Opinion
A146999 A148407
12-19-2017
FEDCO CONSTRUCTION, INC., Plaintiff and Appellant, v. INTERNATIONAL FIDELITY INSURANCE COMPANY, Defendant and Appellant. FEDCO CONSTRUCTION, INC., Plaintiff and Respondent, v. DANIEL MORGAN et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. Nos. SCV-249622, SCV-249623, MCV-217386) (Sonoma County Super. Ct. No. SVC-249622)
In these consolidated actions, Fedco Construction, Inc. (Fedco) sought to recover damages for breach of contract from two entities developing three subdivisions, their owners, Daniel Morgan and James Clifford, and from the developers' surety, International Fidelity Insurance Company (IFIC), on payment bonds. During a jury trial, the trial court granted the individual defendants' motion for directed verdict and, after deeming alter ego issues moot, entered judgment in their favor. However, the jury found the developers failed to pay Fedco balances due under the construction contracts, and that IFIC owed Fedco the total amount of $15,657.85. Judgment was entered accordingly.
IFIC appealed from the judgment entered in Fedco's favor and Fedco cross-appealed (No. A146999). In its appeal, IFIC maintains Fedco's cause of action was barred by the statute of limitations applicable to actions on public work payment bonds (Civ. Code, former § 3249). In its cross-appeal, Fedco seeks judgment notwithstanding the verdict or a new trial on damages. Morgan and Clifford have also filed a separate appeal from the trial court's postjudgment order denying their motion for attorney fees (No. A148407). On our own motion, we ordered the two appeals consolidated for decision. We affirm.
Unless otherwise noted, all further statutory references are to the Civil Code.
I. LEGAL BACKGROUND
" 'The Subdivision Map Act [(Gov. Code, § 66410 et seq.)] is "the primary regulatory control" governing the subdivision of real property in California.' [Citation.] It has three principal goals: 'to encourage orderly community development, to prevent undue burdens on the public, and to protect individual real estate buyers.' [Citation.] It 'seeks "to encourage and facilitate orderly community development, coordinate planning with the community pattern established by local authorities, and assure proper improvements are made, so that the area does not become an undue burden on the taxpayer." ' [Citation.] [¶] '[T]he Act vests the "[r]egulation and control of the design and improvement of subdivisions" in the legislative bodies of local agencies, which must promulgate ordinances on the subject.' [Citation.] The local entity's enforcement power is directly tied to its power to grant or withhold approval of a subdivision map. Thus, '[o]rdinarily, subdivision under the Act may be lawfully accomplished only by obtaining local approval and recordation of a tentative and final map . . . .' " (Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles (2012) 55 Cal.4th 783, 798-799.)
II. FACTUAL AND PROCEDURAL BACKGROUND
Morgan and Clifford owned Chanate Village, LLC (Chanate) and Meadowlark Properties, Inc. (Meadowlark), both of which are now dissolved. In 2005, Chanate and Meadowlark contracted with Fedco to perform site improvement work, specifically installation of storm drains, sewers, water lines, curbs, and streets, at three parcels of real property owned by Chanate and Meadowlark in Santa Rosa (Subcontract Agreements). The first site, known as the Chanate Village Subdivision, was developed and subdivided by Chanate. A second site, known as the Northview Subdivision, was developed and subdivided by Meadowlark. A third site, known as the Meadowlark 2 Subdivision, was also developed and subdivided by Meadowlark.
For each of the three projects, Chanate or Meadowlark also entered into a Subdivision Agreement with the City of Santa Rosa. Under the Subdivision Agreements, Chanate and Meadowlark agreed to construct improvements for each subdivision—i.e., streets, storm drains, sewers, water lines, sidewalks, and curbs—that would "become the sole exclusive property of [the City of Santa Rosa] without payment therefore, upon final acceptance of said improvements by [the City of Santa Rosa]." (Italics added.)
As required under the Subdivision Agreements, Chanate and Meadowlark obtained from IFIC, acting as surety, a labor and materialmen bond for each of the projects (the Payment Bonds). The Payment Bonds guaranteed payment to contractors and subcontractors for labor and materials furnished to complete the improvements.
The City of Santa Rosa has not accepted the improvements at the three subdivisions and, thus, each project as a whole remains incomplete. Although outstanding items on the Chanate Village and Meadowlark 2 punch lists appeared related to Fedco's work, the jury found Fedco "construct[ed] all or substantially all of the significant things that the [Subcontract Agreements] required [it] to construct."
In 2009, a dispute arose between Fedco and the developers. Fedco asserted it was owed additional retention payments under the Subcontract Agreements. Fedco agreed it had been paid for all change orders for the Northview and Meadowlark 2 Subdivisions, but insisted it was owed retention payments of $40,338 and $10,793, respectively. Fedco's position on the Chanate Village Subdivision was that payment for six approved change orders and retention payments remained outstanding—for a total of $47,666. Morgan and Clifford disputed Fedco's claims, stating nothing more was owed.
On May 6, 2011, Fedco filed three separate suits for breach of contract and recovery on the Payment Bonds against Meadowlark, Chanate, IFIC, Morgan, and Clifford. In July 2011, defaults were entered against Meadowlark, Chanate, Morgan, and Clifford. The trial court later entered default judgments against each. In August 2013, the trial court set aside the default judgment entered against Morgan and Clifford, on the ground entry of default had been voided by Fedco's subsequent substantive amendment of the complaint. Thereafter, Fedco filed a motion to amend the default judgments, entered against Meadowlark and Chanate, to add Clifford and Morgan as judgment debtors on an alter ego liability theory (Code Civ. Proc., § 187).
Each superior court action involved a different subdivision: No. SCV-249622 for Chanate Village, No. SCV-249623 for Northview, and No. MCV-217386 for Meadowlark 2. Morgan and Clifford were named as individual defendants in the original and amended complaints filed in the Chanate Village Subdivision action, but not in the other two actions.
Before hearing the alter ego motion, the cases were consolidated and proceeded to jury trial against IFIC, Morgan, and Clifford. At trial, the defendants took the position that Meadowlark and Chanate had no obligation to pay some of the change orders billed by Fedco because they had not been approved. Morgan and Clifford successfully moved for a directed verdict. In granting the motion for directed verdict, the trial court explained: "No evidence has been offered sufficient to entitle [Fedco] to go to the jury on claims for direct liability against [Morgan] and [Clifford], as individuals . . . [¶] . . . This order is made without prejudice to the court's ruling on and the alter ego allegations in the amendments to the second amended complaints, which have been reserved to the court, and on [Fedco's] motion to amend the judgments to add [Morgan] and [Clifford], as individuals, based on alter ego liability. In holding that this ruling is without prejudice on the issue of alter ego liability, the court expressly reserves the right to consider any and all of the evidence introduced at trial in deciding the issue of alter ego liability under the alter ego allegations in the operative complaint and on the motion to amend the [default] judgments."
IFIC also filed a motion for directed verdict, arguing that Fedco's claims against it were barred by the statute of limitations. The trial court denied IFIC's motion, concluding former section 3249 was inapplicable because "[t]his project does not meet the criteria for a Public Work. (See former section 3100, R&R Pipeline, Inc. v. Bond Safeguard [Ins. Co.] (2014) 223 Cal.App.4th 438, 446; Nissho of California, Inc. v. Bond Safeguard [Ins.] Co. (2013) 220 Cal.App.4th 974, 991-992.)"
Thereafter, the jury, using a special verdict form, found IFIC owed Fedco $13,210.96 and $2,465.89 for unpaid labor and materials supplied to the Chanate Village and Northview Subdivisions, respectively. Specifically, the jury found Fedco contracted with Meadowlark and Chanate to construct site improvements for each of the three subdivisions. The jury also found Fedco substantially performed under each Subcontract Agreement, that Fedco performed change order work as authorized and directed by Meadowlark and Chanate, and that Fedco was excused from having to follow contractual change order requirements. The jury next found, in response to question No. 8 on the special verdict form, that neither Meadowlark nor Chanate agreed with Fedco on a price for the additional work. Therefore, the jury found $36,656.02, $66,047.50, and $30,480.15, respectively, to be the reasonable value of Fedco's additional work performed for the Chanate Village, Meadowlark 2, and Northview projects. After finding Meadowlark and Chanate failed to pay Fedco balances due for the Chanate Village and Northview Subdivisions, the jury found IFIC owed Fedco $13,210.96 for the Chanate Village Subdivision and $2,465.89 for the Northview Subdivision. With respect to Meadowlark 2, the jury found no balance due to Fedco.
Prior to entering judgment, the trial court recognized the Payment Bonds were sufficient to satisfy Fedco's judgment and denied Fedco's alter ego motion as moot. On October 16, 2015, the trial court entered an amended judgment, which provides: "Judgment . . . is entered in favor of [Fedco], the prevailing party in each of the consolidated actions, against [IFIC], as follows: [¶] 1. The principal sum of $2,455.89 on the Northview Subdivision. [¶] 2. The principal sum of $13,201.96 on the Chanate Village Subdivision. [¶] 3. The principal sum of $0.00 on the Meadowlark 2 Subdivision. [¶] 4. For costs of suit according to cost bill. [¶] 5. For attorney's fees pursuant to motion. [¶] Judgment . . . hereby is entered in favor of [Morgan] and [Clifford] on all claims tried against them in these consolidated actions and against [Fedco]."
The amended judgment appears to have minor numeric discrepancies from the jury's verdicts. Because no party has addressed the issue, we do not consider modifying the judgment.
After the amended judgment was entered, Fedco also moved for judgment notwithstanding the verdict (JNOV) and for a new trial. Fedco sought a new trial on the grounds of inconsistency of the verdicts, juror misconduct, and its entitlement to prejudgment interest. In the alternative, Fedco urged the court to enter judgment in its favor because the defendants presented no evidence to support the jury's determination, in response to question No. 8 on the special verdict form, that Fedco and Meadowlark or Chanate did not agree on a price for additional work. Although the trial court's ruling on Fedco's motion is not in the record before us, it appears to have been denied.
Morgan and Clifford also filed a memorandum of costs and a motion for attorney fees. Fedco responded with motions to tax Morgan's and Clifford's costs and an opposition to their motion for attorney fees. In opposing their motion for fees, Fedco argued only that the underlying Subcontract Agreements did not authorize attorney fees. Specifically, Fedco argued the (unsigned) form contracts prepared by Meadowlark and Chanate "should be controlling." Those contracts provide: "In the event of a dispute between [Meadowlark/Chanate] and [Fedco], neither party shall, under any circumstances whatsoever, be entitled to attorney's fees or costs of any kind."
In an order filed on April 7, 2016, the trial court awarded Morgan and Clifford $7,268.35 in costs, but denied their claim for attorney fees. The trial court explains: "As between [Fedco], on the one hand, and Morgan and Clifford, on the other, there is no true prevailing party. Morgan and Clifford were only liable secondarily on the bond claims. The court found the alter-ego claims were moot, based on the verdict and judgments as to IFIC, and dismissed those claims, without prejudice. Although [Fedco] prevailed on two of the three bond claims, the court did not reach the claims at issue between [Fedco] and defendants Morgan and Clifford. Accordingly, there has been no determination as to whether Morgan or Clifford were alter egos of the defendant entities. However, because [Fedco] did not obtain an award against [Morgan and Clifford] and the court entered a directed verdict in their favor, the court will award costs to [Morgan and Clifford] in the amount of $7,268.35." (Italics added.)
With respect to fees, the trial court stated: "As indicated above, the court finds that there is no true prevailing party as between [Fedco] and [Morgan and Clifford]. [¶] . . . [¶] [Morgan and Clifford] seek fees on the basis that they are not alter egos of the contracting entities but they cannot be said to have prevailed on that issue as it was not adjudicated. As the subcontract prepared by [Meadowlark and Chanate] provided that in any dispute between [Meadowlark and Chanate] and [Fedco], neither party 'shall, under any circumstances whatsoever, be entitled to attorney's fees or costs of any kind,' [Morgan and Clifford] have failed to meet their burden of proof to establish that they are entitled to an award of attorney fees.
"[Morgan and Clifford] are correct that [Fedco's] success was modest. However, they did prevail in two of the three actions. Based on the analysis of the foregoing motions, Morgan and Clifford are not entitled to recover all of their fees, under any view of the case. [¶] . . . Even if the court found that [Morgan and Clifford] were entitled to fees, it would not have an adequate basis for determining a reasonable fee based on the moving papers and the reply. The court is obligated to determine a reasonable fee when it does award fees. [Morgan and Clifford] fully cooperated with IFIC in the defense of the bond claims and their attorneys worked together at trial in the primary effort to defeat all of [Fedco's] claims. [Morgan and Clifford] both testified in opposition to [Fedco's] claims and other witnesses on behalf of the defense were closely linked to [Morgan and Clifford.] None of the declarations in support of this fee motion contains any information which would allow the court to allocate between work done on the alter ego claims against [Morgan and Clifford] and work done to defend the bond claims. A review of the billings attached to [their counsel's] declaration suggests that the vast majority of the work related to defense of the bond claims pursuant to contracts between Morgan and/or Clifford and IFIC." (Italics added & fn. omitted.) Morgan and Clifford filed a timely notice of appeal from the fees order.
III. DISCUSSION
These consolidated appeals present the following questions: (1) Were Fedco's causes of action for recovery on the Payment Bonds barred by the applicable statute of limitations? (2) Did the trial court err by denying Fedco's motion for JNOV or for new trial? (3) Did the trial court err by denying Morgan's and Clifford's motion for attorney fees? A. Statute of Limitations
In its appeal from the amended judgment, IFIC maintains Fedco's causes of action for recovery on the Payment Bonds were barred by the statute of limitations. IFIC points to former section 3249, which provided, at the time relevant herein: "Suit against the surety . . . on the payment bond may be brought by any claimant . . . at any time after the claimant has furnished the last of the labor or materials, or both, but must be commenced before the expiration of six months after the period in which stop notices may be filed as provided in section 3184." (Italics added.) Fedco insists the trial court properly concluded former section 3249 does not apply to this case. "A directed verdict may be granted only when, disregarding conflicting evidence, giving the evidence of the party against whom the motion is directed all the value to which it is legally entitled, and indulging every legitimate inference from such evidence in favor of that party, the court nonetheless determines there is no evidence of sufficient substantiality to support the claim or defense of the party opposing the motion, or a verdict in favor of that party." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 629-630.) We determine de novo whether sufficient evidence was presented to withstand a motion for directed verdict. (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 46-47.)
The question before us is whether the three Subdivision Agreements, together with the three Subcontract Agreements, establish a contract for a "public work of improvement." " 'Public work' means any work of improvement contracted for by a public entity." (Former § 3100, italics added.) " 'Public entity' means the state, Regents of the University of California, a county, city, district, public authority, public agency, and any other political subdivision or public corporation in the state." (Former § 3099, italics added.) IFIC concedes that Fedco contracted directly with Meadowlark and Chanate, rather than the City of Santa Rosa. Nonetheless, IFIC insists that the party paying Fedco is immaterial and that any "work under a [Subdivision] Map Act improvement agreement with a local public entity is exactly what the Civil Code defines as 'public work.' "
IFIC asks us to follow California Paving & Grading Co., Inc. v. Lincoln General Ins. Co. (2012) 206 Cal.App.4th 36 (California Paving), in which a private developer of a subdivision had contracted with the City of Los Angeles to construct, at the developer's own cost and expense, all public improvements as a condition for approval of a final map. The developer obtained a " 'subdivision labor and material payment bond' " from an insurance company, acting as surety. A general contractor agreed to construct the public improvements for the developer and a subcontractor contracted with the general contractor to perform street paving and asphalt work at the intersection of two existing streets in Studio City. (Id. at pp. 38-39.) The subcontractor completed its work but was not paid. After both the general contractor and the developer filed for bankruptcy, the subcontractor sued the surety for recovery on the bond. (Id. at p. 39.) The subcontractor's suit was dismissed as untimely, under former section 3249, and the subcontractor appealed. (Id. at pp. 37-38, 40-41.)
The Second District Court of Appeal concluded the surety's demurrer was properly sustained because this was "public work," within the meaning of former section 3100, and that the subcontractor's suit was subject to the statute of limitations found in former section 3249. (California Paving, supra, 206 Cal.App.4th at pp. 38, 43.) The court explained: "[T]he subdivision improvement agreement and contract between the developer . . . and the City, a public entity, expressly required [the developer], at its 'own cost and expense, to construct and install all public improvements required in and adjoining and covered by the final map.' (Italics added.) [¶] In furtherance of [the developer's] contract with the City, [the developer] entered into a contract with the general contractor . . . for the construction of the public improvements. [¶] [The general contractor] then entered into a subcontract with [the subcontractor] 'to furnish labor, services, equipment and materials required pursuant to the prime contract for the construction of the PUBLIC IMPROVEMENTS.' [¶] . . . [¶] [The subcontractor] admits the subcontract was 'for street paving and asphalt work at the intersection of 4411 Wortser Street and 13037 Moorpark Street in Studio City.' Because said subcontract was in furtherance of the underlying Agreement between the City and the developer, the subcontract was for a 'work of improvement contracted for by a public entity.' ([former] § 3100.)" (California Paving, at p. 43.)
California Paving is distinguishable because the improvements in that case were to publicly owned land. (California Paving, supra, 206 Cal.App.4th at pp. 38-39, 43-44.) The Second District Court of Appeal distinguished California Paving on this basis in R&R Pipeline, Inc. v. Bond Safeguard Ins. Co., supra, 223 Cal.App.4th at page 446 (R&R Pipeline). The contractor in R&R Pipeline contracted with a private developer to install a storm drain and sewer on land being developed as a golf course and residential community. (Id. at pp. 440-441.) The developer had previously entered into an agreement with the County of Los Angeles, which required the developer to complete subdivision improvements on the project, including the storm drain and sewer work in question, in order to receive a final map. The developer's work was to be completed to the satisfaction of the county, but the county never accepted the subdivision improvements. (Id. at pp. 440-442.) The developer failed to pay when the contractor completed its work. The contractor sued to recover on a labor and material bond issued in connection with the improvements. (Id. at pp. 441-442.) The trial court granted the surety's motion for summary judgment, on the ground the contractor's action was untimely, under the limitations period applicable to " 'a work of improvement contracted for by a public entity.' " (Id. at pp. 443-444.)
The Second District reversed, concluding that the relevant statute of limitations was the four-year limitations period applicable to actions on a written contract, not former section 3249. (R&R Pipeline, supra, 223 Cal.App.4th at pp. 447-448, 450.) In reaching that conclusion, the court rejected the surety's suggestion that former section 3100 does not require a direct contract with a public entity. The court noted "contract" was specifically defined by former section 3088 to mean " 'an agreement between an owner and any original contractor providing for the work of improvement or any part thereof.' " (Id. at p. 446, italics added.) Because the county was not " 'an owner' " of any portion of the development, nor did the county have a contract with the plaintiff (the " 'original contractor' "), the project was not a " ' "public work," ' " within the meaning of former section 3100. (Ibid.) Instead, it was "a 'private work.' " (Id. at p. 440.)
The R&R Pipeline court was similarly unpersuaded by the surety's reliance on California Paving. (R&R Pipeline, supra, 223 Cal.App.4th at p. 446.) It stated: "The facts in California Paving bear no similarity to the instant case: the work performed by R&R was on private property, not existing city streets; the project was not described as a 'public improvement' in the [developer's agreement with the county], construction contract, or surety bond; and R&R's work was never accepted by the [c]ounty." (Id. at p. 446.) Finally, the R&R Pipeline court observed that the amount of the surety bonds confirmed its result. Former sections 3247 and 3248, subdivision (a), required a public entity contracting for a work of improvement to obtain a payment bond in a sum of no less than 100 percent of the total contract price. Thus, because the bonds involved in R&R Pipeline were in amounts approximating only 50 percent of the total contract price, they would only satisfy the requirements of the Subdivision Map Act, rather than former section 3248. (R&R Pipeline, at pp. 447-448.) Turning to timeliness under Code of Civil Procedure section 337, the court observed it was undisputed the contractor performed up until October 1, 2008. Because the operative complaint was filed on July 25, 2011, it was timely under the four-year limitations period. (R&R Pipeline, at p. 449.)
Under Government Code section 66499.3, subdivision (a), subcontractors may be limited to recovering 50 percent of the contract price.
Code of Civil Procedure section 337, subdivision 1, provides that "[a]n action upon any contract, obligation or liability founded upon an instrument in writing" must be brought "[w]ithin four years."
IFIC's attempts to distinguish R&R Pipeline are unpersuasive. Here, just as in R&R Pipeline, the improvements were contracted for by a private developer, paid for by a private developer, and installed on private land. Under the Subdivision Agreements, the improvements were intended to become the sole exclusive property of the City of Santa Rosa, "upon final acceptance of said improvements by [the City of Santa Rosa]." However, as in R&R Pipeline, the improvements never became public property because the improvements were not accepted. The improvements were, in some places in the Subdivision Agreements, referred to as "public improvements." However, in other instances they were referred to simply as "improvements." Furthermore, the amounts recoverable under the bonds do not approach the amount required by former section 3248 for public works. We agree with the trial court and Fedco that the case before us is fundamentally indistinguishable from R&R Pipeline and that former section 3249 is inapplicable.
In deciding IFIC's motion for directed verdict, the trial court stated, repeatedly, that the improved property was not owned by the City of Santa Rosa. In its briefs, IFIC represents that Fedco was contracted to improve existing public roads, but its record citations do not support its position. At oral argument, IFIC conceded the improved property was privately owned.
Fedco filed suit on May 6, 2011. Thus, as long as its causes of action accrued after May 6, 2007, they are timely. (See Code Civ. Proc., § 337.) In its special verdicts, the jury found balances due to Fedco, as of September 19, 2007 (for the Northview Subdivision) and as of July 17, 2007 (for the Chanate Village Subdivision). The trial court did not err by concluding Fedco's actions were timely under the four-year statute of limitations applicable to actions on written contracts. B. Fedco's Motion for JNOV or New Trial
IFIC raises additional arguments premised on the assumption that former section 3249 applies, rather than Code of Civil Procedure section 337. (See W.F. Hayward Co. v. Transamerica Ins. Co. (1993) 16 Cal.App.4th 1101, 1104, 1110 [construing "cessation of labor," within the meaning of former § 3086, for purpose of determining whether complaint was filed within six months from time stop notices could be filed, as required by former § 3249].) Because we have already rejected IFIC's premise, we need not address the derivative argument.
In its opening brief on the cross-appeal, Fedco challenges the trial court's ruling on its motion for JNOV or new trial. (See Code Civ. Proc., §§ 629, 657, subds. (2), (6).) Specifically, Fedco challenges the jury's findings that Fedco and Meadowlark and Chanate did not agree on prices for additional change order work performed by Fedco at the direction of Meadowlark and Chanate. As a result of this finding (on question no. 8 of the special verdict form), the jury awarded Fedco only the reasonable value of the additional work performed. Fedco asserts: "Special Verdict 8 is inconsistent with Special Verdicts No. 3 through 7 which found that Fedco had performed the additional work at [the] request [of Meadowlark or Chanate], that the additional work was authorized by [Meadowlark or Chanate,] that Fedco was excused from compliance with the contract [c]hange [o]rder procedure and that [Meadowlark and Chanate] had waived the [c]hange [o]rder procedure." Fedco also insists it was entitled to a new trial due to juror misconduct and to recover prejudgment interest. Fedco raised the same arguments before the trial court in its motion for JNOV or new trial.
We lack jurisdiction to address the trial court's ruling on Fedco's motion for JNOV. On December 22, 2015, Fedco filed its notice of cross-appeal from the amended judgment. In its notice of cross-appeal, Fedco checked only one box—indicating it was appealing from the judgment after jury trial. Fedco did not indicate it appealed from "[a]n order after judgment under Code of Civil Procedure section 904.1(a)(2)" or "[a]n order or judgment under Code of Civil Procedure section 904.1(a)(3)-(13)." Nor did it otherwise indicate it was appealing from the trial court's order denying JNOV by filing a subsequent notice of appeal. Yet, in Fedco's opening brief, it challenges only the denial of its motion for JNOV or new trial.
"[A]n aggrieved party must file a timely notice of appeal from [an appealable] order to obtain appellate review. [Citation.] A notice of appeal from a judgment alone does not encompass other judgments and separately appealable orders . . . . [¶] . . . ' "[W]here several judgments and/or orders occurring close in time are separately appealable . . . , each appealable judgment and order must be expressly specified—in either a single notice of appeal or multiple notices of appeal—in order to be reviewable on appeal." ' " (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 239.) An order denying a motion for JNOV is separately appealable. (Code Civ. Proc., § 904.1, subd. (a)(4).) But no notice of appeal was filed from the order denying a motion for JNOV. Thus, we lack jurisdiction to consider the JNOV arguments raised by Fedco in its briefs on the cross-appeal. "The taking of an appeal is not merely a procedural step, but is jurisdictional, and where no appeal is taken from an appealable order, a reviewing court has no discretion to review its merits; the court must disregard all issues concerning the order on its own motion even if no objection has been made." (Berge v. International Harvester Co. (1983) 142 Cal.App.3d 152, 158.)
We cannot save Fedco's argument by construing it as an attack on the sufficiency of the evidence supporting the judgment, because Fedco has not carried its burden to demonstrate such error. Fedco challenges the jury's findings that Fedco and Meadowlark or Chanate did not agree on prices for additional change order work performed by Fedco. However, to carry its burden of demonstrating insufficiency of the evidence, Fedco was required to summarize all of the material evidence, not merely its own, and show the finding to be unsupported. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) " 'It is well established that a reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact.' " (Ibid.) By virtue of IFIC's designation, the testimony received at trial is before us in numerous bound volumes of reporter's transcript. Yet, Fedco has plainly failed to summarize it. Fedco also includes no citation to the record for its repeated conclusory assertions that "[t]he evidence was undisputed that Fedco had billed [Meadowlark or Chanate] for the authorized additional work at the negotiated price at the time the work was performed." (Italics added.) We are not inclined " 'to make an independent, unassisted study of the record in search of error or grounds to support the judgment.' [Citation.] It is the duty of counsel to refer the reviewing court to the portion of the record which supports appellant's contentions on appeal. [Citation.] If no citation 'is furnished on a particular point, the court may treat it as waived.' " (Guthrey v. State of California (1998) 63 Cal.App.4th 1108, 1115.) Thus, we give no further consideration to Fedco's substantial evidence argument.
Fedco also challenges the trial court's denial of its motion for a new trial. Unlike an order denying JNOV, an order denying a motion for new trial is not independently appealable, and it "may be reviewed only on appeal from the underlying judgment." (Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 19.) We have jurisdiction to review the merits of Fedco's new trial argument, but the wholly inadequate record prevents us from doing so.
Fedco elected to proceed with an appendix, in lieu of a clerk's transcript, and no record of the trial court's oral proceedings. This is permissible (Cal. Rules of Court, rule 8.124), but the burden nevertheless remained on Fedco to produce an adequate record demonstrating that the trial court erred. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575; Baker v. Children's Hospital Medical Center (1989) 209 Cal.App.3d 1057, 1060.) " 'A judgment or order 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. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.' " (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) "The [appellant] must affirmatively show error by an adequate record. [Citations.] Error is never presumed. It is incumbent on the [appellant] to make it affirmatively appear that error was committed by the trial court." (Rossiter v. Benoit (1979) 88 Cal.App.3d 706, 712, disapproved on other grounds as stated in Jackson v. Cedars-Sinai Medical Center (1990) 220 Cal.App.3d 1315, 1322.) In the absence of a proper record on appeal, a judgment or order must be affirmed. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296.)
Fedco's appendix includes many of the exhibits admitted into evidence at trial and its moving papers in support of the motion for new trial, but little else. No other pleadings are included. Thus, Fedco has not included any opposition briefs or declarations filed in response to its motion, its reply, or any other documents the parties may have submitted to the trial court. Most importantly, the appendix also does not include the trial court's ruling on the motion or a reporter's transcript from the hearing. Without the trial court's ruling or a complete set of the pleadings before the trial court, it is essentially impossible for us to properly review the trial court's ruling on Fedco's new trial motion. Fedco has, therefore, failed to carry its burden of establishing error. (See Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.) C. Attorney Fees
The appendix also does not contain the trial court's separate ruling, of October 8, 2015, on prejudgment interest.
Morgan and Clifford contend the trial court erred in denying their motion for attorney fees because "based on undisputed procedural facts, they were the prevailing parties" and, as such, were entitled to contractual attorney fees. Under the "American rule," each party to litigation must pay its own attorney fees unless expressly provided for by contract or statute. (Trope v. Katz (1995) 11 Cal.4th 274, 278-279; Code Civ. Proc., § 1021.) "[R]ecoverable litigation costs . . . include attorney fees, but only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees." (Santisas v. Goodin (1998) 17 Cal.4th 599, 606; see 1717, subd. (a); Code Civ. Proc., §§ 1032, subds. (a)(4), (b), 1033.5, subd. (a)(10).)
"Generally, a trial court's determination that a litigant is a prevailing party, along with its award of fees and costs, is reviewed for abuse of discretion." (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332.) " ' "The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court." ' " (Id. at p. 1339.) We independently review the legal basis for an attorney fees award as a question of law. (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1213-1214; Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1003.)
Morgan's and Clifford's claim of entitlement to attorney fees is complicated by conflicting provisions in the competing written agreements. With respect to the Chanate Village action, Morgan and Clifford rely on the Chanate Village Subcontract Agreement, which is unique in that it includes a second form contract, prepared by Fedco and signed by both Fedco and Chanate. It provides: "In the event the parties hereto become involved in litigation arising out of this contract . . . the court in such litigation . . . shall award reasonable costs, expenses and attorneys' fees to the prevailing party."
In reliance on this signed contract, the trial court awarded attorney fees to Fedco in connection with the default judgment entered against Chanate.
With respect to the Meadowlark 2 and Northview actions, however, Morgan and Clifford can rely only on the form contracts prepared by Meadowlark and Chanate. Each of the unsigned form contracts, drafted by Chanate/Meadowlark, provide in relevant part: "Section 9 - Disputes/Arbitration . . . In the event of a dispute between Contractor [Meadowlark/Chanate] and Subcontractor [Fedco], neither party shall, under any circumstances whatsoever, be entitled to attorney's fees or costs of any kind. Excepting from this provision is the attorney fees provision and costs associated with enforcing the indemnification provision of this contract as provided for in Section 13 . . . . [Fedco] hereby agrees to indemnify and hold harmless all officers, directors and shareholders of [Meadowlark/Chanate]. Should [Fedco] file a complaint or cross complaint in a court of law or any arbitration proceeding naming any officer, director and/or shareholder, [Fedco] hereby agrees to pay all attorney's fees and court costs for any and all officers, directors and/or shareholders of [Meadowlark/Chanate] provided that the named officers, directors and/or shareholders are dismissed for any reason and/or prevail on any issue . . . ." (Italics added.)
The Northview Subdivision contract refers to indemnification and payment of attorney fees to "officers, directors and shareholders of Delmar Homes, Inc."
Putting aside the fact that such contracts were never signed by Meadowlark, Chanate, or Fedco, we agree with the trial court and Fedco that Morgan's and Clifford's fee claims fail for additional reasons. Morgan and Clifford concede they, as individuals, were not parties to any of the Subcontract Agreements. They posit they can recover fees under section 1717's reciprocity provisions. Contractual attorney fees are available in cases involving a nonsignatory defendant even if the court concludes the nonsignatory had no right to enforce the contract, as long as such fees would have been available had the party suing on the contract as if the nonsignatory were a party to it prevailed. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 [fees properly awarded to nonsignatory prevailing defendants because "[h]ad [the] plaintiff prevailed on its cause of action claiming [the] defendants were in fact the alter egos of the [signatory] corporation [citation], [the] defendants would have been liable on the [contract]"]; Hsu v. Abbara (1995) 9 Cal.4th 863, 870 (Hsu).) The problem is that, at least with respect to the Northview and Meadowlark 2 Subcontract Agreements, this is not a case where the other party (Fedco) would have been entitled to attorney fees had it prevailed on its alter ego claim. Fedco's suits are in no way "associated with enforcing the [Subcontract Agreements'] indemnification provision." In fact, under the terms of the Northview and Meadowlark 2 Subcontract Agreements, Fedco would not "under any circumstances whatsoever, be entitled to attorney's fees or costs of any kind." Morgan and Clifford cite no authority suggesting section 1717 makes fees available to a defendant who is not a party to the contract and would not have been liable for attorney fees had the plaintiff prevailed.
Moreover, the trial court did not abuse its discretion in determining Morgan and Clifford were not prevailing parties for the purposes of awarding fees. Morgan and Clifford point out that the trial court found them to be prevailing parties for the purposes of awarding costs, under Code of Civil Procedure section 1032, subdivision (a)(4), and insist the same analysis must govern the determination for fees purposes. They are mistaken. (See Galan v. Wolfriver Holding Corp. (2000) 80 Cal.App.4th 1124, 1128-1129; Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1572.) "[T]he premise for this argument, that a litigant who prevails under the cost statute is necessarily the prevailing party for purposes of attorney fees, has been uniformly rejected by the courts of this state. [Citation.] . . . Code of Civil Procedure section 1032, subdivision (a) only defines ' "[p]revailing party" ' as the term is used 'in [that] section.' It does not purport to define the term for purposes of other statutes." (Heather Farms, at p. 1572, italics added.)
Section 1032 of the Code of Civil Procedure provides, in relevant part: "(a) As used in this section, unless the unless the context clearly requires otherwise: [¶] . . . [¶] (4) 'Prevailing party' includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. When any party recovers other than monetary relief and in situations other than as specified, the 'prevailing party' shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034. [¶] (b) Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." (Italics added.)
Furthermore, even if Code of Civil Procedure section 1032 applied, the trial court would have discretion to determine the prevailing party in this case because both Fedco and the individual defendants can claim to be prevailing parties under the definition given by Code of Civil Procedure section 1032. (Wohlgemuth v. Caterpillar Inc. (2012) 207 Cal.App.4th 1252, 1264.) "In cases where both parties achieved a status that Code of Civil Procedure section 1032 defines as a prevailing party, the action 'falls into the "situation other than as specified" category, calling for an exercise of the trial court's discretion.' " (Ibid.)
Similarly, section 1717 vests the trial court with discretion to determine there is no prevailing party. (Hsu, supra, 9 Cal.4th at p. 871.) Section 1717 provides, in relevant part: "(a) In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs. [¶] . . . [¶] (b)(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. . . . [T]the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section." (Italics added.)
In deciding "whether there is a 'party prevailing on the contract,' the trial court is to compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made only upon final resolution of the contract claims and only by 'a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.' " (Hsu, supra, 9 Cal.4th at p. 876.) "If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees." (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.)
"Although a trial court has broad discretion to determine the prevailing party in a mixed result case, its discretion is not unlimited." (Silver Creek, LLC v. BlackRock Realty Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1541.) "[I]n determining litigation success, courts should respect substance rather than form, and to this extent should be guided by 'equitable considerations.' For example, a party who is denied direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its main litigation objective. [Citations.] But when one party obtains a 'simple, unqualified win' on the single contract claim presented by the action, the trial court may not invoke equitable considerations unrelated to litigation success, such as the parties' behavior during settlement negotiations or discovery proceedings, except as expressly authorized by statute." (Hsu, supra, 9 Cal.4th at p. 877, italics omitted.) "[W]hen a defendant defeats recovery by the plaintiff on the only contract claim in the action, the defendant is the party prevailing on the contract under section 1717 as a matter of law." (Id. at p. 876.) "The trial court has no discretion to deny attorney fees to the defendant in this situation by finding that there was no party prevailing on the contract." (Id. at p. 877.) Thus, section 1717 allows "parties whose litigation success is not fairly disputable to claim attorney fees as a matter of right, while reserving for the trial court a measure of discretion to find no prevailing party when the results of the litigation are mixed." (Id. at p. 876.)
Morgan and Clifford insist the court lacked discretion to deny their motion for attorney fees because, as evidenced by the trial court's order granting directed verdict on personal liability and the amended judgment in their favor, they obtained an "unqualified win" against Fedco. We disagree. The court decided the issue of Morgan's and Clifford's direct liability on the Subcontract Agreements in their favor. However, the trial court correctly recognized that the main litigation objective for the individual defendants, who were alleged to be alter egos of Meadowlark and Chanate, was defeating Fedco's claims. Fedco's objective was to obtain the relief requested in its complaints. Ultimately, Fedco obtained relief on its breach of contract cause of action, via the default judgments entered against Meadowlark and Chanate, and the defendants did not prevent Fedco from doing so. Morgan and Clifford failed to accomplish their primary litigation goal. Morgan and Clifford did not "obtain[] a simple, unqualified victory by defeating the only contract claim in the action." (Hsu, supra, 9 Cal.4th at p. 877.) Furthermore, they did not obtain a ruling on the merits on alter ego liability. The trial court merely denied Fedco's alter ego motion without prejudice. The trial court did not abuse its discretion in concluding Morgan and Clifford were not the prevailing parties for purposes of attorney fees.
Morgan and Clifford also contend the trial court erred by concluding they had not met their burden to prove the reasonableness of the fees sought. We need not address this argument.
The trial court did not err in denying Morgan's and Clifford's motion for attorney fees.
IV. DISPOSITION
Fedco's appeal from the trial court's order denying its motion for JNOV is dismissed. The amended judgment, order denying Fedco's motion for new trial, and order denying Morgan's and Clifford's motion for attorney fees are affirmed. The parties are to bear their own appellate costs.
/s/_________
BRUINIERS, J. WE CONCUR: /s/_________
JONES, P. J. /s/_________
NEEDHAM, J.