Maurice L. Bein, Inc. v. Housing Authority of City of Los Angeles

• Decision Date: 19 February 1958
• Citation: 157 Cal.App.2d 670,321 P.2d 753
• Court: California Court of Appeals Court of Appeals
• Parties: MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs and Respondents, v. HOUSING AUTHORITY OF The CITY OF LOS ANGELES, California, Defendant and Appellant. MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs, Cross-Defendants, and Cross-Appellants, v. BERG ELECTRIC CORPORATION, S. A. Cummings, Hood Construction Company, Sam Delia, and Ben F. Smith, Inc., Defendants, Cross-Complainants, and Cross-Respondents. MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs and Respondents, v. HOUSING AUTHORITY OF The CITY OF LOS ANGELES, California, a public corporation; Hood Construction Company, a corporation; Berg Electric Corporation, a corporation; Ben F. Smith, Inc., a corporation; Sam Delia; S. A. Cummings; and Doe I to Doe XX, Inclusive, Defendants, Housing Authority of the City of Los Angeles, California, a public corporation, Appellant. Civ. 22325, 22436.

Page 753

321 P.2d 753

157 Cal.App.2d 670

MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs and Respondents, v. HOUSING AUTHORITY OF The CITY OF LOS ANGELES, California, Defendant and Appellant.

MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs, Cross-Defendants, and Cross-Appellants, v. BERG ELECTRIC CORPORATION, S. A. Cummings, Hood Construction Company, Sam Delia, and Ben F. Smith, Inc., Defendants, Cross-Complainants, and Cross-Respondents.

MAURICE L. BEIN, Inc., a corporation; The Bein Construction Co., a co-partnership composed of Joseph A. Bein, William A. Bein and Eugene Aiches; R. J. Daum Construction Company, a corporation, Joint Venturers, Plaintiffs and Respondents, v. HOUSING AUTHORITY OF The CITY OF LOS ANGELES, California, a public corporation; Hood Construction Company, a corporation; Berg Electric Corporation, a corporation; Ben F. Smith, Inc., a corporation; Sam Delia; S. A. Cummings; and Doe I to Doe XX, Inclusive, Defendants, Housing Authority of the City of Los Angeles, California, a public corporation, Appellant.

Civ. 22325, 22436.

District Court of Appeal, Second District, Division 3, California.

Feb. 19, 1958.

Rehearing Denied March 12, 1958.

James J. Arditto, Los Angeles, and Stanley A. Furman, Beverly Hills, for appellant, Housing Authority of the City of Los Angeles, California.

Max F. Deutz, Chief Asst. U. S. Atty., Richard A. Lavine, Asst. U. S. Atty., Chief of Civil Division, and Jordan A. Dreifus, Asst. U. S. Atty., Los Angeles, amici curiae on behalf of appellant.

Anderson, McPharlin & Conners, Eldon V. McPharlin, and Robert E. Jones, Los Angeles, for respondents and cross-appellants.

Harry A. Franklin, Los Angeles, for cross-respondent Berg Electric Corp.

Leon J. Garrie, Los Angeles, for cross-respondents S. A. Cummings, Hood Construction Co., and Sam Delia.

Boyle, Bissell & Atwill, and Robert C. Mardian, Pasadena, for cross-respondent Ben F. Smith, Inc.

VALLEE, Justice.

Plaintiffs brought this action against defendant Housing Authority of the city of Los Angeles for declaratory relief and damages for breach of contract.

On June 30, 1952 plaintiffs, sometimes referred to as Bein-Daum or as the prime contractor, entered into a written contract with Housing Authority for the construction of a low-rent housing project for the agreed consideration of $4,195,000. Prior to entering into this contract plaintiffs entered into written contracts with certain individuals and corporations, referred to as subcontractors, for performance of various parts of the work to be performed under the prime contract. The subcontractors were named as defendants in the action. Plaintiffs sought judgment declaring the rights and obligations of all the parties and against Housing Authority for $115,845.55 for its own damages plus the amounts, if any, which the subcontractors might be awarded as damages against plaintiffs. The subcontractors filed cross-complaints against plaintiffs seeking damages against them. The complaint was amended to conform to the claims of certain of the subcontractors. Judgment was for plaintiffs against Housing Authority for $209,510.77, and for the various subcontractors against plaintiffs in varying amounts. Housing Authority appealed from the judgment. It also appealed from an order denying its motion to quash a writ of execution. Plaintiffs filed a precautionary cross-appeal from the judgment in favor of the subcontractors.

About August 10, 1949 Housing Authority entered into an agreement with the city of Los Angeles whereby the city agreed to cooperate in the construction of the housing project, to vacate certain streets and alleys, and to annex certain territory in the county of Los Angeles, referred to as the County Strip, which was necessary to the project site. The invitation for bids for construction of the project provides that no bid should be withdrawn for a period of 30 days after the opening of bids without the consent of Housing Authority. Bids were opened on November 27, 1951 and Bein-Daum was the successful bidder. Thereafter, at the request of Housing Authority, Bein-Daum from time to time extended the period within which it would not withdraw its bid up to and including June 30, 1952 because Housing Authority as engaged in a dispute and litigation with the city concerning the cooperation agreement, the closing of the streets and alleys, and the annexation of the County Strip which ran about through the middle of the project site.

On June 28, 1952 and again on June 30, 1952, prior to the execution of the contract by plaintiffs, Housing Authority represented to plaintiffs that all obstacles in connection with the annexation by the city of Los Angeles of the County Strip had been overcome. The court found the representations were false and known to Housing Authority to be false; plaintiffs relied upon the representations and were thereby induced to execute the contract.

On June 30, 1952, the date the contract was executed, Housing Authority gave plaintiffs written notice to proceed as of that date with performance of the contract. A few days thereafter Housing Authority gave plaintiffs a second notice to proceed which was also dated June 30, and plaintiffs returned the first notice. The second notice ordered plaintiffs to proceed with the work on that date provided that no construction work should be commenced on the area of the streets and alleys to be closed until that action had been accomplished and that no construction work should be commenced on the County Strip until it was annexed, 'both of which proceedings have been in process for some time and the accomplishment of which is required by the peremptory writ of mandate issued by the California Supreme Court in the case of Housing Authority of City of Los Angeles v. City of Los Angeles.' ¹ The court found that Housing Authority represented to plaintiffs that the return of the original notice to proceed and the delivery of the second notice to proceed was merely a formality and that there had been no change in the situation and that plaintiffs would be given possession of the County Strip area within a matter of days or a week or so; the representations were false and known by Housing Authority to be false; plaintiffs relied upon the representations and were thereby induced to return the original notice to proceed and to acknowledge receipt of delivery of the second notice to proceed.

The general scope of the work provided for in the prime contract consisted of the construction of sixty-two 2-story frame, stucco and concrete block apartment buildings totaling 601 dwelling units, and an administration and maintenance building, with all the necessary clearing, grading, excavation, demolition of existing concrete slabs, footings, etc., site improvements, sewer collection system, storm drain, pumps, water, gas and electrical distribution systems, landscape work, and all the appurtenant facilities necessary to put these units into satisfactory operation. The part of the work required by the contract to be constructed on the County Strip consisted of eleven 2-story frame, stucco and concrete block apartment buildings totaling 104 dwelling units with excavations, site improvements, and appurtenant facilities.

By the contract, Housing Authority agreed to furnish to the city of Los Angeles drawings and specifications for the work and to obtain approval thereof from the department of building and safety and the engineer's office in order that plaintiffs could obtain the necessary permits for construction from the city. The court found Housing Authority failed and refused to furnish to and obtain approval from the city of the drawings and specifications for the work within a reasonable time; and as a result, plaintiffs were prevented from commencing the preliminary site work or any work whatsoever until August 23, 1952. The building permits for the dwelling buildings were not issued until September 12, 1952. The sewer and storm drain permits were not issued until October 16, 1952. The permit for installation of gas mains was not issued until December 4, 1952. The permit for house sewer connections was not issued until April 13, 1953. The County Strip was annexed to the city on June 29, 1953, one year after the prime contract was executed. Bein-Daum and the subcontractors were not given possession of, and were prevented from doing the work on, the County Strip until that date.

A construction progress chart was prepared by Bein-Daum and approved by Housing Authority. The chart provided that the entire work covered by the contract would be completed in 257 days plus 19 days for inclement weather, a total of 276 days. The court found the progress chart was a reasonable and accurate schedule of the time required for the completion of the work shown therein, and that plaintiffs and their subcontractors would have substantially complied with it had it not been for the delay occasioned by the County Strip; that plaintiffs could and would have fully completed the entire project within the period of 276 days from June 30, 1952, or on or before April 2, 1953, except that as a direct result of the failure and refusal by Housing Authority to deliver full possession of, and to permit commencement of construction on, the County Strip and to furnish to and obtain approval within a reasonable time of the plans and specifications from the city of Los Angeles, plaintiffs and the subcontractors were delayed, hindered, and prevented from completing the work until April 15, 1954, when the project was actually completed; and that the total delay was 378 days.

Plaintiffs and...