Coffman Specialties v. West Coast Aggregates
Filed 3/2/07 Coffman Specialties v. West Coast Aggregates CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
COFFMAN SPECIALTIES, INC., H029349
Plaintiff and Respondent, (Santa Clara County
Superior Court
v. No. 1-03 CV815294)
WEST COAST AGGREGATES, INC., et al.,
Defendants and Appellants.
_____________________________________/
Plaintiff Coffman Specialties, Inc. (CSI) brought a claim against defendant West Coast Aggregates, Inc. (West Coast) for breach of contract to supply materials for a project to widen Highway 101. Following trial, the court found in favor of CSI and awarded damages in the amount of $391,592, plus costs, prejudgment interest, and attorneys fees. On appeal, West Coast contends: (1) the trial court erred in allowing CSI to base its claim on documents not specifically identified in its complaint; (2) the statement of decision was ambiguous and inconsistent, and failed to resolve material issues; and (3) there was insufficient evidence to support the finding that there was a written contract between the parties. We find no error and affirm.
I. Factual and Procedural Background
The Santa Clara Valley Transportation Authority (VTA) sought bids on a project to widen Route 101 near Morgan Hill. Bids were to be submitted on July 23, 2001. CSI is a paving subcontractor. In order to prepare its bid on the paving portion of the project, CSI obtained price quotes on materials, including sand and aggregates. The contract for the project required that these materials comply with the specifications of the California Department of Transportation (Caltrans) and pass certain quality tests.
West Coast is a supplier of paving materials. West Coast learned about the project through an online source. Since this source did not provide details, Rusty Gainor, West Coasts sales manager, obtained the information about types and quantities of materials from other contractors. On July 20, 2001, West Coast submitted a price quote to CSI for 80,000 tons of concrete sand, 80,000 tons of 1 x 4 washed concrete aggregate, and 60,000 tons of 1 1/2 x 3/4 washed concrete aggregate. The quote contained the language: ALL MATERIALS QUOTED, SUBJECT TO PRIOR SALE [] QUOTE IS NOT A PURCHASE ORDER NOR COMMITMENT OF SUPPLY. COMPLIANCE WITH SPECIFICATIONS ARE LIMITED TO F.O.B. QUARRY[.][1] According to Richard DeAtley, president of West Coast, this language appeared on all of West Coasts quotes. DeAtley explained that West Coast would not make a commitment to supply a specific quantity, because subcontractors were not obligated to purchase any particular amount of materials, even those that had been ordered.
When James Coffman, president of CSI, saw West Coasts price quote, he asked Martin Keane, CSIs project manager and chief estimator, to find out if West Coast could supply the materials needed for the project. According to Coffman, when CSI cannot confirm that a supplier will provide the quantity and quality of material needed within the time frame of construction, it uses an alternate source in pricing its bid and does not use that supplier on the project. Keane contacted Gainor, who stated that it would not be a problem to supply the materials.
On July 23, 2001, CSI received a revised quote from West Coast. This quote included a price for 80,000 tons of Class II aggregate base and a reduction in price for the 1 1/2 x 3/4 washed concrete aggregate. It also stated: QUOTE IS NOT A PURCHASE ORDER NOR COMMITMENT OF SUPPLY. Both Gainor and Jeannette Nelson, his assistant, told Keane that the price had been reduced because they really wanted this job. West Coast also faxed two letters certifying that its sand and aggregate met the Caltrans specifications.
CSI used the West Coast figures for the portion of the bid reflecting the aggregate supplier. CSI then sent its bid to various general contractors, including RGW Construction, Inc. (RGW). The VTA awarded the contract to RGW, who informed CSI that it was being awarded the paving subcontract. On the same day, Keane told Gainor that CSI was going to use them as the materials supplier. Gainor was happy to hear it, and told Keane that West Coast was moving additional equipment to the site.
The VTA originally planned that the project would occur in three phases beginning in August 2002 and ending a year later, with the north part of the highway being done last. However, the VTA decided to change the sequencing of the project so that the north portion would be done first, starting in the winter of 2001. In November 2001, Coffman asked Gainor if West Coast could provide materials for the accelerated phase. Gainor replied, Yes, we believe we can do it.
On December 5, 2001, West Coast sent CSI a credit application for the purchase of materials. The following day, CSI executed the application, which included an attorneys fees clause.
In December 2001, CSI ordered a portion of the material needed for the accelerated phase of work. CSIs practice was to inform[] its suppliers the quantity of materials it may need on any given day by providing them with a schedule that shows basically a daily consumption of materials . . . . This information, characterized as a pour schedule, was sent by facsimile to West Coast in spreadsheet format on December 11, 2001. After receiving this order, West Coast worked overtime to supply the material.
On December 17, 2001, CSI sent a purchase order to West Coast. According to Coffman, this document was intended to memorialize all of the conditions of the original quote as well as any of the conversations and oral agreements we have. On January 7, 2002, Gainor sent a letter to CSI in which he acknowledged receipt of the purchase order, but stated that it is not [West Coasts] practice to reflect on any terms other than what is stated on our original quote, see attached. Attached to the letter was a copy of West Coasts July 23, 2001 price quote.
On December 19, 2001, CSI began using LCB materials from West Coast. However, the following day CSI discovered that these materials did not meet specifications. CSI then discontinued use of the LCB materials and located another supplier.
CSI had also encountered problems with the aggregates from West Coast to be used in the Portland cement concrete. A test report, which was dated December 5, 2001, showed that the aggregates failed the sodium sulfate soundness test. Though the material passed a December 11, 2001 test, it failed subsequent tests.
On February 4, 2002, West Coast informed CSI that it had run 2 months at two 8-hour shifts to produce the required inventory at both our Freeman Quarry and Pilarcitos Quarry operations. In a February 19, 2002 letter to CSI, West Coast stated: . . . we have produced the quantities the above referenced job requires and the necessary materials are on the ground for both the 1 x No.4 (1) and the concrete sand. D[ue] to the uncertainty on retesting we are about half way through the 1 1/2 order. [] We will continue to call RGW for retesting and make 1 1/2 for this project. However, West Coast also stated: . . . we are going by the terms on the quote.
CSI attempted to use the West Coast materials in Phase II. On May 16, 2002, West Coast requested a schedule of pouring activities. CSI replied with a list of materials needed for this phase. West Coast began processing the order upon receipt.
In May 2002, West Coast requested that their materials be pre-qualified for Phase II. On June 11, 2002, representatives from the VTA, RGW, CSI, and West Coast met at the Freeman Quarry, and samples were taken for testing. Since the materials barely passed the sodium sulfate test, the VTA ordered additional testing. On July 2, 2002, another sample was taken and the materials failed.
On July 31, 2002, RGW notified CSI that the VTA would no longer approve West Coast materials. CSI then used other suppliers for the remainder of the job, and encountered additional costs as a result.
On March 7, 2003, CSI filed a complaint against West Coast for breach of written and oral contract and warranty. West Coast answered the complaint and filed a cross-complaint against CSI for breach of contract and intentional and negligent misrepresentation. In July 2004, CSI filed a first amended complaint that added a cause of action for promissory estoppel. On January 21, 2005, West Coast dismissed its cross-complaint without prejudice.
At trial, CSI claimed that it rejected West Coasts quotes, that West Coast had accepted CSIs counteroffer, and that the terms of the contract were set forth in the quotes, the purchase order, and the credit application. Alternatively, CSI argued an estoppel theory. West Coast argued that the parties never agreed on the quantity term, and thus there was not an enforceable contract. In its reply brief on closing argument, CSI argued, among other things, that the parties entered into a contract in August 2001 when it informed West Coast that it would use its materials and/or when CSI ordered materials in December 2001.
The trial court overruled West Coasts objections to consideration of the pour schedules as contractual documents, found that the parties had entered into a written contract that was breached by West Coast, and rejected CSIs estoppel theory. Following the denial of West Coasts motion for new trial, the trial court entered judgment in favor of CSI.
II. Discussion
A. Basis for Breach of Contract Claim
West Coast contends that the trial court erred in allowing CSI to base its breach of contract claim on documents that were not specifically identified in its first amended complaint.
The first amended complaint alleged: The written contract is comprised of the written documents exchanged between the parties, and the course of dealings between the parties, including the written quotations supplied by WEST COAST, and DOES 1 through 10, (Exhibit A); the Credit Application (Exhibit B); and the Purchase Order (Exhibit C).
CSIs discovery responses stated that there was a contract between the parties, and that the documents comprising the contract were the two quotes, the credit application, and the purchase order dated December 17, 2001. CSIs trial and opening post-trial briefs also took this position. CSI then stated in its closing post-trial brief that the pour schedule was part of the contract. When West Coast objected to this change, CSI argued that West Coast was aware of these documents prior to trial. CSI noted that West Coasts dismissed cross-complaint had alleged that CSI breached the contract, and pointed out that West Coast attached the May 20, 2002 pour schedule to its cross-complaint and referred to the December 11, 2001 order in the pleading allegations in connection with the its misrepresentation claim.
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. Whenever it appears that a party has been so misled, the Court may order the pleading to be amended upon such terms as may be just. (Code Civ. Proc., 469.) Where the variance is not material, as provided in Section 469 the court may direct the fact to be found according to the evidence, or may order an immediate amendment, without costs. (Code Civ. Proc., 470.) It is within the trial courts discretion to allow amendments to conform to proof. (Walker v. Belvedere (1993) 16 Cal.App.4th 1663, 1670.)
Here the first amended complaint alleged that the written documents exchanged between the parties constituted the contract, including the price quotes, credit application, and purchase order. We fail to understand how this allegation misled West Coast. The allegation clearly notified West Coast that the parties written documents constituted the contract. The fact that the first amended complaint listed some of the documents, but not others, did not limit the documents that CSI could rely on at trial to prove its breach of contract claim. The term includes is ordinarily a word of enlargement and not of limitation. [Citation.] (People v. Western Air Lines (1954) 42 Cal.2d 621, 639.) Nor are we persuaded that CSIs discovery responses and part of its briefing somehow altered the allegations in the first amended complaint. In our view, there was no variance between the allegations in the first amended complaint and the evidence introduced at trial. Accordingly, there was no error.
West Coasts reliance on Trafton v. Youngblood (1968) 69 Cal.2d 17 is misplaced. In Trafton, the plaintiff sued his attorney for diversion of escrow funds, and the attorney cross-complained for fees on an account stated. (Id. at pp. 21-22.) Following trial, the attorney sought to amend the cross-complaint to conform to proof on a claim of quantum meruit. (Id. at pp. 23-24.) The California Supreme Court held that the 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.] (Id. at p. 31.) The court then affirmed the trial courts refusal to allow the attorney to amend his pleading. (Id. at p. 32.) In contrast to Trafton, here, as previously discussed, CSIs pleadings adequately informed West Coast as to the basis for its breach of contract claim.
B. Statement of Decision
West Coast next argues that the statement of decision was ambiguous and inconsistent, and failed to resolve material issues.
Code of Civil Procedure section 634 provides: When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous . . ., it shall not be inferred on appeal . . . that the trial court decided in favor of the prevailing party as to those facts or on that issue. In a statement of decision, [a]ll that is required is an explanation of the factual and legal basis for the courts decision regarding such principal controverted issues at trial as are listed in the request. (Miramar Hotel Corp. v.Frank B. Hall & Co. (1985) 163 Cal.App.3d 1126, 1130.) The trial court does not err when it fails to make findings on immaterial issues. (In re Marriage of Garrity& Bishton (1986) 181 Cal.App.3d 675, 687.) Even where findings are to some extent inconsistent a judgment may not be set aside unless the conflict is clear and material and the findings are incapable of being harmoniously construed. (Richter v. Walker (1951) 36 Cal.2d 634, 639.) Thus, a missing finding may be supplied by implication from the stated findings. (Triple A Management Co., Inc. v. Frisone (1999) 69 Cal.App.4th 520, 537.)
West Coast first focuses on the trial courts findings regarding the price quotations. The trial court stated: West Coasts Quotes were directed to CSI. The Quotes referred to the Project by name, address, and bid date. The Quotes identified materials for sale, the FOB price, the discount price, approximate quantities, shipping terms, payments terms, and warranty terms. The Quotes expressly indicated that they were not a commitment to supply. The Quotes contained a signature line for CSIs acceptance. Viewed as a whole, the Quotes were offers to sell the materials stated, at the prices stated, for the Project, in the approximate quantities set forth in the Quotes, on an open book account.
The trial court then addressed the issue of acceptance of the offers in three subsequent findings. The trial court found: Although Gainor confirmed, in two letters dated July 23, 2001, that the materials would meet Caltrans specifications, he never confirmed in writing that West Coast was committed to supply the entire Project or that it was waiving the non-committal language contained in its Quotes. As a result, the only oral representations that became part of West Coasts offer were the ones that were confirmed in its July 23, 2001 letters.
The trial court discussed the effect of the purchase order that was sent on December 17, 2001 and West Coasts reply: To the extent that the Purchase Order contained terms that conflicted with the terms established by the Quotes and Credit Application, it was a request for modification. . . . By letter dated January 7, 2002, West Coast rejected these and all other requests for modification.
The trial court then found that [t]he approximate quantities stated in the Quotes are not part of the Contract because the Quotes expressly indicated that they were not a commitment to supply. The quantities requested in the orders that CSI placed on December 11, 2001 and May 20, 2002 are part of the Contract because West Coast agreed to fill these two orders. In other words, West Coast was obligated to supply the following materials in the following quantities at the following prices . . . .
West Coast contends that this latter finding contradicted the finding on the equitable estoppel claim. Regarding the equitable estoppel claim, the trial court found: West Coasts original writings (the Quotes) clearly informed CSI that West Coast was not making a commitment of supply. West Coast never issued any subsequent writing to CSI stating anything to the contrary. After West Coast received CSIs first Purchase Order, it replied, via letter dated January 7, 2002 that it was not agreeing to any terms other than what it stated in its original quotes and it attached a copy of its quotes. In these circumstances, it cannot be said that CSI was ignorant of the true state of facts or that West Coast acted in such a way that CSI had the right to believe that West Coast was committed to supply the entire Project.
West Coast claims that the statement of decision is ambiguous and inconsistent, because the trial court found that the parties agreement included a written provision that West Coast was expressly not agreeing to be obligated to supply any particular quantity of materials, and which was never modified, contained an obligation to supply a specific quantity of materials. We find no merit to this claim. The trial courts finding that West Coast never agreed to supply the quantity of materials set forth in the price quotation of July 23, 2001 is not inconsistent with its finding that West Coast did agree to supply the quantities ordered by CSI on December 11, 2001 and May 20, 2002.
West Coast next argues that the trial court did not resolve the ambiguity in its use of the term open book account.
The term book account means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract . . . and shows the debits and credits in connection therewith . . . . (Code Civ. Proc., 337a.) An open book account is one which is continuous or current, uninterrupted or unclosed by settlement or otherwise, consisting of a series of transactions; also one in which some item in the contract is left open and undetermined by the parties . . . . (Mercantile Trust Co. of San Francisco v. Doe (1915) 26 Cal.App. 246, 254.)
Here the trial court found that [v]iewed as a whole, the Quotes were offers to sell the materials stated, at the prices stated, for the Project, in the approximate quantities set forth in the Quotes, on an open book account. West Coast asserts that this finding is internally inconsistent, because the concept of an open account does not include a fixed commitment to sell anything in the future. However, West Coast has taken this finding out of context. In the same paragraph, the trial court also found that the price quotations made in July 2001 expressly stated West Coast was not committed to supply a specific quantity of materials. Thus, this finding was not internally inconsistent. Nor do we find that the trial courts use of the term was ambiguous. The trial court then found that the parties entered into a contract on December 11, 2001 in which they agreed to record a series of transactions arising out of their contract. The fact that West Coast was obligated to supply the materials ordered on that date did not preclude subsequent transactions between the parties in which CSI agreed to buy and West Coast agreed to sell additional materials.
West Coast also claims that the trial court failed to make a finding on the custom and practice in the aggregate supply business, which would have supported its position that it had no obligation to supply any quantity of materials.
Evidence of the custom and practice in an industry cannot be used to vary the terms of a contract. (Paez v. Mutual Indem. Acc., Health & Life Ins. Co. of California (1931) 116 Cal.App. 654, 660-661; Rottman v. Hevener (1921) 54 Cal.App. 485, 490.) Here the trial court found that the parties entered into a written contract in which West Coast agreed to supply a specific quantity of paving materials. Accordingly, it was not required to make a finding as to the custom and practice in the industry.
West Coast further contends that the trial court erred by failing to make a finding on the issues of mutuality and exclusivity, because these issues were central to a determination of whether there was a contract between the parties. According to West Coast, unless CSI was obligated to purchase materials from West Coast, or at least obligated not to buy from another source, there was no consideration by CSI in exchange for West Coasts obligation to supply a specific quantity of materials. The trial courts findings on these issues may be implied from the stated finding that West Coast was obligated to supply the amounts ordered by CSI in December 2001 and May 2002. Based on this finding, one can infer that CSI was required to purchase the materials that it ordered on these dates.
C. Sufficiency of Evidence
Relying on Commercial Code section 2201,[2] West Coast contends that there was insufficient evidence to support the trial courts finding of a written contract that obligated West Coast to supply any specific quantity of materials to CSI.
Section 2201, subdivision (1) states: Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his or her authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in the writing.
As stated in the Official Comments to section 2201, [o]nly three definite and invariable requirements as to the memorandum are made by this subsection. First, it must evidence a contract for the sale of goods; second, it must be signed, a word which includes any authentication which identifies the party to be charged; and third, it must specify a quantity.
A memorandum of agreement sufficient to meet the requirements of the statute of frauds may be evidenced by several writings such as an exchange of letter or telegrams, or in a writing from one party to the other acted upon by the other. [Citations.] (Goodman v. Community Sav. & Loan Assn (1966) 246 Cal.App.2d 13, 22.)
Here there is evidence of the sale of goods in excess of $500.[3] The parties also reached a written agreement as to the quantity of materials to be supplied by West Coast. There is no dispute that CSI ordered specific quantities on December 11, 2001 and May 20, 2002. West Coast agreed orally and in writing to supply these materials. The testimony of Coffman, Keane, Gainor, and DeAtley established that West Coast attempted to supply the quantities of materials ordered in the pour schedules. West Coast also wrote letters to CSI in which it acknowledged its obligation to fill the orders. On February 4, 2002, West Coast stated that it had run 2 months at two 8-hour shifts to produce the required inventory at both our Freeman Quarry and Pilarcitos Quarry operations. (Italics added.) In a February 19, 2002 letter to CSI, West Coast stated: . . . we have produced the quantities the above reference job requires and [t]he necessary materials are on the ground for both the 1 x No.4 (1) and the concrete sand. (Italics added.) West Coast also indicated that it would continue to call RGW for retesting . . . . Thus, West Coasts letters referred to and acknowledged that specific amounts had been included in the December 11 order, and that it intended to fill the order.[4] In May 2002, West Coast requested a schedule of CSIs pouring activities in Phase II. West Coast then began processing the order. When the materials failed to meet specifications, West Coast sought to be given the opportunity to fill the order. West Coast requested in writing that their materials be pre-qualified to establish that they met Caltrans specifications. West Coast subsequently challenged the test results. After the VTA refused to allow CSI to use West Coast materials on the project, West Coast wrote to CSI that it had worked overtime to fill CSIs order and that it would not credit CSI for any returned materials. Thus, West Coast documented its understanding that it was obligated to supply the materials ordered by CSI.
West Coast also argues that there was insufficient evidence that CSI gave consideration for West Coasts obligation to provide materials. We disagree. CSIs consideration was the obligation to pay for the materials that it ordered on December 11, 2001 and May 20, 2002. Keane testified that when CSI was awarded the subcontract, it intended to use West Coast as the supplier. CSI then paid West Coast for the materials produced by West Coast that met specifications. West Coasts focus on Coffmans testimony that CSI was not obligated to purchase West Coasts materials as of July 23, 2001 does not alter our conclusion as to the sufficiency of the evidence. As the trial court found, the parties had not yet reached an agreement on July 23, 2001 as to the quantity of materials that CSI would purchase from West Coast.
III. Disposition
The judgment is affirmed.
_______________________________
Mihara, J.
WE CONCUR:
_____________________________
Bamattre-Manoukian, Acting P.J.
_____________________________
McAdams, J.
Publication courtesy of California pro bono legal advice.
Analysis and review provided by La Mesa Property line attorney.
[1] Commercial Code section 2319, subdivision (1)(a) states: Unless otherwise agreed the term F.O.B. (which means free on board) at a named place, even though used only in connection with the stated price, is a delivery term under which [] (a) When the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this division (section 2504) and bear the expense and risk of putting them into the possession of the carrier[.]
[2] All further statutory references are to the Commercial Code.
[3] A contract for the sale of minerals to be mined is a contract for the sale of goods. ( 2107, subd. (1).)
[4] West Coast points out that this letter also stated: . . . we are going by the terms on the quote. However, as the trial court found, West Coasts refusal to make a commitment of supply for the entire project did not mean that it had not agreed to supply the materials ordered in December 2001 and May 2002.
