Filed 7/23/13 Premier Patio Heating Specialists v. WestAir Gases & Equipment CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115. 

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

PREMIER PATIO HEATING 

SPECIALISTS, LLC,

Plaintiff, Cross-defendant and

Appellant,

v.

WESTAIR GASES & EQUIPMENT, INC.,

Defendant, Cross-complainant and 

Respondent.

 D058776

 (Super. Ct. No. 37-2008-00093766-

 CU-BC-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, 

Steven R. Denton, Judge. Affirmed.

Sulzner & Associates and Bruce E. Sulzner for Plaintiff, Cross-defendant and 

Appellant.

Higgs Fletcher & Mack, John Morris and James M. Peterson for Defendant, 

Cross-complainant and Respondent.
2

This case involves a dispute over WestAir Gases & Equipment, Inc.'s (WestAir) 

agreement to purchase Premier Patio Heating Specialists, LLC's (Premier) assets. 

Premier contends the judgment in favor of WestAir must be reversed because (1) the trial 

court improperly instructed the jury that it could consider whether WestAir was "honestly 

and genuinely" dissatisfied (i.e., a subjective test) with the condition of certain assets and 

instead should have instructed the jury to consider WestAir's purported dissatisfaction 

based on a "reasonable person" standard (i.e., an objective test), (2) the jury's finding that 

WestAir performed all of its obligations under the contract is not supported by substantial 

evidence, and (3) the jury's finding that WestAir acted in good faith is not supported by 

substantial evidence.

We disagree with Premier's contentions and affirm the judgment in favor of 

WestAir.

FACTUAL AND PROCEDURAL BACKGROUND

Premier, a business owned by Ed Essey and his wife, leased industrial-grade patio 

heaters and other items to restaurants and commercial businesses. WestAir, an industrial 

gas and welding supply company, distributed gases, such as propane and carbon dioxide, 

gas equipment and welding supplies to various businesses including restaurants. Steve 

Castiglione was the president of WestAir.

In 2007, Essey called Castiglione to determine whether Castiglione was interested 

in buying Premier. Castiglione believed the purchase of Premier would allow WestAir to 

expand its business into the propane patio heater business with its own customer base. 

Thus, the parties engaged in negotiations regarding the purchase.
3

In November 2007, Essey prepared a summary of Premier's assets and valued 

them at approximately $1.2 million. The assets included patio heaters, which Essey 

assigned a replacement value of $550 each, several trucks and various equipment. After 

further discussions with Castiglione, Essey agreed to decrease the purchase price to 

approximately $1.1 million by applying an 8.5% discount to his prior valuation.

In February 2008, Castiglione turned over primary responsibility for the potential 

acquisition of Premier to WestAir's industrial sales manager, Chris Owen. Owen and 

other WestAir employees researched Premier's business, took a tour of its facility, 

reviewed Premier's books, financial records, contracts, human resource documents, and 

did an audit of Premier's business operations.

In June 2008, the parties signed a letter of intent (LOI). The LOI provided basic 

terms for the proposed transaction between Premier and WestAir, including that WestAir 

would purchase Premier's assets for $1,096,772. The LOI also allowed for adjustments 

to the purchase price, stating, "The Purchase Price shall be decreased $500 for each patio 

heater that is not in good working order or rent-ready condition. If WestAir determines 

in its sole discretion that the value of any other assets is less than set forth on the [asset 

list prepared by Essey], it shall adjust the Purchase Price to its best estimate of fair 

market value for such assets. [Premier] shall have the option to accept or reject the 

adjusted price for any asset, and if [Premier] reject[s] the adjusted price [it] may retain or 

otherwise dispose of such assets." The LOI further provided that its principal terms 

would be incorporated into an asset purchase agreement (APA) and that both parties 

would agree to "negotiate in good faith and use [their] best efforts to enter into the APA 
4

on or before June 30, 2008." Lastly, the parties included conditions to closing, including 

"[v]erification, to the satisfaction of WestAir regarding . . . [t]he condition of all [a]ssets."

WestAir expected the parties to carry on negotiations after executing the LOI and 

it continued to investigate Premier's assets. In July 2008, Castiglione visited Universal 

Propane to inquire about purchasing replacement Type 2 quick disconnect valves, which 

were the type of valves used on Premier's heaters. Castiglione learned the Type 2 quick 

disconnect valves were outdated and had safety issues, including that they potentially 

caused fires. Castiglione relayed this information to Owen and stated he wanted to adjust 

the purchase price for Premier's assets to approximately $500,000, which Castiglione 

thought was the fair market value.

Working from Essey's asset summary, Owen created a spreadsheet and adjusted 

the price of the assets to approximately $530,000. As part of that adjustment, Owen 

reduced the price of the heaters to $250 each. Owen believed $250 was the fair market 

value of the heaters based upon his observations and information from WestAir's 

beverage division manager that some of Premier's heaters were "beat up." Castiglione 

also observed some of Premier's heaters at various businesses and noticed they were 

"pretty beat up," "dented," and "rusty." Further, Owen stated that Premier's business 

operations did not meet his safety standards and was informed by another WestAir 

employee that some of Premier's assets "looked tired."

Owen called Essey to inquire about the fire hazard associated with the heaters and 

to explain that WestAir wanted to adjust the purchase price. Essey responded by stating 

that he was aware of the potential fire risk and a related lawsuit, but was not concerned 
5

about the valves. Owen confirmed that WestAir was concerned about the safety risks and 

informed Essey that he was going to reduce the purchase price to around $500,000. 

Thereafter, Owen sent Essey a letter stating WestAir was adjusting the purchase price to 

$530,460 "to reflect [its] best estimate [of] the fair market value of the assets." The letter 

further explained the price was adjusted because WestAir could purchase new heaters for 

$368 instead of paying $500 for Premier's used heaters and WestAir was "concerned 

about the risk of the quick disconnect valves [Premier was] using." Lastly, Owen 

reminded Essey that under the terms of the LOI, Premier could accept or reject the 

adjusted price.

Essey did not respond to Owen's letter or subsequent phone calls. Instead, Essey 

asked his attorney to handle the matter. Premier's counsel then informed WestAir that the 

purchase price reduction was not permitted by the LOI and WestAir's reasoning for the 

reduction lacked merit. Accordingly, Premier rejected the price reduction and insisted 

that WestAir complete the transaction according to the terms of the LOI. WestAir 

responded by clarifying how they calculated the reduced purchase price and informing 

Premier that it had prepared an APA. Essey believed the LOI was a binding contract 

requiring WestAir to pay approximately $1.1 million for Premier's assets and thus, 

refused to negotiate further regarding the purchase price.

In October 2008, Premier filed an action against WestAir for breach of contract 

and breach of the implied covenant of good faith and fair dealing. The case was tried 

before a jury in August 2010. The jury returned a verdict in favor of WestAir, finding, 

among other things, that there was a contract between the parties, WestAir did all or 
6

substantially all of the things the contract required it to do, all conditions had occurred 

that required WestAir's performance, and WestAir did not fail to do something required 

by the contract.

DISCUSSION

I. Alleged Instructional Error

A. Additional Background

During the jury instruction conference, the parties disagreed about a special 

instruction relating to the satisfaction clause in the contract. WestAir requested the jury 

be instructed to decide whether it was "honestly and genuinely dissatisfied with the 

condition of the assets and whether it honestly and genuinely adjusted the purchase price 

to its belief of the fair market value for those assets." Premier argued for a 

"reasonableness standard" instead of a "good faith standard" because this was a 

commercial transaction rather than one involving personal taste or fancy. The trial court 

agreed with WestAir, reasoning that the good faith standard was appropriate because the 

language in the contract at issue "reserved to the defendant in this case sole discretion as 

to the value of the assets and conditions related to the condition of the assets as 

inspected."

B. Analysis

Premier argues the trial court improperly instructed the jury that it could consider 

whether WestAir was "honestly and genuinely" dissatisfied (i.e., a subjective test) with 

the condition of certain assets and instead should have instructed the jury to consider 
7

WestAir's purported dissatisfaction based on a "reasonable person" standard (i.e., an 

objective test).

"A party is entitled upon request to correct, nonargumentative instructions on 

every theory of the case advanced by him which is supported by substantial evidence." 

(Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 572.) However, it is the duty of 

counsel for the respective parties to propose complete and correct instructions on all legal 

theories advanced in the case. (See Willden v. Washington Nat. Ins. Co. (1976) 18 Cal.3d 

631, 636.) "Instructions should state rules of law in general terms and should not be 

calculated to amount to an argument to the jury in the guise of a statement of law." 

(Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 

Cal.App.2d 675, 718.) Therefore, our inquiry is whether the special instruction correctly 

and completely stated the law applicable to the satisfaction clause at issue in this case.

"When, as here, a contract provides that the satisfaction of one of the parties is a 

condition precedent to that party's performance, two different tests are recognized: (1) the 

party may make a purely subjective decision but it must be made in good faith; or (2) the 

party must make the decision in accordance with an objective standard of 

reasonableness." (Storek & Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 

Cal.App.4th 44, 58–59 (Storek).) "The choice of objective or subjective test to evaluate a 

promisor's satisfaction depends upon the intent of the parties, as expressed in the 

language of the contract. In the absence of a specific expression in the contract or one 

implied from the subject matter, the preference of the law is for the less arbitrary 

reasonable person standard. [Citations.] The reasonableness test is especially preferable 
8

when factors of commercial value or financial concern are involved, as distinct from 

matters of personal taste." (Id. at pp. 59–60.) "When a promisor has the power under a 

contract to make a purely subjective decision, that decision must be made in 'good faith,' 

but the courts will not examine its 'reasonableness.' " (FEI Enterprises, Inc. v. Yoon 

(2011) 194 Cal.App.4th 790, 800.) "While contracts making the duty of performance of 

one of the parties conditional upon his satisfaction would seem to give him wide latitude 

in avoiding any obligation . . . , such 'satisfaction' clauses have been given effect." 

(Mattei v. Hopper (1958) 51 Cal.2d 119, 122–123.)

Premier contends the objective standard was applicable in this case because 

"Westair's satisfaction was tied to its evaluation of the operative fitness and/or 

mechanical utility of the assets" rather than its fancy, taste or judgment. (Boldface 

omitted.) In making this argument, Premier gives little weight to the language of the 

LOI. Although the preference in the law is generally the objective or "reasonable person 

standard," we must look to the intent of the parties as expressed in their contract. (Storek, 

supra, 100 Cal.App.4th at p. 60.)

The LOI gave WestAir wide latitude in adjusting the purchase price. Specifically, 

it stated, "The Purchase Price shall be decreased $500 for each patio heater that is not in 

good working order or rent-ready condition. If WestAir determines in its sole discretion

that the value of any other assets is less than set forth on the [asset list prepared by 

Essey], it shall adjust the Purchase Price to its best estimate of fair market value for such 

assets." (Italics added.) Further, the parties included conditions to closing, including 

"[v]erification, to the satisfaction of WestAir regarding . . . [t]he condition of all [a]ssets." 
9

(Italics added.) This language demonstrated the parties intended to give WestAir broad 

authority to adjust the purchase price for Premier's assets based on its best estimate of 

their fair market value and to be satisfied with the condition of all assets. Accordingly, 

the parties expressly gave WestAir subjective discretion in this case.

We are also not convinced by Premier's argument that WestAir's exercise of its 

"sole discretion" to adjust the purchase price was limited to assets other than the patio 

heaters. "[L]anguage in a contract must be construed in the context of that instrument as 

a whole, and in the circumstances of that case." (Producers Dairy Delivery Co. v. Sentry 

Ins. Co. (1986) 41 Cal.3d 903, 916, fn. 7.) "The whole of a contract is to be taken 

together, so as to give effect to every part, if reasonably practicable, each clause helping 

to interpret the other." (Civ. Code, § 1641.) Here, although the provision giving WestAir 

sole discretion to adjust the purchase price referenced "any other assets," it also referred 

to the asset list prepared by Essey, which included the patio heaters. Given this language 

and the parties allowing WestAir to verify the condition of all assets to its satisfaction 

before closing, it is clear that the parties intended to give WestAir broad discretion 

including as to the patio heaters. Thus, we reject Premier's argument.

Based on the foregoing, the trial court did not err in instructing the jury on the 

subjective standard as applied to the LOI's satisfaction clause.

II. Substantial Evidence Supported the Jury's Findings

A. Standard of Review

Premier's challenges to the jury's factual findings and conclusions, express or 

implied, are reviewed under the substantial evidence standard of review. (SFPP v. 
10

Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.) Under this 

standard, we review the entire record to determine whether there is substantial evidence 

supporting the jury's factual determinations (Bowers v. Bernards (1984) 150 Cal.App.3d 

870, 873–874), viewing the evidence and resolving all evidentiary conflicts in favor of 

the prevailing party and indulging all reasonable inferences to uphold the judgment 

(Jordan v. City of Santa Barbara (1996) 46 Cal.App.4th 1245, 1254–1255 (Jordan)). 

The issue is not whether there is evidence in the record to support a different finding, but 

whether there is some evidence that, if believed, would support the findings of the trier of 

fact. (Rupf v. Yan (2000) 85 Cal.App.4th 411, 429–430, fn. 5.) Credibility is an issue of 

fact for the trier of fact to resolve (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28

Cal.App.4th 613, 622) and the testimony of a single witness, even a party, is sufficient to 

provide substantial evidence to support a factual finding (In re Marriage of Mix (1975) 

14 Cal.3d 604, 614). 

B. WestAir's Performance

Premier argues the jury's finding that WestAir performed all or substantially all of 

its obligations under the LOI is not supported by substantial evidence. Specifically, 

Premier contends WestAir failed to meet its obligations under the LOI because WestAir 

did not provide Premier with "information about the adjusted fair market value of any 

specific assets." Premier's argument is unavailing.

In making its argument, Premier focuses on Owen's testimony that he prepared a 

spreadsheet with adjusted asset values to determine the new purchase price for Premier's 

assets. Premier describes the spreadsheet as " 'phantom' documentation" and contends 
11

Owens testimony about the creation of the spreadsheet was contrary to his deposition 

testimony in which he stated he did not have any documentation on how he arrived at the 

adjusted price of $530,460. Owen's deposition testimony was presented to the jury and 

we presume the jury considered it. Weaknesses, conflicts, and inconsistencies in the 

evidence were for the jury to evaluate and our task on appeal is to determine whether any 

reasonable trier of fact could have reached the same conclusion as the jury did. Premier's 

citation to evidence from which a jury could have drawn a different conclusion is nothing 

more than an invitation to reweigh the credibility of the witnesses, something we cannot 

do in assessing the sufficiency of evidence.

Further, Premier ignores other evidence in the record from which the jury could 

reasonably conclude WestAir complied with its obligation to provide its best estimate of 

the fair market value of the assets to Premier. Notably, Owen sent Essey a letter stating 

WestAir was adjusting the purchase price to $530,460 "to reflect [its] best estimate [of] 

the fair market value of the assets." Thereafter, WestAir's counsel clarified how WestAir 

calculated the reduced purchase price. Further, when presented with his deposition 

testimony, Owen stated he worked with Premier on everything during the negotiations 

and "it was pretty much open." Based on this evidence, the jury could have reasonably 

concluded WestAir did all or substantially all of the things it was required to do under the 

LOI. Accordingly, we decline to reweigh the evidence and credibility of the witnesses 

and overturn the jury's verdict.
12

C. Good Faith

Premier argues the jury's finding that WestAir acted in good faith is not supported 

by substantial evidence. We disagree.

In making its argument, Premier focuses on the absence of evidence showing 

WestAir consulted with outside sources to determine the fair market value of Premier's 

assets. However, the LOI did not require WestAir to consult with outside sources for its 

asset valuation. Rather, the LOI allowed WestAir to adjust the price based on "its best 

estimate of fair market value" and verify the condition of the assets to "[its] satisfaction." 

(Italics added.) Regardless, WestAir did consult with Universal Propane about the quick 

disconnect valves and learned they were outdated and had safety issues. WestAir also 

compared the price of Premier's heaters to new Teeco heaters, which they could purchase 

for $368.

Further, Premier ignores other evidence demonstrating WestAir acted in good 

faith. Notably, Owen testified he attempted to negotiate and act in good faith at all times 

with Essey. After Owen sent Essey a letter indicating the reduced purchase price, he 

called Essey numerous times and did not get a response. Castiglione also testified he 

believed the LOI permitted WestAir to "do its due diligence and investigate all of the 

parts of [Premier's] business." Castiglione went on to state he believed "in good faith" 

that the value of Premier's assets was only approximately $500,000 and he would have 

continued discussions if Essey would have returned WestAir's calls. Arguably, Premier 

thwarted WestAir's ability to continue negotiations and provide further explanation 

regarding the adjusted purchase price.
13

Premier is again asking us to reweigh the evidence in its favor. However, we must 

review the entire record, viewing the evidence and resolving all evidentiary conflicts in 

favor of WestAir and indulging all reasonable inferences to uphold the judgment. 

(Jordan, supra, 46 Cal.App.4th at pp. 1254–1255.) Based on the evidence presented at 

trial, a reasonable jury could conclude WestAir acted in good faith and we will not 

disturb that finding on appeal.

DISPOSITION

The judgment is affirmed. WestAir is entitled to its costs on appeal.

MCINTYRE, Acting P. J.

WE CONCUR:

O'ROURKE, J.

IRION, J.