Opinion
B228418
01-31-2012
VICTOR CEPORIUS et al., Plaintiffs and Respondents, v. GUY MATURO et al., Defendants and Appellants.
Turner Aubert & Friedman, Steven Morris for Defendants and Appellants. Speciale & Burton, Steven E. Burton; Esner, Chang & Boyer, Stuart B. Esner, Andrew N. Chang for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC415335)
APPEAL from a judgment of the Superior Court of Los Angeles County. Kenneth R. Freeman, Judge. Affirmed.
Turner Aubert & Friedman, Steven Morris for Defendants and Appellants.
Speciale & Burton, Steven E. Burton; Esner, Chang & Boyer, Stuart B. Esner, Andrew N. Chang for Plaintiffs and Respondents.
Appellants, who are general contractors and their bonding companies, contend that a referee wrongly awarded over $100,000 to the respondent homeowners for a feature that (according to appellants) was not required by contract, not important, and not possible to install. They also argue that the referee improperly found they had abandoned the project, and that the referee's behavior mirrored prior behavior for which he had been publicly admonished, an admonishment that was not disclosed to the parties in this case.
We find no issues that require reversal. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Project
Appellants and defendants Guy Maturo and Aharon Poringer are California licensed general contractors who operate under the business name Matcon Design/Build (Matcon). Matcon was engaged by plaintiffs and respondents Victor and Marnie Ceporius to work on their recently purchased house in the hills of Arcadia.
For ease of reference, the name "Matcon" is used generically in this opinion and may refer to Maturo, Poringer, and/or appellants collectively. The Ceporiuses, either individually or collectively, are generally referred to as "plaintiffs."
Matcon's initial scope of work was the preparation of plans and specifications for remodel of the house. These plans and specifications were prepared pursuant to a "design agreement" executed in November 2006. Matcon was paid $5,800 by plaintiffs for the job.
Following completion of the design agreement, the parties entered into a "pool contract" in June 2007, which called for remodeling of the existing swimming pool; installation of new plumbing; and construction of an upper and lower deck, a spa, side planters, a fire pit, and a fountain. The contract price for this work was $119,875.
Finally, the parties entered into a "remodel contract" in March 2008. The scope of work was extensive, and included additions to the master bathroom, master bedroom and kitchen; remodel of various rooms; exterior demolition; preparation of new foundations; roofing of the entire house; and stucco of the entire home, "including sand-blast of existing surfaces." The original cost of the remodel contract was $304,848.
Preliminary work began as early as April 2007, though the bulk of the work on the house was done after a building permit was issued by the City of Arcadia in June 2008. Numerous change orders were issued by Matcon and accepted by plaintiffs, which had the effect of greatly expanding the scope of work on the project. Approximately two dozen change orders were approved for items relating to the pool contract, bringing the total adjusted contract price up from $119,875 to $248,560. In addition, approximately 40 change orders were accepted for items relating to the remodel contract, bringing its total adjusted price to $515,380. Taking all of these change orders into account, the total sum charged to plaintiffs by Matcon was approximately $763,940.
Work on both contracts proceeded to a point approaching completion, when in April 2009, plaintiffs had one of Matcon's vendors construct a concrete driveway at the front of the residence. Around this time, Matcon stopped work on the project and presented plaintiffs with unpaid invoices totaling approximately $60,000.
Soon afterward, plaintiffs requested a "walk-through" of the project to address a "punch list" they had prepared of approximately 25 purported corrections and deficiencies. Matters were not resolved, and the meeting ended with plaintiffs asking Matcon to respond to the punch list in writing.
A week later, Matcon responded with a letter from its attorney titled "Notice of Default." The letter disputed most of the items on the punch list, though Matcon did acknowledge the validity of some items. Matcon's letter further stated: "The project is substantially completed. The current bills total $15,776. You shall have 10 days to pay these new invoices. You are past due on payment of $97,493.70 less the holdback set forth below in the amount of $3,105. . . . [^] Please accept this letter as formal demand that you comply with the terms of the contract forthwith, that you tender $94,388.70 to Matcon immediately and $15,776 within 10 days. In exchange, Matcon will complete [certain] punch list items . . . ."
Matcon did not receive payment as demanded in its letter and it did not recommence work on the project. In May 2009, a little more than two weeks after Matcon's Notice of Default letter was sent, Matcon's attorney sent a "Notice of Termination" to plaintiffs' attorney. The notice stated that the pool and remodel contracts were terminated and that "[d]emand for payment is hereby made in the amount of $110,164.70. I will provide your clients seven (7) days to pay the balance before enforcing our remedies under the contracts."
Instead of paying this amount, plaintiffs filed suit against Maturo, Poringer, and certain bonding companies (including appellants American Contractors Indemnity Company and Old Republic Surety Company) in June 2009. The complaint stated claims for breach of contract, negligence, breach of express warranty, and breach of implied warranty, as well as an "action against license bonds" pertaining to the bonding companies. Maturo and Poringer promptly cross-complained for unpaid amounts owing on the pool contract and remodel contract.
Appellants' December 23, 2011 request to augment the record is granted.
The Trial
The case was originally assigned to Judge Kenneth R. Freeman and set for jury trial. Apparently due in part to overcrowded court calendars, the case was transferred among several departments without going to trial. Finally, the parties entered into a stipulation pursuant to Code of Civil Procedure section 638, agreeing to have Judge Robert Letteau (Ret.) serve as referee and decide "all issues in dispute."
The matter was therefore tried before Judge Letteau, proceeding substantively the same as it would with a sitting judge in a bench trial. The trial was conducted over four days, with seven witnesses testifying.
Code of Civil Procedure section 644, subdivision (a) provides: "In the case of a consensual general reference pursuant to Section 638, the decision of the referee or commissioner upon the whole issue must stand as the decision of the court, and upon filing of the statement of decision with the clerk of the court, judgment may be entered thereon in the same manner as if the action had been tried by the court."
A primary issue at trial was the absence of "weep screed" in the stucco work performed by Matcon. "Weep screed" is a long, preformed piece of sheet metal that is installed horizontally at the bottom sill of a stucco structure, above the top level of concrete foundation. Water can permeate stucco, soaking through to the paper backing located behind the stucco. Weep screed is designed to let that water exit the interior of the stucco wall through holes running along the length of the weep screed. If weep screed is not installed to provide an exit point for the water, the structure may suffer water intrusion problems.
The house was built in approximately 1960 and, although it had a mostly stucco exterior, it did not have weep screed. Pursuant to the remodel contract and change orders, Matcon installed new stucco around most of the house. Mike Brown, one of plaintiffs' designated construction experts, testified that all but 20 percent of the original stucco was replaced by Matcon. Victor Ceporius testified that he discovered Matcon had not installed any weep screed for the new stucco in June 2009 (after the notice of termination), when he was so informed by experts who reviewed Matcon's work.
At trial, Matcon argued that weep screed was not a required component of any of the relevant contracts. Matcon presented testimony from John Zurick, senior building inspector for the City of Arcadia, who stated that the stucco work was approved because the project was not new construction or a "rebuild," and "so weep screed would not be required. You could match existing nonconforming construction." Maturo testified that, given the already existing concrete and grade elevations, it would have been functionally impossible to install weep screed that met with current code requirements.
Arcadia has required weep screed on new construction and rebuilds involving stucco since the early 1970's.
Plaintiffs contended that the remodel contract did provide for the installation of weep screed since the contract by its terms included the plans approved by the City of Arcadia, and those plans included a "typical detail" showing installation of weep screed. Plaintiffs' expert, Brown, testified that the Uniform Building Code requires weep screed, and that it was "crucial" to redo the stucco work to install weep screed. According to Brown, the total cost of all the work required to do this would be $106,216. Much of this cost would be comprised of demolition of concrete abutting the wall, regrading to allow clearance for the weep screed, and reinstallation of the concrete. Brown testified that it would have been much easier and less expensive to install the weep screed if the issue had been addressed earlier.
In addition to the weep screed issue, plaintiffs claimed that Matcon failed in numerous other respects. For example, plaintiffs argued that Matcon failed to apply for and obtain a permit for a cantilevered deck with a handrail. For its part, Matcon contended that plaintiffs owed $95,620 for completed and uncompensated work, a charge that was not seriously contested by plaintiffs.
After issuing a tentative decision and a revised tentative decision, and receiving objections from Matcon, the referee issued his statement of decision in August 2010. The referee held that plaintiffs had proven all of their causes of action by a preponderance of the evidence, and awarded them "total gross damages" of $165,014.49. Deducting a "credit" in the amount of $95,620 due Matcon, the total net amount due plaintiffs was $69,349.49.
It appears there was a mathematical error of $45. Neither side ever raised the error as an issue.
By far, the largest component of the gross damages number was for the missing weep screed. The statement of decision stated, in pertinent part: "The Referee, specifically, was faced with the task of weighing the proportionately huge expense entailed by the post-construction installation of a weep screed against its benefit to and need by the . . . Property. After due consideration was given to these and all other influencing and relevant circumstances, which included generally, the several construction errors made by Defendants (and the inferences taken thereby) and the large number of contractor-authored 'change-orders,' it is determined that Maturo and Poringer must bear and be responsible for this contract-mandated cost. . . . [¶] . . . [¶] . . . [T]here can be no question that Defendants were contractually obligated to provide this desired, albeit not City-required, protection, just as there can be no doubt that its absence is a breach of Defendants' own contract, causing actual damage to Plaintiffs. The only real question is the damages sustained thereby. The Referee under these circumstances has no choice but to find that the $106,216.49 cost figure testified to by Plaintiffs' construction expert, Mike Brown[,] is the amount necessary to provide same to the property. . . . [¶] . . . [Weep screed] is something required for all new residential construction by the City of Arcadia, given its importance as a mechanism to allow moisture drainage at the bottom of framed walls. The Plaintiffs paid a large amount of money to Defendants for a weep screed among many other items and they are entitled either to have it or be fully compensated for its absence, which was caused only by the neglect of Defendants in failing to install it as shown on the building plans and presumptively as agreed. Moreover, this Referee finds that the absence of a weep screed has diminished the value of Plaintiffs' . . . Property by approximately the same amount as its post-construction installation cost of $106,216.49." (Original bold and italics.)
In September 2010, the superior court entered judgment awarding plaintiffs $69,349.49 against Maturo and Poringer, and $12,500 each against their bonding companies American Contractors Indemnity Company and Old Republic Surety Company. These four defendants now appeal from the judgment.
DISCUSSION
The main focus of the appeal is the referee's award of damages for the weep screed. Matcon contends the award was improper because the contracts did not call for weep screed, the referee applied the wrong standard of damages, and the referee should have found that installation of weep screed was impossible by operation of law. Matcon also argues that the finding that Matcon abandoned the project was erroneous. Finally, it asserts that the decision was motivated by prejudgment, bias, and embroilment, as evidenced by the referee Judge Letteau's prior admonishment by the Commission on Judicial Performance.
As is the case with any appeal, we review these issues guided by the fundamental tenet that the judgment is presumed to be correct. (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 267.) "We will indulge all intendments and presumptions to support the judgment on matters as to which the record is silent and prejudicial error must be affirmatively shown." (Ibid.)
I. Weep Screed
A. It was not error to find Matcon was contractually required to install weep screed.
Matcon argues that the relevant contracts did not contain a requirement to install weep screed. Matcon points out that the term "weep screed" is not found in the text of the contracts or in any change orders, and argues that requiring installation of weep screed would be contrary to several exclusions in the agreement.
We generally exercise our independent judgment to determine the meaning of a contract's terms. (Aew Haven Unified School Dist. v. Taco Bell Corp. (1994) 24 Cal.App.4th 1473, 1483.) To the extent the contract is clear and explicit, the language of the contract governs its interpretation. (City of El Cajon v. El Cajon Police Officers' Assn. (1996) 49 Cal.App.4th 64, 71.) Extrinsic evidence may be considered to explain ambiguous language, so long as the evidence is relevant to prove a meaning to which the language is reasonably susceptible. (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266.) Our review of such extrinsic evidence is also de novo, unless it turns on resolution of credibility issues, in which case we defer to the trial court under a substantial evidence standard of review. (Ibid.)
Based on the relevant contractual terms, we find that installation of weep screed was required. As noted by the referee, the remodel contract called for Matcon to "[c]onstruct room additions as per City of Arcadia approved plans . . . ." Since the plans were incorporated into the contract, they constituted an effective part of the contract. (See Oberg v. Los Angeles (1955) 132 Cal.App.2d 151, 159.) The plans contained a "typical detail" illustrating construction of exterior footing and a shear wall, and this detail drawing included installation of weep screed. The fact that this reference to weep screed was not especially prominent is unimportant. Installation of weep screed was a part of the plans approved by the City of Arcadia and therefore was a part of the work that Matcon undertook to perform.
Maturo acknowledged in testimony that the requirement for weep screed was included in the plans.
None of the exclusions highlighted by Matcon actually excluded the installation of weep screed. These exclusions—"[r]emoval or import of soils in excess of one low boy dumpster"; "[r]emoval of soils under house in order to obtain 18 inches (or code-required height) of clear space between bottom of joists and soil"; and "[r]emoval of filled ground or rock or any other materials not removable by ordinary hand tools (unless heavy equipment is specified in Scope of Work section above)"—clearly did not specifically relate to the installation of weep screed, unlike the typical detail found in the plans. Rather, they simply related to conditions that could affect the installation of weep screed, such as excavation and demolition. If these exclusions were at all contrary to the typical detail, the typical detail, being more specific, would control. (See Code Civ. Proc., § 1859 ["[W]hen a general and [a] particular provision are inconsistent, the latter is paramount to the former"].)
Furthermore, to the extent that these exclusions would be at variance with a requirement of installing weep screed, other provisions in the contract pointed to the opposite conclusion. For example, the remodel contract called for "[e]xterior demolition of necessary elements to perform the work as required by the approved plans"; "[e]xport of up to 1 low boy dumpster of residual soils . . ."; "[f]inish exterior grading around foundation work to facilitate the design intent . . ."; and "[f]raming of approved additions and affected remodel areas as depicted in approved plans . . . ." Presumably, all of this work would be conducive to and/or relate to the installation of weep screed.
In addition to the language of the remodel contract, extrinsic evidence also supported the conclusion that weep screed was required. Maturo testified that he told Victor Ceporius he was not going to install a weep screed "right after the inspector came out to inspect the lath. . . . I told him that based on the existing elevations that were established around that house that proper installation of the weep screed in the required clearances from finished surfaces and/or dirt from the weep screed could not be obtained." Maturo did not attempt to explain why, absent a pre-existing requirement to install weep screed, he needed to tell Ceporius that weep screed would not be installed.
The referee's rejection of a purported oral agreement between Maturo and Ceporius to eliminate the weep screed was a matter within his sound discretion. (See Leff v. Gunter (1983) 33 Cal.3d 508, 518 [reviewing court does not judge the credibility of witnesses].)
Finally, the inspector's approval of the lath work without a weep screed does not compel a finding that weep screed was not required by contract. The inspector testified that he was not responsible for approving the plans himself. He also testified that there were references in the plans calling for weep screed. It is well established that a contractor cannot avoid liability simply by relying on an inspector's approval. (El Escorial Owners' Assn. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1358; Firemen's Ins. Co. v. Indermill (1960) 182 Cal.App.2d 339, 342.) The inspector's approval here could not take the place of a valid amendment to the contract, such as by change order. Since no amendment was obtained, the installation of weep screed remained a valid part of the contract.
B. Matcon failed to show that a different measure of damages was required.
1. Applicable standard for damages
Matcon next argues that the referee erred by relying on the testimony of plaintiffs' expert, Brown, to determine that the costs of repair to install weep screed would be $106,216.49, and then awarding this amount in damages. Matcon contends that instead of awarding repair costs, the referee should have awarded (at most) the amount the property value was diminished by the absence of weep screed. This argument has several problems, not least of them being that Matcon failed to present any evidence showing the diminution in value.
The general standard of damages in a breach of contract action against a contractor is expressed in Civil Code section 3300. (Amerson v. Christman (1968) 261 Cal.App.2d 811, 824-825.) That section states: "For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom." (Civ. Code, § 3300.)
A trial court generally has some flexibility in determining damages in a construction case, including whether to base damages on diminution in value (i.e., the difference between the actual value of the property and its value if constructed in accordance with plans and specifications) or cost of repair, though it may not award both. (Mozzetti v. City of Brisbane (1977) 67 Cal.App.3d 565, 576.) Cost of repair is the generally accepted measure when, like here, the work is done on the property of a plaintiff homeowner. (Jones v. Kvistad (1971) 19 Cal.App.3d 836, 843-844; Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 123 (Glendale Federal).)However, under appropriate circumstances, diminution in value may be awarded instead. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 561; Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 46-47.)
Matcon argues that the referee should have employed a diminution in value standard because the cost of repair greatly exceeded the diminution in value. This rule is generally applied in cases of negligence. (Mozzetti v. City of Brisbane, supra, 67 Cal.App.3d 565, 576, original italics omitted ["in a case involving damage to plaintiff's property due to defendant's negligence, the general rule is that if the cost of repairing the injury and restoring the premises to their original condition amounts to less than the diminution in value of the property, such cost is the proper measure of damages; and if the cost of restoration will exceed such diminution in value, then the diminution in value of the property is the proper measure"]; Heninger v. Dunn (1980) 101 Cal.App.3d 858; 862.) It has been rejected in cases involving breach of contract. (Jones v. Kvistad, supra, 19 Cal.App.3d at pp. 843-844 [in cases of breach of contract on plaintiff homeowner's property, "the diminution in value rule cannot be invoked and the measure of damages is not the difference between the actual value of the property and its value had it been constructed in accordance with the plans and specifications"]; Kitchel v. Acree (1963) 216 Cal.App.2d 119, 123.)
While we do not necessarily agree that the diminution in value rule should never apply in cases of contractor breach of contract (particularly when negligence is also found), the record here does not demonstrate that employing a cost of repair standard was erroneous. As the party seeking to obtain equitable relief from the diminution in value rule, the burden was on Matcon to prove that economic waste would result from cost of repair damages. (Shell v. Schmidt (1958) 164 Cal.App.2d 350, 366.) In its appellate briefs, Matcon points to no portion of the record in which it presented evidence proving the diminution of value of the property due to lack of weep screed, and our own review of the record does not reveal any such evidence. This presumably could have been a matter testified to by an appraiser or similar expert, but no expert of this sort was called. Without evidence showing that the diminution value was substantially less than the cost of repair, even if reversal were otherwise appropriate, we would be unable to reverse.
We can speculate that the diminution in value may have been less than $106,216.49, the amount awarded for cost of repair. But it is also possible that it was substantially the same or greater. In the statement of decision, the referee noted that weep screed "is something required for all new residential construction by the City of Arcadia, given its importance as a mechanism to allow moisture drainage at the bottom of framed walls." Plaintiff's construction expert, Brown, testified that it was "crucial" to install weep screed. Given these circumstances, it was not error for the referee to conclude that the amount required for cost of repair should be awarded.
In his statement of decision, the referee wrote that the absence of weep screed diminished the value of the property by approximately the same amount as the cost of repair. Although this conclusion may have been somewhat arbitrary given the absence of any expert evidence on diminution, it was consistent with the conclusion that weep screed was an important component of stucco construction designed to prevent potentially severe water damage.
2. Amount of damages
In its opening brief, Matcon contends that the referee awarded excessive damages. According to Matcon, the referee improperly included amounts required to repair areas outside the scope of construction, allowed for double-counting, and awarded other amounts that were not supported by the record, including $25,000 for damages relating to cracked concrete.
Defendants assert that this argument was waived due to Matcon's failure to move for a new trial, and we agree. "A failure to timely move for a new trial ordinarily precludes a party from complaining on appeal that the damages awarded were either excessive or inadequate, whether the case was tried by a jury or by the court. (Glendale [Federal, supra,]66 Cal.App.3d 101, 122.) The power to weigh the evidence and resolve issues of credibility is vested in the trial court, not the reviewing court. (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 919.) Thus, a party who first challenges the damage award on appeal, without a motion for a new trial, unnecessarily burdens the appellate court with issues that can and should be resolved at the trial level. (Ibid.)Consequently, if ascertainment of the amount of damages turns on the credibility of witnesses, conflicting evidence, or other factual questions, the award may not be challenged for inadequacy or excessiveness for the first time on appeal. (County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1121.)" (Jamison v. Jamison (2008) 164 Cal.App.4th 714, 719-720.)
C. Matcon did not prove impossibility.
Matcon next argues that installation of weep screed was impossible by operation of law. The relevant building code provision requires clearance of two inches from the top of the finished hardscape to the bottom of the weep screed. Matcon argues that due to existing grading and elevations, it would have been impossible to allow for this level of clearance, and therefore installation of weep screed was impossible.
Matcon bases its argument on Civil Code section 1511, subdivision 1, which states in pertinent part: "The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent which they operate: 1. When such performance or offer is prevented or delayed . . . by the operation of law . . . ." Matcon also cites to Mineral Park Land Co. v. Howard (1916) 172 Cal. 289, in which the defendant was excused from completing a contract to remove gravel because the remaining gravel was below water level and would have been too expensive to remove. The Supreme Court in that case held: "'A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.'" (Id. at p. 293.)
We find that none of the authority cited by Matcon supported a finding of impossibility in this case. This is because a condition or expense that could have reasonably been anticipated does not give rise to the defense of impossibility. (Glendale Federal, supra, 66 Cal.App.3d at p. 154; Ellison v. City of San Buenaventura (1975) 48 Cal.App.3d 952, 962.) There was no showing that any of the claimed reasons for impossibility could not have been anticipated. The building code requirement had been in effect for decades by the time Matcon began the project. Further, Maturo testified that the elevations around the stucco walls which may have affected the clearance level already existed.
"Facts which may make performance more difficult or costly than contemplated when the agreement was executed do not constitute impossibility." (Glendale Federal, supra, 66 Cal. App. 3d at p. 154.) Here, the additional cost (if any) of installing weep screed is something that should have been contemplated by Matcon. It is a matter that could have been dealt with in the parties' original contract or by change order. (See Lloyd v. Murphy (1944) 25 Cal.2d 48, 54 ["The purpose of a contract is to place the risks of performance upon the promisor, and the relation of the parties, terms of the contract, and circumstances surrounding its formation must be examined to determine whether it can be fairly inferred that the risk of the event that has supervened to cause the alleged frustration was not reasonably foreseeable. If it was foreseeable there should have been provision for it in the contract, and the absence of such a provision gives rise to the inference that the risk was assumed"].)
Moreover, the record provides support for the conclusion that installation of the weep screed would not have been impractical. Defendants' expert Brown testified that it would have been considerably less expensive to install the weep screed if the issue had been addressed earlier, since it would not have required re-demolition and re-laying of concrete. He also testified that Matcon likely could have obtained approval to install the weep screed with a shorter clearance. Installation of weep screed was a contractual term. To the extent (if any) that the work required to install weep screed was more involved than Matcon contemplated, this did not excuse Matcon from performing the work.
Accordingly, we do not reverse the referee's award of damages relating to the missing weep screed.
II. Abandonment
Matcon next argues that the referee erred by finding it abandoned the project. Whether a contractor has abandoned a project is generally a question of fact. (Snow Mountain W. & P. Co. v. Kraner (1923) 191 Cal. 312, 324; Connell v. Higgins (1915) 170 Cal. 541, 556.) Business and Professions Code section 7107 proscribes a contractor from abandoning "any construction project or operation" "without legal excuse." The scope of a "construction project or operation" is determined by the contractual agreement between the parties. (Viking Pools, Inc. v. Maloney (1989) 48 Cal.3d 602, 606.) As reflected in the statement of decision, the referee found numerous items within the scope of the parties' agreement that were not completed before Matcon stopped work on the project. It was therefore not error to decide that Matcon did not complete the construction project.
Matcon's argument that the project was substantially completed misses the point. Even if it were clear that there was substantial completion, Business and Professions Code section 7107 does not limit the scope of abandonment to work done prior to substantial completion. (See Viking Pools, Inc. v. Maloney, supra, 48 Cal.3d at pp. 606-609.)
The referee's decision that Matcon was not excused from stopping work on the project also does not compel reversal. In the statement of decision, the referee noted that due to extensive change orders, the cost of the pool and remodel contracts increased by more than $339,000. In total, plaintiffs were charged approximately $763,934 by Matcon, of which they had paid in excess of $689,050. At the time Matcon stopped work on the project, it presented invoices totaling approximately $60,000 for work that had not been previously invoiced. At the subsequent walk-through, plaintiffs presented Matcon with a punch list of approximately 25 items. Soon after, Matcon demanded immediate payment of $94,388.70 and $15,766 within 10 days as a condition to completing the project and the punch list items. When these amounts were not paid, Matcon promptly terminated the contracts. In light of these findings, and taking into account how the referee was able to judge the credibility of the witnesses and view the construction, including alleged omissions and defects, we cannot say that the referee erred by finding that Matcon wrongfully terminated the contracts "without legal basis for doing so, and itself being itself in breach of the pool and remodel contracts."
III. The Public Admonishment of Judge Letteau
In connection with his retention as a referee pursuant to Code of Civil Procedure section 638, Judge Letteau made several disclosures. However, he did not disclose that he had been publicly admonished by the Commission on Judicial Performance (Commission). In a May 20, 2004 decision and order imposing public admonishment, the Commission found that "Judge Letteau engaged in misconduct while presiding over two matters between 1998 and 2000: an attorney's motion for fees in the Conservatorship of Feist, and the court trial in Condon v. Mazza. . . . [¶] The commission further found that Judge Letteau's misconduct in the Feist and Condon v. Mazza matters was similar to conduct between 1996 and 2001 in three other matters for which the judge was privately admonished in 2002." Among other misconduct, Judge Letteau was found to have engaged in "bias and embroilment" in the Conservatorship of Feist matter, and improper "prejudgment and advocacy" in the Condon v. Mazza matter. He was admonished for "a troubling pattern of repeated violation of ethical duties that are fundamental to the fairness, and the perceived fairness, of the judicial process." The Commission determined "the existence of a pervasive pattern of bias, prejudgment, ex parte communication, and abuse of judicial authority toward parties and attorneys warrants a public admonishment."
According to Matcon's attorney, he discovered Judge Letteau's prior public admonishment after the statement of decision was rendered and all matters before Judge Letteau were concluded. In a declaration filed in the superior court, Matcon's attorney stated his secretary found an article on the Internet concerning the admonishment, which led to the discovery of the decision and order imposing public admonishment itself.
Matcon argues that the referee should have disclosed his public admonishment to the parties. It asserts that the award of damages in this case was motivated by prejudgment, bias, and embroilment, the same type of misconduct that led to the admonishment.
Addressing this mixed question of fact and law de novo (Haworth v. Superior Court (2010) 50 Cal.4th 372, 384-386 (Haworth)), we conclude that the referee was not required to disclose his prior public admonishment, and that the record does not reveal improper prejudgment, bias, or embroilment.
Matcon points to no rule that would have required the referee to disclose the admonishment. Although the referee was subject to the California Code of Judicial Ethics, pursuant to Canon 6D, he was not subject to all provisions therein. Under Canon 6D(5)(a), the referee was required to disclose information "reasonably relevant to the question of disqualification under Canon 6D(3)," which included such matters as personal or professional relationships with a party or attorney, personal knowledge of disputed evidentiary facts, and financial interest in the subject matter in the proceeding. None of these required disclosures implicated disclosure of a prior public admonishment.
The only disclosure required by Code of Judicial Ethics Canon 6D(5)(a) (with reference to Canon 6D(3)) that was potentially pertinent to the prior admonishment was a requirement to disclose information where "a person aware of the facts might reasonably entertain a doubt that the temporary judge would be able to be impartial." (Code of Judicial Ethics Canon 6D(3)(a)(vii)(C).) This is the same standard by which a judge may be disqualified pursuant to Code of Civil Procedure section 170.1, subdivision (a)(6)(A)(iii).
This standard was recently addressed by our Supreme Court in Haworth, supra, 50 Cal.4th at pages 388-389. In Haworth the superior court vacated an arbitration award in a case involving a claim by a female patient that her physician was negligent in performing plastic surgery on her lip, and the Court of Appeal affirmed. (Id. at p. 377.) The Supreme Court reversed, holding that the arbitrator was not required to disclose a public censure he received 10 years earlier while serving as a judge on the superior court based upon his conduct toward and statements to court employees, which created "'an overall courtroom environment where discussion of sex and improper ethnic and racial comments were customary.' [Citation.]" (Ibid.)
The Supreme Court defined "impartiality" as entailing the "'absence of bias or prejudice in favor of, or against, particular parties or classes of parties, as well as maintenance of an open mind.' [Citation.]" (Haworth, supra, 50 Cal.4th at p. 389.) It stated that an impression of possible bias could occur in an arbitration context if "'one could reasonably form a belief that an arbitrator was biased for or against a party for a particular reason.' [Citation.]" (Ibid.)But there was no reasonable basis to form such a belief based on the facts presented. "[N]othing in the public censure would suggest to a reasonable person that [the arbitrator] could not be fair to female litigants, either generally or in the context of an action such as the one now before us. . . . The conduct that was the subject of the public censure occurred between April of 1990 and October of 1992, more than 15 years prior to the arbitration proceeding. None of the conduct or comments for which [the arbitrator] was censured involved litigants or occurred in the courtroom while court was in session. . . . Had this court concluded that [the arbitrator] was unable to be fair to female litigants generally, public censure—which permitted him to continue to sit as a judge—would have been an inadequate form of discipline. . . . [¶] Furthermore, implicit in a determination that public censure, rather than permanent removal from office, will be sufficient to protect the public is the expectation that the judge will respond to the censure by ceasing to engage in the conduct that resulted in the disciplinary action." (Id. at pp. 390-391.)
Importantly, "the circumstances underlying the public censure would not suggest to a reasonable person that [the arbitrator's] conduct and attitude toward women would cause him to favor a male physician over a female patient in a case in which the appearance of the patient who underwent cosmetic surgery instead was worsened." (Haworth, supra, 50 Cal.4th at p. 391.) "Unlike cases in which evidence of gender bias has required disqualification of a judge, the subject matter of this arbitration was not such that the circumstance of gender was material, or that gender stereotyping was likely to enter into the decision made by the arbitrators." (Ibid.)
This analysis is clearly applicable to the situation presented in this case. While Judge Letteau served as a referee, not an arbitrator, the distinction is not critical here, since Haworth examined the arbitrator's duty to disclose under the same standard that applied to the referee—whether a "'person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.'" (50 Cal. 4th at p. 389.) It is true that, unlike the arbitrator in Haworth, Judge Letteau was admonished for his conduct while court was in session. Nevertheless, the conduct for which he was admonished occurred no later than 2001, approximately nine years before the trial in this case.
The matter of greatest importance, however, is that there was no reasonable basis to believe that Judge Letteau would be biased for one party or another. The public admonishment of Judge Letteau did not evidence any bias against contractors or defendants in general, or any predisposition toward homeowners or plaintiffs. Nothing in the public admonishment would suggest to a reasonable person that Judge Letteau could not be fair to a litigant such as Matcon in the context of the instant action. (See Haworth, supra, 50 Cal. 4th at p. 390.)
The citations to the record that Matcon contends evidence Judge Letteau's prejudgment, bias, and embroilment in this case are, taken in context, benign. It appears that Judge Letteau questioned witnesses more often than would normally be expected, and it also appears that Judge Letteau likes to talk, but his volubility was directed at both sides; it was not constrained to the portions of the trial where Matcon presented its case. His comments were not overly disparaging or discourteous, and his behavior did not reveal any bias or improper involvement. (See Lester v. Lennane (2000) 84 Cal App.4th 536, 575 [rejecting bias claim that relied on "on a selective, out-of-context reading of the record"].)
In fact, based on our review of the record (and acknowledging that we are unable to witness the tenor of his affect or tone), it appears that he was generally quite courteous.
The one issue of alleged improper behavior raised by Matcon that potentially could be cause for concern—the posttrial letter from a plaintiff-retained engineer, which the referee apparently relied on in assessing $3,000 in remediation damages relevant to the cantilevered deck—is a matter that should have been raised by Matcon in a motion for new trial. (See Jamison v. Jamison, supra, 164 Cal.App.4th at pp. 719-720.) In any event, as explained in the statement of decision, the referee requested a joint report from each side's structural engineer, and the information presented by plaintiffs' engineer would have been incorporated into the report but Matcon's engineer failed to participate in the preparation of the report. Under these circumstances, we find no grounds for reversal on this issue.
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Finally, while again acknowledging that Haworth involved an arbitration rather than a trial conducted by a referee, we find the following holding instructive here: "[A] broad interpretation of the appearance-of-partiality rule could subject arbitration awards to after-the-fact attacks by losing parties searching for potential disqualifying information only after an adverse decision has been made." (50 Cal. 4th at pp. 394-395.) Presumably, if the referee had decided in its favor, Matcon would never have raised its prejudgment, bias, and embroilment argument. The public admonishment of Judge Letteau occurred years before the parties stipulated to his appointment as referee, and the corresponding decision was a matter of public record readily accessible through the Commission's website. (See http://www.cjp.ca.gov/desisions_by_judges.htm.) Matcon had the opportunity to take reasonable steps to satisfy itself that Judge Letteau was acceptable (see Haworth, at p. 393). It cannot credibly attack his fitness after the fact, particularly because the admonishment was not relevant to any allegedly improper behavior in this case.
DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
BOREN, P.J. We concur:
DOI TODD, J.
CHAVEZ, J.