B.S.B. Const. Co. v. Rex Const. Co.

• Decision Date: 15 February 1962
• Citation: 19 Cal.Rptr. 167,200 Cal.App.2d 327
• Parties: B. S. B. CONSTRUCTION COMPANY, a corporation, Petitioner and Respondent, v. REX CONSTRUCTION COMPANY, Respondent and Appellant. Civ. 6641.
• Court: California Court of Appeals Court of Appeals

Page 167

19 Cal.Rptr. 167

200 Cal.App.2d 327

B. S. B. CONSTRUCTION COMPANY, a corporation, Petitioner and Respondent, v. REX CONSTRUCTION COMPANY, Respondent and Appellant.

Civ. 6641.

District Court of Appeal, Fourth District, California.

Feb. 15, 1962.

M. S. Bernard, Santa Ana, and Ernest F. Shelander, Los Angeles, for appellant.

Palmer & Tookey, Pasadena, for respondent.

COUGHLIN, Justice.

The question for determination on this appeal is whether the trial court erred in confirming an arbitration award.

Rex Construction Company, the appellant herein, as the prime contractor, and B. S. B. Construction Company, the respondent herein, as a subcontractor, executed an agreement in writing whereby the latter was to perform certain cement work required under the prime contract, whichinvolved the construction of a building for a firm named Hyer and Perkins.

The subcontract contained the following arbitration agreement:

'Any controversy or claim arising out of or relating to this Contract, or the breach thereof, shall be settled by arbitration in accordance with the Rules Committee of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof.'

In due course, the subcontractor undertook its work; on July 20, 1959, received a letter from the prime contractor referring to 13 deficiencies therein, and demanding that they be corrected; and on July 28, 1959, received a further letter from the prime contractor stating that the cement floor laid by the subcontractor was less than the specified thickness, that the wire mesh therein was not laid at the required distance from the top thereof, and that unless the floor were removed and replaced in accord with the plans and specifications the prime contractor would proceed to complete the work at the subcontractor's expense. The subcontractor replied by letter dated July 31, 1959, stating that it was unnecessary to remove the floor, and that any action of the prime contractor to do so would be the latter's sole responsibility. Shortly thereafter the parties agreed to and did submit the controversy thus presented to arbitrators for arbitration, as required by their contract. On August 28, 1959, the arbitrators made a report in the nature of an award in which they set forth their conclusions that 10 of the 13 deficiencies could be corrected; that 3 of the 13 deficiencies were minor in character; and that the failure of the floor to precisely comply with the plans and specifications did not affect the 'full structural integrity, quality or intended use' of the building.

In the meantime, the owner of the building, Hyer and Perkins, by letter dated August 24, 1959, demanded that the prime contractor remedy certain deficiencies in the construction work, including the failure of the floor to conform to the plans and specifications. The prime contractor acceded to these demands and thereafter, among other things, removed and replaced the floor.

On September 24, 1959, the subcontractor filed a petition in the Superior Court of Orange County asking that the award of the arbitrators be returned to them with instructions to specifically determine the monetary damages sustained by the prime contractor as a result of the alleged deficiencies claimed by it and the net amount due the subcontractor. After hearing, the court made its order remanding the matter to the arbitrators for further proceedings; directed them to determine the amount of damages suffered with respect to the 13 items in the letter of July 20th; ordered them to 'ascertain the amount of the monetary damages done to REX CONSTRUCTION COMPANY by virtue of any defect in the performance with respect to the construction of the floor in the subject factory building'; and further ordered them 'to ascertain the agreed contract price of the job, the agreed extras and costs thereof, the amounts of money paid by REX CONSTRUCTION COMPANY to B. S. B. CONSTRUCTION COMPANY pursuant to said contract and/or contract for extras, and the amounts of money due on the contract and for extras, the total amount of offsets on account of damages hereinbefore referred to, and the balance, if any, due either REX CONSTRUCTION COMPANY or B. S. B. CONSTRUCTION COMPANY, as the case may be.'

On May 5, 1960, the arbitrators made their award in writing which, in substance and reasonably construed, stated that 11 of the 13 claimed deficiencies could and should be corrected; that two of the 13 deficiencies were minor in character; that as a result of these 13 deficiencies the prime contractor had been damaged in the sum of $1251.65 which 'will be sufficient and ample to make such corrections as hereinbefore stated'; that the deficiency in the floor 'has not affected the full structural integrity, quality, or the intended use of he building'; that by reason of variances from the plans and specifications, which impliedly the trial court later determined related to the floor, the prime contractor was damaged in the sum of $656.37; that there was unpaid under the original contract, including agreed extras, the sum of $5,942,46; that the 'total damages suffered' by the prime contractor and the total of all obligations paid by it in favor of the subcontractor amount to 'the total sum of $4,512.91;' that the net amount unpaid to the subcontractor was $1,430.05; ¹ and that they awarded the subcontractor the 'net sum of $1,430.05.' By an addenda to their award the arbitrators stated that the prime contractor, pursuant to its agreement with the owner to make certain corrections, had done additional work on the subject building, including that in connection with two of the 13 items referred to in their report and replacement of the floor, for which it expended the total sum of $13,306.67.

The subcontractor moved the court to confirm the award. The prime contractor objected thereto and moved that the award be corrected, or that it be vacated and returned to the arbitrators for further consideration. The court confirmed the award. From the order of affirmance and from the order denying its motion to correct, modify or vacate, the prime contractor has taken this appeal.

The proceedings herein were taken pursuant to the provisions of Sections 1280-1293 of the Code of Civil Procedure.

The prime contractor contends that the award should have been vacated as prescribed by Section 1288 of the Code of Civil Procedure, under the provisions thereof requiring such 'Where the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award, upon the subject matter submitted, was not made'; based its motion on these code provisions; and supported the same by affidavits from the arbitrators which, in substance, stated that they gave no consideration to the duty and responsibility of the prime contractor to the owner to correct the deficiencies referred to in the addenda to their report, because they believed their award was required to be in the form originally set forth under date of August 28, 1959; that the addenda was prepared to set out the actual costs of the prime contractor in making the corrections noted therein; and that they believed the court, on confirmation, would make an award with respect to the matters set forth therein. A counter-affidavit was filed by the subcontractor in which its attorney related a conversation between himself and one of the arbitrators, which occurred before the award was made, in which the arbitrator stated, in substance, that the items of cost in question were not proper elements of damage, but should be referred to in the award, and that the measures taken by the prime contractor were not the result of any deficiency in performance by the subcontractor, but resulted from the agreement between the former and the...