Opinion
B196270
4-17-2008
CHRIS LEVENTIS, etc., Plaintiff and Respondent, v. NORMAN LA CAZE et al., Defendants and Appellants.
Law Office of Raymond Green and Raymond D. Green for Plaintiff and Respondent. Freeman, Freeman & Smiley, Gregory M. Bordo, and Jared A. Barry for Defendants and Appellants.
NOT TO BE PUBLISHED
INTRODUCTION
Plaintiff, Chris Leventis, individually and doing business as Chris Hauling, sued defendants, LaCaze Development Company et al., alleging breach of contract, quantum meruit, and account stated. Defendants raised the affirmative defense that they were entitled to an offset credit for work that plaintiff did not perform under the contract. The trial court entered judgment awarding plaintiff all of the damages he requested and denying defendants a setoff. In their appeal, defendants contend that the trial court erred in failing to apply their offset defense. We hold that: (1) the trial courts interpretation of the contract was correct that the agreement did not contemplate deductions for specific items of work not performed; (2) the evidence supported plaintiffs theory with the result defendants were not entitled to an offset credit; and (3) the trial court properly denied defendants new trial motion. Accordingly, the judgment is affirmed.
Defendants are Norman R. LaCaze, individually and doing business as LaCaze Development, LDC, Skypark LLC, City of Torrance, Norman R. LaCaze Trust, Lowes HIW, Inc., and American Contractors Indemnity Company as the mechanics lien bond surety.
FACTUAL AND PROCEDURAL BACKGROUND
The issue in this case is whether the trial court properly denied defendants an offset from the judgment, pursuant to their affirmative defense, for plaintiffs failure to crush asphalt and cement under the parties original contract.
The evidence adduced at trial shows that defendant Skypark LLC is owned and controlled by Norman LaCaze, doing business as LaCaze Development. Skypark entered into a ground lease with defendant City of Torrance to redevelop real property on Skypark Drive in Torrance. Skypark turned to plaintiff to (1) demolish structures, (2) crush the concrete and asphalt, and (3) demolish a metal water tank on the property.
After submitting three or four different bids, plaintiff entered into a contract (the Demolition Contract) with LaCaze under which he agreed to demolish the water tank on the site and all remaining stucco and block buildings and "demo[lish] all concrete and crush on site, stockpile crushed materials in dirt area on west side of property." The price was $295,000. Because the cost of fuel was rising, the price included a $25,000 fuel charge.
Soon, LaCazes son, Mike LaCaze, instructed plaintiff not to demolish the water tank. As plaintiff understood it, the fire department wanted the tank to remain intact because the tank supplied water to sprinklers for the part of the project not being demolished.
By April 17, 2005, plaintiff had completed the demolition portion of the Demolition Contract, except for the water tank, and had stockpiled three-quarters of the asphalt and cement in preparation for crushing. LaCaze informed plaintiff that the property owner did not want the asphalt and cement debris left on the site because the asphalt was considered contaminated. LaCaze wanted plaintiff to quote a price for hauling the asphalt and concrete away instead of crushing it on site.
Plaintiff consulted with Tom Accetta, a demolition contactor and equipment subcontractor who was working for plaintiff. Plaintiff asked Accetta what he thought the hauling would cost because "`[t]hey want a solid price for hauling away all the concrete. They dont want to crush it anymore." Accetta responded that the job required 500 truck loads, at an average of about $300 a load, for a total of $150,000. Accetta recommended adding $20,000 for a cushion "in case were off," for a total of $170,000.
Plaintiff considered Accettas estimate in calculating his bid price for hauling the debris. He considered the fact that he had done "numerous" jobs for defendants in the past, including "just about . . . every building in the whole shopping center . . . ." Plaintiff additionally calculated that, at the time, he would be charged $130 per load by Chandlers dump. He also considered that all of the equipment he needed was already in place and so he would not "have to move in." Plaintiff concluded that a "fair" price would be $135,000.
Plaintiff told LaCaze that he would "`do it for $135,000 extra." (Italics added.) LaCaze "shook [plaintiffs] hand and said ` "send me a change order. Mike will sign it." " The following morning, plaintiffs wife informed him that "`you have a signed change order." This new contract, or change order, provided that plaintiff would haul "away concrete and asphalt from site[. ¶] This bid includes trucking and dumps fees" (the Hauling Contract).
In negotiating the Hauling Contract, the parties had no discussion about setoff under the Demolition Contract. LaCaze never asked about the value of the crushing portion of the Demolition Contract. Nor did defendants ask about how much crushing preparation plaintiff had already done.
Four days after LaCaze signed the Hauling Contract, plaintiff finished hauling away 11,000 tons of debris in 432 truck loads. Plaintiff testified that he had completed the work by demolishing the structures and trucking the concrete and asphalt away, without crushing it. The next day, he submitted an invoice to LaCaze for $445,000, comprised of $295,000, for the Demolition Contract and a $15,000 bonus for early completion, plus the $135,000 Hauling Contract. LaCaze paid plaintiff the $295,000 and the $15,000 bonus, but not the $135,000 under the Hauling Contract.
Plaintiff then filed this action against defendants (see fn. 1, ante) for breach of the Hauling Contract, quantum meruit, and account stated. Acknowledging he did not demolish the water tank as contemplated by the Demolition Contract, plaintiffs complaint gave defendants a $10,000 credit for that work by "adjust[ing the Hauling] contract price" to $125,000 and seeking damages in that amount. Defendants answered and raised as an affirmative defense that they had paid plaintiff for crushing work under the Demolition Contract that he did not perform, and so they were entitled to an offset for that amount against the Hauling Contract.
Plaintiff alleged an additional cause of action for release of the mechanics lien against the bond surety.
LaCaze testified that he felt he was entitled to a credit for the crushing work that plaintiff did not do. He waited for plaintiff to come up with an amount for the credit. Asked whether LaCaze estimated what the amount of the credit for crushing should be, LaCaze responded, "To be very honest with you, I was not in that thinking mode. I just figured [plaintiff] would come up with the exact amount. We would have a price per load for crushing. It would offset whatever his cost was for dumping. [¶] I wasnt looking at this and analyzing or doing anything. I figured wed settle up when it was over, a credit for the crushing and a charge." (Italics added.)
Larry Ray Alexander, a demolition, grading, and recycling contractor, testified that he bid $25,000 minimum for the crushing part of plaintiffs Demolition Contract, based on 8,000 tons of debris. (Italics added.) Over that amount, he charges an additional $2.25 a ton.
Defendants called general contractor Robert W. Gaudenti who testified that crushing and hauling prices are calculated on the volume of material calculated in tonnage. He testified that the fair market cost of hauling debris on the Skypark project was $220 per load. He testified that the fair market cost for crushing the material at the Skypark project was $5.20 per ton. He later testified the cost of crushing would be $5.25 per ton.
After trial, the court found in favor of plaintiff and entered judgment in the amount of $143,253.42, plus costs. The court explained simply that "[t]he terms of the contract are brief but binding. And while it could have been included, there, in fact, was no provision provided for deductions for piecemeal items. The contract controls the price for the job without deductions, and none were stated in the contract. [¶] The plaintiff has, however, agreed to accept $10,000 reduction in the amount due. [¶] The court adopts the reasoning set forth and stated on the record by the plaintiff. [¶] Judgments for the plaintiff in the amount of $125,000, plus interest at the legal rate and costs." (Italics added.)
Defendants moved for a new trial on the grounds the evidence was not sufficient to justify the decision, the decision was contrary to existing law, irregularity in the proceedings, and abuse of discretion. (Code Civ. Proc., § 657.) The court denied the motion. Defendants timely appeal ensued.
CONTENTIONS
Defendants contend (1) the trial court made no findings justifying its ruling denying defendants a setoff for the crushing work that plaintiff did not perform; (2) the trial court abused its discretion in failing to apply defendants setoff defense; (3) defendants adduced substantial evidence to support their setoff defense; and (4) the trial court was confused and dozed off during critical defense testimony.
DISCUSSION
1. The contract does not contemplate a deduction for work not performed.
"`The basic goal of contract interpretation is to give effect to the parties mutual intent at the time of contracting. [Citations.] When a contract is reduced to writing, the parties intention is determined from the writing alone, if possible. [Citation.] [Citations.] `The words of a contract are to be understood in their ordinary and popular sense . . . . [Citation.]" (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 979 (Cedars-Sinai).) "`If contractual language is clear and explicit, it governs. (Civ. Code, § 1638.) [Citations.]" (Maggio v. Windward Capital Management Co. (2000) 80 Cal.App.4th 1210, 1215.)
"`When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is "reasonably susceptible" to the interpretation urged by the party. If it is not, the case is over. [Citation.]" (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 393.)
However, "`If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean? [Citations.] Whether the contract is reasonably susceptible to a partys interpretation can be determined from the language of the contract itself or from extrinsic evidence of the parties intent. [Citation.] Extrinsic evidence can include the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. [Citations.] When no extrinsic evidence is introduced or the extrinsic evidence was not relied on by the trial court or is not in conflict, we independently construe the contract. [Citation.]" (Cedars-Sinai, supra, 137 Cal.App.4th at pp. 979-980, citing Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 847.)
"`California recognizes the objective theory of contracts [citation], under which "[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation." [Citation.]" (Cedars-Sinai, supra, 137 Cal.App.4th at p. 980.)
Defendants contend that the trial court erred in awarding the entire amount of the Hauling Contract, minus the $10,000 credit for the water tank demolition, without awarding them an additional credit for plaintiffs similar nonperformance of the crushing work. Noting that plaintiff testified the contract was completed and he was paid in full, they assert they are entitled to a credit for the work plaintiff did not perform.
The language of the Hauling Contract is clear: it does not contemplate a deduction for work not performed. That contract reads:
"Item: Haul ____ Description: Away concrete and asphalt from site [¶] This bid includes trucking and dumps fees[.]
"Total: 135,000."
The document clearly identifies what is included therein, and so we conclude from the documents silence on what is excluded therefrom, that the contract did not provide for line-item deductions or credits. The trial court correctly and reasonably concluded that no deductions "were stated in the contract[,]" i.e., no provision was made for deductions of individual items. Clearly, the trial court made findings that justify its ruling denying defendants a setoff, defendants assertion to the contrary notwithstanding. Because the evidence is susceptible of only one interpretation, we conclude the trial courts ruling was reasonable and not erroneous. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866.) Where the language of the Hauling Contract is not "`reasonably susceptible" to the interpretation urged by defendants, namely, that they are entitled to a credit for the crushing work, "`the case is over. [Citation.]" (Dore v. Arnold Worldwide, Inc., supra, 39 Cal.4th at p. 393.)
Notwithstanding the Hauling Contracts languages lack of ambiguity precluding admission of extrinsic evidence (Civ. Code, § 1638), we observe that the evidence of the circumstances under which the parties entered into the Hauling Contract further supports our interpretation. That evidence demonstrates that the subject of a deduction for nonperformed crushing work was not raised during the negotiations for the Hauling Contract. LaCaze never told plaintiff to deduct the unperformed crushing work from his bid. The parties did not discuss the value of the crushing work under the Demolition Contract. The parties simply did not consider the issue. Although LaCaze assumed plaintiff would calculate a credit for the unperformed crushing work, he never said as much to plaintiff before agreeing to the $135,000 and signing the change order. An "`undisclosed intent or understanding is irrelevant to contract interpretation. [Citation.]" (Cedars-Sinai, supra, 137 Cal.App.4th at p. 980.)
2. The evidence does not support the setoff defense.
Defendants contend the trial court abused its discretion in failing to apply their affirmative defense of offset (Code Civ. Proc., § 431.70) because, they argue, the evidence supports this defense.
Setoff is an equitable doctrine (Wm. R. Clarke Corp. v. Safeco Ins. Co. of America (2000) 78 Cal.App.4th 355, 358-359) under which "`either party to a transaction involving mutual debts and credits can strike a balance, holding himself owing or entitled only to the net difference, . . . [Citation.]" (Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744.)
In denying defendants motion for new trial, the trial court stated that it had "considered all the evidence regarding the availability of credits and offsets and deemed the ultimate verdict reflected fair value for plaintiffs [sic] services in consideration of all of the applicable contracts."
Reviewing the record, it shows that in calculating the $135,000 price for the Hauling Contract, plaintiff factored in a deduction for his nonperformance of the crushing work, defendants contention to the contrary notwithstanding. Alexander testified that theminimum cost for the crushing portion of the Demolition Contract would be $25,000 for 8,000 tons of debris plus an additional $2.25 a ton for amounts in excess of 8,000 tons. (Italics added.) Thus, the cost of crushing under the Demolition Contract would have been at least $31,750 based on the 11,000 tons of debris actually hauled. Accetta suggested a price of $170,000 for hauling. Plaintiffs $135,000 bid was $3,250 less than Accettas $170,000 for hauling minus the $31,750 minimum crushing cost. It is reasonable to conclude that plaintiffs bid included a deduction for the crushing work he did not do because plaintiff testified that in fashioning his bid, he took into account his long-established relationship with LaCaze and the fact that he was already present on the Skypark site. When he made his bid to LaCaze for the Hauling Contract, he stated he would "do it for $135,000 extra." (Italics added.) The trial court reasonably could understand plaintiffs use of the word "extra" to mean that plaintiffs bid already accounted for the crushing work he was asked not to do. Stated otherwise, the evidence supports the conclusion that the change orders $135,000 bid amount did indeed reflect a credit for the crushing work that would not be done. Although defendants presented conflicting mathematical analyses, the trial court implicitly believed that of plaintiff. We may not reweigh that determination. (In re Casey D. (1999) 70 Cal.App.4th 38, 52; see also Parsons v. Bristol Development Co., supra, 62 Cal.2d at pp. 865-866.) Plaintiff adduced math-based testimony that supports the trial courts implicit conclusion that the Hauling Contracts $135,000 price already incorporated a credit for the crushing work that plaintiff did not perform. Accordingly, defendants were not entitled to an offset. There was no error.
3. There was no irregularity in proceedings.
Finally, defendants argue, as they did in their motion for new trial, that the trial court dozed off during critical testimony concerning their setoff defense and appeared confused. This was a basis for defendants motion for new trial. As the judgment is supported by the record, we conclude the trial court was not confused. In denying defendants motion for new trial, the trial court stated, "There is no irregularity in the proceedings . . . . [¶] . . . The court was attending to the proceedings at all times." The trial court is in the best position to know whether it was sleeping during trial or was paying attention.
DISPOSITION
The judgment is affirmed. Each party to bear its own costs on appeal.
We concur:
KLEIN, P. J.
CROSKEY, J.