South Bay Transportation Co. v. Gordon Sand Co.

• Decision Date: 14 December 1988
• Docket Number: No. H002385,H002385
• Citation: 206 Cal.App.3d 650,253 Cal.Rptr. 753
• Court: California Court of Appeals Court of Appeals
• Parties: SOUTH BAY TRANSPORTATION CO., Plaintiff and Appellant, v. GORDON SAND CO., Defendant and Appellant.

Page 753

253 Cal.Rptr. 753

206 Cal.App.3d 650

SOUTH BAY TRANSPORTATION CO., Plaintiff and Appellant, v. GORDON SAND CO., Defendant and Appellant.

No. H002385.

Court of Appeal, Sixth District, California.

Dec. 14, 1988.

CERTIFIED FOR PARTIAL PUBLICATION ^*.

Ara Shirinian, San Francisco, for plaintiff and appellant.

Michael S. Rubin, Walsh, Donovan, Lindh & Keech, San Francisco, for defendant and appellant.

AGLIANO, Presiding Justice.

1. Introduction

Under the Highway Carriers' Act, a permit from the Public Utilities Commission is required to engage in the business of transporting property on the highways in dump trucks and certain other types of vehicles. ( §§ 3501, 3517, 3541, 3611; unspecified section references are to the Pub.Util.Code.) Such highway carriers are required to charge no less and no more than minimum and maximum rates established by the rules of the Public Utilities Commission unless the Commission approves a deviation. ( §§ 3662, 3664, 3665, 3667.) "The paramount purpose of the regulation of the carriers is the protection of the public against ruinous carrier competition and such possible attendant evils as improperly maintained equipment, inadequate insurance, and poor service." (Keller v. Thornton Canning Co. (1967) 66 Cal.2d 963, 967, 59 Cal.Rptr. 836, 429 P.2d 156; cf. § 3661.) "[A] carrier has both the right and the duty to recover undercharges; recovery is essential to preserve the minimum rate structure for a vital quasi-public industry and to maintain the integrity of the orders of the Public Utilities Commission [citations]." (West v. Holstrom (1968) 261 Cal.App.2d 89, 92, 67 Cal.Rptr. 831.)

After a court trial, plaintiff South Bay Transportation Company, a licensed dump truck carrier ("carrier"), recovered $33,561.37 by which it had undercharged defendant Gordon Sand Company ("shipper") for transporting bulk sand. Shipper appeals from this judgment on the following grounds: its motion for continuance of trial should have been granted; it was entitled to prevail because carrier had misled it about the true cost of carrier's services public policy does not require further payments by shipper; and the amount of the judgment should be reduced because carrier has saved expenses and because the wrong rates were applied to some shipments. We affirm the judgment.

Carrier cross-appeals from the denial of its post-trial motion for attorney fees. We reverse this order.

Before reviewing the trial evidence, we consider whether a continuance of the trial should have been granted.

2. Motion for Continuance ^**

3. Substantiality of Evidence

Shipper attempted to defeat or limit carrier's recovery of undercharges and to place liability on carrier by cross-complaint on the grounds that (1) carrier had tricked shipper into a contract for shipping sand by misrepresenting the legality of the agreed rates and (2) the agreed rates would have been legal for a number of shipments if carrier had provided enough trucks and completed the necessary paperwork. Shipper now contends the trial court's adverse factual findings are not supported by substantial evidence.

A. Trial Court Findings

The trial court made the following findings on these factual issues. The rates applicable to shipping bulk sand by truck are those contained in the Public Utility Commission's minimum rate tariff ("MRT") 7-A. "Under the provisions of MRT 7-A, the carrier and the shipper can take advantage of an alternative rail rate, that is, a rate different from that required by MRT 7-A if certain conditions are met.... An additional prerequisite is that there must be issued by the shipper or carrier what is called a 'multiple lot document'.... If neither of these conditions is met, each shipment must be rated under MRT 7-A.... There was no substantial evidence presented demonstrating that these conditions were met."

"The [shipper's] contention that it was the victim of a deal perpetrated by the [carrier] on an innocent [shipper] is not supported by the evidence under the preponderance test. [p ] As pointed out in [carrier's] closing brief ..., Mr. Gordon has exercised managerial duties with the [shipper] for some 14 years.... For a period of at least 8 years prior to the retention of [carrier], he has handled the business of transportation of sand in behalf of his company under complex rail tariffs.... [p ] Transportation costs are a very important element in the conduct of [shipper's] business, and to be the success it has been in this business, the [shipper] had to be aware of these costs.... The [shipper's] position is that it was not aware of the complicated provisions of the PUC's freight tariffs.... [p ] Mr. Gordon knew ... a recognized rail tariff expert ... since the mid-70's and has consulted with him at least once prior to the retention of [carrier].

"Of importance is the testimony of Mr. Mallen (President of [carrier] ).... He testified that he told Mr. Gordon that the rates the [carrier] charged the [shipper] were illegal.... [p ] Of further interest is Exhibit 6, a letter which was admitted into evidence ... which Mr. Gordon admitted seeing about February 17, 1981 ... which was around the time of the so-called deal between the parties.... The letter raised the question whether the rates charged by the [carrier] were illegal. Such evidence is important on the issue of the credibility of Mr. Gordon's testimony that he did not know the rates charged by the [carrier] were not lawful under the PUC regulations.

"Of further interest in this case is Exhibit C which is an application by the [carrier] to prospectively legitimize the rates it had previously charged the [shipper]. In support of that application and attached to that application ... is a statement dated May 5, 1981 signed by Mr. Gordon, President of the [shipper], setting forth that the [shipper] intended to use the applicant's services under the proposed rates if the authority is granted.

"The reasonable interpretation of the fact of the application ... and the attached supporting statement of Mr. Gordon is that Mr. Gordon was aware of the fact that the rates charged by [sic ] the [shipper] by the [carrier] were below the authorized PUC rates. [p ] From the evidence, it is evident that the [shipper] was using [carrier's] services at those rates some five months prior to that letter."

B. Standard of Review

The standard of review is: " '[A]ll factual matters will be viewed most favorably to the prevailing party ... and in support of the judgment [citation].' (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925 [101 Cal.Rptr. 568, 496 P.2d 480]....) ' "In brief, the appellate court ordinarily looks only at the evidence supporting the successful party, and disregards the contrary showing." ... All conflicts, therefore, must be resolved in favor of the respondent. [Citation.]' (Id., at pp. 925-926 [101 Cal.Rptr. 568, 496 P.2d 480]....) ' "[T]he power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the [court]. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court...." ' (Florez v. Groom Development Co. (1959) 53 Cal.2d 347, 354 [1 Cal.Rptr. 840, 348 P.2d 200]....)" (Santa Clara County Environmental Health Assn. v. County of Santa Clara (1985) 173 Cal.App.3d 74, 81, 218 Cal.Rptr. 678; emphasis omitted.)

On the other hand, " 'Substantial' means evidence 'of ponderable legal significance. Obviously the words cannot be deemed synonymous with "any" evidence. It must be reasonable in nature, credible, and of solid value; it must actually be "substantial" proof of the essentials which the law requires in a particular case.' [Citations.]" (Claussen v. First American Title Guaranty Co. (1986) 186 Cal.App.3d 429, 436, 230 Cal.Rptr. 749.)

C. Trial Evidence

The presidents of shipper and carrier reached a general oral agreement at a meeting in late 1980 or early 1981 that carrier would deliver bulk sand from Lapis in Monterey County, California to shipper's headquarters in Compton, California, at a charge of $15 per ton and directly to shipper's customers in Los Angeles County at a charge of $18 per ton. As was customary in shipper's business, the agreement was not reduced to writing.

Shipper had learned from a rail rate expert that, in January 1981, it could have shipped the sand between Lapis and Compton by rail for $14.50 per ton. Shipper's president testified he preferred trucking over rail because "in the case of the sales to the end user it would be more efficient to ship by truck directly from the Lapis plant right on through to the end users without making an intermediate stop."

Carrier hauled sand under this agreement from January 15 to August 14, 1981, when shipments ceased by mutual agreement. In March, shipper agreed to carrier's request for a retroactive increase in the base rate to $15.50 per ton. After a continuing dispute about the amount shipper owed, carrier filed this lawsuit.

Shipper contends the trial court unreasonably viewed the evidence bearing on whether shipper's president was aware that the agreed trucking rates were illegally low. Shipper argues that the trial court should have believed the following testimony of its president. He was continually assured by carrier's president and vice-president that carrier could lawfully charge trucking rates near railroad rates so long as the carrier was moving 50 tons or more a day. He would not have entered a contract knowing it was illegal. In February 1981, carrier's president convinced him to disregard the letter to carrier from a former sand supplier asserting their agreed rates violated the Public Utilities Commission's minimum rate tariff 7-A. In May 1981, shipper's president signed support for an application by carrier to the Public...