Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC352166 Joanne O’Donnell, Judge.
Law Offices of Kent Vallette and Kent Leeds Vallette; Ostergar Hunter Law Group and Treg A. Julander; Law Offices of Joel R. Bennett and Joel R. Bennett for Plaintiffs and Appellants.
Bright and Brown, Maureen J. Bright and Kristin G. Taylor for Defendant and Respondent.
MANELLA, J.
Appellants Richard C. Jones, Smith Heavy Industrial Transit Corp. (Smith Heavy), and Advanced Development Holdings, Inc. (Advanced) own the surface rights to land on which respondent Brea Cañon Oil Company, Inc. (Brea) conducts oil production operations and maintains a pipeline. In the underlying action, appellants alleged that the leases authorizing the presence of Brea’s oil production operations and pipeline had expired. The trial court granted summary adjudication in favor of Brea on appellants’ claims regarding the oil production operations and, after a trial, entered a directed verdict against appellants on their remaining claims regarding the pipeline. We affirm.
RELEVANT FACTUAL AND
PROCEDURAL BACKGROUND
There are no disputes regarding the following facts: Oil production operations have long existed in an area south of Los Angeles often called the “Joughin Ranch, ” after its original owner, Andrew Joughin. In 1921 and 1945, the ranch owners executed leases permitting oil and gas drilling operations on the ranch in exchange for the payment of royalties. The so-called “habendum” clauses of the leases established a 20-year primary term, but permitted the lessees to continue their operations “so long as” oil and gas “may be produced, ” subject to specified conditions. In 1964, the ranch owners and oil companies operating under the 1921 and 1945 leases entered into an agreement that created the “Joughin Unit” (unit agreement) for purposes of regulating production activities. On July 29, 1964, the unit agreement was approved by the Oil and Gas Supervisor of the State of California pursuant to Public Resources Code section 3301. Brea is the successor in interest to the original lessees under the 1921 and 1945 leases and the oil companies that executed the unit agreement.
A habendum clause of an oil and gas lease typically “states a primary term of years (to cover the exploration period) and an indefinite term thereafter for profitable production.” (12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 796, p. 925.) The indefinite term of the 1921 habendum clause provides that the lease will continue “so long... as oil or gas may be produced... in paying quantities.” The indefinite term of the 1945 habendum clause provides that the lease remains in force “so long... as Lessee in good faith shall conduct drilling (including deepening, repairing or redrilling) or producing operations upon said land, and so long as oil, gas or other hydrocarbon substance may be produced therefrom....”
In the late 1950s, Ray Watt became interested in developing the Joughin Ranch for residential and commercial purposes. Following negotiations with Watt and other parties, the oil company lessees agreed to a plan that accommodated the subdivision of the ranch for development, yet permitted continued oil and gas operations. Under the plan, the lessees retained their subsurface mineral rights, but concentrated their surface operations on specific sites within the ranch and quitclaimed their rights to use the surface of other portions of the ranch.
The parties to the plan executed ground leases regarding several drill sites and other documents relevant to the oil companies’ operations. Pertinent here are two ground leases regarding the A-4 drill site dated February 9, 1967, and the grant of a right-of-way executed by Watt on June 15, 1967. The ground leases gave the companies “sole and exclusive right to use and occupy the surface of” the A-4 drill site for a 35-year term -- that is, until 2002 -- and further provided that the companies, upon “surrender or termination, ” were to quitclaim “full title” to the drill site to the lessors. The grant of the right-of-way permitted the companies to maintain a pipeline on another portion of the Joughin Ranch until January 2002.
Appellants initiated the underlying action in May 2006. Their second amended complaint (SAC) asserted claims for trespass, ejectment, and declaratory relief, alleging, inter alia, that Brea had continued its operations on the A-4 drill site, despite the expiration of the 1967 ground leases in 2002. On May 28, 2008, the trial court granted Brea’s motion for summary adjudication on certain of the SAC claims, concluding that the expiration of the ground leases had not extinguished Brea’s rights regarding the A-4 drill site under the 1921 and 1945 leases, and that appellants lacked standing to challenge these leases.
Appellants’ third amended and first supplemental complaint (TAC), filed October 21, 2008, alleged that Smith Heavy owned the A-4 drill site and Jones owned a lot on Oakhorne Drive on which Brea operated a pipeline (Oakhorne lot). Smith Heavy asserted claims for trespass, quiet title, nuisance, ejectment, and injunctive and declaratory relief against Brea, alleging that after the ground leases regarding the A-4 drill site expired in 2002, Brea never removed its production facilities and quitclaimed its rights to the site. Jones asserted similar claims against Brea, alleging that Brea had maintained its pipeline on the Oakhorne lot after January 1, 2002, despite the expiration of the right-of-way granted by Watt.
Smith Heavy’s claims also encompassed other drill sites subject to ground leases with similar terms. As appellants do not challenge the trial court’s resolution of the claims regarding the other drill sites, they have forfeited all contentions of error regarding them. (Horowitz v. Noble (1978) 79 Cal.App.3d 120, 138-139; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 701, pp. 769-771.)
The complaint also asserted other claims, including claims by Advanced predicated on the allegation that it owned lots on the Joughin Ranch. None of these claims are at issue in this appeal.
Following a jury trial, the trial court directed a verdict in favor of Brea on Jones’s claims, and otherwise resolved appellants’ remaining claims without submitting them to the jury. In the statement of decision, the court found that the 1921 and 1945 leases authorized Brea to maintain its operations on the A-4 drill site and its pipeline on Jones’s lot, notwithstanding the expiration of the 1967 ground leases and Watt’s grant of a right-of-way. On March 10, 2009, judgment was entered in Brea’s favor. This appeal followed.
DISCUSSION
Appellants contend the trial court erred in granting Brea’s motion for summary adjudication and for a directed verdict. We disagree.
A. Summary Adjudication
We begin with appellants’ challenges to the summary adjudication on the SAC claims. Generally, “[a] summary adjudication motion is subject to the same rules and procedures as a summary judgment motion. Both are reviewed de novo. [Citations.]” (Lunardiv. Great West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819.) “Summary judgment is proper if there is no triable issue of material fact and the moving party is entitled to summary judgment as a matter of law. (Code Civ. Proc., § 437c.)” (National Auto. & Cas. Ins. Co. v. Underwood (1992) 9 Cal.App.4th 31, 36.) Generally, “‘[r]eview of a summary judgment motion by an appellate court involves application of the same three step process required of the trial court. [Citation.]’” (Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1662.) The three steps are (1) identifying the issues framed by the complaint, (2) determining whether the moving party has made an adequate showing that negates the opponent’s claim, and (3) determining whether the opposing party has raised a triable issue of fact. (See ibid.)
Although we independently review the grant of summary judgment, our inquiry is limited to the contentions adequately raised in appellants’ opening brief. (Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125-126.) Appellants maintain that the trial court erred in ruling (1) that Smith Heavy lacked standing to assert its claims related to the 1967 ground leases, and (2) that the expiration of the 1967 ground leases did not extinguish Brea’s surface rights regarding the A-4 drill site under the 1921 and 1945 leases. At the outset, we note that appellants have provided a limited record upon which to raise their challenges: they have failed to provide the second amended complaint, their opposition to the summary adjudication motion, or the parties’ separate statements. To support their contentions of error, they rely on the 1921, 1945, and 1967 leases and a declaration from Watt they submitted in opposition to the motion. As Brea does not suggest that appellants’ record is inadequate for purposes of our review of the summary adjudication, we examine appellants’ contentions in light of these materials.
1. Standing
In seeking summary adjudication, Brea successfully contended that Smith Heavy’s SAC claims amounted to a challenge to the 1921 and 1945 leases that Smith Heavy lacked standing to assert. Brea argued that Smith Heavy could not attack the 1921 and 1945 leases, notwithstanding its purported status as owner of the A-4 drill site, because Smith Heavy was neither a party to the leases nor their intended beneficiary. The trial court agreed. As explained below, we conclude that Smith Heavy had standing to assert the SAC claims as a successor in interest to the parties to the 1967 ground leases, which are tied to the interests created by the 1921 and 1945 oil and gas leases.
An owner of real property in fee simple may transfer the oil and mineral rights in the property by a lease while retaining the “remaining general estate in the land.” (Wall v. Shell Oil Co. (1962) 209 Cal.App.2d 504, 510 (Wall).) “An oil and gas lease is both a conveyance and a contract. [Citation.] The conveyancing elements are the granting and habendum clauses, and the contractual elements include the provisions that pertain to the lessee’s obligations with respect to exploring, drilling, and producing operations. [Citation.]” (San Mateo Community College Dist. v. Half Moon Bay Limited Partnership (1998) 65 Cal.App.4th 401, 409 (San Mateo Community College).)
As our Supreme Court explained long ago, the effect of the granting and habendum clauses in an oil and gas lease is to create “an interest or estate in real property in the nature of a profit à prendre.” (Callahan v. Martin (1935) 3 Cal.2d 110, 118.) The lessee’s rights include “a right to remove a part of the substance of the land”; moreover, “[i]f the... lessee is not granted exclusive possession of the surface by the terms of the lease, he has nonetheless a right to such possession as is necessary and convenient for the exercise of the profit, which, in fact, may preclude any other surface possession.” (Id. at p. 122.) When the original lessor is the owner of the property in fee simple, the lessor retains “all rights to use the surface which do not interfere with the operation of the mineral estate.” (Cassinos v. Union Oil Co. (1993) 14 Cal.App.4th 1770, 1780, italics omitted (Cassinos).) The lessee’s profit à prendre and the lessor’s retained surface rights and rights to royalties can be assigned or transferred to others. (12 Witkin, Summary of Cal. Law, supra, Real Property, §§ 806-807, pp. 934-936; see Cassinos, supra, 14 Cal.App.4th at p. 1775 & fns. 1, 2; Brookshire Oil Co. v. Casmalia etc. Co. (1909) 156 Cal. 211, 213-216 (Brookshire Oil) overruled on another ground in Callahan v. Martin, supra, 3 Cal.2d at p. 123.)
The assignees and transferees of such rights are ordinarily entitled to enforce them. Generally, lease provisions relating to the use of real property are understood to “run with the land, ” and may be enforced by the parties’ assignees and successors in interest. (12 Witkin, Summary of Cal. Law, supra, Real Property, §§ 431-439, pp. 502-512.) This principle encompasses oil and gas leases. (Richardson v. Callahan (1931) 213 Cal. 683, 686-690.) Accordingly, in the context of an oil and gas lease, the holder of the original lessor’s surface rights may seek relief against the holder of the original lessee’s rights when the latter’s use of the surface exceeds its right to do so.
In Brookshire Oil, the oil and gas lease granted the lessee non-exclusive surface rights for its oil production operations. (Brookshire Oil, supra, 156 Cal. at pp. 214-215.) When the lessee destroyed a pipeline maintained by the lessor’s assignee, the assignee obtained a judgment for damages and injunctive relief against the lessee. (Id. at p. 213.) Our Supreme Court affirmed the judgment, reasoning that the lessee’s non-exclusive surface rights did not authorize it to remove the pipeline, which had not interfered with the lessee’s production operations. (Id. at pp. 215-217.) The court explained that “[a]ny use by the owner, or others operating under him, which does not affect the search for and production of minerals, is lawful.” (Id. at p. 217.)
Again, in San Mateo Community College, the habendum clause of the oil and gas lease permitted the lessee to continue its operations for as long as its wells produced oil in “paying quantities.” (San Mateo Community College, supra, 65 Cal.App.4th at pp. 405-406.) When the assignee of the original lessee conducted no active operations on the property for eight years, the lessor brought a successful action to quiet title against the assignee. (Id. at p. 405.) In affirming the judgment, the appellate court concluded that the lease had expired under the terms of the habendum clause. (Id. at pp. 409-413.)
Here, the SAC claims are for trespass, ejectment, and declaratory relief. Generally, “‘[t]he essence of the cause of action for trespass is an “unauthorized entry” onto the land of another.’ [Citation.] ‘[A] trespass may occur if the party, entering pursuant to a limited consent, i.e., limited as to purpose or place, proceeds to exceed those limits by divergent conduct on the land of another. “A conditional or restricted consent to enter land creates a privilege to do so only in so far as the condition or restriction is complied with.” [Citation.]’” (Cassinos, supra, 14 Cal.App.4th at p. 1778, quoting Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 16-17.) Ejectment permits a party to “recover possession of real property wrongfully withheld.” (5 Witkin, Cal. Procedure (5th ed. 2008), Pleading, § 634, p. 67.) Declaratory relief is available to establish a party’s rights and interests regarding real property under a lease. (Karbelnig v. Brothwell (1966) 244 Cal.App.2d 333, 340; Code Civ. Proc., § 1060.)
In seeking summary adjudication, Brea admitted several facts relevant to Smith Heavy’s standing to assert the SAC claims. The crux of the claims is that Brea’s predecessors in interest agreed in the 1967 ground leases to vacate the A-4 drill site in 2002, but Brea failed to honor the agreement. Brea’s summary adjudication motion admitted that the 1921 and 1945 leases gave the original lessees only non-exclusive surface rights regarding the drill site, and that the original lessors retained rights to use the surface of the drill site (the retained surface rights). Brea also acknowledged that under the 1967 ground leases, the owners of the retained surface rights gave Brea’s predecessors in interest exclusive surface rights to the drill site until 2002. Although Brea questioned whether Smith Heavy was the rightful owner of the drill site, Brea did not dispute that Smith Heavy had evidence to support its ownership claim.
On appeal, Brea suggests that Smith Heavy’s trespass claim in the second amended complaint was predicated on the theory that the 1921 and 1945 leases “had terminated under their own terms for lack of oil production.” The record does not support this contention. Brea’s summary adjudication motion did not attribute this theory to appellants, and otherwise stated that appellants’ “principal argument” in support of their claims was that “the 2002 expiration of certain Ground Leases entered into by [Brea’s] predecessorsininterest in 1967... foreclose[d] [Brea] from further possession of its Drill Sites....”
In view of these admissions, there are triable issues regarding Smith Heavy’s standing to assert the SAC claims. If Smith Heavy’s ownership of the A-4 drill site were established, Smith Heavy would stand in the shoes of the parties that leased the retained surface rights to Brea’s predecessors in interest in the 1967 ground leases (and ultimately in the shoes of the original lessors under the 1921 and 1945 leases, with respect to their retained surface rights). Similarly, Brea stands in the shoes of the oil companies that executed the 1967 ground leases (and ultimately in the shoes of the original lessees under the 1921 and 1945 leases). Under these circumstances, Smith Heavy, as owner of the site, could properly allege that Brea had violated the “‘“restricted consent to enter land”’” it had received under the 1967 leases (Cassinos, supra, 14 Cal.App.4th at p. 1778) because the lease terms “[ran] with the land.” (See 12 Witkin, Summary of Cal. Law, supra, Real Property, §§ 431-439, pp. 502-512.)
Nothing before us suggests that appellants hold any of the original lessors’ royalty rights.
The out-of-state cases upon which Brea relies do not support the contrary conclusion. In each case, the court concluded that a holder of rights under an oil and gas lease lacked standing to claim that the lease had expired because the holder was neither an original party to the lease nor a third party beneficiary under it. (Grinnell v. Munson (Tex.Ct.App. 2004) 137 S.W.3d 706, 712-714; NRG Exploration v. Rauch (Tex.Ct. App. 1995) 905 S.W.2d 405, 410-411; Bigge v. Tallent (Ky. 1976) 539 S.W.2d 288, 290.) However, none of the cases confronted a ground lease of the kind before us; moreover, none applied California law regarding the enforcement of lease rights by the successors in interest to the original parties to the lease.
Pointing to Code of Civil Procedure section 772.030, subdivision (b), Brea suggests that the existence of the 1964 unit agreement denies Smith Heavy standing to assert the SAC claim. We disagree. The provision in question belongs to a statutory scheme permitting the termination of rights of entry to land under oil and gas leases when oil production activities have effectively ended. (Code Civ. Proc, § 772.010 et seq.). As explained in Donlan v. Weaver (1981) 118 Cal.App.3d 675, 679, the scheme was enacted to remedy the “‘evil’” presented by “‘the continued existence of a right of entry or occupation on the surface... which... affects and encumbers surface areas no longer utilized or needed for the conduct of leasehold operations.’” (Id. at pp. 679-680, quoting Stats. 1971, ch. 1586, § 3, p. 3202.)
Under the scheme, a landowner whose property is subject to a lease may seek to terminate the lessee’s right of entry when “(a) the lease is more than 20 years old, (b) the land to be freed is not occupied by a producing well, and (c) termination of the right of entry will not significantly interfere with the lessee’s right to continue to produce oil in an appropriate manner.” (12 Witkin, Summary of Cal. Law, supra, Real Property, § 798, p. 927; see Butcher v. Okmar Oil Co. (1977) 65 Cal.App.3d 972, 974; Code Civ. Proc., § 772.040.) Although any owner of a “fee interest in the surface of the leasehold lands” may bring an action (Code Civ. Proc., § 772.030, subd. (a)), the scheme provides in Code of Civil Procedure section 772.030, subdivision (b): “No judgment rendered pursuant to this article shall change or affect the terms or operation of any valid unit agreement or valid operating agreement which comes within the provisions of Section 3301 or 3321 of the Public Resources Code.”
The latter provision does not bar Smith Heavy’s claims. Because appellants concede that Brea is producing oil on the drill site, they do not assert a claim under the statutory scheme. (12 Witkin, Summary of Cal. Law, supra, Real Property, § 798, p. 927.) Accordingly, Smith Heavy’s claims do not arise “pursuant to this article, ” within the meaning of Code of Civil Procedure section 772.030, subdivision (b).
2. No Termination of Rights Under 1967 Ground Leases
We turn to the trial court’s alternative grounds for granting summary adjudication on the SAC claims. Following an examination of the language of the 1967 ground leases regarding the A-4 drill site, the trial court concluded that their expiration did not terminate Brea’s nonexclusive surface rights under the 1921 and 1945 leases.
Generally, “[t]he precise meaning” of a contract or lease “depends upon the parties’ expressed intent, using an objective standard.” (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 21.) To determine the parties’ intent, courts examine the pertinent language of the leases, viewed within the lease as a whole. (Eltinge & Graziadio Dev. Co. v. Childs (1975) 49 Cal.App.3d 294, 297.) When there is ambiguity in the language, a court may also consider extrinsic evidence “to ascertain a meaning to which the instrument’s language is reasonably susceptible.” (Golden West Baseball Co. v. City of Anaheim, at p. 21.) The trial court may properly grant summary adjudication on claims based on its interpretation of a written instrument when the extrinsic evidence raises no triable issues regarding the meaning of the instrument’s terms. (See Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1341-1342.)
Here, the 1967 ground leases contain materially similar terms. After stating that the oil companies had quitclaimed their surface rights under the 1921 and 1945 leases to portions of the Joughin Ranch other than the drill site, the ground leases grant the oil companies “sole and exclusive right to use and occupy the surface of” the drill site. The ground leases further provide: “This lease shall become effective on the date hereof and shall continue in effect for the full term of [the 1921 and 1945 leases], or either of them, but in no event beyond a period of thirty-five [] years from the date hereof. [¶] The rights herein leased shall be in addition to, and not a limitation upon, the rights and interests leased to Lessees under [the 1921 and 1945 leases]. [¶]... [¶] Lessees shall have the right at any time during the term hereof to surrender and terminate this lease in its entirety. [¶] Upon the surrender or termination of this Lease, Lessees shall record or cause to be recorded a good and sufficient Quitclaim Deed which shall revest in Lessor full title to the leased premises, free of any claims of Lessees....” (Italics added.)
The key issues presented by Brea’s motion for summary adjudication concern the meaning of the clause italicized above, which the trial court called “the ‘[n]on-[l]imitation [c]lause.’” In seeking summary adjudication, Brea contended that the 1967 ground leases’ 35-year term was inapplicable to their rights regarding the non-exclusive use of the drill site established in 1921 and 1945 leases. Pointing to the non-limitation clause, Brea maintained that the ground leases did not affect their rights under the 1921 and 1945 leases. The trial court concluded that the non-limitation clause, by its plain language, preserved Brea’s rights to the drill site under the 1921 and 1945 leases after the expiration of the ground leases. As explained below, we agree.
In addition, Brea submitted extrinsic evidence that the trial court ultimately did not use in construing the ground leases. The extrinsic evidence concerned the parties’ course of conduct in connection with the ground leases. On February 17, 1967, shortly after the ground leases were executed, the Chief Zoning Administrator for the City of Los Angeles informed the parties by letter that their development plans for the Joughin Ranch had been approved. The chief zoning operator found, inter alia, that the parties had negotiated a plan under which the oil companies relinquished their surface rights to the property, with the exception of certain sites that “would be available for home construction if and when individual oil wells become unproductive and are abandoned or the oil field become[s] economically unproductive and the various drill sites are abandoned.” (Italics added.) In ruling on the summary adjudication motion, the trial court relied exclusively on the language of the ground leases, and did not refer to this extrinsic evidence.
The 1967 ground leases must be interpreted in light of the 1921 and 1945 leases, which are expressly identified in the ground leases. (See Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 54; 1 Witkin, Summary of Cal. Law, supra, Contracts, § 748, pp. 836-838.) The 1921 and 1945 leases are effective for periods of potentially considerable duration. The habendum clause of the 1921 lease provides that “[t]he lease shall continue... so long... as oil or gas may be produced... in paying quantities.” Courts have interpreted clauses with similar language to mean that the lease remains effective as long as continued production operations are profitable for the lessee. (West v. Russell (1970) 12 Cal.App.3d 638, 642; Montana-Fresno Oil Co. v. Powell (1963) 219 Cal.App.2d 653, 666-668). On these matters, the habendum clause of the 1945 lease provides that the lease is effective “so long... as Lessee in good faith shall conduct drilling (including deepening, repairing or redrilling) or producing operations upon said land, and so long as oil, gas or other hydrocarbon substances may be produced therefrom....”
The terms of the 1967 ground leases expressly preserve Brea’s rights under the 1921 and 1945 leases. The ground leases provide that the oil companies, in quitclaiming their surface rights under the 1921 and 1945 leases, “retain[] the surface rights” to the area encompassed by the ground leases. As the trial court noted, the nonlimitation clause further states that the rights granted in the ground leases are “in addition to, and not a limitation upon, the rights and interests... under [the 1921 and 1945 leases].” (Italics added.) Moreover, the clause in the ground leases defining their duration (duration clause) reflects the preservation of the 1921 and 1945 lease rights. Each ground lease states: “This lease shall become effective on the date hereof and shall continue in effect for the full term of [the 1921 and 1945 leases], or either of them, but in no event beyond a period of thirty-five [] years from the date hereof.” (Italics added.) The duration clause thus ties the ground leases’ duration to the 1921 and 1945 leases, as it provides that the ground leases are effective for 35 years unless the 1921 and 1945 leases both expire earlier. However, the italicized phrase in the duration clause impliedly recognizes that the “full term” of the 1921 and 1945 leases could extend beyond the 35-year maximum term of the rights granted under the ground leases.
Appellants contend that the non-limitation clause does not preserve Brea’s rights under the 1921 and 1945 leases. Noting that the non-limitation clause states that “[t]he rights herein leased” do not limit Brea’s “rights and interests” under the 1921 and 1945 leases, they argue that the 35-year cutoff on Brea’s right to the drill site under the ground leases is not itself an element of such right, and thus that the 35-year cutoff falls outside the non-limitation clause. We disagree. Under California law, the period of occupation specified in a lease is integral to the lessee’s right of occupation, as the nature of the period (either determinate or indeterminate) fixes the conditions under which the lessor may recover possession of the property. (Palmer v. Zeis (1944) 65 Cal.App.2d Supp. 859, 862; 12 Witkin, Summary of Cal. Law, supra, Real Property, §§ 504-508, pp. 582-586.)
Appellants’ reliance on San Mateo Community College, supra, 65 Cal.App.4th 401 is misplaced. There, the appellate court characterized the habendum clause in an oil and gas lease similar to those in the 1921 and 1945 leases as “a conditional limitation on the lease term.” (San Mateo Community College, at p. 410.) This remark does not conflict with our conclusion above because oil and gas leases, though denominated “leases, ” do not establish leaseholds of the ordinary sort, but operate instead to create profits à prendre. As the court explained in Kennecott Corp. v. Union Oil Co. (1987) 196 Cal.App.3d 1179, 1187-1188, because “[a] profit interest in geothermal resources is not an ordinary leasehold interest at all, ” specialized principles govern the termination of oil and gas leases that distinguish them from ordinary leases. In view of the fact that the 1967 ground leases did not create a profit à prendre, they are ordinary leases, not oil and gas leases.
Appellants also contend that the ground leases contain two provisions establishing that Brea’s rights under the 1921 and 1945 leases are subject to the 35-year cutoff. The provisions are the clause permitting the lessees to “surrender and terminate” the ground leases (surrender clause) and the clause obliging the lessees to quitclaim their rights upon “surrender or termination” (termination clause). As appellants note, the surrender clause gives the lessees the right to terminate the leases voluntarily prior to their expiration under the duration clause. Arguing that the phrase “or termination” in the termination clause would be redundant if “surrender” were identical in meaning to “termination, ” appellants maintain that surrender cannot be the only way in which termination can be effectuated. They thus contend that “termination, ” as used in the termination clause, must encompass another manner by which the ground leases could end. According to appellants, the clear candidate is the expiration of the 35-year period, as defined in the duration clause.
We disagree with the premise of appellant’s argument. The terms “surrender” and “terminate” first appear in the surrender clause of the ground leases, and refer to the right of the lessees “at any time during the term hereof to surrender and terminate” the ground leases. These terms are thus reasonably construed to refer to the voluntary action of the lessees during the pendency of the ground leases. The fact that the words thereafter appear in the termination clause separated by the word “or” does not change this conclusion. Nor does it suggest that the expiration of the leases after 35 years is tantamount to the lessees’ exercise of their right to terminate prior to expiration of the lease term.
Appellants’ proposed interpretation also fails because it places the termination clause in conflict with the non-limitation clause. Generally, “[c]ontradictory or inconsistent provisions of a contract are to be reconciled by interpreting the language in such a manner that will give effect to the entire contract. [Citations.]” (Estate of Petersen (1994) 28 Cal.App.4th 1742, 1754, fn. 4.) Thus, an interpretation of an oil and gas lease that creates conflicts between its provisions must be rejected “when another interpretation serves to harmonize all the provisions in the lease.” (Southern Pacific Land Co. v. Westlake Farms, Inc. (1987) 188 Cal.App.3d 807, 822.) Under appellants’ proposed interpretation of the termination clause, the expiration of the 35-year lease period would operate to extinguish the lessees’ rights under the 1921 and 1945 leases, thus contradicting the non-limitation clause, which states that the 1967 ground leases supplement, but do not limit, “the rights and interests... under [the 1921 and 1945 leases].”
Appellants contend there are triable issues whether their proposed interpretation of the ground leases is correct. They point in particular to a declaration from Ray Watt and to excerpts from his deposition testimony submitted in opposition to Brea’s summary adjudication motion. Watt asserted that he participated in negotiations with the oil companies preceding the 1967 ground leases. Watt further stated: “[T]he oil companies wanted to continue to extract petroleum and they took the position that this property had a projected limited life for oil production. I was interested in negotiating a maximum term for the oil companies to be present.... We originally discussed a... [25] year term and they negotiated it up to a... [35] year term in which to complete their operation. After that, they would leave. [¶]... [¶] The oil companies agreed that they would be done with their production operations in no more than thirty-five [] years and would, at the termination of [the l]eases in 2002 or sooner, remove themselves and their equipment from the surface of the land and quitclaim all of their interest back to the [l]essors.” Appellants maintain that Watt’s declaration constitutes admissible extrinsic evidence supporting their proposed interpretation of the ground leases.
We conclude that the trial court properly declined to admit Watt’s declaration and deposition testimony to establish an ambiguity in the ground leases. Generally, “[t]he test of whether parol evidence is admissible to construe an ambiguity is... whether the evidence presented is relevant to prove a meaning to which the language is ‘reasonably susceptible.’” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 (Winet), quoting Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37; see ASP Properties Group, L.P. v. Fard, Inc., supra, 133 Cal.App.4th at p. 1270.) For the reasons explained below, Watt’s statements are irrelevant to the meaning of the ground leases under this test.
In ruling on the motion for summary adjudication, the trial court sustained Brea’s objections to Watt’s declaration and deposition testimony on the grounds of speculation and lack of foundation. Brea argued, inter alia, that Watt’s declaration and testimony reflected only his subjective understanding of the ground leases, rather than objective communications between the parties to the ground leases. The trial court agreed.
“The decision whether to admit parol evidence involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine ‘ambiguity, ’ i.e., whether the language is ‘reasonably susceptible’ to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is ‘reasonably susceptible’ to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step -- interpreting the contract. [Citation.]” (Winet, supra, 4 Cal.App.4th at p. 1165.)
Our focus is on the first step. As the court explained in Winet, extrinsic evidence “is admissible only to prove a meaning to which the language is ‘reasonably susceptible’ [citation], not to flatly contradict the express terms of the agreement.” (Winet, supra, 4 Cal.App.4th at p. 1167, quoting Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, 69 Cal.2d at p. 38; see also Curry v. Moody (1995) 40 Cal.App.4th 1547, 1554 [“[E]xtrinsic evidence cannot be used to show that when the parties said ‘Bunker Hill Monument’ they meant ‘the Old South Church’ or that when they said ‘pencils’ they really meant ‘car batteries.’ [Citations.]”].) Thus, in Winet, the appellate court held that extrinsic evidence was inadmissible to show that a release expressly covering unknown claims did not encompass a claim discovered after the release was executed. (Winet, at p. 1169.)
The trial court’s determination regarding the first step presents a question of law that we examine de novo. (Winet, supra, 4 Cal.App.4th at pp. 1165-1166.)
Here, appellants tendered Watts’s declaration and deposition testimony to support their proposed interpretation of the ground leases, which places the termination clause in direct conflict with the non-limitation clause. Under appellants’ proposed interpretation, the termination clause made the 35-year limit on Brea’s right of occupation under the ground leases applicable to Brea’s rights under the 1921 and 1945 oil and gas leases; this interpretation contradicts the non-limitation clause’s express declaration that “[t]he rights herein leased” are “not a limitation upon, the rights and interests leased” under the 1921 and 1945 leases (italics added). Because Watts’s statements do not “prove a meaning to which the language is ‘reasonably susceptible’” (Winet, supra, 4 Cal.App.4th at p. 1167), the trial court did not err in barring the statements. In sum, summary adjudication was proper on the SAC claims.
B. Directed Verdict
The remaining issue concerns whether the trial court properly directed a verdict on Jones’s claims in the TAC related to the Oakhorne lot. “A directed verdict may be granted only when, disregarding conflicting evidence, giving the evidence of the party against whom the motion is directed all the value to which it is legally entitled, and indulging every legitimate inference from such evidence in favor of that party, the court nonetheless determines there is no evidence of sufficient substantiality to support the claim or defense of the party opposing the motion, or a verdict in favor of that party. [Citations.]” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 629-630.) The trial court’s ruling is reviewed de novo. (Brassinga v. City of Mountain View (1998) 66 Cal.App.4th 195, 210.)
1. Evidence at Trial
In January 2009, the court conducted a jury trial on Jones’s claims in the TAC based on Brea’s pipeline on the Oakhorne lot. The crux of the claims was that Brea had improperly maintained the pipeline on Jones’s Oakhorne lot since 2002. The pipeline runs from the B-1 and B-2 drill sites to the boundary of the Joughin Ranch, and crosses the Oakhorne lot. Appellants contended that Brea’s entitlement to maintain a pipeline on the Oakhorne lot ended with the expiration of the ground lease regarding the B-1 and B-2 drill sites and a right-of-way granted by Watt.
The evidence at trial established that the pipeline did not carry oil from the A-4 drill site.
The evidence at trial showed that on February 9, 1967, the oil companies that were Brea’s predecessors in interest executed a quitclaim deed conveying their interests in a portion of the Joughin Ranch. The deed stated that the oil companies “quitclaim[ed] and surrender[ed]... all of their right, title, and interest under [the 1921 and 1945 leases, and 1964 unit agreement]” to use of the surface of a defined area within the Joughin Ranch, subject to several express limitations. The oil companies reserved their rights regarding several parcels of property described in the quitclaim deed. In addition, the companies retained their subsurface rights, as well as “any and all other rights as may be provided for under the terms of [the 1921 and 1945 leases, and 1964 unit agreement] with respect to conducting a drilling, producing or other operation with regard to [the subsurface of the property].” John E. Malloy, an expert in determining the boundaries of properties described in leases and deeds, opined that the deed expressly excluded the B-1 and B-2 drill sites from its scope, but did not exclude the strip of land containing the pipeline that intersects the Oakhorne lot.
We limit our summary of the evidence presented at trial to the evidence pertinent to appellants’ contentions on appeal.
On February 9, 1967, the oil companies also entered into a 35-year ground lease regarding the B-1 and B-2 drill sites (B-1 ground lease). The terms of this lease are materially similar to those of the A-4 drill site ground leases. According to Malloy, the property description in the B-1 ground lease encompassed the strip of land that now contains the pipeline. As set forth in the property description, the strip was approximately 20 feet wide, and crossed the Oakhorne lot Jones subsequently purchased. Later, on June 15, 1967, Watt granted a right-of-way to the oil companies for the construction and maintenance of a pipeline on the strip of land. The grant provided that the right-of-way would expire on January 1, 2002.
Because appellants’ theory at trial relied on assertions regarding the B-1 ground lease, the trial court permitted them to present evidence regarding the meaning of the 1967 ground leases, notwithstanding the summary adjudication on Smith Heavy’s claims in the SAC. Appellants’ principal witness was Watt, who testified that he became interested in developing the Joughin Ranch in the 1950’s. After Watt proposed a development plan for the Joughin Ranch, the oil companies agreed to consolidate their operations on specific sites. The execution of the ground leases was crucial to the plan. According to Watt, the purpose of the duration clause in the ground leases was to “eliminate the entire easement” after 35 years, thereby rendering residences within the development more attractive to buyers.
Watt further testified that the grant of a right-of-way and the quitclaim deed implemented the development plan. The grant was part of the plan’s “fine detail.” As with the duration clause in the ground leases, the purpose of the 35-year limit on the right-of-way was to “minimize all the easements.” According to Watt, the quitclaim deed “complete[d] the [parties’] understanding” regarding the purchase of the Joughin Ranch for development.
Following the presentation of evidence, the trial court determined that the grant of a right-of-way and the quitclaim deed did not impose a 35-year limit on Brea’s right to maintain the pipeline on the Oakhorne lot. The court thus directed a verdict in Brea’s favor on Jones’s claims.
2. Analysis
We conclude the directed verdict was proper. As the grant of a right-of-way and the quitclaim deed implemented a development plan, they must be interpreted in light of the other documents executed under the plan, including the 1967 ground leases. Generally, “where two or more written instruments are executed contemporaneously, with reference to each other, for the purpose of attaining a preconceived objective, they must all be construed together and effect given if possible to the purpose intended to be accomplished; and this principle controls whether each of the several instruments was signed by all or only some of the parties to the transaction. [Citation.]” (Goodman v. Severin (1969) 274 Cal.App.2d 885, 895.) Similarly, the 1921 and 1945 leases and the 1964 unit agreement are relevant to the interpretation of the quitclaim deed, in view of the express references to them in the quitclaim deed. (See Shaw v. Regents of University of California, supra, 58 Cal.App.4th at p. 54.)
Strict contemporaneity is not required for the application of this principle. (Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 967 [“Several documents concerning the same subject and made as part of the same transaction will be construed together even if the documents were not executed contemporaneously.”].)
The interpretation of contracts and other writings presents a question of law when, as here, there are no material disputes regarding the pertinent extrinsic evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
As explained above (see pt. A.1, ante), the 1921 and 1945 leases, by operation of law, gave the lessees the right to occupy the Joughin Ranch to the extent “necessary and convenient” to conduct oil and gas operations (Callahan v. Martin, supra, 3 Cal.2d at p. 122). This right was supplemented by the 1964 unit agreement, which granted Brea’s predecessors in interest “the right to use as much of the surface of the land within the Unit Area as may reasonably be necessary for Unit Operations.” The unit agreement expressly specified that this right was “in addition to[, ] and not in limitation of[, ] the rights conferred by oil and gas leases.” (Italics added.)
The evidence at trial showed that Brea’s predecessors, in consolidating their operations pursuant to the development plan, placed an important pipeline on the Oakhorne property. Although the pipeline did not exist when the B-1 ground lease was executed, the parties anticipated its construction: the B-1 ground lease covered a strip of land running from the B-1 drill site to the boundary of the Joughin Ranch, and Watt’s grant of a right-of-way expressly provided for the construction of a pipeline. The evidence otherwise established that the pipeline had existed since the late 60’s, and that it was crucial for removing crude oil from the area of the Joughin Ranch containing the B-1 drill site.
None of the documents executed to implement the plan extinguished or nullified the oil companies’ rights to build and maintain the pipeline under the broad authorization contained in 1921 and 1945 leases and the unit agreement. We begin with the quitclaim deed. Although the deed did not include the 20-foot strip in the description of the property excepted from the deed’s scope, the deed expressly provided that the oil companies retained “any and all other rights as may be provided for under the terms of [the 1921 and 1945 leases, and 1964 unit agreement] with respect to conducting a drilling, producing or other operation with regard to [the subsurface of the property].” (Italics added.) Because the deed contained other clauses preserving the oil companies’ drilling rights regarding a defined parcel of property and their subsurface rights, the clause above would be superfluous unless it safeguarded their pre-existing rights to maintain pipelines and similar items on the land surrendered under the deed, provided these items were reasonably necessary for the companies’ drilling operations on the retained land.
Our conclusion finds additional support in the terms of the 1921 and 1945 leases. The 1945 lease contains provisions permitting the lessees to surrender and terminate their rights to all or part of the Joughin Ranch. The lease states in pertinent part: “All land surrendered shall remain subject to easements and rights of way for roads and pipelines necessary for use by Lessee in operating the premises retained by Lessee.” (Italics added.) The 1945 lease also provides that in terminating the lease, the lessees would “execute... a quit[]claim deed or other appropriate instrument of surrender.” Similarly, the 1921 lease contains the following provision: “After discovery of oil, the lessee may at any time quit[]claim any part of said land to the lessors, their successors or assigns. Upon the quit[]claiming of any part of the land..., all rights of the lessees therein shall cease, except that the lessees shall have the right to... maintain all producing wells upon the property at that time, and to use so much of the surface of the land as may be necessary or convenient for such operations.” (Italics added.)
In view of these lease terms, the quitclaim deed did not extinguish or nullify the oil companies’ right to operate the Oakhorne lot pipeline. In Clark v. Elsinore Oil Co. (1934) 138 Cal.App. 6, 8, the pertinent oil and gas lease contained a provision similar to those described above. After the lessee executed a quitclaim deed that conveyed “all right, title and interest” in the leasehold, with the exception of a parcel of property on which the lessee operated some oil wells, the lessee continued to maintain a pipeline on the property returned to the lessor. (Id. at pp. 9, 17.) The appellate court concluded that the lease provision authorized the lessee’s pipeline, notwithstanding the quitclaim deed, stating: “[T]he surrender... did not operate to return to [the lessors] that full and unqualified use of their land which they had enjoyed prior to the execution of the lease contract. Their land was returned to them, but it was returned burdened with certain restrictions.” (Id. at p. 17.) The same is true here.
The provision stated in pertinent part: “‘The lessee may at any time quitclaim to the lessors this lease in its entirety or as to part of the acreage covered hereby.... All lands quitclaimed shall remain subject to easement for rights-of-way necessary or convenient for lessee’s operations on land retained by it.’” (Clark v. Elsinore Oil Co., supra, 138 Cal.App. at p. 8.)
Nor did the B-1 ground lease and the grant of a right-of-way modify or terminate this entitlement. As noted above (see pt. A. 2., ante), the ground leases regarding the A-4 drill site expressly preserved the oil companies’ rights under the 1921 and 1945 leases; moreover, for the reasons we have explained, Watts’ testimony failed to support a reasonable alternative interpretation of the ground leases (see Stevenson v. Oceanic Bank (1990) 223 Cal.App.3d 306, 317 [extrinsic evidence, though admitted at trial, could not establish interpretation of contract in direct conflict with contract terms]). As the B-1 ground lease is materially similar to the A-4 ground leases, it also preserved the oil companies’ rights regarding the parcel of property it covered, which includes the location of the anticipated pipeline on the Oakhorne lot. Because the ground lease permitted the oil companies to maintain their drill site operations after the 35-year cut-off, nothing in the lease suggests that the companies’ right to the vital pipeline would end when the ground lease expired in 2002.
We therefore reject appellants’ suggestion that Watt’s trial testimony undermined the propriety of the summary adjudication on Smith Heavy’s claims in the SAC.
We reach a similar conclusion regarding the grant of a right-of-way, which was executed solely by Watt and another representative of Watt’s partnership. As the unilateral actions of a developer cannot limit a lessee’s rights under an oil and gas lease, the grant did not modify the oil companies’ entitlement to maintain the pipeline under the 1921 and 1945 leases or the unit agreement. (See Wall, supra, 209 Cal.App.2d at pp. 514-515.)
Appellants contend that the oil companies’ conveyance of “all of their right, title, and interest” in the quitclaim deed, coupled with their failure to state expressly in the deed that they reserved the right to install the pipeline, necessarily divested them of any right to do so under the 1921 and 1945 leases and the unit agreement. We disagree. As our Supreme Court has explained, although such phrases in quitclaim deeds often reflect an intention to “convey title in its entirety, ” their import must be determined in accordance with principles of contract interpretation, the application of which may sometimes show that they carry a different meaning. (City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 239-240.) As explained above, the quitclaim deed did not divest the oil companies of their pre-existing right to install and maintain the pipeline on the land surrendered under the deed. The quitclaim deed contained a provision that preserved the rights secured by the 1921 and 1945 leases which, as we have explained, were broad enough to encompass the right to build and maintain the pipeline.
To the extent appellants rely on expert testimony from Malloy to support propositions of law regarding the quitclaim deed, we disregard the testimony. Generally, Evidence Code section 805 permits expert testimony on the ultimate issue to be decided by the factfinder. However, this rule “does not... authorize an ‘expert’ to testify to legal conclusions in the guise of expert opinion. Such legal conclusions do not constitute substantial evidence. [Citation.]” (Downer v. Bramet (1984) 152 Cal.App.3d 837, 841; see also Elder v. Pacific Tel. & Tel. Co. (1977) 66 Cal.App.3d 650, 664.) Even lawyers may not testify as to legal conclusions. (See California Shoppers, Inc. v. Royal Globe Ins. Co. (1985) 175 Cal.App.3d 1, 67; Downer v. Bramet, at p. 842.)
Appellants contend that the quitclaim deed cannot be interpreted as preserving the oil companies’ right to a pipeline under the 1921 and 1945 leases and the unit agreement, as such an interpretation renders the grant of a right-of-way superfluous. We reject this contention. Watt testified that the right-of-way was executed as part of the development plan’s “fine detail, ” prior to the construction of the pipeline. Because the oil companies’ rights under the 1921 and 1945 leases and the unit agreement did not compel them to place the pipeline in any particular location, the grant promoted the construction of a pipeline in a determinate place, for purposes of long-term development of the area.
On appeal, the parties dispute whether the oil companies knew the right-of-way had been granted. In our view, this dispute does not involve a material fact. As Watt provided unchallenged testimony that he granted the right-of-way for a pipeline after negotiating with the oil companies, the record establishes that the parties were interested in the location of the pipeline. This fact provides a sufficient explanation for Watt’s decision to grant the right-of-way.
Appellants also contend there is insufficient evidence that the Oakhorne lot pipeline is “absolutely ‘necessary’” for their operation, for purposes of preserving their rights under the 1921 and 1945 leases. However, under California law, the lessee need establish only that the burdens to the leasehold are “reasonably necessary to the full enjoyment of the mineral estate.” (Wall, supra, 209 Cal.App.2d at p. 513.) Here, the evidence at trial showed that the pipeline was an integral part of Brea’s operations in an area of the Joughin Ranch.
In a related contention, appellants maintain there is a triable issue whether the location of the Oakhorne lot pipeline is “reasonably... necessary” under the unit agreement, arguing that the record discloses evidence that the pipeline could be redirected to run beneath a street. On this matter, an engineer who testified on Brea’s behalf opined that although a relocation of this sort was possible, it would be a “big undertaking, ” requiring the displacement of existing utilities. In addition, Malloy testified that he appeared at a city hall meeting on Jones’s behalf, and opposed a proposal of this sort regarding the Oakhorne lot pipeline. None of this evidence supports the inference that the relocation is reasonable.
Finally, appellants argue that if Brea is authorized to maintain a pipeline under the 1921 and 1945 leases and the unit agreement, then Brea could build a pipeline anywhere in Joughin Ranch. This contention fails, as nothing before us suggests that Brea could show that placing a pipeline in a capriciously chosen location was “reasonably necessary to the full enjoyment of the mineral estate.” (Wall, supra, 209 Cal.App.2d at p. 513). In sum, the trial court properly granted a directed verdict on Jones’s claims related to the Oakhorne lot.
DISPOSITION
The judgment is affirmed. Brea is awarded its costs on appeal.
We concur: WILLHITE, Acting P. J., SUZUKAWA, J.
Brea contends that appellants forfeited their challenge to the evidentiary rulings by relegating their argument to a footnote in their opening brief. Although footnote arguments often work a forfeiture (Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 160), we elect to address whether the trial court properly excluded Watt’s statements. However, it is unnecessary for us to address the precise bases for the evidentiary rulings, as we will affirm the trial court’s decision not to admit extrinsic evidence regarding the meaning of the ground leases on any ground properly supported by the record. (See ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1268.) As explained below, such a ground is present here.