MBA Construction v. ReddingSchool Dist

Filed 6/22/07 MBA Construction v. Redding School Dist. CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Shasta)

----

Defendant Redding School District (District) awarded plaintiff MBA Construction, Inc. (Mack), a $2.89 million contract to build a multi-use facility at Sequoia Middle School (Project).^[1]Mack finished construction five months after the completion date set forth in the contract. It sued the District for breach of contract, indemnity and declaratory relief, seeking $856,371 in damages and interest for delays (delay damages) caused by the District and for payments improperly withheld by the District. Following a court trial, the court awarded Mack $31,984 in damages.

Mack appeals, challenging the damage award. It also argues the courts statement of decision was defective. We shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

California Rules of Court, rule 8.204(a)(2)(C) states that the appellants opening brief must [p]rovide a summary of the significant facts limited to matters in the record. Macks 29-page statement of facts is largely irrelevant to the issues raised in this appeal. Mack also risks forfeiture of its challenge to the sufficiency of the evidence to support the damage award by failing to cite all the material evidence on the point and not merely their own evidence. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246 (Nwosu).) After reviewing the entire record, we set forth our own factual and procedural summary here.

Under the contract with the District, Mack agreed to complete construction of the Project within 360 days from the issuance of the notice to proceed. The Districts notice to proceed gave Mack until May 28, 2003, to complete the project. The District did not record its notice of completion until November 4, 2003.

At the May 29, 2002, preconstruction meeting, Mack gave the District a construction schedule showing a completion date of February 28, 2003. The architect thought the completion date was a little optimistic, but was happy that they thought they could do it that quickly.

Delays occurred which caused Mack to change the order in which various subcontractors performed their work. In March 2003, [t]here was a lot of debate back and forth as far as how much of [the delay] was design changes, design errors, and how much of it was fabrication errors and issues with Bay Cities, the steel fabricator. There was still debate over sequencing of the project and whether Mack should have known that the steel had to be erected before the concrete was placed. . . . [A]nd then there was debate over the weather.

The District paid Mack for the direct costs set forth in 36 change orders. In addition, it granted Macks request for a 20-day extension of contract time in connection with one change order, but rejected other requests for extension.

On March 19, 2003, the District agreed by letter to pay claims currently in dispute but denied requests for additional days. The letter continued: There is no dispute that there has been work added to the contract that has extended the project duration, but it is not clear to us how this has affected the critical path. The District is willing to negotiate payment to you for additional days that are reasonable and that can be shown conclusively to have impacted the critical path. To date, your published schedules have not adequately addressed that issue. [] It is incumbent upon Mack Construction to prove that these additional costs are justified. . . . [] By agreeing to the approved dollar amounts on the attached change order requests, you are not giving up your right to claims for additional time. We want to get this matter resolved as much as you do, and see this as a way to keep the project moving forward while working out our differences. . . .

Mack acknowledged that the parties agreed to this procedure, but noted it was difficult to quantify the nature of the problems or the impact of delays at that early date. The District continued to assure Mack that it would have the opportunity to pursue its claims for delay-related costs after the original contract completion date of May 28, 2003.

When Mack submitted documentation, the District rejected the claims. The architect stated, [t]his all boils down to the fact that there was never a critical path schedule that we could understand, how these things affected their total schedule. [Mack] was just putting down that every little thing that was different. And that is not a legitimate extra, unless he can tie it to the critical path. [] [H]e had, this is how long we wanted it to take, but this is how long it actually took. So Mr. Owner, you pay the rest of this. And that is not legitimate.

Three different lawsuits arose from this project: two were consolidated in state court and are the subject of this appeal; and one proceeded and settled in federal court. The litigation began when the structural steel erector, Tilbury Constructors, Inc. (Tilbury) filed a lawsuit(the Tilbury action) against Bay Cities, the structural steel fabricator, Mack and the District. In August 2003, Mack filed a notice of claim against the District pursuant to Government Code section 900 et seq. Three months later, Mack filed a complaint against the District alleging various causes of action which was consolidated with the Tilbury action and is the subject of this appeal. Both Mack and Tilbury alleged Bay Cities misfabricated a significant portion of the structural steel. Bay Cities settled with various parties, paying Mack $20,000 in damages.

Later, in April 2004, First National Insurance Company of America (First National), Macks bonding company, filed suit against Mack in the United States District Court (the Federal action). The federal action arose after several subcontractors filed stop notices at the end of the project. First National paid the subcontractors stop notice claims and filed suit against Mack for indemnity and attorney fees. First National obtained a judgment against Mack for close to $80,000.

At the time of trial, Mack and the District were the only remaining parties to the litigation. We include the courts findings of fact and conclusions of law in our discussion of the specific issues raised by Mack on appeal.

DISCUSSION

I.

Standard of Review

A judgment . . . of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, 349, p. 394; see also State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610.)

As plaintiff, Mack had the burden of proving each fact the existence or nonexistence of which is essential to the claim for relief . . . that he [was] asserting. (Evid. Code, 500.) Damages are an essential element of claims for breach of contract and indemnity. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading,  476, p. 570; 5 Witkin, Cal. Procedure, supra,  879, pp. 337-338.)

The determination of damages is primarily a factual matter on which the inevitable wide differences of opinion do not call for the intervention of appellate courts. [Citation.] (Niles v. City of San Rafael (1974) 42 Cal.App.3d 230, 241.) Where, as here, the parties challenge the sufficiency of the evidence to support the amount of damages awarded, our power begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the [finding]. . . . When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court. [Citations.] (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429 (Crawford).)

Macks challenge to the damage award also involves contract interpretation, which is ordinarily a question of law subject to our de novo review on appeal. (Horsemens Benevolent & Protective Assn. v. Valley Racing Assn. (1992) 4 Cal.App.4th 1538, 1559 (Horsemans Association); 9 Witkin, Cal. Procedure, supra, 317, pp. 355-356.)

II.

Delay Damages Based on Macks Early Completion Date

Mack argues the court erred in rejecting his claim for damages based on its early completion date of February 28, 2003.

The court made the following findings regarding the completion date:

A. Findings of Fact: The contract between the plaintiff and defendant included a completion date of June 17, 2003.^[[2]] The plaintiff scheduled his work to be completed on February 28, 2003. Whether the work, under ideal conditions, could have been completed in that time is an academic question. Plaintiff, by presenting a critical path schedule showing an earlier completion date, cannot change the completion date in the contract. The defendant and defendants architect reviewed the schedule presented by plaintiff. Review of the schedule does not change the completion date.

B. Conclusion of Law: The plaintiff cannot, by submitting a schedule, unilaterally change the contract completion date.

The question whether Mack is entitled to delay damages from its projected February 28, 2003, completion date presents a question of contract interpretation which we review de novo. (Horsemans Association, supra, 4 Cal.App.4th at p. 1559.) We begin by looking at the contract language.

Paragraph 1.1.2 of the general provisions states that the contract documents represent the entire and integrated agreement between the parties. Macks construction schedule, printed for the May 29, 2002, preconstruction meeting, was not part of the contract documents as defined in paragraph 1.1.1.

The contract also stated that the parties could amend or modify the contract only by a Modification. Paragraphs 7.1 and 7.2 provided for modifications in contract work, including extensions of time, through change orders reviewed and approved by both parties. Thus the agreed upon date of completion of May 28, 2003, would remain unchanged unless the parties agreed to extend it by change order. Only once did the District approve a change order with an extension of time. In that instance, it agreed to extend the completion date by 20 days to June 17, 2003.

Mack is correct that the contract language did not prevent Mack from completing construction early. But that fact does not entitle Mack to recovery of delay damages based on the February 28, 2003, completion date. The flaw in Macks argument is that its submission of a construction schedule to the District for informationin accordance with paragraph 3.10 of the contract did not modify the contract. Nothing in the contract language required the District to approve the construction schedule it received from Mack and the District did not do so.

The Districts way of handling Macks construction schedule was consistent with the contract language. The architect testified that she used the construction schedule to track the work and make sure it was completed on time. She emphasized that the construction schedule submitted by Mack at the preconstruction meeting was Macks schedule and [t]hey [could] do it in as many days as they want[ed].

Mack cites Howard Contracting, Inc. v. G.A. MacDonald Construction Co. (1998) 71 Cal.App.4th 38 (Howard), for the proposition that a contractor is entitled to recover delay damages, based on the early completion date set by the contractor, when the owner causes construction delays. Mack misreads Howard, which has no application to this case.

Mack also cites federal and out-ofstate authority to support his argument. However, federal decisional authority is neither binding nor controlling in matters involving state law. (Howard, supra, 71 Cal.App.4th at p. 52.)

We conclude the trial court correctly determined that Mack could not unilaterally change the contract and was not entitled to delay damages based on its own construction schedule.

III.

The $20,000 Credit From The Bay Cities Settlement

Bay Cities paid Mack a $20,000 settlement for steel fabrication delays. The trial court found Mack and the District equally responsible for the steel delay damages, totaling $25,176.^[3]Mack contends the court made a mathematical error in crediting the District the full $20,000 (received by Mack in the Bay Cities settlement) against the $25,176 steel damage award. We reject this contention.

The court made the following findings regarding the $20,000 credit from the Bay Cities settlement:

A. Findings of Fact: Tilbury Contractors, a sub-contractor, sued Bay Cities and Mack by cross-complaint joined the defendant. A good faith settlement was entered into. Mack was paid $20,000. This is for the same damages Mack claims against the defendant District.

B. Conclusion of Law: Defendant is entitled to a $20,000 credit in this action as a rsult [sic] of the good faith settlement.

Mack argued in its trial brief, opening argument, and post-trial brief that the entire $20,000 Bay Cities settlement should be credited against damages assessed against the District. Mack claimed error only after the court stated in the tentative decision that Bay Cities and the District were each responsible for half of the $25,176 in delay damages suffered by Mack. On appeal, Mack maintains that the District owed him $12,588, half of the $25,176, and the judgment held the District responsible for only $5,176 ($25,176 minus the $20,000 Bay Cities settlement). According to Mack, the District owes it an additional $7,412, because the Districts obligation to Mack for the steel delay damages is an entirely separate obligation requiring separate treatment. Mack reasons that regardless of what Bay Cities paid in the settlement, the District remained liable for half of the $25,176 in steel fabrication delay damages. The $20,000 settlement covered Bay Cities half of the damages plus $7,412. Under Macks calculations, the judgment against the District was deficient by that amount.

Bay Cities and the District were jointly liable for $25,176 in delay damages relating to steel fabrication. Bay Cities had settled for $20,000 before the court issued its findings in this action. Mack offers no authority that prevents offset of Bay Cities entire settlement against the total steel delay damages assessed against the District. Nor does Mack show how it was prejudiced by a judgment that gave Mack the full $25,176 in steel fabrication delay damages it suffered. Macks theory would result in a $7,412 windfall at the expense of the District.

IV.

Evidence of Post-Steel Delays and Disruptions

Mack maintains there is no substantial evidence to support the courts findings regarding post-steel delays and disruptions.

The court made the following findings regarding the courts calculation of post-steel delay damages:

A. Findings of Fact: The plaintiff seeks damages for every day past February 28, 2003, which is the date that plaintiff, in plaintiffs initial schedule, proposed the work would be completed. The contract provided for a completion date of June 17, 2003. Plaintiffs expert, Thomas Reeves, followed the same approach in preparation of his analysis of damages (Exhibit 23). Plaintiff presumed that everyday [sic] past February 23 [sic], 2003, was a day of delay attributable to the defendant. Mr. Reeves then prepared a productivity schedule based upon the assumption that the work would be completed on February 28, 2003 and that an average of the productivity of the contractor and all subcontractors and trades would be the same and could be based on the February 28, 2003 completion date. Plaintiff failed to distinguish days attributable to defendant and days attributable to others. Plaintiff failed to establish that he appropriately scheduled his work. In fact, in submitting an extension of time and delay claimed in COPR No. 1, the plaintiff asked for and was given a 20-day delay. Nevertheless, Partition Specialty, a subcontractor who . . . was delayed by defendant, requested from plaintiff an extension of 45 days which plaintiff denied. The plaintiff has the responsibility of scheduling and coordinating the work of his subcontractors.

B. Conclusion of Law: Plaintiff employed an improper measure of damages and failed to prove the damages claim against defendant.

We conclude Mack forfeited the issue by providing a one-sided summary of the facts. (Nwosu, supra, 122 Cal.App.4th at p. 1246.) As we explained, California Rules of Court, rule 8.204(a)(2)(C) requires Mack to provide a summary of the significant facts which includes evidence damaging to [its] position. (Nwosu, supra, 122 Cal.App.4th at p. 1246.)

V.

Delays Related to the Death of the Painting Contractor

Mack argues the District is responsible for the painting delays and additional project costs as a matter of law. The court made the following findings regarding the painting subcontractor:

A. Findings of Fact: The plaintiff subcontracted with a sole proprietor painting subcontractor. During the course of the work the painting subcontractor died. Plaintiff seeks damages for having to have the work done at greater expense.

B. Conclusion of Law: The defendant cannot be responsible for the death of a painting subcontractor or impacts that death may have on the cost of painting. Nor can the court speculate as to what may have occurred if the painter became ill or died sooner or later.

Mack argues that the District-caused delays prevented the painter from finishing the job before his death. Mack asserts it did not assume the risk of damages consequentially caused by DISTRICT delays. Mack offers no law or facts to support his argument that there is a causal link between the delays and the increased costs resulting from the painting subcontractors death.

Civil Code section 3300 provides: For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.

Case law identifies two types of contract damages: [G]eneral damages (sometimes called direct damages) and special damages (sometimes called consequential damages). (Lewis Jorge Construction Management, Inc. v. Pomona Unified School District (2004) 34 Cal.4th 960, 968 (Lewis Jorge).) General damages are often characterized as those that flow directly and necessarily from a breach of contract, or that are a natural result of a breach. [Citations.] Because general damages are a natural and necessary consequence of a contract breach, they are often said to be within the contemplation of the parties, meaning that because their occurrence is sufficiently predictable the parties at the time of contracting are deemed to have contemplated them. [Citations.] (Ibid.)

In general, the death of a subcontractor by accident, old age or illness is not sufficiently predictable that the parties are deemed to have contemplated them. (Lewis Jorge, supra, 34 Cal.4th at p. 968.) Indeed, if the contractor contemplated the risk of death of a subcontractor in the course of the job, he would not hire that subcontractor. Thus, Mack is not entitled to general contract damages based on the Districts delay.

Unlike general damages, special damages are those losses that do not arise directly and inevitably from any similar breach of any similar agreement. Instead they are secondary or derivative losses arising from circumstances that are particular to the contract or to the parties. Special damages are recoverable if the special or particular circumstances from which they arise were actually communicated to or known by the breaching party (a subjective test) or were matters of which the breaching party should have been aware at the time of contracting (an objective test). [Citations.] (Lewis Jorge, supra, 34 Cal.4th at pp. 968-969.)

Without citation to the record, Mack states that the District knew at the time it entered the contract that Macks painting subcontractor was a one-man company. However, even if the District were privy to this fact, Mack has not shown as a matter of law that the District knew or should have known that the painting contractor might die before the project was completed. We conclude Mack is not entitled to special contract damages.

Mack argues for the first time in its reply brief that Civil Code 1512 specifically governs this type of situation. Mack offers no excuse for failing to present this argument in the opening brief. Accordingly, we will not consider it. (9 Witkin, Cal. Procedure, supra,  616, pp. 647-648.)

VI.

Stop Notices and Attorney Fees in the Federal Litigation

Mack contends it is entitled to reimbursement from the District for the attorney fees that it paid to First National in the federal litigation because the District could not lawfully honor stop notices that were invalid on their face under Civil Code section 3210.^[4]

The court made the following findings relating to the Districts action on stop notices:

A. Findings of Fact: Numerous Stop Notices were filed by subcontractors. At one point the amount of Stop Notices exceeded the money withheld and available for paying plaintiff (Exhibit 43). Plaintiff failed to avail itself of the summary . . . procedure to challenge Stop Notices. Plaintiff claims that some Stop Notices were invalid on their face but plaintiff failed to go through the procedures necessary to challenge those Stop Notices. Plaintiff eventually contacted an attorney who sought the withdrawal of Stop Notices that plaintiffs felt were inappropriate. This was largely successful. Promptly after the release of Stop Notices, payments were made to plaintiff (Exhibit 44). The defendant did not withhold attorneys fees for work done on the Stop Notices.

B. Conclusion of Law: The defendant did not breach any obligation with respect to the processing of Stop Notices, plaintiff failed to pursue the statutory remedy to challenge improper Stop Notices and plaintiff has failed to establish any damages resulting from inappropriate withholding of Stop Notice funds.

The court also set forth findings and conclusions of law regarding attorney fees in the federal litigation:

A. Findings of Fact: First National, under its payment bond, paid several of plaintiffs subcontractors or suppliers. First National then sued plaintiff for indemnity and attorneys fees. At the same time plaintiff and defendant were in dispute over funds withheld for stop notices and other claims. It is speculation to assume that earlier release of funds by defendant would have satisfied the claims presented by First National. The evidence showed that First National agreed to make payments to satisfy bond claimants if plaintiff would assign its cause of action against defendant to First National. Plaintiff declined to do this. Plaintiff also declined to enter into a consent judgment against First National until after the expenditure of a great deal of attorneys time and funds on litigation that appears largely unnecessary.

B. Conclusion of Law: Plaintiff has failed to establish that the troubles with First National were a result of any breach by defendant. Plaintiff also failed to establish that the costs incurred were reasonable or necessary.

On appeal, the District responds to Macks contentions, arguingthat it was not required to adjudicate the legal sufficiency of the stop notices and Mack should have pursued the summary procedures set forth in Civil Code section 3197 through 3205. More to the point is the question whether the Districts allegedly improper withholding of funds caused the damages claimed by Mack in this litigation.

The court resolved this question against Mack. It made two key findings relating to causation when it rejected Macks claim for reimbursement of attorney fees. First, the court found [i]t [was] speculation to assume that earlier release of funds by defendant would have satisfied the claims presented by First National. Second, the court concluded: Plaintiff has failed to establish that the troubles with First National were a result of any breach by defendant. Plaintiff also failed to establish that the costs incurred were reasonable or necessary. Mack forfeited any challenge to the sufficiency of the evidence to support the courts findings by failing to raise the issue on appeal.

VII.

Evidence to Support $540 Per Day

As the Measure of Delayed Damages

Mack contends the court employed the wrong analysis of delay damages and there is no substantial evidence to support the $540 figure. The court made the following findings that relate to the measure of delayed damages:

A. Findings of Fact: The contract provides for payment of overhead[,] bonding and other general office as markup in the change order. Change orders approved by the defendant included those figures. In addition, plaintiff asked for and was given an additional $540 which it claimed was appropriate.

B. Conclusion of Law: The court accepts the plaintiffs measure of delayed damages in the amount of $540 per day for the limited purpose of determining damages awarded.

Mack forfeited its challenge to the courts findings on this issue by failing to accurately cite all material evidence. (Nwosu, supra, 122 Cal.App.4th at p. 1246.) Among other things, Mack ignored testimony concerning limitations of the measured mile analysis of productivity given by the Districts expert after the court overruled the plaintiffs objection. We assume the court considered this evidence in rejecting the testimony of Macks expert.

VIII.

Statement of Decision

Mack seeks remand for a determination supported by the record on each of the controverted issues specified in [its request] on grounds that the statement of decision was irregularly issued, did not resolve controverted issues, was ambiguous, and constituted an insufficient basis for the judgment. We reject Macks argument.

The court mailed and faxed its tentative decision to the parties on October 31, 2005. On November 8, 2005, Mack requested a statement of decision and specification of controverted issues which it detailed in its papers. The court issued a minute order on November 14, 2005, directing the District to prepare a statement of decision consistent with the tentative decision. Mack sent the court a letter on November 29, 2005, asking about the status of the statement of decision. Thereafter, on December 19, 2005, Mack faxed a letter to the Districts attorney stating it was anxious to have the Statement of Decision filed so that [it could] proceed to finalizing a judgment and seeking [its] attorneys fees. The court filed its statement of decision and findings of fact and conclusion of law the same day.

On appeal, Mack does not state how it was prejudiced by the courts handling of the statement of decision. Mack identified the controverted issues in papers filed in response to the tentative decision. More importantly, Mack does not explain its failure to avail itself of the remedy provided in Code of Civil Procedure section 634, which reads: When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court either prior to entry of judgment or in conjunction with a motion under Section 657 [for new trial] or 663 [to set aside judgment and enter a new judgment], it shall not be inferred on appeal or upon a motion under Section 657 or 663 that the trial court decided in favor of the prevailing party as to those facts or on that issue. (Italics added.) Macks December 19, 2005, letter to the Districts attorney is revealing. At that point, Mack knew from the tentative decision that it was the prevailing party and the court had rejected most of its damage claims and Mack was eager to finalize the judgment and collect its attorney fees.

DISPOSITION

The judgment is affirmed. The District shall recover costs on appeal. (Cal. Rules of Court, rule 8.276(a)(2).)

CANTIL-SAKAUYE , J.

We concur:

SCOTLAND, P.J.

BLEASE , J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line attorney.

^[1]MBA Construction, Inc., does business as Mack Construction. We shall follow the parties example and refer to plaintiff as Mack throughout this opinion.

^[2]We presume this date reflects the 20-day extension of time the District granted as part of one change order.

^[3]Mack cites the total steel delay damages as $25,116. However, the correct figure is $25,176 ($12,588 x 2). There was no $60 overpayment as suggested by the District.

^[4]Civil Code section 3210 provides: An action against the original contractor and the public entity to enforce payment of the claim stated in the stop notice may be commenced at any time after 10 days from the date of the service of the stop notice upon the public entity and shall be commenced not later than 90 days following the expiration of the period within which stop notices must be filed as provided in Section 3184. No such action shall be brought to trial or judgment entered until the expiration of said 90-day period. No money or bond shall be withheld by reason of any such notice longer than the expiration of such 90-day period unless proceedings be commenced in a proper court within that time by the claimant to enforce his claim, and if such proceedings have not been commenced such notice shall cease to be effective and the moneys or bonds withheld shall be paid or delivered to the contractor or other person to whom they are due.