HUFFMAN, Acting P. J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTSCalifornia Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2011-00092049-CU-CO-CTL) APPEALS from a judgment of the Superior Court of San Diego County, Joel R. Wohlfeil, Judge. Affirmed in part, reversed in part and remanded with directions. McCartney & Associates, N. Thomas McCartney; Eastman & McCartney, Matthew C. McCartney and N. Thomas McCartney for Defendant, Cross-complainant and Appellant. Mahoney & Soll and Paul M. Mahoney; Thomas / Lucas and Timothy D. Lucas for Plaintiff, Cross-defendant and Appellant.
HPS Mechanical, Inc. (HPS) entered into a contract with the City of San Diego (City) to serve as the prime contractor for City's South Mission Valley trunk sewer project (Project). HPS entered into a $394,700 subcontract (Subcontract) with Ayala Boring, Inc. (Ayala), an underground pipeline boring contractor, for Ayala to install casings and sewer lines under Interstate 8 (I-8) at two locations that were part of the Project. One location was near the interchange of I-8 and Interstate 15 (I-15), at which Ayala was to bore a 260-foot tunnel under I-8, install a 36-inch diameter casing, and then install a 24-inch customer furnished sewer pipe through that casing. When Ayala encountered unanticipated larger rocks, boulders, or other materials at that location, it requested additional compensation for the different site conditions and ultimately City, HPS, and Ayala agreed to a change order to pay Ayala an additional $203,000 for its extra work. Also, during Ayala's work at that location, a rising, or "heaving," of the lanes of I-8 was discovered immediately above the area where Ayala was boring and grouting for installation of the casing. Believing that Ayala's work caused that heaving, HPS demanded that Ayala repair the heaving damage and informed Ayala it would withhold its payment of the $203,000 change order amount until such repairs were made. When Ayala refused to repair that damage, HPS made the repairs at a cost of $199,559.34.
Ayala filed a complaint against HPS and its bonding companies alleging a breach of contract cause of action and seeking payment for its extra work performed for the different site conditions and payment of other amounts that HPS wrongfully retained. HPS filed a cross-complaint against Ayala alleging a breach of contract cause of action that sought reimbursement of its costs to repair the heaving damage. On the last day of the jury trial, the trial court granted Ayala's motion to amend its complaint to conform to proof and add a common count for money had and received. After receiving instructions on the parties' respective breach of contract causes of action and Ayala's common count for money had and received, the jury returned special verdicts finding: (1) in favor of HPS on Ayala's breach of contract cause of action; (2) in favor of Ayala on its common count for money had and received; and (3) in favor of Ayala on HPS's breach of contract cause of action. The jury calculated Ayala's damages to be $249,470, which the court awarded to Ayala. Ruling on Ayala's posttrial motions, the court also awarded Ayala prejudgment interest and attorney fees and costs incurred in prevailing on its complaint, but denied its request for statutory prompt payment penalties.
The trial court also denied Ayala's separate motion for attorney fees incurred in successfully defending against HPS's cross-complaint.
On appeal, HPS contends: (1) the trial court erred by excluding evidence that referred to Ayala's insurance; (2) the court erred by granting Ayala's motion to amend its complaint to conform to proof and add a common count for money had and received; (3) the special verdict on Ayala's common count for money had and received must be reversed because it is inconsistent with the special verdict on Ayala's breach of contract cause of action; (4) HPS's bonding companies cannot be held liable on the common count special verdict; (5) the court erred by awarding Ayala prejudgment interest; (6) regarding the special verdict on HPS's cross-complaint, there is insufficient evidence to support the jury's finding that HPS did not do all of the significant things the Subcontract required it to do and that it was not excused from doing those things; and (7) in any event, the court erred by excluding evidence of HPS's contractual right to withhold payment.
In its cross-appeal, Ayala contends: (1) the trial court erred by denying its motion for an award of statutory prompt payment penalties; (2) the court did not have jurisdiction to amend, and erred by amending, the judgment to award HPS a $35,000 credit for Ayala's settlement with a codefendant; and (3) the court erred by denying its motion for attorney fees and costs incurred in successfully defending against HPS's cross-complaint. For the reasons discussed post, we reverse the judgment to the extent it found in Ayala's favor on the common count for money had and received and awarded it $249,470 in damages and awarded Ayala attorney fees and costs for prevailing on its complaint. We remand the matter with directions that the trial court enter a new judgment finding in favor of HPS on Ayala's complaint and in favor of Ayala on HPS's cross-complaint and, after allowing the parties to file new motions for awards of attorney fees and costs, to determine which parties, if any, prevailed on their respective actions arising out of the Subcontract and award any such prevailing parties their attorney fees and/or costs.
FACTUAL AND PROCEDURAL BACKGROUNDSubcontract.
On July 16, 2009, after HPS entered into a contract with City for construction of the Project, HPS and Ayala entered into the Subcontract pursuant to which Ayala would use the "jack and bore" method to install casings and sewer pipe at two locations that were part of the Project. One location was east of the interchange of I-8 and I-15, at which Ayala was to bore a 260-foot tunnel under I-8, install a 36-inch diameter casing through the tunnel, pressure grout that casing, and then install a 24-inch customer furnished sewer pipe through that casing. Ayala was to receive a total of $394,700 for its work under the Subcontract, including $7,000 for its first mobilization. According to Ayala's proposal, Exhibit C, which was incorporated into the Subcontract, the contract price was "based on machine borable conditions with the casing size stated" and "[did] not include soil conditions with rock, . . . cemented ground, . . . or obstructions which make it prohibitive for a machine bore installation." Section 19 of the Subcontract provided for future changes in the work to be performed by Ayala (i.e., change orders), stating in pertinent part:
The other location, which was not directly involved in the instant action, was near the Taylor Street off-ramp of I-8, at which Ayala was to bore a 315-foot tunnel under I-8, install a 60-inch diameter casing through the tunnel, and then install a 36-inch customer furnished sewer pipe through that casing.
The Subcontract provided that Ayala would be paid $7,000 for each mobilization.
"[City] has reserved the right under Contract Documents to require [HPS] to make changes in the work, including additions thereto and deletions therefrom. Moreover, [HPS] shall have the right, from time to time, whether the Work or any part thereof shall or shall not have been completed, to make changes, additions and/or omissions in the Work as may be necessary, upon written order to [Ayala] . . . [HPS] may from time to time by written order ('Change Order') to [Ayala], make changes in the Work. [Ayala] shall thereupon perform the changes in the Work in accordance with the terms of this Subcontract and the Change Order. [¶] . . .
"Where a Change Order is issued, the price shall be adjusted by the net amount of any direct savings and direct costs, plus profit percentage attributable to the Change Order, and the time for performance for the work may be adjusted according to the Contract Documents, subject, however, in each case to the following limitations: [¶] (a) the price and time adjustments hereunder shall be limited to the amount and extent of the adjustment actually allowed [HPS] under the Contract Documents; . . . [¶]
"If the parties are able to agree on the amount of the price adjustment and the extent of any time adjustment, such adjustment shall be set forth in a Change Order which shall be accepted by [Ayala]. . . . In the event that the change in the work is ordered by [City], [HPS] shall not be obligated to [Ayala] for a greater sum than [HPS] obtains from [City], less reasonable overhead and profit to [HPS]. In all events, no change order shall be considered approved and billable until such time as a contract adjustment has been made to [HPS's] contract for the work in question."
In an amendment to the Subcontract dated August 28, 2009, section 19 of the Subcontract was amended to provide for mark-ups only as allowed by City and required HPS to pay Ayala within 30 days for all work directed by HPS, but which was not paid for by City.
Section 3(a) of the Subcontract provided that "[i]nvoices submitted to and approved by [HPS] by the 25th of the month shall be paid, less ten percent (10%) to be held by [HPS] as retention. . . ." Section 3(d) provided that "[HPS] reserves the right to withhold, as additional reserve and without limiting its other rights and remedies, an amount sufficient: [¶] (1) To defend, satisfy and discharge any asserted claim that [Ayala] . . . has caused damage to the work or any other work on the [P]roject . . . ." Section 8 provided: "[Ayala] shall be responsible for, and shall bear all risks of, and shall make good at its own expense for any loss or destruction of or damage to the Work . . . ." Section 9 provided that Ayala would indemnify HPS "from and against any claims, costs, expenses or liability . . . arising out of the performance of the Work by [Ayala], including, but not limited to . . . property damage . . . ."
Section 22 of the Subcontract provided in pertinent part: "This Agreement consists of this Agreement, the general conditions pertaining to the Project, all drawings and specifications related to the Project, and any and all addenda . . . , modifications or change orders thereto, all of which are incorporated herein by this reference (collectively the 'Contract Documents'). . . ." One of those incorporated documents was City's specifications for the Project, which document provided that the work performed by Ayala should not cause any freeway crossing to settle or heave by more than one-eighth of an inch. Section 25 provided for awards of attorney fees and costs to prevailing parties in any legal actions arising out of the Subcontract. Ayala's Performance of Its Work and the Heave.
On September 22, 2010, Ayala mobilized and began its work at the I-8 and I-15 interchange location. On September 26, Ayala apparently encountered large rocks, boulders, or other materials that were larger than anticipated and that required excavation by hand. Ayala notified HPS of the different site conditions and requested a change order providing Ayala with additional compensation for the extra work required. Although City initially disagreed with Ayala's claim that there were different site conditions, Ayala continued its work and excavated by hand when necessary. Ayala apparently completed its work at that location in January 2011 without reaching any agreement with City and HPS on a change order for Ayala's extra work. However, in February 2011, City's staff agreed to recommend to the City Council a change order providing Ayala with $203,000 in additional compensation for its extra work. Ayala agreed to accept the proposed change order providing it with $203,000 in additional compensation. After the City Council apparently approved the change order, City subsequently paid HPS an additional amount that included the $203,000 amount for Ayala for its extra work. Discovery of Heave.
On January 27, 2011, the State of California Department of Transportation (Caltrans) notified City that it had discovered that the concrete pavement of I-8 had risen or heaved "[a]s a result of the recent jack and bore sewer main installation" and corrective action was required. Caltrans stated its position that the heaving "occurred directly [as] a result of the aforementioned sewer main construction activities" and demanded that City correct it. After City demanded that HPS correct the heave, HPS directed Ayala to do so, believing the heave was caused by Ayala's pressure grouting in the area of the heave. Ayala initially denied causing the heave, but subsequently assured HPS that it would take responsibility for the repairs. However, after Ayala learned that HPS intended to withhold the $203,000 change order payment until Ayala had repaired the heave, Ayala apparently refused to make the repairs. HPS then made the heave repairs at a cost of $199,559.34. Instant Action.
In May 2011, Ayala filed a complaint against HPS, Insurance Company of the West (ICW), City, and RBF Consulting (RBF), alleging causes of action for breach of contract, payment bond, stop notice, and negligent misrepresentation. In its operative second amended complaint, Ayala added a release bond cause of action against HPS and Explorer Insurance Company (Explorer). Ayala's breach of contract cause of action alleged HPS had breached the Subcontract by not paying Ayala all of the amounts due it under the Subcontract.
In July 2012, HPS filed a cross-complaint against Ayala and City, alleging causes of action for breach of contract, indemnity, and declaratory relief. HPS's breach of contract cause of action alleged that Ayala breached the Subcontract by failing to repair the heave, thereby causing HPS to incur the costs to repair it.
During Ayala's opening statement to the jury, Ayala stated that City, HPS, and Ayala had agreed to a change order providing that Ayala would be paid $203,000 for the different site conditions that required extra work. Ayala stated that although HPS received the $203,000 amount from City, HPS had not yet paid that amount to Ayala. Ayala also stated that the evidence would show that HPS breached the Subcontract by wrongfully withholding 10 percent of the $394,700 contract price, or $39,470, and not paying Ayala $7,000 for an additional mobilization.
In its opening statement, HPS stated that it had never disputed that there was a change order providing for the $203,000 in additional compensation for Ayala or that HPS had received the $203,000. HPS stated that it had not paid Ayala the $203,000 because HPS believed Ayala had caused the heave of the I-8 freeway pavement by improper pressure grouting, but Ayala refused to repair the damage. HPS stated that it had the right to withhold money otherwise due Ayala under the Subcontract because of that damage to the freeway and the costs HPS incurred to repair it.
During the jury trial, the parties presented the testimony of various percipient and expert witnesses and submitted the Subcontract and other exhibits into evidence. On the last day of the trial, Ayala moved to amend its complaint to conform to proof by adding a common count for money had and received and requested an instruction thereon with CACI No. 370. HPS objected to the motion and instruction. The trial court overruled HPS's objection and granted Ayala's motion for leave to amend its complaint to add a common count for money had and received and thereafter instructed the jury on, inter alia, the breach of contract causes of action and the common count for money had and received.
In closing argument, Ayala argued that City, HPS, and Ayala agreed that Ayala was to receive $203,000 for its extra work pursuant to the change order issued by City, but HPS had retained the $203,000 amount despite having received it from City. Ayala argued that HPS had no right to withhold the $203,000 amount until Ayala made the repairs for the heave damage. It also argued HPS had no right under the Subcontract to retain 10 percent of the $394,700 Subcontract amount, or $39,470. Ayala also argued that HPS owed it $7,000 under the Subcontract for the additional mobilization. Ayala therefore asked the jury to award it a total of $249,470 in damages.
In its closing, HPS argued that it was entitled to withhold part of Ayala's compensation pursuant to the Subcontract and that Ayala owed it $197,761 for its cost of repairing the heave damage.
On special verdict form 1, the jury returned a special verdict on Ayala's second amended complaint, finding in favor of HPS on Ayala's breach of contract cause of action, but in favor of Ayala on its common count for money had and received, and finding Ayala's damages were $249,470. On special verdict form 2, the jury returned a special verdict on HPS's cross-complaint, finding in favor of Ayala on HPS's causes of action for breach of contract and negligence.
The trial court entered judgment in the amount of $249,470 in compensatory damages against HPS, ICW, and Explorer based on the special verdicts and the parties' stipulation that any judgment against HPS would apply to those bonding companies (i.e., ICW and Explorer). Ayala filed a postjudgment motion for an award of attorney fees and costs as the prevailing party on its second amended complaint and a motion for partial judgment notwithstanding the verdict seeking awards of prejudgment interest and prompt payment penalties. Ayala also filed a motion for an award of attorney fees and costs as the prevailing party on HPS's cross-complaint against it. HPS moved for a $35,000 credit for a settlement payment Ayala received from RBF before trial.
The trial court granted Ayala's motion for attorney fees in the amount of $227,945 as the prevailing party in its action against HPS, but denied its motion for attorney fees incurred in defending against HPS's cross-complaint. The court granted Ayala's request for prejudgment interest in the amount of $94,733.33, but denied its request for prompt payment penalties. On May 9, 2016, the court entered an amended judgment awarding Ayala a total of $605,110.14, consisting of $249,470.00 in compensatory damages, $94,733.33 in prejudgment interest, $227,945.00 for attorney fees, and $32,961.81 in costs. On May 20, the court awarded HPS a $35,000 credit for the settlement payment that Ayala received from RBF.
HPS, ICW, and Explorer timely filed a notice of appeal challenging the amended judgment. Ayala also timely filed a notice of appeal challenging the amended judgment.
DISCUSSION I Common Count for Money Had and ReceivedHPS contends the trial court erred by granting Ayala's motion for leave to amend its second amended complaint to add a common count for money had and received because Ayala's breach of contract cause of action, which was based on the express terms of the Subcontract, precludes that count. HPS also contends that the special verdict in Ayala's favor on the common count must be reversed because it conflicts with the special verdict in HPS's favor on Ayala's breach of contract cause of action against it.
AIn its operative second amended complaint, Ayala alleged a breach of contract cause of action for HPS's breach of the Subcontract by not paying Ayala all of the amounts due it under the Subcontract. During the hearing on the parties' pretrial in limine motions, Ayala confirmed that its breach of contract cause of action was based on HPS's failure to timely pay it the $203,000 change order amount to which City, HPS, and Ayala had agreed pursuant to the Subcontract and which amount HPS had previously received from City. Ayala stated that "there is no dispute about the $203,000."
During Ayala's opening statement to the jury, Ayala stated that "the parties agreed that Ayala would be paid 203,000 bucks for the differing site condition only. And the 'parties' being the City, HPS, and Ayala." Ayala stated that although HPS received the $203,000 amount for Ayala, it had not yet paid that amount to Ayala. Ayala summarized what the evidence at trial would show, stating:
"As you will see from the testimony and the exhibits, there's no dispute on anything that I said: They agreed to the $203,000; the City approved what is called a 'change order'; the City issued the money to HPS; HPS didn't pay us. So Ayala wants [its] $203,000, real simple."
Ayala also stated that the evidence would show that HPS breached the Subcontract by wrongfully withholding 10 percent of the $394,700 contract price, or $39,470, and not paying Ayala $7,000 for an additional mobilization.
In its opening statement, HPS stated that "HPS never disputed the $203,000 agreement between the City, Ayala, and HPS. HPS has never disputed that there was a resulting change order incorporating the $203,000 from [City] to HPS, and that HPS never disputed that it ultimately received the $203,000." HPS stated that it had not paid Ayala the $203,000 because HPS believed Ayala had caused the heave of the I-8 freeway pavement by improper pressure grouting, but Ayala refused to repair the damage. HPS stated that it had the right to withhold money otherwise due Ayala under the Subcontract because of that damage to the freeway and the costs HPS had incurred to repair it.
On the last day of the evidentiary portion of the trial, Ayala sought leave to amend its complaint to conform to proof by adding a common count for money had and received and requested an instruction thereon with CACI No. 370. HPS objected to the motion and instruction. The trial court stated:
"[F]rom the Court's perspective a breach of contract claim based upon the evidence presented in this case, which was pled, and a common count claim, which was not pled, but, again, based upon the
evidence presented, from the Court's perspective, are so integrally related, are so closely connected that I see little if any prejudice to HPS if this—if the Court grants the motion, allows leave to amend the operative Complaint and allows Ayala to add this claim and proceed to the jury on this additional claim. That's how I worked my way through it."
The court then asked the parties to focus on the issue of prejudice to HPS. HPS argued that the entire case had been litigated based on Ayala's breach of contract cause of action and its stop notice claim and not on a money had and received theory. HPS argued the jury would be confused if the common count were now added to Ayala's complaint. Ayala argued there would be no prejudice to HPS if the common count were added to its complaint. Stating that the breach of contract claim and common count were closely connected, the court overruled HPS's objection and granted Ayala's motion for leave to amend its complaint to add a common count for money had and received and request to instruct thereon with CACI No. 370.
The court thereafter instructed the jury on, inter alia, the parties' breach of contract causes of action and Ayala's common count for money had and received. In particular, the court instructed with CACI No. 303 on the elements of Ayala's breach of contract cause of action against HPS, stating:
"To recover damages from [HPS] for breach of contract [Ayala] must prove all of the following:
"1. That [Ayala] and [HPS] entered into a contract;
"2. That [Ayala] did all, or substantially all, of the significant things that the contract required [it] to do, or that [it] was excused from doing those things;
"3. That all conditions required by the contract for [HPS]'s performance [had occurred/[or] were excused];
"4. That [HPS] failed to do something that the contract required [it] to do; . . . [or] . . . [t]hat [HPS] did something that the contract prohibited [it] from doing; and
"5. That [Ayala] was harmed by that failure."
The court instructed with CACI No. 370 on Ayala's common count for money had and received, stating:
"[Ayala] claims that [HPS] owes [it] money. To establish this claim, [Ayala] must prove all of the following:
"1. That [HPS] received money that was intended to be used for the benefit of [Ayala];
"2. That the money was not used for the benefit of [Ayala]; and
"3. That [HPS] has not given the money to [Ayala]."
In closing argument, Ayala argued the jury should read the Subcontract, which included its proposal to HPS, to determine how much money Ayala was owed. Ayala argued that when it encountered different site conditions that required it to excavate by hand, it was entitled to additional compensation for that extra work and City, HPS, and Ayala agreed Ayala was to receive $203,000 for that extra work pursuant to the change order issued by City. Ayala argued that after HPS received the money for that change order, it retained it without paying Ayala any of the $203,000 amount. Ayala argued that "there is no dispute that Ayala is owed the $203,000." It argued: "So there's no dispute, there is a change order to Ayala." It argued HPS had no right to withhold the $203,000 amount until Ayala made the repairs for the heave damage. It also argued HPS had no right under the Subcontract to retain 10 percent of the $394,700 Subcontract amount, or $39,470. Ayala also argued that HPS owed it $7,000 under the Subcontract for the additional mobilization. Summarizing its argument, Ayala's counsel argued:
"So I ask each of you to read the evidence, read the documents, read the change orders that are contained in the exhibit books. There's no dispute as to money owing. And I ask you to award a judgment on the Ayala [c]omplaint for [a total of] $249,470."
In its closing, HPS argued that it was entitled to withhold part of Ayala's compensation pursuant to the Subcontract and that Ayala owed it $197,761 for its cost of repairing the heave damage.
On special verdict form 1, the jury returned a special verdict on Ayala's second amended complaint, finding in favor of HPS on Ayala's breach of contract cause of action, but in favor of Ayala on its common count for money had and received, and finding Ayala's damages were $249,470. On special verdict form 2, the jury returned a special verdict on HPS's cross-complaint, finding in favor of Ayala on HPS's causes of action for breach of contract and negligence. The trial court entered judgment for Ayala on the special verdicts in the amount of $249,470 in compensatory damages against HPS, ICW, and Explorer.
On the special verdict form 1's questions on Ayala's breach of contract cause of action, the jury answered "yes" to the question: "Did [Ayala] do all, or substantially all, of the significant things that the contract required Ayala to do, or was Ayala excused from doing those things?" However, the jury answered "no" to the question: "Did all conditions required by the contract for the performance of [HPS] occur, or were the conditions excused?" On the special verdict form 1's questions on Ayala's common count for money had and received, the jury answered "yes" to the question: "Did HPS receive money that was intended to be used for the benefit of Ayala?" It answered "yes" to the question: "Was the money not used for the benefit of Ayala?" It answered "yes" to the question: "Has [HPS] not given the money to Ayala?" Finally, it answered "$249,470" to the question: "What are Ayala's damages?"
On the special verdict form 2's questions on HPS's cross-claim for breach of contract, the jury answered "no" to the question: "Did [HPS] do all, or substantially all, of the significant things that the contract required HPS to do, or was HPS excused from doing those things?" On the special verdict form 2's questions on HPS's cross-claim for negligence, the jury answered "yes" to the question: "Was Ayala negligent?" However, the jury answered "no" to the question: "Was Ayala's negligence a substantial factor in causing harm to HPS?"
B"In the common law action of general assumpsit, it is customary to plead an indebtedness using 'common counts.' [Citation.]" (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) Under California law, "[a] common count [e.g., for money had and received] is not a specific cause of action . . . [;] rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness . . . ." (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 (McBride).) A common count for money had and received is stated if the complaint alleges the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. (Schultz v. Harney (1994) 27 Cal.App.4th 1611, 1623.) A common count for money had and received seeks relief that "is something in the nature of a constructive trust." (Zumbrun v. University of Southern California (1972) 25 Cal.App.3d 1, 14.) Under that common count, "[o]ne must have acquired some money which in equity and good conscience belongs to the plaintiff or the defendant must be under a contract obligation with nothing remaining to be performed except the payment of a sum certain in money." (Ibid.) "California has consistently held that, where an express contract is fully executed and nothing remains but the payment of money, it is proper to plead a common count, omitting any mention of the express contract. [Citations.]" (Benson Electric Co. v. Hale Bros. Associates, Inc. (1966) 246 Cal.App.2d 686, 697.) "A common count cannot be used to secure the performance of an executory express contract unless all of the covenants and conditions have been performed and there remains only an obligation for the payment of money." (Moya v. Northrup (1970) 10 Cal.App.3d 276, 281 (Moya), italics added.) "When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the [specific] cause of action is demurrable." (McBride, at p. 394.) Alternatively stated, the common count "must stand or fall with" the specific cause of action. (Id. at p. 395.)
"[C]ommon counts are sufficient to state a cause of action upon either a contract implied in fact [citations] or a contract implied in law. [Citations.] . . . [¶] It is unnecessary for the pleading to distinguish between the contract implied in fact and the contract implied in law, or quasi-contract . . . ." (Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 793-794.) A contract implied in law, or quasi-contract, is not a true contract, but is an obligation created by law for reasons of justice. (Id. at p. 794.) However, a " 'quasi-contract' claim [or common count] for money had and received [may] fail[] when considered under classic contract doctrine. The rule is that '[u]ntil an express contract is avoided,' there cannot be an implied contract, which is 'essential to an action on a common count.' [Citation.] If a 'plaintiff cannot return the benefits conferred under the express contract the action for money had and received will not lie.' [Citation.]" (Jalali v. Root (2003) 109 Cal.App.4th 1768, 1783 (Jalali).) Therefore, if the plaintiff does not rescind, or undo, the contract and return the benefits received thereunder, a common count for money had and received cannot be maintained. (Ibid.; Lloyd v. Williams (1964) 227 Cal.App.2d 646, 649 (Lloyd) ["Until an express contract is avoided, an implied contract, essential to an action on a common count [citation] cannot arise, and it necessarily follows that until an express contract is avoided, an action on an implied contract cannot be maintained."].) Alternatively stated, "[a] party cannot retain substantial benefits under an express contract and recover under the theory of an implied contract. Return of benefits under an express contract is a condition precedent to an action for rescission. [Citations.]" (Lloyd, at p. 649.) If the plaintiff does not or "cannot return the benefits conferred under an express contract[,] the action for money had and received will not lie." (Ibid.) As the California Supreme Court stated long ago in Bechtel v. Chase (1909) 156 Cal. 707 (Bechtel):
"[W]here [the plaintiff] has actually agreed to an exchange, which is executed, his affirmance of the transaction is an affirmance of it as a whole. Having parted with his property [or services] for an agreed consideration, he cannot, while relying upon his transfer as one made pursuant to contract, hold the defendant to the payment of any other consideration than the one agreed upon. No contract will be implied by the law as against an express contract not disavowed by either party." ( Id. at pp. 711-712, italics added.)
Since Bechtel, courts have continued to recognize the law's preclusion of an implied-in-law contract, or quasi-contract, that may provide the basis for a common count when it is inconsistent with an express contract between the parties. "[T]here simply cannot exist a valid express contract on one hand and an implied contract on the other, each embracing the identical subject but requiring different results and treatment. [Citations.]" (Tollefson v. Roman Catholic Bishop (1990) 219 Cal.App.3d 843, 855 (Tollefson).) "[A]n action based on . . . [a] quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter. [Citations.] Here, the [plaintiff] has alleged the existence and validity of an enforceable written contract between the parties in its first two causes of action. The [plaintiff] then realleges the existence of the written contract in its claim of a quasi-contract. This is internally inconsistent. The [plaintiff] must allege that the express contract is void or was rescinded in order to proceed with its quasi-contract claim. [Citation.]" (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 203 (Lance Camper); see Shvarts v. Budget Group, Inc. (2000) 81 Cal.App.4th 1153, 1160 (Shvarts) [citing Lance Camper, appellate court held trial court correctly sustained demurrer to common counts for money had and received because express contract existed covering same subject matter].) "For the reason that parties are bound by their agreement and there is therefore no ground for implying a promise when there is an express contract, the general rule is that where an action is based upon a special contract, a common count will not support the action, but the plaintiff must declare specially on the contract." (Canepa v. Sun Pacific, Inc. (1954) 126 Cal.App.2d 706, 712 (Canepa).) Absent a finding of rescission of the express contract or other exception to the general rule, there can be no common count for money had and received when there is an express contract. (Id. at p. 713.)
In California Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151 (California Medical Association), we stated:
"[A]s a matter of law, a quasi-contract action for unjust enrichment does not lie where, as here, express binding agreements exist and define the parties' rights. [Citations.] 'When parties have an actual contract covering a subject, a court cannot--not even under the guise of equity jurisprudence--substitute the court's own concepts of fairness regarding that subject in place of the parties' own contract.' [Citation.] Thus, [the plaintiff] may not proceed on its quasi-contract claim because the subject matter of such claim . . . was governed by express contracts . . . ." ( Id. at pp. 172-173, fns. omitted.)
Similarly, in Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342 (Klein), the appellate court held that the trial court properly sustained the defendant's demurrer to the plaintiff's quasi-contract equitable claim for unjust enrichment, stating: "A plaintiff may not . . . pursue or recover on a quasi-contract claim if the parties have an enforceable agreement regarding a particular subject matter." (Id. at p. 1388.) In its circumstances, Klein noted the plaintiff alleged a breach of contract cause of action based on an enforceable contract, but its unjust enrichment cause of action did not allege that contract was unenforceable or did not exist on the subject matter. (Id. at p. 1389.) Klein stated:
"Although a plaintiff may plead inconsistent claims that allege both the existence of an enforceable agreement and the absence of an enforceable agreement, that is not what occurred here. Instead, plaintiffs' breach of contract claim pleaded the existence of an enforceable agreement and their unjust enrichment claim did not deny the existence or enforceability of that agreement. Plaintiffs are therefore precluded from asserting a quasi-contract claim under the
theory of unjust enrichment. [Citations.]" (Id. at pp. 1389-1390, fn. omitted.)
Accordingly, Klein affirmed the trial court's order sustaining the defendant's demurrer to the quasi-contract equitable claim. (Klein, at p. 1390; see Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1419 (Hedging Concepts) ["it is well settled that there is no equitable basis for an implied-in-law promise . . . when the parties have an actual agreement"]; Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 613 ["where the parties have freely, fairly and voluntarily bargained for certain benefits in exchange for undertaking certain obligations, it would be inequitable to imply a different liability"]; Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370 (Durell) ["As a matter of law, an unjust enrichment claim does not lie where the parties have an enforceable express contract."]; Sheppard v. North Orange County Regional Occupational Program (2010) 191 Cal.App.4th 289, 314 (Sheppard) [because plaintiff had only a contractual right for earned but unpaid wages, he had no quantum meruit common law claim based on quasi-contract or implied-in-law contract]; Shapiro v. Wells Fargo Realty Advisors (1984) 152 Cal.App.3d 467, 482 ["There cannot be a valid express contract and an implied contract, each embracing the same subject, but requiring different results."].) C
We agree with HPS's assertion that the trial court erred by granting Ayala's motion for leave to amend its complaint by adding a common count for money had and received because Ayala's breach of contract cause of action, which was based on the express terms of the Subcontract, precludes that count. The record shows that in its second amended complaint and through trial Ayala alleged that HPS breached the Subcontract by not timely paying it the $203,000 amount due it for extra work completed pursuant to the change order. Ayala did not at any point, whether before or during trial, assert that the Subcontract was void or unenforceable or seek rescission thereof. Rather, at all times Ayala argued that the Subcontract, along with the change order it entered into pursuant thereto, were binding and enforceable on the parties thereto and that HPS breached its contractual obligations thereunder by not timely paying Ayala the amount due it for extra work completed under the change order. When Ayala on the last day of the trial requested leave to amend its complaint to conform to proof by adding a common count for money had and received and requested an instruction thereon with CACI No. 370, Ayala, in effect, sought equitable relief based on an implied-in-law contract, or quasi-contract.
However, as extensively discussed ante, there can be no implied-in-law or quasi-contract claim when there is a valid express contract between the parties covering the same subject matter. (Lance Camper, supra, 44 Cal.App.4th at p. 203; see also Shvarts, supra, 81 Cal.App.4th at p. 1160.) Therefore, absent an allegation that the Subcontract or change order was void or unenforceable or should be rescinded (and evidence at trial to support that allegation), Ayala could not allege a common count or other equitable claim seeking the same relief that it sought under its breach of contract cause of action. (Lance Camper, at p. 203; Shvarts, at p. 1160; Jalali, supra, 109 Cal.App.4th at p. 1783; Lloyd, supra, 227 Cal.App.2d at p. 649 ["Until an express contract is avoided, an implied contract, essential to an action on a common count [citation] cannot arise, and it necessarily follows that until an express contract is avoided, an action on an implied contract cannot be maintained."].)
Under California law, "[n]o contract will be implied by the law as against an express contract not disavowed by either party." (Bechtel, supra, 156 Cal. at p. 712.) "[T]here simply cannot exist a valid express contract on one hand and an implied contract on the other, each embracing the identical subject but requiring different results and treatment." (Tollefson, supra, 219 Cal.App.3d at p. 855.) Therefore, when Ayala sought leave to amend its complaint to conform to proof by adding a common count for money had and received, it improperly sought relief that was "internally inconsistent" with its breach of contract cause of action based on the Subcontract and change order, neither of which Ayala alleged was void or unenforceable or for which it sought rescission. (Lance Camper, supra, 44 Cal.App.4th at p. 203.) "For the reason that parties are bound by their agreement and there is therefore no ground for implying a promise when there is an express contract, the general rule is that where an action is based upon a special contract, a common count will not support the action, but the plaintiff must declare specially on the contract." (Canepa, supra, 126 Cal.App.2d at p. 712.)
Accordingly, based on our review of the record on appeal, we conclude that the trial court erred by overruling HPS's objection to Ayala's motion for leave to amend its second amended complaint to conform to proof and add a common count for money had and received, by granting Ayala's motion, and by thereafter instructing the jury with CACI No. 370 on a common count for money had and received. (Cf. Klein, supra, 202 Cal.App.4th at pp. 1388-1390 [trial court correctly sustained demurrer to quasi-contract equitable claim for unjust enrichment where plaintiff alleged breach of contract cause of action based on enforceable contract, but its unjust enrichment cause of action did not allege that contract was unenforceable or did not exist on that subject matter]; California Medical Association, supra, 94 Cal.App.4th at p. 172 ["[A]s a matter of law, a quasi-contract action for unjust enrichment does not lie where, as here, express binding agreements exist and define the parties' rights."]; Lance Camper, supra, 44 Cal.App.4th at p. 203; Shvarts, supra, 81 Cal.App.4th at p. 1160 [trial court correctly sustained demurrer to common counts for money had and received because valid express contract between parties existed covering same subject matter]; Durell, supra, 183 Cal.App.4th at p. 1369; Sheppard, supra, 191 Cal.App.4th at p. 314.)
DAssuming arguendo the trial court did not err by granting Ayala's motion for leave to amend its second amended complaint to conform to proof and add a common count for money had and received and request for an instruction with CACI No. 370 thereon, we nevertheless conclude the jury's verdict on special verdict form 1 must be reversed to the extent it found in favor of Ayala on its common count for money had and received and calculated Ayala's damages to be $249,470 because that verdict is necessarily inconsistent with, and contradicts, its finding on Ayala's breach of contract cause of action. In particular, the jury found that although Ayala had done all, or substantially all, of the significant things the Subcontract required it to do or it was excused from doing those things, all of the conditions required by the Subcontract for performance by HPS had not occurred and had not been excused. Accordingly, the jury found in favor of HPS on Ayala's breach of contract cause of action based on the Subcontract and change order. The jury could not thereafter find HPS liable on a common count on the same subject matter as the Subcontract and change order, which count sought the same damages Ayala sought under its breach of contract cause of action against HPS.
As discussed above, "[a] common count cannot be used to secure the performance of an executory express contract unless all of the covenants and conditions have been performed and there remains only an obligation for the payment of money." (Moya, supra, 10 Cal.App.3d at p. 281, italics added.) Alternatively stated, no common count for money had and received based on an express contract can be successfully maintained when the trier of fact finds that the conditions to the defendant's performance of that contract have not yet been performed or satisfied. (Cf. Hedging Concepts, supra, 41 Cal.App.4th at p. 1420.) For example, in the analogous case of Hedging Concepts, the trial court in a bench trial found that although the parties had entered into an express contract, the plaintiff had not performed a required contingency and therefore could not recover on a breach of contract cause of action. (Id. at pp. 1418-1419.) However, despite that finding, the trial court nevertheless awarded the plaintiff the reasonable value of his services based on a quantum meruit theory. (Id. at p. 1418.) On appeal, Hedging Concepts reversed the trial court's quantum meruit award to the plaintiff, concluding:
"The trial court violated the rule that equitable entitlement to a quantum meruit payment is not implied where the parties have actual contract terms covering payment. The trial court made a factual finding that the parties had formed an actual, not an implied, contract. The court also made a factual finding that the actual
contract conditioned [the plaintiff's] right to payment upon the procurement of a securitization. The court also made the factual finding that [the plaintiff] had not procured a securitization and that the condition precedent to payment had therefore not been satisfied. In light of these factual findings, it was error for the trial court then to rule that [the defendant] nevertheless had an equitable implied-in-law duty to pay money to [the plaintiff]. The legal ruling is inconsistent with the factual findings.
"When parties have an actual contract covering the same subject, a court cannot--not even under the guise of equity jurisprudence--substitute the court's own concepts of fairness regarding that subject in place of the parties' own contract." (Hedging Concepts, supra, 41 Cal.App.4th at p. 1420, fn. omitted.)
Accordingly, Hedging Concepts reversed the trial court's judgment awarding the plaintiff quantum meruit damages, prejudgment interest, and costs. (Id. at p. 1423.)
As also discussed ante, there can be no implied-in-law or quasi-contract claim when there is a valid express contract between the parties covering the same subject matter. (Lance Camper, supra, 44 Cal.App.4th at p. 203; see Shvarts, supra, 81 Cal.App.4th at p. 1160.) "[T]here simply cannot exist a valid express contract on one hand and an implied contract on the other, each embracing the identical subject but requiring different results and treatment." (Tollefson, supra, 219 Cal.App.3d at p. 855.) Accordingly, the jury's special verdict finding that the conditions to HPS's performance of the Subcontract and change order had not been performed or satisfied and were not excused precluded any recovery on Ayala's breach of contract cause of action and, therefore, necessarily precluded any recovery by Ayala on its common count for money had and received, which count was based on the Subcontract and change order. (Moya, supra, 10 Cal.App.3d at p. 281.) Ayala's common count for money had and received "must stand or fall with" its specific breach of contract cause of action. (McBride, supra, 123 Cal.App.4th at p. 395.) Because the jury found in favor of HPS on Ayala's breach of contract cause of action, Ayala's common count for money had and received necessarily "fall[s] with" its breach of contract cause of action. (Ibid.) Therefore, the jury's special verdict, and the trial court's judgment based thereon, must be reversed to the extent they found in favor of Ayala on its common count and awarded it damages thereon.
II Exclusion of Insurance EvidenceHPS contends the trial court reversibly erred by excluding certain evidence that referred to Ayala's insurance. In particular, HPS argues the court should have admitted all or portions of Exhibits 584, 591, and 593, even though they contained direct or indirect references to insurance. However, because we reverse the special verdict and judgment in favor of Ayala on its common count for money had and received, we need not, and do not, address the question of whether the trial court abused its discretion by excluding that evidence.
III Liability of Bonding CompaniesHPS contends its bonding companies cannot be held liable on the common count special verdict. However, because we reverse the special verdict and judgment in favor of Ayala on its common count for money had and received, we need not, and do not, address the question of whether HPS's bonding companies can be held liable on that verdict. Neither HPS nor its bonding companies are liable on that common count.
IV Prejudgment InterestHPS contends the trial court erred by awarding Ayala prejudgment interest on the damages awarded on the common count for money had and received. Because we reverse the special verdict and judgment in favor of Ayala on that common count, there remains no award of damages on which prejudgment interest may be awarded. Therefore, the court's award of prejudgment interest must also be reversed. (Cf. Hedging Concepts, supra, 41 Cal.App.4th at p. 1423 [reversing award of prejudgment interest in analogous case].)
V Substantial Evidence to Support Special Verdict on Form 2On special verdict form 2, the jury found in favor of Ayala on HPS's cross-claim against Ayala for breach of contract. HPS contends there is insufficient evidence to support the jury's finding on special verdict form 2 that it did not do all, or substantially all, of the significant things the Subcontract required it to do and that it was not excused from doing those things. We disagree.
AIn applying the substantial evidence standard of review on appeal, we review the whole record in the light most favorable to the judgment to determine whether it discloses substantial evidence—that is, evidence that is reasonable, credible, and of solid value—to support the finding of fact. (People v. Rodriguez (1999) 20 Cal.4th 1, 11.) We do not reweigh the evidence, resolve conflicts in the evidence, or reevaluate the credibility of witnesses. (People v. Cochran (2002) 103 Cal.App.4th 8, 13.)
The substantial evidence standard of review involves two steps. "First, one must resolve all explicit conflicts in the evidence in favor of the respondent and presume in favor of the judgment all reasonable inferences. [Citation.] Second, one must determine whether the evidence thus marshaled is substantial. While it is commonly stated that our 'power' begins and ends with a determination that there is substantial evidence [citation], this does not mean we must blindly seize any evidence in support of the respondent in order to affirm the judgment. . . . [Citation.] '[I]f the word "substantial" [is to mean] anything at all, it clearly implies that such evidence must be of ponderable legal significance. Obviously the word cannot be deemed synonymous with "any" evidence. It must be reasonable . . . , credible, and of solid value . . . .' [Citation.] The ultimate determination is whether a reasonable trier of fact could have found for the respondent based on the whole record." (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633, fns. omitted.)
BRegarding HPS's breach of contract cause of action against Ayala, on special verdict form 2 the jury answered "no" to the question: "Did [HPS] do all, or substantially all, of the significant things that the contract required HPS to do, or was HPS excused from doing those things?" Accordingly, the jury found in favor of Ayala on HPS's cross-claim against it for breach of contract.
Regarding HPS's negligence cross-claim against Ayala, the jury found that Ayala was negligent, but that its negligence was not a substantial factor in causing harm to HPS.
Because special verdict form 2 does not specify what act or acts HPS did not substantially perform under the Subcontract, the jury's answer to the above question could have been based on HPS's failure to perform any of the significant acts it was required to do under the Subcontract. As Ayala asserts, there is substantial evidence to support a finding that HPS did not substantially perform its obligation under the Subcontract to dewater the jacking and receiving pits at the I-15 site. Exhibit C, which was Ayala's proposal and was incorporated into the Subcontract, provided:
"15. DEWATERING: A. [HPS] is responsible for any and all dewatering of bore pit and of the entire length of bore. . . .
D. Dewatering shall be to the satisfaction of Ayala."
A copy of City's inspection report dated December 27, 2010 (Exhibit 138) states: "Both pits have been flooded and are filled with approx. 15 ft[.] of water. The dewatering system failed over the long holiday weekend. The system was not monitored during this period. [¶] . . . [¶] Night shift: Cleans out pit on the north side of I-15. Pit was not protected or monitored during the past rain events. Pit had about 4 ft[.] of water and silt in it. Ayala's tunneling machine is flooded (water in transmission oil) and needs to be replaced. . . ." At trial, Ayala's expert, Stavros Chrysovergis, testified that the flooding of the jacking pits caused water to infiltrate the tunnel, which caused soil erosion underneath the freeway and minor settlement of the freeway adjacent to the casing. Based on the above evidence, the jury could reasonably infer that the Subcontract required HPS to properly dewater the jacking and receiving pits and that HPS did not substantially perform that duty. Accordingly, there is substantial evidence to support the jury's finding that HPS did not do all, or substantially all, of the significant things the Subcontract required it to do and that it was not excused from doing those things. VI Exclusion of Taylor Street Evidence
HPS contends the trial court abused its discretion by excluding certain evidence regarding its contractual right to withhold payments to Ayala based on subsidence damage at the Taylor Street work site. HPS apparently asserts it would have prevailed on its cross-claim against Ayala for breach of contract had the court not so erred.
AAt trial, Leslie DenHerder, HPS's president and owner, testified that HPS received two separate claims from City regarding Ayala's work. He testified that one of the claims involved the heave damage at the I-15 site and the other claim related to something else. He testified that in December 2014 City paid HPS its retention amount, but that payment had been delayed by City. When HPS's counsel asked DenHerder whether City's retention payment was delayed because of the other claim made by City, Ayala objected on grounds of relevancy, an improper leading question, and Evidence Code section 352.
In the absence of the jury, the trial court discussed with counsel Ayala's objection to the proffered evidence. The court initially overruled Ayala's objection on relevancy grounds, concluding the Taylor Street site work was another phase of the same project under the Subcontract. However, the court ruled that it would not allow testimony about another lawsuit (presumably involving Ayala's Taylor Street site work) during the instant case. The court stated that under section 3(d) of the Subcontract, HPS could not withhold payments to Ayala without some connection of the claim to Ayala. The court asked HPS to cite foundational evidence establishing a connection between HPS's payment retention to something Ayala did wrong, but HPS did not cite any evidence that had been admitted. The court ruled that HPS would need to present expert opinion to establish a connection between the Taylor Street repairs and Ayala's work there. The court ruled that HPS could not introduce evidence from the Taylor Street lawsuit in the instant case. It ruled that absent evidence of such a connection, it would sustain Ayala's objection and exclude testimony regarding the Taylor Street claim. However, the court stated it was not "shutting the door on HPS" and would allow HPS additional time to proffer adequate foundational evidence. Thereafter, HPS did not proffer any other evidence to provide a foundation for testimony regarding the Taylor Street subsidence claim or lawsuit.
BHPS has not carried its burden on appeal to persuade us that the trial court abused its discretion by excluding evidence regarding the Taylor Street subsidence claim or lawsuit. HPS simply argues that because section 3(d) of the Subcontract allowed it to withhold payments to Ayala if any claim were asserted against HPS regarding Ayala's work, the court necessarily abused its discretion by excluding that evidence. However, HPS's conclusory argument, lacking any citation to the Evidence Code or supporting cases, does not persuade us the court abused its discretion to exclude evidence for lack of an adequate foundation or for other reasons (e.g., Evid. Code, § 352). (Cf. People v. Lucas (2014) 60 Cal.4th 153, 226-227 [trial court did not abuse its discretion by excluding testimony for lack of adequate foundation]; Fundamental Investment etc. Realty Fund v. Gradow (1994) 28 Cal.App.4th 966, 971 ["The burden of affirmatively demonstrating error is on the appellant."]; Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852 ["An appellant must provide an argument and legal authority to support his contentions."]; Paterno v. State of California (1999) 74 Cal.App.4th 68, 105 [conclusory claims did not persuade appellate court].)
More importantly, assuming arguendo HPS carried its burden on appeal to show the trial court abused its discretion by excluding evidence of the Taylor Street claim or lawsuit, HPS nevertheless has made no attempt to show that error was prejudicial. An appellant has the burden on appeal to affirmatively demonstrate prejudicial error (i.e., show that the error resulted in a miscarriage of justice or that it is reasonably probable that the appellant would have obtained a more favorable result had the court not erred). (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475; Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1069 (Pool); People v. Watson (1956) 46 Cal.2d 818, 836 (Watson).) If an appellant fails to meet its burden to show an error by the trial court is prejudicial, reversal of the judgment is not required. (Citizens for Open Government v. City of Lodi (2012) 205 Cal.App.4th 296, 308 (Citizens).) Furthermore, an appellate court will not "act as counsel for appellant by furnishing a legal argument as to how the trial court's ruling was prejudicial." (Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 963.) Because HPS has made no attempt to show that it is reasonably probable it would have obtained a more favorable result had the trial court not erred by excluding evidence of the Taylor Street claim or lawsuit or that a miscarriage of justice occurred, HPS has not carried its burden on appeal to show the court's purported evidentiary error was prejudicial. (Cal. Const., art. VI, § 13; § 475; Pool, at p. 1069; Watson, at p. 836.) Absent a showing by HPS that the purported error was prejudicial, reversal of the judgment is not required. (Cal. Const., art. VI, § 13; § 475; Citizens, at p. 308.)
All statutory references are to the Code of Civil Procedure unless otherwise specified.
Even if HPS had attempted to show the purported evidentiary error was prejudicial, we likely would have rejected that attempt. Based on our review of the record on appeal, we believe it is not reasonably probable HPS would have prevailed on its cross-claim against Ayala for breach of contract even had the Taylor Street evidence been admitted. In particular, we note that on special verdict form 1 regarding Ayala's breach of contract cause of action against HPS, the jury found that Ayala did all, or substantially all, of the significant things that the Subcontract required Ayala to do or that Ayala was excused from doing those things.
VII Prompt Payment PenaltiesIn its cross-appeal, Ayala contends the trial court erred by denying its motion for an award of statutory prompt payment penalties based on its recovery of damages on its common count for money had and received. However, because we reverse the special verdict and judgment in favor of Ayala on that common count, there remains no award of damages and there can be no violation of prompt payment statutes on which an award of prompt payment penalties can be based. Accordingly, we reject Ayala's contention.
VIII $35,000 CreditAyala contends the trial court did not have jurisdiction to amend, and erred by amending, the judgment to award HPS a $35,000 credit for Ayala's settlement with RBF. However, because we reverse the judgment in Ayala's favor on its second amended complaint against HPS, there is no judgment remaining against HPS for which a settlement credit can be applied. Accordingly, we reverse the order awarding HPS a $35,000 credit and we need not discuss the merits of Ayala's contention.
IX Attorney Fees and CostsAyala contends the trial court erred by denying its motion for attorney fees and costs incurred in successfully defending against HPS's cross-complaint. HPS contends that if we reverse the judgment for Ayala on its second amended complaint (which we have done herein), then the court's award to Ayala of its attorney fees and costs as the prevailing party must also be reversed.
ASection 25 of the Subcontract, as amended on August 28, 2009, provided: "In the event of any legal action or proceeding arising out of this Agreement is brought by either party to this Agreement, the prevailing party shall be awarded, in addition to any other relief that may be granted, the [actual] attorney's fees, costs, including expert witness fees, and expenses incurred in the action or proceeding by the prevailing party."
The August 28, 2009, amendment to the Subcontract amended section 25 to delete its phrase "reasonable attorney's fees" and replace it with "actual attorney's fees." --------
Following the trial court's entry of judgment in the amount of $249,470 in compensatory damages against HPS, ICW, and Explorer on Ayala's second amended complaint, Ayala filed a motion for an award of attorney fees and costs as the prevailing party on that complaint. Ayala also filed a motion for an award of attorney fees and costs as the prevailing party on HPS's cross-complaint against it. The court granted Ayala's motion for an award of attorney fees in the amount of $227,945 as the prevailing party in its action against HPS, but denied its motion for attorney fees incurred in defending against HPS's cross-complaint. The court also awarded Ayala $32,961.81 in costs for prevailing on its complaint and $33,944.39 in costs for prevailing on HPS's cross-complaint.
BCosts.
Section 1032, subdivision (b), generally provides that "a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." Section 1032, subdivision (a)(4), provides: " 'Prevailing party' includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the 'prevailing party' shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034." Attorney Fees.
Section 1021 generally provides that "the measure and mode of compensation of attorneys . . . is left to the agreement, express or implied, of the parties . . . ." Section 1033.5, subdivision (a)(10)(A), provides that attorney fees authorized by contract are allowable as costs. (Santisas v. Goodin (1998) 17 Cal.4th 599, 606 (Santisas).) In general, a contractual provision providing for an award of attorney fees to a party prevailing on an action "arising out of" the contract is sufficiently broad "to encompass both contract actions and actions in tort . . . ." (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342-1343; see also Santisas, at pp. 603, 608 ["arising out of the execution of this agreement" contract language was broad enough to support attorney fee award to prevailing party in action alleging both contract and tort claims]; Lerner v. Ward (1993) 13 Cal.App.4th 155, 159-161.) If neither party obtains a complete victory on all causes of action covered by a contractual attorney fee provision, the trial court has discretion to determine which party, if any, prevailed and may be entitled to an award of attorney fees. (Cf. Hsu v. Abbara (1995) 9 Cal.4th 863, 875-876 [regarding Civ. Code, § 1717]; Smith v. Krueger (1983) 150 Cal.App.3d 752, 756-757 [regarding Civ. Code, § 1717, "the [trial] court is given wide discretion in determining which party has prevailed on its cause(s) of action"].) Absent a contractual definition of the term "prevailing party," the trial court may make that determination based on the extent to which each party realized its litigation objectives. (Santisas, at p. 609.) For example, one case held that in its circumstances the trial court did not abuse its discretion by finding there was no prevailing party where relief was denied on both the complaint and cross-complaint. (Cf. McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1456 [regarding Civ. Code, § 1717 attorney fees].)
CBecause we reverse the judgment to the extent it found in favor of Ayala on its common count for money had and received, the trial court's awards to Ayala of $227,944 in attorney fees and $32,961.81 in costs as the prevailing party on its second amended complaint must necessarily also be reversed. (Cf. Hedging Concepts, supra, 41 Cal.App.4th at p. 1423.) Similarly, because of the now mixed results obtained by the parties in this case, we need not, and do not, address Ayala's contention that it should have been awarded contractual attorney fees for prevailing on HPS's cross-complaint against it, but nevertheless conclude the trial court's award to Ayala of $33,944.39 in costs for prevailing on HPS's cross-complaint should be reversed for new determinations by the court on remand regarding awards, if any, of attorney fees and/or costs in this case.
Because the circumstances for the trial court's determination of which party, if any, has prevailed under the Subcontract's attorney fee and costs provision and/or sections 1032 and 1033.5 have changed, it is appropriate to remand the matter to allow the parties to file new motions for awards of attorney fees and costs and for new determinations by the trial court of which party, if any, is the prevailing party entitled to attorney fees under the Subcontract's attorney fee provision and the appropriate amount of fees to be awarded to any such prevailing party, as well as which party or parties, if any, are the prevailing parties for an award or awards of costs pursuant to sections 1032 and 1033.5 and/or the Subcontract's costs provision and the appropriate amount of costs to be awarded to any such prevailing party.
DISPOSITIONThe judgment is reversed to the extent it found in favor of Ayala on its second amended complaint and awarded Ayala $249,470.00 in compensatory damages, $94,733.33 in prejudgment interest, $227,945.00 for attorney fees, and $32,961.81 in costs. The judgment is further reversed to the extent it awarded Ayala $33,944.39 in costs on HPS's cross-complaint and awarded HPS a $35,000.00 credit toward the judgment against it. In all other respects, the judgment is affirmed.
The matter is remanded with directions that the trial court conduct further proceedings and enter a new judgment consistent with the views expressed in this opinion.
HPS is entitled to its costs on appeal.
HUFFMAN, Acting P. J. WE CONCUR: HALLER, J. GUERRERO, J.
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