Los Angeles Unified etc. v. Torres Construction CA2/8 ( 2020 )

Filed 10/26/20 Los Angeles Unified etc. v. Torres Construction CA2/8
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
LOS ANGELES UNIFIED B291940
SCHOOL DISTRICT,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC485280)
v.
TORRES CONSTRUCTION
CORP. et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Robert L. Hess, Judge. Affirmed.
SMTD Law, Jonathan J. Dunn, Andrew C. Harris;
AlvaradoSmith, Raul F. Salinas and William M. Hensley for
Defendants and Appellants.
Orbach Huff Suarez & Henderson, David M. Huff, Colin E.
Barr, Kelly Houle-Sandoval; Mark A. Miller for Plaintiff and
Respondent.
_________________________
SUMMARY
Appellant Torres Construction (Torres) agreed to renovate
school cafeterias for the Los Angeles Unified School District
(LAUSD). Appellant Western Surety Company (Western) bonded
Torres’s performance on the project. The project encompassed
three phases. LAUSD ended up filing a civil complaint against
appellants for breach of contract arising out of all three phases of
the cafeteria renovations.
This appeal is from a judgment entered after an
encyclopedia of partial adjudications of the causes of action in
LAUSD’s complaint against appellants. The parties brought
motions for summary judgment, motions for judgment on the
pleadings, motions for summary adjudication, and motions for
directed verdicts; a few remaining claims survived these motions
and were decided by jury verdict. Ultimately, LAUSD prevailed
on its claims for breach of contract and was awarded $3,941,829
in damages. Western was found liable on its bonds. The parties
settled Torres’s offset claims for withheld payments on other jobs
in the amount of $556,296.89 plus $151,958.47 in interest.
LAUSD was awarded prejudgment interest of $1,232,887.88 and
costs in the amount of $88,716.97. LAUSD’s net recovery was
$4,555,178.49. In addition, LAUSD was awarded $2.1 million in
attorney fees against Western alone.
This appeal is from the final judgment, but appellants do
not directly challenge every court ruling. Torres focuses on 1) the
denial of appellants’ motion for summary judgment; 2) the grant
of LAUSD’s motion for summary adjudication on about half of the
job orders it issued to Torres; and 3) the award of prejudgment
interest. Torres contends its summary judgment motion should
have been granted because LAUSD elected to sue on the overall
2
job order contracts, which were merely agreements to negotiate,
rather than on the individual job orders for the school
renovations, which were the final agreements. Torres also
contends the trial court erred in granting LAUSD’s motion
because 1) the trial court abused its discretion when it admitted
evidence offered by LAUSD in reply to Torres’s opposition to
summary judgment; 2) Torres’s offset affirmative defense
rendered LAUSD’s damages uncertain; 3) LAUSD failed to obtain
independent cost estimates, which were a statutory condition
precedent to Torres’s performance; and 4) there were triable
issues of material fact about waiver. Torres contends the trial
court abused its discretion in awarding prejudgment interest
because LAUSD’s damages were uncertain.
Western joins Torres’s claims, and adds additional claims
based on three of its affirmative defenses related to suretyship:
1) the statute of limitations on the bonds had run; 2) notice to the
surety was deficient; and 3) LAUSD’s damages were not
recoverable under the bond. Western contends LAUSD’s motion
for summary adjudication should have been denied because
LAUSD failed to negate these three affirmative defenses related
to suretyship. Western also challenges the denial of its motions
for directed verdict on these three affirmative defenses.
Additionally, Western contends the trial court abused its
discretion in awarding attorney fees in the absence of more
detailed information about the work of each attorney.
Some of appellants’ claims have been forfeited on this
appeal due to appellants’ 1) failure to provide adequate, or, in
some cases, any record citations; 2) failure to fully develop their
arguments; and 3) failure to cite supporting relevant California
3
legal authority.1 As for the remaining claims, we find no error.
The judgment is affirmed.
BACKGROUND
Beginning in 2003, California statutorily authorized
LAUSD to use an alternative procedure for bidding of public
works projects. (Assem. Bill No. 14 (2003-2004 Reg. Sess.) § 1
(AB14).) This procedure, known as job order contracting, was
defined in former Public Contracts Code sections 20919 through
20919.15.2 The Legislature stated that “[t]he benefits of a job
order contract project delivery system include accelerated
completion of the projects, cost savings, and reduction of
construction contracting complexity.” (§ 20919, subd. (c).) The
Legislature stated the procedure should be used to reduce project
costs and expedite project completion. (Id., subd. (d).)
Under this system, a job order contract (JOC) is
competitively bid and awarded to the lowest responsible qualified
bidder. (§ 20919, subd. (g).) A JOC is defined as a contract “in
which the contractor agrees to a fixed period, fixed unit price, and
1 See United Grand Corp. v. Malibu Hillbillies, LLC (2019)
36 Cal. App. 5th 142, 153 (United Grand Corp.).
2 All further statutory references are to that version of the
Public Contract Code unless otherwise indicated.
The code was revised in 2012, after the events in this case
had occurred. All citations to section 20919 et seq. are to the pre-
2012 version of the code, as shown in AB 14.
4
indefinite quantity contract that provides for the use of job orders
for public works or maintenance projects.” (§ 20919.1, subd. (e).)3
For each JOC up for bid, LAUSD was required to provide
potential bidders with a set of documents which include a
construction task catalog and the JOC technical specifications,
which in turn include General Conditions. (§§ 20919.4, subd.
(a)(1); 20919.1, subds. (b) & (f).) The General Conditions set forth
all the terms and conditions of the JOC, including pricing
formulas, audit rights, insurance requirements, and payment
obligations. The 2005 and 2007 General Conditions for the JOCs
at issue in this appeal average about 90 pages. The bidders use
the JOC documents to bid an adjustment factor that the bidder
will charge for unit prices listed in the construction task catalog.
LAUSD awards the JOC to the lowest responsible prequalified
bidder. (§20919.4, subd. (b)(1).) The construction task catalog
and General Conditions are incorporated into the JOC as
contract documents.
Once a JOC is awarded, LAUSD may order the contractor
to perform work by issuing individual job orders under the JOC,
using the procedures outlined in the General Conditions. LAUSD
first notifies the contractor that work is necessary. The
contractor is required by the JOC to participate in a “joint scope
meeting” at the project site, as a result of which they develop a
Detailed Scope of Work. LAUSD then issues a Request for
Proposal (RFP) to the contractor, who is contractually required to
prepare a Job Order Proposal (proposal) which sets forth the cost
of performing the work.
3 “ ‘Indefinite quantity’ means one or more of the
construction tasks listed in the catalog of construction tasks.”
(§ 20919.1, subd. (c).)
5
By statute a proposal is defined as “the job order contractor
prepared document quoting those construction tasks listed in the
catalog of construction tasks that the job order contractor
requires to complete the project scope of work, together with the
appropriate quantities of each task. The pricing of each task
shall be accomplished by multiplying the construction task unit
price by the proposed quantity and the contractor’s competitively
bid adjustment factor.” (§ 20919.1, subd.(l).) Under the JOCs at
issue here, the proposal must be prepared using either the
statutory method or, if the task cannot be found in the
construction task catalog, using a non-prepriced (NPP) work
formula set forth in the General Conditions. (See § 20919.1,
subd. (l).) If the proposal is approved, it becomes part of the job
order. A job order is defined as “a firm, fixed price, lump-sum
order issued by [LAUSD] to a job order contractor for a definite
project scope of work as compiled from the catalog of construction
tasks to be performed pursuant to a job order contract.” (Id.,
subd. (d).) Job orders are incorporated into the master JOC as
contract documents.
As relevant here, Torres was the successful bidder on five
JOCs for general contracting services, which LAUSD referred to
in its complaint as JOC Contract No. 1 and two JOCs for
electrical services, which LASUD referred to as JOC Contract
No. 2. The earliest contract date is December 21, 2005 and the
latest is February 5, 2008.
In March 2008, LAUSD began a program to modernize
middle and high schools as part of LAUSD’s district-wide Café
LA program. The work was scheduled to occur in three phases.
Phase I involved the purchase of a uniform set of kitchen
equipment for schools. Phase II involved the purchase of
6
additional kitchen equipment which varied by school. Phase III
involved the installation of the Phase I and II equipment and
electrical upgrades. Torres submitted proposals for this work,
and ultimately was awarded 19 Phase I Job Orders, 18 Phase II
Job Orders and 18 Phase III Job Orders.
Torres installed kitchen equipment and made electrical
upgrades in the schools covered by its Job Orders. LAUSD made
the required payments on those Job Orders.
At some point prior to October 2011, LAUSD began a
contractually authorized audit of Torres’s job orders for the Café
LA project. The General Conditions provide that LAUSD has the
right to review, obtain, inspect, audit and copy all contractor
records pertaining to the contract work. Under the 2005 General
Conditions, the contractor agreed to maintain such records and to
submit to an audit for a period of up to four years following the
date the Notice of Completion is recorded; under the 2007
General Conditions, the contractor agreed to the audit without
reservation. If the audit “discloses overpricing or overcharges of
any nature by the CONTRACTOR to [LAUSD] in excess of one
percent (1%) of the total Contract Amount, then, in addition to all
other LAUSD rights and remedies, and in addition to making
adjustments for the overcharges and/or overpricing,” [LAUSD]
would be reimbursed for the costs of the audit.
In the final audit dated October 24, 2011, the LAUSD
auditor found what it believed were substantial irregularities in
Torres’s pricing of the Phase I and II Job Orders and in Torres’s
billing for the Phase III Job Orders. For the Phase I Job Orders,
the audit found LAUSD had directed Torres to purchase
equipment in the catalog of its subcontractor Trimark, and
Torres had supplied LAUSD with that required equipment but
7
“the pricing and description of the equipment in the Contractor’s
detailed cost proposal did not reflect the equipment it supplied or
the equipment required in the scope of work.” The audit found
“Torres supplied the District with equipment it purchased from
Trimark but its cost proposal consisted of unrelated equipment
and prices from the Construction Task Catalog (CTC).” The
equipment Trimark actually suppled should have been priced
using the NPP work formula in the contract, but Torres did not
use this methodology.
For the Phase II Job Orders, Torres did use the correct
method of pricing (NPP work) but did not apply the correct mark-
up amount, resulting in a total overpricing of about 11 percent.
For the Phase III Job Orders, “Torres did not provide all
the services listed in the scope of work, but billed the District for
the entire service required in the scope of work.” “For example,
Torres billed for larger size transformers than supplied, thicker
wires than installed, larger quantities of electrical, piping and
ductwork materials than supplied and some HVAC work was not
performed.”
On May 23, 2012, LAUSD filed this action against Torres
and Western, alleging breach of the JOC’s and breach of the
bonds. After the trial court granted summary adjudication in
LAUSD’s favor on all 19 Phase I Job Orders and 9 Phase II Job
Orders, the case proceeded to jury trial. At the close of evidence,
the trial court granted LAUSD’s motions for directed verdict on
all the remaining Phase II Job Orders and 15 of the 18 remaining
Phase III Job Orders. Following a jury verdict on the remaining
three Job Orders, the court awarded prejudgment interest and
attorney fees. This appeal followed.
8
DISCUSSION
We review an order granting or denying summary
judgment or summary adjudication independently. (Wiener v.
Southcoast Childcare Centers, Inc. (2004) 32 Cal. 4th 1138, 1142
(Wiener); Buss v. Superior Court (1997) 16 Cal. 4th 35, 60 (Buss).)
“ ‘ “First, we identify the issues raised by the pleadings, since it is
these allegations to which the motion must respond; secondly, we
determine whether the moving party’s showing has established
facts which negate the opponent’s claims and justify a judgment
in movant’s favor; when a summary judgment motion prima facie
justifies a judgment, the third and final step is to determine
whether the opposition demonstrates the existence of a triable,
material factual issue.” ’ ” (Claudio v. Regents of University of
California (2005) 134 Cal. App. 4th 224, 229 (Claudio).)
“ ‘Declarations of the moving party are strictly construed, those of
the opposing party are liberally construed, and doubts as to
whether a summary judgment should be granted must be
resolved in favor of the opposing party. The court focuses on
issue finding; it does not resolve issues of fact.’ ” (Assilzadeh v.
California Federal Bank (2000) 82 Cal. App. 4th 399, 409
(Assilzadeh).)
“ ‘[D]e novo review does not obligate us to cull the record for
the benefit of the appellant in order to attempt to uncover the
requisite triable issues. As with an appeal from any judgment, it
is the appellant’s responsibility to affirmatively demonstrate
error and, therefore, to point out the triable issues the appellant
claims are present by citation to the record and any supporting
authority. In other words, review is limited to issues which have
been adequately raised and briefed.’ ” (Claudio, supra,
134 Cal.App.4th at p. 230.)
9
In motions for summary judgment or adjudication, “ ‘all
material facts must be set forth in the separate statement. “This
is the Golden Rule of Summary Adjudication: if it is not set forth
in the separate statement, it does not exist.” ’ [Citation.] Thus,
when the ‘fact’ is not mentioned in the separate statement, it is
irrelevant that such fact might be buried in the mound of
paperwork filed with the court, because the statutory purposes
are not furthered by unhighlighted facts.” (North Coast Business
Park v. Nielsen Construction Co. (1993) 17 Cal. App. 4th 22,
30-31.) “The corollary for an opposing party, unless it wishes to
advance additional disputed or undisputed material facts, is that
it clearly indicate which of the facts contained in the moving
party’s separate statement it disputes. ([Code Civ. Proc.,] § 437c,
subd. (b)(3).) Each party also must supply a ‘reference to the
supporting evidence’ in its separate statement ([Code Civ. Proc.,]
§ 437c, subd. (b)(1), (3)).” (Parkview Villas Assn., Inc. v. State
Farm Fire & Casualty Co. (2005) 133 Cal. App. 4th 1197, 1214.)
“ ‘If, in deciding this appeal, we find there is no issue of
material fact, we affirm the summary judgment if it is correct on
any legal theory applicable to this case, whether or not that
theory was adopted by the trial court, and whether it was raised
by the [defendant] in the trial court or first addressed on
appeal.’ ” (Assilzadeh, supra, 82 Cal.App.4th at p. 409.)
I. Appellants’ Motion For Summary Judgment Was
Properly Denied Because A JOC Is An Enforceable
Contract, Not Just An Agreement To Negotiate.
Appellants’ Motion for Summary Judgment was the first
potentially dispositive motion to be heard by the trial court.
Appellants sought judgment in their favor on the ground that
JOCs are contracts to negotiate further contracts and could not
10
support LAUSD’s claims for damages. Appellants argued
because LAUSD did not allege Torres failed to negotiate, which
was the only cognizable breach of the JOCs, it was not entitled to
expectation damages. Appellants took the position that each Job
Order was a separate contract from the JOC, and LAUSD should
have sued for breach of the Job Orders rather than the JOCs.4
Thus, appellants’ arguments were essentially legal arguments
based on the pleadings and the face of the contracts. The trial
court and the parties agreed that these two grounds for summary
judgment were the functional equivalent of motions for judgment
on the pleadings. The trial court denied the motion.
To prevail on its motion, a defendant moving for summary
judgment must conclusively negate a necessary element of the
plaintiff’s case or establish a complete defense thereto. (Frank
and Freedus v. Allstate Ins. Co. (1996) 45 Cal. App. 4th 461, 468.)
When a motion for summary judgment challenges the sufficiency
of the pleadings rather than the evidence supporting the
allegations therein, it is tantamount to a motion for judgment on
the pleadings and may be treated as such by the trial court. “The
practical effect of this procedure is that in granting judgment on
the pleadings, the trial court may give the plaintiff the
opportunity to amend the complaint even when no motion to
amend has been filed.” (Taylor v. Lockheed Martin Corp. (2000)
78 Cal. App. 4th 472, 479.) “The standard for granting a motion
4 In an attempt to persuade us, Torres resorts to poetry here,
referring to Robert Frost’s poem “The Road Not Taken” to
characterize LAUSD’s “conflicted” choice. We find that all roads
led back to the General Conditions. Thus, if poetry is called for,
“the end of our exploring/ Will be to arrive where we started/And
know the place for the first time.” (Eliot (1942) “Four Quartets.”)
11
for judgment on the pleadings is essentially the same as that
applicable to a general demurrer, that is, under the state of the
pleadings, together with matters that may be judicially noticed, it
appears that a party is entitled to judgment as a matter of law.”
(Schabarum v. California Legislature (1998) 60 Cal. App. 4th
1205, 1216 (Schabarum).)
The standard of review for a motion for summary judgment
and a motion for judgment on the pleadings is essentially the
same: we independently review the trial court’s order. (Wiener,
supra, 32 Cal.4th at p. 1142; Buss, supra,16 Cal.4th at p. 60;
Schabarum, supra, 60 Cal.App.4th at p. 1216.) We agree with
the trial court that appellants’ motion was much closer to a
motion for judgment on the pleadings than for summary
judgment, but however the motion is characterized, we find the
motion was properly denied.
Appellants first contend that the legislative history of the
bill enacting job order contracting shows that JOC’s are merely
agreements to negotiate.5 Appellants quote two documents from
that history which state that after the bidding process, the
contractor and the owner/LAUSD enter into “a contract defining
the overall relationship.” Appellants understand this to mean
that the JOC only establishes a relationship which lacks any
specifics and simply establishes that the parties will agree to
specifics in the future.
There is nothing to indicate what the writer meant by the
phrase “overall relationship.” The term can mean either
“involving only main features” or “including everything.”
5 Having received no opposition from LAUSD, we grant
appellants’ request that we take judicial notice of the legislative
history. (Evid. Code, §§ 452, 453.)
12
( [as of Oct. 26,
2020].) It is far more accurate and useful to look at the JOCs,
which incorporate the General Conditions. Those terms are very
detailed, and describe far more than the main features of the
relationship. To give just one example (apart from the pricing
related provisions), the General Conditions contain an elaborate
and detailed discussion of the notice required upon the
occurrence of specific events, as we discuss in some detail, post, in
our analysis of Western’s motion for directed verdict on this topic.
Looking at the 90 pages of General Conditions, it is simply not
reasonable to view the JOCs as only defining the broad or main
features of the relationship.
Appellants next turn to Copeland v. Baskin Robbins U.S.A.
(2002) 96 Cal. App. 4th 1251, a case which they cited in the trial
court, but which is not dispositive. The contract at issue in
Copeland involved a potential agreement by defendant to
purchase ice cream and, when the defendant broke off
negotiations, the parties had not reached agreement on key terms
of the ice cream purchase agreement, such as flavor, quantity,
quality, pricing, trademark protection, and liability for spoilage.
(Id. at p. 1254.) Both parties agreed on appeal that no ice cream
purchase contract had been formed. The issue in Copeland
was not whether a binding agreement to purchase had been
formed but whether and what kind of damages were available for
breach of an agreement to negotiate. Plaintiff sought lost profits.
As the court explained, “damages for breach of a contract to
negotiate an agreement are measured by the injury the plaintiff
suffered in relying on the defendant to negotiate in good faith.
This measure encompasses the plaintiff’s out-of-pocket costs in
conducting the negotiations and may or may not include lost
13
opportunity costs. The plaintiff cannot recover for lost
expectations (profits) because there is no way of knowing what the
ultimate terms of the agreement would have been or even if there
would have been an ultimate agreement.” (Id. at pp. 1262–1263,
fns. omitted, italics added.)
Copeland does not offer any support for appellants’
argument that the JOCs are, in fact, just contracts to negotiate.
At most, Copeland discusses that determining whether the
specific contract at issue is an agreement or merely an agreement
to negotiate depends on the terms of the agreement and the
relationship of the terms to the work to be performed or services
rendered under the ultimate contract.6
To determine whether the JOCs in this case are
agreements or merely agreements to negotiate, we look at the
terms of the contracts, and at the various documents
incorporated in those contracts. “Where a contract is clear and
unambiguous, it is interpreted by the language therein without
resort to extrinsic evidence. [Citations.] Such interpretation is a
question of law [citations], which may be resolved on summary
judgment.” (Niederer v. Ferreira (1987) 189 Cal. App. 3d 1485,
1499.)
Here, LAUSD is not suing on an agreement that never
materialized. The JOCs are valid executed agreements, and the
6 Similarly, in Cedar Fair, L.P. v. City of Santa Clara (2011)
194 Cal. App. 4th 1150, the court looked to the contents of the
term sheet at issue to determine whether the parties had an
agreement, or merely an agreement to negotiate. (Id. at
pp. 1169–1171.) The court concluded that “although the term
sheet is extremely detailed, it expressly binds the parties to only
continue negotiating in good faith.” (Id. at p. 1171, italics added.)
14
parties agreed to far more than simply to negotiate future job
orders. Under the General Conditions of the JOCs, the parties
agreed to every key term of future job orders except one: the
Scope of Work for any projects which LAUSD would assign to
Torres.
LAUSD is not suing on a Scope of Work that never
materialized. There is no claim that the required Scope of Work
for each job order was not established as required by the General
Conditions of the JOCs. Under the General Conditions, once the
Scope of Work is properly established, LAUSD issues its RFP,
and the contractor is required to respond with a proposal which
prices the work using the applicable formulas in the General
Conditions. This is arithmetic, not negotiations.
Appellants argue that even after the Scope of Work is
established, and a proposal is required, there is still only an
agreement to negotiate because the General Conditions provide
for termination of the contractor if it fails to provide the required
proposal. In fact, the General Conditions provide LAUSD can
terminate the Contract for cause if the contractor fails to timely
submit a proposal. We fail to see how this agreed-upon remedy
supports appellants’ argument that the JOCs are not binding
agreements to perform work. How is this different from a
provision which would permit an owner to terminate a contract if
the contractor falls behind the construction schedule or simply
fails to show up at the work site? “We may and do ‘disregard
conclusory arguments that are not supported by pertinent legal
authority or fail to disclose the reasoning by which the appellant
reached the conclusions he wants us to adopt.’ ” (United Grand
Corp., supra, 36 Cal.App.5th at p. 153.)
15
Appellants further argue there was no binding agreement
even after the Scope of Work was determined and a proposal
submitted, because “there could be no expectation Torres would
build or bill for anything until the [job order] issued.” They are
mistaken. Once a contractor submits a proposal, he is “expected”
to do the work. As Torres itself noted, under the 2005 General
Conditions, once the contractor submits a proposal, LAUSD can
issue a notice to proceed in lieu of a job order. The contractor will
be paid according to the pricing formulas for work actually
performed. This requirement is less direct under the 2007
General Conditions, but when a contractor submits its proposal,
it is “agreeing to accomplish the Work as defined in the Job Order
Proposal Scope of Work.” (Art. 6.28.4.3.) The ability to issue a
Notice to Proceed without a Job Order does not appear to have
been carried over, but LAUSD may direct the contractor to
modify the proposal by, for example, adjusting quantities and
then resubmitting it. (Art. 6.28.5.) Thus, a contractor is bound
by its proposal before a job order issues. The JOCs are binding
agreements.
Alternatively, and for the first time on appeal, appellants
argue the JOCs are “too indefinite on price and quantity” to allow
a court to award expectation damages. Appellants’ only example
suggests this is a factual question which cannot be raised for the
first time on appeal, particularly since this is an appeal from a
motion for summary judgment and appellants did not identify
this as a fact in their separate statements. Appellants claim:
“Pricing for a light bulb installation has to be different if the
locale is a domed cathedral, hundreds of feet overhead.” Even
setting aside the extreme unlikelihood that LAUSD owns a
domed cathedral hundreds of feet tall, appellants fail to explain
16
what such pricing is different from. Is it the price to install a
light bulb in a classroom? Are appellants claiming that the
construction task catalog only has one price for installing a light
bulb despite significantly varying conditions throughout LAUSD
schools? It is impossible to tell and, in any event, even if
appellants had identified a specific task description, we would not
be able to resolve the adequacy of the task description without
reference to evidence such as the varying conditions in LAUSD
buildings, and how such conditions affect light bulb installation,
if at all. “ ‘In order to demonstrate error, an appellant must
supply the reviewing court with some cogent argument supported
by legal analysis and citation to the record.’ ” (United Grand
Corp., supra, 36 Cal.App.5th at p. 153.) We may and do
disregard arguments that “ ‘fail to disclose the reasoning by
which the appellant reached the conclusions he wants us to
adopt.’ ” (Ibid.)
Finally, as the trial court correctly found, even if a
completed Job Order were necessary for damages, Job Orders are
not separate agreements: they are expressly incorporated into
and part of the JOC. A cause of action alleging breach of a JOC
is thus sufficient to include a breach of a Job Order issued under
the authority of the JOC.
II. Western Has Forfeited Its Claims Challenging Denial
Of Appellants’ Motion For Summary Judgment.
One of appellants’ affirmative defenses was that LAUSD
itself breached the contract by failing to independently price the
Job Order, one of its obligations under the JOCs. Western
appears to contend separately that when the trial court denied
appellants’ motion for summary judgment it erroneously
foreclosed this key affirmative defense, which, it contends, would
17
have relieved them of liability for their own alleged contractual
breaches. This argument has been forfeited by Western’s failure
to supply record citations or a fully developed argument, without
which we are unable to understand Western’s claim of
foreclosure. As we understand the record, the trial court denied
summary judgment because it found there was a material issue
of fact as to whether the JOCs were contracts to build or
contracts to negotiate. This ruling does not foreclose anything: it
simply finds a disputed material fact over the nature of the JOCs,
leaving that issue and the issue of affirmative defenses to be
decided later. “ ‘In order to demonstrate error, an appellant must
supply the reviewing court with some cogent argument supported
by legal analysis and citation to the record.’ ” (United Grand
Corp., supra, 36 Cal.App.5th at p. 153.) We are not required to
develop appellants’ arguments for them. (Ibid.) “We may and do
‘disregard conclusory arguments that are not supported by
pertinent legal authority or fail to disclose the reasoning by
which the appellant reached the conclusions he wants us to
adopt.’ ” (Ibid.)
III. LAUSD’s Motions For Summary Adjudication Were
Properly Granted In Whole And In Part.
Shortly after the trial court denied appellants’ Motion for
Summary Judgment, LAUSD filed two Motions for Summary
Adjudication against appellants, one for the Phase I Job Orders
and another for the Phase II Job Orders. The motions were made
on the ground that Torres breached the JOCs by failing to price
its proposals in accordance with the formulas in the General
Conditions. The trial court granted LAUSD’s motions as to all
Phase I Job Orders and some Phase II Job Orders. The partial
denial was based on disputed factual issues over the amount of
18
engineering and site inspection services for some Phase II Job
Orders.
Appellants contend the trial court’s decision to admit and
consider additional evidence submitted in LAUSD’s reply was
erroneous and violated their rights to due process. They contend
this alone requires reversal of the court’s ruling granting
summary adjudication.7 They also contend the trial court erred
in granting the motion because 1) Torres’s affirmative defense of
offset rendered LAUSD’s damages uncertain; 2) independent
estimates are a condition precedent under the General
Conditions and LAUSD failed to obtain such estimates; and
3) there were triable issues of fact over waiver.
A. The Trial Court Did Not Abuse Its Discretion In
Admitting The Gap Filler Documents Submitted By
LAUSD In Reply.
In support of its Motion for Summary Adjudication on the
Phase I Job Orders, LAUSD submitted a computer printout of
Torres’s Phase I proposals. The printout shows dates which
might have reflected the dates the proposals were printed out,
rather than the dates they were initially submitted. In
opposition, appellants claimed that the proposals could not be the
basis of the Job Orders because they were dated after the Job
Orders and did not show that the scope of work included
engineering and site investigation work. In reply, LAUSD
7 Appellants appear to have submitted a joint Opposition to
LAUSD’s Motions for Summary Adjudication: the document uses
the plural term “defendants” and counsel are listed as counsel for
both Torres and Western. The Opposition does not, however,
raise any claims specific to Western.
19
submitted a printout from the computer system contractors use
to submit bids to LAUSD, showing the dates Torres’s proposals
were submitted. LAUSD also submitted a revised damages chart
which reduced the damages claimed by the amount of the
engineering and site investigation work, conceding for purposes
of the motion that those charges were proper.
A trial court has discretion to consider new evidence in
reply papers supporting a summary judgment motion as long as
the opposing party has notice and an opportunity to respond.
(Wall Street Network, LTD. v. New York Times Co. (2008)
164 Cal. App. 4th 1171, 1183.) Evidence which is used to fill gaps
in the original evidence created by the opposition is particularly
appropriate to consider in a reply. (Jay v. Mahaffey (2013)
218 Cal. App. 4th 1522, 1538.)
Here, appellants claim the evidence was more than a gap
filler and they were improperly denied the opportunity to present
new evidence. They suggest LAUSD changed its theory by
“shift[ing] to subcontractor costs” and that LAUSD’s recalculated
damages created inconsistencies which raised triable issues of
material fact. The record on appeal does not support appellants’
contentions. LAUSD’s theory of recovery was and remained that
subcontractor costs were the appropriate basis for calculations for
Phase I and II. LASUD’s new damages figures simply reflected
the subtraction of the amount of the engineering and site
investigation services correctly identified by appellants. This is
basic arithmetic, not an unexplained inconsistency.
Appellants claim on appeal that the declaration LAUSD
submitted in support of the new evidence contradicted the Blanca
Sanchez declaration they submitted. Appellants cite only to the
Sanchez declaration and then only to an excluded portion of her
20
declaration. We do not consider this evidence. (Yanowitz v.
L’Oreal USA, Inc. (2005) 36 Cal. 4th 1028, 1037.) More generally,
appellants had ample opportunity to object to LAUSD’s new
evidence, and did so. The trial court did not abuse its discretion
in considering this gap filler evidence.
B. Torres’s Setoff Defense Did Not Create A Triable Issue
Of Material Fact Over The Amount Of LAUSD’s
Damages.
Torres alleged a setoff affirmative defense, and also
claimed a setoff in its cross-complaint. In Opposition to
Summary Adjudication, appellants claimed Torres’s setoff
defense precluded summary adjudication because the defense
created a triable issue of material fact concerning the amount of
LAUSD’s damages. More specifically, they contend that by
introducing evidence of payments withheld by LAUSD on other
jobs, they shifted the burden to LAUSD to disprove these setoffs.
Appellants claim the trial court misunderstood the burden of
proof and erroneously found the setoff was not applicable because
Torres did not file a cross-motion for summary adjudication.
To support their claim, appellants quote the trial court as
saying: “Where is the motion? Where is the motion for summary
adjudication? Where is the motion for summary judgment in
which you establish your entitlement to these offsets?”
Appellants have taken the trial court’s remarks out of context.
The trial court stated the amount of the offset had not yet been
adjudicated, and that absent a motion for summary adjudication
by Torres, the amount of the offset would be determined at the
end of the case. When Torres claimed the amount of the offset
was undisputed, the court replied: “If it really was undisputed, if
they admitted it in their answer to your cross-complaint, then
21
you reduce the judgment.” The court even noted that the
affirmative defense itself read “ ‘In the event this answering
defendant is found liable in any manner, . . . this answering
defendant would be entitled to offsets and credits against any
purported damages, if any, allegedly sustained by plaintiff.’ ”
(Italics added.)
The court’s comments as a whole show a correct
understanding of the law.8 A setoff “occurs at the end of
litigation.” (Keith G. v. Suzanne H. (1998) 62 Cal. App. 4th
853, 860.) Generally, “a setoff procedure simply eliminates a
superfluous exchange of money between the parties.” (Jess v.
Herrmann (1979) 26 Cal. 3d 131, 137; see Code Civ. Proc.,
§ 431.70 [where cross-demands for money exist between plaintiff
and defendant, defendant “may assert in the answer the defense
of payment.”] The affirmative defense of setoff is equitable in
nature (see Granberry v. Islay Investments (1995) 9 Cal. 4th
738, 743–744) and so would not ordinarily be decided by the jury
which decides the amount of damages. Thus, LAUSD would not
have been required to disprove the affirmative defense of setoff at
a jury trial, and Torres would not have been entitled to prove it
as an affirmative defense at such trial.
8 Appellants focus on the trial court’s comments at the
hearing. The trial’s written ruling and order more clearly state:
“Torres is not entitled to these offsets at this juncture because
they have not yet been adjudicated, either through trial or some
other mechanism such as a motion for summary adjudication or
summary judgment. Even if Torres were entitled to an offset, it
would be at the end of trial if they can prove the offsets, and such
would not defeat the District’s MSAs.”
22
Moreover, a setoff defense does not negate or change the
plaintiff’s damages. (See Fullington v. Equilon Enterprises,
LLC (2012) 210 Cal. App. 4th 667, 685-687 [even where a party’s
award of compensatory damages is completely offset, the
requirement of actual damages as prerequisite for punitive
damages is satisfied]; see also McMillin Companies, LLC v.
American Safety Indemnity Co. (2015) 233 Cal. App. 4th 518,
534-535 [equitable offset arising from settlement does not affect
amount of damages awarded, only right to recover full amount of
damages awarded].)
In some instances, a defendant’s offset claim may be
directly related to and intertwined with the claims asserted in
plaintiff’s complaint, and deciding one will necessarily decide the
other. This appears to have been the situation, at least in part,
in the case appellants rely on, Cal. Lettuce Growers v. Union
Sugar Co. (1955) 45 Cal. 2d 474. In such cases, summary
adjudication on the plaintiff’s claim may not be possible unless
the defendant’s offsetting counterclaim can also be resolved.
Further, as LAUSD points out, Cal. Lettuce involved summary
judgment which necessarily disposed of the entire action
including the offset claim. Here, Torres’s offset defense and
counterclaim did not arise from the jobs that were the source of
LAUSD’s claims, and resolution of LAUSD’s claims would in no
way decide the merits of Torres’s claim for withheld payments on
unrelated and undisputed jobs. Thus, the trial court could decide
Torres’ offset defense after summary adjudication and before
entering a final judgment in the matter.
Relatedly, the trial court excluded the declaration of Marcia
Amos, offered by appellants to show the claimed amount of
offsets. The court excluded the declaration on the ground that
23
Amos lacked personal knowledge; Amos offered an improper legal
conclusion; and the declaration was barred by the best evidence
rule. Appellants contend this was an abuse of discretion.
However, LAUSD had also objected to the declaration on
the ground it was not relevant, and in light of our conclusion that
an offset defense does not defeat summary adjudication,
LAUSD’s objection was, and remains, valid. Put differently, even
assuming for the sake of argument that the trial court erred in
excluding the declaration, any error would be harmless in light of
our ruling that an offset defense or claim does not defeat
summary adjudication in favor of LAUSD on the issues raised.
C. An Independent Estimate Is Not A Statutory
Condition Precedent.
Appellants contend that an independent price estimate by
LAUSD is a statutory condition precedent before Torres’s
performance could be required.
Section 20919.11 provides that “[i]n order to prevent fraud,
waste, and abuse,” a school district using JOCs shall “(a) Prepare
for each individual job order developed under a job order contract
an independent unified school district estimate. The estimate
will be prepared prior to the receipt of the contractor’s offer to
perform work and will be compared to the contractor’s proposed
price to determine the reasonableness of that price before
issuance of any job order.” (§ 20919.11, subd. (a).)
“A condition precedent is one which is to be performed
before some right dependent thereon accrues, or some act
dependent thereon is performed.” (Civ. Code, § 1436.) Provisions
“ ‘are not to be construed as conditions precedent unless such
construction is required by clear, unambiguous language; and
particularly so where a forfeiture would be involved or
24
inequitable consequences would result. [Citations.]’ [Citations.]
Because ‘such conditions are not favored by the law, [they] are to
be strictly construed against one seeking to avail [it]self of them.
[Citations.]’ ” (JMR Construction Corp. v. Environmental
Assessment & Remediation Management, Inc. (2015)
243 Cal. App. 4th 571, 594.)
There is no language in the statute expressly conditioning a
contractor’s duty to prepare a correctly priced proposal on
LAUSD obtaining an independent estimate. There is nothing at
all in section 20919.11, subdivision (a) requiring a contractor to
properly price its proposal. The contractor’s statutory duty to
price a proposal is found in section 20919.1, subdivision (l). This
formula is repeated in the General Conditions and supplemented
by NPP formula. It is an independent duty.
Further, as LAUSD argues, construing the statutory
estimate requirement as a condition precedent would mean
transforming a step intended “to prevent fraud, waste and abuse”
into a complete bar on seeking recovery for such fraud, waste or
abuse. In other words, treating an estimate as a condition
precedent would be construing the requirement in favor of
Torres, shielding him from liability for any fraud, waste or abuse.
The law requires this to be construed against Torres.
Appellants also claim, for the first time on appeal, that the
independent estimate requirement is a contractual duty and
LAUSD has not shown it performed, or was excused from
performing, that duty. Appellants contend that we may consider
this claim for the first time on appeal because it involves a pure
question of law based on undisputed facts. (See C9 Ventures v.
SVC-West, L.P. (2012) 202 Cal. App. 4th 1483, 1491.) We do not
agree.
25
LAUSD presented evidence that it had performed its
contractual obligations by issuing Job Orders and paying Torres
for the Job Orders that were the subject of the motions. As
appellants acknowledge, in the trial court they did not contest
this evidence or argue that LAUSD had failed to fully perform its
contractual duties by failing to obtain an independent cost
estimate.9
Generally, “ ‘in reviewing summary judgment, the appellate
court must consider only those facts before the trial court,
disregarding any new allegations on appeal. [Citation.] Thus,
possible theories that were not fully developed or factually
presented to the trial court cannot create a “triable issue” on
appeal.’ [Citation.] ‘A party is not permitted to change his
position and adopt a new and different theory on appeal. To
permit him to do so would not only be unfair to the trial court,
but manifestly unjust to the opposing litigant.’ ” (Expansion
Pointe Properties Limited Partnership v. Procopio, Cory,
Hargreaves & Savitch, LLP (2007) 152 Cal. App. 4th 42, 54–55.)
Here, the necessary facts to support appellants’ claim were
either not before the trial court at all or were not fully developed
and factually presented to the court. LAUSD argues on appeal it
does not owe such a duty to Torres, and only a breach of a
material obligation would excuse Torres’s performance or prevent
recovery. Whether an obligation is material is a question of fact.
(Brown v. Grimes (2011) 192 Cal. App. 4th 265, 277.)
9 Appellants did submit evidence which they contend showed
LAUSD had not performed independent cost estimates, but the
trial court ruled the evidence was irrelevant because an estimate
was not a statutory condition precedent.
26
In addition, LAUSD’s position on appeal is that if an
estimate were required, the Trimark proposals would be
sufficient to constitute an estimate for Phases I and II.
Appellants ridicule this idea, but provide no legal authority or
record citations to show that the proposals would not qualify. As
appellants note in Torres’s reply brief, LAUSD’s auditor used
pricing provided by Trimark for Phase I and II equipment as part
of its audit, comparing those prices to the Job Order pricing. “We
may and do ‘disregard conclusory arguments that are not
supported by pertinent legal authority or fail to disclose the
reasoning by which the appellant reached the conclusions he
wants us to adopt.’ ” (United Grand Corp., supra, 36 Cal.App.5th
at p. 153.)
D. There Were No Triable Issues Of Material Fact As To
Torres’s Waiver Defense.
Appellants claim they raised triable issues of fact as to the
affirmative defense of waiver. “The gist of Defendants’ waiver
defense is by accepting Torres’ job proposals, via the [job orders],
the District accepted the contractual terms, even if they were at
variance from the [General Conditions].” Appellants did not
clearly make this argument in their Opposition to the Motions for
Summary Adjudication in the trial court. In fact, the trial court
found Torres’s affirmative defense of waiver “was raised in the
moving papers, and the Court finds it was not addressed by
Torres in its opposition.”
Through its submission of the Blanca Sanchez and
McGallian declarations, appellants attempted to argue that
LAUSD had instructed Torres to use a different pricing procedure
than the one in the General Conditions, which might be
characterized as a waiver argument. However, the trial court
27
excluded those declarations. On appeal appellants do not
challenge that ruling, so we do not consider the content of those
declarations. (Yanowitz v. L’Oreal USA, Inc., supra, 36 Cal.4th
at p. 1037 [we take the facts from the record that was before the
trial court when it ruled on the motion].)
Turning to the issue of waiver as a matter of law,
appellants referred to their affirmative defense of waiver only
once in their memorandum, in the section discussing the estimate
requirement, contending “LAUSD’s failure to perform its [cost
estimate] duties also creates a genuine dispute of material fact
precluding summary adjudication on . . . Torres’ affirmative
defense of waiver.” Appellants’ argument is not clear, but it
appears to have been that LAUSD’s failure to obtain an estimate
meant that Torres did not have to comply with the pricing
requirements of the General Conditions, and LAUSD could not
waive the estimate requirement and thereby negate its failure to
obtain an estimate/restore Torres’s pricing duties. However, the
trial court correctly found that the estimate requirement was not
a statutory condition precedent to Torres’s independent duty to
correctly price the work, and so this argument was not relevant.
The closest argument in their Opposition to the argument
appellants now make on appeal is their contention that once a
Job Order was signed, it took precedence over any conditions in
the General Conditions. They based this contention on provisions
that in the event of a conflict or ambiguities between the contract
documents, the job orders take priority. It was only in the
Opposition’s separate statement that appellants used the term
waive, and then only in connection with the argument that the
Job Orders trumped the General Conditions. They stated:
“LAUSD entered into a written contract that specifically agreed
28
to waive any prior pricing breaches in the proposal because the
Job Order is a contract and [General Conditions] §§3.3 and 3.14
in tandem provide that for a JOC and for a Job Order, the terms
of the Job Order prevail over conflicting, different, or discrepant
terms in the [General Conditions] and the pricing terms alleged
by LAUSD as the basis for breaches are such conflicting,
different, or discrepant terms with the terms of the Job Orders
and because [General Conditions] 11.2 constitutes written
agreement that the Job Order Amount cannot be changed except
by Change Order.”
This was not really a waiver argument, however. “Waiver
requires the intentional relinquishment of a known right upon
knowledge of the facts. The burden is on the party claiming a
waiver of right to prove it by clear and convincing evidence that
does not leave the matter to speculation. As a general rule,
doubtful cases will be decided against the existence of a waiver.”
(Ringler Associates Inc. v. Maryland Casualty Co. (2000)
80 Cal. App. 4th 1165, 1188.)
Appellants rely on a 35-year-old case, which itself relies on
a 20-year-old case, for the proposition that “ ‘A waiver may occur
(1) by an intentional relinquishment or (2) as “the result of an act
which, according to its natural import, is so inconsistent with an
intent to enforce the right as to induce a reasonable belief that
such right has been relinquished.” ’ ” (Freshman, Mulvaney,
Marantz, Comsky, Kahan & Deutsch v. Superior Court (1985)
173 Cal. App. 3d 223, 233–234, italics added.) We question
whether inconsistent conduct is a form of waiver, at least where
the conduct must induce a “reasonable belief that such right has
been relinquished.” The Freshman court considered the
“reasonable belief” of the party asserting waiver, making this
29
standard much closer to estoppel than waiver. (Id. at p. 234.)10
Nonetheless even this broad definition does not help appellants.
The anti-waiver provision of the General Conditions
provides: “No action or failure to act by [LAUSD] shall constitute
a waiver of a right, remedy, or duty afforded to [LAUSD] under
the Contract Documents, nor shall such action or failure to act
constitute approval of or acquiescence in a breach thereunder,
except as may be specifically agreed to in writing.” The provision
thus prohibits waiver by conduct.
Further, in order for appellants to prevail, LAUSD would
have to have waived two rights: 1) the right to have a proposal
prepared in accordance with the pricing formulas; and 2) the
right to later audit the job order and recover overcharges.
Appellants have not pointed to any admissible evidence showing
that LAUSD personnel were aware that Torres’s proposals
violated the General Conditions pricing formulas or that LAUSD
expressly relinquished the right to require those formulas.
Appellants point to the conduct of LAUSD personnel in approving
and signing the job orders. Even assuming for the sake of
argument that signing a job order without checking for pricing
conformity could be viewed as conduct inconsistent with an intent
to enforce the General Conditions pricing formula and that such
waiver was not prohibited by the express terms of the anti-waiver
10 “Waiver refers to the act, or the consequences of the act, of
one side. . . . Waiver does not require any act or conduct by the
other party.” (DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum
Cafe & Takeout III, Ltd. (1994) 30 Cal. App. 4th 54, 59.) Estoppel
is applicable where the conduct of one side has induced the other
to take such a position that it would be injured if the first should
be permitted to repudiate its acts. (Ibid.)
30
provision, this conduct would only be inconsistent with an intent
to enforce the pricing formulas through the job order issuance
process. The conduct is not inconsistent with a belief that a
subsequent audit could and would make a compliance
determination and that any overcharges could be recovered.
Thus, for waiver purposes, LAUSD’s conduct is not inconsistent
with an intent to enforce the pricing formulas.
Appellants also fail to show that waiver would be
permissible in a public works contract, specifically a waiver
which would operate to modify the JOC process by removing the
requirement that a contractor follow the pricing formulas in the
General Conditions in preparing its proposal.
“[P]ublic works contracts are the subject of intensive
statutory regulation and lack the freedom of modification present
in private party contracts.” (Amelco Electric v. City of Thousand
Oaks (2002) 27 Cal. 4th 228, 242 (Amelco).) Appellants cite
Amelco for limitations on a court’s power to make a new contract,
but ignore this important limitation on the parties’ ability to
modify the contract. At most, a public entity may waive only
inconsequential deviations from contract requirements. (See
Ghilotti Construction Co. v. City of Richmond (1996)
45 Cal. App. 4th 897, 900 (Ghilotti) [requirements for competitive
bids].) Appellants cite Ghilotti for the proposition that a public
entity can waive contractual rights, but they ignore this
important limiting caveat on waiver.
What is inconsequential may vary by the specific procedure
or requirement at issue. Broadly, to be considered
inconsequential, “a deviation must neither give the bidder an
unfair competitive advantage nor otherwise defeat the goals of
31
insuring economy and preventing corruption in the public
contracting process.” (Ghilotti, supra, 45 Cal.App.4th at p. 900.)
Here, the JOC procedure was authorized both to enable
school districts to complete projects more rapidly, to reduce costs,
and to reduce complexity. A JOC is defined as “a competitively
bid contract . . . in which the contractor agrees to a fixed period,
fixed unit price, and indefinite quantity contract.” (§ 20919.1,
subd. (e).) Indefinite quantity means “one or more of the
construction tasks listed in the catalog of construction tasks.”
(Id., subd. (c).) A JOC contractor has a statutory duty to price its
job order proposals using a formula based on the construction
task catalog where applicable. (Id., subd. (l).)
A job order which waives the use of the statutorily
prescribed pricing formula which defines job order contracting is
not an “inconsequential” deviation from contract requirements as
a matter of law.11 These pricing formulas are the heart of the
JOC process. It defeats the statute’s goal of ensuring both speed
and low costs by prepricing tasks (or if no such task is found in
the catalog of tasks, using a specified formula for NPP work).12
More concretely, in this case the deviations did result in
significantly higher costs.
11 Here, we are faced with a waiver claim that applies to the
entire JOC order. We do not consider whether a waiver of the
price formula for a small portion of a job order would be
consequential or inconsequential.
12 The Legislature intended that a more traditional method of
job delivery be used only when it results in greater cost savings.
(§ 20919, subd. (f).) Appellants’ waiver argument is contrary to
that intent.
32
There is no evidence of corruption here, but it must be
recognized that deeming a complete waiver of the pricing
formulas inconsequential defeats the goal of preventing
corruption in the public contracting law. Corruption spans a
wide range of conduct, including collusion and favoritism, as well
as fraud. (Amelco, supra, 27 Cal.4th at p. 240.) A contractor is
awarded a JOC on the basis on its low adjustment factor bid; the
statute specifies the factor be applied to construction task unit
prices. If LAUSD could waive the unit pricing provisions, a
contractor could bid an unreasonably low adjustment factor, in
the hope or knowledge that LAUSD would waive the requirement
that the contractor follow the pricing formulas which use the
adjustment factor. That would also give the contractor a unfair
competitive advantage.
IV. To Prevail On Its Motions LAUSD Was Not Required
To Disprove Western’s Boilerplate Affirmative
Defenses.
Western separately contends the trial court erred in
granting LAUSD’s motion for summary adjudication because
LAUSD did not disprove Western’s affirmative defenses of lack of
contractually required notice, bar by the statute of limitations
and damages not recoverable under bond.
This argument was not raised in appellants’ Opposition to
LAUSD’s motion. There are no references to these affirmative
defenses at all. The trial court specifically noted that Torres’s
“oppositions made no challenge to Western’s liability under the
bond.”
Western now attempts to claim that LAUSD was required
to disprove these defenses as part of showing performance under
the bonds. Western has characterized these issues, accurately, as
33
affirmative defenses, not as elements of LAUSD’s performance
obligations. (See Standard Oil Co. v. Houser (1950)
101 Cal. App. 2d 480, 488 [statute of limitations, conditions
precedent, exoneration and similar claims are affirmative
defenses which must be pled in the answer].) A plaintiff moving
for summary judgment is not required to disprove affirmative
defenses not sufficiently put at issue by the defendant’s answer.
(See FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d
367, 384-385 [defendant’s laundry list of 16 affirmative defenses
which essentially stated the name of the defense and that it
barred recovery did not raise any issues of material fact that
plaintiffs were required to disprove].) Western alleged 35 such
affirmative defenses in such boilerplate fashion, and provided no
facts during discovery to support any defense. LAUSD had no
burden to disprove the listed defenses.
V. The Trial Court Properly Awarded LAUSD
Prejudgment Interest.
Appellants contend the trial court erred in awarding
prejudgment interest from the date of the last retention payment
on each Job Order because the amount of the damages was
uncertain. Appellants also contend the trial court erred by
awarding such interest before adjudicating its offset affirmative
defense. Appellants contend that at most the trial court had
discretion to award prejudgment interest from the filing of the
complaint, and that it abused its discretion in this case by
making that award.
Prejudgment interest may be awarded where damages are
certain or capable of being made certain by calculation. (Civ.
Code, § 3287, subd. (a).) Prejudgment interest may also be
awarded for unliquidated damages in breach of contract causes of
34
action, but such interest may begin no earlier than the action was
filed. (Id., subd. (b).) “Generally, the certainty required of Civil
Code section 3287, subdivision (a), is absent when the amounts
due turn on disputed facts, but not when the dispute is confined
to the rules governing liability.” (Olson v. Cory (1983) 35 Cal. 3d
390, 402.)
On appeal appellants now contend the damages were
uncertain because ascertainment of the amount of damages
required expert trial testimony. Appellants do not provide record
citations showing they argued for some alternative calculation of
damages. Indeed, in the trial court, appellants generally claimed
LAUSD had agreed to the amounts in the Job Orders and so had
not suffered damages. A claim that damages is $0 is not a
dispute which renders the amount of damages uncertain; it is
effectively an argument for no liability.13 A defendant’s denial of
liability does not make damages uncertain for purposes of Civil
Code section 3287. (Stein v. Southern Cal. Edison Co. (1992)
7 Cal. App. 4th 565, 572.)
Appellants then argue that their offsets made LAUSD’s
damages uncertain. Not so. “[O]nly the claimant’s damages
themselves must be certain. Damages are not made uncertain by
the existence of unliquidated counterclaims or offsets interposed
by the defendant.” (Howard v. American National Fire Ins. Co.
(2010) 187 Cal. App. 4th 498, 536.)
13 In Torres’s reply brief, appellants contend that damages
“required a judicial determination based on conflicting evidence
that ultimately re-wrote the firm, fixed-price JO amounts.” This
reinforces our conclusion that appellants’ only “conflicting”
evidence about the amount of damages was that damages should
be $0.
35
VI. The Trial Court Properly Denied Western’s Motions
For Directed Verdict.
Western unsuccessfully moved for directed verdicts based
on three of its affirmative defenses. These motions applied only
to the Job Orders which had survived summary adjudication and
made it to trial. The trial court denied all three motions, and
stated that in the alternative it would strike the motions for
abuse of discovery. Western contends the trial court erred in
denying the three motions, and in striking the defenses as a
discovery sanction. Because we affirm the trial court’s
substantive rulings on the motions, we need not and do not reach
the discovery sanction issue.
“Like a motion for nonsuit, a motion for a directed verdict is
in the nature of a demurrer to the evidence. [Citations.] In
determining such a motion, the trial court has no power to weigh
the evidence, and may not consider the credibility of witnesses.
It may not grant a directed verdict where there is any substantial
conflict in the evidence. [Citation.] 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
(Howard).)
A directed verdict is subject to de novo appellate review.
(Brassinga v. City of Mountain View (1998) 66 Cal. App. 4th
195, 210.)
36
A. Western Failed To Identify Evidence Of A Key Date
Needed To Prevail On Its Statute Of Limitations
Motion.
Western contends “[e]ach of the bonds contained express
contractual limitations periods providing . . . ‘Any action on this
Bond shall be commenced within three (3) years of the date of
Substantial Completion.’ (27AA10034:20-10035:3.)” This record
citation, the only one purporting to be to the bonds, is to the
argument sections of Western’s motion, not the bonds
themselves. It is Western’s responsibility to provide a record
citation to the bonds at issue which contains the language upon
which it relies; Western’s previous quotations in a motion are not
sufficient. (Nwosu v. Uba (2004) 122 Cal. App. 4th 1229, 1246
(Nwosu) [party’s argument deemed forfeited if not supported by
necessary citations to the record].) This is particularly true as
LAUSD contends only two of the five bonds that were the subject
of Western’s motion had such limitations periods.
A motion for directed verdict is in effect a demurrer to the
evidence, and cannot be granted where there are any substantial
conflicts in the evidence. (Howard, supra, 72 Cal.App.4th at
p. 629.) Here, there are no facts, undisputed or otherwise, in
Western’s Opening Brief, reciting the dates that the statutes of
limitations began to run for each job order. Western contends the
statute begins to run on the date of Substantial Completion, but
does not provide any citations to the record on appeal where
evidence of the date of Substantial Completion can be found.
Western refers to testimony in a reporter’s transcript which is not
part of the record on appeal.14 Western then states LAUSD “had
14 As described by Western, LAUSD’s expert James Becica
testified that LAUSD had three opportunities to discover
37
no obligation to issue a Certificate of Substantial Completion or
file a Notice of Completion until ‘all of the requirements of the
Job Order are completed.’ (27AA10041:1-3.)” This is a citation to
the last page of its motion.
Western has forfeited this claim by failing to provide record
citations to the documents which it claims show the dates of
Substantial Completion. (Nwosu, supra, 122 Cal.App.4th at
p. 1246.) Further, as LAUSD points out, the Certificates of
Substantial Completion upon which Western relied in its motion
were not trial exhibits, were not admitted into evidence, and are
not part of the appendix or other appellate record.
In its reply brief, Western narrows its argument to a single
bond and to Notices of Completion for nine job orders which it
asserts were admitted at trial. We decline to consider these
documents, provided for the first time in the reply brief,
particularly in light of Western’s overstatement in its Opening
Brief. Western’s carelessness has deprived LAUSD of the
opportunity to address these specific documents and Western’s
related arguments. (See American Indian Model Schools v.
Oakland Unified School Dist. (2014) 227 Cal. App. 4th 258,
275-276 [“Fairness militates against allowing an appellant to
raise an issue for the first time in a reply brief because
consideration of the issue deprives the respondent of the
problems with Torres’s proposals, the last of which was the audit.
Western suggests the audit occurred within the limitations
period, but does not further develop this argument. “We may and
do ‘disregard conclusory arguments that are not supported by
pertinent legal authority or fail to disclose the reasoning by
which the appellant reached the conclusions he wants us to
adopt.’ ” (United Grand Corp., supra, 36 Cal.App.5th at p. 153.)
38
opportunity to counter the appellant by raising opposing
arguments about the new issue.”].)
We briefly note that a Notice of Completion alone would not
appear to be sufficient to show the date of substantial completion.
The purpose of such notices is “to protect property owners by
shortening the time period in which lien notices may be filed
against them.” (Kray Cabling Co. v. County of Contra Costa
(1995) 39 Cal. App. 4th 1588, 1594.) Given the number of
published appellate opinions discussing issues related to
premature filing of notices of completion (see, e.g., Fontana
Paving, Inc. v. Hedley Brothers, Inc. (1995) 38 Cal. App. 4th 146,
154–155; Scott, Blake & Wynne v. Summit Ridge Estates, Inc.
(1967) 251 Cal. App. 2d 347, 357 (Scott); Otis Elevator Co. v.
Brainerd (1909) 10 Cal. App. 229, 232), filing a premature notice
of completion appears common.15 Thus, a notice of completion is
not necessarily proof the work has in reality been substantially
completed.
B. LAUSD Was Not Required To Provide Notice Of
Torres’s Improper Pricing.
Western contends LAUSD never gave the required notice
making a demand upon the bonds until it filed this lawsuit, and
that this lack of notice constitutes a material breach of the bonds
and renders them null and void. Western contends “[e]ach bond
15 In Scott, for example, the owner filed a premature notice of
completion and the court explained that, notice notwithstanding,
the work was not in fact complete until the plaintiff, whose
services were basic to the scheme of improvement, had completed
its services under the contract. (Scott, supra, 251 Cal.App.2d at
pp. 357–358.)
39
at issue contained its own express notice requirements prior to
triggering the liability of Western’s.”
Western fails to provide record citations for these bonds.
Further, Western does not quote any notice language from the
bonds and does not explain how such language applied to the
facts of this case. Accordingly, Western has forfeited any claim
based on the language of the bonds. (Nwosu, supra,
122 Cal.App.4th at p. 1246; United Grand Corp., supra,
36 Cal.App.5th at p. 153.)
Western does rely on language from the General Conditions
to support its claim. It appears to be undisputed that LAUSD did
not give notice before the commencement of this action; LAUSD’s
position was that notice was not required. Thus, we will consider
this portion of Western’s argument.
Western relies on Articles 15.5.10, 15.5.11 and 15.5.12.
Article 15.5.10 provides that if, in the opinion of LAUSD, certain
failures occur, “then [LAUSD] shall give notice as required by
Article 15.5.11 or Article 15.5.12, as applicable.” Article 15.5.11
concerns safety violations and is not applicable here.
Article 15.5.12 provides: “[B]efore [LAUSD] can proceed
under Articles 15.5.15 and/or 15.5.16, [LAUSD] shall first send a
written notice to CONTRACTOR and its performance bond
surety . . . .”
The preamble to Articles 15.5.13 through 15.5.16 states:
“[LAUSD] may, at its sole option and without prejudice to any
other rights and/or remedies [LAUSD] may have at law, under
the Contract, the performance bond(s), and/or in equity, do any
and/or all of the following . . . .” Articles 15.5.13 and 15.5.14
involve revoking the contractor’s prequalification status and/or
declaring him a non-responsive bidder, while Article 15.5.16
40
involves termination of the contractor’s services; none of these
provisions are applicable here.
Article 15.5.15 provides LAUSD may “make good such
deficiencies (i.e., Articles 15.5.1 through 15.5.10, inclusive) by
whatever method [LAUSD] deems most expedient with all costs
and expenses thereof being deducted, and/or drawn down, and/or
charged against, the Contractor, the Contract funds, including
retention, and/or the performance bond . . . .”
Western offers no argument concerning the scope or
meaning of Article 15.5.15. LAUSD contends it refers to
“construction administration tasks during the progress of the
work, such as remedying defective work or failing to pay
subcontractors.”
Article 15.5.10 is broad, and refers to the contractor’s
failure “to adhere to any provision of this Contract.” Thus, in the
abstract, Article 15.5.10 could include Torres’s failure to follow
pricing procedures. Western does not explain what LAUSD did
to make good any such deficiency, however. The only action
LAUSD has taken is this lawsuit, and the language of the
preamble to Articles 15.5.13 through 15.5.16 indicates lawsuits
are not included in those options. Further, the activity described
in Article 15.5.15 -- making good a deficiency and then charging
the contractor, construction or retention funds and/or the
performance bonds for the work -- is not the equivalent of a
lawsuit. Thus, LAUSD was not required to give notice by the
terms of the General Conditions.
Contrary to Western’s suggestion, there is no requirement
under California law requiring notice to the surety. After citing
federal and out-of-state cases, Western contends “California
courts apply this reasoning. Since the bond usually requires the
41
owner to notify the surety of the contractor’s default under the
construction contract, notice of the principal’s default is a
material term of the bond and a condition precedent to the
surety’s liability.” We have no doubt California courts apply the
identified reasoning in cases in which there is an applicable
contractual notice requirement. California law, however,
expressly provides: “A surety who has assumed liability for
payment or performance is liable to the creditor immediately
upon the default of the principal, and without demand or notice.”
(Civ. Code, § 2807.) Thus, “[a]bsent a contract provision, the
surety is not entitled to notice of the principal’s default.”
(9 Miller & Starr, Cal. Real Estate (4th ed.2020) § 32.100.)
Western has not shown there is an applicable notice provision
which LASUD failed to follow and so its claim fails.
C. Western Failed To Show That LAUSD’s Damages
Were Not Recoverable Under Westerns’s Bonds.
Western contends that LAUSD seeks “overpayment”
damages and such damages are not recoverable under the bonds.
Western does not cite any specific provisions of the bonds which
bar such recovery. It spends almost five pages of argument on
general legal principles concerning changes in the relationship
between the contracting parties, the role of contract funds as
security and the effect of premature payments concerning
premature payment of contract funds. It barely explains the
application of these broad principles to the facts of this case.
Western’s first legal discussion states: “Under settled
principals of suretyship, a surety is discharged or exonerated
from its bond obligations when there is a material alteration of
42
the principal obligation. ([Civ. Code, § 2819;16 R. P.] Richards,
Inc. v. Chartered Construction Corp. (2000) 83 Cal. App. 4th 146,
154 [(R. P. Richards)]). . . . ‘A material alteration is one that
works some change in the rights, interests, or obligations of the
parties to the writing.’ (Hill & Morton, Inc. v. Coughlin (1963)
214 Cal. App. 2d 545, 549 [(Hill & Morton)].) [¶] In addition to
any material alteration, ‘Civil Code § 2819 exonerates a surety if
the creditor . . . impairs or suspends the creditor’s “remedies or
rights” against the debtor.’ (Bennett v. Leatherby (1992)
3 Cal. App. 4th 449, 452 [(Bennett)].)”
Western does not explain how these general rules apply to
the facts of the case. In R. P. Richards, the promisee (a
subcontractor) and the principal (the general contractor) entered
into a settlement and release of the subcontractor’s claim against
the general without the surety’s knowledge or consent; thereafter
the subcontractor continued to prosecute its claim against the
surety. (R. P. Richards, supra, 83 Cal.App.4th at p. 150.)
Bennett involves a similar settlement of claims and a release.
(Bennett, supra, 3 Cal.App.4th at p. 451.) Hill & Morton involves
a change in method of payment by a retailer so that its
wholesaler lost its right to seek payment directly from the
retailer’s customers. (Hill & Morton, supra, 214 Cal.App.2d at
p. 549.) This case, of course, does not involve a settlement and
release or a loss of assigned payments. Western turns
16 Civil Code section 2819 provides: “A surety is exonerated,
except so far as he or she may be indemnified by the principal, if
by any act of the creditor, without the consent of the surety the
original obligation of the principal is altered in any respect, or the
remedies or rights of the creditor against the principal, in respect
thereto, in any way impaired or suspended.”
43
immediately to a discussion of collateral and “overpayment” so
perhaps it sees a connection there. We do not.
Western discusses the issue of collateral only in general
terms, stating the general proposition that “[c]ontract funds in
the possession of an obligee are collateral security to protect the
surety against loss in the event its principal defaults.” This is an
inaccurate summary of the dicta in Cates Construction, Inc. v.
Talbot Partners (1999) 21 Cal. 4th 28 (Cates). The phrase
“collateral security” does not appear in Cates. Perhaps Western
is referring to the court’s statement that “it is common for
construction contracts to contain terms that protect an owner’s
construction funds.” (Id. at p. 55.) If so, Western has not
identified any of the specific terms which it claims protected the
construction funds in this case, or explained how those terms
were intended to protect it.
Western also argues that “overpayment” exonerates a
surety. All California cases cited by Western to support this
argument in fact refer to “premature” payments.17 As Western
recognizes, premature payments occur when money which is
intended to be kept by one party until a specific milestone is
reached, is instead released before that milestone, which is often
completion of some phase of work. (County of Glenn v. Jones
(1905) 146 Cal. 518 [contractor asked owner to alter terms of
contract and pay contractor before all materials were delivered;
17 In its reply brief, Western provides a quote from Cates,
which uses the term “overcharging” but does not explain why it
failed to cite Cates on the topic of overcharging in its opening
brief. In any event, the statement in Cates is dicta, and in
context refers to premature payments. (Cates, supra, 21 Cal.4th
at pp. 55–56.)
44
contractor did so]; Siegel v. Hechler (1919) 181 Cal. 187, 190 [the
contractor “had the right to pay these bills at the time they were
paid” and so the payments were not premature]; Burr v. Gardella
(1921) 53 Cal. App. 377, 387–388 [payments were made
“according to the requirements of the contract as to when certain
payments should be made” and so were not premature]; see
American Insurance Co. v. Heritage Construction Corp. (N.D.Cal.
1966) 268 F. Supp. 336, 343 [premature payment claim involved
alleged premature disbursal of funds from a specified security
fund “which the surety stipulated should be kept on hand
pending the lien filing period”].)
Western does not point to any specific payment milestones
here which were tied to correct pricing of the Job Order, and for
this reason alone its analogy is inapt. We see no similarity
between an owner’s payment of an inflated price contained in the
contract documents, apparently made on the schedule set forth in
those documents, and the payment of a proper sum in disregard
of the payment schedule in the contract documents.
Rather than develop this analogy, Western reverts to its
use of the term “overpayment” and argues that if LAUSD had
followed its own guidelines for job order approval and for owner’s
review and approval of payment applications submitted on the
project, LAUSD would not have made any overpayments.
Western argues it did not bond LAUSD’s errors, omissions,
neglect or mistakes.
Western did bond Torres’s performance of all the terms and
conditions of its contract with LAUSD, and those terms and
45
conditions include properly pricing its proposals.18 Western does
not point to any evidence, let alone undisputed evidence, that
LAUSD failed to follow its guidelines for job order approval or
that if LAUSD had followed the guidelines, Torres’s breach of
contract in pricing the items would have been discovered.
Western’s references to the owner’s review of payment
applications are made entirely without context. Western’s only
record citation is to its directed verdict on this topic, but those
pages contain only general legal arguments. Western has
forfeited this claim.
Finally, the entire concept of overpayment (or premature
payment) as a bar to recovery of overcharges or overpricing is
inconsistent with the audit provisions of the General Conditions.
Article 6.55 requires a contractor to “maintain . . . records and
allow . . . audits for a period of up to four (4) years following the
date the Notice of Completion is recorded.” If an audit uncovers
overcharging or overpricing in excess of 1 percent of the total
contract amount, that “overpricing or overcharges . . . by the
18 Western’s bonds provide: “The condition of this obligation is
that if the CONTRACTOR shall in a workmanlike manner
promptly, competently, and faithfully perform the Work and all of
the terms, conditions and provisions of the Contract, in strict
conformity therewith, then this Bond shall be null and void;
otherwise, this Bond shall remain in full force and effect.”
Where the bond is “explicit” “in tying [the surety’s]
obligations under the bond to [the contractor’s] performance or
nonperformance of all the covenants, conditions and agreements
of the underlying contract” then the bond does guarantee
performance of all covenants, conditions and agreements.
(Fort Bragg Unified School Dist. v. Colonial American Casualty &
Surety Co. (2011) 194 Cal. App. 4th 891, 911-912.)
46
CONTRACTOR . . . shall be reimbursed to [LAUSD] by the
Contractor.” This audit provision, like all terms and conditions of
the contract, was incorporated into the bonds.
By specifying that LAUSD could recover for overcharging
or overpricing up to four years after the Notice of Completion, the
provision clearly contemplates an audit may occur well after the
physical work on the project is complete. This provision would be
meaningless if, as Western’s argument would require, LAUSD
could only recover for overcharges or overpricing if it had
somehow presciently not paid those amounts before undertaking
an audit. The audit provision contains no requirement for
LAUSD to withhold funds or final payment until it completes an
audit of a project for overcharging or overpricing.
VII. The Trial Court Did Not Abuse Its Discretion In
Awarding Attorney Fees To LAUSD.
LAUSD sought a total of $2,123,277.20 in attorney fees for
its six years of work on this case. The fee motion was supported
by the declaration of lead attorney David Huff and very heavily
redacted billing statements. Western claims that the Huff
declaration does not have enough detail to permit an evaluation
of or opposition to the fee request and the bills are so heavily
redacted as to be meaningless. Western contends the trial court
abused its discretion by “rubber stamping” the fee request and
violated Western’s right to due process.
We review the trial court’s determination of a reasonable
attorney fee for abuse of discretion. (Syers Properties III, Inc. v.
Rankin (2014) 226 Cal. App. 4th 691, 697 (Syers Properties III).)
“ ‘[T]he “ ‘experienced trial judge is the best judge of the
value of professional services rendered in his court, and while his
judgment is of course subject to review, it will not be disturbed
47
unless the appellate court is convinced that it is clearly
wrong.’ ” ’ ” (Syers Properties III, supra, 226 Cal.App.4th at
p. 698.) Generally “the trial judge [who] presided over the entire
matter . . . [is] well able to evaluate whether the time expended
by counsel in this case, given its complexity and other factors,
was reasonable.” (Id. at p. 700.)
LAUSD submitted only one declaration in support of its fee
motion, the declaration of David Huff, its lead attorney. Mr. Huff
described his own work as follows: “I was the primary trial
attorney; developed strategy in this litigation and for trial;
prepared witnesses and exhibits for trial; and prepared for and
attended the mediation and hearings for most motions in this
case.” Mr. Huff billed 734.5 hours.
The Huff declaration also described the work of other
attorneys:
“Mr. Barr responded to the voluminous discovery
propounded by Defendants; opposed motions to compel;
propounded discovery on Defendants; and took or defended over
thirty depositions in this case. Mr. Barr also prepared witnesses
for trial, attended the trial, and opposed the motions for directed
verdict brought by Defendants.” Barr billed 2266.4 hours.
“Ms. Houle-Sandoval worked to develop the discovery and
trial· strategy; assisted in the production of tens of thousands of
documents for the District; responded to the voluminous
discovery propounded by Defendants and drafted discovery
propounded by the District; assisted in preparing for numerous
depositions; reviewed the thousands of documents produced by
Defendants; identified and prepared the witnesses and exhibits
for trial; drafted and opposed the 18 total motions in limine;
prepared the joint long cause binders submitted to the Court on
48
behalf of all parties; prepared the three motions for summary
adjudication brought by the District and opposed the two motions
for summary adjudication/summary judgment; opposed the
motions to compel brought by Defendants; attended the trial;
drafted motions to exclude witnesses during trial; drafted the
District’s motion for directed verdict; and prepared for the bench
trial on Defendants’ offset claims.” Ms. Houle-Sandoval billed
3731.8 hours.
“Niv Davidovich assisted in drafting the District’s motions
for summary adjudication on its claims, as well as opposing
Defendants’ motions for summary adjudication/motion for
summary judgment, and assisted in developing general litigation
strategy.” He billed 634.4 hours.
The Huff declaration also described the work of the head
paralegal, Kelly Lucas: “Ms. Lucas was instrumental in
organizing and maintaining the large litigation files; scheduling
and attending site inspections at the cafeterias; reviewing and
organizing documents during the discovery process; assisting
with the production of expert documents; reviewing and
organizing documents and voluminous exhibits for the trial;
preparing the exhibit list for trial; preparing and assembling key
information for use during depositions and witness examinations
at trial; and assisting in the preparation of this Motion.”
Ms. Lucas billed 2223.3 hours.
At the hearing on the fee motion, Western indicated it did
not have a problem with the fees for Huff, Barr and Sandoval,
whom Western described as the three principal attorneys for
LAUSD. LAUSD lead attorney Huff then pointed out that
attorney Niv Davidovich was very involved in the summary
adjudications motions and “appeared at the hearing as reflected
49
in the court’s minute order.” The court then noted that those four
attorneys plus lead paralegal Kelly Lucas accounted for about
$1.95 million of the $2,123,277.20 sought by LAUSD.19 The
court’s calculation of the total fees for those five persons indicates
it accepted all their work as necessary.20 That left $174,430.08 in
miscellaneous fees. The trial court awarded a total of $2.1
million in attorney fees. That $23,277.20 decrease represents a
13 percent reduction of the $174,430.08 in miscellaneous fees.
The trial court was not asked for and so did not provide a
statement of decision. Western contends that where a trial court
does not explain how and why it reached its fee award, a
heightened sense of arbitrariness is inescapable.
The court revealed some of its reasoning and concerns
during the hearing. The court explained: “I have a moderately
intimate familiarity with the history of this case because it’s been
before me its entire duration. And I have been through multiple
summary judgment or summary adjudication motions as to
various portions of this and also presided at trial.”
Turning to the merits of the motion. the court stated:
“There seem to be two principal objections raised. One is the
number of people who at one time or another have worked on
different pieces of this.” The court explained that “[h]aving in my
own practice been involved in . . . similarly-intense, dollar-heavy,
19 The fees for David Huff ($181,954.02), Colin Barr
($557,221.20), Kelly Houle-Sandoval ($846,743.30), Niv
Davidovich ($140,233.50) and Kelly Lucas ($222,695.10) total
$1,948,847.12.
20 Defense counsel did not discuss the hours for paralegal
Lucas.
50
highly-contested litigation, and including substantial and
prolonged jury trials, I do have a familiarity with what it takes.”
The court concluded: “I understand why people would be pulled
in here and there to help with little pieces of it. But I do see
there is only . . . three attorneys, who are doing the bulk of this.
So the number of people involved really doesn’t bother me.”
The court then identified “the other question which really is
the substantive issue is we have all these billing statements.
Great, I love billing statements. I like to see what is there, but
some of these are so heavily redacted that . . . it’s very, very, very
difficult to tell how much time was spent and for what.” The
court stated: “This makes it difficult for me to analyze. Given the
stakes in this case, given the intensity with which it was
litigated, given the duration of the case, given the volume of
discovery that was involved in this case. I am hardly shocked by
the dollar total.” The court added: “In the best of all possible
worlds, I would be a lot happier to see a set of bills that only
redacted the subject of attorney-client communications.” The
court then asked if there was another way to approach the fees.
Mr. Huff replied: “What I would say is that, you know, the
heartland of the court’s inquiry today is does [the] value of the
services rendered does that equate to the fee requested.” The
court nevertheless expressed concern that the redacted bills
might conceal inadvertent duplicate billing. Turning to one set of
task entries for one of the principal attorneys, the court stated:
“Now I appreciate that the time for different tasks has been
broken out. But we have several of these that are for the same
amount of time, and I have in the past reviewing attorneys’ fees
bills found things that are essentially duplicate entries that were
51
not caught. And one of the things that this makes it very difficult
to do is say are any of these duplicate entries.”
Western agreed that potential duplication was a concern,
and also expressed concern that it was not possible to tell if the
work was “reasonably necessary [and] was efficient.” The court
expressed some reservations about these additional concerns,
replying “I don’t know.”
These remarks show the court was familiar with the
amount of work and cost of a case like this, found the total
amount of LAUSD’s attorney fees reasonable, and had some
concerns about duplicate time entries. Western effectively
conceded the $1.95 million billed by four attorneys and the head
paralegal. Its concern was with the other attorneys who billed
smaller amounts of time but whose fees still totaled about
$174,000. While the trial court did not share all of Western’s
concerns, the court was concerned about duplicative billing based
on its own reading of the bills. The court reduced the remaining
fees by about 13 percent, which is a substantial amount. It is
reasonable to infer that this reduction reflected the trial court’s
concern about potentially duplicative entries. We see no abuse of
discretion in the trial court’s decision.
We see no merit in Western’s claim that it was denied due
process because it was unable to effectively challenge the
attorney fees amount due to the redacted billing. Western and
Torres shared counsel, and so that counsel was familiar with all
the defense work involved in the case and could have used those
numbers as a base to evaluate the overall hours billed by
LAUSD, and, in many cases, the appropriate hours for particular
tasks. Western had, or should have had, copies of all the
pleadings in the case, a record of the volume of discovery, and the
52
deposition and trial transcripts. Western could have hired an
expert to use that information to estimate the appropriate hours
for the work involved. Presumably that is what an expert would
have done even if the bills were complete. Significantly, this is
not a case with a great variation in the attorney’s hourly rates,
and an expert could have simply categorized the work into one of
two hourly rates ($259 or $240)21
DISPOSITION
The judgment is affirmed. LAUSD is awarded costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, J.
We concur:
GRIMES, Acting P. J.
WILEY, J.
21 A few attorneys billed a small number of hours at $205 per
hour.
53