Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC315745, Conrad Richard Aragon, Judge.
Peter J. Glor for Plaintiff and Appellant.
Thelen Reid Brown Raysman & Steiner, Robert B. Thum, Peter K. Zweighaft and E. Todd Chayet for Defendants and Respondents.
MALLANO, Acting P. J.
Plaintiff Automated Switching & Controls, Inc. (Automated), prevailed in a jury trial against defendants Modern Continental Construction Company, Modern Continental Roadway, Modern Continental Construction Holding, and Modern Continental Companies, Inc. (collectively Modern). Automated appeals from that judgment, contending that the trial court erred in denying its motions (1) to vacate and reinstate the judgment to include penalties for bad faith withholding of payments under “prompt payment” statutes, (2) for prejudgment interest, and (3) for attorney fees. We reverse the judgment insofar as it denies attorney fees and remand the matter for further proceedings on that issue. In all other respects, we affirm.
BACKGROUND
Modern was the general contractor on a railway construction project in the City of Los Angeles. Automated entered a subcontract with Modern by which Automated agreed to provide signaling systems for the project. In 2004, Automated filed the action that gives rise to this appeal. In it, Automated alleged in pertinent part that Modern had failed to make payments for labor and materials that were due under the subcontract. The complaint further sought penalties for bad faith withholding of payments, prejudgment interest, and attorney fees.
Also named as defendants in this action were surety companies against which Automated sought to enforce payment bonds that Modern had secured under the prime contract. The surety defendants were dismissed by Automated at the pleading stage and were awarded attorney fees. In a separate appeal by Automated, we affirmed the attorney fees award. (Automated Switching & Controls, Inc. v. Fireman’s Fund Insurance Company et al. (Nov. 27, 2007) B190333 [nonpub. opn.].)
The case ultimately proceeded to jury trial. (Neither a reporter’s transcript of trial proceedings nor the written jury instructions have been made part of the record on appeal.) On November 7, 2006, the jury rendered a verdict in favor of Automated in the amount of $150,000. In special interrogatories on the verdict, the jury answered “Yes,” that “[Modern] breached its contract with [Automated],” that “[Modern] withheld payment for work performed by [Automated],” and that “[Modern] received from the City of Los Angeles the amount of funds . . . withheld by [Modern].” The jury answered “No” to the question, “Did [Modern] withhold all such payments to [Automated] in good faith after such amount was paid to [Modern].” The jury also answered that $150,000 was the amount “that was not withheld in good faith” by Modern, but that it was unable to determine the date at which the “wrongful withholding commence[d].”
The special interrogatory on this subject asked, “On what date did such wrongful withholding commence?” and provided a blank line to write in the month and year. The interrogatory further instructed, “If you are unable to find the date of wrongful withholding from the evidence presented, then insert ‘0’. . . .” The jury’s verdict contained a “0” in that space.
At a hearing the day after the verdict was taken (for which a reporter’s transcript has been provided), the court noted the jury had concluded that $150,000 “was withheld in bad faith” and directed its attention to “whether penalties should be added” to the verdict. The court stated that its tentative ruling was “to find that the penalties do not apply because the jury was unable to find on the evidence when the withholding commenced, which is a critical element in applying the penalty statute.”
The penalties to which the trial court referred are set forth in Business and Professions Code section 7108.5, Public Contract Code section 7107, subdivision (f), and Civil Code section 3260, subdivision (g). These statutes, the pertinent provisions of which are set forth in footnotes 5–7, post, provide that if a general contractor, having received payment under the prime contract for work done by a subcontractor, fails to pay the subcontractor in a timely manner, the contractor must pay a penalty to the subcontractor of 2 percent per month for each month payment to the subcontractor is not made.
Arguing against the tentative ruling, Automated urged: “The question that we asked [the jury] in the verdict form was if they could determine when the penalties commenced. [W]e had argued that approximately $74,000 had been withheld in June [2003], when [Modern] got their final payment. [¶] What we did not ask them was when was the latest date the withholding could have occurred. And I really had not anticipated that the jury would find more than $74,000 subject to penalty.” Automated continued that June 2003 “would be the most favorable date to [Modern] in view of the fact that [the jury] did find that there was a wrongful withholding.”
The trial court responded: “[T]he immediate problem that arises from that argument is [the jury] found the total withheld of $150,000. Under your theory, it would have been $74,000, or some lesser amount.” The court then “rule[d] as a matter of law that there were not sufficient findings to impose the penalty under the provisions of the Government [sic] Code on which [Automated] relies. So total judgment, $150,000.”
Judgment was served on the parties on December 7, 2006. On December 22, Automated filed three motions in the trial court. In one, Automated asked the trial court to vacate the judgment and to enter a new judgment that included the 2 percent prompt payment penalty for bad faith withholding of payment. In another, Automated sought prejudgment interest on liquidated damages under Civil Code section 3287. The third motion sought attorney fees under Civil Code section 1717 and the prompt payment statutes.
The three motions were argued and denied on January 31, 2007. In its tentative ruling, which was incorporated by reference into the order of denial, the court stated with respect to the motion to vacate: “In extensive discussions with the parties aimed at settling the structure and content of the verdict form, including the language of the special interrogatories, the court concluded (a) that the statute allowing interest required a jury finding of a triggering date, (b) that the court would then make the computation using the amount of principal damages found by the jury multiplied by the statutory interest rate (2%), for the applicable time period commencing on the date the jury found the damages to have been wrongfully withheld until the time of judgment. Thus, in the absence of such a finding by the jury, the interest could not be fairly computed, and, without a proper computation of interest, any amount awarded by the court would be based upon speculation and would be, for that reason, impermissible. [¶] Thus even if, as Automated argues, the evidence could support a finding (of the date of withholding in order to apply the interest charge authorized under the statutes), the jury obviously found the evidence insufficient, and therefore could find no such date.”
With respect to the motion for prejudgment interest under Civil Code section 3287, the court noted that the jury awarded damages to Automated in an amount greater than those sought under Automated’s theory of the case, and Automated had “fail[ed] to demonstrate either (1) that any such sum was certain, or capable of being made certain by calculation, or (2) what date such sums were certain or reasonably capable of being made certain.”
Finally, the court denied Automated’s motion for attorney fees, concluding that the reciprocal right to attorney fees under Civil Code section 1717 did not apply where, as here, the attorney fees provisions related only to third party actions against Modern rather than actions between Modern and Automated. The ruling did not address Automated’s argument that it was entitled to attorney fees under the prompt payment statutes.
DISCUSSION
1. Penalties for Withholding Payments
Automated contends that the trial court erred in failing to award prompt payment penalties for Modern’s wrongful withholding of payments. The contention is based on trial exhibits that Automated has included in its appellant’s appendix. Automated interprets these documents as establishing that some wrongful withholding commenced 10 days after July 18, 2000, and other wrongful withholding commenced 10 days after June 16, 2003. Modern responds that the issue of entitlement to penalties was one of fact, not law, that the jury resolved against Automated and that Automated has failed to provide a complete record on appeal from which it can be determined whether the jury’s finding was supported by substantial evidence. Modern also refers to certain trial exhibits it has transmitted to this court which Modern interprets as suggesting that the disputed amounts were not withheld in bad faith.
“When the [trier of fact] has resolved a disputed factual issue, the appellate courts review the ruling according to the substantial evidence rule. If the . . . resolution of the factual issue is supported by substantial evidence, it must be affirmed. [Citation.]” (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) In challenging the sufficiency of the evidence to support a factual finding, “[i]t is the burden of appellant to provide an accurate record on appeal to demonstrate error. Failure to do so precludes an adequate review and results in affirmance of the trial court’s determination. [Citation.]” (Estrada v. Ramirez (1999) 71 Cal.App.4th 618, 620, fn. 1; accord, Estate of Fain (1999) 75 Cal.App.4th 973, 992.)
The limited record that Automated has provided to this court, which does not include a reporter’s transcript of the trial proceedings, makes it impossible for us to evaluate Automated’s claims about the meaning of the exhibits and the validity of the jury’s findings. As such, Automated has failed to satisfy its burden of demonstrating error in the jury’s failure to award prompt payment penalties to Automated or the court’s failure to grant a new trial on that basis.
2. Prejudgment Interest
Automated contends that prejudgment interest should have been awarded under Civil Code section 3287, subdivision (a), asserting that calculation of its damages was a “pure mathematical determination” based on dates that Automated, again, argues are supported by the trial exhibits. We disagree.
Civil Code section 3287, subdivision (a) provides in pertinent part: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . .”
“‘Damages are deemed certain or capable of being made certain within the provisions of subdivision (a) of [Civil Code] section 3287 where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but where their dispute centers on the issue of liability giving rise to damage.’ [Citation.]” (Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948, 958.) “[W]here the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate. [Citation.]” (Id. at p. 960.)
As with the previous contention, the lack of a complete record prevents us from being able to determine whether the damages in this case were certain or capable of being made certain. To the contrary, the record strongly suggests that prejudgment interest was not appropriate, given that the jury awarded damages in an amount which, as noted by the trial court, was not in keeping with Automated’s theory of the case. Accordingly, Automated has failed to demonstrate that the trial court erred in failing to award prejudgment interest under Civil Code section 3287, subdivision (a).
3. Attorney Fees
Automated argued in the trial court that it was entitled to attorney fees, both under Civil Code section 1717 as applied to the subcontract and under attorney fees clauses of the prompt payment statutes. The trial court ruled solely on the first argument, concluding that Civil Code section 1717 did not apply. We agree that section 1717 is inapplicable to the subcontract, but further conclude that there is merit to Automated’s argument that it is entitled to attorney fees under the prompt payment statutes.
Reciprocal attorney fees under Civil Code section 1717 apply “‘in any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party . . . .’ [Citation.]” (Topanga and Victory Partners v. Toghia (2002) 103 Cal.App.4th 775, 786, italics omitted.) “However, the inclusion of attorney fees as an item of loss in a third party claim indemnity provision does not constitute a provision for the award of attorney fees in an action on contract as is required to trigger operation of Civil Code section 1717. [Citations.]” (Campbell v. Scripps Bank (2000) 78 Cal.App.4th 1328, 1337.)
The subcontract between Modern and Automated contained a section captioned “Remedies of General Contractor,” a portion of which provides, “In the event the General Contractor is a party to any legal proceeding on account of any acts or conduct of the Subcontractor, Subcontractor agrees to pay General Contractor all reasonable expenses including attorneys’ fees incurred in connection with the legal proceeding.” Another provision of the subcontract, which Automated concedes involves indemnity, required Automated to promptly pay its bills and to hold Modern “fully harmless and indemnified from any cost, attorneys’ fees, loss, or damage arising therefrom.” Reading the language regarding attorney fees within the context of the entire subcontract, we conclude (as did the trial court) that attorney fees are required only for indemnification in the event that Modern is sued by a third party based on Automated’s conduct, and that attorney fees for litigation directly between Automated and Modern are not covered. (See Campbell v. Scripps Bank, supra, 78 Cal.App.4th at p. 1337.)
Automated further contends that attorney fees should have been awarded under Business and Professions Code section 7108.5, Public Contract Code section 7107, subdivision (f), and Civil Code section 3260, subdivision (g), each of which requires attorney fees to be awarded to the prevailing party in an action for collection of funds improperly or wrongfully withheld. Relying principally on Denver D. Darling, Inc. v. Controlled Environments Construction, Inc. (2001) 89 Cal.App.4th 1221 (Darling), Modern argues that automated is not entitled to attorney fees under these statutes. Modern’s reliance is misplaced.
Business and Professions Code section 7108.5 provides in pertinent part: “A prime contractor . . . shall pay to any subcontractor, not later than 10 days of receipt of each progress payment . . . the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor’s interest therein. . . . [¶] Any violation of this section shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subcontractor, of 2 percent of the amount due per month for every month that payment is not made. In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees and costs.”
Public Contract Code section 7107, subdivision (f), provides in pertinent part: “In the event that retention payments are not made within the time periods required by this section, the public entity 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. Additionally, in any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to attorney’s fees and costs.”
Civil Code section 3260, subdivision (g), provides in pertinent part: “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. Additionally, in any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees and costs.”
In Darling, supra, 89 Cal.App.4th at pages 1240–1241, the trial court found that a bona fide dispute had existed between the contractor and the subcontractor over the requirements of the contract, thus permitting the contractor to withhold payment from the subcontractor. The subcontractor, which had prevailed in the dispute, contended that it was entitled to attorney fees under Civil Code section 3260, subdivision (g). “The trial court . . . denied [the subcontractor’s] request for attorney fees, based on its interpretation of section 3260, subdivision (g) as indicating that attorney fees and costs are to be awarded only if the 2 percent per month charge is awarded, i.e., if a bona fide dispute does not exist and the retention payment is not made within the specified time periods.” (Darling, supra, 89 Cal.App.4th at p. 1240.) The Darling court continued:
The statutes at issue allow a contractor to withhold up to 150 percent of a disputed amount if a “bona fide” (Civ. Code, § 3260, subd. (e); Pub. Contract Code, § 7107, subd. (e)) or “good faith” (Bus. & Prof. Code, § 7108.5) dispute exists between the contractor and its subcontractor.
“Retention proceeds or retention payments are ‘payments relating to work already done but which are not presently paid . . . .” (McAndrew v. Hazegh (2005) 128 Cal.App.4th 1563, 1566.)
“[T]he inclusion of the sentence regarding attorney fees in the same paragraph as the sentence imposing a charge of 2 percent per month on improperly withheld amounts, indicates the Legislature’s intention that attorney fees are to be awarded only in cases in which the retention payments are not made within the required time periods, i.e., where a bona fide dispute does not exist. The sentence begins with the word ‘additionally,’ and makes reference to ‘funds wrongfully withheld,’ indicating that the attorney fees provision directly relates to the preceding provision imposing a 2 percent per month charge on the ‘improperly withheld’ amount. It would seem that if the Legislature had intended to provide for an award of attorney fees to the prevailing party in every action for collection of retention funds, the provision would have been placed in a separate paragraph. . . . The 2 percent penalty and the attorney fees provision are directed at the more egregious situation in which a contractor withholds payment of retention proceeds beyond specified time periods and without cause.” (Darling, supra, 89 Cal.App.4th at p. 1241.)
Focusing on the words quoted above with which the Darling court characterized the trial court’s holding (“attorney fees and costs are to be awarded only if the 2 percent per month charge is awarded”), Modern argues that because no penalties were awarded to Automated, the attorney fees provisions of the statutes do not come into play. But neither the language of the statutes nor the analysis set forth in Darling require a lumping together of the 2 percent per month charge and attorney fees. Rather, attorney fees are triggered by wrongful withholding of payment by a general contractor. Here, although the jury did not determine the date that Modern’s wrongful withholding commenced, it found that Modern’s withholding of $150,000 payment to Automated was wrongful and not done in good faith.
The word “Additionally” is the first word in the attorney fees provisions in Civil Code section 3260, subdivision (g), and Public Contract Code section 7107, subdivision (f), but is absent from Business and Professions Code section 7108.5. This difference is of no consequence to the disposition of this case.
Modern also suggests that “[i]t would be illogical to read those statutes as allowing for attorneys’ fees where a good faith dispute existed up until the time of trial, as in this case.” Although the record sheds no light on why the jury could not fix a date at which Modern’s wrongful withholding began, the jury’s negative answer to the special interrogatory of whether Modern’s withholding was in good faith establishes the wrongful withholding requirement of the attorney fees statutes. The trial court therefore erred in failing to award attorney fees to Automated under these statutes.
DISPOSITION
The judgment is reversed insofar as it denies attorney fees, and the matter is remanded for further proceedings on that issue. In all other respects, the judgment is affirmed. Plaintiff is entitled to costs on appeal.
We concur: VOGEL, J., ROTHSCHILD, J.