Opinion
NOT TO BE PUBLISHED
Super. Ct. No. TCV979
NICHOLSON, J.
Homeowners Al and Barbara Tirapelli hired DeVore Construction (DeVore) to build an addition to their home. Following an unreported court trial, the court allowed setoffs by the Tirapellis to amounts it found otherwise due DeVore, and found in favor of the Tirapellis on their cross-complaint. It ultimately awarded DeVore $39.66, plus prejudgment interest.
DeVore appeals on the judgment roll, contending the trial court erred in denying it prejudgment interest on all billed but unpaid amounts; erred in denying its claim for lost profit damages; and erred in finding the Tirapellis were entitled to a setoff for ceiling repairs. We find no error and affirm the judgment.
FACTUAL AND PROCEDURAL SUMMARY
We treat this case as an appeal on the judgment roll, since it reaches us based only on the clerk’s transcript. (Rubin v. Los Angeles Fed. Sav. & Loan Assn. (1984) 159 Cal.App.3d 292, 296.) Because the case is presented in this posture, we presume that the trial court’s findings of fact are supported by substantial evidence, and its conclusions of law are binding upon us unless error appears on the face of the record. (Bond v. Pulsar Video Productions (1996) 50 Cal.App.4th 918, 924.) Except where otherwise indicated, the following facts are taken chiefly from the trial court’s statement of decision.
The Dispute
The Tirapellis entered into a written contract with DeVore, doing business as Sticks and Stones, to build an addition to, and remodel their home based on plans prepared by Wittels Engineering. The contemplated project included construction of a garage, expansion of the kitchen and dining area, and construction of a master bedroom above; it also included excavation for a driveway and parking area, and substantial exterior excavation and construction for aesthetic improvement.
According to the contract, the work was to be performed on a “Time and Material basis, plus profit and overhead as described[,]” i.e., both labor and materials were to be billed “7.5% overhead and 7.5% profit = 15% total mark up.” The contract also provided that “[a]ny payment past due will be charged interest at the rate of 2% per month. A failure to make payment for a period of 30 days from the due date of the payment shall be deemed a material breech [sic] of contract.”
But the contract contained no cap or limit on the total time or materials to be provided by DeVore for the work. Prior to the agreement, DeVore sent the Tirapellis a “proposed budget [that] was ‘reasonable and realistic[,]’”: it estimated the project cost to be $311,505, with the caveat that the budget was “‘provided as a guideline only’” and was “‘not a guarantee to provide Labor and Materials at a set price.’” Moreover, the contract provided work would begin on October 1, 2003, and the approximate completion date was January 31, 2004; it contained no “‘time is of the essence’” clause regarding the estimated completion date.
The parties’ ultimate dispute was caused by their overly optimistic expectations and conflicting personalities, and the changes and clarifications made to the work. By late May 2004 -- four months after the originally contemplated completion date -- the work was only approximately 75 percent complete, and the Tirapellis had paid DeVore about $370,000, substantially over the amount originally estimated.
DeVore ultimately filed a complaint for breach of contract, common counts and foreclosure of its mechanic’s lien; it claimed the Tirapellis still owed $33,909.98 under the contract.
The statement of decision notes that the evidence at trial established that only $31,622.12 had been billed and unpaid.
The Tirapellis cross-complained, alleging intentional and negligent misrepresentation, negligence and breach of contract. In the Tirapellis’ view, because DeVore failed to perform its services in a workmanlike manner and to code, they were forced to employ others to remedy defects, redo the work correctly and finish the project.
The Trial
The court trial of this matter spanned about one week.
DeVore requested the court issue a statement of decision, and both parties made proposals as to its contents.
The statement of decision contains lengthy recitation of the evidence pertaining to each of the 10 offsets claimed by the Tirapellis, which included amounts paid to enlarge a cabinet opening to accommodate the dishwasher; repair the Jacuzzi platform; remove newly installed siding so that vents can be placed in accordance with applicable building code requirements; repair and/or replace the newly installed driveway; repair the retaining wall; and replace or repair a sliding door latch, a toilet and a screen.
Among the matters at issue in this appeal is the largest offset claimed by the Tirapellis: $16,280 for repairs to the kitchen ceiling, as to which the court concluded “the ceiling was installed in such a manner that it slopes at least several inches over a seven foot run. As depicted in the photographs at trial, the slope left on the ceiling was noticeable, unsightly and, overall, not an acceptable, workmanlike result.... Given the finished ceiling product by DeVore, the court concludes it would have been unlikely for a homeowner such as Mr. Tirapelli, who was spending substantial funds on the project, to agree to have the ceiling put in on a slope [as DeVore claimed].... The estimated repairs by Finishing Touch Carpentry included the removal of the new cabinets, the demolition and reframing of the ceiling, and related work. The total reasonable repair cost for this is $16,280, including sheetrock work estimated by Taylor Drywall and painting and staining estimated by Jim Olson Painting. That the house ultimately sold without the work being done first does not detract from the necessity of repairs.”
As to DeVore’s claim for “lost profit” damages, the court found it “ha[d] not been proved.” “DeVore claims lost profits in the amount of $4,807, apparently deriving this number from his estimate that the overall project was approximately 75% complete at the time he was terminated. However, the contract here is a time and materials contract. As noted by Miller and Starr, ‘In some contracts, there is a similar formula whereby the contractor is paid on a time and materials basis, often referred to as a “T & M” contract. In such cases, the contractor is entitled to actual expended costs for subcontractors, labor, and materials, including their overhead, but cannot recover any additional sums for his profit and overhead unless expressly provided in the contract.[’] (Miller and Starr: 10 Cal. Real Est. § 27:46...) In this case, the contract provides that all work is to be performed on a time and materials basis ‘plus profit and overhead as described....’ The contract then provides separate 15% overhead and profit ‘markups’ for labor and for materials.... Thus, under this contract, a profit could only be realized when the work actually has been performed and costs actually expended. Proof under a time and materials contract would normally include testimony of the time incurred, labor costs, materials used, and other expenses embodied in the time and materials contract, and substantiated by records kept by the contractor.... No such evidence exists here.” (Original italics and underscoring.)
In any event, the court concluded, “determination of any claimed lost profits here would involve guesswork on the part of the court.... [E]specially in light of the magnitude in which DeVore exceeded his original time and material cost estimates for the project, future profits cannot be estimated with reasonable certainty. The contract here has proved the accuracy of the following observation: ‘T&M’ contracts are the least preferred of all contract types. This is because ‘[a] time-and-materials contract provides no positive profit incentive to the contractor for cost control or labor efficiency.’ [Citation.]”
The court concluded, based on the evidence adduced at trial, both that the Tirapellis were (1) entitled to offsets against DeVore’s claims and (2) entitled to recover on their cross-complaint for amounts necessary to repair the “substandard work” performed by DeVore on the drip line trenching. In sum, it wrote in its statement of decision, “[t]aking into account all offsets and damages, DeVore is owed $39.66” and may recover prejudgment interest on that amount only.
In so doing, the court expressly rejected DeVore’s claim he is entitled to interest on the billed, and unpaid, amount of $31,622.12, citing treatise authority for the proposition that, when a setoff or cross-claim has been allowed for “‘defective work’” against a plaintiff’s otherwise legitimate claim, “‘interest may properly be allowed only on the balance found to be due after the deduction of the setoff and payment, on the theory that the plaintiff is entitled to interest on only that amount with respect to the use of which he or she has been deprived during the period of the defendant’s default in making payment, because the plaintiff has been damaged only to that extent.’”
DISCUSSION
I
Applicable Standards of Review
On appeal, we must presume the trial court’s judgment is correct. (See Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) In service of that rule, we adopt all intendments and inferences to affirm the judgment or order unless the record expressly contradicts them. (Brewer v. Simpson (1960) 53 Cal.2d 567, 583.)
It is the burden of the party challenging a judgment on appeal to provide an adequate record to assess error. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141.) Thus, an appellant must not present just an analysis of the facts and legal authority on each point made; he must support arguments with appropriate citations to the material facts in the record. If he fails to do so, the argument is forfeited. (Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856.)
The California Rules of Court provide an appellant with a choice of several types of records upon which to take an appeal. The choices include a reporter’s transcript, a clerk’s transcript, an agreed statement and a settled statement. (Cal. Rules of Court, rules 8.831, 8.832, 8.834, 8.836, and 8.837.) DeVore has elected to proceed with only a clerk’s transcript.
Because DeVore has provided us with only the clerk’s transcript, we must treat this as an appeal “on the judgment roll.” (Allen v. Toten (1985) 172 Cal.App.3d 1079, 1082-1083; accord, Krueger v. Bank of America (1983) 145 Cal.App.3d 204, 207.) Therefore, as previously noted, we “‘must conclusively presume that the evidence is ample to sustain the [trial court’s] findings.’” (Ehrler v. Ehrler (1981) 126 Cal.App.3d 147, 154.) Our review is limited to determining whether any error “appears on the face of the record.” (National Secretarial Service, Inc. v. Froehlich (1989) 210 Cal.App.3d 510, 521; Cal. Rules of Court, rule 8.830(b).)
II
Recovery of Prejudgment Interest
DeVore contends on appeal the trial court erred in denying its request for prejudgment interest on $31,622.12, i.e., the amount billed for work and materials that remains unpaid by the Tirapellis.
Civil Code section 3287, subdivision (a) provides that “[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day....” Under this provision, “‘prejudgment interest is allowable where the amount due plaintiff is fixed by the terms of a contract, or is readily ascertainable by reference to well-established market values. [Citations.] On the other hand, interest is not allowable where the amount of the damages depends upon a judicial determination based upon conflicting evidence....’ [Citation.]” (Great Western Drywall, Inc. v. Roel Construction Co., Inc. (2008) 166 Cal.App.4th 761, 767.)
DeVore argues that because its “claim for late fee interest charges does not arise from statutory entitlement, [but] rather, by and through the written agreement between the parties,” it may recover prejudgment interest regardless of any setoff claim by the Tirapellis. Notwithstanding that DeVore makes this appeal on the judgment roll, the court’s statement of decision order shows it believed it properly applied setoff amounts before determining whether the Tirapellis owed any sum to DeVore on the outstanding invoices, to which prejudgment interest should apply. If that determination was error, it is error that “appears on the face of the record” and is therefore cognizable on appeal. (National Secretarial Service, Inc. v. Froehlich, supra, 210 Cal.App.3d at p. 521.)
But DeVore has failed to show that the court erred in allowing it prejudgment interest only on the amount owed by the Tirapellis after the application of their setoffs against DeVore. “It is settled that when a plaintiff sues for a liquidated sum and the defendant establishes an offsetting claim based upon defective workmanship or defective performance of the same contract by the plaintiff, the amount of the former is to be offset against the latter as of the due date of the original debt and only the balance bears interest.” (Burgermeister Brewing Corp. v. Bowman (1964) 227 Cal.App.2d 274, 285, italics added; see also Great Western Drywall, Inc. v. Roel Construction Co., Inc., supra, 166 Cal.App.4th at p. 767; Bentz Plumbing & Heating v. Favaloro (1982) 128 Cal.App.3d 145, superseded on other grounds as stated in J. A. Jones Constr. Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1574, fn. 4.) “[I]f, when the day of reckoning is reached, it has been decided that a defendant is entitled to an offset, this is a finding that the plaintiff was never entitled to more than the net amount. The defendant was therefore justified in having withheld payment from plaintiff even though the amount of his offset had not been then judicially determined.” (Burgermeister Brewing Corp. v. Bowman, supra, 227 Cal.App.2d at pp. 285–286; see also Burnett & Doty Development Co. v. Phillips (1978) 84 Cal.App.3d 384.)
The reasoning behind this rule was articulated by the California Supreme Court almost 80 years ago, in Hansen v. Covell (1933) 218 Cal. 622. “[T]he contractor is entitled to interest only on such amount of the use of which he has been deprived during the period of default[;] thus, the court may properly allow interest only on the balance found to be due after deduction of such offsets” because “to that extent only has the plaintiff been damaged.” (Id. at p. 631.) In Hansen -- as here -- an offset was allowed where contractors sued an owner for the unpaid balance on a building construction contract, and the owner cross-complained against the contractors, alleging abandonment of the project and seeking costs of completion and repair of defective work. (Id. at pp. 624–625, 630–631.)
The trial court did not err in following this venerable line of authority.
III
Setoff For Ceiling Repair
The trial court allowed the Tirapellis to offset against amounts owed to DeVore under the contract the cost of repairing DeVore’s defective work on the kitchen ceiling. In so doing, it expressly found that because “the house ultimately sold without the work being done first does not detract from the necessity of repairs.”
DeVore contends on appeal that the “Tirapellis did not incur any damages that would support a setoff for the kitchen ceiling repair” and thus the court allowed them a setoff that was not supported by the evidence.
We disagree. Cognizant that on this judgment roll appeal we “‘must conclusively presume that the evidence is ample to sustain the [trial court’s] findings’” (Ehrler v. Ehrler, supra, 126 Cal.App.3d at p. 154), we must presume there was evidence at trial to support the court’s conclusion that the Tirapellis were damaged in the amount of the ceiling repairs, notwithstanding that they had not yet actually paid to have the repairs made. The court described the ceiling damages as “noticeable, unsightly and, overall, not an acceptable, workmanlike result.” Such an “unsightly” kitchen ceiling would certainly have diminished the purchase price paid to the Tirapellis by the home’s new owner in the amount necessary to repair the damage.
We may presume that the evidence at trial established that the Tirapellis were damaged by having to accept a reduced price for their home as a result of having to sell it while the ceiling was in its damaged state (cf. Ehrler v. Ehrler, supra, 126 Cal.App.3d at p. 154).
Accordingly, DeVore cannot demonstrate the court erred.
IV
Lost Profits
Finally, DeVore contends the trial court erred in refusing to allow it to recover as damages the lost profits it would have earned had the contract been fully performed by “us[ing] an improper legal standard, and ignor[ing] undisputed facts and evidence.”
On this record, we cannot evaluate this claim.
To recover lost profits, a plaintiff must prove both its occurrence and extent with reasonable certainty. (Maggio, Inc. v. United Farm Workers (1991) 227 Cal.App.3d 847, 869-870.) Moreover, “[w]hen loss of anticipated profits is an element of damages, it means net and not gross profits.” (Gerwin v. Southeastern Cal. Assn. of Seventh Day Adventists (1971) 14 Cal.App.3d 209, 222.)
Here, the trial court found DeVore’s claim for lost profit damages “ha[d] not been proved.” Contrary to DeVore’s suggestion on appeal, the court recited no “test” for lost profits which can be challenged on appeal as erroneous; rather, it cites one commentator’s description of how a time and materials contract operates, and then describes the time and materials contract at issue here: “In this case, the contract provides that all work is to be performed on a time and materials basis ‘plus profit and overhead as described....’ The contract then provides separate 15% overhead and profit ‘markups’ for labor and for materials.... Thus, under this contract, a profit could only be realized when the work actually has been performed and costs actually expended.” We see no error in this characterization of DeVore’s contract.
The court’s statement of decision goes on to find that “no such evidence exist[ed] here” of the type generally required to show lost profits under a time and materials contract, such as “the time incurred, labor costs, materials used, and other expenses embodied in the time and materials contract, and substantiated by records kept by the contractor.” It also noted that, due to the magnitude by which DeVore had exceeded its original time and material cost estimates, “future profits cannot be estimated with reasonable certainty.” In sum, the court concluded in the first instance that DeVore offered no evidence to substantiate its claim of lost profits, and in the second instance that it could not estimate DeVore’s lost profits given the factual uncertainty that had arisen since the contract was made over what it would actually cost to complete the project.
Whether these conclusions are error is not cognizable on a judgment roll appeal. (See National Secretarial Service, Inc. v. Froehlich, supra, 210 Cal.App.3d at p. 521.)
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to the Tirapellis. (Cal. Rules of Court, rule 8.278(a)(2).)
We concur BLEASE, Acting P. J., BUTZ, J.