Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. TC019476 William P. Barry, Judge.
Law Offices of Timothy P. Creyaufmiller and Timothy P. Creyaufmiller for Defendant and Appellant.
Gill and Baldwin and Kirk S. MacDonald for Plaintiff and Respondent.
TURNER, P. J.
I. INTRODUCTION
This case arises out of a dispute over extra work performed on a construction project. The general contractor, Mackone Development, Inc. (defendant), appeals from a judgment in favor of the subcontractor, Bannaoun Engineers Constructors Corp. (plaintiff). We reverse the judgment only insofar as it awards $2,138.07 in Public Contract Code section 7107 prompt payment penalties to plaintiff. We affirm the judgment in all other respects.
II. BACKGROUND
On May 6, 2004, defendant entered into a contract with the Lynwood Unified School District (school district) to build an elementary school (the prime contract). On February 14, 2005, plaintiff subcontracted to perform curb, gutter, and paving work (the subcontract). A dispute arose after plaintiff made a claim for extra work. This litigation followed. In its first amended complaint, the operative pleading, plaintiff asserted causes of action for: contract breach; an open book account for money due; to recover under a statutory labor and material payment bond; and to enforce a stop notice release bond. The court trial resulted in a judgment for plaintiff as follows: “[Plaintiff is awarded] the principal sum of $28,173.61 plus $2,138.07 in prompt payment penalties[;] [defendant] is entitled to an offset in the principal sum of $17,428.70. Therefore, [plaintiff] shall have and recover from defendants Mackone Development, Inc. and Fidelity and Deposit Company of Maryland, jointly and severally, the sum of $12,882.98, together with [attorney fees and costs] as allowed by law.”
III. DISCUSSION
A. Overview of Arguments
Defendant contends: plaintiff is barred from recovery due to its failure to provide timely written notice of its claim as required by the contract; plaintiff failed to present evidence of its actual damages; and defendant is not responsible for prompt payment penalties when monies are released by the owner in response to the filing of a stop notice release bond. We agree only with defendant’s contention that Public Contract Code section 7107 payments were not owed to plaintiff. Otherwise, we agree with plaintiff.
B. Notice
1. The Notice Requirement
Defendant contends the prime contract and the subcontract required plaintiff to give written notice of changes “and/or” modifications. We disagree. The contracts are ambiguous with respect to the notice required.
Our review is governed by the ordinary rules of contract interpretation. The Supreme Court has held: “The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the ‘mutual intention’ of the parties. ‘Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage” (id., § 1644), controls judicial interpretation. (Id., § 1638.)’ [Citations.] A [contract] provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable. [Citation.] But language in a contract must be interpreted as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in the abstract.” [Citation.]’” (TRB Investments, Inc. v. Fireman’s Fund Ins. Co. (2006) 40 Cal.4th 19, 27; accord, People v. Shelton (2006) 37 Cal.4th 759, 767.)
It is undisputed defendant prepared the subcontract. It is further undisputed plaintiff agreed to be bound by the prime contract as well as the subcontract. However, read together, the prime contract and the subcontract create uncertainty whether plaintiff was required to give written notice of changes in work. Under the subcontract, section 6, plaintiff agreed to make all claims for which the school district might be liable in the “manner” provided in the contract documents for “like claims” by defendant upon the school district: “6. CLAIMS AND DISPUTES [¶] SUBCCONTRACTOR agrees to make all claims for which OWNER is or may be liable in the manner provided in the Contract Documents for like claims by CONTRACTOR upon OWNER.” Section 6 of the subcontract continued: “Notice of such claims shall be given by [plaintiff] to [defendant] within one week prior to the beginning of [plaintiff’s] work for which such claim is to be made, or immediately upon [plaintiff’s] knowledge of the claim, whichever shall occur first. Otherwise,such claim shall be deemed waived.” (Italics added.) As to any changes in work due to “unforeseen conditions,” or plan errors requiring immediate clarification, plaintiff agreed under the subcontract, attachment A, to bring such matters to defendant’s immediate attention. Further, under these circumstances, plaintiff was required to obtain defendant’s written authorization before proceeding with the work. Section 2 of the subcontract provided in part, “Should any conflict, error, omission or discrepancy appear in the drawings and specifications, [plaintiff] shall notify [defendant] at once and [defendant] will issue written instructions to be followed.” The prime contract, section 9.6, required 10 days’ written notice of any situation giving rise to delay or an increase in the contract price.
The subcontract states: “The Contract Documents for this agreement consist of this Subcontract Agreement . . . [and] the prime contract . . . .” Also, the subcontract provides, “SUBCONTRACTOR is bound to CONTRACTOR by the Contract Documents . . . .”
Attachment A states in part: “ATTACHMENT A . . . [¶] SCOPE OF WORK [¶] . . . [¶] 15. Change in work due to unforeseen conditions, errors in plans or specifications requiring immediate clarification shall be brought to the attention of [defendant] immediately. No change order work shall be performed without the written authorization from [defendant].”
The written notice paragraph of the prime contract states: “9.6 Contractor Notice of Changes. If the Contractor should claim that any . . . situation obligates the [school district] to increase the Contract Price or to extend the Contract Time, the Contractor shall notify the District’s Inspector and the Architect, in writing, of such claim within ten (10) days from the date of its actual or constructive notice of the factual basis supporting the same. . . . Contractor acknowledges that its failure, for any reason, to give written notice . . . within ten (10) days . . . shall be deemed the Contractor’s waiver [of its claim].” (Italics added.)
Plaintiff’s bid was premised on construction notes and a schedule of quantities included in the plans it received from defendant. Plaintiff later discovered the amount of material it was using was greater than it had anticipated based on the construction notes and schedule of quantities. This discrepancy between the plans and the actual work performed gave rise to plaintiff’s extra work claim. Pursuant to the prime contract and subcontract provisions described above and with respect to the extra work claim, plaintiff was to give defendant either: “[n]otice . . . within one week prior to the beginning of [the] work for which such claim is to be made, or immediately upon . . . knowledge of the claim”; notice “at once”; or written notice within 10 days from the date of actual or constructive notice of the facts. None of the subcontract provisions made written notice of extra work a condition precedent to recovery therefor. The written notice requirement appeared in the prime contract. Moreover, the notice requirements of the prime contract and the subcontract are in conflict. It is uncertain which of the notice requirements controls. Because defendant prepared the subcontract, any ambiguity must be resolved in plaintiff’s favor. (Civ. Code, § 1654; Weil v. Federal Kemper Life Assurance Co. (1994) 7 Cal.4th 125, 161; Victoria v. Superior Court (1985) 40 Cal.3d 734, 739.)
The provision most clearly applicable to the situation at hand—a discrepancy between the scope of the work set forth in the schedule of quantities and the actual work required—is section 2 of the subcontract, “Should any conflict, error, omission or discrepancy appear in the drawings and specifications, SUBCONTRACTOR shall notify CONTRACTOR at once and CONTRACTOR will issue written instructions to be followed.” The quoted subcontract provision does not require written notice by plaintiff to defendant. Moreover, plaintiff’s president, Omar Maloof, testified this was the method the parties used throughout the project when there were issues as to: extra work; changed work; or problems on the job. Defendant asserts, “[T]he first notice that was ever received in writing (or verbally for that matter) was after [defendant] had already completed its work in or about June 27, 2005.” There was substantial evidence, however, to the contrary. Plaintiff’s president, Mr. Maloof, testified that as soon as he became aware of the discrepancy, in late March to mid-April 2005, and continuing thereafter, he orally notified defendant and sought instructions.
2. Lack Of Written Notice
Even if notification in writing was required, substantial evidence supported the trial court’s finding that lack of written notice did not preclude plaintiff’s recovery. Our review is for substantial evidence to support the trial court’s findings. (Katsura v. City of San Buenaventura (2007) 155 Cal.App.4th 104, 107; Howard Contracting, Inc. v. G.A. MacDonald Construction Co., Inc. (1998) 71 Cal.App.4th 38, 49.) As the Court of Appeal has held, “We must take the evidence most favorable to the court’s findings and judgment, drawing every reasonable favorable inference therefrom.” (Howard J. White, Inc. v. Varian Associates (1960) 178 Cal.App.2d 348, 353; accord, Katsura v. City of San Buenaventura, supra, 155 Cal.App.4th at p. 107.)
The Courts of Appeal have applied waiver principles in the analogous situation of contracts requiring written change orders. Waiver of a contractual written change order requirement by course of dealing and execution was applied in Wilson v. Keefe (1957) 150 Cal.App.2d 178, 179-181. A building construction contract between the parties required, in paragraph 8, that the value of any changes or extra work be fixed in writing prior to execution. The contractor performed extra work at the owner’s request. Neither party suggested there was noncompliance with the writing requirement or that a writing was necessary. The Court of Appeal held: “Such conduct waives compliance with a provision such as paragraph 8. [Citations.]” (Id. at p. 181.) Similarly, in Howard J. White, Inc. v. Varian Associates, supra, 178 Cal.App.2d at page 351, the contracting parties had consistently disregarded a contract provision that no extra work or change would occur unless pursuant to a written order. The Court of Appeal held there was substantial evidence the parties by their previous conduct had waived the written order requirement. (Id. at p. 353.)
And in Weeshoff Constr. Co. v. Los Angeles County Flood Control Dist. (1979) 88 Cal.App.3d 579, 589-590, we held the flood control district waived a contractual written change order requirement by its conduct: “. . . California courts generally have upheld the necessity of compliance with contractual provisions regarding written ‘change orders.’ [Citations.] However, California decisions have also established that particular circumstances may provide waivers of written ‘change order’ requirements. If the parties, by their conduct, clearly assent to a change or addition to the contractor’s required performance, a written ‘change order’ requirement may be waived. [Citations.]” (Id. at p. 589.)
It has also been repeatedly held that a contractor who, acting reasonably, is misled by incorrect plans and specifications provided by a public authority as the basis for a bid, and who submits a bid that is lower than it would otherwise have been, may recover for the extra work and expenses occasioned by the misrepresentations. (E.H. Morrill Co. v. State (1967) 65 Cal.2d 787, 791; Coleman Engineering Co. v. North Am. Aviation, Inc. (1966) 65 Cal.2d 396, 404; Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510; Los Angeles Unified School Dist. v. Great American Ins. Co. (2008) 163 Cal.App.4th 944, 964-965; Tonkin Construction Co. v. County of Humboldt (1987) 188 Cal.App.3d 828, 832; Welch v. State of California (1983) 139 Cal.App.3d 546, 550; Healy v. Brewster (1967) 251 Cal.App.2d 541, 550; Gogo v. Los Angeles County Flood Control Dist. (1941) 45 Cal.App.2d 334, 341; 53 Cal.Jur.3d, Public Works and Contract, § 50; but see Thompson Pacific Const., Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525, 551 [contractor must prove public agency affirmatively misrepresented or actively concealed material facts rendering the bid documents misleading]; Jasper Construction, Inc. v. Foothill Junior College Dist. (1979) 91 Cal.App.3d 1, 10 [same].)
Here, there was substantial evidence plaintiff was misled by the construction notes and schedule of quantities defendant provided. Plaintiff provided a bid that was lower than it would have submitted if what turned out to be the actual construction needs were known at the outset. Mr. Maloof testified he first became aware the amount of material plaintiff was using was greater than anticipated based on the schedule of quantities in late March to mid-April 2005. Mr. Maloof raised the subject with defendant’s project manager, Daniel Reyes. As the work progressed and the discrepancies increased, in May 2005, Mr. Maloof spoke again with Mr. Reyes. There was a third discussion between Mr. Maloof and Mr. Reyes about the quantity variations in late May or early June 2005. Mr. Maloof also had frequent conversations with Sean Burkholter at McCarthy Building Companies, defendant’s construction manager. Mr. Burkholter told Mr. Maloof: “Don’t worry about it, we have to finish the project. We have to put the kids in school, and you’ll be paid for that.” Mr. Maloof requested on several occasions that someone come to the jobsite and see the additional work that was being done. Defendant and its representatives kept telling Mr. Maloof to go do the work under protest and he would get paid at the end of the project. On June 27, 2005, Mr. Maloof and Eddie Harrison, defendant’s management consultant, took field measurements of the work plaintiff had performed. Mr. Maloof then wrote to Mr. Reyes identifying the difference between the field measurements and the plan dimensions. Mr. Reyes said he would pass the claim for the additional work through to the school district. In none of these conversations did anyone ever tell Mr. Maloof that written notice was required. There is no assertion plaintiff did not satisfactorily complete the contracted work. This was sufficient evidence to support the trial court’s finding the parties by their conduct waived any written notice requirement.
Defendant takes issue with the finding it knew or should have known that the field measurements differed significantly from the dimensions set forth in the plans. Defendant claims there was no evidence it had knowledge of the alleged extra work. What the trial court found was that defendant knew or should have known by June 27, 2005, that the actual measurements in the field differed from the dimensions shown on the plans. There was substantial evidence that on June 27, 2005, Mr. Maloof and Mr. Harrison measured the actual work plaintiff had constructed and compared those measurements to the plans. Also on June 27, 2005, plaintiff notified defendant in writing, “[T]he actual field measurements, verified by your representative Mr. Eddie Harrison of TEC Management Consultants, Inc., do not agree with the project plans, construction items and estimated quantities.” This was substantial evidence that, as the trial court found, as of June 27, 2005, defendant knew or should have known of the discrepancies.
The statement of decision states: “Defendant knew or should have known by June 27, 2005 that the field measurements differed significantly from the plan dimensions . . . and that a valid claim could be made for this extra work and material, which were required to complete the contract. Plaintiff’s June 27, 2005 claim was based upon the joint field measurements. . . . Plaintiff should be compensated for the unanticipated costs it incurred because of the errors in the plans. This is work and materials that even a careful study of the plans by Mr. Maloof would not have revealed.”
C. Damages
Defendant contends plaintiff was required, under article 9.4.1.3 of the prime contract, to state its claim for additional work in terms of actual labor, material, and equipment costs. Hence, defendant reasons, the failure to comply rendered plaintiff’s damages claim speculative. But the trial court impliedly found the parties had waived that requirement. There was substantial evidence the parties’ practice with respect to this project was not to price change orders on a time and materials basis. Defendant’s project manager, Mr. Reyes, testified it was not his understanding that time and materials was the only way to price a change order; he understood that a variety of methods, including a lump sum or unit price, would be acceptable. Mr. Reyes never asked plaintiff to state change order requests in terms of time and materials. In fact, Mr. Reyes thought what Mr. Maloof submitted was an acceptable method for pricing a change order. Mr. Reyes had used that same method in passing the change order request on to the school district. Contrary to defendant’s assertion, plaintiff’s failure to abide by article 9.4.1.3 of the prime contract did not render its damages claim speculative. Mr. Maloof testified that the amounts requested for the extra work were premised upon the unit prices in the original bid, which in turn were based on plaintiff’s costs including materials, labor, overhead, profit, and sales tax. The approved change orders also had been based on the unit prices.
Defendant argues in part: “[The] documents which [plaintiff] did provide in discovery indicated a cost vastly different from the claim amounts submitted by [plaintiff] at trial. Specifically, [plaintiff] admitted it utilized All American Asphalt for the asphalt work on the project and [plaintiff] was charged $49.00 a cubic yard while at the same time [plaintiff] claimed recovery in the amount of $68.00 for that same work. [Record citations.]” This argument misstates the evidence. First, Mr. Maloof testified that a May 6, 2005 statement from All American Asphalt reflecting a unit price of $49 for 4-inch asphalt—on which defendant relies—concerned phase II of a project for the City of Lynwood, not the present project. Second, Mr. Maloof testified that between May 6, 2005, when the foregoing statement was issued, and July 14, 2005, when plaintiff claimed a unit cost of $68 for 4-inch asphalt, surface material suppliers increased their prices in response to a crude oil price increase.
D. Prompt Payment Penalties
The trial court awarded plaintiff a prompt payment penalty of $2,138.07 pursuant to Public Contract Code section 7107. We typically review the trial court’s finding as to the prompt payment penalty for substantial evidence. (Tesco Controls, Inc. v. Monterey Mechanical Co. (2004) 124 Cal.App.4th 780, 803; see Crawford v. Southern Pac. Co. (1935) 3 Cal.2d 427, 429.) In construing the statute, we apply the following standard of review described by our Supreme Court: “When interpreting a statute our primary task is to determine the Legislature’s intent. [Citation.] In doing so we turn first to the statutory language, since the words the Legislature chose are the best indicators of its intent.” (Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 826; People v. Jones (1993) 5 Cal.4th 1142, 1146.) Further, our Supreme Court has noted: “‘If the language is clear and unambiguous, there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute) . . . .’” (Delaney v. Superior Court (1990) 50 Cal.3d 785, 798; accord, People v. Lopez (2003) 31 Cal.4th 1051, 1056.) In other words, “[I]f there is no ambiguity or uncertainty in the [statutory] language, the Legislature is presumed to have meant what it said, and we need not resort to legislative history to determine the statute’s true meaning.” (People v. Cochran (2002) 28 Cal.4th 396, 400-401; accord, People v. Licas (2007) 41 Cal.4th 362, 367.) We give the statute’s words a plain and commonsense meaning. (People v. Murphy (2001) 25 Cal.4th 136, 142; Garcia v. McCutchen (1997) 16 Cal.4th 469, 476.)
We conclude Public Contract Code section 7107 does not apply in the circumstances of this case. Public Contract Code section 7107 states in pertinent part: “(a) This section is applicable with respect to all contracts entered into on or after January 1, 1993, relating to the construction of any public work of improvement. [¶] (b) The retention proceeds withheld from any payment by the public entity from the original contractor, or by the original contractor from any subcontractor, shall be subject to this section. [¶] (c) Within 60 days after the date of completion of the work of improvement, the retention withheld by the public entity shall be released. In the event of a dispute between the public entity and the original contractor, the public entity may withhold from the final payment an amount not to exceed 150 percent of the disputed amount. . . . [¶] . . . [¶] (d) Subject to subdivision (e), within seven days from the time that all or any portion of the retention proceeds are received by the original contractor, the original contractor shall pay each of its subcontractors from whom retention has been withheld, each subcontractor’s share of the retention received. . . . [¶] (e) The original contractor may withhold from a subcontractor its portion of the retention proceeds if a bona fide dispute exists between the subcontractor and the original contractor. The amount withheld from the retention payment shall not exceed 150 percent of the estimated value of the disputed amount. [¶] (f) In the event that retention payments are not made within the time periods required by this section, the public entity or original contractor withholding the unpaid amounts shall be subject to a charge of 2 percent per month on the improperly withheld amount, in lieu of any interest otherwise due. Additionally, in any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to attorney’s fees and costs.”
The Court of Appeal has explained: “[Public Contract Code] [s]ection 7107 is one of a number of prompt payment statutes that subject project owners and prime contractors to ‘charges’ or ‘penalties’ for failing to timely remit progress payments or retention proceeds, absent adequate good faith justification. [Citations.] The purpose of the various prompt payment statutes is to serve a ‘remedial purpose: to encourage general contractors to pay timely their subcontractors and to provide the subcontractor with a remedy in the event that the contractor violates the statute.’ (Morton Engineering & Construction, Inc. v. Patscheck (2001) 87 Cal.App.4th 712, 720.)” (S&S Cummins Corporation v. West Bay Builders, Inc. (2008) 159 Cal.App.4th 765, 777, fn. omitted.)
The Court of Appeal has described retention proceeds as follows: “Retention proceeds or retention payments are ‘payments relating to work already done but which are not presently paid, which instead are withheld until completion of 100 percent of the [contractor’s] work.’ (Western Landscape Construction v. Bank of America (1997) 58 Cal.App.4th 57, 59.) Typically, an owner withholds retention proceeds [or] payments only where the construction contract calls for installment payments. (10 Miller & Starr, Cal. Real Estate (3d ed. 2001) § 27:50, pp. 135-136.) The withholding of retention payments provides the contractor with incentive to complete the work, while reducing the owner’s risk of the contractor’s nonperformance. (Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 55-56.)” (McAndrew v. Hazegh (2005) 128 Cal.App.4th 1563, 1566-1567.) Retention proceeds serve as security for plaintiff’s full and complete performance. (Id. at p. 1567.) Finally, the purposes of punctual disbursement statutes like Public Contract Code section 7107 are to assure prompt payment of subcontractors and create a remedy in the event the contractor fails to timely pay for work performed. (S&S Cummins Corporation v. West Bay Builders, Inc., supra, 159 Cal.App.4th at p. 777; Morton Engineering & Construction, Inc. v. Patscheck, supra, 87 Cal.App.4th at p. 720.)
Plaintiff’s original bid was $273,100. The subcontract called for progress payments to plaintiff less a 10 percent retention by defendant. Plaintiff’s original bid was increased under four approved change orders by $28,900. This brought the total due plaintiff, without regard to the added work in dispute here, to $302,000. Defendant paid plaintiff $274,700 in progress payments, leaving a balance due of $27,300—an amount equal to 10 percent of the original bid. Plaintiff served a stop notice for $144,300 to the school district on August 19, 2005. As the Court of Appeal has explained, “A stop notice is a remedy to reach unexpended construction funds that remain in the owner’s hands. (See Civ. Code, § 3138.)” (S&S Cummins Corporation v. West Bay Builders, Inc., supra, 159 Cal.App.4th at pp. 774-775.) The $144,300 figure consisted of the $27,300 due under the original contract as modified by the approved change orders, plus $117,000 for the extra work at issue in this litigation. In response, the school district withheld $180,000 from defendant (slightly less than 125 percent of $144,300). Plaintiff filed its original complaint in this action on November 10, 2005. On April 19, 2006, defendant submitted a stop notice release bond to the school district. In July 2006, the school district accepted the stop notice release bond. The school district then released to defendant the $180,000 held pursuant to plaintiff’s stop notice. Once the bond was posted and accepted, plaintiff’s remedies were limited to the bond and the school district could no longer withhold money due defendant on account of the stop notice. (S&S Cummins Corporation v. West Bay Builders, Inc., supra, 159 Cal.App.4th at p. 775, citing Civ. Code, § 3196 and Winick Corp. v. County Sanitation Dist. No. 2 (1986) 185 Cal.App.3d 1170, 1177-1178.) At trial, Scott Yang, a vice president with defendant, testified he believed the $180,000 the school district released to defendant pursuant to the stop notice release bond included the $27,300 in retention proceeds owed to plaintiff. Defendant received the money from the school district in early August 2006. Four months later, while this action was pending in the trial court, on December 7, 2006, defendant paid plaintiff $27,300.
Defendant argues plaintiff was not entitled to prompt payment penalties because, “[T]he payment to [defendant] [by the school district] was not a payment of retentions under [Public Contracts Code section 7107], but rather the release of funds withheld under [plaintiff’s] stop notice upon the placement by [defendant] of a stop notice release bond.” We agree. Public Contract Code section 7107 clearly and unambiguously applies when, upon completion of the project, the public entity releases retention proceeds to the general contractor and a portion of those retention funds belong to a subcontractor. (People v. Lopez, supra, 31 Cal.4th at p. 1056; Delaney v. Superior Court, supra, 50 Cal.3d at p. 798.) Here, the school district withheld $180,000 from defendant pursuant to plaintiff’s own stop notice. Plaintiff’s stop notice was issued in an amount that included the $27,300 due plaintiff without regard to the extra work. The school district released the money to defendant when the stop notice release bond was filed. At that time, this action was already pending. We cannot construe Public Contract Code section 7107—which clearly and unambiguously applies solely to retention proceeds released upon completion of a work of improvement—to also apply: when a claimant serves a stop notice; the public entity withholds construction funds from a general contractor pursuant to the stop notice; the funds are released to the contractor when it files a stop notice release bond on the public entity; and the funds are then paid to the subcontractor.
IV. DISPOSITION
The judgment is reversed insofar as it awards $2,138.07 in prompt payment penalties (Pub. Contract Code, § 7107) to plaintiff. In all other respects, the judgment is affirmed. Plaintiff, Bannaoun Engineers Constructors Corp., is to recover its costs on appeal from defendant, Mackone Development, Inc.
I concur: ARMSTRONG, J.,
MOSK, J., Dissenting
The trial court stated that a finding that “plaintiff’s failure to give written notice per the contract was material . . . would impose a forfeiture upon plaintiff.” The trial court did not find that there was no requirement of written notice or that there was a waiver of such a requirement.
The trial court also concluded that any discrepancy or mistake with regard to the specifications and information in the schedule that was the basis of the subcontract was plaintiff’s responsibility. The trial court only found defendant responsible for plaintiff’s extra work based on the discrepancy between the dimensions for the driveways in the plan and the actual on-site measurements.
Thus, the trial court concluded that because of the discrepancy in measurements, plaintiff did extra work. According to the trial court, if plaintiff were not paid for that extra work, there would be a forfeiture.
It appears that plaintiff gave notice of the discrepancy and requested a change order, but only after the work was completed. No change order was forthcoming, and no notice of a claim was made. At trial, Mr. Maloof, who testified on behalf of plaintiff, stated as follows: “Q. . . . at no time prior to January 12, 2007 did you ever indicate in writing verbally or otherwise that there was a difference between the actual take-off and what you installed in the field, isn’t that correct? A. Correct. Q. So at no time did you claim any damages for the difference between what the take-off showed and what the field showed, is that right? A. To the owner, you mean? Q. Right, to owner or Mackone or anybody. A. No, I did not.”
Accordingly, as to the only ground entitling plaintiff to damages, no notice of a claim was given and no waiver was found. The trial court determined that to deny plaintiff a recovery for work that essentially fulfilled what was required, even though it exceeded the lump sum provided for in the contract, would amount to a forfeiture. We can interpret the documents to determine whether written notice is required. Here, however, there was no change order, and it appears there was no claim for the amount until long after the work was completed. We cannot deal with or conclude there was a “waiver” because the trial court did not. The issue of waiver is a factual one to be determined by the trial court. The trial court found a forfeiture, but it is unclear what was forfeited. There is no indication of the allocation of the amount requested to cost or profit. Defendant did not have an opportunity to assess the amount charged in excess of the lump sum before it was incurred.
It appears that the trial court concluded that as the measurements were inaccurate and plaintiff did the required work, any lack of notice was not prejudicial. But I have trouble fitting such a conclusion into a legitimate framework. I can conceive of legal theories, such as abandonment (see Amelco Electric v. City of Thousand Oaks (2002) 27 Cal.4th 228, 235) or quantum meruit, but none of these theories or others were relied upon by the trial court, and plaintiff does not raise any of them on appeal.
Accordingly, I would reverse the judgment.