Opinion ID: 2634389
Heading Depth: 3
Heading Rank: 2

Heading: Genentech's challenge to the general verdict

Text: The jury returned a general verdict finding Genentech liable for, among other things, having breached the contract with City of Hope. Genentech contends interpretation of the contract was a question of law that should have been decided by the trial court, not the jury. Genentech argues the trial court should have asked the jury to make special findings on pertinent questions of fact, after which the court, taking into account the jury's special findings, should have undertaken the task of interpreting the contract. We disagree. Juries are not prohibited from interpreting contracts. Interpretation of a written instrument becomes solely a judicial function only when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence, or a determination was made based on incompetent evidence. ( Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839; Estate of Piatt (1942) 21 Cal.2d 343, 352, 131 P.2d 825.) [5] But when, as here, ascertaining the intent of the parties at the time the contract was executed depends on the credibility of extrinsic evidence, that credibility determination and the interpretation of the contract are questions of fact that may properly be resolved by the jury ( Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 289, 85 Cal.Rptr. 444, 466 P.2d 996 [since the interpretation of the crucial provisions turned on the credibility of expert testimony, the court did not err in submitting the construction of the contract to the jury]). This rulethat the jury may interpret an agreement when construction turns on the credibility of extrinsic evidenceis well established in our case law. (See, e.g., Warner Constr. Corp. v. City of Los Angeles, supra, 2 Cal.3d at p. 289, 85 Cal.Rptr. 444, 466 P.2d 996; Fischer v. First Internal Bank (2003) 109 Cal. App.4th 1433, 1443, 1 Cal.Rptr.3d 162; Horsemen's Benevolent & Protective Assn. v. Valley Racing Assn. (1992) 4 Cal. App.4th 1538, 1562, 6 Cal.Rptr.2d 698; Kaufman & Broad Bldg. Co. v. City & Suburban Mortgage Co. (1970) 10 Cal. App.3d 206, 216, 88 Cal.Rptr. 858.) California's jury instructions reflect this (Judicial Council of Cal. Civ. Jury Instns. (2008) CACI No. 314; Com. to BAJI No. 10.75 (9th ed.2002) p. 407), as do authoritative secondary sources (11 Williston on Contracts (4th ed.2006) § 30:7, pp. 87-91; Rest.2d Contracts, § 212, subd. (2), p. 125). In arguing to the contrary, Genentech relies on three Court of Appeal decisions: De Guere v. Universal City Studios, Inc. (1997) 56 Cal.App.4th 482, 505-506, 65 Cal. Rptr.2d 438 ( De Guere) ; Medical Operations Management, Inc. v. National Health Laboratories, Inc. (1986) 176 Cal. App.3d 886, 892, 222 Cal.Rptr. 455, fn. 4 ( Medical Operations ); and Estate of Casey (1982) 128 Cal.App.3d 867, 871, 198 Cal.Rptr. 170 ( Casey ). Genentech's reliance is misplaced. In Medical Operations, supra, 176 Cal.App.3d 886, 222 Cal.Rptr. 455, a breach of contract case in which the evidentiary facts were not in conflict, the Court of Appeal suggested that if the evidence had been in conflict, a procedure more in keeping with the rationale of Parsons [v. Bristol Development Co., supra, 62 Cal.2d 861, 44 Cal.Rptr. 767, 402 P.2d 839] would have been for the jury to make special findings and the trial court to interpret the contract. ( Id., at p. 892, fn. 4, 44 Cal.Rptr. 767, 402 P.2d 839.) By using the phrase more in keeping, the Court of Appeal in Medical Operations simply indicated a procedure that trial courts could use, not one that trial courts must use. Code of Civil Procedure section 625 supports our conclusion that a trial court is not required to submit special verdicts to the jury when construction of a written instrument turns on the credibility of extrinsic evidence. That statute states: In all cases the court may direct the jury to find a special verdict in writing, upon all, or any of the issues, and in all cases may instruct them, if they render a general verdict, to find upon particular questions of fact, to be stated in writing, and may direct a written finding thereon. ( Ibid., italics added.) (See also Li v. Yellow Cab. Co. (1975) 13 Cal.3d 804, 824, fn. 18, 119 Cal.Rptr. 858, 532 P.2d 1226 [§ 625 reposes the matter of special findings within the sound discretion of the trial court].) Casey, supra, 128 Cal.App.3d 867, 198 Cal.Rptr. 170, the second case relied on by Genentech, involved an issue of probate, not contract, law. At issue was the admissibility of extrinsic evidence to show the testator's intent. (128 Cal.App.3d at pp. 871-873, 198 Cal.Rptr. 170.) Casey did state that once a jury determines the facts, the interpretation of the testator's intent to be drawn from the established facts, is a matter of law for the court. ( Id, at p. 871, 198 Cal.Rptr. 170.) Because the extrinsic evidence offered in Casey sought to give the will a meaning to which it was not reasonably susceptible, it was inadmissible. Therefore, the Casey court's statement in question was unnecessary to its decision and as such mere dictum lacking precedential force. ( Hassan v. Mercy American River Hospital, supra, 31 Cal.4th at p. 716, 3 Cal.Rptr.3d 623, 74 P.3d 726.) Moreover, the statement is inconsistent with the statutory and decisional law we just discussed in the preceding paragraph. With respect to De Guere, supra, 56 Cal.App.4th 482, 65 Cal.Rptr.2d 438, the remaining case relied on by Genentech, the Court of Appeal there simply quoted language from Medical Operations, supra, 176 Cal.App.3d 886, 222 Cal.Rptr. 455, and Casey, supra, 128 Cal.App.3d 867, 198 Cal. Rptr. 170, without any accompanying analysis. ( De Guere, supra, 56 Cal.App.4th at pp. 505-506, 65 Cal.Rptr.2d 438.) Thus, De Guere provides no additional support for Genentech's position. We conclude that the trial court here did not err in having the jury resolve the breach of contract claim. [6]