Opinion
NOT TO BE PUBLISHED
San Francisco City & County Super. Ct. No. 408659
Richman, J.
William Spencer Company, a sole proprietorship of William D. Spencer, owned property located on Third Street in San Francisco, which it planned to develop as a light industrial building, its three stories having about 225,000 square feet. This appeal represents the litigational fallout from that project, a trial between Spencer and Anning Johnson, Co., the sole remaining parties, Spencer having settled with all others. A jury returned a special verdict awarding Spencer $1,024,057 in damages, and finding both Spencer and Anning-Johnson negligent. Following post-verdict motions, the trial court reduced the verdict by (1) $461,028, representing the combined 45 percent comparative fault, 15 percent for Spencer and 30 percent for another subcontractor that the court determined was Spencer’s agent; and (2) $300,000, the full amount of one of the settlements.
There is also a what appears to be a Spencer family trust, with a trustee named Claire A. Spencer, both named in various pleadings.
Both parties appeal, Spencer contending that the post-verdict reductions were too high, and Anning-Johnson contending they were not high enough. Both complain of alleged instructional error. And Anning-Johnson presents a variety of arguments dedicated to proving that its “liability is zero.”
We reject all contentions save one, Spencer’s argument challenging the post-verdict determination that Spencer’s comparative fault as found by the jury should be increased by the amount of fault of a subcontractor that the trial court determined as a matter of law was Spencer’s agent. We thus modify the judgment to restore the $307,352 portion of the jury’s verdict nullified by this determination. As so modified, we affirm.
BACKGROUND
The Facts
Spencer is a licensed contractor and entered into various contracts with other contractors to actually work on the project. These contractors and their roles in the project were: (1) JD2, Inc., to install the structural steel that would form the “skeleton” of the building; (2) Alexander Drywall, to install the exterior and interior framing and sheetrock; (3) Schendel Construction, to pour the concrete foundations, install stairways and sidewalks, and also coordinate other contractors and maintain site safety; (4) Progress Glass, to supply and install windows; (5) MWH, Inc., to perform inspections and tests of materials; (6) Ryan Fire Supply, Inc., to provide the fire sprinkler system (which Spencer would install); and (7) Anning-Johnson.
Spencer entered into contracts with two other professionals: (1) a firm known only as ZFA, which was engaged to design and engineer the structural elements of the building; and (2) Smith-Emery, a firm which was to provide various inspections at the project site.
Because Anning-Johnson is Spencer’s sole adversary on this appeal, its relationship with Spencer deserves a bit more discussion. Spencer originally contracted with Anning-Johnson for it to do fireproofing, for a price of $176,200. Numerous change orders were negotiated, the upshot of which was that Anning Johnson’s role was significantly expanded beyond fireproofing, to also include the exterior stucco and waterproofing. And the contract price increased more than five-fold, to $926,195.
The pertinent change order for the stucco work provided as follows: “Complete Project of lath and stucco. Work to at least comply with Project drawings, and be complete in every detail. All clean-up and removal of waste and excess material included. All work to meet local codes. Complete Project will include waterproofing of all surfaces exposed to the weather which will receive stucco. Time frame to complete scope is six (6) weeks. Contract DRAWINGS DO NOT DETAIL EACH AND EVERY CONDITION OF CONSTRUCTION OR THE LIKE. THIS SCOPE INCLUDES all required work to complete the work to meet the highest standards and to meet all codes:”
Construction on the project began in December 2000, with the original completion date to be January 2002. However, in October 2001 San Francisco building inspectors rejected JD2’s welding work on the tresses and columns, delaying the project some three-to-four months. Also in late 2001, during the pour of the decks to set the landings for the second floor, it was discovered that the decks were “too short,” which came to be called the “short deck” issue. The short deck issue required Alexander Drywall to build another interior bearing wall that was not on the original plans, causing an additional delay of six-to-eight weeks. Then the fire sprinkler system installed by Ryan Fire Supply was found to have hundreds of leaks due to defective couplings. Although aggravating, this problem did not cause a further delay. By now, the targeted date for occupancy was moved back to January 2003, a year behind schedule. But the worst was yet to come.
In the first week of December 2002, as the project was within two months of completion, extensive “water intrusion” was discovered, apparently having come through the exterior stucco that had been applied by Anning-Johnson. Mr. Spencer characterized this latest difficulty as “a major, major problem... the building had a serious leak problem.” In fact, all of the building’s floors were flooded. “It was a lot of water.” And it continued to rain, increasing the flooding and the damage within the building. Spencer treated the leaks as the responsibility of Anning-Johnson and Progress Glass.
Anning-Johnson proposed a number of measures it would undertake, at no increased cost to Spencer, to fix the leaks and resulting damage. However, after these measures were completed, Anning-Johnson admitted that water was still leaking into the buildings. Meanwhile, Spencer was required to replace a considerable amount of the installed sheetrock drywall that was water-damaged. According to Mr. Spencer, by April 2003, the building was still “leaking like a sieve,” but no satisfaction was coming from either Anning-Johnson or Progress Glass, both of which had pretty much been paid in full and were more interested in dodging responsibility. Progress Glass did some remedial work, but when water intrusion was still occurring in April 2003, Spencer engaged a “window consultant.” After extensive testing, this expert ultimately placed almost all of the blame for the leaks on the stucco work done by Anning-Johnson.
Spencer also hired a stucco expert, Harvey Abernathy, who also concluded that Anning-Johnson’s work was defective. An inspection firm named Smith-Emery had been hired to test the building’s exterior, and Smith-Emery admitted to Spencer that it missed detecting the leaks. Eventually, a remediation program was agreed and implemented. And in December 2003 Spencer agreed, however grudgingly, to cover the entire exterior of the building with a chemical sealant called elastomeric coating, at a cost to Spencer of $145,500. Even though it was Anning-Johnson which suggested this “solution,” Anning-Johnson refused to pay for any part of it. This work began in January 2004 and was completed in April. But the building still leaked. According to Mr. Spencer, “Because of the water leak, we were delayed essentially from 1/1/03”—when “the building would have been totally complete”—“through 4/1/04.”
Even so, Spencer was unhappy with this “bandaid” solution. As Mr. Spencer testified: “We haven’t fixed the problem. We haven’t fixed the leak. What we’ve done is we’ve sealed the outside surface, and, in doing that, we’ve actually created a maintenance situation where it’s guaranteed for ten years, and then I’m sure ten years and a month... I’m going to have to redo it again, so I’m going to have to do this every ten years.” Spencer was driven to this measure because “I had given up with anybody that we’d never be able to find the real source, the real problem,... so I basically told them [to]... coat the outside of the building.”
The Pleadings
Meanwhile, this action began on June 3, 2002, with a complaint by JD2, one of the subcontractors on the project, which sought damages and foreclosure of a mechanics lien. Spencer responded in August 2002 with an answer and cross-complaint, naming only JD2.
JD2 also filed a separate complaint against Canam Steel, which supplied steel to JD2 for use at the project. The two actions were consolidated.
On August 27, 2003, Spencer filed an amended cross-complaint, naming six cross-defendants: JD2, Alexander Drywall, Ryan Fire Supply, Progress Glass Company, Anning-Johnson, and MWH, Inc. This cross-complaint alleged claims for breach of contract, negligence, and indemnity.
The amended cross-complaint led to the flurry of cross-complaints typical in a construction dispute, most of which are not relevant here. One such cross-complaint is that filed by Anning-Johnson. It named as cross-defendants JD2, Canam Steel, MWH, Progress Glass, Alexander Drywall, and Ryan Fire Supply, and sought declaratory relief, equitable indemnity, equitable contribution, and implied contractual indemnity.
Various case management conferences were held, and by order of July 20, 2005, the case was set for trial on September 12, 2005.
The Settlements
In the latter part of 2004, the first settlement was effected; it was between Spencer and MWH, with Spencer receiving $30,000. (See fn. 20, post.)
The next settlement occurred in February 2005, when Spencer settled with Ryan Fire Supply, with Ryan paying $20,000. The settlement was determined by the court to be in good faith (no opposition having been filed), and Ryan was dismissed.
In October 2005, Spencer, JD2, and Canam Steel settled all their claims. To settle JD2’s complaint, Spencer paid $770,000, $616,00 of which went to Canam, and $154,000 to JD2. To settle Spencer’s cross-complaint, JD2 paid $300,000 to Spencer. This settlement, too, was determined to be in good faith, and these two parties were dismissed. As to this settlement, however, it was subject to Anning-Johnson’s right to argue the propriety of the apportionment and the offset amounts, as described in detail below.
On October 7, 2005, after the trial had begun, Progress Glass settled with Spencer for $40,000.
Thus, the litigation was reduced to Spencer versus Anning-Johnson, the sole remaining cross-defendant in Spencer’s cross-complaint.
The Trial And The Verdict
Evidence was taken over six days, during which Spencer presented four witnesses: Mr. Spencer, Leonard Schendel, a subcontractor whose precise relationship to Spencer is an issue on this appeal; Harvey Abernathy, an expert witness who testified about the leaks at the project, and their causes; and Joseph Harney, who provided expert testimony as to the amount of rent lost to Spencer during the repair period.
Anning-Johnson presented five witnesses: Richard Feardon, Anning-Johnson’s district manager; John Aranda, its superintendent at the project; Don Pilz, its foreman at the project; Ronnie Baum; and Ahmad Issa, Spencer’s structural engineer on the project. The first three testified as to Anning-Johnson’s interpretation of the contract, and the remedial work that Anning-Johnson performed after the leaks were revealed. Baum testified as to the valuation of the property. Issa testified about the short deck issue and also testified as a rebuttal witness for Spencer.
Spencer’s argument to the jury included claims for: (1) the $15,000 Spencer paid to Abernathy; (2) the $145,000 Spencer paid for the elastomeric coating, plus $22,000 interest; and (3) lost rent, for a total of $1,170,000.
The matter went to the jury on two special verdict forms—one for “negligence,’ one for “breach of contract”—with interrogatories to be answered by the jury. Because the answers to those questions are pertinent to several issues on this appeal, it is appropriate to briefly recite the background leading to the negligence verdict form, which is as follows:
Spencer objected to the proposed special verdict form to the extent it allowed the jury to find negligence as to Schendel, Smith-Emery, Alexander Drywall, Spencer, or Issa, on the ground that there was no expert testimony that any of these contractors or professionals acted below the appropriate standard of care. (See Miller v. Los Angeles County Flood Control Dist. (1973) 8 Cal.3d 689, 703.) The trial court apparently agreed as to Issa, and removed him from the verdict form. The others remained.
On October 21, 2005, the jury returned its verdict, awarding Spencer $1,024,057 in damages on the negligence claim. As pertinent here, the other jury findings included the following:
—Spencer’s own negligence was a contributing factor to its losses;
—Anning-Johnson, Schendel, Alexander Drywall, and Smith-Emery were each negligent, which negligence was a substantial factor in causing Spencer’s loss; and
—The percentages of responsibility for the various parties were: Anning-Johnson 30 percent; Spencer 15 percent; Schendel 30 percent; Alexander Drywall 15 percent; and Smith-Emery 10 percent.
On the special verdict form for breach of contract, the jury concluded that (1) Spencer and Anning-Johnson did enter into a contract; (2) Spencer did “all, or substantially all, of the significant things that the contract required it to do”; and (3) not all of the conditions “required for Anning-Johnson’s performance” occurred.
Post-Verdict Motions
Following the verdict both parties filed motions regarding it. As germane to the issues on appeal, Anning Johnson filed motions addressing: (1) the amount of offsets to which it was entitled (a) based on the contributory negligence finding, and (b) by virtue of Spencer’s settlements with other parties; and (2) why it should be declared the prevailing party and thus entitled to attorney’s fees. Anning-Johnson also filed motions seeking a new trial and judgment notwithstanding the verdict.
The motions came on for hearing on July 12, 2006, and the court’s comments at that hearing will be discussed below in connection with the issue to which those comments particularly pertain. Suffice it to say at this point that on August 4, 2006, the court entered a series of rulings, including the following:
(1) Spencer’s total percentage of fault would be 45 percent, made up of Spencer’s own 15 percent responsibility and 30 percent for the responsibility of Schendel, as Spencer’s agent;
(2) Anning-Johnson was entitled to offset $340,000 based on Spencer’s pretrial settlements with JD2 and Canam Steel ($300,000) and Progress Glass ($40,000);
(3) Anning-Johnson’s total liability was $223,479: the $1,024,507 jury award, less $461,028 for Spencer’s 45 percent liability and $340,000 for the settlement credits;
(4) Spencer was declared to be the prevailing party, and awarded attorney’s fees and costs; and
(5) Anning-Johnson’s motions for new trial and judgment notwithstanding the verdict were denied, the court rejecting its argument that the contract and negligence verdicts could not be reconciled under Aas v. Superior Court (2000) 24 Cal.4th 627 (Aas), because, among other things, the property damage to the sheetrock was separate from Anning-Johnson’s defective work.
Meanwhile, on May, 11, 2006, Anning-Johnson had filed a notice of appeal from “An order of Judgment under Code of Civil Procedure section 904.1(a)(3)-(13).” On January 30, 2007, we dismissed the appeal for failure to file an opening brief. Judgment was thereafter entered on March 29, 2007, providing that Spencer recover $370,634.46.
This amount was comprised of the $233,479 as mentioned, plus $147,155.46 for attorneys’ fees and costs.
On April 20, 2007, Spencer filed a motion for new trial, which was denied on June 1, 2007. On July 6, 2007, Spencer filed a notice of appeal from the judgment, and on July 26 Anning-Johnson filed what it called a “notice of cross-appeal.”
ANALYSIS
SPENCER’S APPEAL
The Trial Court Erred When It Offset The Jury Verdict By $307,352 Due To Schendel’s Negligence That Was Attributed To Spencer
Spencer first contends that the trial court erred in ruling that the offset for Spencer’s negligence was 45 percent, as it included a $307,352 reduction based on the jury’s determination that Schendel was 30 percent negligent, and the court’s later determination that Schendel was Spencer’s agent. Spencer’s contention has two prongs: (a) whether Schendel was Spencer’s agent was a question of fact, and one never presented to the jury; and (2) the jury should not have been allowed to determine Schendel’s negligence in the absence of expert testimony. We agree with Spencer on the first prong. We thus need not reach the second.
A. The Proceedings Below
Anning-Johnson’s position at trial was that Schendel was Spencer’s agent. At the conference concerning proposed jury instructions, Spencer argued that agency was a fact question, which argument included the following colloquy:
“MR. McINERNEY [Counsel for Spencer]:... General law is you’ve got to prove agency. This is taking it to a different level.
“Over my objection, we’re already instructing that if these people’s negligence contributes, they get harmed. Agency is a whole different ball game. You have to look at each individual and what their role was. And Herbert Hunt & Nichols [Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278], the architect, construction manager more particular. He was signing change orders, running the job. I mean, had a lot of authority. We don’t have any evidence of that fact here.
“THE COURT: I’m not familiar with either [sic] of those cases.
“MR. JOHNSON [Counsel for Anning-Johnson]: The strange thing is that I fully expected to find an agency instruction in CACI and there isn’t one. The issue of agency comes up frequently, especially in contract actions. So
“THE COURT: So there is no CACI Instruction?
“MR. JOHNSON: Not that I can find.”
Such observation is rather curious, as CACI has a series of instructions dealing with agency. (See CACI Nos. 3700-3710.)
In short, Anning-Johnson did not propose any jury instructions on the issue of agency, nor any question for determination on the special verdict form.
On May 8, 2006, almost seven months after the jury verdict was returned, Anning-Johnson filed a series of motions, one of which was styled “Re: Pre-Trial Settlements, Apportionment and Allocation of Settlement.” The motion was supported by a memorandum of points and authorities, which, as relevant here, argued that Schendel’s negligence “is imputed to Spencer.” The entire argument was in two pages, in claimed support of which Anning-Johnson cited three passages—comprising a total of 27 lines—of Mr. Spencer’s testimony at trial.
Spencer filed opposition to the motion arguing that there was no jury determination of agency, which “is a question of fact for the jury to decide.”
Anning-Johnson filed a reply which asserted that “Agency is a Matter of Law, When Undisputed.” This reply included a declaration from its counsel which—however incredibly—contained this bit of “testimony”: “I was present every day at trial and the testimony was uncontroverted that Leonard Schendel and Smith and Emery were acting in the capacity of Spencer’s agents on the Project.”
The various post-trial motions came on for lengthy argument on July 12, 2006. The Schendel-agency issue was first discussed when the trial court observed as follows:
“THE COURT: Let me give you the tentative on this and then we’ll go from there.... There is no way to say that the injury is divisible. The—you had a building that had so many incredible problems in the course of its construction that it’s impossible to extricate one problem from another, that they’re so intertwined. And that there is no way to say that they did not all, in some way, contribute to the leaking. So I think it’s an indivisible injury.
“What I think you do is simply take... the total negligence award, $1,024,507, and then you have to reduce that by the percentage of fault attributable to Spencer. And then the question becomes: Are Schendel and Smith-Emery Spencer’s agents? I’ll give—I’m giving you my tentative and let you argue it.
“The tentative is that they are. And so the percentage of fault attributable to Spencer would be 55 percent, leaving liability of $461,028. The offsets would simply be the settlement credits: 300,000, JD2; 40,000 Progress Glass; and 20,000, Ryan Fire Extinguishers.”
Argument ensued, most of it addressed to the amount of the offset, with much less focus on the issue of whether Schendel was Spencer’s agent. But what colloquy there was on the subject indicates that the trial court’s ultimate decision was error—one perhaps caused by a misunderstanding of the fundamental principles. Two illustrations should suffice.
The first was the court’s response to the argument of Spencer’s counsel that Schendel was an independent contractor, not an agent. The court said: “I think the basic issue is both Mr. Schendel and Mr. Spencer said that Schendel was there to be Spencer’s eyes and ears. And it’s pretty clear that Schendel had his eyes closed for a while.” It was Schendel who described himself as Spencer’s “eyes and ears.” While Mr. Spencer did accept this characterization, and that Schendel could “perhaps” be classified as Spencer’s “superintendent,” Mr. Spencer declined to admit that Schendel was Spencer’s “representative” on the project, or that Schendel was responsible for making sure “that work that other contractors were performing was done correctly.” Indeed, Schendel himself testified that while he “monitored” the other subcontractors, he did not check the quality of their work.
The second observation by the court is even more problematic. This occurred after Spencer’s counsel pointed out that the jury made no determination of agency, and that it was Anning-Johnson’s burden to prove that, and had to “show it by the verdict form.” The court responded, “What is the evidence that Schendel was not Spencer’s agent?” The law is that the burden is on the party asserting the agency. (See Oswald Machine & Equipment, Inc. v. Yip (1992) 10 Cal.App.4th 1238, 1247 and decisions cited; Evid. Code, § 500 [“a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim... that he is asserting”].) The court’s observation turns the burden of proof on its head.
The July 12 hearing ended without any indication from the court as to its ruling. That same day a minute order was entered, which provided in pertinent part as follows:
“After argument, the Court makes the following rulings:
Anning-Johnson’s Motion re Pretrial Settlements/Allocation SUBMITTED
“Court’s Tentative
“Wm Spencer Companies, et al. (including Schendel and Smith Emery) 55 percent
“leaving
$461,028.00
“Settlement Allocation:
“JD2
$300,000
“Progress Glass
$40,000
“Ryan Fire
$20,000
“Anning-Johnson
30 percent of $101,028
$30,308”
On August 4, 2006, the court filed its formal order, including that “Plaintiff Spencer’s total percentage of fault is 45 percent, which includes Schendel’s 30 percent fault liability as plaintiff’s agent.” That ruling was error.
The record is not clear as to how the 55 percent in the minute order (including 10 percent for the negligence of Smith-Emery) became 45 percent in the judgment, which omitted Smith-Emery.
B. Agency is a Question of Fact
The applicable law is well settled: “Unless the evidence is susceptible of but a single inference, the question of agency is one of fact for the jury.” (Seneris v. Haas (1955) 45 Cal.2d 811, 831; accord, Universal Bank v. Lawyers Title Ins. Corp. (1997) 62 Cal.App.4th 1062, 1066; L. Byron Culver & Associates v. Jaoudi Industrial & Trading Corp. (1991) 1 Cal.App.4th 300, 305)
Spencer set forth almost five pages of facts and law supporting its claim that “there was conflicting evidence on the issue of whether Schendel was an agent. Such exposition includes discussion of the pertinent law, including the “principal test” of agency, the right of control. (See Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491, 512-513 and authorities cited.) It also includes discussion of the “secondary” factors set forth in CACI 3704.
The factors are:
Spencer’s exposition goes into detail as to why such tests are not met here, pointing out that Schendel was “a separately incorporated general contracting business,” separately licensed by the California Contractors State License Board, and that Schendel worked on the project under his own contractor’s license. The exposition also discusses Schendel’s role on the project, which was to install foundations, set sidewalks, coordinate contractors and inspections, and develop the schedule. And, Spencer’s brief goes on: “Schendel used his own tools. Schendel hired and paid his own employees and [Spencer] had no control over who Schendel hired or fired. (7 RT 637-643) [¶] Schendel bid the job at an hourly rate, as was his business custom and practice. (8 RT 802-803) Schendel set his own hours. (8 RT 777) Schendel was not paid overtime. (6 RT 637-643) Schendel invoiced [Spencer] for his work. (8 RT 797; Pl. Ex. 83) Schendel had no withholding taken from [his] pay. [Spencer] hired Schendel for a finite period of time—for the construction of the 3000-3rd Street Project. (8 RT 774-775) Schendel did not believe or hold himself out as part of [Spencer’s] normal business operations, but worked only under his own ‘B’ general contractor’s license.”
Spencer’s exposition also discusses various facts pertinent to the secondary factors which, it asserts, also demonstrate that Schendel was an independent contractor, not an agent. Specifically:
“Schendel was simply one of the vendors, subcontractors that [Spencer] hired to build the Project (7 RT 637);
“Schendel was not the general contractor of record, but was merely one contractor responsible for a distinct portion of the work (7 RT 637-639, 707);
“Schendel was not responsible for ensuring that other contractors performed their work correctly because [Spencer] hired inspection companies (7 RT 639, 707; 8 RT 804-805);
“Schendel was not the superintendent, foreman or Project manager (7 RT 639);
“Schendel was not [Spencer’s] ‘representative’ on the Project (7 RT 639);
“Schendel hired its own assistants and crew out of the contractor’s labor pool. (7 RT 640-641).”
Anning-Johnson’s response to all this is capsulized in its one-page synthesis in its brief:
“According to Spencer, Schendel acted as Spencer’s ‘general contractor’ and ‘on site representative’ who ‘wore many hats.’ (6 RT 2039) Spencer describes Schendel as being ‘out there from day one’ and ‘[e]ssentially, he was—he was over the entire project.’ (6 RT 2040-2041) None of this was disputed. [¶] ‘One who contracts to act on behalf of another and subject to the other’s control except as to physical conduct is both an agent and an independent contractor.’ [Citing City of Los Angeles v. Meyers Bros. Parking System, Inc. (1975) 54 Cal.App.3d 135, 138; 3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 21.] Here, Schendel contracted with Spencer to be Spencer’s ‘eyes and ears’ on the Project. Spencer accepted the benefit of Schendel’s actions. Schendel’s negligence is therefore imputed to Spencer because at all times he acted as Spencer’s agent. [¶] Agency Is a Matter of Law. [¶] Finally, imputing Schendel’s negligence to Spencer is a matter of law because the facts of agency are undisputed. Schendel dealt with third persons on the Project at Spencer’s behest. Spencer commonly referred to Schendel as his ‘general contractor’ and ‘on site representative’ for this Project. (6 CT 2039) Ahmad Issa, Spencer’s structural engineer on the Project, testified that Schendel was ‘the person who was representing Mr. Spencer.’ (11 RT 1365-1366) In the presence of undisputed evidence, agency is established as a matter of law.”
We have two observations, one legal, one factual.
As to the legal, we fail to see how Schendel being Spencer’s “general contractor” can equate to being its “agent.” Indeed, with rare exceptions, the relationships are mutually exclusive. As Witkin puts it: “In a number of situations, it becomes necessary to distinguish between an agent or employee on the one hand and an independent contractor on the other. [¶]... Where liability in tort is sought to be imposed on a person for the wrongful act of another under the doctrine of respondeat superior, it must be shown that the wrongdoer was an agent or employee of the defendant.” (3 Witkin, Summary of Cal. Law, supra, § 22 et seq., p. 61.)
City of Los Angeles v. Meyers Bros. Parking System, Inc., supra, 54 Cal.App.3d 135, the decision cited by Anning-Johnson, is not to the contrary. Witkin tersely explains why: “Agent and independent contractor are not necessarily exclusive legal categories, as are employee and independent contractor. Thus, one who contracts to act on behalf of another and subject to the other’s control except as to physical conduct, is both an agent and independent contractor. (City of Los Angeles v. Meyers Bros. Parking System, Inc.[, supra, at p.] 138... citing Rest.2d, Agency §§ 2, 14N.)” (3 Witkin, Summary of Cal. Law, supra, § 21, p. 61; see Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526, 537, fn. 2.)
As to the factual, if this is the record that Anning-Johnson believes reflects evidence that is “undisputed,” it comes in a novel guise.
The record we have read shows that Mr. Schendel and Mr. Spencer are acquaintances of long-standing, whose friendship has deepened into a mutual trust. But, “ ‘ “[t]he law indulges in no presumption that an agency exists but instead presumes that a person is acting for himself and not as an agent for another.” ’ ” (Inglewood Teachers Assn. v. Public Employment Relations Bd. (1991) 227 Cal.App.3d 767, 780.)
In sum, the trial court erred when it added Schendel’s 30 percent responsibility to that of Spencer, and thus erred when it reduced the jury’s verdict by $307,352. Given the distinctive timing of when it was made, that action was equivalent in effect to granting a partial judgment notwithstanding the verdict. If such a ruling had actually been made, it would be reviewed according to exceedingly strict criteria. That action would be upheld only if, on an independent review of the record, we could find no substantial evidence in opposition to the trial court’s determination. In other words, we would have to reverse if we found substantial evidence that would support a determination that Schendel was not Spencer’s agent. (E.g., Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68; Mason v. Lake Dolores Group (2004) 117 Cal.App.4th 822, 829-830; Hansen v. Sunnyside Products, Inc. (1997) 55 Cal.App.4th 1497, 1510.) As already shown, the trial evidence was far from being sufficiently one-sided that the issue could be decided as an issue of law. In deciding it as such, and on the basis of that decision reducing the verdict Spencer was won from the jury, the trial court erred.
The same analysis defeats Anning-Johnson’s argument that the trial court erred in refusing to reduce Spencer’s damages by the 10 percent that the jury found attributable to the negligence of Smith-Emery (which Anning-Johnson refers to as “Smith & Emery.” Beyond perfunctorily stating that “Spencer enlisted Smith & Emery,” the latter “was Spencer’s agent because it performed Spencer’s inspections,” and Spencer “therefore took on the risk of its negligence.” Unlike Spencer, Anning-Johnson makes no attempt to satisfy the primary and secondary criteria for establishing agency. (See Metropolitan Water Dist. v. Superior Court, supra, 32 Cal.4th 491, 512-513; fn. 8, ante.)
Spencer’s brief asserts that “reversal of the breach of contract verdict is not necessary if the negligence verdict is upheld as requested.” The brief concludes with the observation that the “errors do not require a retrial,” that we can “simply recalculate the judgment.” We interpret this as Spencer’s satisfaction that a verdict based on negligence provided Spencer all the damage to which it was entitled, an interpretation confirmed at oral argument. We thus need not reach Spencer’s arguments addressed to claimed improper instructions and verdict form in connection with the breach of contract claim.
The Trial Court Did Not Abuse Its Discretion In Rejecting the Apportionment Of the JD2 Settlement the Parties Had Made
Both Spencer and Anning-Johnson complain about the level of the offsets ordered by the trial court. The complaints divide into the predictable pattern of Spencer arguing that the offsets are too large, while Anning-Johnson argues that they are inadequately small. Anning-Johnson goes so far as to submit that its “liability is zero.” At this point in our opinion, we address what is Spencer’s final argument, that the trial court’s reductions made the judgment inadequate as a matter of law,” including by reducing the verdict “for... all the amounts [Spencer] received from JD2 and Progress Glass in settlements.” We conclude that this argument is without merit.
This argument also contests the reduction of $307,352 based on the court’s determination that Schendel was Spencer’s agent, an issue on which we agree with Spencer, as discussed above. Although Spencer appears to include within its argument the $40,000 credit for its settlement with Progress Glass, Spencer states in its brief that it does not dispute this ruling by the trial court.
A. The Proceedings Below
On October 3, 2005, after a jury had been selected and three days before trial was to begin, counsel advised the court that Spencer had settled with JD2 and Canam Steel, and was now asking the court for “confirmation of the good faith aspects under C.C.P. Section 877.6,” via an oral presentation to the court. As counsel for Canam Steel explained it:
“There has been no formal motion. And I do not believe that there will be any objections to the settlement as being in good faith, although Mr. Johnson [counsel for Anning-Johnson] does want to put a reservation on the record.
“With the Court’s permission, I’ll recite the general terms of the settlement as it applies to the good faith aspects of 877.6, the [Tech-Bilt] standards.
A reference to Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488.
“In settlement of JD2’s claim against William Spencer Company for the outstanding balance on its contracts for the fabrication and the erection of the structural steel at the Third Street Project, William Spencer Company has agreed to pay JD2 the sum of $770,000. Of that amount, 80 percent, or $616,000, by agreement, will be distributed to Canam Steel, and the remaining 20 percent, or, $154,000 will be paid to JD2.
“Second of all, the insurance carriers for JD2 and Canam Steel have agreed to pay William Spencer Company the sum of $300,000 in settlement of their cross-action.
“It’s been agreed between the parties that the $300,000 will be allocated as follows: 80 percent, or $240,000, will be allocated to settlement of William Spencer Company’s claim relating to the fabrication and installation of the structural steel as it pertains to the undersized [welds],... which required field rewelding and resulted in a consequential claim by William Spencer Company for damages.
“The remaining 20 percent, or $60,000, will be allocated to what we have referred to as the building envelope issues, which involve three aspects of JD2’s work, separate and apart from the structural steel welding issue. Those would include the absence of what are called structural hats on certain aspects of the structural steel, bird baths, or dips in the concrete slabs on the second and third floor, and the issue of the decks being cut short, for which there is an allegation that... this led to a situation where a revision to the method of attachment of the exterior framing for the exterior stucco, which may, in turn, have led to some form of cracking, which, in turn, may have led to some form of water intrusion.
“So, in summary, 60 percent of the $300,000 payment to William Spencer Company goes to the structural steel welding issues. The remaining 30 percent, or $60,000, is allocated to the building envelope issues as I’ve described.”
The settlement had other components not relevant here, including waivers, releases, and dismissals of various insurers for the parties, including indemnity claims and concomitant attorney’s fees issues.
Counsel for Anning-Johnson asked if he wished to “comment,” and he did, first expressing concern about whether there was in fact a settlement. Counsel then said he “also wanted to reserve my rights as to the issue of attorney’s fees, and ended with this: “And apparently we’re also going to have to—there’s apparently some gamesmanship going on here with allocations and maybe some attempt to affect the credit by allocating certain amounts of the monies to bifurcated issues that the—even though we never had a bifurcation, but that’s something we can deal with later.”
The court responded: “All right. Well, you can certainly—your reservation with respect to attorney’s fees makes sense, so we’ll start with that. [¶] Do we have a deal, or we don’t have a deal?”
Extensive colloquy ensued about whether there was a settlement, with the court observing that, as it was not involved in the settlement discussions, it needed assurance by “Thursday morning [whether] you’ve actually settled or not.” The court again confirmed with counsel for Anning-Johnson that he was maintaining his “reservation as to attorney’s fees,” and then asked if “there [was] anything else.” Counsel for JD2 made a brief response, after which counsel for Anning-Johnson said:
“MR. JOHNSON: Yeah. The only reservation I would have, Your Honor, is as I mentioned this allocation of the $300,000—and I think that’s something that’s a legal issue that can be addressed later—but I don’t know if there is some attempt here to limit the credit of the 300 to be only 20 percent for envelope issues, even though we don’t have a bifurcation. That’s an issue I would brief later, if necessary, and I’m reserving my rights on that. And that would only be between Spencer and us on the credit.
“On the base payment terms, I’m not opposing it on good faith. And as I understand it, being that I’m here [appearing] for Progress Glass... [which] also does not oppose it, except for those reservations.”
Counsel for Canam Steel responded:
“MR. LAHADERNE: I will state, Your Honor, the reason we did allocate it is because if I didn’t, I could be accused of being in violation of the Alcal case and Ragan Roofing [sic], where you’re required to make an allocation between issues. I will say that the 80-20 split is consistent with the percentages that had been taken between JD2 and Canam Steel, in which we’ve segregated out the $770,000 between structural steel issues, as well as the nonstructural steel issues. [¶] So, there is method in the madness of the 80-20 split. The percentages are consistent with the remainder of the settlement.”
Counsel was referring to Alcal Roofing & Insulation v. Superior Court (1992) 8 Cal.App.4th 1121 and Regan Roofing Co. v. Superior Court (1994) 21 Cal.App.4th 1685 (Regan Roofing).
The hearing ended with this:
“THE COURT: Okay. Well, as to the good-faith aspect of it, do you want me to sign something?
“MR. LAHADERNE: I’ll just—frankly, Your Honor, subject to the reservations, I’d like the Court’s ruling from the bench that it finds the settlement terms, as described, as being in good faith, under 877.6, subject to their being confirmed by a written agreement between the parties.
“MR. JOHNSON: That’s fine.
“THE COURT: Okay.
“MR. JOHNSON: It’s kind of hard to say it’s a good-faith settlement until it’s settled, but if it’s conditional, that’s fine.
“THE COURT: Right. And there is the remaining issue that you talked about.
“MR. DEANE [Counsel for JD2]: Well, Your Honor, I don’t believe that the allocation issue affects the determination that’s put us in good faith.
“MR. LAHADERNE: That’s correct.
“MR. DEANE: The allocation issue only affects between the remaining parties of whether they get any credits or offset of the ultimate judgment. So, I think the Court can make the judicial determination that the settlement is in good faith, reserve the question regarding the efficaciousness of the allocations, subject to a written agreement that we’re going to prepare. [¶] And that ruling is commonly made from the bench....
“THE COURT: All right. Agreed?
“MR. DEANE: Agreed, Your Honor.
“MR. LAHADERNE: Agreed, Your Honor.
“MR. McGAHAN [Counsel for Spencer]: Yes, Your Honor.
“MR. JOHNSON: Yes, Your Honor.
“THE COURT: Okay. So, I’ll make the finding that its’ a good-faith settlement under 877.6....”
The minute order for October 3 recites that “Anning-Johnson reserves objections regarding allocation issues/credits.”
B. Analysis
The reserved issue came before the trial court via Anning-Johnson’s post-verdict motions, and the trial court agreed with Anning-Johnson on this issue, holding that the entire $300,000 payment to Spencer would be credited against the verdict.
Before turning to the merits of Spencer’s contention, we discuss a procedural issue raised by Spencer—that Anning-Johnson could not assert the offset issue via a post verdict motion, but had to seek writ relief.
It is true that the relevant statute provides that any “party aggrieved” by a trial court’s good faith ruling may file a writ petition. (Code Civ. Proc., § 877.6, subd. (e).) That does not bar Anning-Johnson here.
It is also true that the court’s ruling was that the JD2/Canam Steel settlement was in good faith. But Anning-Johnson expressly agreed to this, so it was not “aggrieved.” The only ruling that would “aggrieve” it—the ultimate apportionment of the settlement—was not made, and as to this Anning-Johnson expressly reserved its rights. In short, there was nothing to “writ.”
In any event, many cases recognize that a post-trial “motion for apportionment of settlement” is a proper procedure to determine the amount of credit based on the appropriate allocation. (See, e.g., Wilson v. John Crane, Inc. (2000) 81 Cal.App.4th 847, 866 [“motion to determine settlement credits”]; Greathouse v. Amcord, Inc. (1995) 35 Cal.App.4th 831, 840 [apportionment between economic and non-economic damages].) Given the setting here—the good faith determination was brought before the court orally, without any evidence (declaration or otherwise), and on the eve of trial—writ relief would have been futile, not to mention an abject waste of time.
Indeed, given that setting, it would appear that the manner in which the trial court proceeded was the preferred manner, at least according to the leading practical treatise for judges, the California Judges Benchbook Civil Proceedings Before Trial (CJER 2008) (Benchbook.) The Benchbook is a treatise that “focuses on the judge’s role,” (id., Preface, p. v), and provides “practical working tools to enable a judge to conduct proceedings fairly, correctly, and efficiently. [It is] written from the judge’s point of view, giving the judge concrete advice on what to look for and how to respond.” (Ibid.)
Chapter 5 of the Benchbook deals with “Settlement Proceedings,” Part III of which deals with the issues regarding good faith when plaintiff settles with “fewer than all defendants (CCP § 877.6).” (Benchbook, § 5.33 et seq.) And section 5.42 contains this practical advice:
“A CCP § 877.6 motion presents potential pitfalls for the judge. The parties sometimes ask the judge who hears the motion to resolve the key issue of their comparative fault. The judge should decline to do so, this being an issue that can be decided only by the ultimate trier of fact.
“The judge hearing the CCP § 877.6 motion should also avoid making any determination as to the correct valuation or allocation of the settlement proceeds. The issue to be determined is whether the settlement was made in good faith, i.e., whether the valuation and allocation have been shown to be ‘in the ballpark’ of what seems reasonable. [Citations.]” (Benchbook, supra, at pp. 288-289.)
In sum, Spencer’s procedural argument fails. We thus proceed to the merits of this issue, and conclude that this ruling of the trial court will not be set aside. For several reasons.
It is perhaps enough to note that Spencer did not make the requisite showing to support the claimed apportionment in the first instance. As the Court of Appeal explained in Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1558 (Franklin Mint), discussing the good faith settlement determination in general:
“Thus, in moving under section 877.6 for a good faith settlement determination, the moving party must set forth the value of the consideration paid and an evidentiary basis for that valuation, and must demonstrate that the valuation ‘was reached in a sufficiently adversarial manner to justify the presumption that a reasonable valuation was reached.’ (Erreca’s [v. Superior Court (1993)] 19 Cal.App.4th [1475,] 1496; see also [United Services Automobile Assn. v. Superior Court (2001)] 93 Cal.App.4th [633,] 644 [valuation must be ‘supported by specific evidence, declaration, or opinion’]; Brehm Communities v. Superior Court (2001) 88 Cal.App.4th 730, 736 [‘the initial burden to provide evidence of the value of the settlement falls on the settling parties’]...; Regan Roofing Co. v. Superior Court[, supra, ] 21 Cal.App.4th 1685, 1704 [settling parties are required to ‘furnish to the court and to all parties an evidentiary showing of a rational basis for... the credits proposed’].) A nonsettling defendant may then challenge the settlement by ‘attempt[ing] to prove that the parties’ assigned value is too low and that a greater reduction in plaintiff’s claims against the remaining defendants is actually warranted.’ (Abbott Ford[, Inc. v. Superior Court (1987)] 43 Cal.3d [858,] 879.)” (Franklin Mint, supra, 130 Cal.App.4th at p. 1558.)
And, the court went on, the “nonsettling defendant’s right to challenge the valuation of a settlement should not... be interpreted as giving that defendant a right to a mini-trial on that valuation issue. [Citations.] ‘The nature, extent and the procedure regarding any such challenge is left to the discretion of the trial court.’ (Abbott Ford, supra, 43 Cal.3d at pp. 879-880, fn. 23.) The trial court’s determination of the value of the consideration paid will be upheld if supported by substantial evidence. (Regan Roofing, supra, 21 Cal.App.4th at p. 1714; Erreca’s [v. Superior Court], supra, 19 Cal.App.4th at p. 1498.)” (Franklin Mint, supra, 130 Cal.App.4th at p. 1558.)
Erreca’s v. Superior Court, supra, 19 Cal.App.4th 1475 (Erreca’s), a case heavily relied on by Spencer, is instructive. Erreca’s began as an action by homeowners against the developers of a residential subdivision. Various other defendants were added by amendment, specifically those responsible for the grading and filling of the developed lots (referred to as “the soils defendants.”) Plaintiffs settled with the developers and various subcontractors for $6.8 million, $1.5 million of which (plus $300,000 in assigned claims) were apportioned to the soils issues. The trial court held an ex parte hearing and then referred the matter to a special master, following which the court ruled that the settlement was in good faith, and that the $1.5 million apportionment was appropriate. However, based on a belief that the developers had contributed more to the settlement than their probable ultimate liability, the court ruled that the credit to be given to the nonsettling soils defendants should be limited to $500,000. (Id. at p. 1475.)
The Court of Appeal reversed, and held that this allocation was error, but not on any basis offering solace to Spencer. Rather, the Court of Appeal noted that by allocating only $1.5 million out of the total settlement to the soils issues, the settling parties effectively reduced the credit to be accorded to the nonsettling soils defendants and that an evidentiary showing is required to justify such an allocation. Specifically: “[a] party seeking confirmation of a settlement must explain to the court and to all other parties, by declaration or other written form, the evidentiary basis for any allocations and valuations made, and must demonstrate that the allocation was reached in a sufficiently adversarial manner to justify the presumption that a reasonable valuation was reached.” (Erecca’s, supra, 19 Cal.App.4th at pp. 1495-1496; accord, Franklin Mint, supra, 130 Cal.App.4th at p. 1558.)
No such evidentiary showing was made here. To put it in the language of Franklin Mint, determining the value of the consideration paid “clearly requires more than a mere presentation of the terms of the settlement.” (130 Cal.App.4th at p. 1559.)
But even if Spencer (or JD2/Canam) had made a sufficient showing as to the basis of the apportionment, it would not be dispositive, not in light of other well-settled principles.
One such principle is that the allocation of settlement proceeds between defendants is not binding in determining the amount of credit to which the nonsettling defendant is entitled. (Jones v. John Crane, Inc. (2005) 132 Cal.App.4th 990, 1009; Greathouse v. Amcord, Inc., supra, 35 Cal.App.4th at p. 841.) In the language of Gouvis Engineering v. Superior Court (1995) 37 Cal.App.4th 642, 651 (Gouvis): “[T]he determination of the value of settlement as well as whatever underlying allocations may be deemed to have been approved at the good faith hearing have no precedential value” at trial. And Gouvis explained why: at the section 877.6 hearing, the burden is on nonsettling parties to show lack of good faith; at trial, the burden is to show the amount of credit, calling for complete precision of allocation. (Gouvis, supra, at pp. 650-651.)
Another principle is that where the nonsettling defendant challenges the fairness of the allocation, the burden is on the settling party to justify it. As Witkin distills the rule: “The consideration involved in the settlement must be valued in order to be offset against any judgment subsequently recovered against nonsettling tortfeasors. The burden of establishing the value of the settlement and, where necessary, of allocating that amount to particular types of damages rests on the settling parties. (Southern Calif. Gas Co. v. Superior Court (1986) 187 Cal.App.3d 1030; Arbuthnot v. Realty Service Co. (1991) 227 Cal.App.3d 682, 690; Alcal Roofing Insulation & Superior Court[, supra, ] 8 Cal.App.4th 1121.)” (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 96, pp. 183-184; accord, Franklin Mint, supra, 130 Cal.App.4th at p. 1558; Erreca’s, supra 19 Cal.App.4th at p. 1491.)
Spencer does not even attempt to meet such burden, but contents itself with the argument that apportionment given by the parties in effect must be honored. As shown above, the law is contrary, manifest by the many cases that have affirmed decisions of trial courts that disregarded the apportionment the parties had themselves agreed. (See, e.g., Jones v. John Crane, Inc., supra, 132 Cal.App.4th 990, 1009; Hackett v. John Crane, Inc. (2002) 98 Cal.App.4th 1233; Wilson v. John Crane, Inc., supra, 81 Cal.App.4th 847; Bobrow/Thomas & Associates v. Superior Court (1996) 50 Cal.App.4th 1654, 1660.) Evaluation of the allocation of settlement proceeds is “committed to the sound discretion of the trial court.” (Erreca’s, supra, 19 Cal.App.4th at p. 1489.) We find no such abuse here.
ANNING-JOHNSON’S APPEAL
The Negligence Verdict Was Proper
Anning-Johnson first argues that the negligence award should be vacated because it violates the “economic loss” rule. In bullet-point fashion Anning Johnson elaborates the claimed reasons why: “the negligence verdict awarding lost rents should be overturned because:
● “Anning-Johnson did not breach any duty independent of the construction contract;
● “Anning-Johnson and Spencer were in privity and lost rents could have been awarded in the contract action (which Spencer lost);
● “There is no ‘special relationship’ between Anning-Johnson and Spencer; and
● “This is a commercial transaction between a developer and a subcontractor and involves no social, moral, or public policy issues.
● “The issue before this court is a question of law.”
Anning-Johnson’s argument then cites Erlich v. Menezes (1999) 21 Cal.4th 543; Aas, supra, 24 Cal.4th 627; and Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, all of which it discusses at length. The argument is not persuasive.
As Spencer aptly points out, those three decisions are easily distinguishable because no economic damages were involved in them. Such damages were present here. Thus, the negligence verdict was proper, as Aas itself would recognize. And Jimenez v. Superior Court (2002) 29 Cal.4th 473 (Jimenez) would expressly so hold.
Defendants in Aas developed and built a condominium project and also a subdivision of tract homes. The homeowners in both discovered a variety of construction defects, and brought an action for negligence and strict liability, seeking damages for the cost of repair and diminution in value of their property. The trial court granted defendants’ motions in limine, excluding any evidence of defects that had not caused property damage. Plaintiffs sought a writ of mandate, which the Court of Appeal denied. The Supreme Court affirmed, but not on any basis providing solace to Anning-Johnson here—as Jimenez would confirm two years later. (Aas, supra, 24 Cal.4th 627, 633-634.)
Jimenez was a class action against manufacturers of windows. The complaint alleged that the windows were defective and caused damage to other parts of the homes, and stated claims for strict liability and negligence. The trial court granted summary adjudication of the strict liability cause of action. Plaintiffs sought mandamus, which the Court of Appeal granted, and which the Supreme Court affirmed, in language dispositive here:
“California decisional law has long recognized that the economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated. In Aas v. Superior Court, supra, 24 Cal.4th at p. 641, we observed that ‘the concept of recoverable physical injury or property damage’ had over time ‘expanded to include damage to one part of a product caused by another, defective part.’ The list of examples we gave (ibid.) included Stearman v. Centex Homes (2000) 78 Cal.App.4th 611, in which the Court of Appeal affirmed a judgment making a builder strictly liable in tort for damages that a defective foundation caused to the interior and exterior of a home. Aas also cited with approval the part of Casey v. Overhead Door Corp. [(1999)] 74 Cal.App.4th 112, in which the Court of Appeal affirmed a nonsuit for the defendant on a tort claim for defective windows only because the plaintiffs had failed to prove that the windows damaged other property. The nonsuit would not have been proper, the Court of Appeal explained, had the plaintiffs been able to support their assertion that the windows had ‘caused damage to the drywall and framing and resulted in insect infestation and damage to personal property.’ [Citations.].” (Jimenez v. Superior Court, supra, 29 Cal.4th 473, 483-484.)
As set forth at length above, Spencer proved that Anning-Johnson’s poor workmanship caused damage to the drywall, to the framing, and to the window casings. Anning-Johnson’s poor workmanship also caused Spencer to add the elastomeric coating, something neither contemplated by the plans nor within Anning-Johnson’s contract to stop the leaks. (See, e.g., KB Home v. Superior Court (2003) 112 Cal.App.4th 1076, 1088-1089 [negligence action not barred by economic loss because plaintiff could properly claims costs associated with remedying damage as involuntary out-of-pocket losses].) By damaging the larger property or causing out-of-pocket loss, Anning-Johnson is liable in negligence.
Some additional observations are in order. First, in its posttrial motions, Anning-Johnson accepted, and made no attempt to overturn, the $145,000 presumably awarded Spencer by the jury as reimbursement for the elastomeric coating. Second, Anning-Johnson does not challenge the jury’s determination that it was one of several parties collectively responsible for Spencer’s damages. This is apparently an abandonment of its trial theory that those damages were divisible.
Spencer Was Properly Awarded Attorney’s Fees
As mentioned above, after the verdict Awning-Johnson moved to be declared the prevailing party and entitled to attorney’s fees under the contract. Spencer argued otherwise, and the trial court ruled for Spencer. Anning-Johnson contends that the award to Spencer was error because “Spencer was not the prevailing party in the contract litigation.” The law is contrary.
The contract term here provided in pertinent part as follows: “In the event either party becomes involved in litigation arising out of this Agreement or the performance thereof, the court in such litigation... shall award attorney fees to the prevailing party.” Such provision supports the attorney’s fees award here, as numerous cases make clear, illustrated by Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338 (Xuereb), the case expressly relied on by the trial court—a case utterly ignored by Anning-Johnson.
Xuereb was an action by purchasers of real estate against a real estate broker and its agent. Plaintiffs’ complaint included causes of action for breach of contract, negligence, products liability, fraud, and misrepresentation. The case went to the jury on all causes of action except breach of contract, and the jury sided with the defendants. (Xuereb, supra, 3 Cal.App.4th at pp. 1340-1341.)
The purchase agreement provided for attorney’s fees to the prevailing party “[i]f this Agreement gives rise to a lawsuit or other legal proceeding.” (Xuereb, supra, at p. 1340.) The successful defendants sought attorney’s fees, which the trial court denied, ruling “that it could ‘not find that [Code of Civil Procedure section] 1021 somehow overrides the case law interpreting Civil Code section 1717 or is a separate basis for awarding attorney’s fees.’ ” Our colleagues in Division Three reversed. (Id. at pp. 1340-1341.)
The attorney’s fee provision—awarding fees to the prevailing party in any action to which the Agreement “ ‘gives rise’ ”—must be read “expansively,” the court said. (Xuereb, supra, at p. 1344.) It “does not limit an award of attorney fees to actions brought on a breach of contract theory, or to actions brought to interpret or enforce a contract.” (Id. at pp. 1342-1343.)
Numerous cases are to the same effect, including several involving the identical “arising from” language used here. (See Drybread v. Chipain Chiropractic Corp. (2007) 151 Cal.App.4th 1063, 1072 [fee award for action “arising out of” sublease includes non-contract claims]; Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 973 [“action... arising out of this contract”]; Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1101 [same]; Lerner v. Ward (1993) 13 Cal.App.4th 155, 158 [same]; see also Thompson v. Miller (2003) 112 Cal.App.4th 327, 335 [“ ‘any dispute under’ ” the contract]; Moallem v. Coldwell Banker Com. Group, Inc. (1994) 25 Cal.App.4th 1827, 1831 [action “relating to” the contract].)
A leading commentator sums it up this way: “the parties may agree in their contract that attorney fees be awarded to the prevailing party in any contract-related litigation between them, even causes of action in tort.” (Pearl, Cal. Attorney Fee Awards (2d ed. 2008) § 6.28, p. 218.) In the language of the Supreme Court: “[i]f a contractual attorney fee provision is phrased broadly enough... it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.) Such was the provision here.
Eschewing all reference to pertinent cases, including Xuereb, the case expressly relied on by the trial court, Anning Johnson focuses on Civil Code section 1717 and Code of Civil procedure section 1021, and argues that “all attorney’s fees clauses are mutual, and the party prevailing on a contract containing an attorneys’ fees clause is entitled to attorneys’ fees. [¶] Applying these statutes to the present case, Anning-Johnson is entitled to its costs and attorneys’ fees for prevailing on the contract cause of action.”
Such advocacy is not to be condoned. (See Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82-83, fn. 9.)
Xuereb has the complete answer: “By its terms, therefore, Civil Code section 1717 has a limited application. It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to enforce that contract. Its only effect is to make an otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions to enforce the contract. [Citation.] Civil Code section 1717 necessarily assumes the right to enter into agreements for the award of attorney fees in litigation, a right which it in fact derives from Code of Civil Procedure section 1021. Because of its more limited scope, Civil Code section 1717 cannot be said to supersede or limit the broad right of parties pursuant to Code of Civil procedure section 1021 to make attorney fees agreements.” (Xuereb, supra, 3 Cal.App.4th at p. 1342.) This would remain even if we were to conclude the jury’s breach of contract verdict could not sustain the verdict—an issue we do not reach. “[W]hen a contract provision that encompasses noncontract claims awards fees to the prevailing party, a party who prevails on tort claims may be deemed the prevailing party even though that party did not prevail ‘on the contract.’ ” (Pearl, Cal. Attorney Fee Awards, supra, § 6.15, pp. 187-218 and decisions cited.)
Anning-Johnson Was Not Entitled To Additional Credits For The Settlements
Anning-Johnson’s final argument is that the trial court’s order regarding offsets for the settlements should be reversed “because it did not include[]... the total value of the settlements.” The argument addresses all four of the settlements Spencer made, with: (1) JD2/Canam Steel; (2) Ryan Fire Supply; (3) MWH; and (4) Progress Glass. We discuss them in turn.
JD2/ Canam Steel. As discussed in detail in connection with Spencer’s appeal, Anning-Johnson was given credit for the entire $300,000 paid to Spencer in connection with the JD2 and Canam Steel settlement. Not satisfied with this, Anning-Johnson asserts that the real value of this settlement was $1,603,536. The argument runs like this:
Anning-Johnson first sets the stage, asserting that “JD2 initiated this lawsuit against Spencer... due to Spencer’s nonpayment of $828,177 for JD2’s services. Spencer cross-complained against JD2 and Canam.... JD2 and Canam’s settlement with Spencer is treated as one transaction, although it has separate components. As part of the settlement, JD2 waived its mechanic’s lien claim of $828,177 and JD2 and Canam paid Spencer an additional $300,000 in cash. The face value of this consideration is the difference between the actual value of the mechanic’s lien ($828,177) and the value assigned to it in the Minutes ($770,000), plus the $300,000 in cash: $828,177-$770,000 + $300,000 = $358,177. That, however, is not the total ‘consideration’ that Spencer received in pretrial settlements.”
Anning-Johnson then goes on: JD2 “gave up valuable claims when it dismissed its lawsuit. It gave up its mechanics lien and all of the interest it had accrued.” This interest, according to Anning-Johnson, was $745,359. Thus, the “value of JD2’s mechanic’s lien claim plus the statutory interest that had accrued was $1,573,536. JD2 then added $300,000 in cash to its settlement—bringing the total in cash and non-cash consideration to $1,873,536. After reducing this amount by a nominative amount of $770,000, Spencer received $1,103,536 in cash and noncash consideration from JD2 in this pretrial settlement. But even that is not the total picture of what Spencer received in pre-trial settlements.”
The actual amount claimed on the lien as filed was $828,177.
No, the “total picture” according Anning-Johnson is that JD2 and Canam Steel also gave up their opportunity to recover attorney’s fees and costs. And JD2 and Canam were represented by separate law firms, and a “fair estimate of the two firms’ combined attorneys fees and costs in this litigation is $500,000.” And so, Anning-Johnson concludes, the value was $1,603,536: “$1,573,536 waived damages and interest plus $300,000 ‘new money,’ plus approximately $500,000 in fees and costs minus the $770,000 discount of Spencer’s cross-claim.” Such audacious argument is far wide of the mark.
To begin with, Anning-Johnson did not assert any such objection to the settlement when it was announced to the court, expressly agreeing that the settlement was in good faith, and reserving only its claim to contest the “allocation.” Thus the argument was not preserved. (E.g., Burden v. Snowden (1992) 2 Cal.4th 556, 570; Doers v. Golden Gate Bridge etc. Dist (1979) 23 Cal.3d 180, 184-185, fn. 1; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 400, p. 458.)
Moreover, any settlement between JD2 and Spencer that involved contract claims between them would not be within the Code of Civil Procedure section 877.6 offset procedure, which applies to a settlement with “two or more... joint torfeasors or co-obligors on a contract.” This is hardly the situation here, where Spencer executed separate agreements with JD2 (and others) and their obligations arose out of those separate contracts. Anning-Johnson was not a party to or beneficiary of these other contracts. There is, in short, no co-obligation that would require an offset of settled contract claims or mechanic’s lien rights. (See Topa Ins. Co. v. Fireman’s Funds Ins. Companies (1998) 39 Cal.App.4th 1331, 1338 [co-insurers not co-obligors on a single contract]; Fireman’s Fund. Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1293, fn. 3 [insurers are neither joint tortfeasors nor co-obligors; their obligations arise out of separate contracts with insured].)
Were all that not enough, Anning-Johnson’s audacious argument includes the “approximate” $500,000 in attorney’s fees. This is rank speculation, lacking any evidentiary basis. (See Regan Roofing, supra, 21 Cal.App.4th at p. 1709.)
Ryan Fire Supply. Anning-Johnson next contends, in a conclusory one paragraph, that the trial court erred in not granting an offset for the $20,000 paid by Ryan Fire Supply. This contention fails, for reasons both procedural and substantive.
Anning-Johnson’s argument has two procedural problems. The first is that Anning-Johnson did not raise this objection below. It therefore cannot be heard to complain here for the first time. (Burden v. Snowden, supra, 2 Cal.4th 556, 570; Doers v. Golden Gate Bridge etc. Dist, supra, 23 Cal.3d 180, 184-185, fn. 1.) The second is that Anning-Johnson sets forth no facts whatever dealing with that settlement, so the issue can be deemed waived. (In re Marriage of Fink, supra, 25 Cal.3d 877, 887-888; Foreman &Clark Corp. v. Fallon, supra, 3 Cal.3d 875, 881.) But this settlement could not avail Anning-Johnson in any event.
The order approving the Ryan Fire Supply settlement noted that “no party has timely filed opposition to the application or filed a motion to contest the Good Faith of said settlement.”
As mentioned immediately ante, the Code of Civil Procedure section 877.6 procedure applies only with one or more of a number of tortfeasors claimed to be liable for the same tort. The application to have this settlement declared to be good faith notified all parties that the disputes between Spencer and Ryan Fire Supply were “distinct from” and “do not overlap” with Spencer’s claims against any other party. Anning-Johnson did not object to such characterization, and understandably so.
The role of Ryan Fire Supply was to install fire sprinklers. Spencer’s claim against it was that “defective fire sprinklers... severely leaked due to the failure of each sprinkler head to include a component called a ‘weldlet.’ Damages include the cost to repair the sprinklers.” There was no claim for lost rent, or other damages Spencer sought against Anning-Johnson. Conversely, Spencer made no claim against Anning-Johnson for repair to the fire sprinkler system. In short, Anning-Johnson and Ryan Fire Supply were not joint tortfeasors or co-obligors within the meaning of Code of Civil Procedure section 877, as the trial court’s order expressly noted:
“Ryan’s settlement for $20,000.00 is clearly within its proportionate share of liability. Ryan supplied and installed the fire sprinkler system at the subject project. The sprinkler system allegedly leaked. Ryan’s employees will testify that the cost of repair for the sprinkler system would be roughly the same amount as the settlement. What is more, the leaks caused no resultant damage, which is required for Spencer’s negligence cause of action [¶] Additionally, the issues relating to Ryan are distinct from the issues relating to the other subcontractors in this matter. In other words, Spencer’s claims against Ryan do not overlap with any other party in this matter.”
MWH. Anning-Johnson’s contention regarding the MWH settlement is likewise conclusory and likewise brief, consisting of two paragraphs set forth in a half page. This contention has the same procedural infirmities: the terms of the settlement are not set forth, and Anning-Johnson did not object below.
The application for good faith determination of this settlement was apparently contested, apparently originally successfully, by JD2 and Canam Steel. However, MWH ultimately convinced the trial court to reconsider. The minute order for September 30, 2004 reads: “No appearances on this matter. The court adopted its tentative ruling: Plaintiff MWH, Inc., a Delaware corporation’s motion for reconsideration of order denying good faith settlement application: GRANTED; no opposition filed.” (Italics added.)
Progress Glass. Finally, in yet another one-paragraph, half page argument, Anning-Johnson contends it did not get sufficient credit for the settlement with Progress Glass, because the court did not include the value of the “indemnity rights [Progress] assigned to Spencer.” Such argument is less than candid.
The Progress Glass settlement was put on the record on the second day of trial, as follows:
“MR. RYAN:... On behalf of Progress Glass, a settlement has been reached with Mr. Spencer’s company, and pursuant to an agreement with Mr. Johnson representing Anning-Johnson, the settlement I’m about to recite has been agreed to and been made in good faith and to discharge Progress from responsibility on Anning-Johnson’s cross-complaint.
“[¶]... [¶]... The settlement is as follows:... In exchange for a payment of $40,000 to be made payable as they direct..., Spencer will extend to Progress a general release of claims with respect to 3000 3rd Street with some exceptions... excepted from this release are these two items: This agreement has no impact on rights of indemnity against them either way, them against us, us against them, indemnity against claims made by third parties at some point in the future, nor does it in any way affect any warranty obligations, if any, created by the contract documents.
“[¶]... [¶] THE COURT: And do you agree to the terms that were set out by Mr. Ryan?
“MR. SPENCER: Yes.
“[¶]... [¶] MR. RYAN: And Mr. Johnson, are you willing to dismiss your cross-complaint and I’ll give you a waiver of costs?
“MR. JOHNSON: Yes.” (Italics added.)
Such settlement did not include indemnity rights.
DISPOSITION
The judgment is modified to provide that Anning-Johnson shall pay to Spencer the amount of $677,986.46 (the judgment balance of $223,479 plus $307,352 plus $147,155.46 for attorneys’ fees and costs). As so modified, the judgment is affirmed. Spencer shall recover its costs.
We concur: Kline, P.J., Lambden, J.
“(a) [Name of defendant] supplied the equipment, tools, and place of work;
“(b) [Name of agent] was paid by the hour rather than by the job;
“(c) The work being done by [name of agent] was part of the regular business of [name of defendant];
“(d) [Name of defendant] had an unlimited right to end the relationship with [name of agent];
“(e) The work being done by [name of agent] was the only occupation or business of [name of agent];
“(f) The kind of work performed by [name of agent] is usually done under the direction of a supervisor rather than by a specialist working without supervision;
“(g) The kind of work performed by [name of agent] does not require specialized or professional skill;
“(h) The services performed by [name of agent] were to be performed over a long period of time; and
“(i) [Name of defendant] and [name of agent] acted as if they had an employer-employee relationship.”
Anning Johnson’s argument fails for the additional reason that Anning-Johnson fails to cite to all evidence in the record relevant to this issue. Thus, any error would be deemed waived. (E.g., In re Marriage of Fink (1979) 25 Cal.3d 877, 887-888; Foreman &Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.)