Tolibas Construction v. Wang

Filed 1/15/10 Tolibas Construction v. Wang CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

Defendants Gary Wang and Jill Pope Wang, individually and as trustees of the Wang Family Revocable Trust (collectively, the Wangs), appeal from a judgment following a court trial in favor of plaintiff Tolibas Construction, Inc., a California corporation, doing business as T & G Construction (Tolibas), in Tolibass action for breach of a construction contract and the Wangs cross-action for breach of contract and fraud. The Wangs contend the court erred in failing to award them damages due to Tolibass delay and other breaches of the parties construction contract, and erred in awarding Tolibas a 15 percent final payment fee and prejudgment interest. Tolibas cross-appeals from the judgment on the ground that the damages offset awarded to the Wangs was improperly calculated.

BACKGROUND

In approximately September 2000, Tolibas and the Wangs entered into a written time and materials contract pursuant to which Tolibas was to construct a new home for the Wangs in Woodside.[1] The project included construction of three separate structures: the main residence, an accessory garage, and a caretaker/guest cottage. The contract does not specify any deadline for completion of construction. It provides in part: UNAVOIDABLE DELAYS: [Tolibas] is not liable for delays or loss caused by Acts of God or other causes that are beyond the control of [Tolibas]. According to Tolibass owner, Michael Tolibas, prior to the parties execution of the contract, he told the Wangs the job would take 24 months, but he would try to complete the job in 18 months. According to Gary Wang, Michael Tolibas orally promised the project would be completed within 12 to 18 months of June 2000.

The contract provides in part: FINAL PAYMENT: Upon completion of residence (Final building permit sign off and notice of completion),[[2]]within thirty days owners shall pay the sum of 15% of project cost per proposal (Exhibit A). Exhibit A to the contract specifies as Cost to operate [Tolibas], the hourly rate charged by Tolibas crew members Mike,[3] Steve [Reynolds] and Frank [Juarez]. A notation in the lower right hand corner of exhibit A states: + 15% of Building Costs.

The contact also provides in part: SUB-CONTRACTORS: [Tolibas] to oversee and co-ordinate all subcontractors required to render a complete and finished house only. [Tolibas] will NOT be held liable for any damages or faulty workmanship deemed by outside vendors or other company products provided by owners.

Construction began on or about November 28, 2000, when the building permit was issued. Approximately 24 months later, on December 6 or 7, 2002, the Wangs and their son moved into the residence. At that point, Michael Tolibas and his crew were still working on the jobsite on a daily basis because some work, including floor refinishing, was not completed. However, according to Stokes, the house had power and heat, the bathrooms and kitchens were functioning, the house was suitable for habitation and therefore substantial completion of the project was achieved.[4]

In April 2004, Tolibas filed the instant action for breach of contract. It sought a 15 percent final payment fee of approximately $202,000 or more pursuant to the contract. It also sought damages of $4,450 for the final invoice amount which remained unpaid and owing by the Wangs, and a $56,000 contractual missed opportunity fee.[5]

The Wangs cross-complained against Tolibas for breach of contract and fraud, alleging that Tolibas agreed to complete construction of the residence by May 2002 and failed to do so. The cross-complaint also alleged that Tolibas failed to arrange for subcontractors, failed to complete work in a workmanlike manner, supplied work at an excessive and unreasonable cost and overbilled for work performed, and falsely represented that it would perform the parties contract in a fair, reasonable, and responsible manner.

TRIAL COURTS STATEMENT OF DECISION

On December 12, 2006, following an 11-day trial, the court issued a 20-page statement of decision.

Delay Damages

The court concluded that Tolibas did not delay in completing the project, and therefore the Wangs were not entitled to any delay damages. In support of this conclusion, the court found that Tolibas completed or substantially completed construction within 24 months.

The court also found that any failure of Tolibas to perform, including timely completion, was excused by delays attributable to inclement weather, changes directed by the Wangs, redesign and additional engineering required in the course of the project, redirection of the sequence of the work by the Wangs, and disruption of services and suppliers resulting from the Wangs failure or inability to timely pay subcontractors and material suppliers.[6] Assuming Tolibas estimated completion in 18 months, the court concluded that these excusable delays more than accounted for any differential between the 18-month estimate and the 24-month period for substantial completion, and concluded that 24 months was a reasonable time for completion or substantial completion of a project of this type.

The court rejected the Wangs argument that the handwritten notation, Finish End of May made by Michael Tolibas on a May 2002 calendar page at a December 2001 breakfast meeting constituted a binding, enforceable modification of the contract requiring Tolibass completion of construction by the end of May 2002. Instead, the court found that the calendar entry was merely a  completion estimate.  It also found that the Wangs never notified Tolibas in the second half of 2002, or thereafter, that Tolibas had breached the contract by failing to complete construction by May 2002. Instead, the Wangs continued paying Tolibas through early 2003. The court also noted that on four Certificates for Payment (exhibits 90-93), dated between February 2001 and June 2002, Jill Wang consistently certified that  . . . the work . . . has been completed in accordance with the Contract Documents. . . . 

Finally, the court concluded that because both parties were responsible for any delay in completion of the project, it need not apportion the delay and could deny the Wangs delay damages.

15 Percent Final Payment Fee

The court next considered the amount of Tolibass claim for the final payment fee due. It found that in approximately March 2003, the Wangs terminated Tolibas and ejected it from the jobsite and concluded that, as a result, Tolibas was excused from any requirement of a final building permit signoff and/or notice of completion as a condition of its entitlement to the final payment fee. The court stated that based on the testimony of the Wangs expert, Patrick Kelley (Kelley), $2,462,000 was a reasonable amount for the total building cost of the project. It found that based on the square footage of new building construction involved in the project, the $2,462,000 building cost was approximately $275 per square foot, which was within the $250 to $800 range that the parties experts testified was reasonable for such projects in the area. Based on a total building cost of $2,462,000, the court awarded Tolibas a 15 percent final payment fee of $369,300.

In determining Tolibass entitlement to the final payment fee award, the court found that pursuant to the parties contract, Tolibas was entitled to 15 percent of the costs of subcontractors selected and hired by the Wangs and not under contract with Tolibas (the outside subcontractors). It also found that the Wangs selected and directly contracted with the outside subcontractors, but excluded Tolibas from any involvement in negotiating the contracts with the outside subcontractors or knowledge of the terms of those contracts. Thus, the court concluded that the Wangs could not realistically expect Tolibas to ensure the outside subcontractors compliance with the terms of their subcontracts, including the materials specified and scope of work.

Offset for Defective or Incomplete Work

The court next considered the Wangs offset claim for Tolibass defective or incomplete work. The court found that the parties intended and contemplated that during the course of the project the Wangs would select, retain and directly contract with the outside subcontractors. The court also found that Tolibas oversaw and coordinated all subcontractors, including the outside subcontractors, and given the extent to which [Tolibas] was insulated from the [Wangs] process of contracting with and paying these outside subcontractors, it was neither feasible nor reasonable to impose on [Tolibas] responsibility or liability for these outside subcontractors work. Based on Stokess estimate, it found that the Wangs were entitled to an offset of $113,000 for the cost of correcting and/or completing work on the project.

The Wangs Other Damage Claims

The court expressly rejected the Wangs claim of Tolibass overcharges related to grading and excavation contractor Penello & Sons (Penello). It noted that Michael Tolibas testified that Penellos truck continuously offloaded soil from the project site in the months before the building permit issued. It ruled that the Wangs failed to produce any competent, admissible evidence regarding limitations by the Town of Woodside on the quantity of soil that can be removed from a site, or the applicability of any such limitations to this project. The court also found that most of the payments received by Penello were made directly by the Wangs from their company (EASCO) account, and the Wangs had responsibility for reviewing, approving and paying such bills directly. Thus, the court concluded it would be inappropriate to hold Tolibas responsible for any discrepancies or irregularities in Penellos charges.

Prejudgment Interest

The court concluded that an award of prejudgment interest to Tolibas was appropriate because the Wangs, as owners, controlled and oversaw financial administration of the construction contract and project. It found that after early 2001, Jill Wang, with the assistance of EASCOs controller, Ed Young, made all payments on the project, and the Wangs could readily obtain an accounting of the costs of the project. The court also found that the project was deemed completed as of March 2003, by which time the Wangs had occupied the premises and discharged Tolibas from the project. The court concluded that an award of 10 percent prejudgment interest as authorized by the Civil Code was appropriate under the circumstances.

On January 16, 2007, the courts judgment issued awarding Tolibas $246,491 plus $92,585 in prejudgment interest from March 30, 2003, through December 31, 2006. The Wangs filed a timely appeal from the judgment. Tolibas filed a timely cross-appeal from the judgment.

DISCUSSION

I. The Wang Appeal

A. The Trial Court Properly Denied Delay Damages for the Wangs

The Wangs contend the court erred in failing to award them any delay damages on their cross-complaint.

1. Handwritten Calendar Notation

The Wangs first argue that the court erred in concluding the handwritten notation, Finish End of May made by Michael Tolibas on a May 2002 calendar page at a December 2001 meeting did not constitute a binding, enforceable modification of the contract requiring completion of construction by the end of May 2002.

The Wangs assert that because the parties contract did not specify a completion date, the calendar notation was the reaching of agreement on a legally-required completion date which should have been contained within the original contract. This is an apparent reference to Business and Professions Code section 7164, subdivision (b)(2), which specifies that a contract between an owner and a contractor for the construction of a single-family dwelling to be retained by the owner for at least one year must be in writing and include the approximate dates when the work will begin and be substantially completed.

An appellate court exercises de novo review in interpreting a written agreement where no conflicting extrinsic evidence in aid of interpretation was introduced. (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1670 (Brookwood).) A written contract may be modified by: (1) a contract in writing (Civ. Code,  1698, subd. (a));[7] (2) an oral agreement to the extent that the oral agreement is executed by the parties ( 1698, subd. (b)); or (3) an oral agreement supported by new consideration ( 1698, subd. (c)). (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts,  968, pp. 1058-1059.)

The elements of a contract are well established: It is essential to the existence of a contract that there should be: [] 1. Parties capable of contracting; [] 2. Their consent; [] 3. A lawful object; and, [] 4. A sufficient cause or consideration. ( 1550.) The existence of a contract depends, among other things, on the ability of the party claiming the existence of a contract to plead that both parties agreed, or consented, to the terms of the alleged contract. Under the objective theory of mutual assent, there must be an objective manifestation or expression of assent sufficient to indicate that each of the parties to a contract agreement agreed to be bound by its terms. (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270-271; 1 Witkin, Summary of Cal. Law, supra, Contracts,  116, pp. 155-156.)

The trial court correctly determined that the calendar entry did not itself constitute a written contract since it does not reflect the requisite mutual assent of the parties. Thus, the calendar entry does not constitute a written modification pursuant to section 1698, subdivision (a).

The Wangs also argue that the calendar notation should be construed together with the written contract because the calendar and written contract relate to the same subject matter (the parties agreement for Tolibas to construct the Wangs new home), and therefore the May 2002 completion date in the calendar entry should be deemed the contractual completion date. Section 1642 provides that [s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together. However, it has been held that the several writings need not each be contracts and that they need not be executed on the same day or within any particular time. [Citation.] (1 Witkin, Summary of Cal. Law, supra, Contracts,  747, p. 836.)

Whether section 1642 applies in a particular case is a factual question for resolution by the trial court. (Brookwood, supra, 45 Cal.App.4th at p. 1675.) Thus, to prevail, the Wangs must demonstrate the courts finding that the calendar notation was not intended to modify Tolibass obligations under the contract is not supported by substantial evidence. In conducting substantial evidence review, we must review all factual matters favorably to Tolibas, the prevailing party, and in support of the judgment and resolve all evidentiary conflicts in Tolibass favor. (See id. at p. 1675, fn. 6.) By citing only the evidence favorable to them and ignoring the evidence in support of the judgment, the Wangs fail to make the proper showing on appeal.

The Wangs point to Michael Tolibass testimony that he prepared the May 2002 calendar at the Wangs request because [the Wangs] insisted upon knowing when this project was going to be finished. When asked whether he intended the calendar notation Finish End of May to give the Wangs a date by which the project would be finished, Michael Tolibas responded, I would loved to have done that, yes. He conceded that the May 2002 calendar did not expressly state that any of the notations therein were only estimates. However, the Wangs fail to mention Michael Tolibass testimony that the calendar notations arose from his meeting with the Wangs in late 2001 to discuss his estimate for completion of the project. They also fail to mention that Gary Wangs October 24, 2002 response to Michael Tolibass September 30 letter states, I believe that the contract that we signed should be the prevailing document. In its discretion, the court could reject Jill Wangs testimony that she understood the Finish End of May calendar notation as Tolibass promise to complete construction on the project by the end of May 2002.

In reliance on Wagner v. Glendale Adventist Medical Center (1989) 216 Cal.App.3d 1379 (Wagner), the Wangs also argue that the doctrine of implied equitable modification applies here. The Wagner court stated, When one party has, through oral representations and conduct or custom, subsequently behaved in a manner antithetical to one or more terms of an express written contract, he or she has induced the other party to rely on the representations and conduct or custom. In that circumstance, it would be equally inequitable to deny the relying party the benefit of the other partys apparent modification of the written contract. (Id. at p. 1388.) The Wangs assert that Tolibass promise of a May 2002 completion date is antithetical to an implied reasonable completion date, as found by the trial court. The Wangs reliance on Wagner is misplaced because here the contract did not contain an express term regarding when construction was to be completed.

Section 1657 provides in relevant part: If no time is specified for the performance of an act required to be performed, a reasonable time is allowed. Substantial evidence supports the courts determination that the parties did not agree that construction would be completed by the end of May 2002, and, because the contract did not specify a date by which construction would be completed, the court properly determined that an implied term of the contract was completion of construction within a reasonable time. (Marshall & Co. v. Weisel (1966) 242 Cal.App.2d 191, 194.)  The question of what constitutes a reasonable time is always a fact question. [Citations.] In determining what period of time would be reasonable, the situation of the parties, the nature of the transaction, and the facts of the particular case should all be considered. [Citation.] (Id. at p. 195.)[8]

2. Substantial Completion Date

The Wangs also contend they are entitled to delay damages because the courts finding that construction was substantially completed by December 7, 2002, is not supported by substantial evidence. They argue that Tolibas should be held to the admission in its complaint that the contract was concluded on or about October 9, 2003.

The trial court found that the Wangs main residence was substantially completed and ready for occupancy by the Wangs on or about December 2, 2002,[9] when they moved in, approximately 24 months after construction commenced. The Wangs argue that although they occupied the house in December 2002, there is no substantial evidence that they moved in at that time and the uncontradicted evidence established that construction on the house was not substantially complete.

The term substantial completion is used interchangeably with the term substantial performance. (5 Bruner & OConnor on Construction Law (2009)  18:12, p. 892.)  At common law, recovery under a contract for work done was dependent upon complete performance, although hardship might be avoided by permitting recovery in quantum meruit. The prevailing doctrine today, which finds its application chiefly in building contracts, is that substantial performance is sufficient, and justifies an action on the contract, although the other party is entitled to a reduction in the amount called for by the contract, to compensate for the defects. What constitutes substantial performance is a question of fact, but it is essential that there be no wilful departure from the terms of the contract, and that the defects be such as may be easily remedied or compensated, so that the promisee may get practically what the contract calls for.  (Murrays Iron Works, Inc. v. Boyce (2008) 158 Cal.App.4th 1279, 1291 (Murrays), citing 1 Witkin, Summary of Cal. Law, supra, Contracts,  818, p. 908.)

In Thomas Haverty Co. v. Jones (1921) 185 Cal. 285, 291, the court stated: [T]here is a substantial performance where the variance from the specifications of the contract does not impair the building or structure as a whole, and where after it is erected the building is actually used for the intended purpose, or where the defects can be remedied without great expenditure and without material damage to other parts of the structure, but that the defects must not run through the whole work so that the object of the owner in having the work done in a particular way is not accomplished, or be such that a new contract is not substituted for the original one, nor be so substantial as not to be capable of a remedy, and the allowance out of the contract price will not give the owner essentially what he contracted for. (Accord, Murrays, supra, 158 Cal.App.4th at p. 1292.)

We conclude that substantial evidence supports the courts finding that the Wangs moved into the house in early December 2002. Michael Tolibas testified that on December 6 or 7, 2002, EASCO trucks arrived at the property with the Wangs furniture and he helped put the carpets, beds and all the Wangs furnishings and personal belongings inside the house. At that time, Michael Tolibas and his crew were working on the jobsite daily. After Michael Tolibas helped the Wangs move their furniture and personal belongings into the house, the Wangs and their son lived there. The Wangs point to Jill Wangs testimony that they started moving furniture into the property in December 2002, but actually moved it upstairs in February 2003. Jill Wang also testified that the furniture was in storage at the EASCO office between May and December 2002. The Wangs fail to mention that Gary Wang testified his bedroom furniture was moved in on December 6 or 7, 2002, and he began sleeping there. They also fail to mention a June 24, 2003, letter from Tolibas to the Wangs which states, It has now been approximately six months since you have taken up residence in this home . . . .

The testimony of Michael Tolibas provides substantial evidence to support the courts finding that the Wangs moved into the house on December 6 or 7, 2002. That Jill Wangs testimony may support a different result is irrelevant for purposes of our substantial evidence review since a reviewing court has no power to assess witness credibility or substitute its own deductions. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 874.)

We also conclude substantial evidence supports the courts finding that construction was substantially complete on December 6 or 7, 2002. The Wangs note that Tolibass complaint states: Pursuant to this contract, between the date of the contract and its conclusion on or about October 9, 2003, [Tolibas] performed the work, labor for, and furnished all necessary services, materials and equipment to be used or consumed in and which were actually used or consumed in the work of improvement, and performed all other conditions, covenants and promises under the contract, on its part to be performed. Michael Tolibas testified that the October 9, 2003 date was grossly incorrect. The Wangs argue that the allegation in the complaint is a binding judicial admission that Tolibas completed construction on or about October 9, 2003. The trial court rejected the argument, noting that Tolibas could amend its complaint to conform to proof regarding the completion date. The courts ruling was correct. The admission of a fact in a pleading is conclusive on the pleader. The pleader cannot offer contrary evidence unless permitted to amend, and a judgment may rest in whole or in part on the admission without proof of the fact. [Citations.] (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading,  454, p. 587.) However, the trial judge has discretion to relieve a party from the effects of a judicial admission by permitting amendment of the pleading. (Ibid.)Amendments to pleadings during trial may be allowed in furtherance of justice. (Code Civ. Proc.,  473, subd. (a).) Such amendments are liberally allowed where the delay in amending is excusable and no prejudice to the adverse party is shown. (5 Witkin, Cal. Procedure, supra,  1204, pp. 637-638.) The Wangs assert no such prejudice, nor can we conceive of any since the issue of the completion date was fully tried and the evidence was before the court. (See North 7th St. Associates v. Constante (2001) 92 Cal.App.4th Supp. 7, 11-12.)

Stokes testified that in the construction trades, the term substantial completion means the project or premises can be used for [its] intended purposes. He said that as of December 7, 2002, the floors were being finished, but the house had power and heat, the bathrooms and kitchens were functioning and it was suitable for habitation. Michael Tolibas testified that as of December 7, 2002, the house was habitable. It had a functioning shower and bathroom but did not have heat. The house was accessible by a gravel rock driveway which had not yet been black topped. He was not sure whether all of the exterior doors were lockable.

Gary Wang testified that when he moved in on or about December 7, 2002, there was no functioning shower in the master bathroom, not all the doors were installed, the driveway was not installed, and painting was not completed. Since the hardwood floors were installed but not sanded or varnished, not all the furniture could be moved in. He said he had the use of a bedroom that was not the master bedroom and had the use of a guest shower and bathroom. He estimated that at that time he had actual use of 15 percent of the property.

The Wangs note that the June 24, 2003 letter from Tolibas to them indicates that the building department had not yet signed off on a notice of completion. The letter also states that the house was extremely underpowered, raising major safety issues, and the lack of proper exterior stairs and landings made navigation around the houses perimeter dangerous.

In its statement of decision the court stated that, even accepting the Wangs testimony as to the work not completed as of December 7, 2002, the remaining work (1) did not [a]ffect the building or structure as a whole; (2) did not require great expenditure to complete nor cause damage to other parts of the structure when performed; (3) did not amount to a defect running through the whole Project; and (4) was not so substantial that if its cost was theoretically deducted from the Contract price, the [Wangs] would still be deprived of essentially what they contracted to have done.[10] The court noted [o]f significance to [its] decision on this issue was the relative paucity or lack of additional work actually undertaken by the [Wangs] to complete the allegedly unfinished aspects of the construction in the three years since March 2003, when Tolibas was ejected from the job site.

We conclude substantial evidence supports the courts finding that as of approximately December 7, 2002, when the Wangs occupied the residence, the construction was substantially completed in that the residence was being used for its intended purpose. Thus, as the court found, there is no factual basis for an award of delay damages.

B. Damages Regarding Penello Were Properly Denied

Next, the Wangs contend the court erred in refusing to award them damages for the $52,216.50 they claim they overpaid Penello for grading and excavation. While the Wangs assert that the courts failure to follow uncontradicted evidence is reviewed for abuse of discretion, the correct standard of review of this factual dispute is substantial evidence.[11] (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2009)  8:43, p. 8-20.)

1. Soil Removal

Jill Wang testified that the Wangs were overcharged $23,100 for soil removal allegedly performed by Penello. She stated that between October 10 and 16, 2001, Penello billed the Wangs $25,200 for hauling 120 truckloads of dirt from the property. She testified she never saw any trucks hauling dirt, Tolibass files regarding Penello contained no truck tags, and there was no evidence of any dump fees paid for dirt. However, there was dirt piled up in front of the cottage. Jill Wang additionally testified that the Town of Woodside only allows 10 to 12 truckloads of dirt to be removed. Based thereon, she deducted $23,100 as the amount overcharged for soil removal.

Gary Wang testified that he was advised by the Town of Woodside of a cut and fill requirement imposed as part of the permit process. He believed that there was a 100 cubic yard limitation on the amount of dirt that could be removed from the property. He also believed that Penello billed the Wangs for 132 truckloads. Based on his understanding that there are approximately 10 yards in a truckload, Gary Wang said Penello billed the Wangs for the removal of 1,320 yards of dirt. He specified that they were billed $210 per truckload for 132 truckloads.[12]

Michael Tolibas testified that, in early 2001, Penello had seven trucks simultaneously hauling soil from the property.

Exhibit PP, relied on by the Wangs, reveals two payments to Penello by Tolibas in late 2000, one payment to Penello from the Wangs checking account in August 2002, and 10 payments to Penello from the Wangs EASCO account between December 2001 and March 2003. Exhibit PP also reveals several items of correspondence between the Wangs and Penello between February and December 2002. Neither the checks nor the correspondence specifies dirt removal from the property.

Based on this evidence the court could properly conclude that no Town of Woodside limitations regarding soil removal were ever applied to this project. In addition, based on Tolibass testimony, the court could have inferred that Penellos five October 2001 billings were for Penellos dirt removal from the property in early 2001.

2. Missing Invoices

Jill Wang testified that Penello overcharged the Wangs $26,290 based on the Wangs never receiving five invoices totaling this amount. The missing invoices were dated May 30, 2000, November 4, 2000, November 14, 2000 (two invoices), and May 30, 2002. Jill Wang admitted that she did not look for three of the missing invoices in Tolibass files.

The short answer to this claim is that even if the invoices are missing, the Wangs have failed to establish that Penello failed to perform the work underlying the charges in the missing invoices.

3. Checks Not Applied

Jill Wang testified that four checks paid by EASCO to Penello between January 2002 and March 2003 totaling $8,500 (check Nos. 59343, 60851, 61046 and 61200) and one check paid by Tolibas to Penello in October 2000 totaling $4,000 (check No. 8283) were not credited because they do not show up as credits on Penellos October 17, 2003 statement. Al Penello did not testify and no evidence regarding Penellos billing practices was adduced at trial. Moreover, no evidence established that all payments to Penello regarding the project should have been reflected on the October 17, 2003 statement. Consequently, the court could conclude that the Wangs failed to establish Tolibass liability for the amounts of these five checks.

C. The 15 Percent Final Payment Fee Was Improperly Awarded

The Wangs contend the trial courts determination that Tolibas was entitled to an award of $369,300 as its final payment fee due under the contract was erroneously based on an imputed reasonable total project cost, rather than the actual cost of the project. Alternatively, they argue that even if the court properly relied on a  reasonable cost, its calculations were erroneous. They argue that the 15 percent fee should have been no more than $180,000: 15 percent of total project costs of $1.2 million.[13]

As we noted above, the contract provides in part: FINAL PAYMENT: Upon completion of residence (Final building permit sign off and notice of completion), within thirty days owners shall pay the sum of 15% of project cost per proposal (Exhibit A). Exhibit A to the contract specifies as Cost to operate [Tolibas], the hourly rate charged by Tolibas crew members Mike, Steve and Frank. A notation in the lower right hand corner of the exhibit states: + 15% of Building Costs.

Michael Tolibas testified that the 15 percent fee was intended to cover the cost of all materials, whether I purchased them or they purchased them and 15 percent of the cost of subcontractors, whether I provided them or they provided them. On cross-examination, Michael Tolibas testified that pursuant to the final payment provision of the contract, project costs included [t]he sum of the suppliers materials, the sum of the subcontractors bids and . . . any costs relative to materials that were supplied to the site. He stated that his crews labor was not to be included in the 15 percent fee, but everything over and above [his crews labor] was to be incorporated into the 15 percent. Michael Tolibas also testified that because he oversaw and coordinated the work of the subcontractors obtained by the Wangs, Tolibas was entitled to a 15 percent fee on the cost of those subcontractors.

Tolibass expert, Stokes, said that the contracts 15 percent fee provision applied to expenses that were non-Tolibas construction labor. On cross-examination, he clarified that the contract does not differentiate between subcontractors subcontracted by Tolibas and those subcontracted by the Wangs. Instead, it refers to project costs exclusive of Tolibass labor. Stokes said the intent of the 15 percent fee provision was that Tolibas would be compensated for the cost of the project regardless of whether Tolibas or the Wangs did the subcontracting.

Gary Wang testified that based on documents provided by Tolibas and various vendors, suppliers and subcontractors, the total project cost as of October 21, 2004 was $2,540,066.

In its statement of decision the court found that $2,462,000 is the total Project or Building Cost for the Project, for purposes of determining Tolibass final payment. The court found that this amount was  reasonable,  based on Kelleys testimony. The court stated, Based on the . . . square [footage] of new building construction involved in the Project, this total Building Cost equates to approximately $275 per square foot, within the range both parties experts testified was reasonable and appropriate for new residential construction of this scope and type in this area. . . . [] Based on this total Building Cost of $2,462,000, Tolibass Final Payment, as calculated under the express terms of the parties Contract, amounts to $369,300, which sum is awarded as damages to Tolibas on its claim for Breach of Contract.

The courts oral tentative decision reveals how the court arrived at the $2,462,000 total cost figure. The court started with Tolibass September 2000 estimated total cost of $1,925,000[14] and added 25 percent as a standard price deviation pursuant to Kelleys testimony, for a total cost of $2,406,375.[15] The court then took the average of $2,406,375, $2,473,410 (EK Constructions bid), $2,405,550 (Kelleys estimate of the total cost based on $281 per square feet), and $2,564,400 (Kelleys estimate of total cost based on $300 per square feet), which equals $2,462,434.[16]

The Wangs argue that it was incumbent on Tolibas, in pursuing its breach of contract claim, to establish the amount of the actual project costs. The Wangs also assert that no contention was made below that evidence of the actual project costs was unavailable to Tolibas or for reasons beyond Tolibass control could not be submitted.

Tolibas rejoins there was no testimony by the Wangs limiting the components of  Building Costs  in the manner testified to by Michael Tolibas, and there was no evidence that Tolibas discussed the methodology for computing the 15 percent fee with the Wangs prior to execution of the contract. Tolibas asserts that the court look[ed] simply to the plain meaning of the contract terms  per proposal  and  Building Costs  in arriving at its finding that $2,462,000 is the total Project or Building Cost for the Project. Alternatively, Tolibas asserts that the courts adoption of a  reasonable cost  rather than an actual cost standard did not prejudice the Wangs, apparently because exhibit 43, the Wangs Profit & Loss Statement dated 1/1/99 Through 10/21/04 listed TOTAL EXPENSES as $2,540,066.08.

Determination of this issue is resolved by the plain meaning of the terms of the parties contract. Exhibit A to the contract defines project cost as the Cost to operate [Tolibas]. No testimony or documentary evidence was presented that the actual cost to operate Tolibas was not subject to calculation and that only an estimated reasonable project cost could be determined. Although the courts tentative decision reveals how the court arrived at its reasonable project cost estimate, it does not shed any light on why the trial court did not determine the actual project cost prior to making its 15 percent fee award. Because the trial court strayed from the plain meaning of the parties contract in calculating the project cost upon which the 15 percent fee was based, the 15 percent fee award is erroneous.[17] The matter is reversed and remanded for recalculation.

II. The Tolibas Appeal

Tolibas contends the $113,000 offset awarded the Wangs for defective or incomplete work was incorrectly calculated. Tolibas argues the offset should have been $10,467 or at most $25,866. We conclude the offset award is unsupported by substantial evidence and reverse.

Stokes, Tolibass expert, testified regarding exhibit 71, entitled, Conceptual Completion Estimate, which he drafted in September 2005. He stated that he based exhibit 71 on the list of incomplete items prepared by the Wangs expert, Kelley. Stokes said punch list items are general items that are merged at the end of the project that relate to say, generally, minor incomplete work or finished work that needs additional attention to render in a condition consistent with requirements of the plaintiffs specifications for work product. Kelleys repair cost estimate was $185,365, but Stokes said $112,359 represented the total [cost] of all of the items [listed in exhibit 71] plus the markup costs. Of that amount, Stokes said $85,496 is the proper amount of costs that should be allocated to the owner and $10,467 is the [cost of the] items based on this analysis that [Stokes] attributed to [Tolibas]. Stokes said $15,399 represented the costs of punch list items that needed to be allocated.

In its oral tentative decision the court stated: [B]ased on the evidence that I have heard that there were some problems with the work here and that there are some deficiencies in the work. And so, there is an offset that I am going to apply under the [Wangs] . . . affirmative defense . . . . So any amounts that I award the Wangs in effect will be as an offset under that affirmative defense . . . . The court also stated: As far as the quality of work and defects and costs of repair there isnt that much difference in the testimony. Mr. Stokes had a figure of around . . . $113,000, Mr. Kelley had a figure of around $185,000 and I am inclined on that to adopt Mr. Stokess figure as the one to do the work that needed to be repaired. Thereafter, the court asked Tolibas to prepare a statement of decision.

The courts conclusion is inconsistent with its determination in its statement of decision that, pursuant to the subcontractors provision of the contract, the parties intended that Tolibas would not be liable for the faulty or defective workmanship of the outside contractors hired by the Wangs. The court found that because Tolibas was excluded from the Wangs hiring and payment of the outside subcontractors, it was neither feasible nor reasonable to impose on Tolibas the responsibility or liability for the outside subcontractors work. In determining the size of the offset awarded the Wangs, the trial court ignored this determination and held Tolibas responsible for punch list items attributable to the outside subcontractors.[18]

Tolibas requests that the matter be remanded for recalculation of the offset amount to be consistent with the courts finding that Tolibas was not liable for the defective work of the outside subcontractors. We agree that the courts $113,000 offset for defective work finding is not supported by the evidence before the court. The matter is reversed and remanded for recalculation.

We reject the Wangs assertion that Tolibas invited the error by preparing the proposed statement of decision without bringing the purported flaw in the courts tentative decision to the courts attention. The doctrine of invited error prevents a party from asserting an alleged error as grounds for reversal when the party through its own conduct induced the commission of the error. [Citations.] (County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1118.) Although Tolibas presented evidence at trial that the offset amount for defective work should be significantly less than $113,000, the court found that $113,000 was the amount of the offset to which the Wangs were entitled for Tolibass defective work. It then asked Tolibas to prepare the statement of decision as the prevailing party. Tolibas did so, including the $113,000 offset amount as found by the court. Because $113,000 was the amount found by the court, it was appropriate for Tolibas to include that amount in the proposed statement of decision without attempting to reargue the issue. Since Tolibas did nothing to induce the commission of this error, it was not invited.

DISPOSITION

The judgment is reversed and remanded with directions that the trial court recalculate: (1) the dollar amount of the contractual 15 percent final payment fee awarded to Tolibas; (2) the offset against Tolibass damages for defective work; and (3) the amount of prejudgment interest awarded to Tolibas. The judgment is otherwise affirmed.

The parties shall bear their own costs on appeal.

SIMONS, Acting P.J.

We concur.

NEEDHAM, J.

BRUINIERS, J.

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[1] According to Tolibass expert, Timothy Stokes (Stokes), a time and materials contract is premised on completing work on a time and expense basis without necessarily guaranteeing a total overall cost.

[2] The court concluded Tolibas was excused from any requirement of a final building permit sign off and/or notice of completion as a condition of its entitlement to the 15 percent final fee payment. The Wangs do not challenge that conclusion on appeal.

[3] Mike is Tolibass owner, Michael Tolibas.

[4] Stokes explained that substantial completion is a recognized term in the construction trades meaning that the project or premises can be used for its intended purposes.

[5] The statement of decision states that this $4,450 amount was undisputed and was awarded. The court declined to award Tolibas a missed opportunity fee. Neither of these rulings are at issue on appeal.

[6] In particular, the court found that numerous delays in 2002 were attributable to the Wangs and/or their architect.

[7] All further undesignated section references are to the Civil Code.

[8] Because we conclude that substantial evidence supports the courts finding that the parties did not agree that Tolibas would complete construction by the end of May 2002, we need not address the Wangs claim that there is no evidence that they were the cause of any delay after December 2001, when the May 2002 completion date was agreed upon.

[9] Although the statement of decision states that construction was substantially completed when the Wangs moved into the residence on or about December 2, 2002, the evidence establishes that the Wangs moved in on December 6 or 7, 2002. The discrepancy is not significant for purposes of this appeal.

[10] The evidence showed that between January 8, 2003 and April 29, 2003, Tolibas billed the Wangs $13,036 for labor and materials expended on the project.

[11] The cases cited by the Wangs that apply an abuse of discretion standard are inapposite in that they sought review of the trial courts issuance of injunctive relief or a protective order. (See IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69; Bookout v. Nielsen (2007) 155 Cal.App.4th 1131, 1137; California State University, Hayward v. National Collegiate Athletic Assn. (1975) 47 Cal.App.3d 533, 544.)

[12] Based on Gary Wangs testimony, the bill for dirt removal would have been $27,720, $2,520 more than Jill Wang testified Penello billed for dirt removal.

[13] The Wangs provide no citation to the record for this asserted $1.2 million total.

[14] Exhibit 7 listed estimated costs as $1,925,500.

[15] The figure $2,406,375 necessarily suggests the court relied on the $1,925,500 cost estimate provided in exhibit 7, not the $1,925,000 amount stated in its oral tentative decision.

[16] The court appears to have rounded off $2,462,434 to $2,462,000.

[17] In light of our determination that the court erred in calculating the 15 percent fee, its award of prejudgment interest on that fee was also erroneous and must be reversed. Consequently, we need not address the Wangs claim of error regarding the prejudgment interest award.

[18] The parties do not mention that in the judgment portion of the statement of decision the court stated that the Wangs will be awarded an offset of $127,964. Tolibas contests an offset amount of $113,000.