Unpublished Disposition, 846 F.2d 1382 (9th Cir. 1986)

Nos. 86-6235, 86-6236.

United States Court of Appeals, Ninth Circuit.

Before BRUNETTI and DAVID R. THOMPSON, Circuit Judges and PHILIP M. PRO^** , District Judge.

MEMORANDUM^* 

By these consolidated appeals, Appellants MARTIN A. WALK and LORRAINE WALK ("WALK") and RICHARD A. WEINTRAUB ("WEINTRAUB") appeal the district court's order of June 23, 1986, granting summary judgment in favor of Appellee, FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC").

The underlying action was brought by the FDIC against TRI-W INVESTMENT COMPANY ("TRI-W"), RICHARD A. WEINTRAUB, WARREN NEMIROFF, SUZANNE NEMIROFF, MARTIN A. WALK aka TONY WALK and LORRAINE WALK, for collection on a $60,000 promissory note and for collection on the continuing guarantees of the indebtedness of TRI-W held by Western National Bank ("WNB").

On July 28, 1981, WNB made a $60,000 loan to TRI-W at an interest rate of 2% per annum in excess of WNB's floating prime rate. The promissory note was executed by MARTIN A. WALK in his capacity as an officer of TRI-W. The TRI-W note was guaranteed by Appellant WEINTRAUB in the amount of up to $30,000 and by Appellants WALK up to $60,000.

Following the last payment made on the note on June 10, 1982, TRI-W defaulted on the note. On August 27, 1982, WNB was declared insolvent and placed in FDIC receivership. Also on August 27, 1982, FDIC, in its capacity as receiver of WNB, sold to FDIC in its corporate capacity, certain assets of WNB, including the TRI-W note and guarantees of WALK and WEINTRAUB.

On November 30, 1984, FDIC brought action against TRI-W, WALK, WEINTRAUB and others in United States District Court for the Central District of California as the present holder and owner of the note and guarantees. Following a hearing conducted May 19, 1986, the Honorable Ferdinand F. Fernandez, United States District Judge, on June 23, 1986, entered summary judgment in favor of FDIC and against Appellants WALK and WEINTRAUB, and others who are not parties to this appeal, in principal sums of $60,000 and $30,000, respectively, plus accrued interest and attorneys fees. In so ruling, the district court rejected the argument of WALK and WEINTRAUB that the language of the guarantees was ambiguous and found that the guarantees provided for a maximum principal amount with interest on the unpaid principal.

This court reviews a district court's grant of Summary Judgment de novo. Ford v. Manufacturers Hanover Mortgage Corp., 831 F.2d 1520, 1523 (9th Cir. 1987). After viewing the evidence in the light most favorable to the party opposing the motion, this court will affirm if no genuine issue of material fact is found and it is determined that the district court correctly applied the relevant substantive law. Poland v. Martin, 761 F.2d 546, 547 (9th Cir. 1985); Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986).

The interpretation of a contract of guarantee is determined by the same rules used in construing other types of contracts. California Civil Code section 2837; Verdugo Highlands, Inc. v. Security Ins. Co. of New Haven, 240 Cal. App. 2d 527, 49 Cal. Rptr. 736, 739 (1966). "A contract is ambiguous when on its face it is capable of two different reasonable interpretations." Pedersen v. Fiksdal, 185 Cal. App. 2d 30, 34, 7 Cal. Rptr. 874 (1960). See also Atchison, Topeka and Santa Fe Railway Co. v. Brotherhood of Railroad Trainmen, et al., 229 Cal. App. 2d 607, 40 Cal. Rptr. 489, 493 (1964).

"The existence of an ambiguity must be determined as a matter of law. United States v. Contra Costa County Water District, 678 F.2d 90, 91 (9th Cir. 1982). If an ambiguity exists, a question of fact is presented." State Farm Mut. Auto. Ins. v. Fernandez, 767 F.2d 1299, 1301 (9th Cir. 1985).

'A term is ambiguous if it has no definite significance or if it is capable of more than one sensible and reasonable interpretation.' Oakridge Cablevision Inc. v. First Interstate Bank, 65 Or.App. 640, 673 P.2d 532, 536 (1983). But a contract is not made ambiguous simply because the parties fail to agree on its interpretation. See Boudreau v. Borg-Warner Acceptance Corp., 616 F.2d 1077, 1079 (9th Cir. 1980).

Port of Portland v. Water Quality Ins. Syndicate, 796 F.2d 1188, 1194 (9th Cir. 1986).

The relevant language of the guarantees executed by WALK and WEINTRAUB provides as follows:

The liability of Guarantors shall not exceed at any one time the sum of _______ dollars ($_______) for principal, together with interest upon the indebtedness or upon such part thereof as shall not exceed the foregoing limitation.

The guarantee executed by WALK provided for a sum of $60,000 whereas the guarantee executed by WEINTRAUB provided for the sum of $30,000. WALK and WEINTRAUB contend that the language of the guarantees provide that the maximum total liability, including principal and interest, shall at no time exceed the specified sum of $60,000 in the case of WALK and $30,000 in the case of WEINTRAUB. The FDIC contends, and the district court agreed, that the specified amount applies only to the principal indebtedness and that interest thereon is an additional indebtedness covered by the guarantees.

At the hearing regarding FDIC's Motion for Summary Judgment conducted May 19, 1986, Judge Fernandez construed the language of the guarantees at issue as follows:

It seems to the court that the merest reading of the guarantee at issue makes it perfectly clear that the liability is $60,000 principal plus interest upon that part of the indebtedness that doesn't exceed $60,000.

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By the way, the underlying note, it's interesting to point out, uses the same language, of $60,000 together with interest. The language that goes on in the guarantee, it's perfectly obvious, is intended to make sure that the people would not have to pay interest, for example, on an $80,000 note if their guarantee was only $30,000. It would be $30,000 together with the interest on the note, on the $30,000. It's not, obviously, intended to limit the interest and everything to the $60,000, period.

We find that a simple reading of the guarantees at issue shows that they unambiguously provide for the payment of principal plus interest. The language provides for a certain amount "for principal". After the word "principal" a strategic comma is placed, causing a break and implying that the word "principal" refers to the preceding amount. After the comma come the words "together with all interest". The dictionary definition of "together with" includes "in addition to". Words in a contract are to be understood in the usual sense. California Civil Code Sec. 1644. Normal usage and understanding of these words clearly reflects that the guarantees cover the principal amounts stated plus all interest on those amounts.

Appellants also argue that an ambiguity in a contract is to be construed against the party causing the ambiguity to exist. Federal Leasing Consultants v. Mitchell Lipsett Co., 85 Cal. App. 3d Supp. 44, 48, 150 Cal. Rptr. 82, 84 (Cal.App.Dep't.Super.Ct.1973). However, because we find no ambiguity in the guarantees at issue, appellants' argument in this regard is inapposite.

Finally, FDIC argues that the Court cannot properly consider WEINTRAUB's declarations that in signing his guarantee, he understood that his liability was not to exceed $30,000 for principal and interest. The Court agrees that such alleged oral agreements are prohibited by Title 12, United States Code, Section 1823(e).

A party's understanding of a contract is not admissible to alter its plain meaning. Parol evidence should not be considered for the purpose of creating an ambiguity. Port of Portland, 796 F.2d at 1194-95. "As a general rule, plain and unambiguous language will be given its ordinary meaning and effect; the need to resort to construction arises only when an ambiguity exists." Pearce v. General Am. Life Ins. Co., 637 F.2d 536, 539 (8th Cir. 1980).

The district court correctly construed the guarantees at issue and properly granted summary judgment in favor of FDIC. We AFFIRM.