Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Edward A. Ferns, Judge, Los Angeles County Super. Ct. No. BC318701
Law Offices of Timothy P. Creyaufmiller and Timothy P. Creyaufmiller for Plaintiff and Appellant.
Monteleone & McCrory, William R. Baerg; and Theodore C. Anderson for Defendant and Respondent.
KRIEGLER, J.
Following a court trial in which plaintiff and appellant Golden State Boring & Pipe Jacking, Inc. was awarded damages of $71,354.10 on its claim for the reasonable value of its services and defendant and respondent Colich Construction, L.P., was awarded $36,500 on its cross-complaint, the trial court denied Golden State’s request for an award of prejudgment interest and attorney fees. In this timely appeal, Golden State makes no challenge to the underlying awards at trial, but argues the trial court committed reversible error in denying prejudgment interest and attorney fees. We affirm.
PROCEDURAL HISTORY
Golden State filed an action against Colich, TPC Management Consultants, Inc., and the City of Palos Verdes Estates alleging breach of contract, common counts, enforcement of stop notice, and payment bond action. Golden State alleged that on or about February 1, 2003, Colich and the City entered into a contract for the construction of storm drains. On or about February 25, 2003, Golden State and Colich entered into a written agreement for Golden State, as a subcontractor, to perform a portion of the work on the storm drains. The estimated contract price was $267,689.24. Subsequent modifications were made to the agreement.
Golden State and Colich are the only parties to this appeal.
Golden State alleged Colich breached the agreement by interfering with or delaying the performance of work, increasing costs, and causing delay damages and lost profits “in an amount according to proof, plus interest thereon.” As common counts, Golden State alleged the agreed upon price had not been paid by Colich, nor was it paid the reasonable value of its work, materials, and other costs. Additional causes of action on Stop Notice and Payment Bond were alleged.
On the first cause of action, Golden State prayed for general damages “in excess of $72,000 plus interest,” as well as increased cost and delay damages in an amount to be determined at trial, and for statutory penalties. The second and third causes of action were for general damages in the amount of $72,742.90.
Colich filed an answer, as well as a cross-complaint for breach of contract and express contractual indemnity. Colich alleged that Golden State failed to fully and timely perform the work under the agreement, performed work that did not comply, delayed the project, abandoned the project, and failed to cooperate with Colich to repair defective work.
The written agreement included a “dispute resolution clause” which provided in part as follows: “For disputes not involving the acts, omissions or otherwise the responsibility of the Owner under the prime contract, the parties hereto shall submit any and all disputes arising under or relating to the terms and conditions of the Subcontract to arbitration in accordance with the Construction Industry Rules of the American Arbitrations Association. . . . In any dispute resolution between the parties, the prevailing party shall be entitled, in addition to any other relief granted, to recover its costs of participation, including attorney’s and experts’ fees. An award rendered by an arbitrator(s) shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction.”
The trial court filed a tentative decision and after considering objections, adopted the tentative decision as the statement of decision of the court. The trial court found that Golden State did not complete the work under the contract within the specification of the prime contract between Colich and the City, thus denying relief on the breach of contract claim. The trial court did find that Golden State was entitled to the reasonable value of its services on the third cause of action in the amount of $71,354.10. On the cross-complaint, the trial court found that Golden State was responsible for delays that caused Colich to be assessed liquidated damages by the City in the amount of $36,500. Judgment was entered in accordance with the statement of decision, which resulted in a net recovery of $34,854.10 by Golden State.
Based upon subsequent motions, the trial court awarded Golden State costs of $4,677, but denied its request for attorney fees and prejudgment interest.
As noted above, Golden State’s appeal is limited to the issues of the denial of prejudgment interest and attorney fees. Originally, the appellate record did not include the trial transcript. We noted that resolution of the issues raised by Golden State—which involved factual and discretionary rulings by the trial court—necessarily required consideration of the trial record. The parties were given an opportunity to address the issue of the adequacy of the record by letter brief. We granted Golden State’s motion to augment the record with the trial transcripts in order to allow for full review of the merits of the appeal.
FACTS
Colich was awarded a contract to build storm drains for the City. Colich was required by contract to complete the job within 100 calendar days from commencement. The contract included liquidated damages of $500 per day for late performance. Colich was unable to obtain performance from the original subcontractor to perform boring and pipe installation. Colich turned to Golden State, which entered into a subcontract in February 2003 with Colich to install 360 feet of drain at a contract price of $735.41 per linear foot, for a total price of $267,689.24. Golden State’s obligations included installing steel casings and the contractor’s supplied carrier pipe, and grouting the angulars. Colich and Golden State disagreed over whether the contract included the $54,000 cost of augers to be used in the drilling. The subcontract obligated Golden State to indemnify Colich for costs due to delay, although there was no express completion date in the subcontract.
The project was delayed from the outset. Golden State was unable to secure delivery of new equipment for the drilling. Therefore, Golden State bored with a machine that had not been used in seven years. Golden State maintained it could not begin the work until Colich prepared a bore pit, from which the boring would take place. Colich contended Golden State was not mobilized to begin work and in order to control costs associated with the bore pit, there was no reason to commence work until Golden State was ready to proceed.
Golden State took the position that it finished work on the bore pit in early May 2003 in order to start the drilling. Once drilling began, there were several machinery breakdowns that slowed Golden State’s work. For what Golden State believed to be safety concerns, the size of the pipe was increased from 21 to 26 inches at a cost of $9,880 at the expense of Golden State. Golden State bored 10 feet per day, which it believed was reasonable for this type of job considering the hard ground composition of the machinery breakdowns. The drilled hole did not daylight until October 2003. Golden State’s position was that it completed the required work on the week ending October 12, 2003.
The actual drilling and pipe installation was 320 feet, which when multiplied by the contract price per linear foot totaled $236,720. Golden State was paid $217,977.10 on the job and maintained that the balance due on the contract as of May 8, 2004, was $72,742.90. The value of all labor services and equipment at the time Golden State issued a stop notice was $236,720.
The parties agreed that the alignment of the project varied from the plan, in that the outlet was approximately 15 feet higher than designed. Golden State agreed to accept the cost of lowering the casings to project tolerances. Golden State asserted that it performed under the contract to the best of its ability. On the other hand, Colich took the position that it terminated Golden State from the job and completed the work itself.
The City assessed 282 days of liquidated damages against Colich, which totaled $141,000.
Colich’s expert concluded there were 443 calendar days of delay on the project. He allocated 79 calendar days and 54 work days of delay responsibility to Colich and 364 calendar days and 228 work days of responsibility to Golden State. Using these figures, Golden State was responsible for 228 days of delay times $500 or $114,000. It took Golden State 92 more days to perform pipe jacking than it represented it would take. Colich also suffered damages of $39,292 related to home office overhead and $141,000 related to liquidated damages.
Golden State’s expert formed the opinion that Golden State was only responsible for six days of delay. The expert believed Golden State was only responsible for the delay in connection with lowering the outlet, which occurred between December 8 and 15, 2003. All other delays and increased costs were attributable to Colich.
DISCUSSION
Prejudgment Interest
Relying upon Civil Code section 3287, Golden State argues it was entitled to prejudgment interest. Golden State reasons that the amount due on the contract—$71,354.10—was certain or capable of being made certain by calculation, thus triggering the right to prejudgment interest.
All statutory references are to the Civil Code unless otherwise indicated.
Section 3287 provides: “(a) Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any such debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state. [¶] (b) Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.”
Subdivision (a) of section 3287 is mandatory where the damages are certain. (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828-829.) “The addition of subdivision (b) created a limited exception to the prevailing general rule that prejudgment interest is not allowed on unliquidated obligations. (See Chesapeake Industries v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906-907.) The usual prohibition against such interest is based upon the rationale that it is unreasonable to expect a defendant to pay a debt before he or she becomes aware of it or is able to compute its amount. (Ibid., see also Stein v. Southern Cal. Edison Co. (1992) 7 Cal.App.4th 565, 571-572.) By allowing an award of prejudgment interest, but only for a limited time period and only if the trial court finds it reasonable in light of the factual circumstances of a particular case, . . . section 3287, subdivision (b), seeks to balance the concern for fairness to the debtor against the concern for full compensation to the wronged party. (See Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948, 960; Chesapeake Industries v. Togova Enterprises, Inc., supra, 149 Cal.App.3d at pp. 906-907.) An award of prejudgment interest is not automatic. (North Oakland Medical Clinic v. Rogers[, supra] 65 Cal.App.4th [at p.] 829.)” (Lewis C. Nelson & Sons, Inc. v. Clovis Unified School Dist. (2001) 90 Cal.App.4th 64, 69.)
“[T]he general rule is almost uniformly adhered to, namely, that interest is not allowable where the damages depend upon no fixed standard and cannot be made certain except by accord, verdict or decree; but that interest will be allowed where the damages are capable of ascertainment by calculation, or where they may be determined by reference to well-established market values.” (Lineman v. Schmid (1948) 32 Cal.2d 204, 211.) Prejudgment interest is mandatory where there is essentially no dispute over the computation of damages, but the issue is instead one of liability. (Cassinos v. Union Oil Co. (1993) 14 Cal.App.4th 1770, 1790; Esgro Central, Inc. v. General Ins. Co. (1971) 20 Cal.App.3d 1054, 1060.)
The focus is therefore on “whether ‘defendant actually know[s] the amount owed or from reasonably available information could the defendant have computed that amount.’ [Citation.]” (Cassinos v. Union Oil Co., supra, 14 Cal.App.4th at p. 1789.) Section 3287 does not authorize prejudgment interest where the amount of damage, as opposed to the determination of liability, depends upon a judicial determination based upon conflicting evidence and is not ascertainable from truthful data supplied by the claimant to his debtor. (Wisper Corp. v. California Commerce Bank, supra, 49 Cal.App.4th at p. 960; Fireman’s Fund Ins. Co. v. Allstate Ins. Co. (1991) 234 Cal.App.3d 1154, 1173.) “As a rule, the amount of damages in an action on quantum meruit is held to be an unliquidated claim, in that the amount due must be determined from a presentation of evidence as to the extent, character and value of the plaintiff's services.” (George v. Double-D Foods, Inc. (1984) 155 Cal.App.3d 36, 46.)
Based upon these principles, the mandatory prejudgment interest provision of section 3287, subdivision (a), was not applicable. Golden State claimed damages for breach of contract, but that cause of action was specifically rejected by the trial court. Golden State did prevail on its common count for the reasonable value of labor, materials, equipment, and work, but damages on that cause of action were not certain absent demonstrable proof at trial, subject to the discretion of the trial court. “The court was not bound by the compensation specified in the written agreement in order to arrive at the reasonable value of respondent’s services. It was free to find that he was entitled to receive approximately as much for the uncompleted services as he would have received for the completed services if in its judgment and discretion this constituted reasonable value.” (McDonald v. Filice (1967) 252 Cal.App.2d 613, 629.)
“It is settled that in an action for the reasonable value of work and labor, a written contract providing for an agreed price is admissible in evidence and may be used as a criterion in establishing the reasonable value of the services rendered. [Citations.] The contract in such an instance serves only as an aid to the court in fixing the amount of recoverable damages which was an unresolved issue prior to judgment. [¶] We conclude that the amount to which plaintiffs were entitled for their work and labor was not ‘certain, or capable of being made certain by calculation’ (Civ. Code, § 3287) at the time the plaintiffs’ right accrued to recover the reasonable value of their work and services, hence the plaintiffs were not entitled to interest on so much of the award as pertains thereto.” (Parker v. Maier Brewing Co. (1960) 180 Cal.App.2d 630, 635.)
Although the trial court relied on the contract amount in fixing the reasonable value of work performed by Golden State, it was not required to do so. As made clear in Parker v. Maier Brewing Co., supra, 180 Cal.App.2d at page 635, the reasonable value of work and services performed is not certain or capable of being made certain by calculation merely because of the existence of a contract. Prejudgment interest was not mandatory.
Because no contention is made by Golden State that the trial court abused its discretion in denying prejudgment interest under the discretionary provisions of section 3287, subdivision (b), we affirm that part of the judgment denying prejudgment interest.
Attorney Fees
Golden State argues it was the prevailing party in the action and entitled to attorney fees. Golden State relies upon the attorney fee provision in the subcontract pertaining to dispute resolution. Because this was an action on the contract, Golden State argues section 1717 supports an award of attorney fees. Colich argues in response that Golden State was not the prevailing party as a matter of law under section 1717 because there were mixed results at trial, and the trial court did not abuse its discretion in finding there was no prevailing party for purposes of the statute.
Golden State argued in the alternative in its briefs before this court that it was entitled to attorney fees under Code of Civil Procedure sections 1032 and 1033.5. At oral argument, counsel for Golden State acknowledged that the right to attorney fees, if it existed, was pursuant to section 1717 and Code of Civil Procedure sections 1032 and 1033.5 were only tangentially relevant. We therefore limit our discussion to section 1717.
“‘On appeal this court reviews a determination of the legal basis for an award of attorney fees de novo as a question of law.’ (Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677.)” (Dell Merk, Inc. v. Franzia (2005) 132 Cal.App.4th 443, 450.) California courts liberally construe the term “on a contract” for purposes of section 1717. (Dell Merk, Inc. v. Franzia, supra, 132 Cal.App.4th at p. 455; California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598, 605.) An action is on a contract as long as it involves a contract under section 1717. (PM Group, Inc. v Stewart (2007) 154 Cal.App.4th 55, 68-69 [attorney fees properly awarded under section 1717 where tort claims were inextricably joined with contract claims]; Dell Merk, Inc. v. Franzia, supra, 132 Cal.App.4th at p. 455; Care Constr., Inc. v. Century Convalescent Centers, Inc. (1976) 54 Cal.App.3d 701, 706.)
Section 1717 provides in pertinent part as follows: “(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. Except as provided in paragraph (2), 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.”
There is no question regarding the existence of the subcontract between Golden State and Colich. The complaint and cross-complaint each alleged breach of the contract. Assuming the attorney fees provision of the subcontract applied to actions in the superior court (rather than being limited to arbitration), and that section 1717 applies to Golden State’s common count cause of action, we nevertheless conclude the trial court did not err in denying attorney fees to Golden State under section 1717 because of the mixed results at trial. “Under section 1717, the trial court has discretion to determine who, if anyone, is the party prevailing on the contract. (Hsu v. Abbara (1995) 9 Cal.4th 863, 871 (Hsu).) That discretion is not unlimited; the statute contemplates that a party prevailing on a contract will ‘receive attorney fees as a matter of right . . . whenever the statutory conditions have been satisfied.’ (Id. at p. 872.) Thus, ‘when the results of the litigation on the contract claims are not mixed—that is, when the decision on the litigated contract claims is purely good news for one party and bad news for the other—the Courts of Appeal have recognized that a trial court has no discretion to deny attorney fees to the successful litigant. Thus, when 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. [Citations.] Similarly, a plaintiff who obtains all relief requested on the only contract claim in the action must be regarded as the party prevailing on the contract for purposes of attorney fees under section 1717. [Citations.]’ (Id. at pp. 875-876, italics omitted.) When ‘the results of the litigation are mixed,’ however, the statute ‘reserve[es][to] the trial court a measure of discretion to find no prevailing party . . . .’ (Id. at p. 876.) In considering this question, the court must ‘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.’ (Ibid.) And critically, ‘[t]he 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.”’ (Ibid.)” (Estate of Drummond (2007) 149 Cal.App.4th 46, 50-51.)
The results of the trial in the instant case were mixed. Golden State recovered the fair value of its work and services performed on a common count cause of action, while Colich was awarded damages for breach of contract. The trial court therefore was vested with discretion under section 1717, subdivision (b), to determine there was no prevailing party. (Hsu, supra, 9 Cal.4th at p. 876.) Golden State has failed to establish the trial court’s determination that there was no prevailing party on the contract was arbitrary or capricious. In our view, the trial court could reasonably take into account the fact that although Golden State had a net recovery after trial, it did not prevail on the breach of contract cause of action. To the contrary, Colich prevailed on its breach of contract cause of action in the cross-complaint, a factor weighing in favor of a determination there was no prevailing party. Colich was awarded a significant setoff on its cross-complaint based upon the breach of contract by Golden State. This appears to be the type of situation, recognized in Hsu, in which a trial court could reasonably find there was no prevailing party. Golden State was not entitled to attorney fees, as a matter of law, under section 1717.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to Colich.
We concur: ARMSTRONG, Acting P. J., MOSK, J.