Filed 5/4/09

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

OMEGA GARCIA,

Plaintiff and Respondent,

v.

RONALD G. ROBERTS et al.,

Defendants and Apellants.

F054234

(Super. Ct. No. 04CECG03607)

OPINION

APPEAL from a judgment of the Superior Court of Fresno County. Stephen R. Henry, Judge. (Retired Judge of the Fresno Sup. Ct. assigned by the Chief Justice pursuant to article VI, § 6 of the Cal. Const.)

The Law Office of John Derrick and John Derrick for Defendants and Appellants.

McCormick, Barstow, Sheppard, Wayte & Carruth, William H. Littlewood and Nicholas C. Miller for Plaintiff and Respondent.

-ooOoo-

Plaintiff Johnny Garcia brought suit for breach of oral contract, fraud and related causes of action when defendants Ronald and Sherry Roberts allegedly reneged on their agreement to allow plaintiff to purchase certain real property located in Sanger, California. Plaintiff claimed during discovery that his agreement was based solely on an oral loan arrangement, not a written contract. Plaintiff died prior to trial and his wife, Omega Garcia, was permitted to continue plaintiff’s lawsuit as his successor-in-interest. After trial commenced, plaintiff (through Omega Garcia as successor-in-interest) moved to amend the complaint to add a new cause of action for breach of a written contract for an option to purchase the real property. The trial court granted the motion to amend over defendants’ objections and the jury subsequently found in plaintiff’s favor on all causes of action, including breach of written contract. Judgment was entered on the verdict. Defendants appeal on several grounds, including that the trial court abused its discretion in allowing the amendment during trial, the oral contract cause of action was invalid as a matter of law, and there was no substantial evidence to support the jury’s findings of liability on any of the causes of action. Although we agree that the trial court abused its discretion in granting leave to amend, in all other respects we affirm the orders and judgment of the trial court.

FACTS AND PROCEDURAL HISTORY

Factual Background Prior to Plaintiff’s Lawsuit

The parties’ dispute concerns a parcel of land located on Academy Avenue in Sanger, California (the property). Plaintiff originally rented the property, along with a mobilehome situated there, from an entity known as the Sasashima Family Trust for $500 per month. Plaintiff lived in the mobilehome and also ran a modest business as a backhoe operator from there. In 2001, plaintiff entered into negotiations with Akiko Sasashima, the trustee of the Sasashima Family Trust, to purchase the property. In October or November of 2001, an agreement was reached giving plaintiff an option to purchase the property for $140,000. Pursuant to that agreement, plaintiff paid the sum of $7,500 to the Sasashima Family Trust and was given two years to come up with the remaining balance of the purchase price ($132,500), with the $7,500 counting as a down payment. In the interim, plaintiff agreed to continue paying $500 in monthly rent.

Plaintiff found it difficult to obtain financing to pay the $132,500 balance to the Sasashima Family Trust. Eventually, he mentioned this fact to an acquaintance, defendant Ronald Roberts. Plaintiff occasionally performed backhoe work for Mr. Roberts, who was a plumbing contractor. During one such job, plaintiff asked Mr. Roberts if he would be willing to loan the money to plaintiff. According to plaintiff’s deposition testimony introduced at trial, plaintiff and Mr. Roberts entered into an oral agreement regarding the property. Under the terms of the oral agreement, Mr. Roberts agreed to pay the $132,500 balance of the purchase price to the Sasashima Family Trust as a loan to plaintiff, but title to the property would be put in Mr. Robert’s name and plaintiff would be required to pay interest on the loan of 12 percent or approximately $1,325 per month for a period of two years. By the end of the two-year period, plaintiff was to secure financing to pay off the loan, whereupon title would be conveyed to plaintiff.

In reliance on this oral agreement, plaintiff facilitated the sale of the property from the Sasashima Family Trust to defendants. The Sasashima Family Trust sold the property to defendants for $132,500, a price that was apparently based on the fact that plaintiff previously paid $7,500 toward the $140,000 purchase price. With additional closing costs, defendants obtained title to the property for a total sum of $133,027. Escrow closed on September 26, 2002.

On September 26, 2002, shortly after escrow closed, defendants asked plaintiff and his wife to come to their home to sign paperwork regarding the property. Defendant Sherry Roberts presented a form contract entitled “LEASE WITH OPTION TO PURCHASE” (the lease-option agreement). After Mrs. Roberts filled out the lease-option agreement, she read all or most of the terms out loud and provided additional explanation of the terms as she read them. This was apparently done because plaintiff spoke some English, but could not read it, while plaintiff’s wife did not understand English at all. All four parties then signed the lease-option agreement.

The gist of the lease-option agreement was that plaintiff and his wife would lease the property for a period of two years beginning on September 26, 2002, at the end of which time they could exercise an option to purchase the property by giving written notice. Rent for the lease term was expressed as “[t]welve percent (12%)” or $1,330.27 per month. This amount was based on defendants’ desire to earn 12 percent interest on the money they paid the Sasashima Family Trust in purchasing the property. The portion of the lease-option agreement describing the option stated that the purchase price of the property was $133,027 and that the option could be exercised “at any time during the period beginning October 26, 2004, and ending October 26, 2004, by giving [defendants] sixty (60) days written notice at any time prior to ________, ___.” The last blank was never filled in. Mrs. Roberts testified that the October 26, 2004 date was meant to give plaintiff a one-month grace period in which to exercise his option to purchase the property after the lease term ended in September of 2004.

In 2004, plaintiff began the process of seeking to qualify for and obtain financing to purchase the property from defendants. Plaintiff started working closely with a mortgage broker by the name of Gilbert Servin, who was owner of Su Casa Mortgage Company. Mr. Servin helped plaintiff “clean up” his credit history and improve his credit score. With Mr. Servin’s assistance, plaintiff’s credit score improved significantly by August of 2004. At that point, Mr. Servin “knew that [he] could get [plaintiff] a loan” to complete plaintiff’s purchase of the property. Accordingly, Mr. Servin opened an escrow regarding the property with Stewart Title Company on August 19, 2004, a preliminary title report was requested from the title company and plaintiff took steps to procure homeowner’s insurance. Additionally, Mr. Servin submitted a home loan application to Countrywide Financial Corporation on plaintiff’s behalf and ordered an appraisal of the property.

In late August or early September of 2004, Mr. Servin placed a telephone call to Mr. Roberts to discuss the status of the escrow and to confirm the terms of the sale to plaintiff. Mr. Roberts confirmed that the agreement was to sell the property to plaintiff and his wife for the same amount of money that defendants had paid to purchase it. During the same conversation, Mr. Servin informed Mr. Roberts that an escrow had been opened at Stewart Title Company, a loan application had been submitted and it appeared the loan would be approved pending receipt of the appraisal. Mr. Servin attempted to set up a meeting with Mr. Roberts to review and sign a written purchase agreement that the lenders would require for the transaction. Mr. Roberts responded that he and Mrs. Roberts were just leaving for Europe on a vacation that would last about one month and said “‘don’t do anything until I get back.’”

Subsequently, an appraisal of the property was completed that showed a market value of $186,000. Additionally, sometime in October of 2004, Mr. Servin received word that a commercial lender had approved plaintiff’s loan request and plaintiff was informed of this fact, whereupon plaintiff made a deposit of approximately $10,000 into the escrow to cover anticipated lending fees and closing costs regarding the transaction.

After defendants returned from their vacation, plaintiff and Mr. Servin had a meeting with defendants at defendants’ home to discuss the real estate purchase. Mr. Servin thought the meeting was in late September of 2004; Mr. Roberts was certain it was on October 23, 2004. At the meeting, Mr. Servin presented a standard form purchase agreement to defendants that Mr. Servin had prepared in order to satisfy the lender’s requirements. The proposed purchase agreement was backdated to September 21, 2002, which Mr. Servin said was either a mistake or perhaps was due to his understanding of the parties’ original agreement. The proposed purchase agreement reflected that a $7,500 deposit was received toward a total $140,000 purchase price, with a balance due to “seller” of $132,500. It further stated that “buyer” had to obtain financing by October 31, 2004 and would continue to pay rent in an unspecified amount until the purchase was completed.

During the meeting, defendants excused themselves for a private conversation about the proposed purchase agreement. Mr. Roberts returned and told plaintiff and Mr. Servin that he would not sign the proposed purchase agreement at that time, but he would go to the title company to sign it. Defendants never asked plaintiff or Mr. Servin to make any changes or corrections to the proposed purchase agreement. Mr. Roberts did go to the title company the next day, but he never signed the proposed purchase agreement. In fact, he refused to do so. Plaintiff continued to call Mr. Roberts until October 26, 2004, demanding that Mr. Roberts sell the property to him, but Mr. Roberts simply told plaintiff he did not like the way the papers had been prepared. Mr. Roberts told plaintiff that he (plaintiff) had not fulfilled his obligations and that his “time was over”—he had lost his opportunity to purchase the property.

Sometime before defendants refused to sign the proposed purchase agreement, plaintiff told defendants that he had heard the property had appreciated and was worth $500,000. Mrs. Roberts thought at that time that plaintiff’s estimate of $500,000 was perhaps a good one.

Relevant Procedural History

Plaintiff filed the present action against defendants on December 16, 2004. On December 14, 2005, plaintiff filed a third amended complaint alleging causes of action for, among other things, breach of oral contract, breach of implied covenant of good faith and fair dealing, and fraud. The third amended complaint was the operative pleading at the time of trial on June 25, 2007. As with all prior versions of the complaint, the underlying contract was alleged to be an oral loan agreement. No written contract was alleged.

Defendants’ responsive pleadings referred to the existence of the written lease-option agreement over two years prior to the commencement of trial. On March 30, 2005, defendants’ answer to the second amended complaint expressly alleged the existence of a written contract as a defense to the oral agreement. In support of that defense, defendants attached a copy of the lease-option agreement to their answer. Later, in their answer to the third amended complaint, sometime after plaintiff’s deposition testimony indicated his denial of the existence of a written agreement, defendants revised their defensive posture by simply asserting that there was “no valid or enforceable oral or written contract between [p]laintiff and [d]efendants.” (Italics added.)

On February 7, 2007, plaintiff Johnny Garcia died. Plaintiff’s wife was then substituted into the case to continue the litigation as plaintiff’s successor-in-interest and personal representative.

Trial commenced on June 25, 2007. During discussion of several motions in limine, plaintiff’s counsel announced his intention to move to amend the third amended complaint in order to allege a new cause of action for breach of written contract. Plaintiff’s counsel proposed to add a claim against defendants based on the lease-option agreement entered on September 26, 2002. Defendants’ counsel, while acknowledging that defendants were aware of the existence of the written contract, objected that it was prejudicial to allow plaintiff to make the proposed amendment during trial since plaintiff previously denied there was any agreement other than the alleged oral loan agreement and, in reliance on plaintiff’s claims, defendants only prepared to defend the alleged oral agreement. The issue of whether plaintiff would be allowed to amend his complaint was then deferred until later in the trial proceedings.

Subsequently, plaintiff’s counsel admitted to the trial court that plaintiff had previously known about the written contract but refused to allow plaintiff’s counsel to refer to it in the lawsuit. Prior to closing arguments, plaintiff’s motion to amend was formally presented along with a brief in support of the motion. The trial court heard extensive oral argument from both sides. Ultimately, the trial court granted the motion and plaintiff was permitted to file the proffered amendment to the third amended complaint adding a new cause of action for breach of written contract.

The jury found in favor of plaintiff on all causes of action. Specifically, plaintiff prevailed against both defendants on the causes of action for breach of written contract and breach of implied covenant of good faith and fair dealing. Plaintiff prevailed against Mr. Roberts on the breach of oral loan contract and fraud claims. Damages of $366,973 were awarded to plaintiff. Judgment was entered in favor of plaintiff on August 13, 2007.

Defendants moved for JNOV and for new trial. The trial court granted a limited new trial on the issue of damages only, but otherwise denied the motions. Defendants’ appeal followed.

DISCUSSION

Standard of Review*

Although the main thrust of defendants’ appeal is from the judgment itself, they also appeal from the trial court’s orders on their motions for JNOV and new trial. We briefly summarize the standard of review in each case.

Appeal from Judgment

It is fundamental to the appellate process that a judgment is presumed correct and error must be affirmatively shown. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) “A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.” (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) The appellant carries the burden of showing the trial court erred and that such error was prejudicial. (In re Marriage of Behrens (1982) 137 Cal.App.3d 562, 574.) Where an appeal challenges the trial court’s resolution of factual issues, we apply the substantial evidence rule in which “‘the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,’ to support the findings below. [Citation.]” (Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1100.) Where an appeal challenges the trial court’s exercise of discretion, the decision will be upheld as long as there exists, given the evidence before the trial court, “‘a reasonable or even fairly debatable justification’” for the decision under applicable legal criteria. (Gonzales v. Nork (1978) 20 Cal.3d 500, 507.)

Appeal from Order on Motion for New Trial

“A trial court has broad discretion in ruling on a new trial motion, and the court’s exercise of discretion is accorded great deference on appeal. [Citation.] An abuse of discretion occurs if, in light of the applicable law and considering all of the relevant circumstances, the court’s decision exceeds the bounds of reason and results in a miscarriage of justice. [Citations.]” (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 752.) However, in our review of an order denying a new trial, we consider the entire record to make an independent judgment as to whether the error, if any, was prejudicial. (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 872.)

Appeal from Order on Motion JNOV

“A motion for judgment notwithstanding the verdict may 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 evidence in support. [Citation.] [] The moving party may appeal from the judgment or from the order denying the motion for judgment notwithstanding the verdict, or both. [Citation.] As in the trial court, the standard of review is whether any substantial evidence—contradicted or uncontradicted—supports the jury’s conclusion. [Citations.]” (Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.)

Abuse of Discretion in Granting of Leave to Amend at Trial

Defendants contend the trial court abused its discretion when it allowed an amendment to plaintiff’s complaint during trial that constituted “the last-minute change of course to add a cause of action for breach of written contract.” Defendants objected to the proposed amendment based on prejudice. The trial court ultimately permitted the amendment to add a claim for breach of the written lease-option agreement since “it appears it conforms to the proof taken in this court.”

We begin our consideration of this issue with an overview of the relevant legal principles. It is well established that leave to amend a complaint is entrusted to the sound discretion of the trial court, and “‘“[t]he exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse.”’” (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.)

Code of Civil Procedure section 473 gives trial courts discretion to allow a party to amend his or her pleadings “in furtherance of justice,” while section 576 states that such leave to amend may be granted even after the commencement of trial. Section 469 specifically governs motions to amend at trial to conform to proof, which was the basis for the trial court’s order in the present case. Section 469 provides in relevant part as follows: “No variance between the allegation in a pleading and the proof is to be deemed material, unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits.” Such amendments at trial to conform to proof, “if not prejudicial, are favored since their purpose is to do justice and avoid further useless litigation.” (Union Bank v. Wendland (1976) 54 Cal.App.3d 393, 400.)

As summarized by our Supreme Court in Trafton v. Youngblood (1968) 69 Cal.2d 17, at page 31: “[T]he allowance of amendments to conform to the proof rests largely in the discretion of the trial court and its determination will not be disturbed on appeal unless it clearly appears that such discretion has been abused. [Citations.] Such amendments have been allowed with great liberality ‘and no abuse of discretion is shown unless by permitting the amendment new and substantially different issues are introduced in the case or the rights of the adverse party prejudiced [citation].’ (Italics added.) [Citations.]” Conversely, “‘amendments of pleadings to conform to the proofs should not be allowed when they raise new issues not included in the original pleadings and upon which the adverse party had no opportunity to defend. [Citations.]’ [Citations.]” (Ibid.)

“The cases on amending pleadings during trial suggest trial courts should be guided by two general principles: (1) whether facts or legal theories are being changed and (2) whether the opposing party will be prejudiced by the proposed amendment. Frequently, each principle represents a different side of the same coin: If new facts are being alleged, prejudice may easily result because of the inability of the other party to investigate the validity of the factual allegations while engaged in trial or to call rebuttal witnesses. If the same set of facts supports merely a different theory—for example, an easement as opposed to a fee—no prejudice can result.” (City of Stanton v. Cox (1989) 207 Cal.App.3d 1557, 1563.) “The basic rule applicable to amendments to conform to proof is that the amended pleading must be based upon the same general set of facts as those upon which the cause of action or defense as originally pleaded was grounded.” (Union Bank v. Wendland, supra, 54 Cal.App.3d at pp. 400-401.)

Defendants argue the trial court erred in granting leave to amend because the amendment caused unfair prejudice. Defendants claim such prejudice existed because plaintiff not only failed to previously allege the existence of any contract other than the oral loan agreement, but affirmatively represented in deposition testimony that the only agreement he had with defendants concerning the property was the oral loan agreement. Our review of plaintiff’s deposition testimony presented in the trial court confirms that plaintiff repeatedly insisted at his deposition that there was only an oral loan agreement, and he expressly denied knowing anything about or entering a written lease-option agreement.

The following excerpt of plaintiff’s deposition testimony is illustrative:

“‘Question: Do you recall entering into this agreement with Mr. and Mrs. Roberts?

“‘Answer: What kind of an agreement is [it]?

“‘Question: It is a lease with option to purchase. Do you recall entering into this agreement with Mr. and Mrs. Roberts?

“‘Answer: No. It was only a loan that I asked them for, that’s all. [] … []

“‘Question: Before today have you ever seen this agreement?

“‘Answer: No. I did not know that I had a [lease], or whatever you meant to say. I only know that I asked for a loan, that’s all.’”

Elsewhere in the deposition, plaintiff was asked whether the oral loan agreement was “‘the only agreement [he] had with [] defendants concerning the property,’” to which plaintiff responded “‘[y]es, that’s all.’” He also expressly denied signing any written agreement concerning the property with defendants. After being shown the signature page on the lease-option agreement, he acknowledged that it “‘looks like my signature,’” so he believed it was possible that he signed it, but he had no recollection of ever doing so.

In support of their argument regarding prejudice, defendants further contend that as a result of plaintiff’s deposition testimony and in reliance thereon, they did not pursue further discovery from plaintiff to defend a potential claim under the lease-option agreement, such as asking plaintiff at his deposition whether (or when) he ever gave notice in writing that he was exercising the option, what steps he took to comply with his obligations under the lease-option agreement, what specific terms (if any) were breached by defendants, and whether the written lease-option agreement was intended to replace the oral agreement.

Additionally, defendants argue it was not in the furtherance of justice to allow the amendment at trial under the particular circumstances because it was demonstrated that plaintiff actually knew of the lease-option agreement but refused to allow his attorney to raise it in the litigation. It was only when plaintiff’s wife took over the case after his death that the amendment was sought. In this regard, plaintiff’s trial attorney, Mr. Littlewood, admitted to the trial court that his deceased client gave a “directive” to him that the written agreement was not to be raised in the lawsuit. Mr. Littlewood conceded that he was “not permitted by [his] client to refer to that contract.” As defendants put it in their new trial motion, these circumstances showed that “[plaintiff] intentionally refused to acknowledge the existence of the [lease-option agreement] until trial thereby depriving the [d]efendants of the opportunity to obtain discovery on that issue.”

Plaintiff’s attorney responds, as he did in the trial court, that plaintiff was not acting in bad faith but probably misunderstood or was confused regarding the facts or the import of the lease-option agreement. Plaintiff’s attorney further suggests in the responsive brief that plaintiff may have clung to his belief that the substance of his agreement with defendants was an oral loan because he was illiterate (could not read English), unsophisticated, over 70 years old, and because the parties’ prior business dealings had been carried out by oral agreements.

Second, plaintiff denies there was prejudice because, while the amendment presented a new legal theory, it was based on the same general set of operative facts.

Defendants reply that of course they were aware of the lease-option agreement’s existence, but since plaintiff had disavowed knowledge of it and claimed that the “‘only’” agreement between the parties concerning the property was the oral loan agreement, the scope of the issues for which discovery was sought was significantly impacted. Additionally, defendants note there are substantial differences between the two types of contractual relationships being put forward, and a written lease with an option to purchase is plainly inconsistent with a mere oral loan. Therefore, defendants argue it is unreasonable to attempt to blend the two agreements and pretend the issues are the same under either agreement.

Having considered the above arguments in light of the record, we are persuaded that allowing the amendment at trial unfairly prejudiced defendants and therefore constituted an abuse of discretion. As recognized by the Court of Appeal in Brautigam v. Brooks (1964) 227 Cal.App.2d 547, 560, if a proposed amendment during trial is prejudicial to the opposing party, it is reversible error to grant leave to amend to conform to proof. In that case, shortly before evidence was presented to the jury the defendant withdrew the issue of contributory negligence, which naturally affected the manner in which the plaintiff questioned the witnesses and elicited testimony during the trial. After the evidence was presented, the defendant changed his mind and moved to amend to assert the defense of contributory negligence with the understanding that both parties could introduce new evidence on that issue. The trial court granted the motion. On appeal, the order was reversed due to the prejudicial effect the amendment had on the manner evidence was presented at trial, inevitably leading to an undue emphasis on the issue of contributory negligence. (Ibid.) In so holding, the Court of Appeal quoted with approval language from prior decisions that our courts should not tolerate a party to “‘blow hot and cold in this manner’” (ibid., cases collected therein) if it would prejudice his or her opponent.

Here, plaintiff’s deposition testimony to the effect that there was only an oral loan agreement between the parties concerning the property, and that he had no knowledge of any agreement in the nature of a written lease-option, reasonably limited the focus of defendants’ discovery efforts and the manner in which defendants prepared for trial. As defendants point out, a number of significant factual issues that specifically related to the lease-option agreement were not pursued in plaintiff’s deposition or in other discovery, since it became unnecessary to do so in light of what plaintiff asserted under oath at his deposition. (See fn. 13, ante.) Indeed, since plaintiff denied knowledge of the lease-option agreement, the pursuit of discovery from plaintiff on that subject could reasonably go no further. Portions of plaintiff’s deposition testimony, as necessarily limited in scope due to plaintiff’s claimed lack of knowledge, were read to the jury at trial because of plaintiff’s death.

In view of these circumstances and the crucial fact that at the time of trial plaintiff was deceased and so could not be questioned further on any issues relevant to the lease-option agreement, we conclude that defendants were unfairly prejudiced when the trial court permitted the amendment during trial and thereby allowed plaintiff (through his wife as successor-in-interest) to materially reverse his position by asserting a cause of action for breach of the lease-option agreement. Plaintiff, whom it turns out knew about the lease-option agreement but refused to allow his attorney to raise it, cannot be permitted through his successor-in-interest to “‘blow hot and cold in this manner’” to defendants’ prejudice. (Brautigam v. Brooks, supra, 227 Cal.App.2d at p. 560.) For these reasons, the trial court’s order granting leave to amend is reversed.

III. Validity of Oral Contract Cause of Action*

Parol Evidence Rule

Defendants make a number of arguments that the verdict and judgment in plaintiff’s favor on the oral contract cause of action was invalid as a matter of law. We begin with the challenge based on the parol evidence rule.

In its motion for new trial, defendants contended that the jury verdict in favor of plaintiff on the cause of action for breach of oral contract was contrary to law because the written agreement superseded the oral agreement as a matter of law. Defendants’ argument relied on the statutory provisions of the parol evidence rule. In the present appeal, defendants reiterate that same argument. The issue is preserved for purposes of appeal, even though it was not raised during the trial itself. (See Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 23 (Tahoe) [waiver rule not applied since rule is one of substantive law of contracts].)

The parol evidence rule is codified in Civil Code section 1625 and Code of Civil Procedure section 1856. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343.) Civil Code section 1625 defines the legal effect of execution of an agreement in writing: “The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.” Section 1856, subdivision (a), describes the significant evidentiary consequences of entering an agreement in writing as follows: “Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.”

Here, defendants argue the written lease-option agreement superseded the oral agreement because said written agreement related to the same subject matter as the oral agreement (citing Civ. Code, § 1625) and because the two agreements were allegedly inconsistent. In response, plaintiff contends the lease-option agreement was not intended as a complete and entire “integration” of all the terms of the parties’ bargain and therefore the parol evidence rule did not preclude evidence of the oral loan agreement. Secondly, in a similar vein, plaintiff argues the oral loan agreement was merely a consistent collateral agreement that did not directly contradict the written terms of the lease-option agreement and was therefore admissible under the parol evidence rule. (§ 1856, subd. (b).) Regarding this second point, Witkin explains: “An apparent exception, though in accord with the purposes of the rule, is that a prior or contemporaneous collateral oral agreement may sometimes be shown where it is not inconsistent with the terms of the integration, even though it relates to the same subject matter.” (2 Witkin, Cal. Evidence (4th ed. 2000) Documentary Evidence, § 86, p. 207 [collecting cases].) The trial court implicitly adopted plaintiff’s position.

We begin with the “integration” issue. Esbensen v. Userware Internat., Inc. (1992) 11 Cal.App.4th 631 explains the following principles regarding the concept of integration: “In contract law, ‘integration’ means the extent to which a writing constitutes the parties’ final expression of their agreement. To the extent a contract is integrated, the parol evidence rule precludes the admission of evidence of the parties’ prior or contemporaneous oral statements to contradict the terms of the writing, although parol evidence is always admissible to interpret the written agreement. [Citation.] [] Obviously where following negotiations the parties execute a written agreement, that agreement is at least ‘partially’ integrated and parol evidence cannot be admitted to contradict the terms agreed to in the writing. [Citation.] Evidence of related oral understandings, however, is admissible to prove additional terms of the contract not inconsistent with the express language of the writing. [Citations.]” (Id. at pp. 636-637, citing § 1856, subds. (a), (b).) It is only when the writing is also intended by the parties as a “complete and exclusive statement of the terms of the agreement” (see § 1856, subd. (b)) that parol evidence is inadmissible “even to add terms not inconsistent with the writing.” (Esbensen v. Userware Internat., Inc., supra, at p. 637.)

In deciding the extent to which a written contract is integrated, we consider such factors as whether the written agreement appears to be complete on its face; whether the written agreement contains an integration clause; whether the alleged oral agreement relates to a subject or terms that might naturally have been made as a separate agreement under the circumstances; or conversely, whether the orally agreed matters are such that they would certainly have been included within the written agreement rather than addressed separately. (See Masterson v. Sine (1968) 68 Cal.2d 222, 225-229; Esbensen v. Userware Internat., Inc., supra, 11 Cal.App.4th at p. 637, fn. 3; Brawthen v. H & R Block, Inc. (1975) 52 Cal.App.3d 139, 146; Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1434.)

Here, following oral discussions of the matter and on the same day escrow closed in defendants’ purchase of the property from the Sasashima Family Trust, the parties met at defendants’ home and signed the lease-option agreement. Clearly, the lease-option agreement was intended as a final expression of agreement with respect to such terms as were actually included therein, and therefore it was at least partially integrated to that extent. (Esbensen v. Userware Internat., Inc., supra, 11 Cal.App.4th at pp. 637-638; § 1856, subd. (d).) However, because of the lack of an integration clause or any other evidence that the writing was intended as the exclusive agreement of the parties, and in view of the ambiguity of the written agreement in certain key respects, combined with its express inclusion of an interest rate (see discussion below), we agree with the trial court’s implied finding that the written agreement was not a complete and exclusive statement of the parties’ bargain. Accordingly, assuming the oral agreement does not directly contradict the express provisions of the writing, it is admissible under the parol evidence rule.

In regard to interpretation of the writing, we emphasize that any ambiguities must be construed against defendants as the drafters who held a position of superior bargaining power. In Tahoe, the Supreme Court applied the rule in that case as follows: “Since the alleged ambiguities appear in a standardized contract, drafted and selected by the bank, which occupies the superior bargaining position, those ambiguities must be interpreted against the bank.” (Tahoe, supra, 4 Cal.3d at p. 20.) Not only were defendants the drafters of the lease-option agreement, they had experience in real estate matters in contrast to plaintiff’s lack of sophistication and they were clearly in a superior bargaining position because, among other things, plaintiff could not read English and would have to rely on whatever defendants told him about the agreement.

As we now explain, we conclude the oral loan agreement was compatible with and did not directly contradict the express provisions of the written lease-option agreement.

In comparing the nature of the two agreements, it is simply not the case that the oral loan agreement, if it existed, would “‘certainly’” have been included in the terms of the written lease-option agreement. (Masterson v. Sine, supra, 68 Cal.2d at pp. 228-229.) The two types of agreement are reasonably construed as alternative methods by which plaintiff could proceed to complete the purchase of the property. As plaintiff’s attorney offers: “[T]he fact that [defendants] orally agreed to sell the property to [plaintiff] [pursuant to the oral loan agreement] is not ‘inconsistent’ with their written obligation to grant a purchase option to both [plaintiff] and his wife.” Although the testimony at trial did not answer the question of why there was an oral collateral agreement, there may have been legitimate reasons (e.g., the difference in parties or perhaps tax consequences) for maintaining separate agreements allowing two avenues for accomplishing the purchase. Viewed in this way—and the two agreements are reasonably susceptible of such an interpretation—not only is there no direct conflict that is necessarily involved, but the oral loan agreement would not certainly have been included in the lease-option agreement.

Moreover, even to the extent the two agreements were intended to be coextensive or to overlap in their respective requirements as to plaintiff’s right to purchase the property, the terms do not necessarily conflict. The only written provisions in the lease-option agreement that arguably conflict with the oral loan agreement are the “rent” provision and the provision for exercise of the option. We consider each of these in turn.

First, although the lease-option agreement refers to plaintiff’s monthly payments as “rent,” the rent is expressed in terms of a payment of 12 percent interest—the same interest rate indicated in the alleged oral loan. The inclusion of this interest rate as the basis for plaintiff’s monthly payments of “rent” reasonably indicates the parties were operating under the understanding of a preexisting loan. Although the lease-option agreement (a fill-in-the-blank form) used the label “rent” to describe the payments of “[t]welve percent (12%)” or “$1,330.27” to be made each month, the uncertainty as to what the interest rate provision was based on creates an ambiguity as to the nature of these monthly payments. At trial, defendants conceded the percentage amount was to earn interest on the money they originally paid to the Sasashima Family Trust. We conclude the oral loan agreement does not conflict with the “rent” provision in the writing.

Second, the provision in the lease-option agreement that spells out the manner in which plaintiff was to give notice of his intention to purchase the property is so ambiguous as to be nearly unintelligible. It states as follows: “[plaintiff] shall have the right to exercise the option to purchase at any time during the period beginning October 26, 2004, and ending October 26, 2004, by giving [defendants] sixty (60) days written notice at any time prior to ________, ___.” The last blank was never filled in. Construed against defendants as drafters, the written provision is arguably too vague and uncertain to be given meaningful effect, in which case any reasonable means of giving notice of intention to proceed with the purchase option would be available. (See Palo Alto Town & Country Village, Inc. v. BBTC Company (1974) 11 Cal.3d 494, 498 [if contract does not positively require one means of notification of exercise of option rights, other reasonable means of communicating the exercise of such rights may be available].) Additionally, even if we were to conclude that the ambiguity in the subject written provision was limited to the issue of timing, and did not affect the need to give written notice (at some point in time), it would still have been reasonable for the trial court in this case to conclude that plaintiff’s acts of presenting a proposed written purchase agreement and opening an escrow—both for the obvious purpose of completing the purchase—adequately signaled to defendants (in writing) the fact that plaintiff intended to proceed with the purchase of the property, even if some minor clarification or correction was needed in the calculation of the purchase price stated therein.

One further comment is needed. The slight variation in purchase price—i.e., $132,500 in the oral loan agreement and $133, 027 in the lease-option agreement—was not significant. It is apparent from the thrust of plaintiff’s allegations that the purchase price in either case was based on the amount of money that defendants originally paid to the Sasashima Family Trust. Testimony at trial showed that the difference was based on the fact that closing costs were included in the $133,027 figure. This difference was reasonably one of calculation only, was insignificant in amount, and was readily correctible. For these reasons, we do not believe it resulted in an actual or material contradiction of the terms of purchase.

In summary, we find that the oral loan agreement was compatible with the written lease-option agreement—i.e., as a collateral oral agreement that was not directly inconsistent with the written provisions—and therefore the parol evidence rule did not preclude the oral agreement.

Other Objections to Validity of Oral Contract Claim

As an additional challenge to the oral contract cause of action, defendants argue a judicial admission at trial precluded it. In initially introducing his intention to bring a motion to amend plaintiff’s complaint during trial, plaintiff’s counsel stated as follows: “[I]t has turned out that [plaintiff] was mistaken as to what the agreement was; and it really wasn’t an oral agreement. I think we’re all in agreement that it was a written lease with option to purchase.” Plaintiff’s counsel added in the same colloquy with the trial court that “the issue’s going to boil down to whether or not the parties performed under the written lease.” Later in the trial, when the motion to amend was formally presented, plaintiff’s counsel backtracked from these initial comments and argued the proposed amendment alleging a cause of action under the written contract would not replace the oral contract claim, but would be in addition thereto.

Defendants contend that the initial statements by plaintiff’s counsel were binding judicial admissions to the effect that the cause of action on the lease-option agreement would replace the cause of action on the oral agreement. Defendants have failed to present any authority for the proposition that such preliminary comments by the attorney would amount to a binding admission. We therefore reject defendants’ contention as unsupported.

Defendants also contend that the oral agreement was invalid under the statute of frauds (Civ. Code, § 1624). The problem with this contention is that the defense of statute of frauds was not raised in the trial court. Issues not raised in the trial court will ordinarily not be considered on appeal. (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3 [failure to raise issue below constitutes waiver].) Defendants note that appellate courts have discretion to hear a new theory on appeal where it involves a pure question of the application of law to undisputed facts. (Yeap v. Leake (1997) 60 Cal.App.4th 591, 599, fn. 6.) However, an appellate court will not exercise such discretion where, as here, the new theory “‘contemplates a factual situation the consequences of which are open to controversy and were not put in issue or presented at trial.’” (Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 879.) Since defendants did not raise the statute of frauds defense at trial, plaintiff was not on notice that he was required to present all evidence on the subject of “part performance” to overcome the defense. (See Sutton v. Warner (1993) 12 Cal.App.4th 415, 421-424 [part performance may overcome statute of frauds in oral agreement to purchase land].) It is not certain what additional facts might have been shown if the defense had been raised below. Under the circumstances, it would be unfair to require plaintiff to have to address such matters on appeal. More generally, we believe the defense was an obvious one in this case and plainly should have been asserted below, and we note that defendants even alleged it in their answer to the second amended complaint. We conclude the statute of frauds theory was forfeited by defendants’ failure to assert it in the trial court.

IV. Remaining Causes of Action and Sufficiency of Evidence*

Finally, defendants contend that none of the causes of action were supported by substantial evidence. We have disposed of the cause of action for breach of written contract by our holding that the trial court abused its discretion when it allowed the amendment at trial to allege that cause of action. We therefore address defendants’ contention that there was insufficient evidence to support the causes of action for breach of oral contract, breach of the implied covenant of good faith and fair dealing, and fraud.

Defendants argue there was no substantial evidence to establish that Mr. Roberts actually breached the oral loan agreement in its express terms or in any implied covenant of good faith and fair dealing. We disagree. We will consider the cause of action for breach of oral contract together with that of breach of implied covenant of good faith and fair dealing because we believe the two causes of action are largely supported by the same facts and they give rise to identical contract damages.

The testimony was sufficient to show that plaintiff secured the necessary financing to repay the loan prior to, and at the end of, the relevant contract period, which was clearly communicated to Mr. Roberts. Mr. Roberts breached the agreement by his conduct that effectively prevented or interfered with plaintiff’s ability to successfully tender funds from his lender. That is, the evidence was sufficient to show that Mr. Roberts refused to sign paperwork on the pretext that he did not like the way it was filled out, but without offering any explanation as to what the problem might be or how plaintiff might cure any mistake or deficiency, and then Mr. Roberts simply waited for time to expire on plaintiff’s rights. Additionally, in light of the ambiguity as to when plaintiff’s contract rights would expire (under either contract), Mr. Roberts’s pronouncement that plaintiff’s time was up and that plaintiff had lost his opportunity to purchase the property constituted a further circumstance supporting a “breach” of the oral loan.

For purposes of our analysis, we emphasize that the facts constituting breach of contract included the fact that Mr. Roberts completely failed to cooperate in regard to the paperwork necessary to allow plaintiff to finance the loan. Obviously, the parties contemplated that such paperwork would be necessary to consummate the object of the contract. “‘“There is implied in every contract a covenant by each party not to do anything which will deprive the other parties thereto of the benefits of the contract.… [This] covenant not only imposes upon each contracting party the duty to refrain from doing anything which would render performance of the contract impossible by any act of his own, but also the duty to do everything that the contract presupposes that he will do to accomplish its purpose.” [Citations.]’ [Citation.]” (Nystrom v. First Nat. Bank of Fresno (1978) 81 Cal.App.3d 759, 767; see also 1 Witkin, Summary of Cal. Law, (10th ed. 2005) Contracts, § 798, p. 892 [cases collected].) Moreover, “[if] the cooperation of the other party is necessary for successful performance of an obligation, a promise to give that cooperation, and not to do anything that prevents realization of the fruits of performance will often be implied.” (1 Witkin, supra, § 798, p. 892, italics added.)

Although it is true that Mr. Roberts was not required to sign plaintiff’s initially-proposed purchase agreement to the extent it contained minor deficiencies or errors, we believe the implied covenant of good faith and fair dealing required Mr. Roberts to minimally cooperate in the process by at least pointing out the purported deficiencies so that the paperwork could be corrected and the transaction completed. Instead, the testimony reflected that Mr. Roberts elected to take advantage of the flawed paperwork by unreasonably failing to provide any information or cooperation and then allowing time to run out, all in order to prevent plaintiff from receiving the benefit of the contract. The jury concluded that Mr. Roberts conduct amounted to a breach of the implied covenant of good faith and fair dealing. We agree.

We turn to plaintiff’s fraud cause of action against Mr. Roberts, which is challenged based on alleged insufficient evidence. One of the representations alleged in plaintiff’s third amended complaint was that whenever plaintiff asked defendants about whether he should start the process of getting a loan, defendants told him it was “too early to begin the process of obtaining separate financing.” Allegedly, defendants were attempting to induce plaintiff to delay in obtaining financing, so as to miss the contractual deadline. Mr. Roberts testified that he told plaintiff on one occasion, “‘Well, Johnny, you can’t get a loan until the end of the contract.’” However, as pointed out by defendants, any alleged reliance on plaintiff’s part with respect to such representations could not have resulted in damages, because plaintiff and Mr. Servin testified that financing was obtained in October of 2004, a conclusion which the jury must have agreed with in finding a breach of contract.

The balance of the fraud cause of action was essentially one for promissory fraud based on the promises in the oral loan agreement. Defendants argue that failure to perform such promises amounted to a mere breach of contract, if anything, but were not shown to constitute actual fraud. We disagree. “‘“A promise made without any intention of performing it” constitutes actual fraud.’” (Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 419, fn. 20.) Of course, to prove that a defendant never intended to perform his original promise requires evidence of “‘something more than nonperformance.’” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.) Such fraudulent intent must often be established by circumstantial evidence, and has been inferred from such circumstances as a defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assurances after it was clear he would not perform. (Ibid.)

Such circumstantial evidence of fraudulent intent was clearly shown here. Mr. Roberts’s conduct of asking plaintiff to wait until nearly the end of the two-year period to secure his loan, his utter lack of any reasonable cooperation in regard to the necessary paperwork to complete the transaction, his month long trip to Europe at the critical timeframe in which plaintiff was attempting to prepare the paperwork and secure the loan financing, his promise to sign the paperwork at the title company office followed by his refusal to do so, were sufficient to permit a reasonable inference that Mr. Roberts never intended to transfer title to plaintiff. We conclude there was substantial evidence to support the fraud cause of action.

As to issues relating to the correct measure of damages, we leave that to the trier of fact on remand, inasmuch as the trial court granted a motion for new trial on the issue of damages.

DISPOSITION

The trial court’s order permitting plaintiff to allege a breach of written contract cause of action is reversed. Accordingly, that part of the judgment awarding damages to plaintiff on the cause of action for breach of written contract is vacated. In all other respects, the orders and judgment of the trial court are affirmed. Costs on appeal are awarded to plaintiff.

Kane, J.

WE CONCUR:

Levy, Acting P.J.

Hill, J.