M.B. Herzog Electric v. B.D. Pacific Construction

Filed 4/3/06 M.B. Herzog Electric v. B.D. Pacific Construction CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from a judgment of the Superior Court of Los Angeles County. Richard C. Hubbell, Judge. Reversed with directions.

William E. Lloyd, Jr. and Howard Posner for Plaintiff and Appellant H.B. Herzog Electric, Inc.

Patrick L. Garofalo for Defendants and Appellants.

________________________

Plaintiff M.B. Herzog Electric, Inc. (Herzog) appeals from a judgment after a bench trial in favor of respondents B.D. Pacific Construction, Inc., Merit Engineering, Inc. and George Domet in its action for breach of contract, account stated, and fraud. The trial court found that Herzog had failed to establish the contracts upon which it sued and awarded defendants their attorneys' fees. Herzog contends that (1) the trial court's statement of decision is deficient because it fails to address all of Herzog's claims, and (2) the judgment is not supported by the evidence. Defendant cross-appeals from the award of attorneys' fees, contending the award of fees was insufficient. We find the trial court's statement of decision is deficient, and reverse and remand for the trial court to prepare and file a statement of decision in conformity with the views expressed in this opinion.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On July 22, 2003, Herzog commenced this action against B. D. Pacific Construction, Inc. (Pacific), Merit Engineering, Inc. (Merit), and George J. Domet (Domet),[1] alleging claims for breach of written contract, account stated, and fraud. Herzog's contract and account stated claims were based upon some electrical subcontracting work it did for Pacific, a general contractor, at the Raytheon Company premises in El Segundo. The fraud claims were based upon alleged representations by Merit and/or Domet that the contract amounts would be paid. Defendants' answer asserted several affirmative defenses, including lack of a valid California contractor's license.

Herzog presented evidence concerning three separate jobs:

1. Herzog Job No. 515 (Pacific Purchase Order No. 50-00398).

Herzog alleged the initial contract price for electrical installation of $48,348 was evidenced by Pacific's Subcontractor Authorization dated April 11, 2000, signed by Walter Beard, Project Manager. The job was expanded to include additional work in the amount of $21,166 relating to security as described on a Herzog Change Order dated May 4, 2001, as accepted by Richard Nasr, Pacific's Vice President, on September 10, 2001. A change order for additional work of $466 was submitted by Herzog in response to Pacific's request.

The total claimed by Herzog for this job was $70,178. This amount was billed in five separate invoices. Herzog contended the evidence showed Pacific paid a total of $48,348, leaving a balance of $21,830 due.

2. Herzog Job No. 516 (Pacific Purchase Order No. 50-00406).

Herzog alleged a contract price of $21,216 for security installation work, as evidenced by Herzog's bid submitted March 27, 2000 and Pacific's Subcontractor Award Notification, signed by Walter Beard, Project Manager. Herzog billed the amount due in three separate invoices. Herzog contended the evidence showed Pacific paid a total of $11,668.80, leaving a balance of $9,547.20.

3. Herzog Job No. 413 (Pacific Purchase Order No. 50-0406).

Herzog alleged a total contract price of $20,192 based upon a Subcontractor Award Notification, Revised, signed by Walter Beard, Pacific's Project Manager, in the amount of $7,000, plus a change order for $5,886 of additional work, although the bid was actually $13,960. Apparently the bid was split in two to assist Pacific in getting the contract. On June 28, 2000, a Subcontractor Authorization from Pacific authorized $4,822 in additional work, to which was added a July 10, 2000 change order in the amount of $2,484. A corrected invoice was sent July 25, 2000, which listed the contract amount of $20,192, deducted the $19,846 already billed, and stated an amount due of $346. Herzog contended Pacific paid only $346 of the amount due.

Herzog's fraud claims were based upon its allegations that when the accounts became seriously past due, Herzog contacted Pacific and told it that Herzog would put a mechanics' lien on the building unless it was paid. Domet asked Herzog to refrain from doing so, and assured Herzog it would be paid. Herzog claimed it did not pursue its lien rights based upon Domet's representations. Herzog contended Pacific was losing money and may have been insolvent.

Pacific defended on the grounds that the documentary and other evidence put on by Herzog did not constitute contracts upon which it could base a suit for money; Pacific had paid for all authorized work; the invoices and change orders presented by Herzog did not accurately reflect the actual amounts negotiated for the jobs; the invoices were inaccurate because they were duplicative; and Herzog continued to bill for amounts already paid.

At the conclusion of Herzog's evidence, Pacific moved for judgment on the grounds that (1) Herzog had not established it had a valid contractor's license, a prerequisite to recovery, and (2) Herzog had failed to make out a prima facie claim of fraud against Merit and Domet. Herzog responded to the motion by stating it would submit evidence concerning its licensing as a contractor, and agreed to withdraw the fraud claim against Merit. Ultimately, the trial court granted the motion as to Domet on the fraud claim, and denied it in all other respects.

At the conclusion of witness testimony, Herzog agreed to withdraw the fraud claim against Domet, and the court agreed to permit Herzog to proceed against Domet on a theory of alter ego. Pacific stated that it would be willing to stipulate that the contracts at issue contained an attorneys' fees provision. Herzog agreed.[2] At the conclusion of trial, the court stated that it would issue a tentative decision, and that the prevailing party was to prepare a proposed statement of decision, to which the opposing party would have an opportunity to respond.

The court issued a tentative decision awarding judgment to Pacific on the ground Herzog had failed to establish contracts for performance thereunder. The trial court issued an abbreviated statement of decision prepared by Pacific which found for defendants, stating only that â€