Vrgora v. Los Angeles Unified School Dist.

• Decision Date: 14 March 1984
• Parties: , 16 Ed. Law Rep. 548 Sevkija VRGORA, Cross-Complainant and Appellant, v. LOS ANGELES UNIFIED SCHOOL DISTRICT, Cross-Defendant and Respondent. Civ. 68443.
• Court: California Court of Appeals Court of Appeals

Page 130

200 Cal.Rptr. 130

152 Cal.App.3d 1178, 16 Ed. Law Rep. 548

Sevkija VRGORA, Cross-Complainant and Appellant, v. LOS ANGELES UNIFIED SCHOOL DISTRICT, Cross-Defendant and Respondent.

Civ. 68443.

Court of Appeal, Second District, Division 5, California.

March 14, 1984.

As Modified April 10, 1984.

[152 Cal.App.3d 1180] William R. Robison, Santa Monica, for cross-complainant and appellant.

DeWitt W. Clinton, County Counsel, and Richard K. Mason, Deputy County Counsel, Los Angeles, for cross-defendant and respondent.

STEPHENS, Associate Justice.

Sevkija Vrgora appeals from a superior court judgment determining that he was liable for certain liquidated damages, pursuant to a contract he entered into with the Los Angeles Unified School District (hereafter LAUSD or respondent) for the construction of an automotive service facility. He contends that the entire amount of damages or a portion thereof was improperly assessed as a matter of law because: (1) LAUSD failed to disclose a condition material to the work he was to perform prior to their entering into the agreement; (2) any damages resulting due to delay were not apportionable to him because he was not entirely responsible for the delay; and (3) LAUSD used the completed portion of the facility prior to acceptance of the project as a whole.

Finding, for the most part, that these arguments are predicated upon conflicting evidence, we must affirm the judgment.

FACTS

Appellant Vrgora, a general contractor, was the successful bidder for the construction of an "automotive service shed" at the West Valley Occupational Center in Woodland Hills, operated by LAUSD. In January 1977, Vrgora and LAUSD memorialized their agreement in writing. The agreement specified, inter alia, that LAUSD would pay Vrgora a total of $160,000 for work that would be completed in 180 days from commencement, and that liquidated damages would be assessed at a rate of $100 per day for late completion. The agreement was subsequently modified by a series of change orders requested by LAUSD, the sum of which increased the total contract price to $167,195.09, and extended the time for completion by 70 days, to a total of 250 days.

For the $160,000, Vrgora agreed to construct a covered carport to house vehicles worked on and, in addition, a specifically enclosed concrete block room outfitted with a $30,000 "Sun Road-A-Matic" electronic vehicle performance tester.

Vrgora commenced construction of the two-part structure on January 31, 1977, with an expected completion date of July 29, 1977. On March 21, 1977, Sun Electric Corporation (hereafter Sun), the manufacturer of the vehicle performance tester, applied for certification of its product from the City of Los Angeles Test Laboratory. Several months later, on September 23, 1977, the now modified machine was approved by the testing agency. However, it was approximately three weeks after the scheduled October 10 completion date that Vrgora first claims he received oral notification of the approval and ordered delivery of the machine to the construction site.

On November 15, 1977, when the vehicle performance tester reached the construction site, Sun demanded immediate payment from Vrgora. Vrgora was unable to comply with said demand and requested LAUSD assign a portion of his contract proceeds to Sun. In the meantime, the machine was removed from the site. After approval of the assignment, Sun redelivered the machine on December 22 or 23. Thereafter, Vrgora installed it and finished the project.

On May 2, 1978, some seven months after the scheduled date of completion, as amended, LAUSD officially accepted physical completion of the construction and in September 1979, upon completion of a review, assessed and withheld from payment, $20,700 as liquidated damages.

Sun provided the impetus for this action by filing suit against Vrgora in the municipal court for moneys owed as a result of price increases on the machine between the date of first quotation and delivery. Vrgora removed the case to superior court by filing a cross-complaint for declaratory relief and breach of contract. Thereafter, having completed the claims procedures pursuant to Government Code section 910 et seq., Vrgora amended his cross-complaint to include LAUSD, seeking, among other things, the amount of liquidated damages withheld by the latter.

Vrgora and Sun reached an out-of-court settlement and the remaining issues arising out of Vrgora's cross-complaint against LAUSD were tried and submitted to the court.

On May 20, 1982, the court issued its intended decision in favor of LAUSD. Specifically, the court concluded that "... the liquidated damages provision in the contract [was] valid under the circumstances of [the] case, ... considering the nature of the contract, the work contemplated, and the intended purpose of the construction." ¹ Judgment in accord with the above stated intention was entered on August 3, 1982. Vrgora's motion to vacate the judgment was heard and denied on September 28, 1982. On October 12, 1982, Vrgora filed his notice of appeal.

DISCUSSION

"A judgment ... of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown." (6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 235, p. 4225; emphasis in original; Denham v. Superior Court (1970) 2 Cal.3d 557, 564, 86 Cal.Rptr. 65, 468 P.2d 193.) "The presumption being in favor of the judgment ..., the court must consider the evidence in a light most favorable to the prevailing party, giving him the benefit of every reasonable inference, and resolving conflicts in support of the judgment." (6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 245, p. 4236; emphasis in original.)

With the foregoing fundaments in mind, we examine appellant Vrgora's contentions of error.

I

In essence, Vrgora first argues that no justification for the liquidated damages assessment exists because the delay resulting in same is attributable to LAUSD's failure to forewarn him of anticipated difficulties in obtaining approval of the vehicle performance testing machine. More specifically, Vrgora suggests that prior to submitting his bid on the underlying contract, he was never placed on notice nor under a duty to discover whether or not he could anticipate problems in obtaining the appropriate test lab approval for the testing machine. Further, he asserts that the architect responsible for the project plans (including specific reference to the subject machine), not only knew that the machine was unapproved, but also knew that another machine of the same type suffered serious and lengthy approval problems.

Although it might appear easy to attribute merit to the above argument, as appellant presents it, the record belies any such contentions.

The evidence in the form of testimony and exhibits, as introduced at trial, establishes that there has never been any mystery If anything, it appears that the foregoing proviso was such that it should have aroused, at the very minimum, the suspicions of any prospective contract bidder, that by so bidding or otherwise agreeing to the contract, that party was affirmatively undertaking to ensure the subject machine's compliance with the qualifications specified by LAUSD. Thus, appellant knew or had reason to inquire as to the exact nature of his obligations at the very inception of the contract.

surrounding the fact that the purpose of the contract was to construct both an edifice housing a vehicle performance tester as well as a structure to park cars to be tested or otherwise worked on. In that same vein, a portion of the contract appropriately entitled "DIVISION 11 [p] SECTION 11D [p] VEHICLE PERFORMANCE TESTER" clearly provides under the subheading of "EQUIPMENT" that: "... The vehicle performance tester shall be the Sun Road-A-Matic Model RAM 937-1, 460 Volt, 30, as manufactured by the Sun Electric Corporation. All electrical equipment shall have UL Label or City of Los Angeles Test Laboratory Label."

In addition to the notice provided by the contract itself, the evidence overwhelmingly suggests that appellant Vrgora was reapprised of his duty to ensure laboratory approval of the machine in question, on numerous occasions, prior to and during his performance. We find particular significance with the fact that on January 24, 1977, approximately a week before Vrgora commenced his performance, that party was reinformed at a "Job Start Meeting" of the crucial importance of the machine's laboratory approval. ^{2 2} Equally significant is evidence that LAUSD took it upon itself on February 2, 1977, to contact the machine's manufacturer, Sun, informing the latter that its product must be laboratory approved because, as witness Moore testified, "... we wanted to be doubly sure that it would happen. And because quite frankly, it didn't seem to register with the general contractor." The record also evidences that appellant was further advised of his obligation by letter on February 10, 1977, and again on February 24, 1977.

The second prong of appellant's initial argument is that at the time of the bidding, LAUSD knew or had reason to know, by and through its employee, architect Moore, that the machine had not been test lab approved, and that a similar machine had been approved only after serious and lengthy problems. Contrary to this charge is the testimony of architect Moore. During cross-examination, Mr. Moore was asked if he had encountered any difficulty in getting approval of a similar machine at North Valley. Admitting that problems were encountered, he was then asked: "So that you knew at least on this occasion because of your experience at North Valley that there was a problem getting City Test Lab approval for the particular model; didn't you?" Mr. Moore responded by stating:

"The two things were running almost concurrently. The one at North Valley had been...