Opinion
G054053
12-03-2018
McMAHON STEEL COMPANY, INC., Plaintiff and Appellant, v. ANGELES CONTRACTOR, INC. et al., Defendants and Appellants.
Murtaugh Meyer Nelson & Treglia, Lawrence A. Treglia, Jr., Matthew W. Johnson and Jeffery M. Suckiel for Defendants and Appellants. Theodore A. Anderson for Plaintiff and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2012-00575919) OPINION Appeals from a judgment and order of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Murtaugh Meyer Nelson & Treglia, Lawrence A. Treglia, Jr., Matthew W. Johnson and Jeffery M. Suckiel for Defendants and Appellants. Theodore A. Anderson for Plaintiff and Appellant.
I. INTRODUCTION
The most famous stadium in the United States is not the house that Ruth built. Hard as it is for baseball fans to admit, it is not even Fenway Park or Wrigley Field. It is, rather, the stadium that has dominated New Year's Day since 1923, and continues to, even when national collegiate titles are often decided in other venues. It's the Rose Bowl.
But like any stadium built in the 1920's, the Rose Bowl has needed refurbishment from time to time. Its most recent renovation was in 2011, in preparation for soccer's Gold Cup, a match in which Mexico beat the United States 4 to 2. The City of Pasadena (the City) awarded a contract for a major part of that renovation to Angeles Contractor, Inc. (Angeles). Angeles in turn awarded a subcontract for steel work to McMahon Steel Company, Inc. (McMahon).
The Angeles-McMahon subcontract resulted in this contentious litigation. McMahon submitted "change order requests" (called COR's in the briefing) which Angeles didn't pay. Angeles deducted amounts (called "back-charges" in the briefing) alleging McMahon had performed some tasks negligently, had abandoned some tasks, and had failed utterly to do others. McMahon sued over these COR's and back-charges, and Angeles cross-complained, claiming it was entitled to deduct more than it had.
The result of the ensuing court trial was a net judgment in favor of McMahon against Angeles for about $535,000. That judgment has generated both an appeal by Angeles and a cross-appeal by McMahon. Together, those appeals have generated no less than 12 separate issues. Below is a short summary of our disposition of those 12 issues. Ten are found in the appeal and another two in the cross-appeal.
Issues presented in the appeal:
(1) Did Angeles waive a dispute and claim provision of the subcontract that would otherwise preclude subcontractor McMahon from filing suit? The trial court said yes, and we agree. There was evidence that during construction Angeles didn't dispute any change order requests submitted by McMahon. Angeles was happy just to pass McMahon's change order requests on to the City with a 7.5 percent markup. And as we show below, the contract required disputes and claims to be resolved prior to doing the actual work involved. The trial court could thus reasonably find that Angeles made a business decision to waive the bureaucratic form filling and not stop the work and risk delaying the time-sensitive project.
(2) Did the subcontract require McMahon to undertake the major job of reinstalling the bench seats at the southern end of the stadium? This time the trial court answered no and we agree. The relevant subcontract provision was ambiguous. McMahon was required to reinstall bench seating in an undefined "staging area." Given the ambiguity in the words "staging area," parol evidence was properly admitted from which the trial court reasonably concluded the staging area did not encompass the entire south end of the stadium as Angeles claimed.
(3) Under the subcontract, who had the job of first scanning for hidden rebar so as to avoid hitting that rebar in the course of construction? The trial court determined it was Angeles which had that responsibility, and we cannot conclude otherwise. An unambiguous exclusion in the subcontract shows that scanning was not McMahon's responsibility. Further, the court had substantial evidence (the testimony of Angeles' own vice-president) that it was the general contractor's responsibility to coordinate the work of the various subcontractors. Any damage to rebar from failure to do prior scanning was thus attributable to Angeles, not McMahon.
Angeles next says it was entitled to deduct six discrete amounts from McMahon's compensation based on allegedly non-performed, negligent, or delayed work. Indeed, Angeles asserts the trial court was required to credit it with these deductions as a matter of law on the theory there was no evidence to the contrary.
Its positions on none of these matters is persuasive. Three of them (issues (4) through (6)) involving core drilling (for $17,052.50, $1,707.720, and $8,893.95) are governed by a plain exclusion in the subcontract exonerating McMahon from the need to do any concrete cutting. Two of them (issues (7) and (9) for $8,259 and $4,269.38) are controlled by the trial court's determination that McMahon was not responsible for the south end bench seating reinstallation. And the last (issue (8) for $6,103.50) turns on the question of who had the responsibility to coordinate work among subcontractors, which was Angeles, not McMahon.
Issue (10) involves attorney fees. Angeles says it was entitled to its attorney fees because it was the prevailing party on one issue: whether it owed McMahon statutory penalties for withholding payment. We reject this claim because the relevant statutes use the word "action," not "issue," to describe the "prevailing party" entitled to fees under them. Angeles may have been the prevailing party on a single issue, but it was hardly the prevailing party in the action.
Issues presented in the cross-appeal:
First, McMahon asserts that it should have been awarded an extra $73,785.61 as money that was undisputedly owed by Angeles to it, but not paid, and somehow forgotten in the judgment. On examination, however, it turns out that the $73,785.81 figure was not some undisputed concession on Angeles' part. The number was nothing more than a hypothetical calculation found in Angeles' trial brief on which it had based a settlement offer. It has no independent existence in the evidence credited by the trial court.
And second, McMahon argues the trial court was required to award it all its fees, even those incurred in pursuit of claims that McMahon eventually dropped. This assertion is wrong because contractual prevailing party attorney fee provisions are governed by Civil Code section 1717, and Civil Code section 1717 statutorily overrides any conflicting contractual attorney fee clauses. Civil Code section 1717 only allows for reasonable fees. The fees awarded to McMahon were reasonable.
II. BACKGROUND
The City owns the Rose Bowl, which it manages through its agent, the Rose Bowl Operating Company. In preparation for the 2011 CONCACAF Gold Cup, the City sought to renovate its famous stadium. It asked for bids on various packages of work, one of which was "RB-01," which Angeles was awarded in November 2010, a $3.4 million job. In late January 2011, Angeles and McMahon entered into a subcontract for steel work on RB-01. Angeles agreed to pay McMahon $1,566,125.00 for the work.
The acronym stands for Confederation of North, Central American and Caribbean Association Football.
Most of McMahon's work was completed by the time of the June 2011 Gold Cup, though some work continued even after the "hard deadline" of June 25, 2011, when the Gold Cup was scheduled. The Rose Bowl renovation as a whole was not finished until February 2012.
Through 2011 and the first half of 2012, a number of disputes arose between Angeles and McMahon over the scope of the work to be done by McMahon. These disputes can be roughly divided into two categories: First, McMahon sought payment based on 24 COR's, amounting to a claim for $316,634.19 in the aggregate. Second, McMahon sought to recover some $252,568.88 that Angeles had withheld in 11 separate back-charges. Almost 60 percent of this $252,568.88 was for amounts that Angeles had paid other subcontractors pursuant to something called "field work directive 159" (sometimes referred to in the briefs as "FWD 159.") Of that 60 percent, roughly two thirds was for the work of reinstallation of bench seats in the entire south end of the bowl ($105,127.83). Another 18 percent was for six discrete "back-charges" imposed by Angeles for a variety of smaller matters which Angeles claims also required the hiring of additional subcontractors. (Those six back-charges are discussed in greater detail below.)
This litigation began in June 2012, with McMahon filing a complaint in Orange County Superior Court against both the City and Angeles (which is based in Buena Park), initially seeking about $537,000. In September, McMahon filed a first amended complaint. In it, McMahon dismissed the City from the case, but expanded its claims against Angeles. In that first amended complaint, McMahon sought $603,000 for unpaid change orders and another $809,000 for charges allegedly arising out Angeles' bad management of the project (e.g., costs for overtime work and being forced to wait on the work of other subcontractors). This claim for $809,000 is called in the briefing an "equitable adjustment" claim.
McMahon's net claim against Angeles was now about $1.35 million. It also asked for statutory penalties of 2 percent per month on that sum, which it claimed had been wrongfully withheld.
In February 2013, Angeles filed a cross-complaint against McMahon, alleging that McMahon had not done some required work, abandoned some work, and did other work in a negligent manner. About 14 months later, in a second amended cross-complaint, Angeles added the City as a defendant, and alleged the City should indemnify it if it turned out that it was liable to McMahon based on its claims. However, the cross-complaint against the City was later dismissed on the City's sustained demurrer. McMahon also abandoned its $809,000 equitable adjustment claim.
The case came to a court trial in November 2015, and the matter was taken under submission on December 1, 2015. The submission was vacated in late January 2016 when the trial court asked for further briefing. On March 30, 2016, the trial court issued its tentative decision. It awarded McMahon a net recovery of $183,683.75.
Two months later, on May 31, 2016, after a short flurry of proposed judgments, proposed statements of decisions and objections to them, the trial judge wrote and signed a two-page judgment. The May 31, 2016 judgment upped the net award to McMahon to $212,673.86.
But the May 31, 2016 judgment was not to last. In mid-June 2016, McMahon timely filed a new trial motion. McMahon argued that while the court had ruled on its claims for unpaid COR's, it had ignored the issue of whether Angeles had properly back-charged McMahon for certain amounts. McMahon claimed the judgment should include another $213,787.77 in incorrect back-charges.
McMahon also asserted a third claim: There was a dangling $73,785.61 in undisputed money owed to it. McMahon's main authority for this putatively unaccounted for money was Angeles' statements in the course of trial.
The new trial motion was denied in a minute order filed July 22, 2016, but McMahon did win a victory of sorts. The July 22, 2016 minute order recognized that the court had not "properly" taken into account Angeles' back-charges to McMahon. Accordingly, it added $213,787.77 to McMahon's recovery.
However, McMahon lost on its $73,785.61 claim. The trial judge wrote that at trial it was "undisputed that Angeles withheld $73,785.61 from McMahon as retention" and noted that McMahon "correctly" had observed the judgment should include the retention. But, she further wrote, the retention was "accounted for in the undisputed Change Order Requests," and so was "already included in the judgment. To award the retention to McMahon would amount to a double payment to McMahon." The July 22, 2016 minute order promised an amended statement of decision and new judgment "shortly."
"Shortly" was three days later. The amended statement of decision slogged through 24 COR's and determined a net amount owing to McMahon of $208,736.86. It did the same for 11 back-charges and determined Angeles incorrectly withheld from McMahon $213,787.77. The accompanying judgment was based on those two figures. When interest was added, the result was a judgment in McMahon's favor of $535,230.70.
Angeles filed a timely appeal from the judgment, and McMahon has filed a cross-appeal. McMahon's cross-appeal primarily centers on a claim for the aforementioned $73,785.61, which it says was undisputed but not otherwise paid or included in the judgment.
III. DISCUSSION
A. Angeles' Appeal
As noted, Angeles presents three contract claims and another six substantial evidence claims for six discrete back-charges, in addition to a final attorney fee argument. We now address those 10 issues in order.
1. Claim and Dispute Provision
Article 15 of the main City-Angeles contract (incorporated by reference into section 9 of the Angeles-McMahon subcontract) is a "Claims and Disputes" provision. It sets out a claims procedure that goes like this: If the contractor (and that means Angeles vis-à-vis the City or McMahon vis-à-vis Angeles) wants to make a claim for more money, it must give written notice within 10 calendar days after the "occurrence of the event giving rise to such Claim." The written notice must be given before proceeding to execute the work "affected by the event."
The main (Angeles-City) contract also provided, in Article 7, for certain "changes in the work." If extra work to be performed by a subcontractor is "approved by the Owner" (i.e., the City), then the general contractor is entitled to add 5 percent as its own fee, plus an extra 2.5 percent for insurance and bond expenses, resulting in the general contractor being able to obtain an extra 7.5 percent on work order changes submitted by a subcontractor and then passed on by the general contractor to the owner.
During the work, McMahon submitted numerous change orders to Angeles, which, in turn, passed them on to the City, after including Angeles' 7.5 percent markup. The City approved many of these change orders. However, in a document entitled "Unilateral Change Order" (exhibit 29, called "Unilateral Change Order No. 1") issued in April 2012, the City disallowed a number of these change orders. We count 10 of them. Plus the City back-charged Angeles for a number of items, amounting to $46,482.19.
These change orders are collected in trial exhibit 169. Trial exhibit 169 is easily an inch thick. Angeles' briefing does not say precisely how many change orders are in exhibit 169. Suffice to say, for purposes of the trial court's finding that Angeles' course of conduct waived the claim and dispute provision of the agreement, there were a lot of them.
An example: "Re-installation of toe kick plate at catwalks on north scoreboard structure."
One item, for example: "Handrails at vomitories and tunnels not galvanized as required."
But that was not the end of the story. Soon the City gave back most of what it had taken away. In August 2012, the City issued another Unilateral Change Order (exhibit 35, called Unilateral Change Order No. 2) revisiting its determinations in the first Unilateral Change Order. Of the $46,482.19 deducted the first time, $37,277.25 was put back in. However, Unilateral Change Order No. 2 made no changes to the 10 items rejected in Unilateral Change Order No. 1.
At trial, as a defense to McMahon's claims for various COR's, Angeles argued McMahon was first required to give it formal notice as required by Article 15 of the City-Angeles contract. The trial court found Angeles had waived any such formal notice by its habit of rubber stamping (48 out of 50) of McMahon's COR's - adding its own 7.5 percent markup - and then passing those COR's on to the City. On appeal, Angeles argues the trial court erred in finding waiver, because in sending on McMahon's COR's to the City complete with markup, Angeles was only doing, in "good faith," what it was supposed to do anyway under Article 7 of the City-Angeles contract. As counsel put it at oral argument in this court, there could be no waiver because Angeles only acted "consistently" with what Article 7 contemplated.
The parties agree that Angeles passed on 48 of 50 COR's received from McMahon.
We examine Angeles' theory in detail. Angeles readily concedes that it passed along almost all of McMahon's COR's to the City. But, it says, its argument that McMahon owed it formal notice really had nothing to do with the processing of COR's during construction. The trial court misread the contract when it predicated its finding of waiver on what happened during construction. Rather, according to Angeles, McMahon's true failure to comply with Article 15 came long after construction was finished - when the City issued Unilateral Change Order No. 1. It was then that McMahon was required to give formal notice to Angeles of its claims for unpaid work so that Angeles could itself give the City the same formal notice, so it could be paid by the City what it would owe to McMahon. But because McMahon sued in civil court instead of giving formal notice in the wake of Unilateral Change Order No. 1, McMahon exposed Angeles to the worst of all possible worlds: Angeles ended up having to pay McMahon in McMahon's civil suit but found itself unable to obtain reimbursement from the City.
As shown best by this passage from page 34 of the Opening Brief: "That obligation [to give notice] arose in April of 2012, after the Project was completed and there is no evidence that ACI agreed to waive McMahon's obligation to comply with the Article 15 provisions."
Angeles' analysis is based on separating Article 7 of the Angeles-City contract, which deals with change orders, from Article 15 of that contract, which deals with claims and disputes and which contains a formal notice of claim provision, and then characterizing those two respective articles as controlling two different time frames. The argument does not bear up, however, when the actual contract language is examined. The neat separation of Article 7 (COR's) from Article 15 (notice and claim) is not compatible with the contract read in context and as a whole. (See Civ. Code, § 1641 [interpret contract as a whole]; People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 526 [interpret contract in context]; City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 473 [individual portions of contract are interpreted together]).
Read as a whole, both Article 7 and Article 15 require formal notice during the construction stage, as distinct from some hypothetical post-construction period in which the parties try to iron out their differences. That makes practical sense. From everybody's point of view it is best to take care of extra expense possibilities before any expenses are actually incurred.
Section 7.6.1 of Article 7 is quoted in the margin, and it contains fairly strong present-it-or-lose language in the context of requests to be paid extra for additional work. ("Contractor's failure to initiate a COR within such period shall be deemed a waiver of the right or adjustment of the Contract Sum or the Contract Time for the alleged change.") Such a COR must also be made in a "format acceptable" to the City. That language seems plain: The time to present formal notices of requests for more money was during construction, not long afterwards.
"§ 7.6.1 If the Contractor alleges that instructions issued after the date of the Contract will result in increases to the Contract Sum or Contract Time, if latent or unforeseen conditions require modification of the Contract Documents, or the Contractor otherwise becomes aware of the need for or desireability of a change in the Work, a Change Order Request ("COR") may be submitted to the Architect in writing, in a format acceptable to Owner, and must specify the reasons for such change, including relevant circumstances and impacts on the Master Construction Schedule. Contractor shall submit a written price proposal, as described in Section 7.5 above, concurrently with the COR. The Contractor may request additional compensation and/or time through a COR but not for instances that occurred more than five (5) calendar days prior to the COR. Contractor's failure to initiate a COR within such period shall be deemed a waiver of the right or adjustment of the Contract Sum or the Contract Time for the alleged change. Any COR that is approved by the Owner will be incorporated in a Change Order or Construction Change Directive. If the Architect determines that the Work in question is not a change, the Owner will issue a Work Directive, ordering the Contractor to proceed with the Work without delay. If the COR is denied but the Contractor believes that it does have merit, the Contractor may submit a Claim in accordance with the procedures set forth in Article 15 below." (Italics added.)
The same emphasis on requests being made prior to doing the work is reiterated in section 15.2.1 of Article 15, also quoted in the margin. Again, the contract is explicit in seeking to prevent work from being done prior to a change order request, and again that seems only common sense. All parties are benefited if no extra work is undertaken without first establishing precisely who is responsible for paying for it.
"§ 15.2.1 If the Contractor wishes to make a Claim for an increase in the Contract Sum or extension of the Contract Time, the Contractor shall give the Owner and Architect written notice thereof within ten (10) calendar Days after the occurrence of the event giving rise to such Claim. The written notice must comply with the requirements of Article 8, above, and this Article 15. This notice shall be given by the Contractor before proceeding to execute Work affected by the event, except in an emergency endangering life or property in which case the Contractor shall proceed in accordance with Section 10.4, above." (Italics added.)
Section 15.5.2 next requires a fair degree of bureaucratic form filling to comply with the Article 15 notice requirement. Again the language indicates the form filling should be done prior to the actual work. It is important to notice the language that specifies the relevant contractor must submit a "plan for mitigating such costs." A plan to mitigate costs implies activity pre-construction, not post-construction.
"§ 15.5.2 The Contractor shall waive all rights to assert a claim unless such notice is given as required in this Paragraph. The written notice shall set forth: [¶] .1 The date of the event or occurrence giving rise to the Claim and, if applicable, the date when the event ceased; [¶] .2 The nature of the event or occurrence and reasons for which the Contractor believes additional compensation will or may be due; .3 Contractor's plan for mitigating such costs; and .4 If ascertainable, the nature of the cost involved, amount of the potential Claim and length of potential delay." (Italics added.)
Notice-of-extra-work provisions in construction contracts have been held particularly waivable: "It is settled law that the parties may by their conduct waive the requirement of a written contract that no extra work shall be done except upon written order." (Howard J. White, Inc. v. Varian Associates (1960) 178 Cal.App.2d 348, 353; accord, Wilson v. Keefe (1957) 150 Cal.App.2d 178, 179-181.) Given the contract's emphasis on fixing COR's before the expense is incurred, we conclude there was substantial evidence to support the trial court's finding of waiver on Angeles' part.
The intense time pressure bearing on the Rose Bowl renovation project simply did not allow for the exhaustive paper exchanges contemplated in the contract provisions relied upon by Angeles. Finishing in time for the CONCACAF Gold Cup was of the essence. Bureaucratic formalities - in particular, standing on the need that no work be done until a COR was formally processed - did not make practical sense, with a large number of COR's. Given the time pressure, the trial court could reasonably conclude that Angeles made a business decision to waive strict compliance with the claim and notice requirements of the contract and pass on most of the COR's submitted by McMahon in the hope that one day any rejections by the City might be sorted out. It apparently concluded that from Angeles' point of view, it was better to finish the project and argue about who owed what later than stop work 30? 40? 50? times and argue about what was, or was not, included in the contract.
We need only add that Angeles' argument that it was somehow unfairly whipsawed by the trial court's decision - in essence left holding the bag of McMahon's claims without the possibility of passing on those claims to the party who was really responsible - the City - rings hollow. One scours Angeles' briefing for a convincing demonstration that Angeles is precluded from seeking from the City the unpaid COR's in this litigation under the same waiver theory McMahon has used.
2. The Benchseats
Item 14 of the scope of work provision in the main City-Angeles contract included, as part of the overall renovation project, some significant work on the bench seats in the south end of the stadium: "Prepare, cut, extend and modify existing bleacher seating, seating trays, seating brackets at south end of the bowl to provide the designated modification of existing aisles and cut in of new aisles as shown, including all required supports, connections and attachments." In turn, item 36 of exhibit A of the scope of work provision in the Angeles-McMahon subcontract stated: "Re-install all existing steel benches (removal by others) including any brackets, bolts, and modifications required to fit the revised staging areas as indicated on the plans and specs." According to Angeles, these provisions meant that McMahon was obligated to reinstall all the benches at the south end of the Rose Bowl, and McMahon breached its subcontract when it refused to do so. That breach required Angeles to pay another subcontractor (apparently Hulk Enterprises) about $105,000 to do the work, resulting in a $105,000 back-charge against McMahon as reflected in FWD-C159.
Walter Shirley, Angeles' Senior Project Manager, testified that Angeles contracted with Hulk Enterprises to do the bench reinstallation. In its brief, McMahon asserts that "Hulk Enterprises was already under contract Angeles to provide the labor to remove all the benches" Angeles had contracted with the City to remove, but provides no record reference to support that assertion. (Resp br. at p. 26.)
The trial court disagreed with Angeles and found that McMahon was only obligated to reinstall the benches in a much smaller area - the "staging area" - as distinct from the entire south end. On appeal Angeles challenges the trial court's decision, pointing to item 36 of Exhibit A in the subcontract.
The issue depends on whether item 36 unambiguously obligated McMahon to reinstall all the benches at the south end of the bowl. If not, the question would then become whether some other interpretation was reasonable, a question on which parol evidence could be admitted. (See Appelton v. Waessil (1994) 27 Cal.App.4th 551, 554.)
"The decision whether to admit parol evidence involves a two-step process. The first is to review the proffered material regarding the parties' intent to see if the language is 'reasonably susceptible' of the interpretation urged by a party. [Citation.] If that question is decided in the affirmative, the extrinsic evidence is then admitted to aid in the second step, which involves actually interpreting the contract. [Citation.]."
We agree with the trial court that item 36 was reasonably susceptible of an interpretation that limited McMahon's responsibility to a much smaller area than the south end, namely an undefined "revised staging area." The trial court pointed out that the words "revised staging area" were nowhere defined in any of the contract documents, so there was a need for parol evidence to delineate the boundaries of the revised staging area. Kevin McMahon's testimony that in the construction industry, a "staging area" is "just a preliminary area for materials" to be kept "prior to moving into an area where work is performed" is enough to show that item 36 did not contemplate the whole south end. Moreover, the trial court pointed out that nothing on the architectural drawings dealing with the southeast and southwest quadrants of the bowl would have alerted McMahon it was responsible for reinstalling all of the bench seats in the south end of the bowl. We also note Angeles makes no attempt in its briefing to show that anything in the architectural drawing requires a contrary conclusion. We cannot quarrel with the trial court's resolution of this point.
Specifically BC A3.5 and BC A3.6 as they are referred to in the main City-Angeles contract.
3. Scanning for Rebar
At trial, the court ruled that the main City-Angeles contract provided Angeles, not McMahon, was to use scanning equipment to "locate and avoid cutting or damaging reinforcing bars." On appeal, Angeles does not contest that conclusion; Angeles admits "McMahon's scope did not include the obligation to actually perform the scanning." And indeed, exhibit A to the subcontract included, at the end, a list of 14 exclusions, the fourth of which was "Inspection costs and/or testing costs." (Italics added.)
But, says Angeles, McMahon had a duty to coordinate its work in such a way as to refrain from doing its work prior to the necessary scanning. By allegedly not doing so, McMahon ended up hitting and damaging some existing structural rebar, requiring McMahon to do extra work to repair it. The cost of repairs was back-charged by the City to Angeles, and Angeles in turn back-charged McMahon for it. At trial, though, the court allowed McMahon's change order requests for the extra work involved in doing the repairs and denied Angeles its back charge of McMahon.
We agree with the trial court. It takes little construction expertise to conclude that it is the general contractor on a project who has the obligation of coordinating the work of the various subcontractors so as to avoid damage by doing work out of sequence. And in fact at trial, Angeles's vice-president Raymond Yoo admitted just that on cross-examination.
"Q. Okay. Sequencing amongst subcontractors would be the responsibility of the general contractor, right, sir? [¶] A. That would be part of the general contractor's responsibility, yes."
Given that it was Angeles' responsibility to scan for rebar and it was specifically not McMahon's responsibility to do any such scanning, the conclusion logically follows that it was Angeles' responsibility to tell McMahon not to proceed with any work that might affect rebar until after Angeles performed the necessary scanning. On appeal, Angeles does not point to any evidence showing it did so. Thus we cannot say the trial court erred in rejecting Angeles' $105,000 assessment against McMahon for the rebar repair work. 4. Core Drilling $17,052.50
Angeles says McMahon was obligated to perform core drilling in order to install various handrails into concrete. McMahon refused, so Angeles paid other subcontractors to do the job. However, exhibit A in the Angeles-McMahon subcontract also excluded, at item number 2, the "cutting, patching or breaking of existing concrete or asphalt." (Italics added.) Core drilling, not otherwise defined, would involve either the cutting or breaking (or both) of existing asphalt, so the trial court correctly disallowed the item. 5. Core Assistance $1,707.72
The core assistance claim is a corollary of the drilling claim, arising out of the need to have another subcontractor catch cores as they fell from elevated concrete. Since McMahon had no responsibility for core drilling in the first place, it also had no responsibility for any collateral work necessary to the core drilling. 6. Cleanup $8,893.35
Angeles claims that McMahon simply did not clean up after itself on 19 different occasions. However, the claim for $8,893.50 as presented in its opening brief was for "labor in connection with the core drilling." Again, since the trial court correctly ascertained that core drilling was not part of McMahon's duties in the first place, the trial court correctly rejected Angeles' charge for the $8,893.50. 7. Delay Costs $8,259.00
According to Angeles, McMahon did not complete some tasks by a certain date, thus requiring a plasterer to spend an additional $4,647.00 to add an ingredient (called "Eisenwall") to speed up the curing time of the plaster in time for the Gold Cup. Additionally, Angeles claims McMahon did not complete the installation of certain knee braces in time for the Gold Cup, so Angeles had to spend $3,612.00 to provide temporary shoring under the south end of the Rose Bowl.
Angeles does not tell us the date in its brief, and its record reference to Raymond Yoo's testimony only shows that he testified that at a certain location McMahon had not finished the work "in time."
It appears the trial court considered these delays to be an outcropping of the reinstallation of bench seats issue. Under the heading "Reinstall Bench Seats in the South End of the Rose Bowl" the court wrote: "Angeles has failed to meet its burden in proving any of its causes of action related to these back charges. McMahon is entitled to the amounts that were back charged," and then cited "FWD C159."
We affirm the trial court's order on grounds fundamental to appellate procedure: Because a trial court's judgment is presumed correct, it is the appellant's responsibility to show error on appeal. "An appellant has the burden to overcome the presumption of correctness and show prejudicial error." (Silva v. See's Candy Shops, Inc. (2016) 7 Cal.App.5th 235, 260.) Here, Angeles has failed to give us enough information in its briefing to allow us to conclude - as a matter of law - that the trial court had no choice but to credit it for the alleged delay. We note Angeles leaves unanswered the questions of what precise work required the speeding up of the plaster curing, and was that work part of the reinstallation of the bench seats (as suggested by the trial court's statement of decision), or was it somewhere else? It is certainly a reasonable inference that the extra shoring was a product of the fact that McMahon wasn't required to do the major south end reinstallation of bench seats that Angeles thought it was. Moreover, Angeles does not tell us any actual deadlines involved in either group of work; Mr. Yoo, in direct examination, only conclusorily said there was work not done "in time." Given such vagueness in its opening brief (and in the trial testimony on which Angeles relies), we cannot conclude the trial court was required to award Angeles for such ill-defined and poorly documented delay costs. 8. Painting ("Re-Mob/Late Work" ) $6,103.50
Angeles does not define what "re-mob" work is and the term is not readily found in glossaries of construction terms. Apparently the term is used for the need to "re-mobilize" construction equipment that might otherwise not be needed. (See United Constructors, LLC v. U.S. (Fed. Cl., Mar. 27, 2009, No. 08-757C) 2009 WL 875358 at p. 4.)
Another back-charge rejected by the trial court was $6,103.50 in additional painting costs; part of those costs included primer for steel on the south scoreboard which McMahon had delivered without either galvanization or shop primer. Part of these additional costs were attributed to McMahon's supposedly out-of-sequence work, but we are not given the details.
We have already dealt with the sequence problem: It was Angeles' responsibility, as the general contractor, to insure that McMahon did its work in proper sequence, not vice versa. Without more detail as to the precise work involved (and Angeles' briefing does not provide that detail) we cannot conclude that the trial court necessarily was required to credit Angeles on this issue.
Indeed, Angeles's best argument on the re-mob issue appears to be its claim for about $1,800 in additional costs paid to a painting contractor for what it claims was non-galvanized or non-shop primed steel delivered for the south scoreboard. Such a claim obviously survives the limited scope of the bench seat reinstallation. What it does not survive is the sequencing problem.
Angeles cites the testimony of its vice-president Yoo that McMahon was "supposed to have the steel [for the south scoreboard] come out galvanized or if it's not an exposed steel it should be shop primed. But since it was not primed, Bruin Painting [another subcontractor] in lieu of McMahon had primed the steel that was out on the site." That testimony in turn referenced Exhibit 170, pages 124 through 125 (Bruin Painting), one of which was for "Paint top metal tube, score board due to new pieces of metal that were added after painting was completed."
And therein is the reason the trial court did not err. On its face, the Bruin Painting invoice alludes to the problem that "new pieces of metal" had been added after previous painting had been done. It was a reasonable inference by the trial court that the fault lay with Angeles, as general contractor, for not coordinating the painting of the scoreboard metal so as to avoid the need to bring in "new" pieces after the initial painting had been finished. 9. Miscellaneous Materials $4,269.38
Angeles says it should be credited for some $4,269.38 in "various materials and equipment." This claim falls with Angeles' argument on the south end benches and core drilling issues. An examination of the various invoices making up the $4,269.38 reveals that of about 27 items, at least 9 are expressly for benches, and several others (e.g., "So Ad panels core drill rental") appear related to core drilling. Moreover, vice-president Yoo's testimony on page 1098 of the reporter's transcript about these "material and equipment rental costs" is cryptic. We are given no basis on which to separate any costs that might otherwise be independent of benches and core drilling from the costs. No error is thus shown on appeal.
10. Angeles' Attorney Fee Claim
Among McMahon's many claims at trial was one for statutory penalties under section 7108.5 of the Business and Professions Code and section 8802 of the Civil Code on Angeles for not paying. Both statutes allow for penalties of 2 percent per month on amounts owing to a subcontractor unless there is a "good faith dispute."
Business and Professions Code section 7108.5 provides in pertinent part: "(a) A prime contractor or subcontractor shall pay to any subcontractor, not later than seven days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor's interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount. [¶] (b) Any violation of this section shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subcontractor, of 2 percent of the amount due per month for every month that payment is not made." (Italics added.)
Civil Code section 8802 provides in pertinent part: "(b) Unless the direct contractor and a subcontractor otherwise agree in writing, within 21 days after receipt of a progress payment from the public utility the direct contractor shall pay the subcontractor the amount allowed the direct contractor on account of the work performed by the subcontractor to the extent of the subcontractor's interest in the work. If there is a good faith dispute over all or part of the amount due on a progress payment from the direct contractor to a subcontractor, the direct contractor may withhold an amount not in excess of 150 percent of the disputed amount." (Italics added.)
The trial judge found such a good faith dispute and so declined to assess any statutory penalties. On that issue, Angeles prevailed. And Angeles now claims that the trial court was "mandated" to award it fees and costs as a prevailing party.
The trial judge's statement of decision alluded to United Riggers & Erectors v Coast Iron & Steel (2018) ___ Cal.5th ___, [May 14, 2018, 2018 WL 2188916] (United Riggers), then pending before the Supreme court and decided during the pendency of this appeal. The court said the good faith dispute exception was restricted to the specific payment otherwise due. No United Riggers issue has been presented to us here; Angeles' appeal is strictly focused on its claim to be a "prevailing party."
The two penalty statutes are connected to the issue of who is the prevailing party in an action. Civil Code section 8802's provision is found in Civil Code section 8818: "If an owner or direct contractor does not make a retention payment within the time required by this article: [¶] (a) The owner or direct contractor is liable to the person to which payment is owed for a penalty of 2 percent per month on the amount wrongfully withheld, in place of any interest otherwise due. [¶] (b) In an action for collection of the amount wrongfully withheld, the prevailing party is entitled to costs and reasonable attorney's fees." (Italics added.)
Business and Professions Code section 7108.5's provision is found in its own subdivision (c): "In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney's fees and costs." (Italics added.)
The reference to "action" in both statutes shows it is not enough to be the prevailing party on just one issue; a party must prevail on the action as a whole. Properly read, neither statute provides a basis on which Angeles can claim fees for merely prevailing on the issue of entitlement to statutory penalties. And, in this case McMahon was the prevailing party in the action, obtaining over half a million dollars in contract damages. B. McMahon's Cross-Appeal 1. The $73,785.61
To read McMahon's cross-appellant's brief, one would think that Angeles walked into court contritely acknowledging that it owed an undisputed $73,785.61, but the trial court, apparently bemused by the confusing welter of claims and cross-claims for multiple items and amounts, simply forgot that acknowledgement in the shuffle and failed to include it in the judgment. Not so.
The $73,785.61 figure does not appear in McMahon's pleadings. It does not appear in the evidence. (Or if it does, we have not found it and McMahon has not pointed out where it could be found.) The sole existence of the $73,785.61 figure is based on assertions made by Angeles in the course of the trial and prior to even the court's initial statement of decision. Specifically, McMahon's argument is based on two passages in Angeles' 65-page trial brief filed in October 2015. And in that brief, it turns out that $73,785.61 was nothing more than a rationale to explain what Angeles had offered McMahon to settle the case before trial.
The first passage (clerk's transcript on page 1687) is somewhat opaque and conclusory. Angeles stated it had back-charged McMahon $250,943.88. Then it said it applied the COR's it received from the City related to McMahon's work (Angeles did not give any figure), and then it "applied" the back charges (again, no number was given), and from those calculations determined that it owed $73,785.61. Angeles alluded to the figure's apparent origin in settlement negotiations: "Despite having the right to withhold that amount as part of a good faith dispute, [Angeles] offered to pay that money to McMahon. It refused to accept it."
In the second passage Angeles' math is a bit clearer. (See clerk's transcript on page 1698). There, in a discussion of McMahon's COR's, Angeles said McMahon had originally submitted 48 COR's to Angeles. Angeles then asserted that $276,845 worth of those 48 COR's had been paid, but it said that $136,492 later had to be deducted from that amount, because the City unilaterally cut some of them. (We have already visited the issue of the City's unilateral cutting in the context of the notice issue.)
Thus, said Angeles, the net value of what was owing to McMahon was its initial contract price of $1,566,125, plus what was left of the $276,845 in change orders after the $136,492 deduction. That figure turned out to be $1,706,478. Angeles then noted that it had already paid $1,632,692 to McMahon, so Angeles' bottom line was that it really only owed $73,785.61 to McMahon. And even then, Angeles hastened to add, the $73,785.61 was "subject to 150% withholding rights based upon the good faith dispute between the parties as to McMahon's failure to complete base contract work."
McMahon cites two other parts of the record for the $73,785.61 figure, again originating in Angeles' own argument: The first is an expert's report, but it is based on an exhibit that has not been supplied us (exhibit 175, which we have not found in the multitudinous heavy binders that are part of the record on appeal - those binders end with exhibit 170). "Where exhibits are missing we will not presume they would undermine the judgment." (Western Aggregates, Inc. v. County of Yuba (2002) 101 Cal.App.4th 278, 291.)
The second is a passage from Angeles' attorney's closing argument, which, like the first passage in its trial brief, simply gave a conclusory ultimate figure: "In fact, McMahon's otherwise due payments have only been withheld to the tune of $73,785.61. And I believe that the evidence is clear that, subject to posttrial motions regarding attorneys' fees and costs, the base amount and the only amount that McMahon is entitled to receive in connection with this claim is $73,785.61."
We cannot - and we have tried - find a way to fit the $73,785.61 figure into the facts as the trial court found them. There is no way to add or subtract the damage elements to get to that number, and McMahon offers no suggestion of its own. From everything we can tell from the record, the $73,785.61 figure is nothing more than a construct of Angeles' advocacy in arguing for a lower judgment than the trial court awarded. McMahon cannot now demand payment of that construct.
The trial court, in its minute order on the new trial motions, dismissed the $73,785.61 as included in a group of "undisputed" COR's. We note that McMahon has not attempted on appeal the tedious task of first isolating all those allegedly undisputed COR's, and then explaining where in the record it shows they were not paid. On appeal, McMahon's sole basis for the $73,785.61 figure is advocacy statements made by Angeles.
2. Attorney Fees
The final issue we face is McMahon's claim the trial court awarded it too little in attorney fees, given it was the prevailing party. After trial, McMahon sought $422,221.01 in attorney fees. The trial court awarded $318,016.47. It specifically excluded all the fees (totaling $27,008.75) for McMahon's work on its claim against the City, and all fees (totaling $163,811.58) for work on the abandoned $809,000 claim against Angeles for delay or "equitable adjustment" to which we have alluded.
McMahon now claims the reductions in its request were error because the attorney fee clause in the subcontract provides the prevailing party is to recover "all costs," including attorney fees, "for and participation in such proceedings." Based on this all costs clause, McMahon now asserts it was entitled to all its fees, even those incurred for work that ultimately was abandoned.
Civil Code section 1717 is the controlling statute. It governs the award of attorney fees arising out of contractual prevailing party clauses, and it only allows the recovery of reasonable fees to the prevailing party. The statute overrides contrary or inconsistent contractual provisions. (See Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 707.)
Subdivision (a) of Civil Code section 1717 provides in pertinent part: "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." (Italics added.) --------
Again, common sense must carry the day. A contract can hardly require courts to award unreasonable fees to a prevailing party.
In the present case, McMahon makes no argument that it was unreasonable (as distinct from its argument that all the fees were required by contract) for the court to cut its fees by the amounts expended on abandoned claims and we see nothing suspicious in the court's computations. Accordingly we do not disturb the trial court's attorney fee award.
IV. DISPOSITION
The judgment is affirmed. In the interests of justice both sides will bear their own costs on appeal.
BEDSWORTH, ACTING P. J. WE CONCUR: FYBEL, J. IKOLA, J.