Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 07CC00291 Frederick Paul Horn, Judge.
Noel A. Klebaum, County Counsel, and Alberto Boada, Deputy County Counsel, for Defendant and Appellant.
Watt, Tieder, Hoffar & Fitzgerald, Robert C. Niesley and Michael Paul Hutchins, for Plaintiffs and Respondents.
OPINION
RYLAARSDAM, ACTING P. J.
Defendant Ventura County Watershed Protection District appeals from a $2.9 million judgment in favor of plaintiffs Ladd and Associates and Safeco Insurance Company of America consisting of damages for extra work performed under a public construction contract. Judgment was entered after confirmation of an arbitration award under Public Contract Code section 10240 et seq., which provides for review of such judgments on the merits. (Pub. Contract Code, § 10240.12 [award must be vacated if contrary to law or not supported by substantial evidence]; see also County of Solano v. Lionsgate Corp. (2005) 126 Cal.App.4th 741, 751 [arbitration award under Pub. Contract Code, § 10240 et seq. reviewed on merits].) Defendant argues the award was contrary to law, it did not waive plaintiffs’ contractual duty to make a proper claim, plaintiffs signed a release as to one portion of the award, and causation was not proven. We affirm.
FACTUAL AND PROCEDURAL HISTORY
1. Introduction and Terms of the Contract
After submitting the lowest bid, Ladd entered into a contract with defendant to construct an earthen flood control dam. The specific work to be performed was broken down into 47 separate bid items. In addition to the bid items, the contract included the industry Standard Specifications for Public Works Construction (Greenbook), modified by defendant’s standard specifications (standard specifications), and the special provisions (special provisions) detailing the specific work to be done for each bid item.
Defendant agreed to pay Ladd a fixed price of over $3.7 million. Ladd would also be paid for “[n]ew or unforeseen work [which was] classified as ‘extra work’ . . . .” The amount was to be agreed on by the parties or, if no agreement could be reached, the actual cost plus overhead and profit. Ladd was also required to advise defendant in writing of “changed conditions,” including “[u]nknown physical conditions of an unusual nature differing materially from those ordinarily encountered . . . .” If defendant determined a changed condition would substantially affect costs or time to complete the project it could increase payment and extend the completion time.
Ladd was required to complete the project by February 14, 2003, 180 days from the starting date of May 21, 2002. The contract provided for an extension of time if “delays are caused by unforeseen events beyond [Ladd’s] control,” including “adverse weather” and “required extra work,” or delays caused by defendant. Ladd was not entitled to additional payment or damages resulting from delays except for those caused by defendant that “delay[ed] the project as a whole.” The project was not completed until May 20, 2004.
2. Work to Be Performed, Bid Items at Issue, and Other Problems a. Bid Item 3 – Water Control and Diversion (1) Obtaining Permit
To construct the dam Ladd had to do extensive excavation and grading and anticipated there would be groundwater that it would need to remove. The contract required that the construction site be “free from water,” which “consist[ed] of diversion, control, and dewatering [sic] of all water . . . in[] the construction area . . . [to] be performed in accordance with [the plans and contract provisions].” The contract allowed for water to be “discharged into the natural channel downstream of the project” as long as it met contract and government requirements. It also required Ladd to obtain a Waste Discharge Permit (permit) from the designated water quality control board to allow it to pump groundwater from the site.
Ladd submitted its application for the permit three weeks after the project was awarded to it and one week before construction began, believing it could obtain the permit in about two weeks. The water quality board literature provides that obtaining a permit is a “process” that typically requires supplementing of the original application and can take up to 120 days to obtain. Ladd learned of the extended time requirement three weeks after it submitted its application. Ladd obtained the permit in 77 days.
Defendant’s division engineer, qualified as an expert witness, testified that he did not know it could take 120 days to procure the permit and even obtaining it in 77 days would not allow Ladd to complete construction in the 180-day contract period. Another of defendant’s experts testified that 150 days should be allowed to procure a permit and the 77-day period was “within the range of [his] experience.” After an initial request in mid-June 2002, in August Ladd submitted to defendant a written request for a 37-day contract extension based on the unforeseeable delay in securing the permit. Eleven months later defendant granted the request under contract terms allowing an extension based on “delays by unforeseen events beyond the control of the contractor . . . caused by ‘. . . government regulations . . . .’”
(2) Disposal of Groundwater
Ladd planned to dispose of the groundwater in the creek downstream of the project, as permitted by the contract. The water quality board disallowed this, however, due to the unacceptable level of chemicals in the water, forcing Ladd to remove the water from the site. Ladd gave defendant written notice it considered the extra costs to do so to be a changed condition under the contract. Defendant’s design engineer testified that hauling the water from the site was an unforeseen condition.
b. Blanket Drain Design
Once excavation began, Ladd discovered underground springs, which prevented it from placing a level embankment on that portion of the site as required. The Department of Safety of Dams (DSOD) required the addition of a blanket drain to the dam. It took defendant three months to design and obtain approval of the drain. During that period Ladd was unable to place all of the embankment fill it had originally scheduled. One of plaintiffs’ experts testified this delayed the project 88 working days and took it into the 2002-2003 rainy season.
c. Bid Item 6 – Left Abutment
The portion of the contract dealing with foundation and spillway excavation required Ladd to provide a proposed method of excavating the foundation of the left abutment. Resolution of how much excavation was required delayed the project for nine working days, for which Ladd requested an extension.
d. Bid Item 7 – Embankment Fill
The contract set out the gradation and strength requirements of the embankment fill materials to be used, including specifications as to its consistency. The contract provided: “The material obtained from the excavation is suitable for use in the construction of the dam embankment and fill and backfill, provided it meets the [contract] requirements . . . .” At a pre-bid meeting, defendant’s geotechnical consultant had stated that onsite material had been tested and 90 to 95 percent was suitable to be used for fill. He also stated only on-site material or material obtained from designated “borrow sites” was to be used for the fill.
Because there proved to be insufficient native soil for the specified embankment fill, in July 2003 the parties began discussing changing the gradation requirements, which required approval by the DSOD. In October defendant ultimately waived this requirement.
A requirement in connection with the fill material was that rocks over six inches had to be “reduced” to the “maximum size or removed by raking.” The rock rake method set out in the contract was not sufficient to meet defendant’s “zero-tolerance policy” of allowing “any rock even fractionally larger than 6[] inches” in the fill. Even using a second method Ladd was unable to suitably perform. Thus, after acquiring the necessary equipment, Ladd employed other methods to remove the oversized rock.
e. Winter 2002-2003
The delays resulting from obtaining the permit and designing the blanket drain and the excessive amount of oversized rocks slowed Ladd’s progress and extended the project into the 2002-2003 rainy season. The rainfall during this season was unusually high. Because of damage to the project caused by storms, in February the parties agreed to shut down the project for the season. Work resumed in May 2003.
Ladd had encountered financial difficulties on the project and during this time Safeco, Ladd’s surety, provided financing so Ladd could finish construction.
f. Resequencing and Acceleration of Work
The construction plan set out a schedule and sequence of work. Both Ladd and defendant contemplated excavation and embankment fill would be completed before the 2002-2003 rainy season. Because design of the blanket drain and obtaining of the permit delayed the project, Ladd changed its schedule and performed concrete and fill work at the same time “in a piecemeal fashion,” filling in the embankment only where there was no groundwater. The resulting condition of the project severely hampered Ladd’s ability to bring in the heavy equipment to pour the concrete and to store other equipment, requiring it to construct temporary pads.
On more than one occasion defendant deferred acting on Ladd’s requests for additional time until near the end of construction, making it difficult for Ladd to plan the order of its work. In conjunction it demanded Ladd complete the project within a “compressed time period.” This necessitated Ladd increasing workers and equipment to avoid threatened liquidated damages.
Further, because the project was not completed before the beginning of 2004, Ladd had to resequence and accelerate its work to protect the project from the winter season.
3. Plaintiffs’ Claims During Construction
During the course of the project, the parties attempted to resolve disputes informally and held meetings to discuss various problems. In September 2002 the parties met to discuss the water disposal issue and Ladd’s request for additional time for the permit delay. The parties met again in January 2003 to discuss project issues, and a third meeting was held in June 2003. Discussion items included the left abutment delay, delay resulting from the blanket drain design and approval, and compensation for the 2002-2003 shutdown. As reflected in a letter from Ladd to defendant shortly following the June meeting, these issues had been discussed previously in weekly meetings, letters between the parties, and other conversations. The letter also shows the parties’ mutual intent to resolve the problems informally and focus on completion of construction.
In July 2003 Ladd submitted a claim for just under $1,294,000 for costs arising from permit delay, hauling groundwater, left abutment delay, delay in design of blanket drain and rejection of its suggested method to remove water, and the winter shutdown. Defendant responded stating it was “not likely under the circumstances that th[e] claim w[ould] be resolved via [its] [a]dministrative [p]rocess” “[b]ased on the magnitude of the claim along with anticipated future extended claims . . . .” It continued that “the most expedient method” to resolve the claims was for Ladd to begin the “[a]dministrative [r]eview [p]rocess set out in the contract.”
Beginning in October Ladd began to submit numerous claim notices pursuant to the contract. In June 2004 plaintiffs submitted their “Consolidated Claim for Additional Compensation and Time Extension (consolidated claim), seeking almost $5.5 million for additional costs for eight items and a 313-working day extension, which claim was subsequently denied.
4. Arbitration, Award, Confirmation of Award, and Judgment
Subsequently plaintiffs filed their complaint in arbitration, alleging causes of action for breach of contract and breach of the implied warranty of plans and specifications, seeking a minimum of $5.8 million in addition to the $3.8 million it had already been paid. After a multi-day trial, the arbitrator issued a decision in favor of plaintiffs, awarding them over $2.9 million, supported by over 140 findings of fact and 50 conclusions of law. As relevant here, the arbitrator ruled that defendant breached the contract by failing to pay for extra work and changed conditions, failing to grant Ladd extensions of time based on unforeseen events, and failing to administer the project in accordance with the contract terms, and that it breached the implied warranty of fitness of the plans and specifications.
After a hearing on defendant’s motion to vacate the award and plaintiffs’ motion to confirm it, the court confirmed the award in full and issued a statement of decision.
Additional facts are set out in the discussion as necessary.
DISCUSSION
1. Damages for Extra Work and Delay
Defendant contends the award of damages for extra work and delay violated the express language of the contract. Specifically it asserts that the court erroneously construed the meaning of new or unforeseen work and of unforeseen events, thereby rendering one of the contract provisions superfluous, and that the damages were for work Ladd was already contractually bound to perform and that was included in the contract price. We are not persuaded.
a. Extra Work
(1) Contract Interpretation
Ladd was awarded damages for several items of what the arbitrator found was extra work. The contract stated that “[n]ew or unforeseen work [is] classified as ‘extra work’ when [defendant’s e]ngineer determines that it is not covered by the [c]ontract . . . price[] . . . .” Defendant contends the court erred by construing “new or unforeseen work” to include “unforeseen difficulties,” for which plaintiffs were not entitled to payment. (Wunderlich v. State of California (1967) 65 Cal.2d 777, 782-783 [in action for breach of implied warranty of specifications, contractor not “‘entitled to additional compensation[] because unforeseen difficulties are encountered’”].)
In support of its claim, defendant cites T. Kelly & Sons, Inc. v. Los Angeles (1935) 6 Cal.App.2d 539. There the plaintiff incurred additional expenses arising from an unexpected rock formation it encountered in constructing a bridge and sued to recover its costs under an extra work provision. In reversing a judgment for the plaintiff, the court held, “Under the clear terms of the contract [the] plaintiff was not entitled to an added sum because of difficulties it encountered in carrying out its agreement. By no reasonable construction could it be said that the provision for payment . . . for ‘extra work’ was intended to provide payment of such added charge to compensate the contractor for obstacles overcome in fulfilling his contract.” (Id. at p. 542.)
Acknowledging Kelly did not interpret the term “new or unforeseen work,” defendant argues that its holding is consistent with other cases that have defined extra work as excluding both work “‘already expressly covered by an obligation imposed upon one or the other party’” (D.A. Parrish and Sons v. County Sanitation Dist. (1959) 174 Cal.App.2d 406, 414) and extra difficulty in performing work already required by the contract. Defendant argues generally that the items for which plaintiffs were awarded damages were not in fact extra work but were unforeseen difficulties it encountered in performing work included in the contract.
In theory defendant may be correct; however, it makes only minor references to bid item 12 in the opening brief and a list of the various items of damages, which it contends were erroneous in the reply brief. Thus except for four items, which we next discuss, it fails to show specifically how the court erred in its interpretation of the definition of extra work as applied to the damages. As to each of the following specific items, in addition to affirming that they were, in fact, compensable extra work, we reject the argument that because the contract imposed specific duties on Ladd, those provisions control over a more general extra work provision. Nor do we agree that the damages were an award for factors beyond Ladd’s control, thereby making defendant an insurer of the project.
(2) Groundwater Permit
The arbitrator found that the delay in plaintiff’s schedule based on the time it took to obtain the groundwater permit “helped push” construction “into the [2002-2003] rainy season and also required Ladd to re[]sequence its early excavation work due to an inability to excavate below the groundwater level without the [p]ermit.” He concluded these events required Ladd to perform new or unforeseen work entitling plaintiffs to damages. The trial court agreed with these findings. Defendant asserts that because the contract required Ladd to obtain a permit, the fact it took longer than anticipated is just an unforeseen difficulty for which Ladd is not entitled to compensation. We disagree.
It is true the contract called for Ladd to secure a permit. But neither party knew the process generally took 120 to 150 days, clearly insufficient time when the entire contract was to span only 180 days. There was testimony that even though it took Ladd only 77 days to obtain the permit, it was impossible to complete the project on time.
Weber v. Milpitas County Water Dist. (1962) 201 Cal.App.2d 666, on which defendant relies, while superficially similar, ultimately is not persuasive. There, although the plaintiff was contractually obligated to obtain all permits, it failed to apply for the one at issue. The defendant had applied for it months before awarding the contract, but it was not issued for several months. This delay pushed the project into a rainy season and required that the plaintiff perform additional work. It sued, claiming it was entitled to compensation for the extra work, based on the defendant’s failure to procure the permit.
The court of appeal reversed a judgment in the plaintiff’s favor, determining there was no basis to hold the defendant responsible for securing the permit, and stating that the plaintiff, “whose late performance was excused by the [defendant,] cannot hold [it] liable for added costs incurred by [the plaintiff’s] late performance.” (Weber v. Milpitas County Water Dist., supra, 201 Cal.App.2d at p. 676.) Here, the delay in performance was not caused by Ladd. Rather, the contract did not allow enough time to obtain the permit. Granted, it was Ladd’s duty to secure the permit. But the additional work resulting from the contractually unaccounted for time it took to obtain it was not included in the contract.
In a related argument, defendant claims the award violates the contract provision that states Ladd will be compensated only for delays caused by defendant, not for those resulting from unforeseen difficulties, including government regulations, not caused by defendant. A similar question was discussed, although not conclusively resolved, in Hawley v. Orange County Flood Control Dist. (1963) 211 Cal.App.2d 708. There, the plaintiff’s construction of a sewer line was delayed for a couple of months by the defendant’s unreasonably protracted revision of plans. During the period of inactivity a trench caved in, requiring the plaintiff to perform extra work to repair it. The contract contained a provision stating that any delay caused by the defendant’s failure to supply plans entitled the plaintiff to an extension of time but not damages. The trial court granted a motion for nonsuit, holding that this provision barred any award to the plaintiff.
The appellate court reversed, ruling that there was a question of fact as to whether the delay provision precluded damages given the circumstances. (Hawley v. Orange County Flood Control Dist., supra, 211 Cal.App.2d at p. 717.) Those circumstances included that the lengthy delay due to the defendant’s revision of plans was a breach of the contract and that that fact and the resulting consequences were not reasonably contemplated by the parties. (Ibid.)
Here the contract provides for damages for delays for which defendant is responsible. The evidence shows the delay was caused by defendant, even though the arbitrator did not find a breach of a warranty of fitness of the plans in this respect, because there was no adequate time allowance built into the contract for securing the permit. Thus, the extra work was outside the contemplation of the parties. We defer to these factual findings under a substantial evidence standard of review. (Lake v. Reed (1997) 16 Cal.4th 448, 457.)
(3) Removal of Groundwater
The arbitrator ruled that the necessity of hauling water off the site as required by the water quality board, instead of disposing of it in a nearby stream as planned, was extra work. The trial court affirmed, finding that the degree of contamination requiring disposal of water offsite were unforeseen and thus extra work. Defendant argues the risk of this was allocated to Ladd pursuant to the contract term that called for it to remove groundwater.
Plaintiffs maintain that the contract only required it to “divert and control” the water, not remove it. Defendants respond by pointing to the contract language calling for Ladd to “dewater[],” citing to a definition that this means to remove water. They claim the method of removal was left to Ladd and that hauling water offsite was an “extra difficulty,” not extra work.
Even assuming the contract called for Ladd to remove the water, we defer to the arbitrator’s ruling that hauling water offsite was not part of the original contract terms. This was not a misconstruction of extra work under its contract definition.
(4) Resequencing Work
The court confirmed the award for damages arising from Ladd’s resequencing and acceleration of its work. This resulted from the delay in designing and obtaining approval for the blanket drain design causing Ladd to change the order of its work. Defendant objects, claiming it was Ladd’s duty to control the sequence, and its deviation from the original schedule was unilateral. Defendant contends it complied with its only duty in this regard, not to interfere, and Ladd should therefore bear the costs.
This is contrary to the evidence, which shows defendant did interfere by delaying decisions on requested extensions. (See Zurn Engineers v. State of California (1977) 69 Cal.App.3d 798, 820 [contractor accelerated work when the defendant failed to timely respond to requests for time extensions].)
Defendant points to testimony that the acceleration was based on other reasons. This is merely contrary evidence that the arbitrator was free to disregard. Likewise we reject defendant’s arguments that the arbitrator’s findings of fact were ambiguous as to the reason for acceleration. There was evidence it was based on defendant’s unreasonable delays and that is sufficient to support the award.
(5) Oversized Rocks
The arbitrator determined that the combination of the larger than anticipated amount of oversized rocks, defendant’s overly strict inspection, and the contractually specified means of rock removal constituted both extra work and a breach of the implied warranty of fitness of plans.
The contract stated that rocks in the fill could not be over six inches and any that were had to be reduced or “removed by raking.” The arbitrator further found that normally contracts do not specify the means to remove rock. It also found that defendant had a “zero-tolerance policy” and did not allow “any rock even fractionally larger than [six] inches . . .” and that this “was not consistent with industry standards.” The arbitrator determined that the method specified in the contract “was not capable of achieving rock removal to the level required . . .” and when neither the specified nor a second method were effective to meet the zero-tolerance policy, Ladd secured additional equipment to comply so it could mitigate its damages.
The arbitrator also found that Ladd’s bid included a sufficient amount to rock rake but the geotechnical report did not disclose the excessive amount of rock Ladd encountered. It awarded plaintiffs damages for extra work to dispose of the rock.
The long-standing rule in California, which defendant acknowledges, states: “‘A contractor of public works who, acting reasonably, is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who, as a result, submits a bid which is lower than he would have otherwise made may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented. [Citations.]’” (Jasper Construction, Inc. v. Foothill Junior College Dist. (1979) 91 Cal.App.3d 1, 8.) Defendant’s district director testified at a deposition to this effect. Defendant asserts, however, that the rule does not apply when “the specification [in the contract] merely sets forth a standard to be achieved, such as the removal of all oversized rock.” Citing a federal court case, defendant argues that such is the case here. We disagree.
First, defendant cites no California cases for the same principle and we are not bound by federal cases. (Ritschel v. City of Fountain Valley (2006) 137 Cal.App.4th 107, 120; Camargo v. California Portland Cement Co. (2001) 86 Cal.App.4th 995, 1015-1016.) Second, we are not convinced the contract merely set out a standard as opposed to the method; it does specify use of a rock rake. Third, even if that method was not required, that was the basis for Ladd’s bid, contrary to defendant’s claim otherwise. Finally, damages were not awarded merely due to specification of the method. The award was also based on the undisclosed and unanticipated amount of rock and defendant’s zero-tolerance policy. There was no error in awarding damages for this item.
(6) Contract Price
Defendant asserts that to recover damages for extra work, the work could not already be included within the contract price. This is true; that is the contractual definition of extra work. But, as discussed above, the evidence shows the costs for the extra work awarded as damages were not included within the contract price because the work was new or unforeseen.
b. Viability of Changed Conditions Provision
The contract provides that Ladd is entitled to compensation for “changed conditions,” (capitalization and bold omitted), defined as including unknown or latent physical conditions arising during construction that materially increase costs. Defendant argues that plaintiffs were paid for work arising from “unforeseen condition[s]” (italics omitted) or “unforeseen difficulties,” which do not entitle them to additional compensation. It asserts that the damage award has the effect of eviscerating the “changed conditions” provision because unforeseen conditions are much easier to prove than changed conditions. Defendant points to no specific items where it contends damages for unforeseen conditions were awarded. And, as discussed above, the award was for extra work.
c. Applicability of Competitive Bidding Laws
We also reject defendant’s attack on the award on the theory it violates competitive bidding. Defendant posits that because it is required to award public contracts over $10,000 to the lowest responsible bidder (Pub. Contract Code, § 21071, subd. (a)), allowing contractors to recover for unforeseen events would encourage unrealistically low bids (Amelco Electric v. City of Thousand Oaks (2002) 27 Cal.4th 228, 240). The award was not based on unforeseen events as defined by defendant but rather on unforeseen work, included in the definition of extra work for which additional payment is allowed.
2. Implied Warranty of Fitness of Plans and Specifications
The arbitrator found that defendant expressly and impliedly warranted there was sufficient on-site soil to use for embankment fill in compliance with gradation requirements. The warranty was contained in the contract documents, information in the geotechnical report, which was referred to in the contract, and discussions at a pre-bid meeting. Because there was not a sufficient amount of material, ultimately resulting in defendant’s waiver of the requirement, plaintiffs were awarded damages for extra work and changed conditions, and also extra contract days.
The trial court upheld the award relying solely on statements made by defendant’s geotechnical consultant at a pre-bid meeting as the basis of the implied warranty. A transcript of a question and answer session at the meeting set out the consultant’s response to questions from potential bidders as follows: “Q: Can imported material be used for the embankment? [¶] A: Use only material from on-site borrow areas. [¶] Q: Does the material on-site meet gradation? [¶] A: The material on-site is suitable for use. Some blending of material may be needed. [¶] Q: How about this material ([at] site of pre-bid meeting)? [¶] [A]: This site has not been explored. Material could possibly be blended.” In addition, defendant’s geotechnical consultant said at that meeting that about “90 to 95% of the material has been tested and is suitable to be used on the project.”
Defendant claims the contract did not contain a warranty; it also asserts that comments at the pre-bid meeting cannot be relied on as a warranty and that the geotechnical consultant’s statements could not bind it. Because the court did not find there was a warranty in the contract, we address only the latter two arguments.
Both parties rely on Wunderlich v. State of California, supra, 65 Cal.2d 777. There the plaintiff contractor sued for breach of warranty based on bid documents and statements at a pre-bid meeting as to the acceptability of soil to be used in connection with construction of a highway. Documents stated that samples showed the soil was satisfactory but that the plaintiff was required to “‘satisfy himself’” on that score and “‘examine carefully the site.’” (Id. at p. 780.) In addition, the defendant would not “‘assume any responsibility’” or guarantee the tests or whether there was enough on-site soil. (Ibid.) Despite these provisions, the plaintiff relied solely on a memorandum discussing the soil tests and was required to do extra work when the material from the designated site was insufficient.
The appellate court reversed a judgment in favor of the plaintiffs, holding there had been no warranty. (Wunderlich v. State of California, supra, 65 Cal.2d at pp. 786-787.) It acknowledged the general rule that a public works contractor may recover for extra work when it has been “‘misled by incorrect plans and specifications’” and, “‘acting reasonably,’” submits a bid lower than what it would have had the plans been correct. (Id. at p. 782.) There, however, the court found, given the state’s disclaimer, the plaintiff could not justifiably rely on the plans. (Id. at p. 786.) The defendant did not misrepresent soil conditions and made no “positive representation” as to the sufficiency of the soil. (Id. at p. 784.) Additionally, the plaintiff failed to review the records as directed by the contract. (Id. at p. 781) And, “any representation as to the quantity of materials . . . was explicitly and clearly disclaimed by an express provision” in the contract. (Id. at p. 785.)
The instant case is different. Here statements at the pre-bid meeting were positive representations that the on-site soil was suitable and was to be used. The consultant also represented that 90 to 95 percent of the soil had been tested and was suitable. Ladd’s reliance on these statements, even with the consultant’s reference to the possible need for blending, was reasonable.
Defendant’s reliance on a disclaimer, as found in Wunderlich, is unavailing. There, the specifications plainly stated that the plaintiff could not rely on any representations as to the soil. Here, on the other hand, there is no such language. The contract merely stated that there would be a pre-bid meeting and that “[n]one of the information transmitted at this meeting will be construed to in any way modify the plans and specifications. Any modification will be forwarded to all plan holders as an addendum.”
The parties focus on whether the pre-bid meeting statements were in fact a modification and thus part of the contract. But whether or not it was a modification matters not; the issue, as discussed above and supported by Wunderlich, is the unconditional nature of the statements made and Ladd’s reliance on them.
That there is no evidence defendant knew there was insufficient soil or withheld any information to that effect also makes no difference. The record supports a conclusion defendant’s statements were incorrect and Ladd relied on them.
We also reject defendant’s contention that the geotechnical consultant had no authority to bind it. The consultant’s statements were made in the presence of defendant’s employees and were published in the memo unchanged. This is akin to a ratification by defendant and is sufficient to bind it. And this does not violate Government Code section 818.8, which shields a public entity from liability for “an injury caused by misrepresentation by [its] employee . . . .” That section does not apply in a breach of contract case. (Lundeen Coatings Corp. v. Department of Water & Power (1991) 232 Cal.App.3d 816, 833, fn. 10 [no governmental immunity for misrepresentation in contract cause of action].)
3. Waiver of Claim Requirement
Plaintiff was awarded approximately $1.1 million of the $5.4 million amount it sought in the consolidated claim, which dealt primarily with fill, backfill, and concrete. Defendant opposed this award on the ground plaintiff had not timely given notice of the claim as required by the contract. The arbitrator concluded that defendant explicitly waived the notice requirements and that defendant’s breach of the contract made the notice provisions inapplicable. In his decision on the merits he also stated that defendant was “estopped to rely on strict compliance with notice provisions and the [a]dministrative [p]rocess contained in the contract.” The trial court affirmed the award, finding that because defendant was “integrally involved with each of the issues giving rise to Ladd’s claims,” it “was on actual notice,” and further that it had waived the “technical notice requirements.” It also noted that the arbitrator had found defendant was estopped to require strict compliance with the notice requirements. Defendant claims the finding of waiver is not supported by substantial evidence, violates the Government Claims Act (Gov. Code, § 810 et seq.), and cannot be based on acts or actual knowledge of its employees. We are not persuaded.
a. Sufficient Evidence
The contract provides that as a prerequisite to payment of additional compensation Ladd had to give written notice of a potential claim to defendant’s engineer stating its reasons for claiming extra payment, “the nature of the costs involved[,]” and the amount, to the extent possible. It also states Ladd would not be entitled to extra compensation if it did not comply with this requirement.
The evidence shows defendant was on actual notice of problems associated with the items for which damages were awarded in the consolidated claims. There are numerous letters in the record where plaintiff set out the problems it was encountering and the basis for its assertion defendant was responsible for additional costs. This is sufficient evidence for the court’s finding, to which we defer.
Defendant argues its halt of informal discussions and instruction to Ladd to follow the formal administrative review process made it clear the discussions were in lieu of that process and not the claim requirement. But according to the contract, administrative review was to occur only after notices of claims had been filed and rejected, so it was reasonable for Ladd to believe the claims procedure had been waived. Moreover, plaintiffs did file the claim; the only real complaint here is its timeliness.
Defendant challenges the arbitrator’s, and the court’s indirect, reliance on Weeshoff Constr. Co. v. Los Angeles County Flood Control Dist. (1979) 88 Cal.App.3d 579, which stated: “If the parties, by their conduct, clearly assent to a change or addition to the contractor’s required performance, a written ‘change order’ requirement may be waived. [Citations.]” (Id. at p. 589.) Defendant attempts to distinguish this by arguing that none of the facts on which the court relied to find a waiver occurred here. But Weeshoff did not state that those facts were exclusive. (Id. at pp. 589-590.)
Moreover, we are not persuaded by Katsura v. City of San Buenaventura (2007) 155 Cal.App.4th 104 to disregard Weeshoff, as defendant urges. Katsura is distinguishable from this case because it disallowed a quantum meruit claim against a public entity, a far cry from the facts here or in Weeshoff. Katsura also criticizes Weeshoff for relying on cases that did not involve a public entity to support its holding. But, as plaintiffs point out, the defendant in Weeshoff was a municipality so there is no doubt the court intended the decision to control public works contracts.
b. Government Claims Act
Defendant argues the finding of waiver violates the Government Claims Act, which requires a written claim as a condition precedent to a suit for damages against a municipality. But compliance is not absolute; a public entity can be estopped to require it. (See Doe v. Bakersfield City School Dist. (2006) 136 Cal.App.4th 556, 567 [“public entity may be estopped from asserting the limitations of the claims statute where its agents or employees have [made]. . . misleading statements about the need for or advisibility of a claim”].) The arbitrator determined defendant was estopped and the trial court acknowledged that finding. This is sufficient to uphold the award.
c. Authority and Knowledge of Defendant’s Employees
Defendant asserts the finding of waiver was based on discussions between its district director and Ladd, and argues an employee cannot modify the contract. Not so. The court did not base its decision solely on those discussions; it merely cited this as one example in support and referred to all 13 of the arbitrator’s findings of fact and four conclusions of law. Defendant also contends the finding it had actual notice of the problems underlying the claims arises from the presence of its project manager and inspector, who do not have the authority to bind it. Again, the decision was not based solely on the knowledge of defendant’s employees but also relied on defendant’s integral involvement in the process and its waiver of timeliness of notice and estoppel to assert it.
4. Release of Claim as to Blanket Drain
After the DSOD’s approval of the blanket drain design, the parties executed a change order for the additional work of constructing the drain on a time and materials basis. It stated that Ladd “has given careful consideration to the change proposed, including its effect on other work already contracted for, and hereby agrees . . . that he will provide all equipment, furnish all materials, . . . and perform all services necessary for the work above specified, and will accept as full payment for all costs related in any way thereto the prices shown above.” The change order also extended the completion date by 10 working days.
The need for the drain caused by the underground springs was unexpected and precluded Ladd from placing the embankment fill on the site as planned. The time it took defendant to complete and obtain approval of the drain’s plan delayed construction by 88 working days and helped push the project into the rainy season, during which there was unusually heavy rain. The project was then shut down for several months.
The arbitrator awarded plaintiffs damages for extra work and for an extension of time as a result of the delay and unusually heavy rain. The trial court ruled the change order “d[id] not release claims for damages that did not result from the work of the change order[] but resulted from other causes.” This included “impacts resulting from the delays associated with the investigation of the need for a drain and the design of the drain itself, which lasted several months, as well as weather delays resulting therefrom . . . .”
Defendant maintains the clear language of the release extinguished any damages based on the blanket drain, including extra work or other effects of the delay in designing the drain. We disagree.
Arguably, the language of the change order is not clear on its face. Defendant contends the language is very broad and applies to everything connected to the drain—events leading up to it and those that followed; the court and plaintiffs assert it is very narrow. These are both facially reasonable interpretations and thus extrinsic evidence was properly admitted. (Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 624.)
Ladd’s project manager testified that when he signed the change order he understood that it related only to the time it took to install the drain itself, that is, the 10- working-day extension included in the order and the cost for labor and materials for that installation. The court included this testimony in its findings of fact. It also found the release did not include damages resulting from the delay in design or the winter shutdown. It was reasonable for the trial court to rely on this testimony to confirm that the change order applied only to installation of the drain.
Defendant’s reliance on Ladd’s refusal to sign a change order with the same release language regarding shutting down construction for the winter is unavailing. Without commenting on the question of relevance, which seems questionable, we note the only record reference in the brief is to that unsigned change order itself; there is no evidence as to why it was not signed. Additionally, the fact that when Ladd signed the change order at issue it already knew that there had been a delay in design and approval of the drain, it had resequenced work, and the project had been halted due to the rainy season does not invalidate the interpretation of the change order. The release stated that Ladd was to provide equipment and materials and perform the work set out in the change order, i.e., constructing the drain. It agreed that the specified payment amount would cover any costs related to that price. The change order did not state that Ladd would accept that price as satisfaction for work resulting from other causes, as the court found here.
5. Proof of Damages
a. Damages for Extra Work
Defendant contends the some of the damages were awarded without proof of causation. As to extra work damages, it maintains plaintiffs used an estimated cost method to determine the amount of damages and cites to the arbitrator’s decision, which states plaintiffs used this method. The decision also says plaintiffs calculated damages “essentially” using the total cost method, which, defendant argues, is disfavored and improper. But defendant’s basic premise is incorrect because the record does not support that statement in the arbitrator’s decision. What it does reflect is the arbitrator’s conclusion of law that damages were computed using the actual cost method.
Plaintiffs’ expert William Schwartzkopf did testify as to the four common methods of calculating damages in construction actions. One is the total cost method and another is the estimated cost method. Schwartzkopf explained about how both of those would be applied but rejected all but the actual cost method. In repudiating the estimated cost method, for example, he stated, “why use it when we know what it really cost.”
Schwartzkopf unqualifiedly stated he used the actual cost method in determining damages and explained how he did so: for work that was never contemplated, this involved “separately track[ing] and pric[ing]” the actual costs of each item. When the work included some that was extra and some already part of the contract, he took the entire cost and deleted the amount set out in the contract to arrive at the amount for that item. He was “confident that [the] actual costs method[ was] right” “[w]ithin reasonable standards of the industry,” stating, “I have never seen a construction project where every single element of the cost is perfectly charged.”
He did not, as defendant argues, “concede[] that he had made no distinction between extra work and contract work.” Consistent with his earlier testimony set out above, he did state that he could not “distinguish precisely” for every subcategory in the bid item 3 what was original work and what was extra. This does not make the award improper. The conclusion defendant draws from these premises is thus flawed, i.e., that the amounts awarded for bid items 3 and 6 are too high.
Schwartzkopf’s testimony quoted in the reply brief that as to bid items 3 and 6 the calculations were the “total costs” is taken out of context. The documentary evidence showing the damages amounts for those two items has a final column labeled “Total Cost” where the actual labor, material, and equipment costs are totaled. That does not mean the damages were calculated using the total cost method.
Instead, Schwartzkopf testified that a different document, the cumulative cost report, contained the total costs of the project. Using the numbers in that document based on the total cost method yields more than $1.5 million over what plaintiffs were actually claiming in damages.
We also reject defendant’s assertion that the total cost method must have been used because the arbitrator did not award the full amounts that plaintiffs claimed for some items and yet awarded the total amount sought for bid items 3 and 6. That does not lead to the conclusion damages were calculated incorrectly.
Switching gears, defendant also argues there is no evidence of causation for the damages awarded for bid items 3 and 6. Not so. There was testimony as to the extra work and delay for which plaintiffs sought damages. Additionally, Schwartzkopf prepared an analysis of the amount of damages, which was admitted into evidence, and testified about the amounts.
Finally, the fact that the arbitrator found Ladd’s financial problems, inefficiencies, and delays affected the project does not necessitate a reduction in the damages for bid items 3 and 6.
b. Damages for Delay
Defendant also attacks the damages for delay, asserting they are based on inconsistent findings, making the decision “contrary to law.” It maintains plaintiffs’ expert testified that defendant was liable for all but 13 of the 223 days of delay. But the arbitrator reduced the award by almost half from the approximately $442,000 plaintiffs claimed. Defendant maintains that the trial court affirmed the award relying on the analysis of plaintiffs’ expert and apparently not accounting for the arbitrator’s reduction. Defendant concludes this is an internal inconsistency that cannot stand. We disagree.
Defendant has not met its burden to show why the amount awarded was incorrect. That the trial court’s analysis of the arbitrator’s decision may be incorrect, which we do not decide, is irrelevant. We review the result, not the rationale, of its decision. (Paniagua v. Orange County Fire Authority (2007) 149 Cal.App.4th 83, 87.)
c. Substantial Evidence
Defendant briefly reiterates its attacks on damages for the blanket drain and embankment fill, and cites again to Ladd’s inefficiencies in construction as set out elsewhere in the brief. As we have already discussed them we do not do so again here.
DISPOSITION
The judgment is affirmed. Respondents are entitled to their costs on appeal.
WE CONCUR: FYBEL, J., IKOLA, J.