Greenwood v. Murphy

Filed 11/19/08 Greenwood v. Murphy CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

Respondents Craig Stephen Murphy and Robin Murphy (the Murphys) hired appellant Peter Greenwood (Greenwood), a civil engineer and architect, to prepare design plans for residential properties in Larkspur and Mill Valley. After a bench trial, the trial court entered judgment in favor of the Murphys on both the breach of contract complaint brought by Greenwood and the Murphys claims, brought via cross-complaint, for breach of contract and professional negligence. The judgment awarded the Murphys $310,037 in damages. Greenwood appeals.

With respect to both projects, Greenwood challenges the sufficiency of the evidence supporting the trial courts findings underlying its conclusions of breach of contract and negligence. Greenwood also asserts that the trial court erred in determining that a limitation of liability clause contained in the Mill Valley contract was unenforceable. In addition, Greenwood maintains that the amounts awarded the Murphys as damages in connection with both properties are unsupported by substantial evidence. Last, Greenwood argues that the trial court erred in concluding that he was to take nothing on his own complaint for breach of contract. We reverse the trial courts judgment with respect to Greenwoods complaint and its award of repair cost damages in connection with the Larkspur project, but otherwise affirm the judgment.

I.       Factual and Procedural Background[1]

Greenwood Prepares Plans for the Larkspur Property

Greenwood, who does business as Artek Design Group, is a civil engineer and architect. Craig Murphy is a licensed general contractor. In late 2000, Greenwood was hired to prepare plans for a construction project undertaken by Craig Murphy, on property at 122 Escalle Lane in Larkspur, California (Larkspur Property).[2] Craig Murphy was converting the structure to a more modern and marketable residence, by adding a master bedroom and bath to the upper floor. As of January 2001, Greenwood had prepared initial plans for the remodel of the Larkspur Property, with revised plans prepared in March 2001.

Greenwoods plans described a second story with a new roof plan, including four (4 x 12) roof joists meeting at the center and connected by a tension ring system to prevent the walls from deflecting outward under the roof load. The new tension ring system included three corner brackets designed by Greenwood to hold the roof beams at three of the four corners. The fourth corner was treated differently. Greenwoods plans called for a plywood arch in the fourth corner. Craig Murphy installed a beam in the fourth corner instead of an arch.

Damages to the Larkspur Property Delay Its Sale

In the fall of 2002, after construction of the addition was completed, Craig Murphy noticed damages to the Larkspur Property, in the form of settling, cracks, and movement of one wall. Craig Murphy installed an all-thread rod in an attempt to avoid any continuation of the separation or wall movement. By late December 2002, however, Craig Murphy discovered substantial leaks in the roof and the outside deck system.

According to Craig Murphy, the Larkspur property was completed and ready to sell when he discovered water intrusion on or about December 22, 2002. Craig Murphy then realized that the property was not marketable in its then-existing condition. After the water was drained, the Murphys made further repairs to the Larkspur Propertygetting it ready to sell by April 27, 2004. The Murphys eventually sold the Larkspur Property in October 2004.

Agreement that Greenwood Will Prepare Plans for the MillValley Property

In the meantime, Greenwood and the Murphys had orally agreed, on or about February 22, 2002, that Greenwood would prepare plans to convert a garage and to construct a detached carport on the Murphys property at 24 Del Casa in Mill Valley, California (Mill Valley Property).[3] At the time of the oral agreement, Greenwood initially estimated that it would take about two weeks to prepare the carport plans.

The Murphys and Greenwood signed a written agreement on July 18, 2002. According to the written contract, Greenwood was to perform four functions: 1. Design garage at Manor Drive (include studio) design review required. [] 2. Design basement walls to design by Craig Murphy. [] 3. Design carport on Del Casa entrance. [] 4.  Show landscape retaining walls.[4] Per the written contract, Greenwood estimated that the plans and drawings could be accomplished for between $6,000 and $8,400 and that they would be completed within 8-10 weeks. The written contract also contained a limitation of liability clause that read: LIMIT OF LIABILITY: Liability shall be limited to the Fee or $1000; which ever [sic] is less.

The MillValley Plans Are Delayed

Greenwood was on notice from the outset that the Murphys had hard money loans at high interest rates to finance the construction at the Mill Valley Property and needed to complete the project within six months. Thus, it was clear that the Murphys would suffer damages if Greenwood could not complete the plans in a timely fashion. Although plans for the carport were submitted and permitted at an earlier date, the final set of plans, in the form of as-built plans, were not submitted to the City of Mill Valley (City) until July 9, 2003more than 16 months after the oral agreement. The City approved the as-built plans and issued the final permit on July 17, 2003. Before the issuance of the final permit, the Murphys were unable to sell the Mill Valley Property.

Procedural Background

Greenwood sued the Murphys for breach of contract, seeking $13,629.50 for architectural and engineering services provided in connection with the Mill Valley Property for which he had not been paid. In response, the Murphys filed a cross-complaint alleging the following causes of action against Greenwood: (1) breach of contract with respect to the Larkspur Property; (2) breach of contract with respect to the Mill Valley Property; (3) professional negligence with respect to both projects; and (4) slander of title.[5] The case was tried to the court. On January 31, 2006, the trial court issued its tentative decision. The tentative decision provided that it shall be the statement of decision, unless within ten days any party specifies controverted issues or makes proposals not covered in this decision.

With respect to the Murphys cross-complaint relating to the Larkspur Property, the trial court concluded that Greenwoods drawings did not adequately provide for a completed tension ring system and that this deficiency caused the ensuing problems at the Larkspur project. . . . The water damages are also traceable to the tension ring failure. Accordingly, the trial court concluded that Greenwood breached his contract to provide appropriate plans and drawings for the Larkspur residence and that the provided plans and specifications constituted practice that was not within, the ordinary skill and competence of professional engineers in this locale. The trial court awarded $118,500 in repair costs to the Murphys as damages proximately caused by Greenwoods negligence and breach of contract. The trial court also awarded the Murphys $95,345 in damages for loan interest charges incurred between January 1, 2003 and April 2004.

With respect to the Mill Valley contract, the trial court found that the liability limitation clause was not a clear expression of the limitation and was not the product of an express negotiation or arms-length bargaining by the parties. As such, the trial court concluded that the clause runs afoul of the prohibition in Civil Code Section 2782 and will not be enforced.

With respect to Greenwoods delay of the Mill Valley plans, the trial court found that [u]ltimately, the plans were not submitted until July 9, 2003, sixteen months after the initial retention. The trial court concluded that the Murphys were clear in their instruction that time was of the essence in the contract they entered into with Greenwood. The trial court also found that [a]lthough Greenwood may be correct in contending that changes accounted for some of the time delay, many of the changes were occasioned by Greenwoods actions and changes alone do not account for the delay of 16 months before plans were completed on or about July 9, 2003.Accordingly, the trial court concluded that Greenwood breached his contract to provide plans and specifications for the Mill Valley property in timely and competent fashion. Furthermore, the trial court concluded that Greenwood was negligent in performing his professional services. The trial court determined [t]he Murphys have provided evidence of loans undertaken to finance construction of the Mill Valley property. . . . These loans provided for a six-month completion period and this circumstance had been explained to Greenwood. The trial court used six months as the outside time for completion of the plans and awarded delay damages in the amount of $85,250.06 to compensate for loan interest paid between September 1, 2002 and July 17, 2003.

With respect to Greenwoods complaint for breach of contract, the trial court stated: [T]here was no written agreement between Greenwood and the Murphys until July 18, 2002. By that time, Greenwood had already billed $6,875. Given the statutory prohibitions of architectural and engineering work without a license,[[6]] plaintiff cannot collect for his services performed before July 18, 2002 when the contract was signed. Furthermore, the trial court found that Greenwood was not a licensed engineer for a period from March 31, 2003 to June 16, 2003.[7] The trial court determined that certain drawings done during this period would require an engineers license and concluded that Greenwood cannot collect for 15 hours attributable to those drawings. Accordingly, the court applied another setoff of $1,875 and determined that if Greenwood is to collect on his breach of contract claim, his damages will be limited to $4879.50, the billed amount less payments and the setoffs described above. In its conclusion, however, the trial court noted Plaintiff Greenwood is to take nothing on his complaint for damages and found in favor of defendant Murphys on the complaint filed by Greenwood for breach of the contract to pay his engineering fee.

The trial court entered a single judgment on the complaint and cross-complaint in conformance with its statement of decision. The judgment awarded the Murphys $310,037 in damages. Greenwood filed a timely notice of appeal from the judgment.

II.    Discussion

Greenwoods appeal challenges the judgment with respect to both his complaint and the Murphys cross-complaint. We separately address Greenwoods arguments with respect to both the Larkspur Property and the Mill Valley Property below.

A. Standard of Review

A judgment . . . is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. (In re Marriage ofArceneaux (1990) 51 Cal.3d 1130, 1133 (Arceneaux).) When the trial courts judgment and statement of decision contain both findings of fact and conclusions of law, the reviewing court review[s] the trial courts findings of fact to determine whether they are supported by substantial evidence. [Citation.] To the extent the trial court drew conclusions of law based upon its findings of fact, we review those conclusions of law de novo. [Citation.] (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266.)

Under the substantial evidence standard of review, the reviewing court must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the judgment. [Citations.] [] It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment. Even in cases where the evidence is undisputed or uncontradicted, if two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact, which must resolve such conflicting inferences in the absence of a rule of law specifying the inference to be drawn. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630-631.) Substantial evidence is evidence of ponderable legal significance, reasonable in nature, credible, and of solid value. (Id. at p. 631.) The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record. [Citation.] (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 652.)

B. Doctrine of Implied Findings

After a nonjury trial, the doctrine of implied findings mandates that the reviewing court assume that the trial court made whatever findings are necessary to sustain the judgment. (Michael U. v. Jamie B. (1985) 39 Cal.3d 787, 792-793; accord, Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58; Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 140.) An appellant may only avoid the application of the doctrine, thus preserving its right to argue that the trial court erred by failing to make factual findings on an issue, by requesting a statement of decision and bringing any ambiguities and omissions in the statement of decision to the trial courts attention. (Code Civ. Proc.,  632, 634;[8]Arceneaux, supra, 51 Cal.3d at pp. 1133-1134; Fladeboe v. American Isuzu Motors Inc., supra, 150 Cal.App.4th at pp. 58-59.) [I]f a party does not bring such deficiencies to the trial courts attention, that party waives the right to claim on appeal that the statement was deficient in [those] regards, and hence the appellate court will imply findings to support the judgment. (Arceneaux, supra, 51 Cal.3d at pp. 1133-1134.)

Thus, when a statement of decision has been issued, the doctrine of implied findings (1) directs the appellate court to presume that the trial court made all factual findings necessary to support the judgment so long as substantial evidence supports those findings and (2) applies unless the omissions and ambiguities in the statement of decision are brought to the attention of the superior court in a timely manner. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.)

In this case, the trial courts tentative decision expressly provided that it would become the statement of decision, unless within ten days any party specifie[d] controverted issues or [made] proposals not covered therein. Greenwood does not argue that his supplemental brief following trial and tentative ruling, which was filed in propria persona more than 10 days later, brought the ambiguities and omissions complained of in this appeal to the attention of the trial court. The trial court, in its order regarding judgment, determined that Greenwoods supplemental brief was not an appropriate specification of controverted issues or proposals for findings not covered in the courts tentative decision, and determined that with no request for a statement of decision having been made by either side, the tentative decision shall become the statement of decision. Thus, the tentative decision became a statement of decision and the doctrine of implied findings applies to this case. (Arceneaux, supra, 51 Cal.3d at pp. 1133-1134; Slavin v. Borinstein (1994) 25 Cal.App.4th 713, 718-719.) We will review the trial courts implied findings to determine whether they are supported by substantial evidence. (Michael U. v. Jamie B., supra, 39 Cal.3d at p. 793.)

C. Larkspur Property

With respect to the Larkspur Property, Greenwood argues that the judgment on the Murphys cross-complaint should be reversed because: (1) the trial courts finding that Greenwoods drawings did not adequately provide for a completed tension ring system and that this deficiency caused the ensuing problems is unsupported by substantial evidence; (2) the amount awarded as repair cost damages is unsupported by substantial evidence; and (3) the amount awarded as loan interest damages is unsupported by substantial evidence.

1. Are the Findings Underlying the Trial Courts Conclusions of Negligence and Breach of Contract Supported by Substantial Evidence?

The trial court concluded that Greenwood breached his contract to provide appropriate plans and drawings for the Larkspur residence and that the provided plans and specifications constituted practice that was not within, the ordinary skill and competence of professional engineers in this locale. [Citation.] The trial court supported this conclusion with its findings that Greenwoods drawings did not adequately provide for a completed tension ring system and that this deficiency caused the ensuing problems at the Larkspur project. Greenwood argues that these findings are not supported by substantial evidence.

(a) Is the Finding that Greenwoods Drawings Did Not Adequately Provide for a Completed Tension Ring Supported by Substantial Evidence?

As noted above, Greenwoods plans required the use of a tension ring system that connects the walls and the roof beams at the four corners to prevent the walls from deflecting outward under the roof load. Instead of an L-shaped metal bracket, the March 2001 revised plans called for a plywood arch for the fourth corner at the entrance to the bedroom.

The Murphys expert testified that Greenwoods drawings did not adequately demonstrate what the arch was to look like or how it was to connect to the adjoining walls in order to give a contractor sufficient information to complete the tension ring. The drawings themselves confirm this testimony. Given this evidence, it is clear that substantial evidence supports the trial courts finding that Greenwoods drawings did not adequately provide for a completed tension ring system . . . .

(b) Is the Trial Courts Causation Finding Supported by Substantial Evidence?

Greenwood argues that substantial evidence does not support the trial courts finding that the tension ring deficiency in Greenwoods drawings caused the ensuing problems at the Larkspur project. Greenwood argues that the incomplete tension ring was actually caused by Craig Murphys failure to ask Greenwood what the arch should look like or how it should be attached . . . .

Greenwood points to the fact that both sides experts agreed that a contractor has a duty to inquire when he or she has questions about the design intent of the drawings or when a contractor wants to make modifications. Accordingly, Greenwood claims that [Craig] Murphy did not follow the drawings and instead installed a beam over the bedroom entrance and that [t]here is no evidence in the record that [Craig] Murphy ever sought or obtained Greenwoods written approval for this change, contrary to his duty as a contractor and contrary to the requirements of the drawings themselves.

The Murphys do not dispute that Craig Murphy installed a beam instead of an arch, but point to evidence that Greenwood orally approved the substitution in April or May 2001before installation. Both Craig Murphy and Greenwood testified that they discussed the fact that installation of the beam should be according to the typical details on the plans. We reject Greenwoods contention, based on notes in the plans themselves, that only written approval of the substitution is sufficient to meet the standard of care. The trial court was entitled to rely on the testimony of the expert witnessesnone of whom testified that written approval of the substitution was required. Furthermore, as Greenwood himself points out, when a professional person is accused of negligence in failing to adhere to accepted standards within his profession the accepted standards must be established only by qualified expert testimony . . . . (Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278, 313.)

Greenwood makes much of the alleged insufficiency of Craig Murphys connection of the beam with only toe-nailing (nailing at an angle) but without a continuous top plate over the beam. Although Greenwoods expert was initially of the opinion that the tension ring would have been completed if Craig Murphy had installed the beam according to typical details contained in the January 2001 initial plans, which provided for continuous top plates, the Murphys expert testified that Craig Murphy could not have installed continuous top plates given that Greenwoods drawings provided for an arch out of alignment with one of the connecting walls.[9] Greenwoods expert even conceded on cross-examination that all of the corners needed to be supported in a manner stronger than the normal stud wall construction provided in the typical details. Given the Murphys experts further testimony that the water intrusion was likely caused by movement in the new wall, which changed the slope of the deck and allowed rainwater to drain toward rather than away from the bedroom,[10] it is clear that substantial evidence supports the trial courts causation finding.

2. Are the Repair Cost Damages Supported by Substantial Evidence?

Greenwood argues that even if the trial courts conclusions with respect to breach, negligence, and causation are upheld, the award of $118,500 in repair cost damages is unsupported by substantial evidence. The trial court noted in its statement of decision that Robin Murphy accounted for the costs and accumulated damages at the Larkspur property. She testified as the accounting manager for the project and provided a listing of Escalle Lane Repair Costs. (Exhibit 77)[11] The trial court awarded a total of $118,500 as repair cost damages, which represented the expenses in exhibit 77 minus a setoff of $1,500 for foundation work that would have been required in any case.[12]

Greenwood takes issue with exhibit 77, claiming it is insubstantial evidence to support the trial courts award because it is hearsay and lacks foundation. Greenwood cannot argue that exhibit 77 is inadmissible because he stipulated at trial to its admission, reserving only his right to argue regarding the weight of the evidence. However, Greenwood asserts that because [exhibit 77] was hearsay and lacked foundation, the compilation does not constitute substantial evidence. We reject Greenwoods argument. Inadmissible evidence admitted without objection is sufficient to support a judgment. (Merchant etc. Assn. v. Kellogg E. & D. Co. (1946) 28 Cal.2d 594, 599 [it is well settled that where hearsay testimony is admitted without objection, such evidence may be considered on appeal in support of the trial courts findings]; Powers v. Board of Public Works (1932) 216 Cal. 546, 552.)

It is of little import that the Murphys did not present invoices, bills or cancelled checks as additional evidence to support exhibit 77. Greenwood has cited no authority, and we know of none, requiring a plaintiff to submit invoices to establish damages. Craig Murphy testified that the expenses listed in exhibit 77, with the exceptions noted below, related to relevant repairs made to the Larkspur Property. Robin Murphy testified that she prepared exhibits 62 and 77 by taking information from the bookkeeper who managed the books for the Escalle Lane project, pulling out the relevant paid expenses, exporting them to Excel, tallying them by subject, and preparing totals. Exhibit 77 is not insubstantial evidence merely because the Murphys could not precisely identify a handful of specific entries.

However, we do find merit in Greenwoods argument that the repair cost damage award cannot be maintained because it includes expenses that the Murphys conceded were duplicated or were not, in fact, repair costs. The Murphys concede that $1,442.53 of the repair costs listed in exhibit 77 had been duplicated and asked that the trial court deduct that amount. The Murphys also concede that charges for $91.87 and $58.69 were improperly included in the repair expenses for the Larkspur Property. Together, these items amount to $1,593.09. However, there is no indication that the trial court actually subtracted out this sum, as its only indicated subtraction was $1,500 for foundation work.

Despite their concessions, the Murphys argue that we must imply findings to support the judgment, pursuant to the doctrine of implied findings. To affirm a damage award of $118,500, substantial evidence must support an implied finding that repair costs totaled $121,593.09 before deductions of $1,500 for the foundation and $1,593.09 for the improper costs noted above. Exhibit 77 only shows a total of $120,178.40 in repair costs for the Larkspur Property. Because the Murphys have conceded that Exhibit 77 itself lists every single individual payment made by the Murphys for the repair costs, any implied finding that the Murphys incurred more than $120,178.40 in repair costs, before deductions, is unsupported by substantial evidence. The evidence is insufficient to support the repair cost damages award because no reasonable interpretation of the record supports the amount awarded. (San Diego Metropolitan Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931; Sperisen v. Heynemann (1957) 149 Cal.App.2d 228, 234-235 [reversing judgment for $3,500 and remanding for retrial when evidence showed loss suffered was no greater than $3,250].) We reverse the judgment on the issue of repair damages for the Larkspur Property and remand for a redetermination of the proper amount of the damages.

3. Are the Loan Interest Damages Supported by Substantial Evidence?

The trial court awarded the Murphys $95,345 in damages for loan interest incurred while they made repairs and were unable to market the Larkspur Property. Greenwood argues that the amount awarded is unsupported by substantial evidence. The trial court agree[d] that [loan interest] damages, if shown, can be described as proximately caused by either Greenwoods negligence or his breach of the contract to design an appropriate structure for [the Murphys]. (Civil Code 3300 and 3333) The trial court awarded the Murphys damages for interest charges on the loans on the Escalle property from a period beginning on January 1, 2003, and extending through April of 2004. Those interest charges amount to $95,345. (See Exhibit 76, charges for 2003 of $69,613 plus 4 months of 2004). Substantial evidence supports the trial courts figure.

Greenwood takes issue with exhibit 76, which is another compilation exhibit. We reject Greenwoods argument that exhibit 76 is insubstantial evidence because it lacks foundation.[13] Robin Murphy testified that exhibit 76 is a detail of all the interest that was accrued for loans on the property at 122 Escalle Lane on a month-by-month and a year-by-year basis. Robin Murphy further testified that she prepared exhibit 76 by looking at the loan documents that Craig had on file. [She] created amortization tables for each loan, and then took the interest for the period as noted on the front. Using loan calculators, Robin Murphy entered the interest rate and loan amount, loan period, number of payments, and the start date of the loan to determine how much interest, how much principal, et cetera, is due on the loan.

Next, Greenwood argues that the loan interest entries in exhibit 76 are not adequately supported by underlying loan documentation in the record. Greenwood concedes that exhibits 15, 16, and 17 are promissory notes to Patricia Montarella that support the three loans identified by her name in exhibit 76. However, Greenwood claims that there is no documentary support for the other 13 loans identified in exhibit 76. We reject Greenwoods unsupported argument that backup documentary support is necessary to establish damages. A similar argument was rejected in Heaps v. Heaps (2004) 124 Cal.App.4th 286, wherein the appellant argued that there was no substantial evidence supporting the value of a trust because the valuation was based on a schedule of assets, which was partially based on nonadmitted evidence (id. at p. 293). However, the reviewing court affirmed, concluding because the schedule was a general compilation of documents that could not be examined individually by the court without great loss of time, it was admissible. (See Evid. Code,  1523, subd. (d) [oral testimony of the content of a writing is not made inadmissible . . . if the writing consists of numerous accounts or other writings that cannot be examined in court without great loss of time, and the evidence sought from them is only the general result of the whole].) (Heaps v. Heaps, supra, 124 Cal.App.4th at pp. 293-294.)

Although Greenwood may be correct that not all of the loan amounts and interest rates evidenced in exhibit 76 can be tied to supporting loan documentation in the record, Greenwood has established little more than a conflict in the Murphys own evidence. We cannot second-guess the trial courts reliance on exhibit 76 and Robin Murphys testimony that it was true and accurate. Conflicts and even testimony which is subject to justifiable suspicion do not justify the reversal of a judgment, for it is the exclusive province of the trial judge or jury to determine the credibility of a witness and the truth or falsity of the facts upon which a determination depends. [Citations.] (Evje v. City Title Ins. Co. (1953) 120 Cal.App.2d 488, 492 [affirming judgment based on testimony of single witness that was contradicted by witnesss own documents].) Testimony may be rejected only when it is inherently improbable or incredible, i.e., unbelievable per se,  physically impossible, or  wholly unacceptable to reasonable minds. [Citations.] (Oldham v. Kizer (1991) 235 Cal.App.3d 1046, 1065.) Substantial evidence supports the amount awarded by the trial court as loan interest damages.

D. Mill Valley Property

With respect to the Mill Valley Property, Greenwood argues that the judgment on the Murphys cross-complaint should be reversed because: (1) the trial courts finding that submission of the plans took 16 months is unsupported by substantial evidence; (2) the trial courts finding that Greenwood was responsible for 10 months delay is unsupported by substantial evidence; (3) the trial court erred in concluding that the limitation of liability clause was unenforceable; and (4) the amount awarded as loan interest damages is not supported by substantial evidence. Greenwood further argues that the judgment on his complaint must be reversed because the trial court erred in concluding that Greenwood take nothing on his claim for breach of contract.

1. Are the Findings Underlying the Trial Courts Conclusions of Negligence and Breach of Contract Supported by Substantial Evidence?

The trial courts conclusions that Greenwood breached his contract and standard of care in connection with the Mill Valley Property are supported by its finding that submission of the plans for the Mill Valley Property actually took 16 months. Greenwood argues that this finding is unsupported by substantial evidence.

Greenwood contends that the trial court improperly assumed that Greenwood worked on a single set of drawings during the entire 16 months and that Greenwood was able to work on the plans during the entire 16 months. However, the statement of decision does not indicate that the trial court made any such assumptions. The trial court found only that [u]ltimately, the plans were not submitted until July 9, 2003, sixteen months after the initial retention. Greenwood relies on his own testimony regarding the permitting process: The process first requires the designer to prepare an initial set of drawings reflecting the project design and to submit them to the city planning department for design review and, if necessary, the issuance of a variance. (RT 46:21-26.) Second, after the planning department approves the design, the designer prepares detailed construction plans and submits them to the building department for plan check to determine whether the plans comply with the building code. (RT 46:27-47:3.) Certain additional items may then have to be added to the drawings, after which the building department approves the plans and issues a building permit. (RT 47:3-9.) In this particular instance, the city also required post-construction as-built plans to be submitted so the building department would provide final signoff that the permitted work was completed. Regardless of the fact that there were various plans submitted to the City before July 9, 2003, it is undisputed that the final permit for the project was based on the submission of as-built plans on July 9, 2003. The fact that 16 months was the total time elapsed between the oral agreement and the submission of the as-built plans is amply supported by the evidence.

Furthermore, Greenwoods argument is not a valid attack on the trial courts conclusion that he breached the contract or his standard of care. Greenwoods argument boils down to a contention that the court charged Greenwood with ten months of delay instead of a maximum of two. The trial court found that it is reasonable to use the six-month period as the outside time for completion of the plans.[14]Accordingly, the trial court calculated delay damages beginning on September 1, 2002approximately six months after the oral agreement on February 22, 2002. Even if Greenwood were correct that he can only be charged with two months of delay in submitting the plans, he would still have breached the contract and his standard of care.

2. Is the Trial Courts Assessment of Damages For a 10-Month Period of Delay Supported by Substantial Evidence?

Greenwood also argues that there is no substantial evidence to support the courts finding that Greenwoods share of the delay for purposes of assessing damages was ten months. Greenwood argues that the evidence in fact shows that there were at least three different sets of drawings that different city departments required in successive phases and that there were numerous time periods when Greenwood could not work on [the plans] because they were under review by the city (a total of four months) or the project was in construction (a total of four more months). Greenwood concedes that he cannot challenge the trial courts decision to credit the Murphys testimony, over his own, about whose actions caused the delays. But, that is precisely what he attempts with this argument. We are mindful that the trial court found that [g]enerally speaking . . . the Murphys contentions [were] more credible than Greenwoods.

First, Greenwood asks us to compare apples with oranges. After finding that six months would be a reasonable outside time limit for completion of the plans, the trial court calculated delay damages beginning on September 1, 2002 and extending to the date when the plans were finally submitted, July 17, 2003. Rather than preparing a complicated tally of which party (Greenwood, the City, or the Murphys) was responsible for each week or day that the final plans went unsubmitted, the trial court used a simpler approach. The trial court based its finding that six months was a reasonable period for completion of the plans on the fact that the Murphys loans provided for a six-month completion period and this circumstance had been explained to Greenwood. In fact, the evidence supporting this six-month completion period shows that it was a start to finish period for the project as a wholenot simply the period in which Greenwood alone was to complete his drawings. It appears implicit in the trial courts finding that six months represented a start to finish time frameincluding review by the City, construction, and Greenwoods design work. Thus, it appears that the trial court merely subtracted the reasonable start to finish time (six months) from the actual start to finish time (16 months). We cannot infer, as Greenwood would have us, that the trial court meant that six months would be a reasonable period of time for Greenwood alone to complete his design workwith no allowance for city review and construction time.

Even if we assume that the trial court allocated delay to Greenwood, the Murphys, and the City, Greenwood has not demonstrated that the trial courts allocation is unsupported by substantial evidence. Greenwood himself testified that there were three phases to the Mill Valley construction project: (1) Carl Ashleys drawings;[15] (2) the carport; and (3) conversion of the garage to a bedroom. The testimony was clear that the carport plans were a gateway item, and that Greenwood was aware of that fact. Craig Murphy testified that they needed Greenwood to first prepare plans for a carport so that they could then move on to converting the garage into a bedroom and bath. The City would not issue a permit for the garage conversion until the carport was built because replacement of the off-street parking was required. In fact, the building official from the City testified that he recommended to Greenwood that, in order to expedite things, he submit the plans for the carport first so that one [set of plans] can get going while the other is getting figured out.

The actual timeline of events illustrates how Greenwoods actions caused the delays. Although Greenwood orally agreed in February 2002 to prepare carport plans by March 8, 2002, the record shows that a variance for the construction of a carport was not approved until July 10, 2002. Next, on October 28, 2002, Greenwood submitted carport plans for plan check to the City. The City requested corrections to those plans in a document dated November 14, 2002, which Greenwood testified to receiving on November 26, 2002. Greenwood responded to the City on December 12, 2002. Thereafter, on January 16, 2003, the City issued a building permit for the carport and Murphy was able to begin its construction. It took approximately six weeks to construct the carport. But, as of February 4, 2003, the Murphys still had not received a permit set of plans for the garage conversion. On or about May 26, 2003, Murphy completed all construction work, including the garage conversion, at the Mill Valley Property. On July 9, 2003, Greenwood submitted as-built plans that covered the garage conversion to the City. The City approved the as-built plans on July 17, 2003.

Greenwood argues that he should not be responsible for a total of four months that the City allegedly reviewed the plans. In support, Greenwood contends that he submitted the initial set of design documents to the city planning department on May 22, 2002, and that [i]t took the city nearly two months, until July 10, 2002, to complete its review and approve the variance. The evidence shows only that Greenwood prepared certain drawings that are dated May 22, 2002. However, resolving all conflicts in the evidence in favor of the Murphys,[16] the evidence shows that the carport plans were not submitted to the City until July 8 or 9, 2002. Thus, Greenwoods argument that [i]t took the city nearly two months . . . to complete its review and approve the variance is not supported by the record. At most, the City was responsible for two months of delay.

Greenwood also argues that he cannot be charged with delay for the four-month period between the time the permit for the carport was approved and construction was completed at the Mill Valley Property. Tellingly, Greenwoods assertion that the preparation or completion of the next set of required drawings was beyond Greenwoods power for this four-month period is not supported by citation to the record. Greenwoods argument relies on the faulty premise that he was at a standstill through no fault of his own during the four-month construction period. Greenwood ignores that the normal process is to have completed plans before construction begins. The Murphys expert testified that the normal permitting process proceeds as follows: [T]he first thing is the design, which results in construction documents that are prepared that are adequate for submittal to the local building department for permit purposes. After the permit is issued, then construction can begin.

Thus, the trial court certainly could have concluded from the evidence that this four-month standstill was actually caused by Greenwoods own delay in preparing the gateway carport plans. The trial court reasonably could have inferred that, had Greenwood acted in a timely manner, the final permits for both the carport and the garage could have been obtained without the necessity of waiting through anything beyond six weeks of construction timethe time it took to construct the carportand without the necessity of submitting as-built plans. Thus, even using Greenwoods suggested approach, the record only compels a conclusion that the delay was out of Greenwoods control for less than four months of the total 16 months. Thus, the trial courts assessment of delay damages for 10 months (September 2002 to July 2003) is supported by substantial evidence.

3. Did the Trial Court Err in Concluding that the Limitation of Liability Clause was Unenforceable?

Greenwood argues that the trial court erred in concluding the limitation of liability clause was unenforceable. With respect to the written contract for the Mill Valley Property, the trial court stated that it could not agree that these were parties of relative equal bargaining power and that this was an arms-length transaction. Rather, the Murphys signed because they had to in order to get the plans filed. In that instance, Greenwood had the superior bargaining power and presented the Murphys with what was essentially a standardized adhesion contract of exculpation . . . Markborough [California, Inc. v. Superior Court (1991) 227 Cal.App.3d 705, 715 (Markborough)], Tunkl v. Regents of University [of California] (1963) 60 Cal.2d 92, 98-101. Accordingly, the trial court found that the liability limitation clause was . . . not the product of an express negotiation or arms-length bargaining by the parties. As such, the single-sentence clause runs afoul of the prohibition in Civil Code Section 2782 and will not be enforced.

Greenwood argues that the trial court erred in determining that the limitation of liability clause violates Civil Code sections 2782 and 2782.5. Civil Code section 2782, subdivision (a) provides: Except as provided in Sections 2782.1, 2782.2, 2782.2, 2782.5, and 2782.6, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract and that purport to indemnify the promisee against liability for damages for death or bodily injury to persons, injury to property, or any other loss, damage or expense arising from the sole negligence or willful misconduct of the promisee or the promisees agents, servants, or independent contractors who are directly responsible to the promisee, or for defects in design furnished by those persons, are against public policy and are void and unenforceable . . . . Civil Code section 2782.5 provides: Nothing contained in Section 2782 shall prevent a party to a construction contract and the owner or other party for whose account the construction contract is being performed from negotiating and expressly agreeing with respect to the allocation, release, liquidation, exclusion, or limitation as between the parties of any liability (a) for design defects, or (b) of the promisee to the promisor arising out of or relating to the construction contract.

In Markborough, the Fourth District Court of Appeal held that a provision in a construction contract limiting a partys liability to the developer of the property for damages caused by the engineers professional errors and omissions is valid under Civil Code section 2782.5 if the parties had an opportunity to accept, reject or modify the provision. (Markborough, supra, 227 Cal.App.3d at p. 708, fn. omitted.) The case concerned a contract between Markborough California, Inc., a subsidiary of the Hudson Bay Company, and an engineer for the design of a lake to be constructed as part of Markboroughs development project. (Id. at pp. 708-709.) The contract included a clause that limited the engineers liability to the greater of $50,000 or his consulting fee, which was $67,640. (Id. at p. 709.) The lake liner eventually failed, causing Markborough to incur over $5 million in remedial expenses. (Id. at p. 708.) After filing suit for breach of contract, Markborough argued that the limitation of liability clause was invalid pursuant to Civil Code section 2782.5. (Id. at pp. 708-709.) Markborough contended that Civil Code section 2782.5 is an exception to Civil Code section 2782, and accordingly the phrase negotiating and expressly agreeing must be narrowly construed to require actual oral discussion of the clause after full disclosure of the projects risks. (Id. at p. 710.)

The court held that negotiating as used in [Civil Code] section 2782.5 and applied to a particular contract containing a limitation of liability clause simply means that the agreement was reached between parties wherein each party had an opportunity to accept, reject or modify such a provision. If the parties had such an opportunity with respect to the provision, the provision is valid even if there is no actual discussion regarding the provision but rather it is simply proposed and accepted. (Markborough, supra, 227 Cal.App.3d at p. 715, fns. omitted.) The court noted that whether the parties had such an opportunity to negotiate will depend upon a consideration of all of the facts surrounding the transaction, including but not limited to such facts as whether the parties were of relative equal bargaining power and whether it was an arms length transaction. (Id. at p. 715, fn. 8.) Applying this standard to the undisputed facts before it, the court found that Markborough had an opportunity to request a change to the limitation of liability clause because the engineer had sent the contract to Markborough with a cover letter that read: If the contract documents are acceptable to you, we can begin work as soon as we receive a copy of the signed contract. We would, of course, have to approve any requested changes before proceeding. (Id. at pp. 715-716.) The limitation of liability clause was deemed valid. (Id. at p. 716.)

We turn to the question of whether the parties in this case had an opportunity to accept, reject, or modify the limitation of liability clause. Pursuant to Markborough, the determination will depend upon a consideration of all of the facts surrounding the transaction, including but not limited to such facts as whether the parties were of relative equal bargaining power and whether it was an arms length transaction. (Markborough, supra, 227 Cal.App.3dat p. 715, fn. 8.) Greenwood argues that no evidence supports the finding that the parties did not actually have equal bargaining power, but whether they did or did not is irrelevant given that the Murphys actually (and successfully) negotiated the Mill Valley contract with Greenwood. We review the trial courts findings for substantial evidence. (See Murphy v. Check n Go of California, Inc. (2007) 156 Cal.App.4th 138, 144 [when an unconscionabilitydetermination is based upon the trial courts resolution of conflicts in the evidence, or on the factual inferences which may be drawn therefrom, we consider the evidence in the light most favorable to the courts determination and review those aspects of the determination for substantial evidence ]; Markborough, supra, 227 Cal.App.3d at pp. 715-716 & fn. 8.)

The Murphys and Greenwood did explicitly negotiate Greenwoods hourly rate when Greenwood presented the contract to them in person. The Murphys were successful in reducing Greenwoods fee from $135 per hour to $125 per hour. Although this evidence tends to suggest an arms-length transaction between parties of equal bargaining powerand that the Murphys could have also negotiated a change in the limitation of liability clausethe record contains substantial evidence to the contrary.[17] Robin Murphy testified that she thought $125 per hour was still too high, but that they needed [Greenwood] to put down in writing an agreement on a date that he would have these done because at this point it had been five months, so we were willing to sign it with that hourly rate. Furthermore, Craig Murphy testified that he felt compelled to hire Greenwood because he believed that Greenwood was the only engineer who could sign off on an earlier concrete foundation pour that had been completed without the proper inspection.[18] Craig Murphy testified that he felt finding another engineer to take over the project would be next to impossible because no one would want to take on potential liability for the work of another. Craig Murphy relied on his experience as a general contractortestifying that on all the jobs he had done its always required for the engineer to sign off on the work thats done.

Greenwood argues that it is irrelevant that the Murphys subjectively felt they had no choice but to sign the contract because the standard for procedural unconscionability is objective rather than subjective. Even assuming that an objective standard applies under Civil Code section 2782.5,[19] the existence of other licensed architects and engineers does not contradict Craig Murphys belief that getting another engineer to take over after the concrete pour would have been next to impossible. Furthermore, the building official from the City testified that, in the absence of a letter from the engineer who observed the work, the City could have required the Murphys to jackhammer out the poured concrete for inspection, or required X-rays to be performed. Thus, there was evidence that the Murphys fears of hardship, should they decline to accept the contract, were objectively reasonable.

Given the evidence described above, and the evidence that Greenwood was aware of the Murphys financial and time pressures, we conclude that the trial courts finding that this was not an arms-length transaction between parties of equal bargaining power is supported by substantial evidence. The trial courts findings support a conclusion that the parties did not negotiate the limitation of liability clause, as required by Civil Code section 2782.5.[20] Because the findings underlying the trial courts conclusion of unenforceability under the Civil Code are supported by substantial evidence, we need not consider whether the limitation of liability clause is unconscionable or inadequately clear and explicit.

4. Are the Loan Interest Damages Supported by Substantial Evidence?

The trial court awarded the Murphys $85,250.06 in damages for loan interest incurred during the time they were unable to market the Mill Valley Property because of Greenwoods delay. Greenwood argues that the amount awarded is unsupported by substantial evidence. The trial court noted that [t]he Murphys have provided evidence of loans undertaken to finance construction of the Mill Valley property. (See loan documents and summary of interest expenses in Exhibit 66.) Accordingly, the trial court awarded the Murphys damages for interest and taxes on the notes in question in the amount of $85,250.06 (calculated as $81,350.80 through June 30, 2003 plus 17 days in July at $288.78 per day; see Exhibit 66 for monthly interest and tax calculations on loans.)

Greenwood challenges the trial courts reliance on exhibit 66, another compilation exhibit. Robin Murphy testified that exhibit 66 is an accounting, a detailed record of all the loans that we had on Del Casa and the interest that we paid monthly on those loans. Craig Murphy also confirmed that exhibit 66 accurately reflected the actual payments made on loans tied to the Mill Valley Property. Robin Murphy further testified that she prepared exhibit 66 by reviewing the Murphys loan records. Therefore, we reject Greenwoods argument that exhibit 66 is not substantial evidence because it lacked foundation.

Greenwood again argues that exhibit 66 cannot constitute substantial evidence to support the amount of damages awarded because it is inadequately supported by the loan documentation in the record. Greenwood concedes that exhibits 26 and 27 support the interest payments identified by the name Dee Murphy Binns in exhibit 66. However, Greenwood claims that there is no documentary support for the other interest payments identified in exhibit 66. Although Greenwood may be correct that not all of the loan amounts and interest rates evidenced in exhibit 66 can be tied to supporting loan documentation in the record, Greenwood has again established little more than a conflict in the Murphys evidence. For the same reasons we noted with respect to the Larkspur Property, we will not second-guess the trial courts reliance on exhibit 66 and the Murphys testimony that it accurately reflected the interest they paid.

5. Did the Trial Court Err by Denying Greenwood Any Recovery for his Unpaid Fees?

Greenwood argues that the trial court erred in concluding that Plaintiff Greenwood is to take nothing on his complaint for damages. Greenwood bases his argument on the fact that elsewhere in the statement of decision the trial court determined that if Greenwood is to collect on his breach of contract claim, his damages will be limited to $4879.50, the billed amount less payments and the setoffs for work done without a written contract and for work done while Greenwood was not a licensed engineer.[21] (Italics added.) Although we disagree with Greenwood that the above statement shows that the trial court had already decided [Greenwood] was otherwise entitled to $4,879.50, we agree that the statement of decision is ambiguous in how the trial court resolved the Murphys liability on Greenwoods complaint.

Unassisted by the Murphys appellate brief, we have looked to the Murphys posttrial brief in an effort to illuminate the basis for the trial courts decision. In their posttrial brief, the Murphys argued the trial court should deny Greenwood any recovery on his complaint because: (1) Greenwood did not have a written contract before July 18, 2002;[22] (2) Greenwood was not properly licensed for the entire period of work;[23] (3) Greenwood materially breached both the oral and written agreements; and (4) Greenwood billed for work beyond that authorized or requested by the Murphys. Although the trial court made explicit findings and conclusions with respect to the first two grounds, the trial court does not mention the latter two, nor explain how it found in favor of defendant Murphys on the complaint filed by Greenwood for breach of the contract to pay his engineering fee.