Opinion ID: 776714
Heading Depth: 2
Heading Rank: 2

Heading: The District Court's Refusal to Consider Parol Evidence

Text: 30 U.S. Cellular argues that even if the partnership agreement, on its face, unambiguously allows the stock sale, the district court still erred in granting summary judgment because it declined to consider extrinsic parol evidence that supports an alternative reading of the anti-transfer provisions. We hold that the district court did not abuse its discretion in excluding the extrinsic evidence. 31 U.S. Cellular asked the district court to consider the declaration of Martin C. Ruegsegger, a former employee of one of the original Los Angeles partners, Advanced Mobile Phone Systems. Ruegsegger's declaration states that he was involved in the drafting of the Form Partnership Agreement and asserts that the drafters of the agreement intended that the anti-transfer provisions be triggered by transactions such as the stock sale in this case. U.S. Cellular also asked the court to consider the declaration of Leroy T. Carlson, the chairman of the parent company of U.S. Cellular. Carlson's declaration describes the company's decision to enter the Los Angeles Partnership and states that the company had a motivation to preclude indirect transfers via stock sales. 32 Where, as here, the contract at issue is fully integrated, California law allows the admission of parol evidence only if it is (1) relevant to prove (2) a meaning to which the language of the instrument is reasonably susceptible. Pacific Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co., 69 Cal.2d 33, 37, 69 Cal.Rptr. 561, 442 P.2d 641 (1968). The district court held that the declarations put forth by U.S. Cellular lacked relevance, and that the partnership agreement is not reasonably susceptible to the meaning asserted by U.S. Cellular. 33 U.S. Cellular argues that the district court failed to follow the process set forth in Pacific Gas for determining the admissibility of this parol evidence. Under Pacific Gas, a court is required to engage in a preliminary consideration of credible evidence offered to prove the intention of the parties, such as testimony as to the circumstances surrounding the making of the agreement ... including the object, nature and subject matter of the writing ... so that the court can place itself in the same situation in which the parties found themselves at the time of contracting. Pacific Gas, 69 Cal.2d at 40, 69 Cal.Rptr. 561, 442 P.2d 641 (internal quotation and citation omitted). Then, if the court decides, after considering this evidence, that the language of the contract is fairly susceptible to either one of the two interpretations contended for, extrinsic evidence relevant to prove either of such meanings is admissible. Id. (internal quotations and citations omitted). The district court did exactly this. It provisionally received the Ruegsegger and Carlson declarations without actually admitting them, then determined that the anti-transfer provisions were not fairly susceptible to the construction U.S. Cellular urged, and then held this extrinsic evidence inadmissible because, as a matter of law, the Partnership Agreement provisions are not susceptible to U.S. Cellular's proposed reading. We agree with the district court's construction of the language of the provisions, and with its conclusion that the declarations should not have been admitted. Because we agree with the district court on this ground, we do not need to discuss its additional conclusion that the declarations were, in any event, irrelevant. 34