HINERFELD-WARD, INC.,v.LIPIAN





















Filed 9/1/10

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>CERTIFIED FOR PARTIAL PUBLICATION^* >









IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND
APPELLATE DISTRICT



DIVISION
FOUR


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HINERFELD-WARD, INC., Plaintiff, Cross-defendant, and Respondent, v. MARK LIPIAN et al., Defendants, Cross-complainants, and Appellants.

B211257 (Los Angeles County Super. Ct. No. BC365866)

APPEALS
from a judgment of the Superior Court
of Los Angeles
County, David Minning, Judge.
Affirmed.

Law Offices
of John P. Dwyer and John P. Dwyer for Defendants, Cross-complainants and
Appellants, Mark and Mary Lipian.

Baker &
Associates, Mark E. Baker, Dean A. Reeves; Law Office of Russell R. Arens,
Russell R. Arens, and Richard E. Nusbaum for Plaintiff, Cross-defendant, and
Respondent.

The
appellants in this litigation are homeowners who embarked on a major
residential home improvement project.
They appeal from a judgment in these cross-actions in favor of their
general contractor which awarded them only $1,000 in damages on their
negligence cause of action. They contend
the trial court erred in enforcing an oral contract in violation of statutory requirements that the contract
be in writing; that the contractor was not entitled to an award of statutory
attorney fees; and that the trial court erred in striking testimony by one of
the homeowners about damages.

In the
published portion of this opinion, we conclude that the oral contract was
enforceable and that the contractor is entitled to attorney fees for the
homeowners' delay in making progress payments.
In the unpublished portion of our opinion we conclude that the trial court's
error in striking the homeowner's lay testimony was harmless.



FACTUAL AND PROCEDURAL SUMMARY

Appellants
Mark and Mary Lipian purchased a single family home in Los
Angeles, intending to undertake a major remodel of
that property. They retained an architect,
Michael Folonis, who began design of the project in early 2000. After the initial design phase, Cameron
Aston, a general contractor, was retained.
Aston eventually became frustrated with repeated design changes and left
the project in 2004. Folonis recommended
that the Lipians retain respondent Hinerfeld-Ward, Inc. as the new general
contractor, based on prior experience with that firm and its reputation for
high-end construction work.
Hinerfeld-Ward (Hinerfeld) is the only respondent on appeal. Neither Folonis nor a lawyer assisted the
Lipians in negotiating an agreement with Hinerfeld.

It is
undisputed that the Lipians and Hinerfeld never entered into a written contract which included the
scope of the work to be done. The work
began without a final agreement, but as negotiations continued, the parties
entered into a memorandum of understanding and the remodeling and construction
work continued. Over the course of the
next two years, Hinerfeld submitted 19 payment applications for work which had
been completed. All of these were
approved by Folonis and paid by the Lipians.

In April
2006, the Lipians disputed some of the charges in payment application 20, which
included project management and supervision charges. They agreed to a partial payment for work
done by subcontractors. The relationship
between the Lipians and Hinerfeld deteriorated over the next several months. A dispute arose regarding commencement of
work on a separate building the Lipians planned to build on their property to
house a theater, gym, and office. The
Lipians terminated Hinerfeld's services in September 2006. At that time, there was an unpaid balance
owed Hinerfeld of approximately $200,000.

Hinerfeld
sued the Lipians for breach of oral
contract, quantum meruit, wrongful withholding of progress payments, and
related causes of action. The Lipians
cross-complained for breach of contract, negligence, fraud, violation of Business
and Professions Code section 17200, negligent misrepresentation, recovery on
bond, and for a declaration that the oral construction contract was void. In addition to Hinerfeld-Ward, the Lipians
named Tom Hinerfeld, its principal, and the firm's indemnity company, American
Contractors Indemnity Company.^[1]

The case
was tried to a jury which returned a special verdict. It found the parties had a contract and that
Hinerfeld had substantially complied with its terms. It found the Lipians had breached the
contract and that their breach was not justified, and that Hinerfeld had not
breached the contract. The jury found
Hinerfeld's damages for breach of the contract to be $202,181.58 and that the
Lipians had withheld an amount more than 150 percent from a progress
payment. On the causes of action for
quantum meruit and foreclosure of a mechanics lien, the jury found the
reasonable value of the services rendered by Hinerfeld to be $820,000, and that
the Lipians failed to pay that amount.
The jury found Hinerfeld negligent, but only $1,000 in damages was
awarded the Lipians on their cross-action.
The jury rejected the Lipians' causes of action for fraud and negligent
misrepresentation, finding no false representations were made by Tom Hinerfeld.


The trial court
entered judgment for Hinerfeld for $202,181.58, plus prejudgment interest of
$36,232.01 and costs of $38,953.19. The
Lipians were given judgment for $1,000.
The Lipians' motion for new trial was denied. Hinerfeld's post-trial motion for a monthly two
percent charge on the amount wrongfully withheld by the Lipians was granted and
$54,736.36 was assessed against them.
The trial court awarded Hinerfeld $200,000 in attorney fees. Timely appeals by the Lipians from the
judgment, the attorney fee award, and from the award of $54,736.36 were filed
and consolidated.



DISCUSSION

I

The Lipians
argue the court erred in enforcing the oral home improvement contract with
Hinerfeld because Business and Professions Code section 7159 (section 7159)
requires that such contracts be in writing.
The statute applies to â€