Opinion
E038256 E040723
5-15-2007
RON BURNS CONSTRUCTION COMPANY, INC., Plaintiff, Cross-Defendant and Respondent, v. MOORE ELECTRIC, INC., Defendant, Cross-Complainant and Appellant. RON BURNS CONSTRUCTION CO., Plaintiff and Respondent, v. DAVID R. MOORE, as Trustee, etc. et al., Defendants and Appellants.
Law Offices of Nolan E. Clark and Nolan E. Clark for Defendant, Cross-Complainant and Appellant. Edward M. Picozzi for Plaintiff, Cross-Defendant and Respondent.
NOT TO BE PUBLISHED
I
INTRODUCTION
In these two consolidated appeals, defendant Moore Electric ("Moore") appeals from an amended judgment after a bifurcated jury trial and court trial.
The defendants collectively referred to as "Moore" are David R. Moore and Gail Le Moore, Trustees of the Moore Family Trust, dated September 1, 1998, and Moore Electric, Inc.
Moore hired Ron Burns Construction Company., Inc. ("Burns") to provide construction services on two buildings. When Burns requested progress payments, Moore withheld 10 percent in retention amounts based on its position that Burns had breached the contract by not completing the work. Burns sued Moore to recover the retention amounts and Moore counter claimed. The jury and the court both found in favor of Burns.
In the first appeal, Moore charges the court erred concerning the jury instructions and Moores proposed special verdict. In the second appeal, Moore contends the court committed error in the bench trial. We conclude substantial evidence supported jury findings that Burns completed the contracted work and that Moore was not entitled to withhold retention proceeds. There was no error in the bench trial.
We affirm the judgment.
II
FACTUAL AND PROCEDURAL BACKGROUND
A jury heard Burnss breach of contract claim and Moores cross-complaint. A bench trial was conducted on the foreclosure of the mechanics lien.
Moore was the general contractor for two buildings in Rancho Cucamonga. In June and August 2002, Burns submitted written bid proposals for grading, concrete work, and the roof structure. The bids contained the language "PAYMENT TO BE MADE AS FOLLOWS: . . . 10 DAYS NET-NO RETENTION," in accordance with Burnss standard business practice. On August 2, David Moore and Scott Brandts, acting for Burns, had a telephone conversation about the final details of the project. David Moores notes show a total purchase price of $277,500 and include the language "Panelize Roof - 50,000 - 5% Discount if paid without retention (47,500)."
Based on a letter of intent dated August 5, Burns began grading work on August 8. On September 3, Burns submitted an invoice for grading, asking for conditional progress payments without any retention.
David Moore recalculated the grading amounts and offered payment based on a 10 percent retention. Burns accepted the lesser payment because it needed to stay solvent. Burns executed a conditional waiver and release, acknowledging the retention. The same general procedure, including retention, occurred with the concrete work in October and November 2002 and January 2003.
Moore paid Burnss roof invoices with a 5 percent discount.
Burns testified it completed all three phases of the project. Other witnesses testified the project was completed satisfactorily and passed inspections.
In February and March 2003, Burns and Moore negotiated regarding additional concrete work for curbs and gutters. On June 4, 2003, Burns did some grading work. By June 16, Burns had not finished the additional work but was seeking payment for the first three phases. On June 17, Burns demanded payment in full.
In an exchange of letters, Burns took the position it was entitled to be paid the retention money in full for the completed work. Moore argued it was entitled to retain 10 percent until the entire project was finished.
When the parties could not resolve their dispute, Burns recorded a mechanics lien against the subject property in the amount of $39,887.
The jury found Moore had breached the contract with Burns and the jury awarded damages to Burns of $37,491.81, the amount of the retention proceeds withheld by Moore. In the subsequent bench trial, the court entered judgment allowing foreclosure of Burnss mechanics lien.
III
ANALYSIS
A. Appeal on the Jury Trial
As is well-established, ". . . our review is guided by recognition that the judgment is presumed to be correct and we must indulge all presumptions in favor of its correctness. [Citations.] In keeping with that standard, we will infer findings in support of the judgment if such findings are supported by substantial evidence. [Citation.]" (Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Casualty & Surety Co. of America (2005) 133 Cal.App.4th 1319, 1338.)
1. Civil Code section 3260
All statutory references are to the Civil Code unless stated otherwise.
Moore argues that it was entitled to withhold retention proceeds based on section 3260, the statute governing the release of retention proceeds, which provides: "(b) The retention proceeds withheld from any payment by the owner from the original contractor, or by the original contractor from any subcontractor, shall be subject to this section. [¶] (c) Within 45 days after the date of completion, the retention withheld by the owner shall be released. . . ." According to Moore, it could withhold retention proceeds until the date of completion and Burns never completed the project.
The difficulty with Moores argument is the contract with Burns specifically disallowed Moore from withholding retention proceeds. Even if Moore did not agree to the "10 DAYS NET — NO RETENTION" language in the three proposals, there was no contract provision between the parties allowing retention. Section 3260 is not applicable law automatically incorporated into the parties contract. (People v. Gipson (2004) 117 Cal.App.4th 1065, 1069.) Instead, section 3260 describes the procedures for release of retention proceeds, assuming the contract permits retention to occur. Section 3260 does not afford an affirmative right to withhold retention proceeds in contradiction of a contracts express terms or in the absence of a retention provision. Substantial evidence supported a finding below that Moore agreed to pay Burns in installments without retention. (WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702, 1710.) Moore is fundamentally wrong in its assertion that it "had a contractual right to withhold retention amounts." Furthermore, even if industry practice allows retention, then, under section 3260, substantial evidence shows Moore breached the contract when it refused to pay the retention proceeds after the work was completed.
Because Moore is wrong on this point, Moore also cannot argue that the jury instructions were wrong. The jury instruction based on CACI No. 322 and section 3260 was not appropriate. Because Moore did not have the right to withhold retention proceeds, the court correctly instructed the jury that Moore breached the contract each time it made a payment and withheld the retention amounts. For these reasons, we reject Moores further claims of instructional error concerning the instruction based on CACI No. 322.
2. Interest Penalty
In cases where retention occurs, whether it was contractually authorized, section 3260, subdivision (g), provides for an interest penalty of 2 percent: "In the event that retention payments are not made within the time periods required by this section, the owner or original contractor withholding the unpaid amounts shall be subject to a charge of 2 percent per month on the improperly withheld amount, in lieu of any interest otherwise due."
Moore contends the courts award of the interest penalty was improper because there was a bona fide dispute between the parties and because it was beyond the scope of the complaint. (§ 3260, subd. (e); Taylor v. Van-Catlin Construction (2005) 130 Cal.App.4th 1061, 1069, citing Denver D. Darling, Inc. v. Controlled Environments Construction, Inc. (2001) 89 Cal.App.4th 1221, 1240.)
Burnss complaint sought damages plus interest at the legal rate and "such other and further relief as the Court deems just and proper." As such, the prayer for relief encompassed a claim for 2 percent interest as a penalty for retention. (Newby v. Vroman (1992) 11 Cal.App.4th 283, 286; North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 829; Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Casualty & Surety Co. of America, supra, 133 Cal.App.4th at p. 1338.)
As to the issue of whether a bona fide dispute exists, section 3260, subdivision (e), provides: "If a bona fide dispute exists between a subcontractor and the original contractor, the original contractor may withhold from that subcontractor with whom the dispute exists its portion of the retention proceeds. The amount withheld from the retention payment shall not exceed 150 percent of the estimated value of the disputed amount." The dispute in this case was about the right to retention itself, not about a "disputed amount" as described in the statute. Therefore, the bona fide dispute exception did not apply under the present circumstances. Furthermore, because the jury found in favor of Burns on the complaint and against Moore on the cross-complaint, we conclude sufficient evidence supported a finding that no bona fide dispute existed between Moore and Burns, justifying Moores retention of proceeds. (Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers Casualty & Surety Co. of America, supra, 133 Cal.App.4th at pp. 1339-1340.)
3. Damages of $2,408 for Roof Work
Moore next protests that Burns should not have recovered $2,408 for the roof work it performed. That amount represents approximately the 5 percent discount Burns offered Moore on the full contract price of $49,500 if it was paid in 10 days. Substantial evidence demonstrated that Burns submitted an invoice to Moore on January 7, 2003, and Moore did not pay Burns until January 24, 17 days later, meaning that Moore lost the 5 percent discount. Because of the late payment, the conditional release was not effective. The disputed amount of $2,408 was properly included as part of Burnss damages and the judgment.
The proposed discount was actually $ 2,478, or 5 percent of $49,570. Moore actually paid $47,092, receiving a discount of $2,408 on $49,500.
4. Instructional Error
In a related claim, Moore maintains the court erred by not giving two special jury instructions concerning waivers and releases, based on section 3262, the substance of which state that Burns should have provided releases before receiving payment from Moore. Moore contends substantial evidence shows Burns did not provide releases when it submitted final invoices for the grading and concrete work and that Burns did not provide a release for the roofing work until February 21, 2003. Moore argues the court committed prejudicial error because the requested instructions supported Moores position that it paid for the roof work within 10 days and that it had the right of retention on the other payments. (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 572, 580-581.)
We have already concluded Moore had no right of retention. We have also determined there was substantial evidence Burns submitted a release for the roofing work on January 7, 2003. Therefore, we reject Moores claims of instructional error in the first appeal.
B. Appeal on the Bench Trial
After the six-day jury trial, the court conducted an afternoon bench trial on Burnss cause of action for foreclosure of the mechanics lien. Moore attacks the judgment of foreclosure, first, protesting the court did not permit evidence on the issues of breach of contract and the reasonable value of services provided, and concerning the date of completion of work. (§§ 3115 and 3123.) Second, Moore objects that the court did not provide a statement of decision. (Code Civ. Proc., § 632.)
Moore argues it had the right to revisit the issue of breach of contract in the bench trial and to present evidence of the cost of completion and repair for the work performed by Burns. Evidence of this type would have duplicated the same evidence already presented by Moore in the jury trial in which the jury found against Moore. The court indicated on the record that it agreed with the jurys decision regarding breach of contract, rendering such evidence superfluous. This is not a case like those relied upon by Moore in which the court expressed disagreement with the jury or in which there was proposed new evidence not considered by the jury. Therefore, it is not appropriate, as urged by Moore, for the matter to "be remanded for clarification and proper exercise of independent judgment." (Saks v. Charity Mission Baptist Church (2001) 90 Cal.App.4th 1116, 1147, citing Posey v. Leavitt (1991) 229 Cal.App.3d 1236, 1242, 1248-1249; A-C Co. v. Security Pacific National Bank (1985) 173 Cal.App.3d 462, 474.)
We also disagree with Moores contention that there was no evidence of when the project was completed. The evidence supported that Burns finished its work on June 28, 2003, and a mechanics lien was recorded on July 31, 2003. Again, we do not perceive any viable reason why the evidence needed to be repeated or why the trial court could not consider this evidence from the earlier jury trial.
Finally, we agree that Moore was not entitled to a statement of decision on the bench trial. Code of Civil Procedure section 632 provides: "In superior courts, upon the trial of a question of fact by the court, written findings of fact and conclusions of law shall not be required. The court shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial. The request must be made within 10 days after the court announces a tentative decision unless the trial is concluded within one calendar day or in less than eight hours over more than one day in which event the request must be made prior to the submission of the matter for decision." The bench trial was concluded in less than one day, meaning that Moore was not entitled to a statement of decision based on a request made several days later.
But, even if the bifurcated trial is considered together as one trial and Moore may have been entitled to a statement of decision, Moore has not identified any prejudice by the absence of a statement of decision in which the findings would necessarily have been adverse to Moore. (Santoro v. Carbone (1972) 22 Cal.App.3d 721, 730; Kerr Land & Timber Company v. Emmerson (1965) 233 Cal.App.2d 200, 223.) Remand for the purpose of generating a statement of decision would constitute an empty exercise under these circumstances. (Miramar Hotel Corp. v. Frank B. Hall & Co. (1985) 163 Cal.App.3d 1126, 1130.)
III
DISPOSITION
We affirm the judgment. As the prevailing party, Burns is entitled to its costs on appeal.
We concur:
McKinster, (Acting) P. J.
Miller, J.