Peter Kiewit Sons' Co. v. Pasadena City Jr. College Dist. of Los Angeles County

• Decision Date: 28 February 1963
• Citation: 379 P.2d 18,59 Cal.2d 241,28 Cal.Rptr. 714
• Court: California Supreme Court
• Parties: , 379 P.2d 18 PETER KIEWIT SONS' CO., Plaintiff and Respondent, v. PASADENA CITY JUNIOR COLLEGE DISTRICT OF LOS ANGELES COUNTY, Defendant andAppellant. L. A. 26950.

Page 714

28 Cal.Rptr. 714

59 Cal.2d 241, 379 P.2d 18

PETER KIEWIT SONS' CO., Plaintiff and Respondent, v. PASADENA CITY JUNIOR COLLEGE DISTRICT OF LOS ANGELES COUNTY, Defendant andAppellant.

L. A. 26950.

Supreme Court of California, In Bank.

Feb. 28, 1963.

Harold W. Kennedy, County Counsel, and James W. Briggs, Deputy County Counsel, for defendant and appellant.

Robert E. Reed, Harry S. Fenton, Kingsley T. Hoegstedt and Orrin F. Finch, Sacramento, as Amici Curiae on behalf of defendant and appellant.

Latham & Watkins and Ira M. Price, II, Los Angeles, for plaintiff and respondent.

GIBSON, Chief Justice.

Defendant, a junior college district, entered into a contract to pay plaintiff $1,071,325 for the construction of school facilities. The final payment of approximately $137,000 was withheld by defendant, and this action was brought to recover that sum plus interest and $600 for additional work and materials furnished by plaintiff. Defendant thereafter paid plaintiff $102,523.61 of the sum withheld but retained the remainder, claiming certain offsets. The trial court, sitting without a jury, found for plaintiff with respect to most of the items in dispute, and defendant appeals from the judgment, which awards plaintiff $30,204.80 and specified sums as interest.

The principal question presented concerns the effect, if any, to be given to a provision of the contract that, if the work was not completed within the time specified (300 days after notice to start work), the sum of $25 was to be deducted from the final payment as liquidated damages for each day's delay after the expiration of that period until final acceptance by defendant. The agreement also provided that, if plaintiff considered itself entitled to an extension of time for any cause, it must submit in writing to the architect and defendant an application for such extension. Extensions were to be granted only for delays resulting from causes beyond plaintiff's control, including, among other things, strikes, alterations of the work delaying completion, and 'any act of neglect, duty, or default' of defendant.

The work was not completed within the time specified, nor within the time allowed by extensions granted by defendant. However, the trial court, in concluding that defendant was not entitled to liquidated damages, found that the late completion was caused by matters beyond plaintiff's control and was entirely excusable. Defendant concedes that the evidence is sufficient to support this finding if it is proper to take into account various delays caused by defendant's conduct as to which plaintiff did not request extensions of time in accordance with the contractual provision set forth above. It is argued that plaintiff cannot be excused in the absence of compliance with that contractual provision.

Section 1511 of the Civil Code provides in subdivision 1 that any delay in the performance of an obligation 'is excused' when performance is delayed by 'the act of the creditor * * * even though there may have been a stipulation that this shall not be an excuse.' (Italics added.) An owner who is a party to a construction contract is a creditor within the meaning of section 1511 (Semas v. Bergmann, 178 Cal.App.2d 758, 762, 3 Cal.Rptr. 277), and, as the italicized portion of the section makes clear, a provision in an agreement that the contractor is not to be excused for late completion caused by the owner is rendered inoperative by the statute. A provision in a contract which would require the contractor to make an application for an extension of time before he may be excused for a delay caused by the owner's conduct would obviously constitute a substantial limitation on the policy declared by section 1511.

In commenting on a case (Progressive Builders, Inc. v. District of Columbia, 103 U.S.App.D.C. 337, 258 F.2d 431) where, in the absence of a statute like section 1511, it was held that a contractor who had not complied with a provision for written notice of the cause of a delay was liable although the delay was caused by the government, a leading authority states: 'It seems like pretty tough governmental policy to interpret the contract provision so that the contractor's failure to give notice that the defendant was obstructing completion on time should not only deprive the contractor of his right to damages for such obstruction, but also justify the defendant in withholding a large part of the contract price as 'liquidated damages' for a delay caused by the defendant itself.' (See 5 Corbin on Contracts (1951) § 1074 (1962 Supp. pp. 50-51, fn. 24).)

Roberts v. Security Trust & Savings Bank, 196 Cal. 557, 571-573, 238 P. 673, which contains language to the effect that a contractor may not be excused for delays caused by the owner where the contractor had failed to comply with a provision requiring him to apply for extensions of time, did not mention section 1511 of the Civil Code, and the decision rests largely on the ground that, under another contractual provision, the architect on the job had made a binding factual determination that a delay was not justified. The case of Suhr v. Metcalfe, 33 Cal.App. 59, 67-68, 164 P. 407, although it mentions section 1511, erroneously concluded, without analysis or citation of authority, that the section was not applicable to acts of an owner causing late completion of a construction contract. Decisions from other jurisdictions relied on by defendant do not appear to have involved a statute like section 1511. (Wm. P. Jungclaus Co. v. Ratti, 67 Ind.App. 84, 118 N.E. 966, 968-969; Ward v. Haren, 139 Mo.App. 8, 119 S.W. 446, 447 et seq.; Trauts Realty Corp. v. Casualty Co. of America, 166 N.Y.S. 807, 809; Austin-Griffith, Inc. v. Goldberg, 224 S.C. 372, 79 S.E.2d 447, 452-453.)

It should be pointed out that, in the absence of a contractual provision for extensions of time, the rule generally followed is that an owner is precluded from obtaining liquidated damages not only for late completion caused entirely by him but also for a delay to which he has contributed, even though the...