Sukumar v. Wise

Filed 4/28/06 Sukumar v. Wise CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Charles R. Hayes, Judge. Affirmed.

Appellant Ponani Sukumar (Sukumar) sued respondent Lois Jean Wise and her business, A Wise Design (Wise) for breach of contract, arising out of an agreement for the design, fabrication, delivery and installation of cabinetry in Sukumar's home. In response, Wise filed a cross-complaint alleging that Sukumar, by his actions, breached the contract when he refused to allow Wise and her workers to complete the installation of the cabinetry.

The matter went to court trial on all the breach of contract allegations, and the parties waived a statement of decision. After presentation of extensive testimony and documentary exhibits, the trial court rendered a decision from the bench that Sukumar had failed to prove a breach of contract or the elements of rescission, while Wise had proven breach of contract and was entitled to recovery. Judgment was entered accordingly, such that Sukumar recovered nothing but Wise recovered contract damages in the amount of $69,968 (which included a prejudgment interest award). (Civ. Code, § 3287, subd. (a); all further statutory references are to the Civil Code unless noted.)

Sukumar appeals the judgment, contending that the trial court erroneously assessed the compensatory damages, by failing to take all the relevant factors into account. He also contends the prejudgment interest award was erroneous and calculated from the wrong starting point, on the theory that the contract damages were not certain or capable of being made certain at that time. We disagree and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A

Contract, Performance, and Pleadings

From July 2000 through February 2001, the parties entered into a series of nine purchase orders for the fabrication and installation of cabinetry in several areas of Sukumar's home. They anticipated that the cabinets would be completely installed in one area of the house before installation was started in another area of the house. The purchase orders included separate line item payments for materials, delivery, and completion.

Unfortunately, although both parties evidently anticipated the project would be completed in a timely manner, this did not occur. The parties had extensive disputes about the working conditions provided in the home and the various installers' abilities to make progress in the work under those conditions.

On appeal, Sukumar is not disputing that he breached the contract by not accepting the manner in which the work was being performed and by therefore materially contributing to delays in installation. Ultimately, although some of the cabinets were partially installed between August 2000 and early January 2001, none of them was completely installed. By the end of February 2001 Sukumar had paid Wise $92,454 and had taken delivery of some of the fabricated cabinets and stored them in his garage and at a nearby storage facility. Wise stored others that were never delivered, because she received instructions from Sukumar's attorney in early April 2001 that she was not to deliver any more cabinets to Sukumar's home or storage site and she was not to do any more installation work until an agreement was reached to "accomplish the smooth completion" of the project.

Negotiations between Wise and the attorneys continued for over a year, with the result that Wise did not deliver or install any cabinetry in Sukumar's house after mid-March 2001, and Sukumar did not pay Wise any more money after February 15, 2001.

On July 3, 2003, Sukumar filed his complaint for breach of contract, seeking damages for his own storage costs ($34,508 through October 2004), $8,850 to complete the installation of the partially installed cabinets, and $56,850 to install the uninstalled cabinets. Alternatively, he proposed an $86,956 damages award to enable him to install different cabinetry.

Wise cross-complained for damages of $47,409 for the balance owing on the purchase orders, $4,780.59 for her storage costs after the receipt of his attorney's letter in early April 2001, and an award of prejudgment interest from February 15, 2001. She pled causes of action for breach of contract, recovery of work, labor, and materials furnished, open book account, and quantum meruit.

B

Trial and Judgment

In November 2004, the complaint and cross-complaint issues were tried to the court. The parties waived a statement of decision. Numerous exhibits were admitted into evidence, including the purchase orders, diagrams, and letters back and forth. Both parties supplied statements/summaries of damages to the court.

During trial, Sukumar was granted leave to amend his complaint to seek rescission of the contract, based on claims the cabinets were damaged and defective. Both parties testified about their versions of the events and Sukumar presented an expert witness on cabinet installation, who estimated a cost of completion of $56,800 for the remaining items. Sukumar testified that he had paid $92,454 toward the total cost of the contract, which he understood included the installation costs (of the $139,853 total cost, installation included.)

Wise testified that she had originally paid her installer on a piecework basis, but changed it to an hourly rate when the job became more difficult. Wise believed that the installation work amounted to about 10-20 percent of the job, with respect to the achievement of a quality, professional look to a cabinet, while the design function represented the remainder. Her damages estimate included $4,780.59 in storage costs for the undelivered cabinets.

At the close of trial, the court ruled that Sukumar had failed to prove a breach of contract by Wise and also had failed to prove any basis for rescission of the contract. The court commented that it did not appear Sukumar wanted Wise to finish the job, as he had found somebody else. The court issued a ruling that Wise had established a breach of contract by Sukumar and was awarded $69,968.01 ("the amount in the statement of damages, including the storage" and "the prejudgment interest that they would be entitled to.")

Judgment was entered in favor of Wise on May 17, 2005, for damages of $52,189.59 and $17,778.42 in prejudgment interest from February 15, 2001, for a total of $69,968.01.

Although Sukumar filed a notice of intention to move for new trial, the motion itself was never filed or brought to hearing. He appeals.

DISCUSSION

Sukumar first challenges the trial court's award of compensatory damages as excessive. In his view, all the relevant factors were not taken into account, such as the estimated cost of completion of the job, and he claims the court should have reduced Wise's damages accordingly. He also contends the prejudgment interest award was calculated from the wrong date (Feb. 15, 2001, when he stopped paying Wise), because the contract damages were not certain or capable of being made certain as of that time. (§ 3287, subd. (a).) We will state the applicable standards of review in each of the following sections.

I

COMPENSATORY DAMAGE AWARD

A

Standards of Review

According to Sukumar, the appropriate standard of review is de novo, because he is not disputing the trial court's factual findings (including his breach of contract), but only its application of damages law to that set of facts. He argues his failure to pursue a new trial motion below should not preclude him "from urging legal errors in the trial of the damage issue such as erroneous rulings on admissibility of evidence, errors in jury instructions, or failure to apply the proper legal measure of damages. [Citation.]" (Glendale Federal Savings & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 122-123 (Glendale Federal) (italics added).) He contends the damages award is excessive in view of the applicable statutory standards setting the measure of damages. (§§ 3300, 3358, 3287, subd. (a).)

In contrast, Wise seeks to have this court apply an abuse of discretion standard, because the trial court supposedly utilized its discretion to evaluate the factual showings on damages in light of the respective arguments of the parties.

Neither party has stated the applicable standard of review correctly. Normally, a failure to move for a new trial on the ground of excessive or inadequate damages will preclude a challenge on appeal to the amount of damages "if the challenge turns on the credibility of witnesses, conflicting evidence, or other factual questions. [Citations.] A trial court ruling on a new trial motion on the ground of excessive or inadequate damages must weigh the evidence and acts as an independent trier of fact. [Citations.] Thus, the trial court is in a far better position than the Court of Appeal to evaluate the amount of damages awarded in light of the evidence presented at trial. [Citations.]" (County of Los Angeles v. Southern California Edison Co. (2003) 112 Cal.App.4th 1108, 1121 (County of Los Angeles).)

Here, both the complaint and cross-complaint were before the trial court, and the parties presented conflicting evidence about their own understanding of their contractual duties, performance, and prevention of performance. They also presented their own summaries of the damages sought and argued those positions to the court. In light of the manner in which this case was presented to the trial court, and the lack of a new trial motion, we have been given no reason why an ordinary substantial evidence review of the judgment for damages should not be conducted. To review a claim that a damages award is excessive, an appellate court will apply the substantial evidence standard of review. (Eisenberg et al., Cal. Practice Guide: Civil Writs and Appeals (The Rutter Group 2005) § 8:140, p. 8-84.) '' 'The reviewing court does not act de novo . . . the trial court's determination . . . is entitled to great weight because it is bound by the "more demanding test of weighing conflicting evidence than our standard of review under the substantial evidence rule . . . " All presumptions favor the trial court's determination . . . , and we review the record in the light most favorable to the judgment . . .' [Citations.]" (Ibid.) Similarly, "the amount of damages awardable is a question of fact for the trier of fact (in a jury trial, first committed to the jury's discretion and next to the discretion of the judge on a motion for new trial)." (Id. at § 8:139, p. 8-83.)

By comparison, in this appeal from a judgment after court trial, where no new trial motion was brought to hearing, our review will focus on whether the entire record of the appeal, not just the portions cited by the parties as favorable to their position, gives support to the judgment for compensatory damages. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.) "When a trial court's factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court." (Ibid.)

B

Evidence Regarding Compensatory Damages; Current Record

Sukumar as the plaintiff was required to prove, as the elements of breach of contract, the terms of the contract, his performance or excuse for nonperformance, the defendant's breach, and resulting monetary damage. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 476, p. 570.) In her cross-complaint, Wise sought damages on theories of breach of contract and related claims (recovery of work, labor, and materials furnished, open book account, and quantum meruit). The trial court had these competing contract claims before it, so that the evidence presented by the parties was effectively both offensive and defensive in nature.

As part of their cases, the parties had to show that respectively they were free from substantial default, in order to qualify for the remedies for breach of contract. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 848, pp. 935-936.) "Hence, the plaintiff must plead and prove performance or tender on his or her part or an excuse for performance." (Id. at p. 935.) The established, now undisputed facts were that Wise was prevented from performing. "Prevention or hindrance of the other party's performance operates not only as an excuse for the performance [citations], but is also a breach, giving that party the affirmative remedies for breach. [Citations.]" (Id. at § 851, pp. 937-938.)

With regard to their proof of damages, the parties submitted their respective statements of damages. Sukumar sought his own storage costs, the cost of completion for the installation of those cabinets that had been partially installed, and an additional amount to install the uninstalled cabinets or alternatively, a larger award to enable him to install different cabinetry.

Wise's statement of damages included $47,409 for the balance owing on the purchase orders, $4,780.59 for her storage costs after the receipt of his attorney's letter in early April 2001, and an award of prejudgment interest from February 15, 2001. The trial court ultimately awarded those amounts.

To argue on appeal that Wise received too great a recovery, Sukumar relies on the principles set out in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 515, for governing awards of contract damages: "Contract damages seek to approximate the agreed-upon performance. '[I]n the law of contracts the theory is that the party injured by breach should receive as nearly as possible the equivalent of the benefits of performance.' [Citations.] . . . [¶] Contract damages are generally limited to those within the contemplation of the parties when the contract was entered into or at least reasonably foreseeable by them at that time; consequential damages beyond the expectations of the parties are not recoverable. [Citations.]" (Ibid.)

In support of his claim, Sukumar points to testimony from Wise that she had to pay an installer at an hourly rate, and he states that the purchase orders included separate figures for materials, delivery, and completion of the cabinetry. He also cites to testimony presented by his expert that it would have cost $56,800 to finish the job to Sukumar's satisfaction. He seems to be arguing that the nature of the parties' agreement required Wise to complete the contractual obligations at the contract price, at her own expense, and if this did not occur, she should be held responsible for the difference (e.g., any additional costs to pay the installers), so that she should receive a net recovery of zero. Any other damages, he argues, are merely speculative, or appear to be unfairly penalizing him for his decision to breach the contract.

However, according to Sukumar's own testimony, the contract price included installation, and he had not paid the remaining portion of the purchase order totals, approximately $47,399. He cites to Wise's testimony that installation represents some 10-20 percent of the finished quality of a job, and seems to interpret this as showing that she had to pay extra for installation. Sukumar now appears to be arguing his expert testimony about the estimated $56,800 cost of completion, presented in his case in chief, should also have been used as an offset to Wise's damages claims, because all the contract claims were handled together in the trial court.

The problem with Sukumar's current argument is that it amounts to a challenge to the award of contract damages, as excessive in nature. However, as previously noted, he failed to follow through on bringing a new trial motion on that ground and effectively, the trial court was never presented with the theory Sukumar is now arguing on appeal. Instead, although the parties discussed the measure of damages, and the court made conscientious inquiries about it, Sukumar cannot point to any place in the record, until his abortive new trial notice, when he challenged the damages request by Wise as excessive in light of any concerns about additional installation costs. Although he now argues that only questions of law are presented, regarding the appropriate measure of damages, he has failed to bring this case within the exception to the new trial requirement, as outlined in Glendale Federal, supra, 66 Cal.App.3d 101, 122. He does not raise legal errors in the trial of the damage issue, by pointing to any erroneous rulings on admissibility of evidence, credibility problems, or other defects in the record regarding the proof of damages. (County of Los Angeles, supra, 112 Cal.App.4th at p. 1121.)

Instead, the parties tried the case in terms of whether contractual damages were due based on the face of the purchase orders, as well as storage costs, in light of their respective efforts at performing their own contractual obligations. The trial court appropriately focused on the parties' cross-claims that each was in breach of the agreement, in terms of performance or excuse from performance. The record does not show whether Sukumar argued to the trial court that the contract price named by Wise failed to allow for installation, nor that the contract required Wise to incur further out of pocket installation costs beyond the contract price. He did not expressly present any competing legal theory at trial that he should receive credit for any such additional costs as against the balance he admittedly owed on the contract price.

Here, Sukumar has no basis in the record to make statutory arguments on a de novo basis, that the trial court should have adjusted the measure of damages based on any theory brought to its attention regarding offsets or credits as now argued on appeal. The trial court was required to ascertain the amount of damages by resolving conflicting evidence about the parties' course of dealings. In such a case, any claim of an excessive damages award could have appropriately been handled by the trial court, if such a new trial motion had been pursued. (9 Witkin, Cal. Procedure, supra, Appeal, § 397, p. 449.)

On appeal, Sukumar has failed to show why, as a matter of law, on this record, he has preserved any issue about whether the damages limitation of section 3358 (that no greater amount in damages for breach of contract should be recovered than would have been gained by full performance) should provide any basis for allowing an offset to him.

In conclusion, Sukumar has failed to demonstrate any reason in this record why this court should consider his challenge to the compensatory damage award given his failure to perfect his motion for new trial. Accordingly, we find the issue has been waived. (County of Los Angeles, supra, 112 Cal.App.4th 1108, 1118; 9 Witkin, Cal. Procedure, supra, Appeal, § 402, p. 454.)

II

PREJUDGMENT INTEREST AWARD

We next address Sukumar's argument on appeal that the trial court erroneously awarded excessive prejudgment interest. (§ 3287, subd. (a).) In KGM Harvesting Co. v. Fresh Network (1995) 36 Cal.App.4th 376, 390-391 (KGM Harvesting), the appellate court utilized a de novo standard of review of the trial court's application of this statute to the established facts, with regard to whether and when the plaintiff's damages were certain or became capable of being made certain by calculation. "It is from that day that buyer's entitlement to prejudgment interest commences." (Id. at p. 391.) In KGM Harvesting, the court declined to apply the abuse of discretion standard, because only the application of the statutory language to undisputed facts was required. (Ibid. at fn. 8.) We therefore may appropriately review on a de novo basis the trial court's application of this statute to the facts as established by the trial court.

Even though de novo review is proper, any review is circumscribed by the factual record before us. As noted above, Sukumar failed to follow through on bringing a new trial motion on any ground of excessive or inappropriate damages. Prejudgment interest is to be calculated on the award of damages that meets the certainty test of section 3287, subdivision (a). We have already explained that Sukumar has not pointed to any portion of the record in which he effectively challenged the damages or prejudgment interest requests by Wise as excessive in light of any concerns about additional installation costs. Nevertheless, Sukumar is contending the trial court incorrectly applied the statute to find the necessary certainty of damages, and used the wrong date to commence the award (the last payment made Feb. 15, 2001). Sukumar claims alternative dates to determine that Wise's damages became certain could have and should have been selected by the trial court, such as March 2001, when the materials costs had accrued, or April 2001, when delivery installments could have become due. He again argues that he should have received credit for future installation costs and storage costs as of June 2001, when it became clear Wise was not going to complete the installation.

Section 3287, subdivision (a) was interpreted by this court in a comparative negligence factual context in Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948, 958-960 (Wisper).) The principles of section 3287, subdivision (a) may be applied in both contract and tort actions. (Wisper, supra, at p. 958.) There, we rejected a corporation's contention of entitlement to prejudgment interest, where the matter went to trial on a comparative negligence theory between the parties, arising from their respective allegations of fraud and failure to detect the fraud, and the judgment made an allocation of their proportionate negligence. (Id. at pp. 955, 959.) We explained that an award of prejudgment interest will be appropriate where the evidence will permit a finding that the damages suffered by the plaintiff had the necessary certainty at the relevant period of time. However, "[W]here the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate. [Citation.]" The focus should not be on whether the defendant is ultimately found liable, but rather on the required availability of information from which to calculate damages. (Id. at p. 960.) "An award of prejudgment interest is intended to make the plaintiff whole 'for the accrual of wealth which could have been produced during the period of loss.' [Citation.]" (Id. at p. 958.)

The case before us is not based on comparative negligence principles, but rather on competing claims of breach of contract, as reflected by this rather limited factual record which comes to us in a unique procedural context, in which no new trial motion regarding excessive damages was perfected. Nonetheless, it is undisputed on this record that the parties had an ongoing course of dealings, as reflected in Wise's cross-complaint, raising claims of open book account, quantum meruit, and breach of contract. Both Sukumar and Wise claimed the other was primarily in default on the contractual obligations. This raises the question of whether any contract damages were not ascertainable until the time of trial, within the meaning of section 3287, subdivision (a), under the general guidelines outlined in Wisper, supra, 49 Cal.App.4th 948.

Even where a party to the contract denies liability, and claims its conduct could not have given rise to any damage to the plaintiff, that does not render the plaintiff's damages "uncertain" for purposes of applying section 3287. (Wisper, supra, 49 Cal.App.4th at p. 958.) Instead, the parties can dispute liability, while still not disputing that an adequate basis for computing damages would exist, assuming any are recoverable in the first instance. (Ibid.)

The rule that prejudgment interest cannot be awarded, in cases in which an amount of damages cannot be determined except by verdict or judgment, applies " 'where the amount of damage, as opposed to the determination of liability, "depends upon a judicial determination based upon conflicting evidence and is not ascertainable from truthful data supplied by the claimant to his debtor." [Citations.]' [Citation.]" (Wisper, supra, 49 Cal.App.4th at p. 960.)

Also, prejudgment interest cannot be awarded in a case in which only a single element in the mathematical calculations involved in computing damages can be determined with some certainty; where only one figure is certain, the entire claim itself is not definitively certain or calculable. (Wisper, supra, 49 Cal.App.4th at pp. 960-961.) Sukumar claims that this is such a case.

It is difficult to apply all these rules to the facts before us, because this record of the manner in which trial was conducted required the trial court, in the absence of any coherent theory of trial regarding the installation costs, to select, as the basic measure of compensatory damages for Wise, the balance remaining on the contract price (in addition to consequential damages such as storage costs). As we have outlined above, the parties did not put before the trial court any clear competing theories of damages regarding the installation problems, such as any additional costs that would have been incurred if the job had been completed by either side, and the like, in terms of offsets or credits against the contract price. Instead, the trial court relied on the balance due under the purchase orders as a rational measure of damages, and the parties did not provide any alternative means of calculating those damages. Nor was a new trial motion pursued to point out to the trial court any defects in the record regarding the effect of installation costs upon the balance due under the contract. Accordingly, we cannot examine at this time any lack of evidence regarding installation costs.

Nevertheless, Sukumar contends that on de novo review, this court may make a correction to the trial court's prejudgment interest award, based on his theory that different amounts of payment were due at different times, within the meaning of the various purchase orders. For the same reasons discussed above, dealing with the manner in which this case was presented to the trial court, Sukumar has preserved no basis to object on appeal to the prejudgment interest determination. The series of purchase orders included separate payment amounts due for materials, delivery, and completion. The trial court reasonably concluded that as of the date of breach, the date of his last payment, Sukumar had adequate notice of the existing amounts due under the contract and potential damages to Wise could readily be ascertained at that time.

Even though Sukumar currently claims that offsets of some kind for installation costs should have been ordered, that was not the theory on which this case was presented to the trial court. Under section 3287, subdivision (a), the trial court did not have to base its determination on the installation problems. Rather, it had an adequate basis in the evidence to conclude that as of the date of his last payment, Sukumar essentially made a business decision to go into breach of the contract. At that time, he had notice of the amount of contract damages he owed to Wise, which could have been computed from reasonably available information. (KGM Harvesting Co., supra, 36 Cal.App.4th 376, 390-391.) This is not a case in which only one element of the damages owed by Sukumar to Wise was available for calculation as of the time of breach, such that the completion of a trial was required for the amount of contract damages to be set (or hypothetically, for any comparative negligence principles to be applied). (Wisper, supra, 49 Cal.App.4th at pp. 959-961.) Rather, the conflicting evidence presented about the cross-claims of liability under contract did not undermine the basically undisputed state of the evidence about the amount of breach of contract damages raised by the pleadings, in terms of the cross-complaint's various theories regarding the purchase orders.

In conclusion, the trial court correctly selected the time of the last payment by Sukumar as the date when Wise's breach of contract damages became certain. (§ 3287, subd. (a).) There is no basis for adjustment of damages at this time regarding storage costs. This portion of the judgment is well supported by the record and must be affirmed.

DISPOSITION

The judgment is affirmed. Costs are awarded to respondent.

HUFFMAN, Acting P. J.

I CONCUR:

HALLER, J.

McDONALD, J., concurring and dissenting.

I concur with the conclusion of the majority opinion that the award of compensatory damages to Lois Jean Wise and her business, A Wise Design (together Wise) resulting from Ponani Sukumar's (Sukumar) breach of contract should be affirmed. The parties waived a statement of decision by the trial court and Sukumar did not pursue a motion for new trial. On this record there is therefore no basis on which this court can analyze the underlying considerations of the trial court's computation of compensatory damages resulting from Sukumar's breach of contract.

I do not agree that Wise is entitled to prejudgment interest under Civil Code section 3287 computed from February 15, 2001, or at all. As Justice Huffman succinctly stated in Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948 at page 960: "Thus, where the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate." In the instant case, both parties contended the other breached the contract. The allocation of the total contract price to the separate elements of performance each asserted was disputed. No demand or specification of damages was presented by either to the other. Neither party completed the obligations imposed by the contract. It was not until the trial court entered judgment that the amount of damages was ascertained, and that amount remains disputed in this appeal. Prior to the entry of judgment there was no way to compute the damages. I conclude from this record that not until the entry of judgment were the damages resulting from Sukumar's breach of contract known or subject to calculation. Furthermore, the trial court's computation of compensatory damages resulting from Sukumar's breach may well have been in error but could not be corrected absent a motion for new trial. An incorrect award of damages after trial cannot be the basis of a conclusion the amount was known or could be computed before trial. Under Wisper, prejudgment interest is not appropriate.

McDONALD, J.

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