L. A. Unified Sch. Dist. v. Torres Constr. Corp.

• Decision Date: 26 October 2020
• Docket Number: B291940
• Court: California Court of Appeals Court of Appeals
• Parties: LOS ANGELES UNIFIED SCHOOL DISTRICT, Plaintiff and Respondent, v. TORRES CONSTRUCTION CORP. et al., Defendants and Appellants.

57 Cal.App.5th 480

271 Cal.Rptr.3d 523

LOS ANGELES UNIFIED SCHOOL DISTRICT, Plaintiff and Respondent,

v.TORRES CONSTRUCTION CORP. et al., Defendants and Appellants.

B291940

Court of Appeal, Second District, Division 8, California.

Filed October 26, 2020

SMTD Law, Jonathan J. Dunn, Irvine, Andrew C. Harris ; Alvarado Smith, Raul F. Salinas, Los Angeles, and William M. Hensley for Defendants and Appellants.

Orbach Huff Suarez & Henderson, David M. Huff, Colin E. Barr, Los Angeles, Kelly Houle-Sandoval; Mark A. Miller, Santa Rosa, for Plaintiff and Respondent.

STRATTON, J.

SUMMARY

Appellant Torres Construction (Torres) agreed to renovate school cafeterias for the Los Angeles Unified School District (LAUSD). Appellant Western Surety Company (Western) bonded Torres's performance on the project. The project encompassed three phases. LAUSD ended up filing a civil complaint against appellants for breach of contract arising out of all three phases of the cafeteria renovations.

This appeal is from a judgment entered after an encyclopedia of partial adjudications of the causes of action in LAUSD's complaint against appellants. The parties brought motions for summary judgment, motions for judgment on the pleadings, motions for summary adjudication, and motions for directed verdicts; a few remaining claims survived these motions and were decided by jury verdict. Ultimately, LAUSD prevailed on its claims for breach of contract and was awarded $3,941,829 in damages. Western was found liable on its bonds. The parties settled Torres's offset claims for withheld payments on other jobs in the amount of $556,296.89 plus $151,958.47 in interest. LAUSD was awarded prejudgment interest of $1,232,887.88 and costs in the amount of $88,716.97. LAUSD's net recovery was $4,555,178.49. In addition, LAUSD was awarded $2.1 million in attorney fees against Western alone.

This appeal is from the final judgment, but appellants do not directly challenge every court ruling. Torres focuses on 1) the denial of appellants’ motion for summary judgment; 2) the grant of LAUSD's motion for summary adjudication on about half of the job orders it issued to Torres; and 3) the award of prejudgment interest. Torres contends its summary judgment motion should have been granted because LAUSD elected to sue on the overall job order contracts, which were merely agreements to negotiate, rather than on the individual job orders for the school renovations, which were the final agreements. Torres also contends the trial court erred in granting LAUSD's motion because 1) the trial court abused its discretion when it admitted evidence offered by LAUSD in reply to Torres's opposition to summary judgment; 2) Torres's offset affirmative defense rendered LAUSD's damages uncertain; 3) LAUSD failed to obtain independent cost estimates, which were a statutory condition precedent to Torres's performance; and 4) there were triable issues of material fact about waiver. Torres contends the trial court abused its discretion in awarding prejudgment interest because LAUSD's damages were uncertain.

Western joins Torres's claims, and adds additional claims based on three of its affirmative defenses related to suretyship: 1) the statute of limitations on the bonds had run; 2) notice to the surety was deficient; and 3) LAUSD's damages were not recoverable under the bond. Western contends LAUSD's motion for summary adjudication should have been denied because LAUSD failed to negate these three affirmative defenses related to suretyship. Western also challenges the denial of its motions for directed verdict on these three affirmative defenses. Additionally, Western contends the trial court abused its discretion in awarding attorney fees in the absence of more detailed information about the work of each attorney.

Some of appellants’ claims have been forfeited on this appeal due to appellants’ 1) failure to provide adequate, or, in some cases, any record citations; 2) failure to fully develop their arguments; and 3) failure to cite supporting relevant California legal authority.¹ As for the remaining claims, we find no error. The judgment is affirmed.

BACKGROUND

Beginning in 2003, California statutorily authorized LAUSD to use an alternative procedure for bidding of public works projects. (Assem. Bill No. 14 (2003-2004 Reg. Sess.) § 1 (AB14).) This procedure, known as job order contracting, was defined in former Public Contracts Code sections 20919 through 20919.15.² The Legislature stated that "[t]he benefits of a job order contract project delivery system include accelerated completion of the projects, cost savings, and reduction of construction contracting complexity." ( § 20919, subd. (c).) The Legislature stated the procedure should be used to reduce project costs and expedite project completion. (Id. , subd. (d).)

Under this system, a job order contract (JOC) is competitively bid and awarded to the lowest responsible qualified bidder. ( § 20919, subd. (g).) A JOC is defined as a contract "in which the contractor agrees to a fixed period, fixed unit price, and indefinite quantity contract that provides for the use of job orders for public works or maintenance projects." (§ 20919.1, subd. (e).)³

For each JOC up for bid, LAUSD was required to provide potential bidders with a set of documents which include a construction task catalog and the JOC technical specifications, which in turn include General Conditions. (§§ 20919.4, subd. (a)(1); 20919.1, subds. (b) & (f).) The General Conditions set forth all the terms and conditions of the JOC, including pricing formulas, audit rights, insurance requirements, and payment obligations. The 2005 and 2007 General Conditions for the JOCs at issue in this appeal average about 90 pages. The bidders use the JOC documents to bid an adjustment factor that the bidder will charge for unit prices listed in the construction task catalog. LAUSD awards the JOC to the lowest responsible prequalified bidder. (§ 20919.4, subd. (b)(1).) The construction task catalog and General Conditions are incorporated into the JOC as contract documents.

Once a JOC is awarded, LAUSD may order the contractor to perform work by issuing individual job orders under the JOC, using the procedures outlined in the General Conditions. LAUSD first notifies the contractor that work is necessary. The contractor is required by the JOC to participate in a "joint scope meeting" at the project site, as a result of which they develop a Detailed Scope of Work. LAUSD then issues a Request for Proposal (RFP) to the contractor, who is contractually required to prepare a Job Order Proposal (proposal) which sets forth the cost of performing the work.

By statute a proposal is defined as "the job order contractor prepared document quoting those construction tasks listed in the catalog of construction tasks that the job order contractor requires to complete the project scope of work, together with the appropriate quantities of each task. The pricing of each task shall be accomplished by multiplying the construction task unit price by the proposed quantity and the contractor's competitively bid adjustment factor." (§ 20919.1, subd.(l ).) Under the JOCs at issue here, the proposal must be prepared using either the statutory method or, if the task cannot be found in the construction task catalog, using a non-prepriced (NPP) work formula set forth in the General Conditions. (See § 20919.1, subd. (l ).) If the proposal is approved, it becomes part of the job order. A job order is defined as "a firm, fixed price, lump-sum order issued by [LAUSD] to a job order contractor for a definite project scope of work as compiled from the catalog of construction tasks to be performed pursuant to a job order contract." (Id. , subd. (d).) Job orders are incorporated into the master JOC as contract documents.

As relevant here, Torres was the successful bidder on five JOCs for general contracting services, which LAUSD referred to in its complaint as JOC Contract No. 1 and two JOCs for electrical services, which LASUD referred to as JOC Contract No. 2. The earliest contract date is December 21, 2005 and the latest is February 5, 2008.

In March 2008, LAUSD began a program to modernize middle and high schools as part of LAUSD's district-wide Café LA program. The work was scheduled to occur in three phases. Phase I involved the purchase of a uniform set of kitchen equipment for schools. Phase II involved the purchase of additional kitchen equipment which varied by school. Phase III involved the installation of the Phase I and II equipment and electrical upgrades. Torres submitted proposals for this work, and ultimately was awarded 19 Phase I Job Orders, 18 Phase II Job Orders and 18 Phase III Job Orders.

Torres installed kitchen equipment and made electrical upgrades in the schools covered by its Job Orders. LAUSD made the required payments on those Job Orders.

At some point prior to October 2011, LAUSD began a contractually authorized audit of Torres's job orders for the Café LA project. The General Conditions provide that LAUSD has the right to review, obtain, inspect, audit and copy all contractor records pertaining to the contract work. Under the 2005 General Conditions, the contractor agreed to maintain such records and to submit to an audit for a period of up to four years following the date the Notice of Completion is recorded; under the 2007 General Conditions, the contractor agreed to the audit without reservation. If the audit "discloses overpricing or overcharges of any nature by the CONTRACTOR to [LAUSD] in excess of one percent (1%) of the total Contract Amount, then, in addition to all other LAUSD rights and remedies, and in addition to making adjustments for the overcharges and/or overpricing," [LAUSD] would be reimbursed for the costs of the audit.

In the final audit dated October 24, 2011, the LAUSD auditor found what it believed were substantial irregularities in Torres's pricing of the Phase I and II Job Orders and in...