Opinion
B160793.
7-15-2003
BERNARDS BROS., INC., Plaintiff and Appellant, v. DiDONNAS MASONRY, INC., et al., Defendants and Respondents.
Ted R. Gropman for Plaintiff and Appellant. Maher & Maher and Cynthia R. Maher for Defendants and Respondents.
Bernards Bros. Inc. (Bernards), a general contractor, sued DiDonnas Masonry, Inc. (DMI), a subcontractor, and its surety, International Business and Mercantile Reassurance Company, in an action to recover damages caused by the subcontractors refusal to perform certain concrete masonry work according to a bid submitted by DMI to Bernards. The theory of liability urged by Bernards was promissory estoppel.
The trial court found no reasonable reliance by Bernards on DMIs bid and granted summary judgment in favor of DMI. The trial court also found that DMI never started the project and therefore could not be held liable for abandonment or failure to complete the project, and granted summary judgment in favor of the surety on Bernards claim for recovery on the bond.
We reverse.
FACTUAL AND PROCEDRUAL BACKGROUND
The Evidence
The moving papers establish the following without material dispute: In April 2000, DMI submitted a written bid to furnish materials and perform labor in connection with the masonry work and brick veneer portions of a public works project at UCLA involving the Environmental Services Facility (UCLA project) on which Bernards was bidding as the prime contractor. On bid day, April 25, 2000, DMI submitted a proposal to Bernards for the masonry work, as did two other subcontractors, R&R Masonry, Inc. (R&R) and J.B. McGaillard & Sons, Inc. (McGaillard) At the time, DMI was already working as a subcontractor for Bernards on another project in Riverside, California (Riverside project).
DMIs bid proposal stated that it was for "masonry block, mortar, grout and rebar only," and identified masonry building levels 1 and 2, "gray smooth CMU" (concrete masonry units). The proposal specifically identified 14 "price exclusions": flashing and paper backing for the brick veneer, drilling and epoxy of floor dowels, bond, footings, lumber for shoring, bolts, hooks, expansion joints "and/or any other hardware of any kind regardless if mentioned in masonry specification section," trash dumpster for job refuse, shop drawings, waterproofing, sandblasting of any kind, dry packing of beams, and "any other material not mentioned in bid proposal regardless if in masonry specification section." The proposal stated that "all material is guaranteed to be as specified, and the above work to be performed in accordance with the drawings and specifications submitted for above work." The proposal also stated: "This proposal may be withdrawn by us if not accepted within 60 days from 4/25/00."
DMIs bid proposal was for the total amount of $ 296,814. This bid was 31.5 percent lower than the next closest bid of $ 433,210 submitted by R&R, which contained 33 exclusions. McGaillards bid was for $ 439,000, and contained 26 exclusions.
According to the declaration of Jeffrey Bernards, vice president of Bernards, "such discrepancies and spreads are not unusual, particularly where a smaller subcontractor with lower home office and administrative expenses, can perform the work for a lesser price." He also stated that "the spread between [DMIs] bid and that of the second-low bidder did not raise any flags concerning the correctness of the bid," and that Bernards "relied upon and included" DMIs bid in Bernards prime contract bid.
After being awarded the prime contract for the UCLA project in the amount of $ 6,949,000, Bernards prepared and sent a written subcontract to DMI, dated June 22, 2000, in the amount of DMIs bid. Attachment B to the subcontract included only three exclusions: "(a) footings; [P] (b) drilling and epoxy of floor dowels; and [P] (c) lumber for shoring." The subcontract also stated under "Section 2 — Scope" that the subcontractor would "perform the work necessary or incidental to complete Concrete Masonry work for the project in strict accordance with the Contract Documents and as more particularly, though not exclusively, specified in: Specification Sections: 04200 Concrete Masonry; 04210 Veneer Masonry." (Bold emphasis deleted.)
More than two months later, on September 5, 2000, DMI sent a fax to Bernards stating that the subcontract did not reflect "any" of DMIs exclusions, "particularly paper backing for brick veneer, flashings, lumber for shoring," and requested that Bernards either amend the subcontract or provide a new one. In response, on September 8, 2000, Bernards sent subcontract change order No. 1, adding exclusions for "(d) paper backing for brick veneer; and [P] (e) flashings." Around this time, DMI had numerous conversations with Bernards requesting payment on the Riverside project, which was not forthcoming. According to Bernards, payments were withheld because of DMIs performance problems, including DMIs "refusal or inability to provide sufficient manpower to the project to complete its work."
More than three months after receiving the change order, on December 27, 2000, DMI notified Bernards in writing that "due to personnel changes we will be unable to adequately man the [UCLA project] in a timely manner. Therefore, [DMI] has no choice but to hereby release its interest in performing this project," and DMI returned the unexecuted subcontract.
The Lawsuit
On February 16, 2001, Bernards sued DMI for promissory estoppel, seeking to recover $ 128,186 plus interest, the amount incurred in hiring R&R as a replacement for DMI, and for breach of contract. Bernards also sued the surety for "recovery on the license bond," issued to DMI, pursuant to Business and Professions Code section 7107 (abandonment without legal excuse of a construction project) and section 7113 (failure by a licensed contractor to complete a construction project or operation for the price stated).
All statutory references are to Business and Professions Code unless otherwise indicated.
DMI submitted no evidence to suggest that its bid excluded the so-called "hi-stress" masonry blocks called for in the specifications other than the declaration of DiDonna stating so. DiDonna does not even state
The Summary Judgment Motion
DMI and the surety brought a motion for summary judgment, or in the alternative, for summary adjudication on the grounds that (1) as a matter of law, Bernards did not reasonably rely on DMIs bid proposal because the proposal contained numerous exclusions, (2) no contract was ever formed between Bernards and DMI because Bernards did not accept the exclusions in DMIs proposal, and (3) Bernards could not recover on the bond because it never accepted DMIs bid proposal and DMI never commenced work on the project. In support of the motion, DMI submitted the declarations of Michael DiDonna, an officer of DMI, and its counsel. In opposing the motion, Bernards submitted the declaration of Jeffrey Bernards, and also submitted evidentiary objections to certain paragraphs of DiDonnas declaration and the declaration of DMIs counsel. Bernards then dismissed its breach of contract claim.
Following oral argument on the motion, the trial court summarily overruled Bernards evidentiary objections and granted summary judgment. With respect to Bernards promissory estoppel claim, the court found as follows: "[Bernards] could not have reasonably relied on [DMIs] bid in light of [DMIs] numerous and substantive exclusions. Although [Bernards] incorporated some of the exclusions in the original and revised contracts, several substantive exclusions were not addressed, including the type of masonry material to be used. Having recognized some exclusions and not others, [Bernards] was aware that [DMIs] bid was conditioned on the exclusions. Since [DMIs] bid differed materially from [Bernards] specifications, [Bernards] reliance on the bid was not reasonable as a matter of law." With respect to Bernards claim against the surety, the court found that DMI "never started the project and therefore cannot be held liable for abandonment or failure to complete as required by Business and Professions Code sections 7107 and 7113 for [Bernards] to recover on the bond." Judgment in favor of DMI and the surety was entered accordingly. This appeal was timely filed.
DISCUSSION
Standard of Review
On appeal from a summary judgment we undertake a de novo review of the proceedings below, and independently examine the record to determine whether triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767; Kids Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878.) The Supreme Court has described our duty as follows: "In ruling on the motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom ([Code Civ. Proc.,] § 437c, subd. (c)), and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar ).) "All doubts as to whether there are any triable issues of fact are to be resolved in favor of the party opposing summary judgment." (Ingham v. Luxor Cab Co. (2001) 93 Cal.App.4th 1045, 1049.) We review the trial courts ruling, not its rationale; thus, we are not bound by the trial courts stated reasons for granting summary judgment. (Kids Universe, at p. 878.)
We apply the rules regarding summary judgment described by the Supreme Court in Aguilar: "From commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a courts action in his favor bears the burden of persuasion thereon. [Citation.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. . . . [P] The party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]" (Aguilar, supra, 25 Cal.4th at pp. 850-851, fns. omitted; accord, Kids Universe v. In2Labs, supra, 95 Cal.App.4th at pp. 878-880.)
Aguilar explained, "in moving for summary judgment, a defendant . . . has met his burden of showing that a cause of action has no merit if he has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere allegations or denials of his pleadings to show that a triable issue of material fact exists but, instead, must set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto." (Aguilar, supra, 25 Cal.4th at p. 849; Code Civ. Proc., § 437c, subd. (o)(2).)
The Supreme Court further explained: "Aguilar also claims that the court may not weigh the plaintiffs evidence or inferences against the defendants as though it were sitting as the trier of fact. We agree here as well. The court may not grant[] the defendants motion for summary judgment based on inferences . . ., if contradicted by other inferences or evidence, which raise a triable issue as to any material fact. (Code Civ. Proc., § 437c, subd. (c).) Neither, apparently, may the court grant their motion based on any evidence from which such inferences are drawn, if so contradicted. That means that, if the court concludes that the plaintiffs evidence or inferences raise a triable issue of material fact, it must conclude its consideration and deny the defendants motion." (Aguilar , supra, 25 Cal.4th at p. 856, italics added.)
"Therefore, if a plaintiff in response to a defendants summary judgment request demonstrates the existence of a triable dispute with specific facts (§ 437c, subd. (o)(2)) by making a prima facie showing of the merit of the complaint, the motion must be denied. There is to be no weighing of evidence. [Citations.]" (Kids Universe v. In2Labs , supra, 95 Cal.App.4th at p. 880.) Moreover, equally conflicting evidence requires denial of a summary judgment motion and a trial to resolve the dispute. (Ibid.; see also Lugtu v. California Highway Patrol (2001) 26 Cal.4th 703, 724; Livingston v. Marie Callenders, Inc. (1999) 72 Cal.App.4th 830, 839.)
Promissory Estoppel
Bernards contends that the trial court erred in granting judgment in favor of DMI on Bernards first cause of action for promissory estoppel. Specifically, Bernards contends that the court erred in finding that as a matter of law Bernards did not reasonably rely on DMIs bid proposal.
Our Supreme Court discussed promissory estoppel in the context of a subcontractors bid in Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, 333 P.2d 757. Quoting section 90 of the Restatement of Contracts, the Drennan court stated: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. This rule applies in this state." (Drennan, at p. 413.)
In Drennan, a subcontractor made a telephonic bid "according to the plans and specifications" for paving work on a school project that was included in the general contractors bid for the project. (Drennan v. Star Paving Co., supra, 51 Cal.2d at p. 412.) The following day, the subcontractor informed the general contractor that a mistake had been made in the bid. (Ibid.) The court held that where there was no reason to know that the subcontractor had made a mistake in submitting its bid, the general contractor reasonably relied on the bid. (Id. at p. 416.) This was particularly true where there was usually a variance of 160 percent between the highest and lowest bids. (Ibid.) Therefore, the Drennan court concluded that the general contractors reliance on the subcontractors bid made the bid offer irrevocable. (Id . at p. 414.) But the court noted that had the bid "expressly stated or clearly implied that it was revocable at any time before acceptance [the court] would treat it accordingly." (Id . at p. 413.)
Following Drennan, the court in Norcross v. Winters (1962) 209 Cal. App. 2d 207, 25 Cal. Rptr. 821 (cited by both parties) found that a general contractor reasonably relied on a subcontractors telephonic bid to perform, furnish and install the chalk and tack boards on a school project where the bid was clear and definite and there were no exclusions. The Norcross court made a number of findings, stating "while the use of a subcontractors bid by the general contractor does not ipso facto create a contract between the general contractor and the subcontractor (i.e., does not constitute an implied acceptance of the subcontractors offer), it does, as illustrated by [Drennan] make the subcontractors bid (offer) irrevocable." (Norcross, at p. 217.) The subcontractors bid was silent on the issue of revocation and the subcontractor argued that the parties never intended a contract to be formed until such time as a written document was signed by both parties. (Id. at p. 221.) The Norcross court rejected this argument, stating that once the subcontractors offer became irrevocable on the basis of promissory estoppel, the subcontractor was in no position to refuse to perform according to his bid when the general contractor manifested assent to accept the offer. (Ibid.)
1. Acceptance
Here, the parties dispute whether Bernards ever accepted DMIs bid proposal. The trial court did not address this threshold issue in determining whether the doctrine of promissory estoppel applied, although the parties argued their respective positions below.
It is undisputed that DMIs bid proposal stated that "this proposal may be withdrawn by us if not accepted within 60 days from 4/25/00." The parties dispute the timeliness of the written subcontract sent to DMI after Bernards was awarded the prime contract on the UCLA project. The declaration by DMIs officer stated that DMI did not receive the subcontract until on or about June 26, 2000. The declaration by Bernards vice president stated that the subcontract, which is dated June 22, 2000, was sent on that date, which is prior to the expiration of 60 days. There is no evidence that DMI ever complained that the subcontract was untimely. An inference can reasonably be made that the subcontract was timely sent.
But even beyond the dispute as to the timing of the subcontract, the parties also dispute whether Bernards accepted the terms of DMIs bid proposal. DMI argued below (and here on appeal) that "by failing to provide a subcontract with the exclusions contained in DMIs bid, [Bernards] failed to accept the bid. Thus, DMI had an absolute right to withdraw its bid at any time after June 24, 2000, which it did in December, 2000."
The evidence shows that the written subcontract prepared by Bernards (in addition to what appear to be numerous standard provisions not included in DMIs original bid) stated DMIs bid price, and included three of DMIs price exclusions. DMI waited more than two months before writing back to Bernards stating that the subcontract did not reflect "any" exclusions, and noting, in particular, that exclusions for paper backing, flashings and lumber for shoring were omitted. DMI asked that the subcontract be amended or a new one provided. Within three days, Bernards sent a change order to the subcontract adding two of the three exclusions mentioned by DMI in its correspondence (the lumber for shoring exclusion had already been included). DMI then waited more than three months before contacting Bernards again to withdraw from the project, giving as its reason "personnel changes" and returning the unexecuted subcontract. DMI did not say anything about the subcontract not including all of its exclusions. In its motion, DMI stated that the real reason for withdrawing was that Bernards was not paying DMI in connection with the Riverside project and DMI feared Bernards solvency.
As discussed further below, DMI presented no evidence as to whether all of the 14 price exclusions listed in its bid proposal were substantial or material or only the three exclusions mentioned in its subsequent correspondence to Bernards, which were included in the change order. In opposing the motion, Bernards relied on the declaration of its vice president, who stated that it was customary in the construction industry for bids to be accepted "by sending out a subcontract for the proposal price." Bernards did so here.
Under these circumstances, we cannot conclude as a matter of law that Bernards did not accept DMIs offer. To the contrary, we conclude that triable issues of fact existed as to whether Bernards accepted DMIs offer and on what terms.
2. Reasonable Reliance
We also conclude that a triable issue of fact existed as to whether Bernards reasonably relied on DMIs offer. In its motion for summary judgment, DMI argued that Bernards "did not reasonably rely on DMIs bid of $ 296,000.00 for all masonry work called out in the plans and specifications" because "DMIs bid contained on its face numerous significant exclusions, which upon review, put the plaintiff general contractor on notice that the difference between DMIs bid of $ 296,000.00 and the other bids was explained by the exclusions."
To support its motion, DMI relied primarily on the declaration of its "officer" Michael DiDonna, who stated that he had worked as a masonry contractor since 1991 and routinely performed his own estimating and preparation of bids for various contractors. DiDonnas declaration attached DMIs bid proposal, which, DiDonna stated, "expressly called for standard Concrete Masonry Units (Block), not hi-stress block as set forth in the specifications." Bernards objected to this statement on grounds of "best evidence rule; improper conclusion," which the trial court overruled. DiDonna also stated that the R&R bid proposal, on which Bernards relied in replacing DMI, included items excluded from DMIs bid such as "hi-stress block, material and labor." DiDonna further stated that "if we were going to include all of the items that we had excluded from our proposal, our bid price would have been increased to $ 460,000.00." Bernards also objected to this statement on the grounds of "lack of foundation; improper conclusion," which the court overruled
During oral argument on the motion, both DMIs counsel and the trial court focused on the issue of concrete masonry blocks versus hi-stress blocks, with the court finding that DMIs bid proposal was qualified on standard block. This is not so clear to us from our own independent review of the proposal. DMIs bid proposal says only "CMU," which we interpret to mean concrete masonry units, and "brick veneer." But R&Rs proposal, which DMI contends includes "hi-stress block, material and labor," likewise only states "Section 04200 — Concrete Masonry" and "Section 04210 — Veneer Masonry." In neither proposal is there any mention of "hi-stress" or any other kind of masonry material. We discern no significant difference in the terminology "concrete masonry" as used by DMI and R&R in each of their bids. The only apparent difference in the proposals is that R&R specifically identified the specifications sections of the governing project documents. But, as Bernards points out, DMIs bid proposal also states, "the above work to be performed in accordance with the drawings and specifications submitted for above work." whether he prepared the bid himself. In any event, DMI submitted no evidence to suggest that Bernards should have been aware that such blocks were being excluded in its bid when the specifications called for such material. "Hi-stress" masonry blocks are not listed as one of the 14 specific exclusions on the bid proposal. Nor is there any evidence to suggest that DMI routinely excluded such material or that it is commonly known in the construction industry that preparing a bid in the manner that DMI did so would put a general contractor on notice of such an exclusion, particularly where the project specifications called for such material. Furthermore, DMI does not identify any price amounts for its exclusions. Thus, there is no evidence to suggest that the difference in price between the types of masonry materials would account for the differential in the overall bid prices among the subcontractors. There is also no evidence to suggest whether the other exclusions identified by DMI are either routinely excluded by it or other subcontractors, or whether they are even inconsequential exclusions.
We note that neither party describes these specifications.
The trial court found that reliance by Bernards was not reasonable based on the "numerous and substantive exclusions." But there was no evidence presented on whether the exclusions were in fact "substantive."
We find that DMI did not meet its "initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact" regarding reasonable reliance such that the burden would shift to Bernards. (Aguilar, supra, 25 Cal.4th at p. 850.) Even assuming that DMI had done so, we find that Bernards met its burden of establishing the existence of a triable issue of fact.
In opposing the motion, Bernards relied primarily on the declaration of its vice president Jeffrey Bernards, a position he has held for 23 years. Mr. Bernards stated that in connection with the UCLA project, his company received bids for more than 30 trades of work and received multiple bids for each trade. He stated that there was nothing unusual about a bid containing exclusions and qualifications, and that each of the two bids for the masonry work, besides DMIs bid, also contained numerous exclusions. Mr. Bernards also stated that DMIs bid was only 31.5 percent lower than the second-low bidder (R&R), and that "such discrepancies and spreads are not unusual, particularly where a smaller subcontractor with lower home office and administrative expenses can perform the work for a lesser price." The inference, of course, is that DMI is such an operation and DMI never disputes this inference. Mr. Bernards also stated "the spread between [DMs] bid and that of the second-low bidder did not raise any flags concerning the correctness of the bid." Again, because DMI was already working for Bernards at the time on the Riverside project, the inference can be made that there was nothing unusual about DMI submitting a low bid.
We are bound to review the evidence and inferences in the light most favorable to the opposing party. (Aguilar, supra, 25 Cal.4th at p. 843.) "All doubts as to whether there are any triable issues of fact are to be resolved in favor of the party opposing summary judgment." (Ingham v. Luxor Cab Co., supra, 93 Cal.App.4th at p. 1049.) Accordingly, we find that triable issues of material fact exist as to whether Bernards reasonably relied on DMIs bid proposal and that the trial court erred in concluding otherwise.
Recovery on Bond
Bernards also argues that the trial court erred in granting judgment in favor of the surety on Bernards claim for "recovery on the license bond."
Bernards brought its claim against the surety under sections 7107 and 7113. Section 7107 provides: "Abandonment without legal excuse of any construction project or operation engaged in or undertaken by the licensee as a contractor constitutes a cause for disciplinary action." Section 7113 provides: "Failure in a material respect on the part of a licensee to complete any construction project or operation for the price stated in the contract for such construction project or operation or in any modification of such contract constitutes a cause for disciplinary action."
DMI argued that these sections did not apply because no subcontract was ever formed and because DMI never commenced work on the UCLA project. The trial court found that sections 7107 and 7113 did not apply because DMI "never started the project." Bernards contends that the trial court erred in so finding. We agree that such a determination could not be made as a matter of law based on the evidence presented here.
DMI relied on the declaration of its "officer" DiDonna, who stated "at no time while DMIs bid proposal was pending with Bernards did I ever visit the UCLA site or perform any services in connection with the masonry work on the UCLA project." But, as Bernards points out, the declaration is silent as to whether any other DMI personnel visited the site or performed any services. Moreover, the fax dated September 5, 2000 with reference to this project from Cheryl DiDonna of DMI to Bernards states "I have received nothing from Pacific Clay for brick submittals. Called again today to get this expedited." Thus, DMIs own evidence suggests that DMI, at the very least, was trying to obtain brick submittals. Thus, we conclude that DMI did not meet its burden of persuasion that there is no triable issue of material fact on whether DMI commenced work on the UCLA project.
The declaration submitted by Bernards in opposition to the motion states "Between June 22, 2000, when Bernards Bros. sent the Subcontract to [DMI], and December 27, 2000, [DMI] commenced its administrative work on the UCLA project by securing and delivering submittals, brick samples, block samples, etc." Although no objection was made, we note this statement lacks foundation.
Moreover, as Bernards points out, even if DMI had not commenced work on the UCLA project, sections 7107 and 7113 could still apply if a subcontract was formed between the parties. In Bailey-Sperber, Inc. v. Yosemite Ins. Co. (1976) 64 Cal. App. 3d 725, 729, 134 Cal. Rptr. 740, the court stated: "(a) . . . If we understand it, [the surety] contends that there is no abandonment of a contract unless the contractor has begun operations thereunder and then ceased operations. The contention is without merit. If a party enters into a contract and then never shows up to even begin performance he has abandoned the contract. [P] (b) By the same token, a contractor who never begins performance of his contract has failed in a material respect to complete his contract." As stated previously, whether the parties entered into a subcontract was a disputed issue of fact.
Accordingly, the trial court erred in granting judgment against Bernards on its third cause of action for recovery on the bond.
DISPOSITION
The summary judgment is reversed. Appellant to recover costs on appeal.
We concur: BOREN, P.J., and ASHMANN-GERST, J.