Maloof Racing Engines
v. Champion
Filed 5/9/13
Maloof Racing Engines v. Champion CA2/2
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opinion has not been certified for publication or ordered published for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
SECOND
APPELLATE DISTRICT
DIVISION
TWO
MALOOF RACING
ENGINES, INC.
Plaintiff and
Respondent,
v.
CHARLES CHAMPION,
Defendant and Appellant.
B237039
(Los Angeles County
Super. Ct. No. BC417790)
APPEAL
from a judgment of the Superior Court
of
County. Debra K.
Weintraub, Judge. Affirmed.
Corey
& Corey and Edward E. Corey for Defendant and Appellant.
No
appearance for Plaintiff and Respondent.
Charles
Champion (appellant) appeals from a judgment entered after a
Engines, Inc. (respondent). The matter
arises out of a transaction between appellant and respondent for a
comprehensive restoration of appellant’s 1965 Ford Mustang automobile. The trial court found in favor of respondent
on respondent’s claims against appellant for breach of written contract, breach
of the implied covenant of good faith and
fair dealing, common count for goods sold and delivered, common count for open
book account, unjust enrichment, and quantum meruit. We affirm.
Appellant
contends: (1) the judgment in favor of
respondent was not proper because respondent was not licensed with the Bureau
of Automotive Repair (BAR) as required by Business & Professions Code
section 9884.16;
title="">[1]
(2) the trial court erred in determining that respondent provided appellant
with a valid written estimate pursuant to section 9884.9; (3) the trial court
erred in determining that the additional authorizations complied with the
requirements of section 9884.9, subdivision (a); (4) the trial court
incorrectly calculated the sums that appellant paid for the restoration; and
(5) the trial court erred in awarding respondent judgment for open book account
when that cause of action had previously been dismissed.
Respondent
is in the business of repairing, restoring, and building custom cars. On May
18, 2007, appellant brought his Mustang to respondent’s facility to
have it restored. The Mustang was in
poor condition and required a complete restoration.
After
a brief inspection, Sam Maloof, the owner and operator of respondent, provided
appellant with a work authorization form, with an estimated price of “$65,000+â€
for the estimated cost of the restoration.
The work authorization form did not detail any parts or labor to be
performed. Respondent retained the
Mustang at its facility for a more detailed inspection and informed appellant
that the estimate could be higher than the $65,000 listed on the work
authorization form. After being so
notified, appellant signed the work authorization form and left the Mustang
with respondent for further inspection.
Appellant
returned to respondent’s facility on July
10, 2007, after the Mustang had been thoroughly inspected. On that date respondent provided appellant
with a three-page document (the “initial estimateâ€) which incorporated the work
authorization form. The initial estimate
listed individual parts needed to restore the Mustang and a detailed
description of the labor required for restoring the Mustang. The total cost for parts and labor listed on
the initial estimate was $69,624.89.
Appellant authorized the work on the initial estimate and provided a
check for $30,000 as a deposit.
After
receipt of the initial $30,000, respondent began work on the Mustang. Appellant
later provided an additional $20,000 deposit.
During the restoration, appellant visited respondent’s facility many
times to inspect the vehicle and participate in the restoration. Appellant also made requests for
modifications to the restoration, which delayed completion of the restoration. Appellant did not authorize any specific
additional labor on the Mustang other than that listed on the initial
estimate. No written authorization was
obtained from appellant for any additional labor that respondent performed.
Maloof
brought the Mustang to appellant’s home on March 15, 2009.
Although the restoration was nearly complete and a final invoice had
been prepared, Maloof did not bring the final invoice to appellant’s home. Maloof left the Mustang with appellant, so he
could drive it and “get all the quirks out.â€
Appellant was not fully satisfied with the Mustang and returned it to
respondent’s facility on March 25,
2009, requesting modifications.
On
April 1, 2009, appellant
returned to respondent’s facility, inspected the Mustang, and was presented
with a final invoice of $106,659.69.
Appellant had previously paid $61,106.36 towards the restoration. He was surprised by the final cost and
declined to sign the final invoice.
Appellant was informed by Scot Kimble, an individual who assisted with
the restoration, that he could not take possession of the Mustang until the
balance on the final invoice was paid.
Appellant left without the Mustang.
However, subsequently, with Maloof’s permission, appellant took
possession of the Mustang on the evening of April 1, 2009.
Appellant informed Maloof that he would pay the additional balance
owed. However, he never signed the final
invoice. Appellant subsequently informed
Maloof that he would not be paying the balance on the final invoice.
Appellant
testified that when he returned the Mustang to respondent’s facility on March 25, 2009, he reported numerous,
significant problems with the vehicle.
However, the court found Maloof and Kimble to be credible in their
testimony that the Mustang was mechanically, cosmetically, and structurally sound
when appellant took possession of it in April 2009.
Appellant
filed a complaint with the BAR. The
complaint was investigated by Freeman Baldwin of the BAR. Baldwin inspected the
work authorization form initially provided to appellant on May 18, 2007, and the initial estimate presented
to appellant on July 10, 2007. Baldwin concluded that
the work authorization form failed to comply with the Automotive Repair Act (§§
9880 et seq.) because it failed to specify any specific job and failed to
specify any parts for work on the Mustang.
Although Baldwin testified that respondent failed to comply with the Act
in a variety of ways, the inadequacy of the work authorization form was the
only violation reported in Baldwin’s final BAR report.
On
the work authorization form, appellant checked the box marked “yes†in response
to a question of whether he wanted the used Mustang parts returned to him. Appellant testified that he requested the
parts and they were never returned to him.
However, the trial court found Kimble credible when he testified that
when appellant was offered the used parts, he indicated they should be disposed
of or given away.
There
was conflicting testimony about the payments appellant made with respect to the
restoration of the Mustang. It was
undisputed that appellant paid a $30,000 down payment when he authorized the
initial estimate, and subsequently paid a $20,000 deposit. However, the parties disagreed about an
additional $10,106.36 paid by appellant.
The trial court found that any payments made by appellant in excess of
the initial $50,000 in deposits did not relate to parts or labor on the initial
estimate. Instead, the court found that
the $10,106.36 related to additional parts authorized by appellant but not
included in the initial estimate.
In
addition to the restoration of the Mustang, appellant requested that respondent
perform work on his F-450 pick-up truck.
Appellant purchased parts for the pick-up truck at a cost of $4,118.96
and had the F-450 parts delivered to respondent’s facility. Subsequently, appellant decided not to have
respondent work on his pick-up truck.
Respondent continued storing the F-450 parts. Maloof testified that appellant was aware of
respondent’s policy regarding storage fees of $25 per day. The policy was clearly advertised on signage
at the facility. However, appellant
testified there was no discussion regarding storage fees and that the signage
at respondent’s facility did not indicate there were storage fees for
parts. When appellant requested
respondent return the F-450 parts, respondent refused until there was payment
of storage fees. The trial court found
there was no agreement for payment of storage fees for the F-450 parts, and
that respondent had possession of the parts and refused to return them.
Respondent
filed its complaint against appellant on July 14, 2009, for breach of written
contract, breach of implied covenant of good faith and fair dealing, promissory
fraud, goods sold and delivered, account stated, open book account, unjust
enrichment, quantum meruit, and declaratory relief. On August 6, 2009, appellant brought a
cross-complaint against respondent for negligence, breach of contract,
conversion, and fraud.
name="_ftnref2" title="">[2]
The
matter was tried to the court between March 2 and March 15, 2011. The court announced its proposed decision in
court on June 6, 2011, and issued a proposed statement of decision on June 10,
2011. After appellant filed a request
for amended statement of decision, the trial court filed an amended statement
of decision on July 14, 2011.
In
its decision, the trial court found in favor of respondent on its claims for
breach of contract, breach of the covenant of good faith and fair dealing,
common counts for goods sold, common count for open book account, unjust
enrichment, and quantum meruit. The
trial court found in favor of appellant on his cross-claim for conversion.
The
court awarded respondent the sum of $19,624.89 on its complaint. The court specified that respondent’s
recovery must be limited to $19,624.89 as the amount owed on the initial
estimate, taking into consideration appellant’s two payments. This amount was offset by the award of
$4,118.96 on appellant’s cross-complaint, resulting in a net award to
respondent of $15,505.93.
Judgment
was entered in accordance with the amended statement of decision on August 23,
2011. Following the issuance of the
amended statement of decision, appellant filed a motion to vacate the judgment. The motion was heard on October 13, 2011, and
denied. A motion to release bond was
also heard on the same date and granted in part. On November 1, 2011, appellant filed his
notice of appeal.
I. Propriety of judgment -- lack
of license
Appellant’s
first argument is that the trial court improperly found in favor of respondent
on respondent’s breach of contract claim.
Appellant claims that this ruling was in direct contradiction of the
provisions of the Automotive Repair Act, which prevent a party from recovering
for breach of contract if that party is required to be licensed by the BAR but
does not have such a license.
Specifically, section 9884.16 provides:
“No
person required to have a valid registration under the provisions of this
chapter shall have the benefit of any lien for labor or materials or the right
to sue on a contract for motor vehicle repairs done unless he has such a valid
registration.â€
The
trial court held that respondent was subject to the Automotive Repair Act. Specifically, the court held:
“The
Court finds that Maloof Racing repairs and/or restores automobiles and that the
work performed on the Mustang was repair and/or restoration work. As such, the work performed on the Mustang is
subject to the requirements of the Automotive Repair Act.â€
The
trial court also found that respondent was properly licensed under the
fictional name of Sam’s Automotive.
Appellant
argues that the court’s own findings in its amended statement of decision
dictate that its decision to allow the contract claim was improper. In its amended statement of decision, the
court held: (1) respondent was engaged
in business activities that required BAR registration; and (2) that respondent
had no such registration.
The
trial court considered this argument in connection with appellant’s motion to
vacate the judgment. At the hearing on
the motion, the trial court recited the following in support of its decision:
“The
court notes that the invoices introduced as trial exhibits reflected that
[respondent] was also known as Sam’s Automotive. The court found that Sam’s Automotive was
registered with the [BAR]. And that’s
set forth in the amended statement of decision.
Further, the court further notes that the amended statement of decision
that as set forth in that amended statement of decision that Mr. Baldwin, from
the [BAR] cited [respondent] only with respect to the inadequacy of the work
authorization performed. And there was
no violation reported by Mr. Baldwin in the final [BAR] dealing with the
license issue.
“The
court also notes that a fictitious business name is not a separate legal
entity. The court does not find that
[section] 9884.16 as counsel argues bars [respondent] recovery pursuant to the
judgment. There are no grounds to vacate
the judgment.â€
Appellant
implies the trial court’s factual finding that respondent was doing business as
Sam’s Automotive was incorrect.
Appellant claims that respondent drew a specific distinction between
respondent and Sam’s Automotive at trial.
However, the testimony cited by appellant in support of this argument
supports the trial court’s decision that respondent and Sam’s Automotive
operated under the same business license:
“Q: Just for the sake of clarification, there are
several entities that we’ve talked about, Maloof Racing Engines and Sam’s
Automotive. You use those company names
interchangeably; don’t you?
“A: Only . . . let me say this right. Only to the understanding that under the BAR
there is no performance side. You can’t
go find a time standard for building racing cars, racing engines or
fabrication, so they lump it all into one.
But under Maloof Racing, I do not do repair. Under Sam’s Automotive, I can do repair, but
I choose what I want to work on.
“[¶]
. . . [¶]
“Q: So with regard to Maloof Racing Engines,
though, you are Maloof Racing Engines; is that right?
“A: I am.
“Q: And you are Sam’s Automotive; is that right?
“A: I am.
“Q: So you draw a distinction as to the type of
work that Sam’s Automotive does and Maloof Racing Engines does; is that
correct?
“A: I do.
“Q: And Maloof Racing Engines, Inc. is not an
entity licensed by the Bureau of Automotive Repair; is it?
“A: It’s licensed by the -- I do have a business
license under Maloof Racing Engines and dba --
“Q: I’m sorry.
Are you done? Are you completed?
“A: I’m done.
“Q: My question is: Maloof Racing Engines, Inc. is not an entity
licensed by the Bureau of Automotive Repair?
“A: No.
It’s under Sam’s Automotive.
“[¶]
. . . [¶]
“Q: But it doesn’t say ‘Maloof Racing Engines?’
“A: I think it’s in one. It says ‘Sam’s Automotive.’â€
The
trial court also relied upon the invoices admitted into evidence, which
indicated that “Sam’s Automotive†was respondent’s fictitious business
name. The invoices show a business title
of “Maloof Racing Engines Aka: Sam’s Automotive†or “Maloof Racing Engines,
Inc. dba: Sam’s Automotive.†In
addition, the court noted that the representative from the BAR did not note a
licensing violation for respondent.
While respondent made a distinction between the type of work performed
under the name Maloof Racing Engines, versus the type of work he performed
under the name Sam’s Automotive, appellant provides no legal support for his
position that the business could not properly function with one license under
two distinct names.
We
evaluate the trial court’s factual decision regarding the relationship between
respondent and Sam’s Automotive under the substantial evidence test. Under that test, the court’s findings will
not be disturbed if they are supported by substantial evidence. (Wilson
v. County of Orange (2009) 169 Cal.App.4th 1185, 1188.) Substantial evidence is evidence of
ponderable legal significance, evidence that is reasonable, credible, and of
solid value. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873.) If such substantial evidence be found, it is
of no consequence that the trial court believing other evidence, or drawing
other reasonable inferences, might have reached a contrary conclusion. (Id. at
p. 874.)
Under
this standard, we find that substantial
evidence supported the trial court’s decision that respondent was properly
licensed under its fictional name, Sam’s Automotive. Because respondent was properly licensed
under this alternate name, the judgment may properly stand.
II. Validity of the estimate
Appellant
also disputes the trial court’s finding that a valid estimate for the
restoration work existed. Under section
9884.9, respondent was required to provide appellant with a “written estimated
price for labor and parts necessary for a specific job.†Without a valid estimate, appellant argues,
the contract at issue was unenforceable, leaving the respondent without
recourse for payment. (
700, 704; see also § 9884.9, subd. (a).)
The
trial court found that the work authorization form and the initial estimate,
taken together, satisfied the requirements of section 9884.9.
Appellant
argues that these documents do not satisfy the requirements of section 9884.9. He argues that the original service
authorization was not a valid estimate because it did not contain any
description of the work to be performed.
The more detailed initial estimate, appellant argues, states no specific
job and contains no breakdown of costs for a specific job. Appellant also points out that this second
document was not signed by appellant.
Further,
appellant draws our attention to an official report entered into evidence of
Baldwin’s findings. In it, Baldwin
concluded that the work authorization form did not constitute a valid estimate
as required by section 9884.9, subdivision (a) and California Code of
Regulations, title 16, section 3353, subdivision (a).
The
report stated the following violation:
“The
first document dated 5/18/2007 does not specify any specific job. It shows a cost of $65,000, but there is no
indication as to what labor and parts were included for this cost. This is a violation of Business and
Professions Code section 9884.9(a) and [California Code of Regulations, title
16, section] 3353(a), failure to provide a written estimate for parts and labor
for a specific job.â€
We
note that Baldwin’s report focused on the insufficiency of the original work
authorization alone. Thus, Baldwin’s
report did not suggest that the work authorization form and the initial
estimate, taken together, did not meet the requirements of section 9884.9. The initial estimate is a three-page document
listing numerous items as well as five different descriptions of labor to be
performed. Three of these labor
descriptions are quite detailed.
Appellant
points out that Baldwin was asked at trial whether the original work
authorization and the initial estimate could be combined so as to satisfy the
requirement to provide a valid estimate.
Baldwin’s testimony was as follows:
“Q: My question to you, Mr. Baldwin, is going to
be, those two documents taken together, does that constitute a valid estimate
under your guidelines?
“[¶]
. . . [¶]
“A: No.
“Q: Why is that?
“A: The first document signed by Mr. Champion is
dated May 8. Doesn’t show any
repairs. Shows $65,000 plus. This document, written sometime later, it’s
not cross-referenced. I see no link
between the two documents.â€
Thus,
Baldwin’s concern with the two documents was that they were not completed at
the same time, and the initial estimate did not cross-reference the work
authorization form. However, as the
trial court noted, both the work authorization form and the initial estimate
were presented to appellant before work commenced on the Mustang. The court found that “[appellant] authorized
the Work listed on the Initial Estimate based on his tendering a deposit to
[respondent] after his review of the Initial Estimate. The Court finds that [respondent] provided a
written initial estimate to [appellant] and obtained authorization from him
before it began restoring the Mustang.â€
Despite
Baldwin’s testimony that there was no explicit cross-reference on the two
documents, the court concluded that that the two documents were linked, and
that appellant understood them to be read together. In addition, the court was persuaded that
respondent did not begin work on appellant’s Mustang until after appellant had
reviewed and approved both the work authorization form and the initial
estimate. The court found that appellant
“authorized the Work listed on the Initial Estimate based on his tendering of a
deposit to [respondent] after his review of the Initial Estimate.â€
Section
9884.9 does not require that the written estimate must be given to the customer
in one single document, nor does it prevent revision or clarification of the
written estimate. Appellant presents no
authority suggesting that a written estimate, supplemented by a second estimate
and provided to the customer before work on the automobile has begun, is
improper or violates any provision of the Automotive Repair Act.
Substantial
evidence supports the trial court’s conclusion that the work authorization form
and the initial estimate were intended to be read together, and that appellant
approved these documents before work began on the Mustang. Appellant has not provided any authority
suggesting that this was improper under the law. No error occurred.
III. Validity of the additional
authorizations
Appellant
next disputes the trial court’s finding that certain sums paid by appellant to
respondent were valid additional authorizations. First, appellant argues that because no valid
estimate was provided, no subsequent modifications were possible. (See Schreiber
v. Kelsey (1976) 62 Cal.App.3d Supp. 45, 50-51.) Because we have found that the trial court
did not err in determining that a valid estimate existed, we decline to address
this argument.
Appellant
further argues that even if a valid estimate did exist, no valid additional
authorizations were obtained. Appellant
notes that the trial court found that $10,106.36 paid by appellant directly to
vendors for parts relating to the restoration of the Mustang were valid
additional authorizations. Specifically,
the trial court found:
“The
Automotive Repair Act allows for written or oral authorization for additional
parts or labor. (Bus. & Prof. Code §
9884.9 subd. (a).) There were numerous
conversations between [respondent] and [appellant] about additional parts not listed
on the Initial Estimate. Authorization
was obtained for additional parts in the amount of $10,106.36.â€
Appellant
argues that the trial court disregarded the requirements of the applicable BAR
rules by finding that “numerous conversations†about additional parts satisfied
the statutory requirements. Appellant
argues that even if such conversations did take place about additional parts,
any such conversations alone are wholly deficient in complying with applicable
rules.
The
applicable rules are set forth in section 9884.9, subdivision (a), which
requires that:
“No
charge shall be made for work done or parts supplied in excess of the estimated
price without the oral or written consent of the customer that shall be
obtained at some time after it is determined that the estimated price is
insufficient and before the work not estimated is done or the parts not
estimated are supplied. . . . If that
consent is oral, the dealer shall make a notation on the work order of the
date, time, name of person authorizing the additional repairs, and telephone
number called, if any, together with a specification of the additional parts
and labor and the total additional cost, and shall do either of the following:
“(1)
Make a notation on the invoice of the same facts set forth in the notation on
the work order.
“(2)
Upon completion of the repairs, obtain the customer’s signature or initials to
an acknowledgment of notice and consent, if there is an oral consent of the
customer to additional repairs . . . .â€
Appellant
argues that the work service authorization does not contain the phone number
called, nor does it include the specification of the total cost.
with the statute renders the additional authorizations unenforceable.
First,
we note that the statute does not specify that additional authorizations are
unenforceable if the specific procedures for such authorizations are not
followed. Nor has appellant provided a
case so holding.
However, assuming
that respondent must follow the specific procedures set forth in the statute in
order for the additional authorizations to be enforceable, the trial court held
that enforceable authorizations existed for the amount of $10,106.36. We review this factual finding under the
substantial evidence standard. As set
forth above, under the substantial evidence test, the court’s findings will not
be disturbed if they are supported by substantial evidence. (Wilson
v. County of Orange, supra, 169 Cal.App.4th at p. 1188.)
First, the trial
court found that appellant was closely involved in the restoration of the
Mustang, and visited respondent’s facility sometimes twice a week to inspect
and participate in the restoration.
Further, the court specifically noted that “[t]here was conflicting
testimony regarding the additional payment of $10,106.36†by appellant for
parts. Both Maloof and Kimble testified
that “this payment was for additional parts not listed on the Initial Estimate
and were purchased at the request of [appellant].†Several documents in the record support this
finding. First, there is a “Customer
Call Log†which details calls made to appellant during the time period from
July 2008 through February 2009. In this
call log, numerous authorizations for purchases are recorded, along with the
number called and a notation of the person with whom the caller spoke. The call log is three pages long, so it
appears that it was impractical for respondent to make all of these notations
on the initial service authorization.
Under the circumstances, a separate log can constitute substantial
compliance with the requirements of section 9884.9.
The record also
contains several communications between the parties. One is an email dated October 15, 2008, to Ly
Lau, appellant’s assistant, confirming a telephone conversation regarding money
needed for tires as well as a request that Lau “approve†an additional amount
of money be spent for power steering components and hoses. In another written communication from Maloof
to appellant, dated April 24, 2009, Maloof explains that the “original estimate
did not cover all the many changes and additions that you requested and
authorized during the build of your vehicle.â€
This evidence further supports the trial court’s conclusion that
enforceable authorizations existed for the amount of $10,106.36.
Substantial
evidence supports the trial court’s conclusion that enforceable authorizations
existed for $10,106.36 in excess of the initial estimate.
IV. Entry of judgment for open
book account
Appellant
notes that respondent dismissed its causes of action against appellant for
account stated and open book account prior to the time that judgment was
entered. However, despite the dismissal of these causes of action, the trial
court granted judgment against appellant for open book account. Appellant claims that this error renders the
judgment subject to reversal.
However,
appellant bears the burden of showing that the error was prejudicial. “[W]ith ordinary error, prejudice must be
shown and reversal is not required unless there is a reasonable probability
that an outcome more favorable to the [appealing party] would have
resulted. [Citation.]†(People
v. Clair (1992) 2 Cal.4th 629, 668.)
Appellant has made no effort to show prejudicial error, nor can he.
The
trial court found in favor of respondent on six of the eight original causes of
action filed against appellant. However,
for each cause of action, the court noted “[respondent’s] damages are limited
by the Automotive Repair Act.†The court
specified that respondent could not recover for any parts or labor not listed
on the initial estimate and for which respondent did not properly document oral
authorization. Thus, for each cause of
action, the trial court specified “[respondent’s] recovery is limited to
$19,624.89.†In its final judgment
against appellant, respondent’s recovery was $19,624.89.
In
breach of contract cases such as this, the plaintiff’s recovery is limited to
damages based on the actual loss caused by the breach. (Plut
v. Fireman’s Fund Ins. Co. (2000) 85 Cal.App.4th 98, 108.) The trial court thus correctly set
respondent’s recovery at the amount of the initial estimate plus properly
authorized amounts in excess of the initial estimate. Whether respondent’s recovery was based on a
single cause of action, or multiple causes of action, respondent’s award could
not exceed its actual loss. The trial
court’s erroneous inclusion of the dismissed open book account cause of action
thus had no effect on the actual damages that respondent recovered.
Appellant
has failed to convince the court that the trial court’s erroneous finding in
favor of respondent on the open book account cause of action was prejudicial
error. Thus, we conclude the error was
harmless.
DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS.
____________________________,
J.
CHAVEZ
We concur:
_____________________________, P. J.
BOREN
_____________________________, J.*
FERNS
________________________________________________________________________
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California Constitution.
name="_ftn1" title="">[1] All further statutory references are to
the Business & Professions Code.
name="_ftn2" title="">[2] The cross-complaint is not at issue in
this appeal.
