Filed 5/22/13 Starpoint USA v. Daewoo Motor CA2/7 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

STARPOINT USA, INC.
Cross-Complainant and Appellant,

v.

DAEWOO MOTOR CO MPANY, LTD.
Cross-Defendant and Respondent. No. B234891
(Los Angeles County Super. Ct. No. TC017448)

APPEAL from a judgment of the Superior Court of Los Angeles County, Cesar C. Sarmiento, Judge. Reversed a nd remanded for further proceedings. Duane Morris, William J. Baron, Colleen A. Cassidy and Cyndie M. Chang for Cross-Complainant and Appellant. Lee, Hong, Degerman, Kang & Waimey, La rry R. Schmadeka, Eric D. Olson and Nilam J. Patel for Cross-Defendant and Respondent.

_____________ _____________2 INTRODUCTION

Starpoint USA filed a breach of contra ct action alleging that Daewoo Motor Company was required to reimburse legal fe es incurred in enforcing two indemnity agreements. Prior to trial, the court ru led that Starpoint could introduce extrinsic evidence to aid in the interpre tation of the agreements. The jury reached a verdict finding that the parties intended the agreements to require Daewoo to reimburse Starpoint’s
claimed costs.
Daewoo filed a motion for new trial a nd a motion for judgment notwithstanding the verdict arguing that: (1) Starpoint had fa iled to introduce any competent extrinsic evidence in support of its interpretation of th e agreement; (2) under the plain language of the agreement, Starpoint was not entitled to attorney’s fees incu rred in an action to enforce the agreement. The trial court granted both mo tions. We reverse the court’s order granting judgment notwithstanding the verdict and affirm its order granting a new
trial.

FACTUAL AND PROCEDUR AL BACKGROUND

A. Starpoint’s Complaint
In 1997, Daewoo Motor Company (Daewoo) established Daewoo Motor America (DMA) to distribute Daewoo ve hicles in the United States. On April 11, 2000, Daewoo
and DMA included a written in demnity agreement in an au dit letter which stated: “[Daewoo] has agreed to reimburse [DMA] for all prod uct liability expenses, including fees and disbursements to legal counsel, experts, judgments, settlement amounts not covered by the insurance policies, and all other costs normally associated with the defense of product liability litig ation relating to vehicles and parts purchased by DMA from [Daewoo].” DMA’s accountant, KPMG, prep ared the audit letter, which was then signed by Daewoo. In April of 2003, KPMG prepared a second audit letter stating, in relevant part: ““[Daewoo] has agreed to indemnify and hold harmless [DMA] from any claim, demand,3 or legal proceedings (including legal fees, co sts and expenses related thereto) involving allegations of . . . bodily injury, or proper ty damage allegedly caused by a defect in design, manufacture or assembly of [Daewoo] products or components thereof.” Daewoo signed the letter on April 18, 2003. Shortly thereafter, Michelle Bandy was injured while driving a Daewoo vehicle and filed a product liability action against Daewoo and DMA’s successor in interest, Starpoint USA. Starpoint filed a cross-comp laint alleging that that the audit letter agreements required Daewoo to indemnify all co sts related to the Bandy Action. In June of 2005, Daewoo settled the Bandy action on behalf of all parties in the chain of distribution, including Starpoint. Starpoint, however, proceeded with its cross-complaint, asserting that Daewoo had
breached the 2000 and 2003 lette r agreements by failing to re imburse: (1) legal expenses Starpoint incurred in the Ba ndy action prior to settlement ; and (2) legal expenses Starpoint incurred in enforcing the indemnity provisions against Daewoo. Starpoint also alleged that Daewoo’s actions constituted a brea ch of the implied cove nant of good faith and fair dealing. During pretrial proceedings, the partie s disputed the meaning of the letter agreements and whether extrinsi c evidence was necessa ry to aid in their interpretation. Starpoint asserted that language in the ag reements requiring Daewoo to indemnify “all legal costs” related to a product liability claim necessarily included attorney’s fees incurred in enforcing Starpoint’s underlying indemnity rights. Alternatively, Starpoint argued that the court “should at least find that there is an ambiguity ” as to whether the agreements were intended to require reim bursement of enforcement costs and “admit extrinsic evidence to clarify th e ambiguity.” It further contended that the court should “permit the jury” to re solve the ambiguity. Daewoo, however, argued that “the une quivocal language of the Audit Letters” precluded Starpoint from recovering “attorneys fe es and costs incurred in the prosecution of its indemnity claims.” Daewoo further argue d that, to the extent any “uncertainties or ambiguity existe[d],” Starpoint had failed to identify any extrinsic ev idence “of any intent4 or formation that would assist in determin ing the meaning of the purported terms in the Audit Letters . . . . As such, the Court must look [only] at the four corners of the
document.” At a pretrial hearing, the court ruled that “there [was] ambiguity ” as to whether the agreements required Daewoo to reimburse enforcement costs and that a jury should
resolve the issue: “I think ther e is extrinsic evidence necessary to what is the intent of the parties on this issue regarding i ndemnity and attorneys fees. So I think that is what this trial is about, and that’s where we have th e disagreement. That’s where the ambiguity begins.”

B. Trial and Verdict
1. Witness testimony At trial, Starpoint called two witne sses who provided testimony regarding the intended meaning of the lette r agreements: Yeong Soo Hong, who was Starpoint’s president and former chief financial officer, and Agnes Cha, who serv ed as an in-house attorney. On direct examination, Hong testified that the audit letters were intended to confirm that Starpoint did not need to set aside reserves fo r product liability exposure in their annual financial statements. Hong alle ged that he directed Starpoint’s accountant, KPMG, to draft the letters in a manner that would require D aewoo to reimburse all costs incurred in either defending a product liability action or enforcing the terms of the agreements. Hong further stat ed that, after KPMG drafted th e letters, he sent them to Daewoo for signature. On cross-examination, defense counsel asked Hong whether he had any conversations with Daewoo regard ing the meaning of the letters: COUNSEL: You did not have any discu ssions with [Daewoo] regarding this letter other than to si gn it, is that right?
HONG: As you can see, the letter is more than ten years old. When such a letter was sent, we did have a mutual un derstanding about the product liability as5 to who is responsible, so the party who is sending and the pa rty who is receiving has sufficient understandi ng as to the liability.
COUNSEL: Motion to strike, your honor.

COURT: Hold on. Overruled. Ask your next question, please.
COUNSEL: What I am asking you is, when this was sent to [Daewoo] in Korea, did you pick up the phone a nd talk to someone at [Daewoo] about the terms in the letter?
HONG: Like I said, when I was sending the letter, I told th em that, ‘A letter is being sent to you.’ But I don’t reme mber as to whether or not I discussed content of this letter with someone else.
COUNSEL: The best of your recollecti on, you only told them it was coming, ‘Please sign it and return it’?
HONG: I just told you that I cannot quite recall.
Hong also reiterated his view that the le tter agreements were intended to include reimbursement of expenses incurred in both “defending” any prod uct liability claim and “in making demands or prosecutin g the claim if [Daewoo] didn’ t pay it.” In response to this assertion, defense counse l asked Hong why he believed the text of the agreements required reimbursement of enforcement costs. Hong provided three reasons. First, he
said it was “common sense” that the manufac turer would “pay the product liability 100 percent.” Second, he asserted that if Starpoint did not believe it was entitled to costs incurred in enforcing the agr eement, KPMG would have “m andated” that the company
list “a reserve asset for that” in the annual financial statements . Third, Hong stated that the agreements referenced “‘all other costs normally associated with the defense of a product liability litigation.’”
At the conclusion of the cross-examinati on, defense counsel inquired again as to whether Hong had any “conversation with . . . Daewoo” regarding the “meaning or interpretation” of the language in the audit letters. Hong responded: “Since this is the6 common understanding as to the content of this letter, I don’t ha ve any recollection speaking.” On re-direct examination, Starpoint’s attorney aske d Hong to clarify his prior statements regarding his co mmunications with Daewoo:

STARPOINT COUNSEL: [Defense coun sel] asked you wh ether you had a specific conversation about these letter ag reements with someone at [Daewoo], and I believe your response was that you did not have a spec ific conversation about the letter agreements with [Daewoo] when you were sending this letter because you had conversations prior to the time you sent the letters, correct?
DAEWOO COUNSEL: Obje ction. Leading,

THE COURT: Overruled. You can answer.
HONG: Yes, that is correct.

STARPOINT COUNSEL: And the bottom line is that [Daewoo] . . . agreed to reimburse you a hundred percent rela ting to product liability expenses.
HONG: Yes, that is correct.

STARPOINT COUNSEL: Includ ing legal fees for defending and including legal fees for going after them if they don’t pay?

HONG: Correct. It woul d include all the expenses.

Finally, on re-cross examination, de fense counsel asked Hong: “Is it your testimony that you had a specific conversati on with people at [Daewoo] prior to the letters in which [Daewoo] specifically sa id that they would agree to pay you reimbursement for expenses, legal expens es, incurred in going after [Daewoo] for product liability expenses?” Hong responded: “I told you already that product liability responsibility would be borne by the manufactu rer a hundred percent, and this is common knowledge between the parties, and there is no reason for [D aewoo] not to pay [Starpoint] the expenses that were incurred. So when ha ve a conversation between the parent company and subsidiary company, you will not list each and every case.”7 Starpoint’s second witness, Agnes Cha, acknowledged on cross-examination that the audit letters did not contain any “express language” regarding enforcement costs. She also admitted that Starpoint’s predecessor, DMA, had entered into agreements with other third parties that did have language “specifica lly . . . say[ing] that ‘attorney’s fees are
recoverable in the enforcement of th e rights of this agreement.’” On re-direct examination, however, Cha testified that the intent of the letter agreements were to ensure that Starpoint r ecovered “100%” of its product liability costs, including any attorney’s fees incurred in enforcing the agreem ents. She also stated that,
in the absence of the letter agreements, she “th[ought]” St arpoint would “have to put a provision in the financial statement for exposu re to legal fees for products liability.” Daewoo did not call any w itnesses to rebut the testimony of Hong or Cha. In closing argument, however, defense counsel ar gued that neither audit letter contained “a promise to reimburse [Starpoint’s] attorney’s fees should they attempt to enforce this agreement.” Counsel also argued that Starpoin t could have included such language, as it had done in contracts with other parties. Finally, counsel reminded the jury that Hong had “no specific recollection of ever talking to [Daewoo]” about the meaning of the letter agreements.

2. Jury verdict In a special verdict form , the jury made the followi ng findings: (1) the letter agreements required Daewoo to “pay all le gal expenses” that Starpoint incurred in defending the Bandy action; (2) the letter agreements required Daewoo to “indemnify Starpoint . . . for all attorney’s fees and le gal expenses incurred to enforce or prosecute the terms of the [agreements]”; (3) Starpoint had substantially complied with all of its obligations under the agreements; and (4) Daewoo had “unfairly interfere[d] with Starpoint[’s] . . . rights to receive the benef its of the contract.” The jury awarded damages to Starpoint of $57,667.28 for its legal expenses in the Bandy action. On September 24, 2010, the court en tered a judgment awarding Starpoint $57,667.28 for “attorney’s fees and legal ex penses in the underlying product liability8 action, plus prejudgment interest and post judgment interest.” The judgment further stated that the amount of Starpoint’s of rec overy for “attorneys’ fees and legal expenses incurred to enforce or prosec ute the terms of the indemn ity letter agreement against [Daewoo]” would “be determined at a later hearing . . . by the Court.”

C. Post-trial motions
1. Daewoo’s motion for judgment notwith standing the verdict and motion for new trial After the judgment was entered, Da ewoo filed a motion for judgment notwithstanding the verdict (JNOV motion) and a motion for new trial challenging the portion of the verdict finding that it was requi red to reimburse Starpoint for legal costs incurred in enforcing the indemnity agreemen ts. In the JNOV moti on, Daewoo argued – as it had before trial – that the plain la nguage of the letter agreements “show[ed] conclusively, and as a matter of law, that Starpoint had no righ ts of indemnification as to
an action to enforce the contract.” Altern atively, Daewoo argued that Starpoint had failed to introduce any extrinsi c evidence “from which the jury could find that the intent of the parties was to extend the indemnity pr ovision language used to indemnifying for enforcing the contracts terms.” According to Daewoo, Starpoint’s witnesses had merely provided their subjective belief as to th e meaning of the agreements, which was “irrelevant in determining the reasonable meanin g of the words and acts of the parties.” Daewoo contended that these same arguments applied to Starpoint’s claim for breach of the implied covenant of go od faith and fair dealing.
Daewoo’s motion for a new trial raised si milar arguments, asserting that the trial court committed legal error when it permitted St arpoint to introduce pa rol evidence to aid in the interpretation of the ag reements. Daewoo also argued that the court should permit a new trial because the “[t]he weight of th e evidence [wa]s agains t the finding that the audit letters provided for recove ry of attorneys fees and costs in an action to enforce their provision.” According to Daewoo, Starpoint’s trial evidence was “limited to self-serving expressions of [its] own subjective intent at the time of the drafting of the letters by its9 own auditors. Starpoint presented no evid ence, however, that such intent was ever communicated to [Daewoo] and that [Daew oo] had concurred with Starpoint thus resulting in a meeting of the minds.” Daewoo argued that these same arguments applied to the jury’s finding on the implied covenant claim: “giv en the insuffici ency of the
evidence to establish that th e Audit Letters indemnified Starpoint for an action on the contract, it follows that the ev idence is insufficient to estab lish that [Daewoo] deprived Starpoint of the supposed benefits of the cont ract and thus breached the implied covenant of good faith and fair dealing.” 1 In opposition, Starpoint argued that: (1) th e court had already ruled that the letter agreements were ambiguous as to whethe r Daewoo was required to reimburse costs
incurred to enforce the agreements; and (2) the extrinsic ev idence at trial was sufficient to support the jury’s finding that th e parties intended the agreements to extend to such costs. In support of its second point, Starpoint cont ended that Hong had “offered . . . testimony” showing that “both [Daewoo] and Starpoint were fully aware that [Daewoo] would indemnify and reimburse all legal expenses relating to litigation involving Daewoo automobiles.” The only extrin sic evidence Starpoint cite d was testimony in which Hong stated that: (1) the parties ha d a “mutual understanding . . . as to the pr oduct liability [issue]”; and (2) if Starpoint did not believe the letter agreements required reimbursement of enforcement costs, its fina ncial statements would have included a reserve for those

costs.

1 Daewoo’s motion also argued that it was entitled to a new trial because the court had erred in instructing the jury and by re fusing to admit findings and judgments entered in a related bankruptcy proceeding.10 2. The trial court’s order granting Daewoo’ s motions for JNOV and new trial After a hearing, the court entered a wr itten order granting both of Daewoo’s
motions. The order addressed the motion for ne w trial first, explaining that Starpoint had failed to provide any “competent” extrinsic evidence regarding the intended meaning of the letter agreements: “[T]he testimony of Mr. Hong and Ms. Cha is not competent parol evidence. Mr. Hong testified that he sent the Letter Agreements to [Daewoo] and asked them to sign and return the letters. [Citati on.] Mr. Hong did not recall whether there were any discussions regardin g the terms of the agreement prior to its execution. [Citation.] Thus, Mr. Hong’s testimony did not provide any evidence of circumstances communicating [Starpoint’s] subjective intent or negotiations between the parties that supports [Starpoint’s] interpretation of th e agreement. The testimony of Ms. Cha is similarly deficient. Ms. Cha was not a party to the negotiations or execution of the Letter Agreements, but had merely gained her knowle dge from review of the agreements and its context. [Citation.] Evidence of the undi sclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language. [Citation.] Thus, [Starpoint] did not produce an y competent parol evidence that supports its interpretation that the Letter Agreements were intended to include attorney’s fee in an action to enforce the contract. Interpretation of the Letter Ag reements is therefore a matter of law.” The court further concluded that, beca use Starpoint failed to introduce any competent extrinsic ev idence, it was required to interp ret the letter agreements based solely on their language. The court noted that, under the relevant case law, “an indemnitee [ordinarily] may not recovery [ sic ] attorney’s fees in curred to enforce the indemnity agreement unless the indemnity agreement expressly or impliedly provides for an award of such fees. It is also the general rule that the inclusion of attorney fees as an item of loss in a third-party claim-indemnity provision does not constitute a provision for the award of attorney fees in an action to enforce the indemnity contract. [Citation.]” The court ruled that, here, the parties’ letter agreements did not contain any language “indicat[ing] an intent to award a ttorney’s fees in an action to enforce the agreement. Rather, the Aud it Letters merely state the obligation of [Daewoo] to11 indemnify [Daewoo] for third-party products liability claims and breach of warranty claims. Moreover, neither Letter Agreem ent even makes any reference to the consequences of an action to enforce the cont ract. Thus, attorneys fees for enforcement of the agreement was not contemplated by th e parties and are outside the scope of the Letter Agreements.” The court granted Daewoo’s motion for JNOV on the same grounds, stating: “[Daewoo] argues that it is entitl ed to judgment notwithstanding the verdict because . . . [¶] there was no substantial evidence that Star point communicated an intent to have the
audit letter extend the indemnit y for enforcement and that [Daewoo] concurred with any such intent. The court agrees. As discussed above . . . in . . . the motion for new trial, Starpoint did not present any competent parol evidence to support its interpretation of the contract. A party’s unexpressed subjective inte nt may not be considered in interpreting the contract. Accordingly, the motion fo r [JNOV] on this ground is [granted].”

3. Starpoint’s motions for reconsidera tion and to set aside the judgment Following the entry of the court’ s order, Starpoint filed a motion for
reconsideration and motion to set aside th e judgment asserting that “the extrinsic evidence presented at trial supp orts Starpoint’s interpretation that the Letter Agreements provide for payment of enforcem ent costs. The evidence supp orts the jury’s verdict in Starpoint’s favor on this issue, and compel s a denial of [Daewoo’s] JNOV motion and its motion for new trial.” Although Starpoint’s mo tions essentially repeated the arguments it had made in opposition to Daewoo’s moti ons for JNOV and new trial, Starpoint
submitted additional trial testim ony in support of its position. In particular, Starpoint highlighted testimony in which Hong stated th at he had “conversations with Daewoo prior to . . . sen[ding] the letters” and that Daewoo had agreed to reimburse both “legal fees for defending and including legal fees fo r going after them if they d[id]n’t pay.” In addition, Starpoint cited testimony in which Hong and Cha stated that if the letter agreements were not in tended to require reimbursement of legal costs incurred in enforcement, KPMG would have mandated that Starpoint set aside a reserve for such12 costs in its annual financial statements. H ong also testified that Daewoo reviewed and approved the financial statements, and theref ore was aware that Starpoint was not setting
aside reserves for future enforcement costs. The trial court denied the motions, explai ning: “In essence, Starpoint argues that the evidence of the parties’ in tent was sufficient to support the jury ’s finding in the special verdict. However, this again rest s on whether or not th e testimony of Mr. Hong and Ms. Cha were competent parol evidence. Starpoint again argues that there was a dispute regarding extrinsic facts and that th e trial testimony of Mr. Hong and Ms. Cha state that they communicated their understanding that th e agreement provides for enforcement costs. [¶] Howe ver, as this Court has alrea dy explained, the testimony of Mr. Hong and Ms. Cha do not co nstitute competent parol evid ence. [¶] . . . [¶] The citations to the testimony of Mr. Hong c ited by Starpoint in its moving papers do not compel a different result. Mr. Hong simply stating that the parties had a mutual understanding is insufficient. None of M r. Hong’s testimony cited in the motion shows that Mr. Hong communicated his intent in entering into the agr eement nor do they support Starpoint’s interpre tation of the agreement.” On June 29, 2011, the court entered a “Judgment on Special Verdict and Pursuant to Rulings in Favor of [D aewoo] for its Motion for Judg ment Notwithstanding the Verdict and Motion for New Trial.” The judg ment affirmed the portion of the special verdict requiring Daewoo “to pay the sum of $57,667.28 for Starpoint’s attorney’s fees and legal expenses in the u nderlying product liability acti on.” The judgment further stated that, “[p]ursuant to the court’s ruling [granting D aewoo’s] Motion for Judgment Notwithstanding the Verdict and . . . Motion for New Trial, . . . it is hereby adjudged . . .[that] Starpoint shall take nothing on its cl aim that . . . [Daewoo] breached the contract with respect to recovery of Attorney Fees and costs in St arpoint’s action to enforce the contract; and Starpoint take nothing on its claim that [Daewoo] breached contractually the implied covenant of good faith and fair de aling.” Starpoint filed a timely appeal of the trial court’s order granting Daewoo’s mo tions for new trial and JNOV and the portion of the judgment reflecting those rulings.13 DISCUSSION

Starpoint argues that we must reverse the trial court’s order granting a JNOV and new trial because the jury’s finding that th e parties intended the letter agreements to require Daewoo to reimburse “attorney’s fees and legal expenses incurred to enforce or prosecute the terms of the [agreements]” wa s supported by substantial evidence. As discussed in more detail below, Starpoint doe s not challenge the trial court’s ruling that, in the absence of competent ex trinsic evidence clarifying the parties’ intent, the language of the letter agreements would not require Da ewoo to reimburse enforcement costs. It asserts, however, that the trial court erred in concluding that the extrin sic evidence at trial was insufficient to suppor t the jury’s interpretation of the contract. Because an order granting a motion for JNOV and an order granting a motion for new trial are subject to significantly different standards of review, we address the trial court’s grant of each motion separately.

A. The Trial Court Erred in Granti ng Daewoo’s Motio n for Judgment Notwithstanding the Verdict

1. Legal standards applicable to a judg ment notwithstanding the verdict “‘“The trial judge’s power to grant a judgment notwithstanding the verdict is identical to his power to grant a directed verdict [citations.]. The trial judge cannot reweigh the evidence [citation], or judge the credibility of w itnesses. [Citation.] If the evidence is conflicting or if several reasonabl e inferences may be drawn, the motion for judgment notwithstanding the verdict should be denied. [Citations.] ‘A motion for judgment notwithstanding the verd ict of a jury may properly be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict,
that there is no substantial ev idence to support the verdict. If there is any substantial evidence, or reasonable inferen ces to be drawn therefrom, in support of the verdict, the motion should be denied.’ [Citation.]”’ [Citation.]” ( Sole Energy Co. v. Petrominerals Corp . (2005) 128 Cal.App. 4th 212, 226-227 ( Sole Energy ).)14 “‘In passing upon the propriety of a judgment notwithstanding the verdict, appellate courts view the evidence in the li ght most favorable to the party who obtained the verdict and against the party to whom th e judgment notwithstan ding the verdict was awarded. [Citations.] In othe r words, we apply the substantia l evidence test to the jury verdict, ignoring the ju dgment.’ [Citation.]” ( Sole Energy, supra, 128 Cal.App.4th at p. 227.) If, however, the “appeal challenging the denial of the motion for judgment notwithstanding the verdict raises purely lega l questions, . . . our review is de novo. [Citation.]” ( Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1138 ( Wolf ).)

2. The trial court did not err in permitti ng Starpoint to introduce extrinsic evidence of the parties’ intent Before assessing whether substantial evid ence supported the jury’s findings, we
first address Daewoo’s assertion that we shou ld affirm the JNOV because, as a matter of law, the letter agreements cannot be reasona bly interpreted to require reimbursement of attorney’s fees incurred in enforcing the agreem ents. Prior to trial, the court ruled that the letter agreements were ambiguous on this issue and permitted Starpoint to introduce extrinsic evidence regarding “the intent of th e parties.” Daewoo, however, contends that
the trial court should have ne ver permitted the trial to hear any extrinsic evidence because the agreements unambiguously preclude Starpoi nt from recovering en forcement costs. A court must interpret a contract to give e ffect to the mutual intent of the parties at the time the contract was formed. (Civ. Code , § 1636.) “Ordinarily , the objective intent of the contracting parties is a legal questio n determined solely by reference to the contract’s terms. (Civ. Code, § 1639 [‘[w]h en a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible . . .’]; Civ. Code, § 1638 [the ‘language of a contract is to govern its in terpretation . . .’].) [¶] The court generally may not consider extrinsic eviden ce . . . to vary or contradict the clear and unambiguous terms of a written . . . contract . [Citations.] Extrinsic evidence is15 admissible, however, to interp ret an agreement wh en a material term is ambiguous. [Citations.]” ( Wolf, supra , 162 Cal.App.4th at p. 1126.) “The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meani ng to which the language is ‘reasonably susceptible.’ [Citation.]” ( Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 ( Winet ).) As explained by the California Supreme Cour t: “Although extrinsi c 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. The fact that the terms of an instrument appear clear to a judge does not preclud e the possibility that the par ties chose the language of the instrument to express different terms. That possibility . . . exists whenever the parties’ understanding of the words used may have differed from the judge’s understanding.” ( Pacific Gas & E. Co. v. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 39-40.)
“The decision whether to ad mit parol evidence involves a two-step process. First, the court provisionally recei ves (without actually admitti ng) all credible evidence concerning the parties’ intentions to determ ine ‘ambiguity,’ i.e., whether the language is ‘reasonably susceptible’ to the interpretation urge d by a party. If in light of the extrinsic evidence the court decides the language is ‘re asonably susceptible’ to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step – interpreting the contract.” ( Winet, supra, 4 Cal.App.4th at p. 1165.) In this case, the court concluded that the letter agreements were reasonably sus ceptible to the interpretation set forth by Starpoint and permitted ex trinsic evidence. We agree that that the letter agreements are ambiguous as to whether the parties intended to require Daewoo to reimburse a ttorney’s fees incurre d in enforcing the agreements. The April 2000 le tter states, in relevant part, that Daewoo “has agreed to reimburse all product liability expenses, in cluding fees and disbursements to legal counsel . . . relating to vehicles and part s purchased by [DMA] from [Daewoo].” The phrase “all product liability expenses, includi ng . . . disbursements to legal counsel”16 might be reasonably construed as extending to legal fees incurred to enforce the agreement. Such costs woul d not have been incurred but for a product liability claim, and therefore might be reasonably character ized as a “product liability expense.” Moreover, the April 2000 letter agreement contai ns no language that expressly precludes the award of legal fees incurre d in enforcing the agreement. The April 2003 letter contains similar la nguage stating, in relevant part, that Daewoo “has agreed to indemnify . . . [DMA ] from any claim . . . (including legal fees, costs, and expense related thereto) involving a llegations of . . . bodily injury or property damages allegedly caused by . . . [Daewoo] prod ucts.” Again, the language requiring Daewoo to indemnify all “legal fees, costs and expenses” “r elated” to a product liability claim might be reasonably construed as in cluding legal expenses Starpoint incurred in enforcing Daewoo’s indemnity ob ligations. Such expenses were ultimately incurred as a result of a product liability claim and were therefore arguably “related” to the product liability claim. Moreover, as with April 20 00 letter, the April 2003 letter contains no language that expressly precludes the reimbursement of such fees. Daewoo, however, contends that seve ral cases have considered indemnity agreements with similar language and conclude d that they did not require reimbursement of attorney’s fees incu rred to enforce the agreem ents. For example, in Carr Business Enterprises, Inc. v. City of Chowchilla (2008) 166 Cal.App.4th 14 ( Carr ), the parties disputed whether the following provisions extended to legal expenses incurred in enforcing the agreement: “[Ca rr] shall indemnify and hold harmless [Chowchilla] . . . from and against all claims, damages, losses a nd expenses including attorney fees arising out of the performance of the work described herein . . .” ( Id . at p. 19.) The court concluded that although, “[a]t first glance, th e language . . . seem[ed] to extend beyond [costs associated with the] third-party clai ms[,] . . . relevant case authority suggest[ed]” the agreement could not be read so broadly. ( Id . at p. 20.)
The court reviewed three cases – Myers Building Industries, Ltd. v. Interface Technology, Inc . (1993) 13 Cal.App.4th 949 ( Myers ), Meininger v. Larwin–Northern California, Inc . (1976) 63 Cal.App.3d 82 ( Meininger ) and Campbell v. Scripps Bank17 (2000) 78 Cal.App.4th 1328 ( Campbell ) – that considered whether an indemnification agreement requiring reimbursement of legal fees “arising out of” or “related to” the performance of certain duties extended to legal fees incurred in enforcing the agreement. (See Myers, supra, 13 Cal.App.4th at pp. 963-964 [i ndemnifying “all claims . . . and expenses, including . . . attorney’s fees, arisi ng out of . . . the perfo rmance of the Work”]; Meininger, supra, 63 Cal.App.3d at p. 84 [indemnifying “any . . . claims . . . , including counsel or attorneys’ fees . . . which may arise directly or indirectly from the performance of this Contract’]; Campbell, supra, 78 Cal.App.4th at p. 1336 [indemnifying “claims, . . . including . . . reasonable attorn eys fees . . . which arise . . . from . . . or relate to this escrow”].) In all three deci sions, the courts concluded that the agreements did not “allow[] recovery of [enforcement] fees.” ( Carr, supra, 166 Cal.App.4th at pp. 21-22.)
The Carr court contrasted those decisions with Baldwin Builders v. Coast Plastering Corp . (2005) 125 Cal.App.4th 1339 and Continental Heller Corp. v. Amtech Mechanical Services, Inc . (1997) 53 Cal.App.4th 500, which ru led that such fees were recoverable where the contract included express language fo r “‘“attorney’s fees incurred in enforcing [the] indemnity agreement.”’ [Citation.]” ( Carr, supra, 166 Cal.App.4th at p. 23.)
The Carr court concluded that that the langua ge of the indemnity provision under consideration “more closely para llel[ed] the language found in Myers, Meininger, and Campbell , than the langua ge examined in Baldwin and Continental . Unlike in Baldwin
, there is no express language authorizing recove ry of fees in an action to enforce the contract.” ( Carr, supra , 166 Cal.App.4th at p. 23.)
Daewoo asserts that Carr is the latest in “a long lin e of established authorities holding that,” in the absence of language ex pressly authorizing recovery of fees in an action to enforce the contract, “standard thir d party indemnity language . . . may not be construed to grant any right to recover attorn ey fees incurred in th e enforcement of the indemnity agreement.” Although Starpoint acknowledges that the contractual language at issue in Carr , Myers , Meininger and Campbell cannot be meaningfully distinguished from the language in the letter agreements here, it correctly asserts that in none of those decisions did the18 parties submit extrinsic eviden ce. Moreover, none of the decisions addressed whether
extrinsic evidence could have been properly admitted to aid in the interpretation of the agreements. Thus, the limited issue decided in those cases was whether the language of the indemnity agreements, considered without the benefit of extrinsic evidence, were properly interpreted as requiring reimbur sement of fees incu rred to enforce the agreement. The issue here, however, is whether the letter agreements were “reasonably susceptible” to such an interpretation, thereby supp orting the admission of extrinsic
evidence. For the reasons explained ab ove, we conclude that the letter agreements were at least reasonably susceptible to Starpoint’s inte rpretation. The trial court’s admission of extrinsic evidence was therefore proper.

3. Starpoint introduced substantial ev idence that the parties intended the letter agreements to include reim bursement of enforcement costs The court granted Daewoo’s motion for JNOV because it concluded that Starpoint failed to introduce any “compet ent” extrinsic evidence rega rding the parties’ intended meaning of the letter agreements. (See City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 37 5, 395 [interpretation of a written contract is “solely a judicial function . . . when a determinati on was made based on incompetent [extrinsic] evidence. [Citation.]”].) In pa rticular, the court concluded th at Starpoint’s witnesses had merely described their own subjective unders tanding of the letter agreements without offering any evidence that they had “communicat[ed]” this intent to Daewoo. According to the court, Starpoint’s President, Yeong Soo Hong, testimony showed only that: (1) he had sent Daewoo the letter agreements for si gnature; and (2) he could not recall whether he had any discussions with Daewoo regarding the meaning of the letters prior to their
execution. The court concluded that none of the other witnesses provided any testimony
related to discussions with Daewoo. Starpoint does not dispute that “‘[e]viden ce of the undisclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language.’” ( Salehi v.19 Surfside III Condomin ium Owners’ Assn. (2011) 200 Cal.Ap p.4th 1146, 1159 ( Salehi ) [“‘[e]vidence of the undisclosed subjective in tent of the parties is irrelevant to determining the meaning of contractual language’”]; Winet, supra, 4 Cal.App.4th at p. 1165, n. 3 [witness’s “testimony as to wh at he subjectively understood and intended the [contract] to encompass . . . was not competent extrinsi c evidence, because evidence of the undisclosed subjective intent of the par ties is irrelevant to determining the meaning of contractual language”].) It argues, howe ver, that it presented substantial evidence from which the jury could re asonably infer that Hong did in fact communicate his understanding of the letter agreements to Daewoo and that Daewoo shared his understanding. We agree. “The testimony of a single witness, ev en a party, is sufficient to provide substantial evidence to support a factual finding.” ( Fariba v. Dealer Services Corp. (2009) 178 Cal.App.4th 156, 171.) At trial, Hong testified th at, when he sent the letters the Daewoo, the parties “ha[ d] a mutual understanding” that Daewoo was required to reimburse any legal costs incurred in enforcing the agreements. Hong also testified that: (1) he had conversations with Daewoo about the letter agreements before they were signed; and (2) Daewoo specifi cally “agreed to reimburse . . . a hundred percent relating to product liability expenses,” which included both “legal fees for de fending and . . . legal fees for going after them if they don’t pay.” Under the “highly deferential” substantial evidence standard ( Hub City Solid Waste Services, Inc. v. City of Compton (2010) 186 Cal.App.4t h 1114, 1128, Hong’s testimony was sufficient to su pport the jury’s finding th at the parties intended the agreements to require reimbursement of le gal expenses incurred in enforcing those agreements. Considered in the light most favorable to the verdict, a jury could legitimately infer from Hong’s testimony that, before entering into the letter agreements, he had conversations during which Daewoo agreed it would indemnify enforcement

costs. As the trial court observed, it is true that other portions of Hong’s testimony raise questions as to whether he did in fact engage in any such discussions. During his20 cross-examination, Hong repeatedly stated th at he could not reca ll whether he had any
conversations with Daewoo re garding the meaning of the letter agreements. He also
stated that such conversations would ha ve been unnecessary because it was “common
sense” that Daewoo would reim burse the costs of enforcing the indemnity agreements. Under the “substantial evidence rule,” howeve r, we “must accept as true the evidence supporting the verdict, disregard conflictin g evidence, and indulge every legitimate inference to support the verdict.” ( Murray’s Iron Works, Inc. v. Boyce (2008) 158 Cal.App.4th 1279, 1285.) “‘[E ]ven testimony which is subject to justifiable suspicion do[es] not justify the reversal of a judgment, for it is the exclusive province of the . . . jury to determine the credibility of a witness and the trut h or falsity of the facts upon which a determination depends.’” ( New v. New (1957) 148 Cal.A pp.2d 372, 384.)

4. The court erred in granting JNOV on Starpoint’s implied covenant claim In its motion for JNOV, Daewoo argued th at because Starpoint had presented no evidence supporting the jury’s finding that the letter agreements required reimbursement of enforcement costs, the c ourt must also grant a JNOV on Starpoint’s breach of the implied covenant claim, which alleged that Daewoo had “‘unfair ly interfere[d ]with Starpoint’s right to receive’” this contractual benefit. The court’s written order states that it “agre ed” with Daewoo on this issue. The final judgment reflects this finding, stating th at Starpoint shall “take nothing on its claim that [Daewoo] breach . . .the im plied covenant . . .” Based on the text of the order and final judgment, it appears that the court en tered a JNOV on Starpoin t’s implied covenant claim based on its finding that that the jury ’s interpretation of the letter agreements was not supported by substantial evidence. 2 Because we conclude that substantial evidence

2 The court’s written order, however, also st ated that “the error was not prejudicial” because Starpoint “did not r ecover any damages on the breach of the covenant claim that were not independently recoverable under the breach of contract claim.” Despite that finding, the language in the final judgment indicates that the court entered judgment against Starpoint on the claim.21 did support the jury’s finding on that issue, we also reverse the court’s grant of JNOV on Starpoint’s implied covenant claim.

B. The Trial Court Did Not Abuse its Di scretion in Gran ting the Motion for New Trial

Daewoo ’s motion for new trial raised e ssentially the same argument set forth in its motion for [JNOV]. Specifically, Daewoo contended that the trial should permit a new trial pursuant to Code of Civil Procedur e section 657, subdiv ision (6) because the “weight of the evidence” s howed that Starpoint had never “communicated” its “subjective intent” to Daewoo at any time prior to the execution of th e letter agreements. The trial court granted Daewoo ’s motion for new trial for th e same reasons it granted the JNOV. Specifically, the court ruled that: (1 ) Starpoint’s extrinsic evidence showed only its “undisclosed subjective” understanding of the letter agreements, which was “irrelevant to determining the meaning of contractual language”; (2) in the absence of any “competent parol evidence, ” interpretation of the letter agreements was a question of law; and (3) the plain language of the letter agre ements did not “obligate [Daewoo] to pay attorney’s fees in actions to enforce the contract.” On appeal, Starpoint contends that beca use the record contains “credible evidence of the contracting parties’ intent . . .” , the trial court “erred in taking this issue from the jury . . .”

1. Summary of applicable law and standard of review
“[T]he function of a new trial motion is to allow a reexamination of an issue of fact. . . . Unlike . . . judgments notwithstanding the verdict[,] . . . . granting a new trial does not entail a victory for one side or the ot her. It simply means the reenactment of a process which may eventually yield a winne r. Accordingly, the judge has much wider latitude in deciding the motion.” ( Fountain Valley Chateau Bl anc Homeowner’s Assn. v. Department (1998) 67 Cal.Ap p.4th 743, 751 ( Fountain Valley ).)
Code of Civil Procedure section 657 sets forth the exclusive grounds for granting a new trial. (See Neal v. Montgomery Elevator Co . (1992) 7 Cal.App.4th 1194, 1198.)22 Section 657, subdivision (6) permits the cour t to order a new trial on all or part of the issues based on “[i]nsufficiency of the evidence to justify the verdict or other decision . . . .” “Insufficiency of the evid ence in this context means an absence of
evidence or that the ev idence received, in the individual judgment of the trial judge, is lacking in probative force to establish the propo sition of fact to which it is addressed.” ( Dominguez v. Pantalone (1989) 212 Cal.App.3d 201, 215.) In making this assessment, the trial court is permitted to “disbelieve witnesses, reweigh evidence and draw reasonable inferences contrary to that of the jury. . . ” ( Fountain Valley, supra , 67 Cal.App.4th at p. 751.) On appeal, “an orde r granting a new trial upon the ground of the insufficiency of the evid ence . . . shall be reversed as to such ground only if there is no
substantial basis in the record for any of such reasons.” (Code of Civ. Proc., § 657.) A ruling on a motion for a new trial is “g enerally review[ed] . . . for abuse of discretion.” ( Plotnik v. Meihaus (2012) 208 Cal.App.4th 1590, 1614.) In Lane v. Hughes Aircraft Co . (2000) 22 Cal.4th 405, the California Supreme Court clarified the highly deferential standard of review applicable to a new trial order predicated on insufficiency of the evidence: “[The] order . . . ‘must be sustained on appeal unless the opposing party
demonstrates that no reasonable finder of fact could have found fo r the movant on [the trial court’s] theory. [Citati on.] Moreover, ‘[a]n abuse of discretion cannot be found in
cases in which the evidence is in conflict a nd a verdict for the moving party could have been reached . . . .’ [Citation.] In other wo rds, ‘the presumption of correctness normally accorded on appeal to the jury’s verdict is replaced by a presumption in favor of the [new trial] order.’ [Citation.] [¶] . . . [¶] The only relevant limitati on on this discretion is that
the trial court must state its reasons for granting the new trial, and there must be
substantial evidence in the record to support those re asons. [Citation.]” ( Id. at p. 412.) “[G]iven the latitude afforded a judge in new trial motions , orders granting new trials [based on insuffici ency of the evidence] are ‘i nfrequently reversed.’” ( Fountain Valley
, supra , 67 Cal.App.4th at p. 751.)23 2. The trial court did not abuse its disc retion in granting a new trial based on insufficiency of the evidence

The trial court’s order indicated that it had granted the motion for new trial upon the ground of insufficiency of the evidence: “[Starpoint] did not produce any competent parol evidence that supports its interpretation that the Letter Agreements were intended to include attorney’s fees in an action to enforce the contract.” The order also provided a statement of reasons for the decision, expl aining that Starpoint’s evidence did not establish that it had communicated its subj ective understanding subjective understanding
of the letters to Daewoo. Th e court noted that Hong had tes tified that he could not recall having any conversations with Daewoo regard ing the letter agreements, while Cha “was not a party to the negotiations or execution of the Letter Agreements, but had merely gained her knowledge from review of the agreements.” In the court’s view, this testimony did not qualify as “competent pa rol evidence” because “the undisclosed subjective intent of the parties [wa]s irreleva nt to determining the meaning of contractual language.” Starpoint contends that we must reve rse the trial court’s order because the
evidence at trial was sufficient to support an inference that Starpoint did communicate its subjective understanding of the letter agreements to Daewoo. In effect, Starpoint asserts
that because substantial evid ence supported the jury’s interpretation of the letter agreements, the court should have denied the motion for ne w trial. This assertion overlooks the different tests applicable to a motion for JNOV and a motion for new trial. In evaluating the motion for JNOV, the tr ial court was prohibited from weighing the evidence or assessing credibility , and was tasked with determ ining whether there was any substantial evidence, contradicted or uncontradi cted, to support the ju ry’s verdict. But, when it came to the motion for new trial, th e court was permitted to weigh the evidence, consider the credibility of witnesses, and de termine whether the wei ght of the evidence went against the jury’s verdict. ( Casella v. Southwest Dealer Services (2007) 157 Cal.App.4th 1127, 1159-1160.) Moreover, the trial court was free to draw inferences24 from the evidence diff erent from those the jury accepted. ( Horsford v. Board of Trustees of California State University (2005) 132 Cal.Ap p.4th 359, 379.) Starpoint attempts to avoid this deferential standard of review by asserting that the court’s “conclusion that . . . the proffered extrinsic evidence was not competent evidence of the parties’ mutual understa nding of their contracts” involv ed a question of law that we
review de novo. While it is true that an order granting a new trial based on an issue of
law is reviewed under th e de novo standard (see Doe v. United Airlines, Inc. (2008) 160 Cal.App.4th 1500, 1505), the or der here was clearly predicated on the court’s factual finding that Starpoint failed to prove it co mmunicated its subjectiv e understanding of the agreement to Daewoo. Accordingly, we must affirm the court’s order “unless [Starpoint]
demonstrates that no reasonable finder of fact could have found fo r the movant on [the trial court’s] theory. . . .” ( Lane, supra, 22 Cal.4th at p. 412.) Starpoint has made no such showing. As discussed above, Hong was the only witness who testified as to communications between Daewoo and Starpo int. During cross-examination, Hong repeatedly stated that he co uld not recall whether he had any discussions with Daewoo regarding the terms of the letter agreement. During his re-direct examination, however, he stated that he had in fact spoken with Daewoo prior to ente ring into the letter agreements and that Daewoo agreed it would reimburse legal fees incurred in enforcing the agreement. Finally, on re-cross examination, defe nse counsel asked Hong again whether he “had a specific conversation . . . in which Daewoo . . . sp ecifically said that they would agree to . . . reim burse[] . . . legal expenses, incurred in going after Daewoo Motor Korea for product liability expenses?” In response, Hong said he did not have to tell Daewoo “each and every case” that was c overed by the letter agreements because it was “common knowledge” that a manufacturer wo uld pay for any costs associated with enforcing a product liability inde mnity agreement. In light of this inconsistent testimony,
a reasonable trier of fact could conclude th at Hong did not have any conversation with Daewoo about his subjective unde rstanding of the contracts.25 Starpoint contends that, in addition to Hong’s testimony, eviden ce of the parties’ conduct unequivocally shows they mutually agreed that the letter agreements were intended to require reimbursement of legal fe es incurred in enforc ing the agreements. Hong and Cha testified that if Starpoint or KPMG did not belie ve those fees were covered by the letter agreements, KPMG woul d have required Starpoint to list a reserve
for such fees on its annual financial statem ents. Hong further testified that Daewoo
reviewed the financial statem ents and never asserted that Starpoint should include
reserves for costs associated w ith enforcing the letter agreemen ts. Starpoint contends this “evidence of the parties’ conduct” shows they shared a mutual “u nderstanding of the Letter Agreements . . . – name ly that, that [Starpoint] ha d no exposure for enforcement
costs.”
To the extent this eviden ce is even relevant to demonstrating the meaning Daewoo ascribed to the letter agreements , it is certainly not sufficien t to reverse the trial court’s order granting a new trial. St arpoint produced no evidence showing that Daewoo shared
its belief that a financial statement would nor mally include a reserve for future costs of enforcing an indemnity provision. Nor did it introduce any expert testimony suggesting
that a financial statement sh ould normally include such a reserve. Without such evidence, Hong and Cha’s testimony about Star point’s financial statements merely serve as additional evidence of their own, undisclo sed subjective understandi ng of the contract.
Because a reasonable trier of fact could have concluded that Starpoint failed to provide any competent extrinsic evidence regarding the partie s’ intent, the court did not abuse its discretion in granting a new trial on th e jury’s finding that Daewoo breached the letter agreements by failing to reimburse St arpoint for attorney’s fees incurred in enforcing the agreements. Nor did the court abuse its discretion in granting a new trial on Starpoint’s breach of the imp lied covenant claim, which wa s predicated on this same alleged breach of the letter agreements. 3

3 Daewoo filed a “protective” cross-appeal to the portion of the jury verdict and original judgment finding that it breached the letter agreements by failing to reimburse26 DISPOSITION

The judgment and the court’s order gr anting Daewoo judgment notwithstanding
the verdict are reversed. The trial court’s or der granting a new trial on the jury’s finding
that Daewoo breached the letter agreements by faili ng to reimburse Starpoint’s enforcement costs and breached the implied cove nant of good faith and fair dealing is affirmed. Because the parties have not appe aled the portion of the verdict finding that
Daewoo breached the letter agreements by failing to reimburse Starpoint for legal expenses incurred in defending against the Bandy Action, no retrial on that issue is required. Each party shall bear its own costs on appeal.

ZELON, J.
We concur:

PERLUSS, P. J.

WOODS, J.

Starpoint for attorney’s fees incurred in enforcing the agreem ents. Daewoo asserts that the jury’s finding on this issue was cause d, in part, by various instructional and evidentiary “errors” that were subsequently “rendered moot by the trial court’s order granting [the’ [n]ew [t]rial and JNOV motions.” Because we affirm the trial court’s order granting a new trial, which vaca tes the portion of the jury ve rdict and original judgment to which Daewoo objects, we n eed not address the issues rais ed in the cross-appeal.