Ponce v. Philco Construction

 

 

 

 

Filed 1/21/14  Ponce v. Philco Construction CA4/3

 

 

 

 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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  This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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

 

FOURTH
APPELLATE DISTRICT

 

DIVISION
THREE

 

 
>

ABRAHAM VICTOR PONCE,         Plaintiff, Cross-defendant and       Respondent,               v.   PHILCO CONSTRUCTION, INC., et al.,         Defendants, Cross-complainants and Appellants.

G049097            (Super. Ct. No. RIC 521704)            O P I N I O N

 

                        Appeal
from a judgment of the Superior Court of
Riverside County, Jacqueline C. Jackson, Judge.  Affirmed as modified.

                        Ward
& Ward and Alexandra S. Ward; Desjardins & Panitz and Michael A. Desjardins
for Defendants, Cross-complainants and Appellants.

                        Murchison
& Cumming, Michael D. McEvoy and Maria A. Starn; Wilson, Elser, Moskowitz,
Edelman & Dicker and Peter Hughes for Plaintiff, Cross-defendant and
Respondent.

*                *                *

Certified Tire & Service Centers, Inc. (Certified) hired general
contractor Philco Construction, Inc. (Philco) to build an automobile service
store location in Moreno Valley, California (the Project).  Philco, in
turn, entered into an agreement with subcontractor Abraham Victor Ponce (Ponce), obligating Ponce to perform
concrete and masonry work on the Project in exchange for $150,000.  Because he was not paid the full contract
price, Ponce sued Philco and Certified (collectively, defendants), seeking
payment of the remaining amount owed to him pursuant to the terms of the
subcontract.  Defendants claimed that partial
nonpayment was justified due to alleged defects in the concrete slab poured by Ponce.  Indeed, defendants filed cross-complaints
seeking damages and/or indemnification
from Ponce to cover the costs of remediating the alleged defects in the
concrete slab and delay associated therewith.

A jury awarded Ponce $92,023.64 in damages against defendants (plus interest and costs)
and rejected the causes of action asserted in cross-complaints against Ponce.  We disagree with defendants’ claims on appeal
that they are entitled to a new trial based on either (1) the admission of
evidence pertaining to Certified’s business practices, or (2) alleged href="http://www.mcmillanlaw.us/">instructional and special verdict form
error.  But we modify the judgment to
eliminate the award of attorney fees to Ponce and against
Philco.  The subcontract clearly indicates
that the parties “shall” resolve all controversies arising out of the
subcontract in arbitration and that “[t]he
arbitrator shall have the authority to
award reasonable attorneys fees.”  The
parties did not arbitrate the matter.  The
subcontract did not authorize the trial court to award attorney fees to the
prevailing party at trial.

 

FACTS

 

Certified sells automotive products and performs automobile repairs
at its 28 locations.  After deciding to
build a Moreno Valley location, Certified hired architect Al Aguirre to design the
Project.  Aguirre’s architectural plans
were completed in March 2008.  In May
2008, Certified hired Philco as general contractor for the Project, based on a
bid of $650,000 by Philco to deliver “a completed store ready to open for
business.”  

Ponce is a licensed
general and masonry contractor.  In June
2008, Ponce and Philco entered into a subcontract with regard to concrete and
masonry work at the Project.  The subcontract
provided, “The Project shall be built according to the plans and
specifications.” 

The subcontractor’s scope of work included the pouring of a rebar
reinforced concrete slab.  The concrete
slab is the floor surface of the building.  Ponce poured the concrete slab in August 2008.  Ponce also cut control joints in the concrete slab with a specialized saw
immediately after pouring the concrete (“about two hours after the final pour”).
 Control joints are used to minimize the
natural tendency of concrete to crack.  Ponce then water
cured the concrete slab for three days pursuant to the schedule prepared by
Philco.  The field superintendant for
Philco continued to water the concrete slab after Ponce’s work.  

Ponce completed all
specified work on the Project by the end of November 2008.  Ponce was paid $67,500 by November 2008, but was not paid the $82,500
balance on the subcontract or $9,523.64 for a series of change orders that
increased the costs of Ponce’s work.  href="http://www.sandiegohealthdirectory.com/">Certified became concerned
about several issues with the concrete slab, including cracks in the slab,
damage to the control joint edges, and a mottled appearance that was
unattractive.  Ponce was not
notified of any alleged problems with the concrete slab until December 2008.  Ponce never received any complaints about the remainder of the work he
performed at the Project.

In February 2009, Ponce recorded a mechanic’s lien against Certified’s interest in the property
on which the Project was constructed.  Ponce then filed a
complaint against Philco and Certified in March 2009.  A parade of cross-complaints followed, pursuant
to which each party sued the other parties for both href="http://www.sandiegohealthdirectory.com/">damages and indemnity.  Prior to trial, however, Philco and Certified
settled their claims against each other and presented a united front against Ponce at trial.

The jury was provided with special verdict forms pertaining to the
parties’ claims.  The jury found Philco
breached its contract with Ponce and damaged Ponce in the amount of $92,023.64. 
The jury separately found that Ponce had recorded
a valid mechanic’s lien and was owed $92,023.64.  Finally, the jury found that Ponce was not
negligent and that Philco did not perform its obligations pursuant to the subcontract,
thereby rejecting defendants’ claims against Ponce.  Judgment was entered in November 2011,
awarding Ponce (as against Philco) $92,023.64 in damages, $21,884 in interest,
$172,850.02 in attorney fees, and $68,829.67 in costs.  Certified was held responsible for the
damages and interest amount, but not the attorney fees or costs.  Certified was separately ordered to pay
$16,904.28 in costs.  Both Certified and
Philco were held jointly and severally liable for costs in the amount of
$51,925.48 regarding Ponce’s successful defense of the cross-complaints.  The judgment also declared the validity of Ponce’s lien on
Certified’s property interest and provided for public auction of the property
interest to satisfy $130,811.92 of the judgment.

 

DISCUSSION

 

>No Error in Admission of
Evidence of Certified’s Checkered History with Consumers

Defendants claim the court committed prejudicial error by admitting into
evidence certain exhibits during the cross-examination of Certified’s
president, Jeff Darrow.  The exhibits
cast an unfavorable light on Certified’s business practices:  (1) Exhibit No. 2301, a Bureau of Automotive
Repair publication listing disciplinary actions against various service
stations in the summer of 2006, including 15 Certified locations; (2) exhibit No.
2302, a May 2008 final judgment pursuant to stipulation (signed by Certified
and Darrow, on one side, and the District Attorneys of Orange, Riverside, and
San Bernardino Counties on the other), which set forth a civil penalty of
$550,000 against Certified and Darrow, provided for restitution to Certified
customers, and established enhanced monitoring protocols of Certified by the
district attorneys; and (3) exhibit No. 2303, a minute order reflecting the
filing of the final judgment introduced as exhibit No. 2302.  According to defendants, these exhibits showcased
“evidence of specific instances of” past conduct and were therefore improperly
admitted to undermine Darrow’s credibility (Evid. Code, § 787);href="#_ftn1" name="_ftnref1" title="">[1]
moreover, the documents were unduly prejudicial (§ 352). 

According to Ponce, Darrow’s testimony about the operation of Certified opened the
door to the admission of exhibits Nos. 2301, 2302, and 2303.  On direct examination by defendants’ counsel,
Darrow testified about the “most important principles” he followed “to grow”
Certified, including organization, standardized policies at all stores, employee
professionalism, and cleanliness of the store.  The image of Certified was very important to
Certified’s success.  According to
Darrow, “the condition of the floor in the shop” “has a tremendous impact” on
employee discipline and safety.  And the
appearance of the concrete floor in the automobile service area is also
important to the image presented to customers, according to Darrow.  On cross-examination, Darrow agreed with the
following leading question, “And you train [your employees] to treat the
customers fairly and honestly; right?”  

Following this testimony, Ponce sought to
introduce exhibit Nos. 2301 through 2303, other litigation documents from the
Attorney General lawsuit, a newspaper article, and a district attorney press
release.  The court stated it was
inclined to admit exhibit No. 2301 as “relevant to impeach testimony given by
Mr. Darrow” but disinclined to admit the newspaper and press release documents
because of the prohibition against hearsay.  The court also allowed exhibit Nos. 2302 and
2303, but deemed cumulative and confusing the remainder of the litigation
documents.  

Defense counsel objected pursuant to sections 787 and 352.  The court overruled the objections.  â€œI think when a witness testifies that part of
the image of the business is important, and that’s why a slab is rejected,
because it doesn’t comport with the image that they wish to portray, and that
image is described in detail, and apparently other issues of customers aren’t
as important [as] image.  [¶]  From what I’m reading from the [Bureau of
Automotive Repair] documents and the suspension, it overlaps our time frame by
a year.  It actually starts at the last
year of the suspension.  It deals
directly with customers and customer issues.”  â€œAnd I find that it’s relevant to
credibility.  Credibility is always an
issue with every witness, and it’s quite clear under [section] 785 . . . that
any party can attack or support credibility of a witness, and it is coming in.”
 â€œMr. Darrow is unquestionably a very
successful businessman, and [he] discussed at length what went into that
success.  [The exhibits are] proper
impeachment for part of that.”  The court
agreed with Ponce’s counsel that the exhibits relate “to [Darrow’s] testimony as far
as his success in building the business, that his employees treat the customers
fairly and honestly [¶] . . . [¶] and [Darrow] trains them
to do that.”  Darrow was then questioned
by Ponce’s counsel as to the contents of these exhibits. 

We review the court’s ruling as to the admissibility of the exhibits
for an abuse of discretion.  (>Pannu v. Land Rover North America, Inc.
(2011) 191 Cal.App.4th 1298, 1317.) 
“‘While the concept “abuse of discretion” is not easily susceptible to
precise definition, the appropriate test has been enunciated in terms of
whether or not the trial court exceeded “‘the bounds of reason, all of the
circumstances before it being considered. . . .’”  [Citations.]’ 
[Citation.]  ‘A decision will not
be reversed merely because reasonable people might disagree.  “An appellate tribunal is neither authorized
nor warranted in substituting its judgment for the judgment of the trial judge.”  [Citations.] 
In the absence of a clear showing that its decision was arbitrary or
irrational, a trial court should be presumed to have acted to achieve
legitimate objectives and, accordingly, its discretionary determinations ought
not be set aside on review.’”  (>Gouskos v. Aptos Village Garage, Inc.
(2001) 94 Cal.App.4th 754, 762.)

“[A]lthough ‘“evidence of a specific instance of a witness’s conduct
is inadmissible under . . . section 787 to impeach the witness as proof of a
trait of his character [it] may become admissible to impeach the witness
pursuant to Evidence Code section 780, subdivision (i), by proving >false some portion of his testimony.”’”  (Andrews
v. City and County of San Francisco (1988) 205 Cal.App.3d 938, 946.)  “California’s
Evidence Code, adopted in 1965, did away with the common law rule [that a party
cannot be impeached on a collateral fact]. 
Section 351 states ‘all relevant evidence is admissible’ and section 780
provides that ‘in determining the credibility of a witness’ the trier of fact ‘may
consider . . . : [¶] . . . [¶] (i) The existence or nonexistence of any fact
testified to by him.’  The effect of
these two statutes ‘is to eliminate this inflexible rule of exclusion.’  [Citation.] 
In its place ‘the court has substantial discretion to exclude collateral
evidence’ under section 352.”  (>People v. Morrison (2011) 199
Cal.App.4th 158, 164.)

It is plausible to argue that Certified’s treatment of its customers
and training of its employees is irrelevant to the primary issue presented in
this case, i.e., whether the concrete slab poured by Ponce was
defective.  And it is obvious that the
contested exhibits were prejudicial to Certified.  But defendants made the question of Certified’s
image an issue in this case on direct examination conducted by defense counsel.  Darrow testified in depth about the
astronomic growth of Certified and the lofty principles that supposedly drove
that growth.  (See Andrews v. City and County of San Francisco, supra, 205 Cal.App.3d at p. 946 [“a witness who makes a
sweeping statement on direct or cross-examination may open the door to use of
otherwise inadmissible evidence of prior misconduct for the purpose of
contradicting such testimony”].)  Darrow’s
testimony was designed to promote a positive view of Darrow and Certified.  The only conclusion to be drawn from Darrow’s
initial testimony was that he ran a professional, squeaky clean operation.  The court reasonably concluded that Darrow’s
testimony on direct examination was intended to illustrate why Certified could
not accept the concrete slab and why it was entitled to the damages claimed in
the cross-complaints.  Ponce impeached
Darrow’s testimony with evidence supporting inferences that Certified did not
have a pristine image and that some of Certified’s success might be attributed
to less admirable business practices. 
This evidence arguably impeached Darrow’s credibility because it
conflicted with the picture of Certified he painted in his testimony.  Had Darrow scrupulously stuck to testifying
about the concrete slab and not introduced a narrative designed to elicit the admiration
of the jury, perhaps we would rule differently. 
But on this record, the court did not abuse its discretion by deeming the
exhibits to be proper impeachment evidence that was not unduly prejudicial.

Defendants argue that the court erred because Ponce should not
have been allowed to create his own basis for impeachment through
cross-examination.  (See >Bowman v. Wyatt (2010) 186
Cal.App.4th 286, 327 [court erred by allowing plaintiff to first inquire
into, then impeach testimony of witnesses on irrelevant matter]; >Winfred D. v. Michelin North America, Inc.
(2008) 165 Cal.App.4th 1011, 1029-1035 [court erred by allowing defendant to
introduce irrelevant matter of plaintiff’s bigamy by claiming it impeached the
plaintiff’s false deposition testimony about the identity of his second and
third wives].)  Certainly, Ponce’s counsel set
up the introduction of the exhibits by asking Darrow whether it was true Darrow
trained his employees “to treat the customers fairly and honestly.”  Darrow’s training of Certified’s employees is
far afield from the issues in this case. 
Were this the only basis for court’s ruling, we might well reach a different
result.  But as discussed above, the
exhibits were admissible to impeach Darrow as to his picture of Certified’s
image presented during his direct examination.

 

No Reversible Error in Jury Instructions or Special
Verdict Form

In its cross-complaint, Certified sued Ponce for
negligence resulting “in a defective concrete slab and footings in the
improvement.”  Certified claimed it
suffered damages greater than $500,000 as a result of the defective work and
delay associated therewith.  In response
to these allegations, Ponce posited that his work was not defective and,
alternatively, that any imperfection was “the result of an inadequate design
which called for a low-grade concrete slab, improper and unevenly spaced hoist
block-outs in the shop area formed by the owner’s contractor, . . . and Philco
and Certified’s use of heavy equipment . . . on the concrete slab prior to
applying a concrete sealer.”

Defendants contend that the court committed instructional error and
error in a special verdict form submitted to the jury with regard to Certified’s
negligence claim against Ponce.  Defendants do not take
issue with (or even address) the general proposition that a subcontractor may
not be held liable for “defective plans and specifications procured by the
owners.”  (Kurland v. United Pac. Ins. Co. (1967) 251 Cal.App.2d 112,
117-119.)  

Instead, defendants assert it was error to allow the jury to find
Aguirre (the architect hired by Certified) to be negligent and to apportion liability
to Aguirre.  Aguirre is a professional
architect subject to a standard of care that was not specifically discussed by
an expert witness at trial.  (See >Wilson v. Ritto (2003) 105
Cal.App.4th 361, 366-370 [court rightly denied defendant doctor’s motion
to add nonparty doctor as additional tortfeasor to special verdict form because
there was not substantial evidence that the nonparty doctor violated his
medical standard of care]; see also Chakalis
v. Elevator Solutions, Inc. (2012) 205 Cal.App.4th 1557, 1568-1573
[plaintiff entitled to new trial because jury deemed nonparty doctor to be 52
percent at fault without expert testimony establishing causation]; >Huber, Hunt & Nichols, Inc. v. Moore
(1977) 67 Cal.App.3d 278, 313 [“Ordinarily, where 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”].)  As explained in depth in
the briefs, there was ample expert testimony assessing the plans for the Project
(particularly with regard to the concrete slab specifications) and the
execution of the plans by the various parties and nonparties.  But it does not appear that any expert
testified to Aguirre’s standard of care in preparing the architectural plans for
the Project.  Defendants argue it was Ponce’s obligation
to put on expert testimony of an architect’s standard of care (>in addition to expert testimony directly
addressing the quality of the concrete slab and the specifications for that
concrete slab, which was provided) before he could point to Aguirre as the
cause of any design defect.href="#_ftn2"
name="_ftnref2" title="">[2]

Nothing in the record suggests defendants raised their appellate
contention with the trial court.  The
parties jointly submitted a package
of proposed jury instructions to the court.  At issue in this appeal are seven special jury
instructions; defendants marked their agreement to six of these instructions, the
gist of which was to suggest that Ponce should not be held liable for defects
in the design of the concrete slab.href="#_ftn3"
name="_ftnref3" title="">[3]  Defendants objected to the following special
instruction:  “If you find that a
particular defect in construction at the subject project was the result of
defects in the design plans provided by general contractor
Philco . . . and/or owner Certified . . . and
Abraham Ponce constructed that part in conformance with the plans, then you
must return a verdict in favor of subcontractor Ponce who constructed that
particular part for general contractor Philco . . . and/or owner Certified . . . .”  The only reasonable inference from the record
is that defendants objected to the form of the instruction (i.e., “if you find
. . . then you must”) rather than the substance of the instruction (which is
similar to the other instructions).  The
parties and the court discussed jury instructions and jury verdict forms off
the record.

The special verdict form first queried whether Ponce was
negligent, to which the jury responded, “No.” 
The special verdict form next asked whether Philco was negligent, to
which the jury responded, “Yes.”  Based
on an affirmative response to one of these two initial questions, the special
verdict form instructed the jury to answer the remainder of its questions.  The jury then found Certified was harmed in
the amount of $23,312, which consisted solely of delay damages.  The jury rejected Certified’s claim that it
was harmed by either the costs of repair or the cost of future repair.  On appeal, defendants criticize subsequent
questions in the special verdict form asking the jury whether various parties
and nonparties (the architect Aguirre and several others) were negligent and to
apportion percentages of responsibility to the various parties and nonparties
for harm to Certified.  The jury apportioned
the following percentages of fault to the parties and nonparties for the harm suffered
by Certified:  Ponce (0 percent),
Philco (50 percent), Certified (15 percent), Aguirre (30 percent), Weber
Equipment (5 percent), and other third parties (0 percent).

The record does not definitively indicate which party or parties drafted
the special verdict form (although it appears from a comment made by counsel
for Ponce that it was Ponce).  Counsel for defendants had
not submitted a proposed special verdict form at the time of the comment by Ponce’s counsel; he
stated he had not yet seen Ponce’s proposed special verdict form but he planned to look at it.  There is no suggestion in the record that
defendants objected to the special verdict form or provided an alternate
special verdict form.  Indeed, during a pretrial
hearing, counsel for defendants (in the context of advocating to keep Philco’s
cross-complaint before the jury) argued that Ponce “could say
it’s partially Philco’s fault.  They
could say it’s partially the architect’s fault. 
They could say it’s partially . . . some third party that isn’t even
related to this.”  “But that’s typical,
when you start talking about apportionment of negligence, for the jury to
determine amongst the universe of potential actors out there who all
contributed to the harm.”

Defendants invited or waived any potential error in the jury
instructions.  With one exception, the
instructions contested on appeal were jointly requested.  “Consequently, the claim of error may not be
raised since it comes within the doctrine of invited error.  A party may not complain of the giving of
instructions which he has requested.”  (>Gherman v. Colburn (1977) 72
Cal.App.3d 544, 567; see also Transport
Ins. Co. v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1000 [“a party
who requests, or acquiesces in, a particular jury instruction cannot appeal the
giving of that instruction”].)  If
defendants invited error with regard to six of the instructions, any error with
regard to the seventh, objected to instruction cannot have been prejudicial on
the grounds argued in this appeal (i.e., that the instructions allowed the jury
to shift blame to Aguirre).  The only
apparent difference in the objected to instruction was its “if . . . then”
phraseology, a ground not asserted as the primary source of prejudice on
appeal.

Even ignoring defendants’ invited error with regard to the jury
instructions, defendants waived their right to instructions that specifically
addressed the architect, Aguirre (as opposed to the general question of a
subcontractor’s liability for executing the design provided by the general
contractor or owner).  If “the ‘trial
court gives a jury instruction which is prejudicially erroneous as given, i.e., which is an incorrect statement of law,
the party harmed by that instruction need not have objected to the instruction
or proposed a correct instruction of his own in order to preserve the right to
complain of the erroneous instruction on appeal.’  [Citations.] 
Any holding making it ‘“‘the duty of a party to correct the errors of
his adversary’s instructions . . . would be in contravention of Section 647,
Code of Civil Procedure, which gives a party an exception to instructions that
are given . . . .’”’  [Citation.]  [But] a party is deemed to waive a right to
challenge an instruction on appeal for failure to request an additional or
qualifying instruction to an instruction given by the court which, though
correct as far as it went, was too general for the state of the evidence.”  (National
Medical Transportation Network v. Deloitte & Touche (1998) 62
Cal.App.4th 412, 428.)  Aguirre is
not specifically mentioned in the jury instructions.  Defendants’ argument on appeal is wholly
addressed to the problem of assigning blame to Aguirre without expert testimony
as to his standard of care.  Defendants
do not argue that Ponce was precluded from pointing to Certified, Philco, or nonarchitect
third parties as the source of the alleged defect in the concrete slab.

Defendants also waived their challenge to the special verdict
form.  A party waives “any objection to
the special verdict form by failing to object before the court discharge[s] the
jury.”  (Jensen v. BMW of North America, Inc. (1995) 35
Cal.App.4th 112, 131; see also Mesecher
v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685–1687 [inconsistent verdict
error waived partly because of jointly drafted special verdict form].)  As previously noted, no objection to the
special verdict form appears in the record.

Finally, even assuming error occurred and was not invited or waived,
such error was not prejudicial.  “[T]he
judgment must be affirmed unless appellant can show an [instructional or
special verdict form] error that was so prejudicial a miscarriage of justice
occurred.”  (Austin B. v. Escondido> Union School Dist. (2007) 149 Cal.App.4th 860, 872.)  An error “generally does not warrant reversal
unless there is a reasonable probability that in the absence of the error, a
result more favorable to the appealing party would have been reached.”  (Soule
v. General Motors Corp. (1994) 8 Cal.4th 548, 574.)

On the first line of the negligence special verdict form, the jury stated
that Ponce was not negligent.  Logically,
this was the end of the jury’s assessment of Ponce with regard
to Certified’s negligence cause of action. 
The jury either agreed with Ponce that the
concrete slab was not defective when it was completed by Ponce or agreed
with Ponce that he had completed his tasks in accordance with the
specifications provided to him by Philco. 
The jury then found that Philco was negligent, obligating the jury to
answer the remaining questions on the verdict form.  Had the jury not found Philco to be
negligent, the jury never would have assessed Aguirre’s fault pursuant to the
special verdict form.  Any assessment of
Aguirre’s negligence or apportionment of harm to Aguirre in the remainder of
the special verdict form could not affect the jury’s initial finding that Ponce was not
negligent.

Next, the jury determined Certified’s total damages.  The damages found by the jury consisted solely
of $23,312 in delay damages; the jury found no damages had been suffered by
Certified for repair of the concrete slab in the past or in the future.  The jury’s verdict suggests it did not think
there was anything wrong with the concrete slab as delivered by Ponce.  Defendants make no attempt in their briefs to
explain how the inclusion of Aguirre on the special verdict form could have
possibly caused the jury to wrongly conclude that there was no defect in the
concrete slab (which is the implication from its finding that Certified was not
damaged by the need to repair the concrete slab).

Finally, the jury was asked to apportion responsibility to the
various parties and nonparties in the special verdict form.  The jury indicated Ponce was zero
percent responsible, then found Philco to be 50 percent at fault, Certified to
be 15 percent at fault, Weber Equipment to be five percent at fault, and
Aguirre to be 30 percent at fault for the (delay) damages suffered by Certified.  Nothing in the record suggests the jury could
have logically shifted the fault attributed to Aguirre over to Ponce had all
mention of Aguirre been excluded from the special verdict form.  Instead, the structure of the special verdict
form and the jury’s findings suggest that the fault attributed to Aguirre by
the jury would have been shifted to Certified and/or Philco, the parties with a
closer connection to Aguirre’s design of the Project.  Certified and Philco are not seeking retrial
vis-à-vis each other (they settled with each other prior to trial); the only
claim on appeal is that defendants were prejudicially affected with regard to Ponce.  We reject defendants’ contention of
prejudicial error.

 

>Award of Attorney Fees Not
Authorized by Subcontract

Finally, Philco asserts the court erred by awarding attorney fees to
Ponce.  “California follows
what is commonly referred to as the American rule, which provides that each
party to a lawsuit must ordinarily pay his own attorney fees.”  (Trope
v. Katz (1995) 11 Cal.4th 274, 278.) 
But “[a] prevailing party is entitled to attorney fees when authorized
by statute or contract.”  (>Bear Creek Planning Committee v. Ferwerda
(2011) 193 Cal.App.4th 1178, 1185.) 
There was no statutory claim at issue in this case that would entitle a
prevailing party to attorney fees.

The subcontract between Ponce and Philco
included the following provision:  “Arbitration.  All
controversies out of this Project and this Agreement shall be resolved through
mandatory, binding arbitration, which shall be had in accordance with the
rules of the American Arbitration Association existing at the time the request
for arbitration is filed.  The arbitrator
shall be empowered to decide the controversy and issue a binding award, even if
one or more parties declines, neglects or refuses to participate in the arbitration.  The
arbitrator shall have the authority to award reasonable attorneys fees.”  (Italics added.)

Notwithstanding the arbitration clause, Ponce filed suit in
state court and Philco did not seek to compel arbitration.  After the jury found in favor of Ponce, the court
awarded attorney fees in Ponce’s favor and against Philco in the amount of $172,850.02.  The court cited several reasons for its award
of attorney fees:  (1) the contract
authorizes the award of fees (by the arbitrator); (2) Ponce and Philco both
requested attorney fees in their pleadings, specifically citing the clause quoted
above; (3) Philco drafted the subcontract at a time when neither party was
represented by counsel; and (4) Civil Code section “1717 says if a contract
provides for attorney fees, it applies to the entire contract unless each party
was represented in the negotiations and execution by counsel.”href="#_ftn4" name="_ftnref4" title="">[4]

Philco does not challenge the amount of fees awarded or any other
factual findings made by the court. 
Instead, Philco asserts there was no legal basis for an award of
attorney fees by the court regardless of the findings it made.  “An appellate court reviews a determination
of the legal basis for an award of attorney fees independently as a question of
law.”  (Leamon v. Krajkiewcz (2003) 107 Cal.App.4th 424, 431.)

“A valid . . . contract must be enforced according to its terms.”  (Kalai
v. Gray (2003) 109 Cal.App.4th 768, 777 (Kalai) [court erred by awarding attorney fees in court proceeding when
“parties’ agreement provided for an award of fees only in favor of the ‘prevailing
party to the arbitration’”];href="#_ftn5"
name="_ftnref5" title="">[5]
see Civ. Code, §§ 1638 [“The language of a contract is to govern its
interpretation, if the language is clear and explicit, and does not involve an
absurdity”], 1639 [“When a contract is reduced to writing, the intention of the
parties is to be ascertained from the writing alone, if possible”].)  Here, the terms of the subcontract are
crystal clear:  “The arbitrator shall
have the authority to award reasonable attorneys fees.”  There is no uncertainty to construe against
Philco, the party that drafted the subcontract. 
(See Civ. Code, § 1654.)  The
arbitrator, not the court, was authorized to award reasonable attorney fees
after arbitration of the parties’ dispute. 
By waiving their right to arbitrate the dispute, Ponce and Philco
did not implicitly create positive authorization for an award of attorney fees
by a court following trial.href="#_ftn6"
name="_ftnref6" title="">[6]

It is true that a prevailing party in an arbitration that is awarded
its attorney fees by an arbitrator may also be entitled to its reasonable
attorney fees in subsequent judicial proceedings related to the confirmation of
the arbitral award.  (>Ajida Technologies, Inc. v. Roos
Instruments, Inc. (2001) 87 Cal.App.4th 534, 552 (Ajida) [“a contract provision that permits the recovery of fees in
arbitration is broad enough to include fees in related judicial proceedings”].)  The agreement in Ajida stated that “‘[e]ach party’s costs of arbitration, attorneys’
fees and costs of experts shall be borne in such proportion as the Arbitration
Panel may determine.’”  (>Id. at p. 551.)  The arbitral award provided “that the
contractual attorneys’ fees clause ‘shall be applicable to any dispute arising
under or related to this Final Award.’” 
(Ibid.)  In compliance with the parties’ contract and
the final arbitral award, the Ajida
court awarded additional attorney fees to the prevailing party on appeal
following this arbitral award.  (>Id. at p. 552.)  In contrast, Ponce did not
obtain an arbitral award and concomitant award of attorney fees by the
arbitrator.  There is no contractual
authorization or authorization by an arbitrator for the recovery of attorney
fees in this case.

Civil Code section 1717, subdivision (a), does not provide for a
different result.  “Section 1717 was
originally enacted to make one-sided attorney fee clauses reciprocal in order
to prevent parties with stronger bargaining power from oppressing weaker
parties by inserting into contracts one-sided clauses, which would allow the
stronger parties to collect contract damages and attorney fees if they prevailed in litigation but pay only
contract damages if they lost.”  (>Douglas E. Barnhart, Inc. v. CMC
Fabricators, Inc. (2012) 211 Cal.App.4th 230, 245-246.)  Had the subcontract imposed one-sided
provisions favoring Philco, Civil Code section 1717 may have been relevant to
determining Ponce’s entitlement to attorney fees. 
But Civil Code section 1717 does not require a court to ignore an
evenhanded contractual condition that the dispute be resolved in arbitration
where the arbitrator is empowered to award attorney fees.  (Cf. Frei
v. Davey (2004) 124 Cal.App.4th 1506, 1511-1520 [contract required
parties to submit dispute to mediation as condition precedent to right to
obtain attorney fees as prevailing party].) 
Clearly, the parties intended to arbitrate any disputes arising out of
the subcontract at the time they entered into the subcontract.  (Civ. Code, § 1636 [“A contract must be
interpreted as to give effect to the mutual intention of the parties as it
existed at the time of contracting, so far as the same is ascertainable and
lawful”].)  Had the parties arbitrated
their dispute, the arbitrator could have awarded attorney fees to the
prevailing party, regardless of which party prevailed or the specific grounds
on which the victory was obtained. 

Finally, the parties’ respective pleadings (which request the award
of attorney fees) do not create an independent basis for the recovery of
attorney fees.  “Merely praying for
relief to which one is not entitled cannot ordinarily engender either reliance
or detriment.”  (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162
Cal.App.4th 858, 898 [rejecting view that estoppel provides basis for
awarding attorney fees]; see also Hasler
v. Howard (2005) 130 Cal.App.4th 1168, 1171 [“A prevailing party is
not entitled to fees simply because the opposing party requested them”]; >M. Perez Co., Inc. v. Base Camp Condominiums
Assn. No. One (2003) 111 Cal.App.4th 456, 467-468 [distinguishing
cases in which the underlying litigation pertains to “the validity of the
contract or the attorney fee provision,” in which cases the prevailing party
can recover fees even if they are successful in disproving the validity of the
contract]; Leamon v. Krajkiewcz, >supra, 107 Cal.App.4th at p. 437;
but see International Billing Services,
Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1186-1192 [much criticized
case holding that a party is judicially estopped from denying existence of contractual
attorney fee clause when that party requests payment of attorney fees in
pleading].)  Regardless of which party
prevailed at trial, an award of attorney fees would have been inappropriate
pursuant to the plain language of the subcontract.  Thus, the court should not have awarded any attorney
fees to Ponce.

 

DISPOSITION

 

The judgment is modified to eliminate the award of attorney fees to Ponce. As modified,
the judgment is affirmed.  Ponce’s request for
judicial notice and motion to submit additional evidence on appeal are denied,
as the settlement agreement between Philco and Certified that is proffered to
this court in each of these submissions is irrelevant to the issues presented
on appeal.  In the interests of justice,
the parties shall bear their own costs on appeal.

 

 

 

                                                                                    IKOLA,
J.

 

WE CONCUR:

 

 

 

O’LEARY, P. J.

 

 

 

THOMPSON, J.