LR Partners, L.L.C. v. Charter Communications Inc. CA1/3 ( 2023 )

Filed 3/3/23 LR Partners, L.L.C. v. Charter Communications Inc. CA1/3
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California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
LR PARTNERS L.L.C.,
Plaintiff and Respondent,
A165058
v.
CHARTER COMMUNICATIONS (San Francisco City & County
INC. et al., Case No. CGC-18-565706)
Defendants and Appellants.
Spectrum Pacific West, LLC (“Spectrum”) appeals from a judgment
entered in favor of LR Partners, L.L.C. (“LR Partners”) after the trial court
granted LR Partners’ motion for summary adjudication and ruled in LR
Partners’ favor on the key contract interpretation issue presented by the
motion. Specifically, the court determined that the 1969 agreement between
the parties’ predecessors, which includes a provision that has obligated
Spectrum to make revenue share payments to LR Partners annually,
included an express term of duration which was not terminable at will by
Spectrum. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The 1969 Contract
The contract underlying this dispute was entered into on September 24,
1969, between Spectrum’s predecessor, cable television operator Southern
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California Cable Television (“SCCTV”), and LR Partners’ predecessor, real
estate developer UTLX, Inc. (“UTLX”) (contract referred to as the “UTLX
Agreement” or “Agreement”). In the Agreement, SCCTV agreed to construct,
install, maintain, and operate a community antenna television system
(“CATV”) throughout certain undeveloped real property in the city of
Thousand Oaks (the “Property”). The Property consisted of approximately
2582.6 acres in Thousand Oaks being developed by UTLX.
The UTLX Agreement is ten pages without exhibits. It contains five
enumerated sections each with additional subsections.
Section 1 (“Recitals”) contains various recitals which the parties
acknowledge “constitute the premises upon which this Agreement [was]
based and the reasons for its execution.” Section 1.1 recites UTLX’s
representation to SCCTV that “UTLX is the beneficial owner of the
Property. . .” Section 1.2 notes that UTLX has advised SCCTV that UTLX
has entered into an agreement with the Donald B. Bren Company (“Bren”)
providing for Bren’s option to purchase approximately 827 acres of the
Property for residential and commercial development. That subsection
further states that UTLX is obligated to “use its best efforts to provide an
operating CATV system available to residential purchasers” in the Bren
portion of the Property and to make that area cable ready as well. Section
1.3 recites SCCTV’s representation to UTLX regarding its experience in the
construction, installation, and operation of CATV systems and its desire to do
so for the Property.
Section 2 (“The Nature of the CATV System and Service to be Provided
by SCCTV”) sets forth SCCTV’s representations and warranties. Section 2.1
states that SCCTV is “the holder of a non-exclusive franchise from the City to
provide CATV System and service therefor to an area including the entire of
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the Property, as authorized by Ordinance No. 28 adopted by the City’s
Council on April 6, 1965. . . . All operation of the CATV System and all
service in connection therewith by SCCTV for the Property will be in
accordance with the terms and conditions of said Ordinance.” The referenced
ordinance, which is the non-exclusive franchise granted SCCTV by Thousand
Oaks, is an exhibit to the Agreement. Section 2.2 provides that SCCTV “will
construct, install, maintain and operate for the entire of the Property a
complete and operating CATV system” and provide associated services, which
include delivering to each subscriber at least 10 television channels and FM
radio reception.
Section 3 (“Construction and Installation of the CATV System”) covers
standards for the system’s construction and installation. Section 3.1 explains
that SCCTV will construct and install the system in a good and workman like
manner. Section 3.2 requires UTLX to give SCCTV not less than 30 days’
notice prior to commencing construction of any streets upon the Property or
any major and secondary streets required under the Bren agreement. This
section further adds that UTLX “shall use its best efforts to cause Bren or
any other developer purchasing portions of the property from UTLX to give
similar notice to SCCTV with respect to construction of any in-tract roads or
utilities with respect to which UTLX has no obligation or responsibility.
UTLX shall also grant to SCCTV all easements, licenses and permissions
necessary for SCCTV to install any portion of the system in such major and
secondary streets which are the obligation of UTLX and any other streets
constructed by it and will use its best efforts to cause Bren or such other
developer to grant to SCCTV similar rights necessary to SCCTV’s
construction and installation of the System upon the Property.”
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Section 4 (“Operation of the CATV System; Division of Revenues”)
discusses payment obligations between the parties. In Section 4.1, UTLX
agrees to pay SCCTV an initial connection fee of $35 per connected
household. Section 4.3, which is the payment provision giving rise to the
parties’ instant dispute, states: “During the term of this Agreement, SCCTV
will pay UTLX an amount equal to 16-2/3 percent of all revenues, whether
received from subscribers or from others, received by SCCTV from or with
respect to the Property for CATV System” service for the covered property.
The payment obligation is subject to certain carveouts not at issue in this
appeal. Section 4.4 provides that the amounts due under sections 4.1 and 4.3
are to be “paid annually on January 31 of each year based upon connections
to the [CATV] System during the previous twelve months and all revenues
received with respect to the Property from the [CATV] System for the
previous twelve months.”
Section 5 (“General Provisions”) – the final enumerated section of the
Agreement – includes the following provision in section 5.1, the meaning of
which the parties dispute:
Subject to the next sentence, this Agreement and all
of the rights and obligations of the parties hereunder shall
remain in effect for so long as SCCTV, or its successors and
assigns, shall continue to be franchised by the City or other
appropriate governmental agency to provide CATV System
service to said City and shall inure to the benefit of and be
binding upon UTLX, SCCTV and their respective
successors and assigns.
Section 5.1 further provides:
In the event that SCCTV, its successors or assigns,
shall have discontinued operation of the System for any
reason other than bona fide repair thereof diligently and
continuously pursued, and shall not have resumed
operation thereof within thirty (30) days after written
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request from UTLX that said service be resumed,
thereupon by written notice from UTLX to SCCTV of its
election to do so, UTLX shall be entitled to receive absolute
title to, and thereafter to operate, all portions of the system
upon or through the Property, including without limitation,
all cable, connections, terminals, easements, licenses, and
other permission for use of the system free and clear of any
further right, title or interest of SCCTV, its successors or
assigns, whatsoever in such portion of the System, such
event constituting a termination of all title or interest of
SCCTV or its successors or assigns in and to such portion of
the System, and the vesting of such title in UTLX, its
successors and assigns forever.
There is no fixed term of years in this section or elsewhere in the Agreement.
B. 1969-1990
In the years following the Agreement’s execution, various entities
succeeded UTLX and SCCTV. In 1971, UTLX changed its name to Langmoor
Corporation (“Langmoor”). In 1971, SCCTV was acquired by and merged into
Storer Cable, Inc. (“Storer”). In 1988, Ventura County Cablevision, Inc.
(“Ventura Cable”) acquired Storer and assumed its obligations under the
UTLX Agreement.
There appears to be no dispute between the parties that UTLX and its
successor provided the easements, licenses, permissions, and notifications
necessary under the Agreement, as well as paid the cable provider the $35
per household connection fees. There is also no dispute that during this time
frame (1969-1990), SCCTV and its successors paid UTLX and its successor
the annual revenue share payments under section 4.3 of the Agreement.
According to LR Partners, UTLX successor Langmoor began receiving
payments from SCCTV successor Storer in 1978, nine years into the
Agreement, “when the amounts due as a percentage of cable revenue under
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§ 4.3 of the UTLX Agreement exceeded the initial connection fees due under
§ 4.1 of the Agreement.”
C. The 1990 Modification of the UTLX Agreement
By 1990, an approximately 504.97-acre portion of the Property known
as the “Lang Ranch Property” was carved out by UTLX successor Langmoor
and transferred to another developer, the Lang Ranch Company.
On September 1, 1990, the Lang Ranch Company and SCCTV successor
Ventura Cable entered into a separate agreement for the provision of cable
services on the Lang Ranch Property. Like the UTLX Agreement, this new
agreement, entitled “Compensation Agreement Lang Ranch” (the “Lang
Ranch Agreement”), was designed to facilitate CATV services to subscribers
on the Lang Ranch Property.
Under the Lang Ranch Agreement, Ventura Cable agreed to pay Lang
Ranch Company a fixed $600 per connection as well as a percentage of gross
revenue – 7-1/2 percent – received from delivery of its cable services on the
Lang Ranch Property. The parties agreed that the payments made by the
cable company to the developer under the agreement were “considered ‘just
compensation’ to the owner for the use of the easements upon the Property.”
Unlike the UTLX Agreement, which had no fixed term limit for payments
from cable provider to developer, the Lang Ranch Agreement stated that
Ventura Cable’s obligation to pay the 7-1/2 percent compensation to Lang
Ranch Company was to last approximately 20 years, commencing on the date
of the contract, which was September 1, 1990, and terminating December 31,
2010, subject to earlier termination if Lang Ranch Company or other
developers failed to satisfy their various obligations under the contract.
The Lang Ranch Agreement required the Lang Ranch Company to
cause Langmoor to acknowledge that the UTLX Agreement had no
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application to the Lang Ranch Property, and that Langmoor had no right
under the UTLX Agreement to any compensation or other consideration
arising from the cable system constructed on the Lang Ranch Property.
Accordingly, on September 1, 1990, Langmoor executed a separate two-page
“Acknowledgement” concurrent with and incorporated by the Lang Ranch
Agreement in which Langmoor stated that it had transferred a portion of the
Property (which had been subject to the UTLX Agreement) to the Lang
Ranch Company. Langmoor further agreed that the “Lang Ranch Property
ha[d] been transferred to Lang Ranch Company . . . [and was] no longer
subject to the UTLX Agreement.” Langmoor affirmed that it was “entitled to
no compensation of any nature from [Ventura Cable] as successor-in-interest
to [SCCTV] under the UTLX Agreement, with respect to the construction,
operation and maintenance of a cable television system upon the Lang Ranch
Property or any revenue of any nature derived by [Ventura Cable] with
respect to such a system.”
Thus, under the Lang Ranch Agreement and Acknowledgment, the
parties modified the UTLX Agreement to effectively limit its reach to the
portions of the original Property which were already developed and not
acquired by the Lang Ranch Company.
D. 1991 to Current Dispute
In 1991, Langmoor sold and assigned its interest and rights under the
UTLX Agreement to LR Partners.
In 1996, TCI West, Inc. acquired the company that owned Ventura
Cable. Three years later, Adelphia acquired TCI West. In 2007, Time
Warner Cable, Inc. (“TWC”) assumed operations from Adelphia, and a direct
subsidiary, Time Warner Cable Pacific West LLC (“TWC Pacific”), held the
local franchise to provide cable services in Thousand Oaks. That same year,
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TWC Pacific obtained a state-issued franchise pursuant to the California
Digital Infrastructure and Video Competition Act (“DIVCA”), which became
effective in 2008. DIVCA required cable operators to transition from local to
state-issued franchises. (Pub. Util. Code, § 5800 et seq.) The franchise
granted by Thousand Oaks expired when the state-issued franchise became
effective. In 2016, Charter Communications, Inc. (“Charter”) acquired TWC
Pacific, but TWC Pacific continued as the entity that held the state-issued
franchise to provide services in Thousand Oaks. Charter did not assume any
of TWC Pacific’s obligations under the UTLX Agreement.
Again, there is no dispute that through 2016, Spectrum’s predecessors
paid LR Partners and its predecessors the annual section 4.3 payments.
Between 1990 and 2016, this sum amounted to approximately $2.3 million.
The last annual payment to LR Partners was made in June 2016, based on
revenue received by TWC Pacific in 2015.
In October 2017, after months of exchanges between the parties
regarding nonpayment of the annual revenue shares for 2016, outside counsel
for LR Partners requested payment. LR Partners advised that it would have
no alternative to filing suit to enforce is rights under the UTLX Agreement if
no response was received. In April 2018, LR Partners filed a breach of
contract claim against the cable provider seeking to enforce LR Partners’
alleged rights to the section 4.3 annual payment.
In August 2018, outside counsel for Spectrum’s predecessor TWC
Pacific wrote LR Partners, advising that TWC Pacific had terminated the
UTLX Agreement in April 2018 when, in its view, it had denied any
obligation to make payments under the Agreement and refused to make
further payments to LR Partners. TWC Pacific reiterated its termination of
the Agreement and any obligation for it to abide by its terms.
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As of November 2018, TWC Pacific was renamed Spectrum Pacific
West, LLC. According to Spectrum, in light of LR Partners’ payment
demands, it began to investigate the current ownership or control of the
Property subject to the UTLX Agreement. Spectrum asserts that its
predecessors had paid LR Partners based on the mistaken belief that LR
Partners and its predecessors owned or controlled the Property subject to the
UTLX Agreement, as modified by the 1990 Acknowledgment, and that such
payment was required for continued access to the Property. Based on its
investigation, the cable provider determined LR Partners no longer owned or
controlled the Property and certain rights of way had been transferred to the
public or third parties. As a result, Spectrum states it terminated the UTLX
Agreement.
Spectrum, now SCCTV’s successor, currently holds the state-issued
franchise to operate on the Property covered by the UTLX Agreement. It is
undisputed that Spectrum has not provided and does not provide any cable
services on, or receive cable-related revenues, from any property owned by LR
Partners. It is also undisputed that LR Partners does not currently own or
control the Property subject to the UTLX Agreement.
E. Trial Court Proceedings
After litigation between the parties commenced in April 2018, LR
Partners amended the complaint to insert TWC Pacific in place of the first
doe defendant. Upon TWC Pacific’s name change to Spectrum, all further
pleadings by the cable provider were made by Spectrum. In January 2019,
Spectrum filed a cross-complaint against LR Partners, seeking among other
relief a declaration that the UTLX Agreement was terminated or
unenforceable.
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Following discovery, the parties stipulated to the precise geographic
scope of the UTLX Agreement, as modified by the 1990 Lang Ranch
Agreement and the Acknowledgment, and to the distinct payment streams
that arose under the agreements. The parties also entered a stipulation
regarding the method of calculating the amount owed under the UTLX
Agreement and amounts payable based on that method. Soon thereafter, the
parties filed cross-motions for summary adjudication on the meaning of the
UTLX Agreement, which the trial court heard and ruled on in April 2021.
The trial court granted LR Partners’ motion for summary adjudication
in its entirety and largely denied Spectrum’s cross-motion as moot. The court
concluded that Spectrum owed a duty to make the 16-2/3 percent payments
under the UTLX Agreement. The court noted that under section 5.1 of the
Agreement, “the parties agreed that the UTLX Agreement shall remain in
effect ‘for so long as SCCTV, or its successors and assigns, shall continue to
be franchised by the City or other appropriate governmental agency to
provide CATV System service to said City.’ ” Rejecting Spectrum’s contention
that such payments were conditioned on LR Partners’ ownership of the
property subject to the UTLX Agreement, the court explained that the plain
language of the Agreement did not condition payment on such ownership and
found no term reasonably susceptible to such a construction. The court also
rejected Spectrum’s argument that the Agreement was indefinite in duration,
reasoning that there was nothing indefinite about section 5.1’s provision that
the agreement would run so long as SCCTV continued to be franchised by
Thousand Oaks or another appropriate governmental agency. Further, it
found the UTLX Agreement was not reasonably susceptible to Spectrum’s
assertion that the city or a local entity had to be the franchising government
agency and concluded the state-issued franchise under which Spectrum had
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operated since 2008 qualified. Based on these rulings, the trial court further
concluded the Agreement was not vague, ambiguous, or insufficiently
definite.
In light of the trial court’s summary adjudication order and the earlier
stipulations regarding how annual payments under the Agreement were to be
calculated, LR Partners and Spectrum stipulated to a damages and interest
calculation, subject to Spectrum’s right to appeal the court’s liability
determination. The trial court entered final judgment based on the
stipulation. This appeal followed.
DISCUSSION
Spectrum contends that the 1969 UTLX Agreement is a “textbook one
of indefinite duration” which it was entitled to, and did, terminate at will
when it took over the cable system in Thousand Oaks in 2018. The cable
provider argues that the trial court erred in construing the Agreement to
have an “implied time limit” tied to its maintenance of a government-issued
franchise or permit to operate its cable system within Thousand Oaks. In
Spectrum’s view, this court should reverse the trial court’s final judgment
that Spectrum is liable to LR Partners for breach of contract. We disagree
and conclude the Agreement contains an express durational term that
governs its termination.
A. Applicable Law
An order granting a motion for summary adjudication, like a summary
judgment order, is reviewed de novo. (Certain Underwriters at Lloyd’s of
London v. Superior Court (2001) 24 Cal.4th 945, 972.)
“Our mission in every contract case is to discern and effectuate the
contracting parties’ mutual intent. We begin with the words of the contract.
The nature of the contract and the surrounding circumstances can inform
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those words. [Citation.] [¶] We gain insight by divining the purpose of the
contract. Understanding what the parties were trying to accomplish can
illuminate their contractual language.” (RMR Equipment Rental, Inc. v.
Residential Fund 1347, LLC (2021) 65 Cal.App.5th 383, 392 (RMR).) “[T]he
language of a contract must be construed in the context of the instrument as
a whole and all the surrounding circumstances.” (Admiral Ins. Co. v.
Superior Court (2017) 18 Cal.App.5th 383, 388; Stockton v. Stockton Plaza
Corp. (1968) 261 Cal.App.2d 639, 644 [in interpreting a contract, the court
may look to the surrounding circumstances to decide what is reasonable and
what the parties intended by the language used].)
“Generally speaking, contract interpretation is a legal rather than a
factual question. [Citation.] It is a judicial function to interpret a written
contract, unless the interpretation turns upon the credibility of extrinsic
evidence. [Citation.] [¶] A trial court properly admits evidence extrinsic to
the written instrument to determine the circumstances under which the
parties contracted and the purpose of the contract.” (RMR, supra, 65
Cal.App.5th at p. 392.) When no extrinsic evidence is in conflict, reviewing
courts undertake their own construction of the agreement. (Id. at p. 393.)
When the material extrinsic evidence is undisputed, reviewing courts
independently determine the meaning of the contract. (Ibid.)
B. Determining Contract Duration
In Consolidated Theatres, Inc. v. Theatrical Stage Employees Union,
Local 16 (1968) 69 Cal.2d 713 (Consolidated), our Supreme Court set out a
three-step analysis for determining a contract’s term of duration. First,
courts look for an express duration provision in the contract. If one exists, we
enforce it according to its terms. Second, if the contract does not have an
express provision, we look to the intention of the parties to imply a duration.
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Third, if we find neither an express nor an implied term, we construe the
term of duration to be a reasonable time. (Id. at pp. 723–731.) If a contract
is of indefinite duration, it may be terminated after a reasonable time and
with adequate notice. (See Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 18
(Asmus).)
1. The UTLX Agreement’s Duration Provision
“California cases have long recognized that a contract may, by its
express terms, provide for a term of duration of indefinite length and without
specific limitation, tied not to the calendar but to the conduct of the
contracting parties.” (Zee Medical Distributor Association, Inc. v. Zee
Medical, Inc. (2000) 80 Cal.App.4th 1, 7 (Zee).) “The general California rule
appears to be that a contract is not fatally defective merely because it does
not specify a time presently definite for its termination [citation]. The rule is
that if the contract is to remain in effect so long as one continues to perform
or act in a certain manner . . . the agreement is sufficiently certain to be
vital.” (Zimco Restaurants, Inc. v. Bartenders and Culinary Workers Union,
Local 340, AFL-CIO (1958) 165 Cal.App.2d 235, 237 (Zimco).)
For example, in Great Western Distillery Products v. John A. Wathen
Distillery Co. (1937) 10 Cal.2d 442, our Supreme Court held that “ ‘[t]he
failure to specifically limit the duration of the contract did not fatally affect it
and did not give rise to a right to terminate the contract at will without a
liability for damages.’ ” (Id. at pp. 446–447.) The contract at issue was an
agreement for the distribution for distilled spirits which provided that “ ‘as
long as the plaintiff purchases and continues to purchase from the defendant
all of its John A. Wathen Distillery Company warehouse receipts for
whiskey,’ ” the defendant would limit its sales to others in California. (Id. at
444–445, emphasis added.) The Court deemed this provision an express term
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of duration which was sufficiently certain and valid. (Id. at p. 447 [“ ‘ “As a
general proposition the failure of an executory contract to state a time
presently definite for its termination does not render it void for
uncertainty.” ’ ”].) Two more recent cases reflecting this rule that a contract
may remain in effect so long as one continues to perform or act in a certain
manner are instructive.
In Lura v. Multaplex, Inc. (1982) 129 Cal.App.3d 410 (Lura), the
plaintiff successfully procured customers for the defendant’s business. (Id. at
p. 412.) Once the plaintiff secured the accounts, he had no further obligation
to service them. (Ibid.) In return for the plaintiff's work, the defendant
promised to pay him a 5 percent commission, based upon the defendant’s
sales to the accounts. (Ibid.) The parties “neither discussed nor reached an
understanding as to the duration of the agreement.” (Ibid.) After a few
years, the defendant sought to terminate the commission payments, even
though the “customers solicited by appellant continued to conduct business
with respondent.” (Ibid.) The trial court determined that the contract was of
indefinite duration, and therefore terminable by either party upon notice
after a reasonable time. (Id. at p. 413.)
In reversing the trial court, the court of appeal reasoned that the
defendant had an ongoing obligation to pay the commission so long as he
continued selling to the plaintiff’s accounts. (Lura, supra, 129 Cal.App.3d at
p. 413.) The court explained: “Since [the defendant’s] obligation to [the
plaintiff] is contingent upon its sales to the accounts he secured, the
agreement is of a limited duration – until [the defendant] stops selling to
those accounts.” (Ibid.) Further, the “ ‘mere fact that an obligation under a
contract may continue for a very long time is no reason in itself for declaring
the contract to exist in perpetuity or for giving it a construction which would
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do violence to the expressed intent of the parties.’ ” (Ibid.) In determining
duration, the court of appeal recognized that “[t]he important factor, then, is
not whether the contract fails to specify a termination date, but whether
there is an ascertainable event which necessarily implies termination.” (Id.
at pp. 414–415.) The agreement at issue provided for such an event: the
termination of sales to the specified accounts. (Id. at p. 415 [“where an
obligation is conditioned upon an event connected with the subject matter of
the contract, the obligation continues until that event occurs”].)
In RMR, supra, 65 Cal.App.5th 383, the defendant, an owner of a
mobile home park, entered into a service contract with the plaintiff, an owner
of water trucks, to be the park’s exclusive supplier of drinking water beyond
what the park’s wells could produce. (Id. at pp. 385–386.) The parties based
the contract duration on performance and contingencies, not on the calendar,
and no expiration date was set. (Id. at p. 389.) “Rather, the contract would
end when the park no longer needed trucked water, either because it put in
enough new wells or because it succeeded in connecting to a public water
system.” (Ibid.) Relevant language in the parties’ agreement stated: “ ‘RMR
Water Trucks will be guaranteed water delivery to Paradise Ranch as long as
the park needs water to supplement its well water production or another
supply of water becomes available.’ ” (Ibid, italics omitted.) After thirteen
years and new park ownership, the park began hauling water in a truck it
had bought, and the plaintiff confronted park managers, asserting a violation
of the agreement. (Id. at p. 390.) When the plaintiff rejected the park’s offer
to be an as needed supplier at the original contract price, the park stopped
asking the plaintiff for water. (Ibid.) The plaintiff then sued for breach of
contract. (Ibid.) The trial court found the defendant had breached the
agreement but refused the plaintiff’s request for a damages award from the
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date of breach to the date of trial, which was a span of about four years,
because the contract contained no express duration term and was thus
terminable at will on reasonable notice. (Id. at p. 391.) The court determined
reasonable notice was three months and awarded damages accordingly.
(Ibid.) In reversing the trial court on damages, the court of appeal held the
contract’s provision – “ ‘RMR Water Trucks will be guaranteed water delivery
to Paradise Ranch as long as the park needs water to supplement its well
water production or another supply of water becomes available’ ” – was an
express duration provision. (Id. at p. 393.) As explained by the court, “This
contract was not terminable at will. It was to continue as long as the park
needed water to supplement its well production: until it obtained another
supply of water by connecting to some larger water system or by drilling more
wells that obviated the need for trucks. Therefore it was error to limit
damages for breach to an arbitrary three-month term.” (Ibid.)
As in RMR, our analysis also begins and ends with the plain language
of the UTLX Agreement, which is not silent as to duration. Section 5.1 of the
Agreement sets forth an express duration provision: “[T]his Agreement and
all of the rights and obligations of the parties hereunder shall remain in
effect for so long as SCCTV, or its successors and assigns, shall continue to be
franchised by the City or other appropriate governmental agency to provide
CATV System service to said City and shall inure to the benefit of and be
binding upon UTLX, SCCTV and their respective successors and assigns.”
This duration provision applies to “all of the rights and obligations of the
parties hereunder,” which no party disputes encompass the section 4.3
annual revenue share payments. It establishes that such obligations shall
remain in effect so long as Spectrum continues to be franchised by Thousand
Oaks or “other appropriate governmental agency” to provide cable services to
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Thousand Oaks. In conditioning termination on Spectrum’s ongoing cable
franchise, the Agreement provides an ascertainable event for termination
which makes it one of definite duration. (Asmus, supra, 23 Cal.4th at p. 17
[“courts have interpreted a contract that conditions termination on the
happening of a future event as one for a definite duration or time period only
when ‘there is an ascertainable event which necessarily implies termination’
”].) Accordingly, like the contracts in Lura and RMR, the UTLX Agreement
was not indefinite and thus not terminable at will. The trial court did not err
in concluding the Agreement was of definite duration.
Spectrum argues that the contract “is a textbook example of an
agreement for an indefinite duration” because it does not contain an express
durational term or even a termination clause. There is no dispute that the
Agreement does not include a term of years. As Spectrum notes, even the
trial court recognized the Agreement does “not appear to have a specific
definite term” and added that “it just seems a little odd that [the Agreement]
. . . like the Energizer [B]unny, just keeps going and going and going.” Case
law, however, clearly establishes that “[a] contract is not fatally defective
merely because it does not provide a time presently definite for its
termination. [Citation.] Words which fix an ascertainable event, by which
the term of a contract’s duration can be determined, make the contract
definite and certain in that particular.” (Bradner v. Vasquez (1951) 102
Cal.App.2d 338, 344; see also Zimco, supra, 165 Cal.App.2d at p. 237 [a
contract to remain in effect so long as one continues to perform or act in a
certain manner is a sufficiently certain agreement].) As we have discussed,
section 5.1 of the Agreement contains an explicit term of duration tied to
Spectrum’s ongoing cable franchise. When the franchise ends, Spectrum’s
obligation to make the section 4.3 payments to LR Partners shall cease.
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Spectrum also relies on various extrinsic evidence to support its view
that the parties understood and agreed the UTLX Agreement would run for
an indefinite period. These include a memorandum dated September 23,
1969, from the UTLX signatory to the Agreement, in which he writes that the
Agreement “will result in our realizing a modest income from an indefinite
period with very little risk or financial commitment.” (Emphasis added.) In
a 1978 internal review memo, a Langmoor executive noted that the UTLX
Agreement “does not have any termination date.” We need not and consider
these documents or the others cited as the durational language in section 5.1
of the Agreement is explicit. (Hollingsworth v. Heavy Transport, Inc. (2021)
66 Cal.App.5th 1157, 1177 [“ ‘The mutual intent of the parties is ascertained
from the contract language, which controls if clear and explicit.’ ”)
2. Implied Durational Terms
Spectrum argues that its contract termination remains proper and
effective because “[e]ven if the Court were to undertake a more searching
review for an implied durational term,” there are “only two ‘reasonable’
timeframes,” both of which have expired. In light of our conclusion that the
UTLX Agreement contains an express duration that must be enforced
according to its terms, we need not undertake any further review to imply a
term of duration in the UTLX Agreement. (People ex rel. Lockyer v. R.J.
Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 524 (Lockyer) [“where ‘
“contract language is clear and explicit and does not lead to absurd results,
we ascertain intent from the written terms and go no further” ’ ”].) However,
even if we were to conclude that there was no express term of duration, we
would not imply either durational term urged by Spectrum.
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a. Continuing Private Ownership of Property
Spectrum contends the Agreement could only reasonably remain in
effect so long as the development remained private. In the cable operator’s
view, “the object and nature of the contract, its text, as well as its
surrounding circumstances, confirm it was fundamentally premised upon the
development remaining private property, and its duration could only
reasonably last so long as the development was private.” Spectrum explains
that since none of the Property remains private today and its once private
roads and ways have since been dedicated to the public, it no longer needs LR
Partners’ or any other private party’s authorization for access. It contends
that implying a duration after the Property is no longer privately held means
“Spectrum and its customers would be required to pay LR Partners
indefinitely for the privilege of accessing public rights of way, where they
already pay the State for that privilege” through franchise fees.
As noted, if a contract does not have an express durational provision,
we look to the intention of the parties to imply a duration. (Consolidated,
supra, 69 Cal.2d at pp. 723–731.) Here, we could not imply the Agreement’s
duration was based on the development remaining private property. The
parties do not dispute, at minimum, that SCCTV entered the Agreement with
UTLX to gain access to subscribers located on the then UTLX-owned
property. But Spectrum’s contention that the parties’ exchange was for
limited access premised upon the Property remaining private is not reflected
in the language of the Agreement, the undisputed facts, or any other evidence
proffered by Spectrum. Under the Agreement, SCCTV agreed to pay a share
of annual revenue for access to customers in the area so long as it held a
franchise to operate in that area. The language reflects an intent for the
cable provider to share revenues from the subscribers on the Property so long
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as it remained franchised to serve them. It does not tie the Agreement’s
duration to private ownership of the Property.
Spectrum argues that implying any durational term that extends to
after the Property is no longer privately held would be unreasonable since the
Agreement would live on even after the reason the parties entered the
contract had disappeared. We disagree. As noted, SCCTV entered the
agreement with UTLX to gain access to subscribers. To this day, Spectrum
(as SCCTV’s successor) remains the cable provider for the subscribers located
within the Property and continues to collect revenue from those subscribers.
In short, Spectrum continues to reap benefits from its predecessor’s
arrangement with UTLX. In this context, implying a duration beyond the
Property’s private ownership is not unreasonable. (Cf. Lura, supra, 129
Cal.App.3d at pp. 414–415 [plaintiff’s success in obtaining accounts for
defendant constituted consideration entitling him to compensation though
plaintiff had no further duty to service accounts and the only obligation
remaining was that of defendant to pay the compensation].)
Spectrum further argues LR Partners’ “perpetual revenue scheme” is
akin to the arrangement the Second Circuit found untenable in Town of
Readsboro v. Hoosac Tunnel & W.R. Co., 6 F.2d 733 (2d. Cir. 1925)
(Readsboro), which our Supreme Court discussed in Consolidated, supra, 69
Cal.2d at pp. 725–726. In Readsboro, supra, 6 F.2d 733, a town and company
entered an agreement with no express terms of duration to build and share in
the costs of maintaining a bridge for a highway both the town and company
would use. (Id. at p. 734.) After some 20 years, the railway company stopped
using the bridge, which was unable to bear its new equipment. (Ibid.) When
the town asked the company to bear half the expense for bridge repairs, the
company refused. (Ibid.) Observing the contract was “unlimited in time,” the
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court found the town’s view that the company was bound forever to pay
maintenance expenses to be untenable. (Id. at p. 735.) Since no time was
expressly fixed in the agreement, the court looked to the circumstances of the
agreement and determined the shared maintenance costs could only last so
long as the company used the bridge. (Ibid.) There was no reason for the
company to continue to pay for something it no longer used. (Ibid.)
Readsboro is readily distinguishable. While the UTLX Agreement does
not include any specified term of years, it does include an explicit term of
duration tied to Spectrum’s maintenance of a government-issued cable
franchise in section 5.1. Such express language obviates the need for the type
of additional inquiry the court engaged in in Readsboro. (Readsboro, supra,
at p 735 [“Had the parties expressed the intention to make a promise for
perpetual maintenance, we should, of course, have nothing to say; their words
would be conclusive.”]; Lockyer, supra, 107 Cal.App.4th at p. 524.) Further,
unlike the railway company which stopped getting use out of the bridge,
Spectrum continues to obtain some benefit from having received access to the
Property from LR Partners’ predecessors via the UTLX Agreement.
b. Expiration of Local Franchise
Spectrum also contends the UTLX Agreement could only reasonably
remain in effect so long as Spectrum operated pursuant to a franchise it
received from the city of Thousand Oaks or an equivalent local authority:
“[B]ased on the ‘nature’ of the agreement, its terms, the ‘surrounding
circumstances’ underlying its formation, and the parties’ contemporaneous
communications, the agreement could only reasonably remain in effect for so
long as the cable operator held its existing City franchise or an equivalent
local authorization.” Spectrum argues that section 5.1 is not an express
durational limit but rather a necessary condition for the cable operator to
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carry out its obligations. It adds that section 5.1’s reference to some “other
appropriate governmental agency” can only reasonably encompass another
local franchising authority, since only local governments franchised cable
operators when the Agreement was executed. Thus, Spectrum reasons any
implied durational term tied to the cable operator’s franchise expired, at the
latest, when Spectrum obtained its state-issued franchise. There is no
disagreement between the parties that since DIVCA, the state has been the
government agency to issue cable franchises to operators like Spectrum. Nor
is there any dispute that Spectrum has maintained its state-issued franchise
since 2008.
We cannot imply the Agreement’s duration based on a city-issued
franchise or one from a local authority, as the UTLX Agreement’s express
language controverts any such implication. Again, section 5.1 states that the
Agreement shall remain in effect “so long as SCCTV, or its successors and
assigns, shall continue to be franchised by the City or other appropriate
government agency to provide CATV System to said City . . .” (Emphasis
added.) Thus, the Agreement explicitly provides for the continuation of
contractual obligations so long as SCCTV or its successors hold a franchise
from the city or “any appropriate government agency.” In using the term
“appropriate government agency,” the contract does not restrict the
franchising authority to the city of Thousand Oaks or another local entity,
and we decline to infer such an intent. (Lockyer, supra, 107 Cal.App.4th at p.
524 [intention of parties to be inferred, if possible, solely from contract’s
written provisions].) Understanding the words of a contract “in their
ordinary and popular sense,” as we must in construing a contract (id. at pp.
525–526), there is no ambiguity that the state is an “appropriate government
agency” within the meaning of section 5.1. Thus, the expiration of the cable
22
operator’s city franchise cannot serve as grounds for implying a durational
term either.
Spectrum argues that such an interpretation of section 5.1, which
recognizes the state as an appropriate franchising authority, is unreasonable.
Noting that an implied term must be a fixed or ascertainable event connected
with the subject matter of the contract, it says “there is nothing fixed, certain,
or even ascertainable about an end date keyed to the loss of some unknown
and unidentified – and possibly yet to be invented – authorization.” We
disagree. There is nothing abstract about the state’s issuance of a franchise
for the relevant area. Spectrum applies at regular intervals to the state for
these grants of authority to provide cable to specific territories, and the
franchise takes effect and expires on dates certain. We are not persuaded
that keying duration to a government-issued permit with such ascertainable
features is unreasonable.
D. Uncertainty of the UTLX Agreement
Alternatively, Spectrum contends that if the UTLX Agreement has not
already terminated, it is “simply far too uncertain to be enforced” as it is
indefinite with respect to “how long Spectrum must continue to pay LR
Partners for nothing.” In its view, the trial court’s judgment “that the
agreement shall continue as long as Spectrum can provide cable services” is
one the parties could not have imagined and that cannot be used “to pinpoint
any logical, definite end date,” rendering the Agreement void and enforceable.
We disagree. An agreement must be definite enough for a court to
determine the “scope of the duty and limits of acceptable performance.”
(Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 407.) As section
5.1 expressly provides that Spectrum’s obligation to make annual payments
to LR Partners shall continue as long as it is franchised to provide cable
23
services in Thousand Oaks, the Agreement is sufficiently certain. (See Zee,
supra, 80 Cal.App.4th at p. 7; Zimco, supra, 165 Cal.App.2d at p. 237.)
DISPOSITION
The judgment is affirmed. The parties shall bear their own costs on
appeal.
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_________________________
Petrou, J.
WE CONCUR:
_________________________
Tucher, P.J.
_________________________
Rodríguez, J.
A165058/LR Partners LLC v. Charter Communications Inc. et al.
25