent, and
they would also be required to use revenues to help pay down the debt
incurred to renovate the arena.
      Section 5.1(a) of the MOU proposed a 20-year term for the agreement
(1997-2017) with four 5-year options to renew. The Warriors could not
terminate the lease in the first ten years (1997-2007), and, if the Warriors
terminated it after June 2007, they would be required to pay all of the
outstanding renovation debt, subject to various offsets and reimbursements
each year until 2027.
      Section 5.1(b) of the MOU provides:

             If the Warriors do not exercise either of the first two
      (2) renewal options and there is a principal balance remaining
      on the Project Debt and, in any year after the expiration of the
      New License Agreement and prior to June 30, 2027 in which the
      New Arena is still operating, the difference between Net New
      Arena Revenues . . . and the New Arena Operating Expenses is
      not sufficient to pay Scheduled Debt Service, then the Warriors
      shall pay . . . an amount equal to the excess of Scheduled Debt
      Service over such difference.

      In other words, if the Warriors did not exercise one of the first two
5-year options to renew the agreement after its initial 20-year term, then
they were required to continue making annual debt payments until 2027




                                       3
subject to an offset based on profits generated by other uses of the arena.2
Section 7.2 provides that “[t]he Definitive Agreements, upon their execution,
shall supersede and replace this MOU and this MOU shall have no further
force or effect.”
      II.    The Contract Negotiations
      During the contract negotiations, the Authority created the initial draft
of the new license agreement. In a memorandum dated April 24, 1996, the
Authority’s counsel, Charles Seaman, explained to the Authority’s
negotiators and representatives of the City and County that “[t]he draft
License Agreement with the Golden State Warriors for the New Arena,
distributed to all parties on April 12, 1996, took relevant provisions of the
MOU and grafted them into the text of the Warriors’ existing license
agreement. Where provisions of the MOU were in conflict with the existing
license agreement (either explicitly or by necessary implication), the text of
the MOU supplanted that of the existing license agreement.”
      However, Seaman noted a change in the language of section 6.4 of the
draft license agreement compared to section 5.1(b) of the MOU. The MOU
provided that the Warriors would have to pay renovation debt, subject to an
offset, “[i]f the Warriors do not exercise either of the first two (2) renewal
options.” But section 6.4 of the draft license agreement provided that the
team’s owner would have to do so if it “terminates this License Agreement for
any reason prior to June 30, 2027.”


      2 A memorandum between attorneys for the Warriors, dated February
9, 1996, entitled “Summary of Deal Points for New Oakland Coliseum Arena”
states: “The Warriors will play at the new arena for at least 20 years with
two 5-year renewal terms at the Warriors’ option; provided the Warriors
must make up any annual deficit in arena debt service for such years if the
Warriors do not exercise renewal options. [Offset?]”


                                         4
      In the April 24 memorandum, Seaman wrote: “In the first sentence of
this paragraph, we should revert to the language of the MOU which makes
this paragraph applicable if the Warriors do not exercise the first and second
extension options.” But, by May 21, 1996, Seaman had changed his mind:
“In my April 24 memo, I suggested revising the first sentence of this
paragraph to reflect language from the MOU. However, since the Warriors
have not objected to this text, it should be retained as it can be read to mean
that the Warriors are liable for paying the Project Debt where the Warriors
exercise any right to terminate the License Agreement . . . including the right
to terminate in case of casualty or even default by Licensor?” The language
in the draft agreement was not changed back to the language of section 5.1(b)
of the MOU.
      III.   The License Agreement
      In July 1996, Oakland-Alameda County Coliseum, Inc. (Licensor), the
Authority, and CC Partners (Licensee) executed the License Agreement. The
first sentence of section 6.4 provides in part:

            If Licensee terminates this License Agreement for any
      reason prior to June 30, 2027 and there is a principal balance
      remaining on the Project Debt and, in any year after the
      expiration of this License Agreement and prior to June 30, 2027
      in which Licensor is operating the New Arena . . . , the difference
      between Net New Arena Revenues . . . and the New Arena
      Operating Expenses is not sufficient to pay Scheduled Debt
      Service, then Licensee shall pay to Licensor an amount equal to
      the excess of Scheduled Debt Service over such difference.

      “Project Debt” is defined as the “debt outstanding from that
originally incurred in connection with the construction of the New Arena.”
“Scheduled Debt Service” means “the principal, interest and related bank
and remarketing fees associated with the Project Debt.”



                                        5
      Section 32 of the License Agreement is an integration clause providing
in part that “[t]his License Agreement constitutes the sole and entire
agreement among Licensor, Authority and Licensee with respect to the
subject matter hereof. There are no other terms, obligations, covenants,
conditions or agreements among Licensor, Authority and Licensee with
respect to the subject matter hereof other than as contained in this License
Agreement.”
      IV.   Post-Agreement Developments
      In August 1996, to finance the renovation of the arena, the Authority
issued bonds in the amount of $140 million to be repaid over 30 years.
During the process of obtaining bond financing, the Canadian Imperial Bank
of Commerce (CIBC) sought “ ‘assurances’ ” that the team would not leave the
Authority with unpaid debt. The team’s owner, Chris Cohan, executed a
“Consent and Agreement,” which provides “that other than a termination due
to a default under the Assigned Agreements, the undersigned has no right to
terminate or cancel the Assigned Agreements until the Project Debt (as
defined in the License Agreement) has been fully paid.”
      In 2010, the Warriors franchise was sold. In a disclosure letter to the
buyer, the team’s former owner stated:

             In 1996, the Oakland-Alameda County Coliseum Authority
      (the ‘Authority’) issued bonds to finance the renovation of
      ORACLE Arena. The Executive Director of the Authority has
      recently been cited as saying that any owner relocating the Team
      between the expiration of the current lease term in 2017 and the
      expiration of the period covered by the options in 2027 would
      require the Team annually to pay any debt service remaining on
      the bonds used to fund the renovations the Arena could not cover.




                                       6
      V.    The End of the License Agreement, the Arbitration, and the Award
      In 2012, GSW announced its intention to construct a new arena in San
Francisco. GSW did not exercise the renewal option in the License
Agreement, and, on June 30, 2017, its initial term as defined in section 6.1
expired. As a result of construction delays in San Francisco, the parties
extended the term of the License Agreement for an additional two years until
June 30, 2019.
      In October 2017, GSW initiated arbitration proceedings seeking a
declaration that it was no longer obliged to make debt payments if it allowed
the License Agreement to expire rather than terminating it. The Authority
responded and counterclaimed seeking a declaration “that section 6.4 of the
License Agreement requires GSW to pay debt service on the Arena through
June 30, 2027.”
      The arbitration hearing occurred over a three-day period in July 2018.
In September 2018, the parties made closing arguments. In October 2018,
the arbitrator issued an interim award in favor of the Authority and against
GSW. In January 2019, the arbitrator issued her final award, which included
an award of attorney fees to the Authority.
      First, the arbitrator found, based on extrinsic evidence, that the word
“terminates” is susceptible to both GSW’s and the Authority’s interpretations.
Second, based on a more extensive review of the extrinsic evidence, the
arbitrator found the parties intended to adhere to the terms of the MOU,
which require the team to continue making debt payments after the initial
term. As explained by the arbitrator, “[w]ithout any direct evidence of
further negotiations, or even any contemporaneous recollection by anyone
involved in the drafting of the License Agreement of the language change, the
MOU and the parties’ negotiations leading up to its execution, provides the



                                       7
best evidence of the parties’ intent with regard to the meaning of ‘terminates’
in [section] 6.4 and the Warriors’ debt payment obligations. . . . The executed
MOU is a clear and objective manifestation of the parties’ intent during the
creation of the License Agreement. The MOU is evidence of the real deal
agreed to and intended by the parties. The License Agreement between the
parties incorporates that deal.”
      The arbitrator concluded the Authority “met its burden of proof in
establishing that the use of the word ‘terminates’ in [section] 6.4 of the
License Agreement encompasses the decision of the Warriors not to renew its
option upon expiration of the Initial Term of the License Agreement.
Therefore, the Warriors are obligated to reimburse the Project Debt in
accordance with and as set forth in [section] 6.4 of the License Agreement.”
      VI.   The Trial Court’s Confirmation of the Award
      GSW petitioned to vacate the arbitration award and the Authority
petitioned to confirm it. The trial court granted the Authority’s petition and
denied GSW’s.
      The trial court found the arbitrator did not err in concluding that GSW
terminated the License Agreement by deciding not to exercise the option to
renew. The court determined the arbitrator “correctly relied on extrinsic
evidence and the Warriors’ conduct to conclude that they are required to
service the renovation project debt. The extrinsic evidence was used to
explain—not to contradict or vary—the terms of the contract. The evidence
shows that the parties used the word ‘terminates’ to include a license
termination where the Warriors failed to exercise the option to renew.”
      The trial court faulted GSW for focusing on the contract language
alone, and for drawing “too fine a distinction between the term ‘terminate’
and ‘expire.’ ” The trial court found that the Warriors’ conduct after



                                        8
execution of the License Agreement indicated that it is reasonably susceptible
to the Authority’s interpretation.
      The trial court entered judgment in favor of the Authority. GSW
appeals.
                                 DISCUSSION
      On appeal, GSW contends that “[t]he question posed by this
case—and reviewable on appeal under the terms of the parties’ arbitration
agreement—is whether allowing a contract to expire by its own terms is the
same as terminating the agreement.” First, we consider our authority to
review the decisions of the arbitrator and the trial court.
      I.    The Scope of Our Review
      An “ ‘arbitrator’s decision is not ordinarily reviewable for error by
either the trial or appellate courts.’ ” (Cable Connection, Inc. v. DIRECTV,
Inc. (2008) 44 Cal.4th 1334, 1354.) To “take themselves out of the general
rule that the merits of the award are not subject to judicial review, the
parties must clearly agree that legal errors are an excess of arbitral authority
that is reviewable by the courts.” (Id. at p. 1361.)
      Here, section 39.3.11 of the License Agreement provides: “The decision
of the arbitrator shall be final and binding upon the parties without appeal or
review except as permitted by California law, . . . provided, however, that
either party may file an application to correct or vacate the arbitration award
or an application for de novo review on all questions of law based on the
arbitrator’s finding[s] of fact (which are deemed for such purpose to be
stipulated by the parties), in either case under California Code of Civil
Procedure Section 1285 et seq. Any party may apply to any court of
competent jurisdiction for confirmation and entry of judgment based on said
award.”



                                        9
      In Cable Connection, Inc. v. DIRECTV, Inc., our high court considered
this arbitration provision and held that the parties may “agree that legal
errors are an excess of arbitral authority that is reviewable by the courts.”
(Cable Connection, supra, 44 Cal.4th at pp. 1347, 1361.) Accordingly, based
on the parties’ agreement, we independently review questions of law.
      We look to California’s rules of contract interpretation to decide
whether the questions we address are factual or legal. When interpreting
contracts, courts must first determine whether the language is ambiguous,
or, in other words, whether it is reasonably susceptible to the interpretation
urged by a party. (WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702,
1710.) The “threshold determination of ‘ambiguity’ . . . is a question of law,”
“subject to independent review.” (Winet v. Price (1992) 4 Cal.App.4th 1159,
1165.) Because it presents a legal question, we begin by addressing whether
section 6.4 of the License Agreement is reasonably susceptible to the
interpretations advanced by the parties.
      II.   Section 6.4 of the License Agreement Is Ambiguous
      Section 6.4 provides that GSW, the licensee, must continue making
debt payments “[i]f Licensee terminates this License Agreement for any
reason prior to June 30, 2027.” GSW claims “the plain meaning of the word
‘terminates’ requires an affirmative act by a party to bring a contract to an
end before its prescribed term has expired.” The Authority responds that
“terminates” is reasonably susceptible to an interpretation encompassing a
“termination by nonrenewal.” We agree with the Authority.
      Civil Code section 1638 provides that the “language of a contract is to
govern its interpretation, if the language is clear and explicit,” and section
1639 provides that when “a contract is reduced to writing, the intention of the
parties is to be ascertained from the writing alone, if possible.” But, as



                                       10
explained by our high court over fifty years ago, the meaning of words can
change depending on the circumstances. (PG&E, supra, 69 Cal.2d at p. 38.)
As a result, “ ‘[t]he exclusion of parol evidence regarding such circumstances
merely because the words do not appear ambiguous to the reader can easily
lead to the attribution to a written instrument of a meaning that was never
intended.’ ” (Id. at p. 39.)
      “Although extrinsic evidence is not admissible to add to, detract from,
or vary the terms of a written contract, these terms must first be determined
before it can be decided whether or not extrinsic evidence is being offered for
a prohibited purpose.” (PG&E, supra, 69 Cal.2d at p. 39.) Accordingly,
courts must preliminarily consider all credible evidence offered to prove the
intention of the parties so that courts can place themselves “ ‘in the same
situation in which the parties found themselves at the time of contracting.’ ”
(Id. at pp. 39–40.) If, after considering this evidence, the language of the
contract “ ‘is fairly susceptible of either one of the two interpretations
contended for,’ ” then the extrinsic evidence is admissible to prove that
meaning. (Id. at p. 40.)
      Here, based on our preliminary consideration of the extrinsic evidence,
we agree with the arbitrator that it is “fully plausible” to interpret the word
“terminates” in section 6.4 of the License Agreement as including a
termination by nonrenewal. Sections 5.1(a) and (b) of the MOU memorialized
a key compromise whereby the Warriors would sign a 20-year lease with four
5-year options to renew, requiring the Warriors to play in the arena for the
first ten years, allowing the Warriors to leave after ten years by paying the
renovation debt in full, or after 20 years by making debt service payments
less an offset until 2027. There is no evidence the parties attempted to
renegotiate this key compromise.



                                        11
      With minor changes, section 5.1(a) of the MOU became sections 6.1, 6.2
and 6.3 of the License Agreement. The language in section 5.1(b) of the MOU
was changed to the language in section 6.4 of the License Agreement, but a
May 21, 1996 internal memo from Seaman—the Authority’s counsel—to the
Authority’s negotiators and City and County representatives suggests he
understood the change as creating a broader obligation to repay debt, not a
narrower one.
      Notably, the team’s owner, Chris Cohan, also believed the team could
avoid servicing the project debt only under limited circumstances. Shortly
after the agreement was executed, when the Authority was seeking bond
financing to construct the new arena, Cohan acknowledged to CIBC that
“other than a termination due to a default . . . . , the undersigned has no right
to terminate or cancel the Assigned Agreements until the Project Debt (as
defined in the License Agreement) has been fully paid.” In 2010, the team’s
owner wrote a disclosure letter to the team’s new buyer, as set forth ante,
that also supports a broad interpretation of the term “terminates” in section
6.4 of the License Agreement.
      In arguing otherwise, GSW relies on cases that are inapposite either
because they do not apply California law (see, e.g., Sleepy’s LLC v. Select
Comfort Wholesale Corp. (2d Cir. 2015) 779 F.3d 191, 197) or because they
shed no light on how the parties to this agreement may have understood
the term “terminates.” (See, e.g., Tahoe National Bank v. Phillips (1971)
4 Cal.3d 11, 14 [analyzing whether real estate document could be construed
as a mortgage]; Mackey v. Bristol West Ins. Service of Cal., Inc. (2003)
105 Cal.App.4th 1247, 1264 [interpreting insurance policy and provisions
of the Insurance Code].)




                                       12
      Here, our provisional review of the extrinsic evidence demonstrates the
parties may have intended the phrase “terminates this License Agreement
for any reason” to encompass a termination of the agreement by the failure to
exercise the first two 5-year options to renew it. Section 6.4 of the License
Agreement is reasonably susceptible to the parties’ competing
interpretations, and this parol evidence is admissible to prove what the
parties intended. (PG&E, supra, 69 Cal.2d at pp. 38–40.)
      III.   The Meaning of Section 6.4 of the License Agreement
      Next, we turn to the “second step—the ultimate construction placed
upon the ambiguous language—[which] may call for differing standards of
review, depending upon the parol evidence used to construe the contract.”
(Winet v. Price, supra, 4 Cal.App.4th at pp. 1165–1166.)
      A.     Is Interpretation of Section 6.4 a Question of Law or Fact?
      Interpretation of a contract is a question of law “when it is based on the
words of the instrument alone, when there is no conflict in the extrinsic
evidence, or when a determination was made based on incompetent
evidence.” (City of Hope National Medical Center v. Genentech, Inc. (2008)
43 Cal.4th 375, 395.) In addition, courts interpret a contract as a matter of
law “even when conflicting inferences may be drawn from the undisputed
extrinsic evidence [citations] or that extrinsic evidence renders the contract
terms susceptible to more than one reasonable interpretation.” (Wolf v. Walt
Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1126–1127, fn.
omitted.)
      “But when . . . ascertaining the intent of the parties at the time the
contract was executed depends on the credibility of extrinsic evidence, that
credibility determination and the interpretation of the contract are questions
of fact . . . .” (City of Hope National Medical Center v. Genentech, Inc., supra,



                                       13
43 Cal.4th at p. 395.) In other words, if interpreting the contract involves
deciding between “conflicting extrinsic evidence concerning the meaning
of . . . contractual provisions,” or “divergent testimony about what the parties
understood certain contractual provisions to mean,” then it is a factual
question, not a legal one. (Id. at pp. 385, 394.)
      B.     The Arbitrator’s Interpretation Was Factual, Not Legal
      Here, GSW argues “the facts are not disputed.” Acknowledging that we
can only review questions of law, GSW focuses on the evidence in the record
that was undisputed, such as Seaman’s April 24 and May 21, 1996
memoranda, and GSW argues the arbitrator and the trial court drew
incorrect inferences from this evidence.
      The Authority responds that “if the extrinsic evidence here was
disputed—which it was—then this Court must affirm the judgment,
regardless of how this Court otherwise might interpret the License
Agreement, because the arbitrator’s interpretation must be deemed
‘stipulated by the parties’ . . . and the arbitration award ‘is not subject to
judicial review.’ ”
      We agree with the Authority. In our view, the second step of the
arbitrator’s analysis—deciding what the parties meant—addressed a
question of fact, not a question of law. At the arbitration hearing, which
lasted three days, eight witnesses testified in person, and one witness
testified by deposition. In her discussion of the extrinsic evidence of intent,
the arbitrator found the obligations at issue “were intensely bargained for by
the Authority and agreed to by the Warriors,” and she found that the parties
sought to adhere to the terms of the MOU during the drafting of the
definitive agreements. The arbitrator rejected GSW’s theory that the
Authority changed the language of the MOU “because of some ‘leverage’ the



                                        14
Warriors possessed,” noting that the Authority was in a stronger position at
the time of drafting the License Agreement, and the team’s owner wanted to
stay in Oakland.
      The arbitrator also rejected GSW’s theory that subsequent negotiations
regarding a proposed entity to manage the arena were an effort to close the
gap in bond-debt payments created by the new language in section 6.4. The
arbitrator was not persuaded by the testimony of two witnesses GSW relied
upon to support this theory. In addition, the arbitrator found that financial
audits prepared by accounting firms “provide no credible evidence of the
Warriors’ intent during the drafting of the License Agreement.” These
factual findings support the Authority’s argument that the interpretation of
this contract was factual, not legal. (City of Hope National Medical Center v.
Genentech, Inc., supra, 43 Cal.4th at p. 395 [interpretation of contract is a
question of fact when based on conflicting extrinsic evidence and credibility
determinations].) Because the arbitrator’s interpretation of section 6.4
addressed a question of fact, section 39.3.11 of the License Agreement places
that interpretation beyond our judicial review.
      C.    Assuming the Interpretation of the License Agreement Is a
            Question of Law, the Undisputed Extrinsic Evidence Supports the
            Authority’s Interpretation
      Nevertheless, even if we assume that the arbitrator addressed a
question of law when she interpreted section 6.4 of the License Agreement,
we conclude the parties intended this section to include a termination of the
agreement upon GSW’s failure to exercise the first two options to renew.
      Here, the extrinsic evidence includes the MOU, Seaman’s memoranda,
and the Consent and Agreement between the team’s owner and the CIBC.
The parties do not dispute the text of these documents, but they draw
conflicting inferences from them. For example, GSW argues we can infer


                                       15
from Seaman’s memoranda that “the Authority elected to exchange the MOU
deal for the ability to trigger GSW’s debt service obligation if GSW exercised
any right to terminate the License Agreement (including the right to
terminate in case of casualty or even default by the Authority).”
      We disagree with this inference. As the trial court explained, “[t]he
Authority unilaterally changed the language in [section] 6.4 even though the
lead negotiators for the parties did not remember any sort of discussion
regarding re-negotiating the payment obligation. . . . It makes little sense
that the parties would have intended to relieve the Warriors of this obligation
where the parties did not discuss it.”
      According to GSW, it is “entirely irrelevant” that “no witness
specifically recalled negotiating the reason for the changed language.” But
surely if the negotiators intended to relieve the team of a debt payment
obligation that, according to the Authority, amounts to $55 million, then they
would have recalled discussing the change? Based on their failure to recall
any discussion of relieving the Warriors of this obligation, we infer the
parties did not intend to do so.
      In addition, we construe Seaman’s memoranda as memorializing his
understanding that the change from section 5.1(b) of the MOU to section 6.4
of the License Agreement broadened the team’s obligation to continue making
debt payments, including if it failed to exercise the first two 5-year options to
renew.3 (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866–868


      3 GSW claims that Seaman testified “that, as used in the License
Agreement, ‘terminates’ refers to an ‘affirmative exercise of a right by a party
to bring the agreement to an end within its term.’ ” Putting to one side
whether this argument is factual, and therefore beyond our authority to
review, Seaman testified that termination was being used in “a broader
sense. . . . Because otherwise, it would not have comported with what the


                                         16
& fn. 2 [courts independently determine the meaning of the contract when
there is no conflict in the extrinsic evidence, even if this uncontroverted
evidence gives rise to conflicting inferences regarding what the parties
meant].)
      Importantly, this inference receives further support from the team’s
agreement with the CIBC, which provides “that other than a termination due
to a default . . . , the undersigned has no right to terminate or cancel the
Assigned Agreements until the Project Debt (as defined in the License
Agreement) has been fully paid.” This agreement—which reflects the team’s
understanding of their obligation shortly after the License Agreement was
executed—carves out an exception for a termination due to a default, but it
implies that if the License Agreement ends for any other reason, then the
team must continue making debt payments. In 2010, the team’s owner
acknowledged that the Authority viewed relocating the team between 2017
and 2027 as requiring continued debt service payments. We conclude the
parties understood “terminates” in section 6.4 of the License Agreement to
include a termination by nonrenewal. (Universal Sales Corp. v. California
Press Mfg. Co. (1942) 20 Cal.2d 751, 761 [“when a contract is ambiguous, a
construction given to it by the acts and conduct of the parties with knowledge
of its terms, before any controversy has arisen as to its meaning, is entitled to
great weight”].)
      IV.   GSW’s Remaining Arguments Fail
      GSW argues the arbitrator and the trial court failed to give effect to the
License Agreement’s integration clause, and they should have construed



parties agreed to in the MOU.” Seaman testified that the distinction between
“terminate” and “expire” is “not honored with regularity,” and that the words
are often “used to be synonymous.”

                                       17
section 6.4 against the Authority because the Authority drafted it. We
disagree.
            A.    The Integration Clause
      Section 32 of the License Agreement provides that it constitutes the
parties’ “sole and entire agreement.” It further provides that “[t]here are no
other terms, obligations, covenants, conditions or agreements . . . with respect
to the subject matter hereof other than as contained in this License
Agreement.” GSW argues that by relying on the MOU to construe the
License Agreement, “the Arbitrator and the trial court wiped out the
integration clause and imported into the parties’ contract terms flatly
contradicting the terms of the License Agreement.”
      Not so. “The courts have long recognized that even when a contract
is integrated—that is, intended to constitute the parties’ final and complete
understanding of the terms of their agreement—the meaning of the terms
of the contract must still be ascertained. The California Supreme
Court . . . permits the admission of extrinsic evidence to interpret the
language of an integrated written instrument where such evidence is
relevant to prove a meaning to which the contractual language is ‘reasonably
susceptible.’ ” (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912–913, fn. 4.)
      Here, the MOU was not used to vary, or contradict, the terms of the
License Agreement. Instead, it was used to ascertain what the parties meant
by the phrase “terminates this License Agreement for any reason.” Thus,
consideration of the MOU was consistent with the License Agreement’s
integration clause. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 521
[“Although extrinsic evidence is not permitted in order to add to, detract
from, or vary the terms of an integrated written agreement, extrinsic
evidence is admissible in order to explain what those terms are.”].)



                                       18
      GSW relies on Hot Rods, LLC v. Northrop Grumman Systems Corp.
(2015) 242 Cal.App.4th 1166, but the case is inapposite. In Hot Rods, the
integration clause provided that “ ‘no extrinsic evidence whatsoever may be
introduced in any judicial proceedings involving this Agreement.’ ” (Id. at
p. 1173.) But here, section 32 of the License Agreement does not bar
consideration of extrinsic evidence to explain its meaning.
            B.     Resolving Ambiguities Against the Drafter
      Civil Code section 1654 provides: “In cases of uncertainty not removed
by the preceding rules, the language of a contract should be interpreted most
strongly against the party who caused the uncertainty to exist.” GSW claims
section 6.4 should be construed against the Authority because the Authority
“introduced the potential ambiguity into the contract.”
      We decline to apply this rule. “Only in those instances where the
extrinsic evidence is either lacking or is insufficient to resolve what the
parties intended the terms of the contract to mean will the rule that
ambiguities are resolved against the drafter of the contract be applied.”
(Rainier Credit Co. v. Western Alliance Corp. (1985) 171 Cal.App.3d 255, 264.)
      Here, assuming the interpretation of the contract presents a question of
law, then based on the undisputed extrinsic evidence, which includes the
MOU, Seaman’s memoranda, and the Consent and Agreement with the
CIBC, we infer the parties intended “terminates” in section 6.4 of the License
Agreement to include a termination by failing to exercise the first two options
to renew it. Therefore, section 6.4 applies, and GSW must continue making
debt payments as provided in that section of the License Agreement.
                                 DISPOSITION
      We affirm the judgment. The Authority is entitled to costs on appeal.
(Cal. Rules of Court, rule 8.278(a).)



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                                 _________________________
                                 Jones, P. J.


WE CONCUR:


_________________________
Simons, J.


_________________________
Needham, J.




A157688



                            20
Superior Court of San Francisco County, Hon. Ethan P. Schulman

Morrison & Foerster, James P. Bennett, Joshua Hill, Amani Solange Floyd,
Miriam A. Vogel, William Herbert; Greines, Martin, Stein & Richland and
Kent L. Richland for Defendant and Appellant.

Keker, Van Nest & Peters, John W. Keker and Daniel E. Jackson for Plaintiff
and Respondent.




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