Kaplan v. Whitmark

Filed 1/13/10 Kaplan v. Whitmark CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Patricia Yim Cowett, Judge. Affirmed in part; reversed in part.

Samuel Kaplan appeals from a judgment, following a bench trial, in his lawsuit seeking to recover from Richard Whitmark, doing business as Rancho Viejo Glass (Whitmark), with whom Kaplan contracted to install glass in a residential building. Kaplan contends that (1)  the trial court awarded inadequate damages to compensate him for Whitmark's breach of contract; and (2)  the trial court erred in concluding that Whitmark was entitled, on his cross-complaint, to recover $4,489.59 in additional charges that were not reflected in a written change order to the parties' contract.

As we will explain, we conclude (1) that Kaplan waived his challenge to the inadequacy of the damages award by not bringing a motion for new trial; and (2) that the trial court erred in awarding $4,489.59 to Whitmark on his cross-complaint.

I

FACTUAL AND PROCEDURAL BACKGROUND

Kaplan is the owner of real property in San Diego on which he was constructing a four-unit residential building. Kaplan, who is an architect, designed the building and managed the construction himself. By design, the walls on one side of the building contain a significant amount of glass.

The original contractor who Kaplan hired to install glass on the building left the job before finishing. Kaplan contracted with Whitmark to finish the glass installation. The parties agreed that to the extent possible, Whitmark would use the glass and aluminum materials already ordered by the previous glass installer.[1] Kaplan agreed to pay Whitmark $75,342.42 for the installation. If additional aluminum or glass was needed, those charges would be handled as "a change order to this contract." The parties' contract addressed the timing of Whitmark's work, providing that "[Whitmark] is allowing approximately 60 working days to complete the exterior of building providing all materials are on jobsite. [Whitmark] will start ordering material at time of signed contract."

According to the trial court's findings, Whitmark commenced work on approximately March 22, 2005, and by August 22, 2005, the project was nearly 95 percent complete. Whitmark worked with Kaplan to address "punch list" items until early October 2005, when Kaplan ordered Whitmark off the property after a verbal confrontation.

Kaplan filed suit against Whitmark alleging that he had abandoned the job, performed substandard work  necessitating Kaplan to incur expenses for repairs  and caused delays to the completion of the building.[2] At trial, Kaplan sought to be compensated both for (1) what he called "intermediate" repairs that he undertook to make the building habitable after Whitmark left the job which, according to Kaplan, cost him $26,056; and (2) the amount that it would cost to remove and replace Whitmark's installation to bring it up to the applicable standard of care  referred to by Kaplan as "permanent repairs"  which Kaplan's expert predicted would cost $166,300. Kaplan also sought $60,483 in lost rent due to the construction delays caused by Whitmark, and $190,948.30 in increased financing costs due to the delay.

Whitmark filed a cross-complaint against Kaplan alleging causes of action for breach of contract, quantum meruit and fraudulent concealment. Whitmark alleged that Kaplan still owed $7,342.42 on the $75,342.42 contract price, and owed an additional $4,489 for change orders to the contract.[3]

After conducting a bench trial, the trial court set forth its findings in a statement of decision. The trial court found that Whitmark had breached the contract by performing work that fell below industry standards, entitling Kaplan to compensatory damages under Civil Code section 3300 in the amount of $28,534.[4] The trial court specifically found that Whitmark's breach of contract was limited to its performance of substandard work and did not extend to any delay in performance.[5] Apart from an award of the costs of completing the project to address Whitmark's substandard work, which the trial court fixed at $28,534, the trial court found that "[t]he evidence did not support foreseeability of other claimed consequential damages . . . ," such as Kaplan's increased financing costs or loss of rental income, because "[t]here was no testimony [that] Kaplan gave or Whitmark had knowledge of Kaplan's unique financing issues concerning refinancing the property or renting the units."

With respect to Whitmark's cross-complaint, the trial court found that "Whitmark is entitled to . . . $4,489.59 . . . for additional materials provided to and orally authorized by Kaplan . . . , despite the language in the contract for prior approval of written change orders."

Applying an offset for the amount awarded to Whitmark on the cross-complaint, the net award to Kaplan was $24,044.41.

Kaplan appeals from the judgment, arguing that the trial court should have also awarded (1) $166,300 corresponding to the estimated cost of performing "permanent repairs" on the building; (2) the $60,483.87 in lost rent; and (3) the $190,948.30 in additional financing costs. Kaplan also challenges the trial court's finding that Whitmark was entitled to $4,489.59 for the additional materials orally authorized by Kaplan, contending that he has no obligation to pay that amount because Whitmark did not prepare a written change order for Kaplan's approval.

II

DISCUSSION

A. Kaplan Has Waived His Challenge to the Adequacy of the Damages Award by Not Filing a Motion for a New Trial

We first address a dispositive issue on which we asked the parties to provide supplemental briefing, namely whether Kaplan's failure to file a motion for a new trial challenging the trial court's damages award precludes his appellate challenge to the adequacy of that award.

In general, "a failure to move for a new trial ordinarily precludes a party from complaining on appeal that the damages awarded were either excessive or inadequate, whether the case was tried by a jury or a court without a jury." (Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 122 (Glendale Fed.).) This rule applies "where the ascertainment of the amount of damage requires resolution of conflicts in the evidence or depends on the credibility of witnesses." (Ibid.) This rule exists because parties who "first challenge the damage award on appeal, without a motion for a new trial, . . . unnecessarily burden the appellate courts with issues which can and should be resolved at the trial level." (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 919.) "[T]he trial court is in a far better position than the Court of Appeal to evaluate the amount of damages awarded in light of the evidence presented at trial." (County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1121.)

"The failure to move for a new trial, however, does not preclude a party from urging legal errors in the trial of the damage issue such as erroneous rulings on admissibility of evidence, errors in jury instructions, or failure to apply the proper legal measure of damages." (Glendale Fed., supra, 66 Cal.App.3d at p. 122, italics added.) Here, because Kaplan failed to move for a new trial, he "is precluded from attacking the adequacy of the award[] except insofar as errors of law were committed by the court below in ascertaining the amount of damage." (Ibid., italics added.) Focusing on two different aspects of his challenge to the trial court's damages award, Kaplan contends that his appeal asserts legal errors that are cognizable on appeal despite his failure to move for a new trial. We consider both arguments in turn.

1. Kaplan's Challenge to the Trial Court's Decision Not to Award Damages for the Estimated Cost of Removing and Replacing the Glass Installation Is Waived Because Kaplan Did Not Move for a New Trial

First, focusing on his challenge to the trial court's decision to award damages based on the "intermediate" repairs performed to complete the glass installation, rather than based on the estimated cost of removing and replacing the glass installation, Kaplan argues that he is making a challenge to the legal measure of damages applied by the trial court. He argues that the trial court applied the wrong legal standard because "it believed only temporary repairs were compensable."[6]

We reject Kaplan's argument because it misconstrues the trial court's decision. As we read the record, the trial court did not make a legal determination that, as Kaplan argues, only "temporary repairs were compensable." On the contrary, the statement of decision shows that the trial court, applying Civil Code section 3300,[7] arrived at the damages award by making a factual finding. The trial court specifically focused on the cost to complete the project that Whitmark had contracted to perform, and made a factual finding that the cost to complete was $28,534, relying on "Kaplan's own testimony [that] the cost to complete the project was approximately . . . $21,000 . . . ."[8]

Having established that Kaplan's challenge to the trial court's failure to include the estimated $166,300 to remove and replace the glass installation in its damages award is a challenge to a factual finding, not a challenge based on legal error, we conclude that Kaplan has waived his right to make that challenge on appeal because he did not bring a motion for a new trial. (Glendale Fed., supra, 66 Cal.App.3d at p. 122.)

2. Kaplan's Challenge to the Trial Court's Decision Not to Award Lost Rental Income and Increased Financing Costs as Damages Is Waived Because Kaplan Did Not Move for a New Trial

Second, Kaplan argues that in his challenge to the trial court's ruling on the foreseeability of certain damages, he is asserting a legal, rather than factual, error, which he may pursue on appeal despite his failure to file a motion for a new trial asserting the inadequacy of the damages award.

The foreseeability issue arose in the context of the trial court's ruling on Kaplan's claim to compensation for increased financing costs and lost rental income due to Whitmark's breach of contract. Applying the principle that "the promisor is not required to compensate the injured party for injuries that he had no reason to foresee as the probable result of his breach when he made the contract" (Coughlin v. Blair (1953) 41 Cal.2d 587, 603), the trial court declined to award damages for increased financing costs and lost rental income because it found that those damages were not foreseeable. In making its finding, the trial court explained that "[t]here was no testimony Kaplan gave [notice of] or Whitmark had knowledge of Kaplan's unique financing issues concerning refinancing the property or renting the units."

Kaplan argues that in challenging the trial court's ruling that the increased financing costs and lost rental income were not foreseeable injuries, he is asserting legal error rather than challenging a factual finding. We disagree. A decision on the foreseeability of damages resulting from a breach of contract is a question of fact (Sun-Maid Raisin Growers v. Victor Packing Co. (1983) 146 Cal.App.3d 787, 790), and the trial court treated it as one, relying on evidence of the parties' dealing with each other to reach its finding. Because the ruling on foreseeability is a question of fact, Kaplan's challenge on appeal is to a factual finding, and is not an assertion of legal error. Accordingly, Kaplan has waived the argument because he failed to file a motion for a new trial challenging the adequacy of the damages award. (Glendale Fed., supra, 66 Cal.App.3d at p. 122.)

In sum, having rejected both of Kaplan's arguments in support of his contention that his challenge to the damages award asserts legal, rather than factual, errors, we conclude that because Kaplan did not file a motion for a new trial, he has waived his arguments that the trial court should have awarded additional damages to remedy Whitmark's breach of contract.

B. The Trial Court Erred in Awarding$4,489.59 as an Offset Under the Cross-complaint

We next consider Kaplan's argument that the trial court erred in awarding Whitmark $4,489.59 on his cross-complaint, applying that amount as an offset to the damages awarded to Kaplan. As we will explain, we agree with Kaplan that the award should be reversed.

1. Whitmark Was Not Entitled to Recover the Amount of $4,489.59 Under a Breach of Contract Theory, Because the Parties' Contract Required Written Change Orders

The trial court's award to Whitmark of $4,489.59 was based on Whitmark's purchase and installation of additional glass as reflected in an invoice from Whitmark to Kaplan dated September 2, 2005. Whitmark testified that Kaplan orally preapproved the ordering of the additional glass, and the trial court credited this testimony, finding that the additional glass was "orally authorized by Kaplan." Whitmark admitted, however, that he did not send a written change order to Kaplan before ordering the glass.

According to Kaplan, the trial court erred in awarding the $4,489.59 for the provision and installation of the additional glass because his contract with Whitmark required preauthorization by written change order to purchase additional glass.

To assess Kaplan's argument we focus on the terms of the contract between Whitmark and Kaplan. As relevant here, the contract states: "Some of the glass was preordered. [Whitmark] will attempt to use all preordered units of glass . . . . Any preordered glass that does not fit and has to be reordered by [Whitmark] will be an extra charge as a change order to this contract." As we read this language, it is ambiguous whether a change order must always be in writing to be binding. Because of this ambiguity, we turn to extrinsic evidence to interpret the contract. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 ["parol evidence is properly admitted to construe a written instrument when its language is ambiguous"].) Where, as here, the extrinsic evidence is not in conflict, interpretation of a contract is a question of law for our independent review. (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1267.)

The undisputed extrinsic evidence at trial supports an interpretation of the contract as requiring preapproval of additional glass purchases through written change orders. Kaplan testified that the term "change order" is an industry term meaning that "if there is a change in the documents, that it's reviewed and approved by the architect and the owner and is presented to the architect . . . by the subcontractor." According to Kaplan, he understood when signing the contract that any change orders would need to be submitted in writing for his approval. Whitmark, in his testimony, agreed with Kaplan's description of a change order as a preapproved writing authorizing additional charges. Whitmark testified, "In construction . . . a change order would mean me writing up a change order, taking it back to the office, making sure that everything is right, getting it to Mr. Kaplan, having him sign it, and then returning it to me so it could go in the proper order." Whitmark explained that it was "probably" his own "fault" that a written change order was not prepared, because he was "trying to stay ahead instead of getting farther behind" by obtaining only an oral authorization from Kaplan. In addition, the evidence at trial established that Whitmark had supplied Kaplan with a written change order earlier in the construction project for a different order of glass, which stated that it "needs to be signed, paid, and returned to [Whitmark] before [the] order can be placed." Thus, Whitmark apparently understood that the contract required the purchase of additional glass to be preapproved by Kaplan through written change orders, but simply elected not to follow that procedure with respect to the $4,489.59 reflected in the September 2, 2005 invoice. Based on this undisputed evidence, we conclude that the contract between Kaplan and Whitmark required that Whitmark obtain a written change order before incurring additional charges for the ordering and installation of glass not already onsite.

Because the contract required a written change order, and Whitmark did not obtain one for the provision and installation of the glass reflected in the September 2, 2005 invoice, Kaplan was not contractually obligated to pay Whitmark the corresponding amount of $4,489.59.

2. Whitmark Was Not Entitled to Recover the Amount of $4,489.59 Under a Quantum Meruit Theory

In addition to seeking recovery under a breach of contact theory, Whitmark also sought recovery of the $4,489.59 under the theory of quantum meruit. The trial court appeared to have relied on this theory for its award of $4,489.59, explaining that it was making the award "despite the language in the contract for prior approval of written change orders."

We conclude, however, that an award of $4,489.59 under a quantum meruit theory is not available to Whitmark here because an express contract exists on the same subject. "A quantum meruit or quasi-contractual recovery rests upon the equitable theory that a contract to pay for services rendered is implied by law for reasons of justice. . . . However, it is well settled that there is no equitable basis for an implied-in-law promise to pay reasonable value when the parties have an actual agreement covering compensation. . . . [] Quantum meruit is an equitable theory which supplies, by implication and in furtherance of equity, implicitly missing contractual terms. Contractual terms regarding a subject are not implicitly missing when the parties have agreed on express terms regarding that subject." (Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1419, citations omitted; see also Haggard v. Kimberly Quality Care, Inc. (1995) 39 Cal.App.4th 508, 521 [" ' "There cannot be a valid express contract and an implied contract, each embracing the same subject, but requiring different results" ' "]; Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 613.) Here, the parties agreed to an express contract providing that extra charges to the contract required a written change order. We thus may not imply a contract under the doctrine of quantum meruit that would require a different result.

We accordingly conclude that the trial court erred in awarding Whitmark $4,489.59 under his cross-complaint as an offset to the damages it awarded to Kaplan.

DISPOSITION

The trial court's award of $4,489.59 to Whitmark on his cross-complaint is reversed. In all other respects the judgment is affirmed. The parties are to bear their own costs on appeal.

IRION, J.

WE CONCUR:

BENKE, Acting P. J.

HUFFMAN, J.

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[1] According to Kaplan's testimony, the previous glass installer had already installed approximately 90 percent of the aluminum needed for the glass installation and approximately 80 percent of the glass.

[2] Kaplan's complaint against Whitmark originally contained causes of action for breach of contract, negligence and fraud, but the trial court sustained a demurrer to the negligence and fraud causes of action without leave to amend.

[3] The fraudulent concealment cause of action was based on Kaplan's alleged concealment of erroneous plans and specifications and improper framing that would make the glass installation job more difficult than it appeared.

[4] It is not completely clear to us how the trial court derived the figure of $28,534. However based on the statement of decision, the trial court appears to have derived its compensatory damages award on the "intermediate" repairs identified by Kaplan to make the building habitable, but appears to have rejected Kaplan's claim to an additional amount for the estimated cost of removing and replacing the glass installation, on the ground that those damages were not foreseeable. We based this understanding on the following portion of the statement of decision, in which the trial court responded to the questions posed by Kaplan:

"Question 19: Whether the costs incurred by Kaplan for temporary repairs to the glazed opening on the exterior of the building . . . after Whitmark stopped working on the project, were, in the ordinary course of things, likely to have resulted from a breach by Whitmark of his contractual obligations.

"Response: Yes. One set of 'repairs' was warranted.

"Question 20: Whether estimated costs for replacement and reinstallation of glazing materials to bring the installation into conformity with accepted trade standards, was, in the ordinary course of things, likely to have resulted from a breach by Whitmark of his contractual obligations.

"Response: No." (Capitalization omitted.)

[5] As the trial court explained, it interpreted the parties to have contracted that the job would be performed in approximately 60 working days, if feasible under the circumstances. The trial court found that performance was justifiably delayed by complications such as improper work by the previous glass installer, nonconforming framing work, damaged or missing materials, and heavy rains. Thus, there was no breach of contract by virtue of the fact that the glass installation was not completed in 60 working days.

[6] Kaplan also argues that the trial court erred because it "apparently believed it would be improper to award more money to the plaintiff than the value of his original contract." We find no support in the record for this interpretation of the trial court's ruling. We therefore reject Kaplan's argument.

[7] Civil Code section 3300 states that the measure of damages in an action for breach of contract, unless otherwise provided for by statute, "is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom."

[8] By focusing on the cost to complete the contract, the trial court applied the proper measure of damages. (See Glendale Fed., supra, 66 Cal.App.3d at p. 123 ["The proper measure of damages for breach of a contract to construct improvements on real property where the work is to be done on plaintiff's property is ordinarily the reasonable cost to the plaintiff of completing the work"].) On the issue of whether his appeal raises a legal or a factual challenge to the damages award, Kaplan urges us to come to the same conclusion as the court in Glendale Fed., which entertained a challenge to a damages award, despite the appellant's failure to move for a new trial, because the appellant had raised a legal challenge to the measure of damages. Glendale Fed. is not apposite here. The trial court in Glendale Fed. measured damages for breach of contract by the loss of enhancement in value to the property at issue. (Ibid.) The appellant challenged this measure of damages, contending that damages should have been measured based on the amount required to bring the property into the condition it would have been had the contract been fully performed. (Ibid.) Here, in contrast, the dispute is over the trial court's finding that $28,534 was the amount required to complete the contract, not over whether the cost to complete the contract is the correct measure of damages.