Opinion
NOT TO BE PUBLISHED
Appeals from Napa County Super. Ct. No. 2623155.
GEMELLO, J.
Plaintiff Patrick Reeves appeals from a judgment in favor of defendants in his lawsuit arising out of a construction contract. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Defendants James and Carol Beazley hired plaintiff Patrick Reeves to remodel a building they purchased in Napa for use as a bed and breakfast inn and to construct a separate “Garden Suites” building at the rear of the property. The parties entered into a written construction contract in February 2002.
The contract incorporated a 22-page budget totaling $1,386,735. A number of the items in the budget included the designation “allow.” Reeves testified that the allowance items were those that had an uncertain scope of work; an estimate was given for each of the items, but final billing would be on a time and materials basis. The Beazleys testified that the all of the items in the budget were to be billed at the fixed price given.
As the construction proceeded, Reeves submitted draw requests to obtain payment for completed work from the Beazleys’ lender. The draw request spreadsheets separately listed the various work items and included the original budget, an “adjusted estimate,” the current billings, the total billings to date, and the loan funds remaining. The first nine draw requests (February 24 through November 3, 2002) list the original $1.38 million total contract price under both the budget and adjusted estimate columns.
On November 7, 2002, Reeves presented a budget breakdown reflecting a projected total project cost of $1.55 million. The Beazleys rejected the new cost estimate because it exceeded the fixed costs in the original budget. They told Reeves to go back and recalculate the budget. Reeves’ subsequent draw request, numbered ten and dated January 12, 2003, again listed the original $1.38 million total budget in the budget and adjusted estimate columns.
Draw request 11, dated April 13, 2003, was the first to reflect an adjusted estimate exceeding the original budget. The adjusted estimate was $1,491,887. The estimate went up to $1,493,616 in draw request 13, dated June 1, 2003, and the request reflects a total draw of $1.55 million. Reeves completed the project on June 6, 2003. The final draw request, numbered 14-D and submitted after completion of the project, kept the same adjusted estimate, but reflects a total draw of $1.59 million. The Beazleys paid Reeves a total of $1,493,616, the adjusted estimate in draw request 13.
Reeves recorded a mechanics’ lien and filed suit against the Beazleys for breach of contract. The Beazleys filed a cross-complaint against Reeves for breach of contract, negligence, and fraud, although they later voluntarily dismissed the fraud claim. Reeves’ answer asserted quantum meruit as an affirmative defense, alleging that he was entitled to recover a reasonable amount for the labor and materials furnished to the Beazleys.
Reeves sought contract damages in the amount of $169,214 based on a total contract price of $1,662,830, which includes changes to the scope of work, allowance items billed at a time and material rate, and fixed cost items removed from the project by the Beazleys. He sought recovery on his quantum meruit claim in the amount of $324,443, based on expert witness testimony that the total reasonable value for Reeves’ labor, services, equipment, and material, plus reasonable profit and overhead, was $1,818,059.
Following a 19-day bench trial, the court issued its Statement of Decision denying relief to both Reeves and the Beazleys. The court rejected Reeves’ contract claim based on its finding that the parties reached a series of accord and satisfaction agreements that resolved Reeves’ claims for payments exceeding the original item costs in the contract. The court also rejected Reeves’ quantum meruit claim and rejected the Beazleys’ claims against Reeves. The court found that neither party prevailed for purposes of attorney fees and costs.
The trial court denied Reeves’ motions for new trial and to set aside the judgment. Only Reeves appeals.
DISCUSSION
I. Accord and Satisfaction
The trial court found that when the Beazleys paid each of Reeves’ draw requests it constituted an accord and satisfaction as to the work covered by the request. “ ‘The phrase “accord and satisfaction” as it is known and applied in the law means the substitution of a new agreement for and in satisfaction of a pre-existing agreement between the same parties.’ [Citations.] The ‘accord’ is the agreement whereby one of two parties having a right of action against the other upon a claim arising out of an existing agreement, agrees to accept from the other party something in satisfaction of such right of action different from and usually less than that which might be recovered upon the original obligation.” (Moving Picture etc. Union v. Glasgow Theaters, Inc. (1970) 6 Cal.App.3d 395, 402-403; see also Civ. Code, §§ 1521-1523.)
Whether the parties intended to reach an accord and satisfaction is a question of fact that we review for substantial evidence. (Conderback, Inc. v. Standard Oil Co. (1966) 239 Cal.App.2d 664, 680-681.) “We review the evidence in the light most favorable to the trial court’s determinations, resolve all evidentiary conflicts in favor of the prevailing party, and indulge in all reasonable inferences to uphold the trial court’s findings. [Citation.] We do not reweigh the evidence, evaluate the credibility of witnesses, or resolve evidentiary conflicts. [Citation.] The burden is on the party or parties challenging the findings and orders of the trial court to show there is no evidence of a substantial nature to support the finding or order.” (In re H.G. (2006) 146 Cal.App.4th 1, 12-13.)
Reeves’ misapprehension of the standard of review leads him to re-argue the evidence. This he cannot do. Based on the testimony and evidence presented at trial, the trial court found as follows: “[I]n presenting his periodic draw requests, Mr. Reeves was doing more than simply listing tasks and requesting payment. He was making statements as to what work had been performed since the last request and what he was asking to be paid for that work. His repeated entries showing the total project cost at $1.3 million amounted to representations that, as of the time of the draw request, allowance items would not bring the cost above that amount. These statements were relied on by the Beazleys and their lender when they made the payments. Together Mr. Reeves’ supplying work and materials, presenting a bill, and the Beazleys’ paying the bill amounted to an accord and satisfaction and discharge of the duties of each as to that portion of the work.”
Reeves contends that the trial court erred because an accord and satisfaction requires a bona fide dispute and intent to settle the dispute. (Moving Picture etc. Union v. Glasgow Theaters, Inc., supra, 6 Cal.App.3d at p. 403.) He argues that the finding of a bona fide dispute is inconsistent with the trial court’s separate finding that the project involved “daily communication and collaboration” between Reeves and Mr. Beazley. There is no inconsistency. The trial court found that the collaboration between the parties included resolution of their differences of opinion about billing, in order that the project could go forward.
The dispute related to how Reeves would bill for allowance items and whether under the contract the billings for those items could result in a total in excess of the original total price of $1.38 million. The trial court found that at the time of contract formation the parties intended that allowance items would be billed on a time and materials basis. It further found that although the first nine draw requests showed the project coming in on budget, in November 2002 Reeves presented the Beazleys a budget breakdown reflecting a projected total cost of $1.5 million. The Beazleys told Reeves that the budget was “unacceptable,” and the next draw request submitted by Reeves, request number 10 in January 2003, continued to list the original budget total as the adjusted estimate. Reeves’ subsequent draw requests, starting with request number 11 in April 2003, list an adjusted estimate of $1.49 million, and the Beazleys ultimately paid that amount in total. Substantial evidence supports the trial court’s conclusion that payment of each draw request constituted an accord and satisfaction as to the work performed by the date of the request.
The trial court found that the Beazleys’ final payment of $238,000 in August 2003 did not result in an accord and satisfaction because “[w]hen the final draw payment was made, the parties were clearly of different views as to the significance of that payment. Mr. Reeves was of the view that the payment was not final and that he would be presenting additional claims for work items that had not been fully billed, and the Beazleys were of the view that they had overpaid for various items that were billed for more than the budgeted amounts.” The trial court did not award any contract damages for the final portion of the project because Reeves failed to show that there was work in that portion for which he had not been paid. Reeves does not challenge that finding on appeal.
Reeves contends that the trial court erred in rejecting his claims based on a theory of accord and satisfaction because the Beazleys did not plead accord and satisfaction as an affirmative defense in their answer. Reeves argues that a trial court cannot properly make findings on an issue not raised in the pleadings, “subject to the qualification that a finding may be considered where the issue, though not formally raised by the pleadings, was tried in the court below without objection.” (Crescent Lumber Co. v. Larson (1913) 166 Cal. 168, 171; see also King v. King (1971) 22 Cal.App.3d 319, 324.) He is correct that the Beazleys did not plead accord and satisfaction. However, Reeves pled the defense in his answer to the Beazleys’ cross-complaint and thereby introduced into the litigation the issue of whether anything in the parties’ course of dealing evinced an intent to settle their disputes. At trial, the parties’ dealings were exhaustively covered by the evidence. Reeves does not argue that there is evidence that he would have presented had the accord and satisfaction defense been pleaded in the Beazleys’ answer. (Cf. Crescent Lumber Co., at pp. 171-172.)
Further, Reeves did not object when the trial court addressed accord and satisfaction in its tentative decision. In objections to the Beazleys’ proposed statement of decision, Reeves relied on the court’s accord and satisfaction rationale. He wrote, “Since the court has concluded that once the allowances, changes and extras were completed, billed for and paid, they are no longer the subject of dispute. They are ‘completed’ and ‘off the table,’ and the BEAZLEYs are precluded from seeking a refund.” Reeves moved to set aside the judgment and moved for a new trial, but in neither motion did he contend that the trial court improperly considered the accord and satisfaction theory. In these circumstances, Reeves forfeited any objection that accord and satisfaction was not before the court. (Freeman v. Gray-Cowan, Inc. (1933) 219 Cal. 85, 88; see also Honig v. San Francisco Planning Dept. (2005) 127 Cal.App.4th 520, 530.)
Finally, Reeves contends that the trial court’s decision that there was an accord and satisfaction effected an improper waiver of his mechanics’ lien. We disagree. The trial court denied foreclosure on the lien not because Reeves waived the lien but because there was no monetary award in his favor. Reeves received no award because he resolved his claims through the accord and satisfaction process. The court properly denied foreclosure on Reeves’ mechanics’ lien.
II. Reeves’ Other Claims for Contract Damages
Reeves contends the trial court erred in failing to award sums under various other contract-based theories. We conclude that the trial court finding of accord and satisfaction precludes an award.
First, Reeves contends he is owed $100,200 of the 10 percent retention withheld by the bank from each payment. The trial court found that the retention was paid to Reeves. Specifically, the Beazleys made a final payment of $238,318.31 in August 2003. The trial court could have reasonably inferred that the payment covered the retention as well as the remaining monies due under the contract. Reeves’ argument that the payment did not include the retention assumes that he was actually owed all of the amounts in his final draw requests (numbers 13 and 14). Those final requests plus the retention exceeded the $238,000 final payment. The trial court rejected Reeves’ contention that he was owed all the sums in the final draw requests because portions of the requests related to work already billed and paid and subject to the accord and satisfaction.
Second, Reeves contends that he is owed $68,450 for fixed price items that were eliminated from the project. He reasons that those items were part of the total contract price the Beazleys agreed to pay. At the outset, we note that Reeves fails to support his contention with citation to any authority supporting the proposition that he is entitled to compensation for such items. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.) In any event, the trial court rejected the proposition that Reeves could recover any additional sums for fixed items, stating “the court has determined that both ‘allow’ and ‘non-allow’ items have been discharged by accord and satisfaction.” The trial court could reasonably infer that crediting the Beazleys for those items was an aspect of the parties’ settlement when confronted by the cost overruns on the allowance items. This inference finds support in the November 2002 budget estimate, which treats omitted fixed items as a credit in favor of the Beazleys.
Third, Reeves contends that the Beazleys breached the contract by providing inadequate plans and specifications, resulting in cost overruns. The trial court found that the plans were “vague” and the scope of the allowance items was “uncertain.” The trial court found that the parties orally modified the contract and agreed to clarify the uncertainties as the project progressed. More importantly, the trial court found that the parties resolved Reeves’ claims based on cost overruns through the accord and satisfaction process. Accordingly, Reeves has no claim for damages resulting from the inadequacy of the plans and specifications.
III. Abandonment
Reeves contends that the construction contract was abandoned and he is entitled to recover the reasonable value of his work.
Under the abandonment doctrine, if parties disregard a contract’s change order process for approving revisions to the scope of work and if the final project is “materially different from the project contracted for,” the contract is deemed abandoned and the contractor may recover the reasonable value for all of the work. (Amelco Electric v. City of Thousand Oaks (2002) 27 Cal.4th 228, 238.) The trial court found that Reeves and the Beazleys ignored the contract’s change order process, but the court also found that the final project was not materially different from that contemplated by the original contract.
Amelco describes the abandonment doctrine but ultimately concludes that the doctrine is inapplicable to a public work. (Amelco Electric v. City of Thousand Oaks, supra, 27 Cal.4th at p. 239.) In dissenting on another issue, Justice Werdegar described abandonment as a “rarely invoked” doctrine which “operates as a safety valve for contractors to recover their actual costs for construction projects that, through no fault of their own, go out of control, far beyond the intention of the contracting parties.” (Id. at p. 249 [dis. opn. of Werdegar, J.].) Only three reported California decisions apply the doctrine. (Id. at pp. 235-236, 248-249, fn. 1 & 5.)
Reeves’ reliance on the abandonment doctrine reflects his continuing disregard of the trial court findings. The court found that the parties’ original intention was that the allowance items were to be billed on a time and materials basis. Accordingly, under the original contract Reeves was protected against the risk from changes in the scope of the work as to those items. In the cases that have found abandonment or a disputed factual issue as to abandonment, the original contracts were fixed or price-not-to-exceed contracts. (C. Norman Peterson Co. v. Container Corp. of America (1985) 172 Cal.App.3d 628, 634; Daugherty Co. v. Kimberly-Clark Corp. (1971) 14 Cal.App.3d 151, 155; Opdyke & Butler v. Silver (1952) 111 Cal.App.2d 912, 913.) In each of those cases, the courts found substantial changes and redesigns from the original plans. (Peterson, at pp. 641-642; Daugherty, at pp. 155-156; Opdyke, at pp. 916-917.) The original plans had been the basis for the agreed-upon fixed or not-to-exceed prices; once the actual projects substantially changed, it was inequitable to hold the contractors to the original prices. (Peterson, at p. 642; Daugherty, at pp. 155-156; Opdyke, at p. 919.) In contrast, the contract between Reeves and the Beazleys was not subject to a price maximum and it included allowance items to be billed on a time and materials basis. Changes were contemplated from the beginning because Reeves entered into the contract based on general rather than detailed drawings. The cited cases are distinguishable.
In any event, the trial court concluded that the abandonment doctrine is inapplicable because it found that the final project was not materially different. Reeves ignores the substantial evidence standard of review and the deference that we must accord to the trial court finding. Reeves’ attempt to show abandonment based on the numerous changes and extras that occurred over the course of the project is unavailing. Many of those changes involved allowance items that the parties agreed would be billed on a time and materials basis; changes involving those items are not extra work outside the original contemplation of the parties. Reeves has failed to show that changes to the scope of the work on fixed items resulted in a materially different project. At the heart of the trial court decision is its finding that the parties reached accord and satisfaction agreements as to the allowance items and other changes to the scope of the work. The trial court properly rejected Reeves’ contention that the contract was abandoned.
We treat as waived Reeves’ other theories of quantum meruit recovery, which are not supported by reasoned argument. (Badie v. Bank of America, supra, 67 Cal.App.4th at pp. 784-785.)
DISPOSITION
The judgment is affirmed.
We concur. JONES, P.J., NEEDHAM, J.