Pro Construction Co. v. Nguyen

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appeal from a judgment of the Superior Court of Orange County, James P. Gray, Judge. Affirmed.

Wenzel & Associates and Kenneth J. Wenzel for Defendants and Appellants.

Law Offices of Frank Satalino and Frank A. Satalino for Plaintiffs and Respondents.

* * *

Nancy Thuy Nguyen and Ngoc Dao (referred to collectively as Homeowners) were sued for breach of contract by their former contractor, Pro Construction Company (Pro Construction). At trial, the Homeowners contended that AV Design & Construction, Inc. (AV Design) was also a party to the construction contract and the action could not proceed without it being joined. The trial court found AV Design was not a party to the contract and entered judgment against the Homeowners. On appeal, the Homeowners contend the trial court should have dismissed the action against it because it should have found that AV Design (1) was a party to the contract, (2) was an indispensable party to the action, and (3) was unable to maintain the action because its corporate powers were suspended at the time the contract was executed. We find there is substantial evidence to support the trial courts conclusion that AV Design was not a party to the contract; accordingly, we affirm.

FACTS

In May 2005, Pro Construction entered into a contract with the Homeowners to construct the building shells and set up the rough plumbing and electrical work for three single-family homes on three separate lots in Anaheim. The Homeowners already had the design plans for the building shells and only needed a contractor to execute their plans. The work was to start on June 15, 2005 and be completed by September 15, 2005. The original contract price was for $177,600, payable in installments.

Pro Construction, a labor and construction company, is owned by Nam Bui, who also owns AV Design, a design company. The contract, which was prepared by Buis office, was printed on paper with a letterhead that listed both Pro Construction Company and AV Design, and the preamble of the contract named both Pro Construction and AV Design as contractors being hired under the contract.

As construction began, the parties had various disputes regarding Pro Constructions handling of the project. More than halfway into the construction period, the Homeowners decided to hire other workers to finish the project and stopped payments to Pro Construction. Pro Construction sued the Homeowners for breach of contract, seeking damages for money owed on the contract and for additional work completed.

The Homeowners demurred and moved to strike the complaint, alleging: (1) They had contracted with AV Design as well as Pro Construction, making the project a joint venture; thus, AV Design had to be joined as a plaintiff. (2) AV Designs corporate powers had been suspended for nonpayment of licensing fees when the contract was made; thus, AV Design could not maintain an action against the Homeowners. (3) Because the project was a joint venture, Pro Construction could not maintain the suit either. The trial court overruled the demurrer and denied the motion to strike, finding it could not be determined from the face of the complaint whether AV Design was a party to the contract and whether its suspension barred Pro Construction from pursuing its claims against the Homeowners. The court stated, These issues are better addressed in a Motion for Summary Judgment/Adjudication of Issues.[1]

The Homeowners answered the complaint and filed a cross-complaint against Pro Construction and AV Design for breach of contract, breach of implied warranty, and recovery of compensation paid to an unlicensed contractor (Bus. & Prof. Code, 7031, subd. (b)). Both Pro Construction and AV Design answered the cross-complaint.

The case was tried without a jury, and the contract was admitted into evidence. It consists of six pages with the letterhead listing AV DESIGN & CONSTRUCTION, INC. and PRO CONSTRUCTION, CO. on the top of each page. The first paragraph reads: This agreement is made this 26th day of May 2005, by and between AV Design & Construction, Inc. and Pro Construction, Co. (hereinafter referred to as the contractor(s)), and (Nancy) Thuy Nguyen & Ngoc Dao (hereinafter referred to as the owner(s)) on the property . . . . The rest of the contract detailed the construction jobs that were to be done and the price of each job, the time of completion, a progress payment schedule sheet, and other terms and conditions. Nowhere else in the contract was AV Design listed as a party to the contract. On the signature page, Buis name was listed underneath the signature line as President: Richard Nam Bui, with no indication of which company he was representing.

Bui testified he and Nguyen discussed having Pro Construction as [t]he one who [was] to perform the contract and that he [would] go to city to fill out permit under Pro Construction, . . . [and] provide to her workers comp under Pro Construction. When asked whether he had entered into the contract on behalf of Pro Construction only, Bui stated, Yeah . . . [] everything under Pro Construction. Bui testified he did not intend to sign the contract as a joint venture between Pro Construction and AV Design, nor did he ever have conversations with Nguyen that AV Design would have any partial or joint involvement with the Anaheim construction project. AV Design was a company that designed construction plans while Pro Construction was a construction and building company. The Homeowners had already given Bui design plans to use; there would be no need for AV Design to be employed for a project that only required building the shells of the single-unit homes and setting up the plumbing and electrical work. Moreover, when Bui was asked whether there would have been any advantage for this project to be handled as a joint venture between AV Design and Pro Construction, Bui answered, I dont think it benefits because I have to buy the workers comp [for AV Design] . . . .

Nguyen testified she met with Bui a week before executing the contract to discuss possible construction work on the three Anaheim properties. Nguyen brought copies of the design plans with her. She recalled that Bui bragged about being a pro constructor, and this professionalism was why his company was called Pro Construction. Nguyen first testified she did not know at the time of signing that Pro Construction and AV Design were two separate companies, but later she testified she knew she had sign[ed] contract with two companies. Regardless of any confusion, however, she understood the underlying components of the transaction: Mr. Bui was to do some [construction] work on this land and you were to pay him money. . . .

After the contract was signed, Bui immediately applied for electrical and building permits for the project. The Homeowners had authorized him to pull the necessary permits under Pro Construction Company. Thus, the electrical, mechanical, and plumbing permits were pulled in Pro Constructions name from the city of Anaheim for all three Anaheim properties. The Homeowners received copies of all the permits from Bui by fax on the same day he pulled them; only Pro Construction Company was listed as the contractor on each copy.

Each permit application required Bui to show proof of workers compensation coverage. Bui listed only Pro Constructions name and policy number on the proof of insurance forms, and this information also appeared on the permit documents that Homeowners received. The building permit renewals were also filed under Pro Constructions name only. And when a dispute arose between the parties and the Homeowners stopped payment, Bui filed a mechanics lien on the properties in Pro Constructions name only.

After the parties negotiated their agreement to have Pro Construction perform the desired work on the Anaheim properties, Buis secretary, Nancy Tang, drafted the contract. Bui testified he customarily used contracts that would list only the company or companies that had been hired for a job. Tang testified she had recently started working for Bui as his secretary at the time when the Homeowners and Bui entered into the contract in 2005. When asked how many contracts she had prepared for Bui before she drafted the contract at issue in this case, she said, Not much; three or four. At that point, her procedure for preparing contracts was no more than mechanical cut-and-paste. She testified, Basically, . . . my former co-worker, who used to work there, he used to do all the contracts . . . and I just used the format, I didnt pay attention to the title [on the contracts letterhead]. Tang testified that Bui never told her to put AV Design as a party to the contract; she merely copied the format for this contract from a previous contract on file. Tang also listed both AV Design and Pro Construction on invoices that she drafted and sent to the Homeowners after work had begun. She used a format of invoices before . . . [and] didnt pay much attention to the title. She affirmed that it was her habit and custom during the Anaheim project to include AV Design on all invoices and that she didnt think it would matter. She was never specifically told by Bui to put AV Design on either the contract or the invoices. According to Tang, Later on, when [Bui] start noticing that I put in AV Design, it was a mistake, so he start asking me to [put in only Pro Construction] for all contracts with Pro Construction from then on.

The Homeowners wrote three checks for payment that included AV Design along with Pro Construction in the payee line. They also wrote eight other checks only to Pro Construction. Bui testified he thought those three checks were written out to AV Design because the Homeowners had referred to the incorrectly prepared invoices.

The trial court found against the Homeowners on both the complaint and the cross-complaint. It specifically found that AV Design was not a party to the contract. Although AV Designs name was on the contract, was on invoices, was on checks, the court concluded the confusion was caused by Tang: She used them interchangeably, without understanding differentiation, but to elevate AV Design as the party in this case . . . would elevate form over substance . . . . The court found Pro Constructions valid license satisfied the legislative purpose of the Revenue and Taxation Code. Pro Construction does . . . construction work, not design work, and thats what we were talking about here . . . .

The Homeowners appeal from the judgment, claiming the trial court should have found that AV Design was a party to the contract and thus an indispensable party to the complaint, thereby precluding recovery by Pro Construction. We agree with the trial court and affirm.

DISCUSSION

The Homeowners assert the trial court erred in finding that AV Design was not a party to the action. But there is substantial evidence in the record to support the trial courts conclusion that AV Design was listed in the contract by mistake.

A contract must be so 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. (Civ. Code, 1636). When, through . . . mistake . . . , a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention. . . . (Civ. Code, 3399). A mistake includes error on the scriveners part: In the classic reformation case a contract is formed, but a provision of the writing that is executed, through mistake such as a scriveners error, contradicts the terms to which the parties agreed. In such a case, upon evidence of the actual agreement a court is empowered to correct the error by striking the mistaken language in the instrument and inserting appropriate language. (Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 593, abrogated on another ground in Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376-377.)

We will affirm the trial courts factual determination that AV Design was not intended to be a party to the contract if it is supported by substantial evidence. We look at the evidence in support of the successful party, disregarding any contrary showing, and we resolve all conflicts in favor of the respondent, indulging in all legitimate and reasonable inferences to uphold the verdict if possible. [Citation.] When two or more inferences can reasonably be deduced from the facts, we do not substitute our deductions for those of the finder of fact. [Citation.] (Canister v. Emergency Ambulance Service, Inc. (2008) 160 Cal.App.4th 388, 394.)

There is substantial evidence that the parties intended Pro Construction to be the only company contracted to perform the prescribed construction work and that the inclusion of AV Design on the letterhead and in the first paragraph was a mistake. AV Design was never mentioned during negotiations, the prescribed construction work was not within AV Designs field, and Tang testified she had mistakenly listed both companies on the contract.

The conduct of the Homeowners and Bui after executing the contract also constitutes substantial evidence that the parties intended only Pro Construction to be a party to the contract. All the documentation filed by Bui in order to commence and sustain work on the Anaheim project was done in Pro Constructions name. The Homeowners wrote out the majority of the checks to Pro Construction only, indicating their intent to do business with Pro Construction only. In construing contract terms, the construction given the contract by the acts and conduct of the parties with knowledge of its terms, and before any controversy arises as to its meaning, is relevant on the issue of the parties intent. (Southern Pacific Transportation v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1242.)

DISPOSITION

The judgment is affirmed. Respondents are entitled to costs on appeal.

SILLS, P. J.

WE CONCUR:

RYLAARSDAM, J.

ARONSON, J.

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line attorney.

San Diego Case Information provided by www.fearnotlaw.com

[1] The Homeowners request that we take judicial notice of a document showing AV Design is currently in good standing with the Secretary of State. Because this information is not relevant to our determination of the issues before us, we deny the request.