Opinion
B285400
03-30-2023
SUFFOLK CONSTRUCTION COMPANY, INC., Plaintiff, Cross-defendant and Appellant; Fisk Electric Company, Plaintiff and Appellant, v. LOS ANGELES UNIFIED SCHOOL DISTRICT, Defendant and Appellant; R.J. Daum Construction Company, Defendant, Cross-complainant and Respondent.
K&L Gates, Pierce Kavcioglu Espinosa & Cesar, Timothy L. Pierce, Hector Espinosa and Samira F. Torshizi for Plaintiff, Cross-defendant and Appellant. Nida & Romyn, Robert Nida and Matthew J. Luce for Plaintiff and Appellant. David R. Holmquist, Devora Navera Reed, Mark Fall ; Theodora Oringher, Kevin A. Dorse, Jon-Jamison Hill, Andrew B. Breidenbach, Los Angeles, Helen M. Cho, and Panteha Abdollahi, Costa Mesa, for Defendant and Appellant. Lubka & White, Laurence P. Lubka, Ronald E. White ; Nemecek & Cole, Benedon & Serlin and Mark Schaeffer for Defendant, Cross-complainant and Respondent.
Certified for Partial Publication.
Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of the Discussion parts I.A.2 through V.
K&L Gates, Pierce Kavcioglu Espinosa & Cesar, Timothy L. Pierce, Hector Espinosa and Samira F. Torshizi for Plaintiff, Cross-defendant and Appellant.
Nida & Romyn, Robert Nida and Matthew J. Luce for Plaintiff and Appellant.
David R. Holmquist, Devora Navera Reed, Mark Fall ; Theodora Oringher, Kevin A. Dorse, Jon-Jamison Hill, Andrew B. Breidenbach, Los Angeles, Helen M. Cho, and Panteha Abdollahi, Costa Mesa, for Defendant and Appellant.
Lubka & White, Laurence P. Lubka, Ronald E. White ; Nemecek & Cole, Benedon & Serlin and Mark Schaeffer for Defendant, Cross-complainant and Respondent.
CHAVEZ, J.
* * * * * * This appeal arises from litigation involving a public construction project to build the Central Region 9th Street Span K-8 school in downtown Los Angeles. The Los Angeles Unified School District (LAUSD or District) and Suffolk Construction Company, Inc. (Suffolk), entered into a development and construction agreement dated September 13, 2011 (contract), for the development and building of the school. Suffolk later entered into subcontracts with various subcontractors, including R.J. Daum Construction Company (Daum) for structural concrete work and Fisk Electric Company (Fisk) for electrical work. Throughout the project, various problems arose, which caused delay and disruption and resulted in increased costs to Suffolk, Daum and Fisk. One major delay occurred after LAUSD discovered significant cracks in the concrete foundation for the elementary school building. Suffolk submitted time impact analyses (TIA) to LAUSD seeking compensation on its own behalf and on behalf of the affected subcontractors due to the cost overruns resulting from delays, which Suffolk claimed were a result of LAUSD's faulty plans.
Suffolk sued LAUSD on April 1, 2014, alleging breach of the contract, implied contractual indemnity, and seeking declaratory relief. Suffolk's first amended complaint pled substantially similar claims against LAUSD and added a claim against Daum for breach of contract.
On February 28, 2014, Fisk submitted to Suffolk a certified claim in the amount of $1,908,157.61 for overtime acceleration and productivity impacts resulting from the various delays on the project. Suffolk passed through Fisk's claim in its lawsuit against LAUSD. The notion of a pass-through claim is described as follows:
"When a public agency breaches a construction contract with a contractor, damage often ensues to a subcontractor. In such a situation, the subcontractor may not have legal standing to assert a claim directly against the public agency due to a lack of privity of contract, but may assert a claim against the general contractor. In such a case, a general contractor is permitted to present a pass-through claim on behalf of the subcontractor against the public agency." (Howard Contracting, Inc. v. G. A. MacDonald Construction Co. (1998) 71 Cal.App.4th 38, 60, 83 Cal.Rptr.2d 590.)
Trial proceeded in phases. The first phase (phase 1) commenced on January 30, 2017, and focused on whether LAUSD breached the contract by providing Suffolk with plans and specifications for the concrete foundations that were not correct (TIA 5). It was LAUSD's position that the delays were attributable to Suffolk's mismanagement of the project and that the cracking of the concrete was attributable to Daum's means and methods rather than LAUSD's plans and specifications. The jury found that Suffolk substantially performed its contract and that LAUSD breached the implied warranty of correctness by providing plans and/or specifications for the concrete footing design that were not correct.
The second phase (phase 2) proceeded with a different judge and jury and determined Suffolk's damages for the concrete issue decided in phase 1 (TIA 5). The phase 2 jury also considered whether LAUSD had a good faith basis to withhold $111,714 in retention from Suffolk, and whether LAUSD breached the implied warranty of correctness by providing incorrect plans and/or specifications for various other problems (TIA's 2, 3, and 4). The phase 2 jury determined, among other things, that LAUSD had a good faith basis to withhold the retention from Suffolk. Suffolk challenged the phase 2 verdict with a motion for new trial and motion for a judgment notwithstanding the verdict (JNOV). Suffolk's motion for new trial was denied but its JNOV motion was granted. The trial court found that, contrary to the jury's findings, LAUSD did not withhold the retention amount of $111,714 in good faith.
The third phase (phase 3) of the proceedings was determined by cross-motions for summary adjudication. The central question posed by the cross-motions was whether Suffolk could require LAUSD to pay Daum's attorney fee award. The trial court determined that LAUSD was not liable to Suffolk for Daum's fees under either a theory of implied contractual indemnity or as damages for breach of contract.
LAUSD appeals from the phase 1 judgment, arguing that there was insufficient evidence to support the phase 1 jury verdict, that the trial court committed instructional error, and that the evidence did not support the jury's verdict. LAUSD also appeals from the phase 2 judgment, arguing that the trial court erred in granting Suffolk's motion for JNOV on the issue of good faith, erred in excluding LAUSD's expert witness on the issue of good faith, and erred in refusing LAUSD's proposed jury instructions on LAUSD's licensing defense.
Suffolk cross-appeals, claiming various errors in phases 2 and 3. Suffolk challenges the jury award of damages in phase 2 on TIA 5, arguing that the jury awarded insufficient damages and the trial court erred by denying its motion for new trial on this issue. Suffolk further challenges for lack of sufficient evidence, the jury verdict on TIA 2, and argues that there was an irreconcilable inconsistency in the jury verdicts on TIA's 3 and 4. Suffolk claims that the trial court erred in granting summary adjudication in favor of LAUSD in phase 3. As to its attorney fee request, Suffolk argues the trial court abused its discretion in excluding certain amounts from the fee request.
Suffolk also appeals from the trial court's award of attorney fees in favor of Daum. Suffolk challenges the trial court's decision to award Daum fees based on a contractual provision first raised in Daum's reply brief. Suffolk argues that the decision was procedurally incorrect and that the contractual provision does not support an award of fees. Suffolk further argues that even if the contractual provision did support an award of fees, the trial court erred in failing to apportion the award between Suffolk and LAUSD. Finally, Suffolk challenges the award of damages it was found liable to pay Daum. Fisk also appeals, arguing that the trial court erred in denying Fisk's motion for attorney fees and in denying Fisk prejudgment interest for the portion of its award payable from Suffolk.
As set forth below, we find that the phase 1 verdict must be reversed and remanded for retrial on the ground that the special jury instruction based on Public Contract Code section 1104 was improper, and it is reasonably probable that the error affected the verdict. The reversal of the phase 1 liability verdict requires that the phase 2 trial of damages for TIA 5 (related to the concrete cracking issue) must also be reversed and remanded for retrial. All attorney fee issues surrounding liability and damages for TIA 5 must also be reconsidered upon remand. Finally, the trial court erred in granting JNOV on the phase 2 jury verdict on the question of whether LAUSD had a good faith basis for retention of fees. Thus, the decision granting the JNOV is reversed with direction to reinstate the jury verdict on that issue.
The subcontractors’ claims for attorney fees and prejudgment interest must also be reconsidered on remand. The jury verdicts on TIA's 2, 3, and 4 are affirmed.
FACTUAL BACKGROUND
LAUSD entered into the contract with Suffolk on September 13, 2011. Through the contract, Suffolk agreed to construct a work of improvement for LAUSD in a project known as the Central Region 9th Street Span K-8 school located near the downtown Los Angeles Fashion District (project). The contract price was $39,479,112. The contract included a number of documents, such as general conditions, supplementary conditions, design plans and drawings, technical specifications for each phase of work, a geotechnical report, and other ancillary documents (collectively contract). KPFF Consulting Engineers (KPFF), LAUSD's structural engineers of record (SEOR), put together the specifications and structural drawings for the project. The project included an elementary school (ES) building, a middle school building, a multi-purpose room/locker room, and parking structure.
Suffolk entered into various subcontracts in connection with the project, including a subcontract with Daum to perform structural concrete work, and a subcontract with Fisk to perform electrical work.
Work on the project commenced in October 2011.
The January 31, 2012 concrete pour
The concrete footings for the school buildings were to be constructed below ground to serve as foundations for the buildings at the project site. By January 31, 2012, the project was already two months behind schedule due to delays in placing the concrete footings. The first pour of concrete on January 31, 2012, for the footings consisted of 1,450 cubic yards of concrete.
The jury found that Suffolk was responsible for the delay surrounding the over-excavation of the concrete footings, which was at issue in TIA 2. LAUSD took the position that Suffolk asked Daum to perform the concrete pour in one large event, rather than spread over two nonconsecutive days as originally planned, in order to make up for the delay caused by Suffolk.
Suffolk asserts that the concrete mix for the pour had been approved by the LAUSD design team. However, LAUSD points to conflicting evidence in the record, showing that LAUSD's design team stamped Suffolk's submittal: "This document has been reviewed for general conformance with design concept only and does not relieve the fabricator of responsibility for conformance with design drawings and specifications."
Suffolk points out that the January 31 pour was observed by KPFF and LAUSD's inspector of record (IOR), Donald Shirley. Also present were third party inspectors from Koury Engineering & Testing, Inc. (Koury), who observed the pour. Koury contemporaneously issued a series of inspection reports stating that the work met the requirements of the contract drawings and specifications. The inspection report noted that the mix design met the requirements of approved drawings and that "[a]ll concrete placed was mechanically vibrated and placed within tolerance for slump as specified on approved mix designs." Koury's deputy inspector, Jorge Delgado, testified that no problems with the contractor's performance were noted. No notice of noncompliance for the pour procedures was issued by any party.
Again, LAUSD points to conflicting evidence in the record: that there was evidence in the record that KPFF engineers and inspectors were not concrete experts, nor were they tasked with "signing off" on the contractor's means and methods to achieve nondefective results. Further, LAUSD points out that section 13.4 of the general conditions of the contract provides that inspections or observations "shall not, in any way, relieve CONTRACTOR from responsibility for full compliance with all terms and conditions of the Contract Documents." The document added, "IOR is not authorized to make changes in the Contract Documents ... nor shall IOR inspection of the Work and methods relieve the CONTRACTOR of responsibility for the correction of subsequently discovered defects, or from its obligation to exactly comply with the Contract Documents."
Three days after the January 31, 2012 pour, the District's IOR alerted Suffolk and Daum that some parts of the foundation had subsided and showed checkerboard cracking patterns of the reinforcement bars (or rebar) inside the foundations. This subsidence cracking was referred to as plastic settlement cracking, or settlement cracking, because the concrete would settle under the stiff rebar while it was in a wet or plastic state. On February 3, 2012, Shirley e-mailed photographs of the cracked foundation to KPFF. Shirley noted that in his experience the cracks were an odd occurrence. Ghanem Garawi, LAUSD's owner authorized representative (OAR), had concern that Suffolk did not respond with urgency to investigate and correct the problem, for which there were safety concerns posed by the cracked concrete.
The OAR is LAUSD's principal point of contact for contractor communications.
LAUSD asserts that because Suffolk and Daum did not take any action to rectify the cracking problem, LAUSD took the lead in attempting to determine the cause of the cracking and to assess whether the foundations were safe. KPFF investigated the concrete cracking through visual inspections and core samples to determine whether the concrete and rebar had debonded, which would affect the structural integrity of the foundation. The core samples revealed significant gaps between the rebar and the concrete.
Given the safety concerns, KPFF's principal engineer on the project, Gary Duncan, engaged the Division of State Architects (DSA), the governmental entity that oversees and monitors public building safety, to assess how to proceed.
LAUSD points out that Suffolk initially blamed Daum for the cracking problem. Suffolk demanded that Daum "respond in writing ... outlining what actions RJ Daum will take in order to achieve compliance with the Contract Document requirements." Suffolk warned Daum that it "consider[ed] RJ Daum responsible for all cost and time impacts related to this issue." In response, Daum disagreed that it was responsible for the failure. Neither Suffolk nor Daum made any proposals to rectify the problem in February or early March 2012.
In early March 2012, LAUSD instructed Suffolk to perform mock pours designed to identify the causes of the problem. The purpose of the mock pours was to observe the procedures used by Suffolk and Daum and evaluate the results. The parties ultimately performed four mock pours to test possible alterations that might allow for an acceptable outcome. The fourth mock pour resulted in a test area that did not exhibit cracking, and using that process, the parties were able to pour the balance of the foundations.
Mock 1—March 16, 2012
The first mock pour occurred on March 16, 2012 (mock 1). Mock 1 used the same concrete mix from the same supplier as was used in the original pour. LAUSD's internal structural engineer, Doc Nghiem, testified that LAUSD provided oversight at the mock pour, including "two, three engineers [and] three, four inspectors." Also present were the SEOR's Duncan and Aldrin Orue of KPFF.
Daum prepared a written pour procedure, which KPFF approved prior to mock 1. KPFF report 8 confirmed that the pour followed the written pour procedure. Suffolk asserts that LAUSD did not request that Daum perform a procedure known as "revibration" of the concrete in mock 1. Further, Suffolk asserts that the contract did not require re-vibration of the concrete.
LAUSD provided contrary evidence of its position on revibration. LAUSD points to evidence that prior to mock 1 KPFF requested that Daum consider revibration as a potential way to mitigate cracking. Further, LAUSD takes issue with Suffolk's claim that the contract did not require revibration. LAUSD points out that specification 03300 mandates that the contractor at a minimum comply with "ACI 309 – Recommended Practice for Consolidation of Concrete." ACI 309 discusses revibration and states, "[t]o eliminate [subsidence] cracking, the concrete should be revibrated at the latest time at which the vibrator will sink into the concrete under its own mass." LAUSD asserts that KPFF asked Daum to consider ACI 309 when recommending revibration, but Daum refused to consider the suggestion "since it was RJ Daum's opinion that these recommendations did not apply to foundations and footing conditions." At a March 15, 2012 meeting involving representatives of KPFF, LAUSD, Suffolk, Daum, and Koury, KPFF "inquire[d] about re-vibration of the top lift near the time of initial set. R.J. Daum (JM) indicate[d] that they do not intend to perform re-vibration as not part or [sic ] their common practice for foundations."
ACI is the American Concrete Institute, the leading authority on concrete construction.
The results of the mock 1 pour were better than the original pour, but still exhibited cracking.
On the same day as mock 1, concrete footings were poured at an area designated as the "[l]ocker [r]oom [a]rea." Nghiem directed the contractor to revibrate a section of the pour in the locker room area to compare it to the unrevibrated concrete in mock 1. The concrete cracks in the locker room area in the small revibrated portion were cracked to a lesser degree than mock 1, though there was not much difference. Nghiem could not conclude that revibration was a factor that affected the cracking. Orue agreed that they would "not require [revibration]," but would "leave it up to the contractor to decide on their own if revibration is appropriate to mitigate this particular condition as part of their means and method procedure for the next pour."
In phase 2, Michael Holliday, Daum's project manager, testified about a KPFF report indicating that the locker room area pour, which occurred on the same day as mock 1, and where Ngheim had "asked for some additional vibration or revibration," showed "no visible signs of concern ..., and the foundations appeared to be in conformance with the project specifications requirements."
Mock 2—April 19, 2012
Following mock 1, KPFF recommended an "engineering investigation" to diagnose further issues and also recommended, "in addition to this, an additional mock-up with this same mix be poured on a section with a rat slab at the bottom of the footing," which would "allow for a side by side comparison and assist us in evaluating the resulting effects of the different conditions if any." Suffolk also suggested the use of a rat slab for mock 2. Garawi did not approve of the use of a rat slab for mock 2 because Suffolk did not provide a proposal of what procedures Suffolk intended to follow.
A rat slab is shorthand for a thin layer of concrete placed directly on the soil in advance of the pour to act as a barrier between the soil and the concrete for the footing.
Mock 2 was performed on April 19, 2012, changing only the concrete supplier to determine whether there was a problem with the material. Cracking still occurred but not as severely as with the original pour. Witnesses from LAUSD's design team testified that mock 2 was designed to determine if changing the concrete mix supplier made a difference. The only thing that changed in mock 2 was the concrete supplier, not the concrete mix recipe. LAUSD points out that mock 2 showed that when Daum slowed its work and paid closer attention to the pour, the cracking was less pronounced
Events following mock 2
LAUSD retained concrete expert Goeffrey Hichborn from the concrete consulting firm Building Forensics International (BFI) to assist with determining the cause of the concrete cracking. BFI issued a preliminary report dated April 24, 2012, which noted a "likelihood that the reduction in concrete volume is specifically due to the loss of water from the fresh concrete into the soil .... This condition is commonly referred to as ‘subsidence cracking’ ...." Hichborn stated that the "cracking situation is mainly the result of the means and methods the concrete installer elected (or failed) to employ in the original placement." As a possible solution, Hichborn's preliminary report proposed the use of an admixture to reduce the loss of water. On May 2, 2012, Hichborn memorialized plans for a mock 3 pour after a call with Garawi, Nghiem, and KPFF engineers (Duncan and Orue). Hichborn stated that subsidence occurs after vibration, thus he opined that "the vibration itself is irrelevant to the subsidence because it is occurring after you vibrated it." Hichborn recommended the use of an accelerant admixture, as well as a "barrier to moisture transport ... between the concrete and soils."
Subsidence is the gradual caving or sinking of the poured concrete.
On the same date, Orue of KPFF presented Garawi with a proposal and revised plans for incorporating the use of a rat slab and Visqueen layer for mock 3. Nghiem was in favor of following KPFF's recommendation of using a rat slab and Visqueen layer for mock 3.
Visqueen is a plastic sheeting used to isolate the sides of the foot excavation from the concrete and block water from traveling from the concrete into the vertical earth surfaces.
LAUSD rejected Hichborn's and KPFF's proposal to use a rat slab or Visqueen layer for mock 3 and asked KPFF to revise the mock 3 plans to exclude them. Instead, Garawi instructed KPFF to include the use of an admixture as proposed by Hichborn. However, that solution turned out to be unworkable because the proposed admixture was not an approved chemical product for use on a school site.
There was conflicting testimony on the reason the admixture proposed by Hichborn (called Polarset) was not used. While Garawi testified that it was because it was not an approved chemical, Duncan testified that there was insufficient data suggesting that this particular admixture had been used elsewhere and "the concrete would still come up to strength and perform the way we expected it to."
Mock 3—May 10, 2012
Garawi then decided mock 3 should proceed with the higher strength concrete mixture that had been used for an adjacent parking structure. Mock 3 was poured on May 10, 2012, and was unsuccessful. The same level of scrutiny was present at mock 3 as at earlier mock pours, and Daum poured strictly in accordance with the pour procedures. Mock 3 exhibited cracking similar to mock 1 and mock 2.
Mock 4—May 21, 2012
On May 14, 2012, during a call among LAUSD and its consultants, the parties agreed on "a rat slab with [V]isqueen sides for the mockup as a way to best insure favorable results on the next mock-up." On the same day, KPFF issued a memorandum requiring that "[t]he mud slab shall be poured a minimum of 3 days prior to placement of foundation concrete. Contractor to submit the mud slab mix design for review." Suffolk submitted a mud slab mix design to LAUSD, which was approved by LAUSD, KPFF and Koury, and used in mock 4. The KPFF memorandum also included new structural sketches (SSK) showing "exactly how to install the water barrier."
The term "mud slab" is a term used interchangeably with the term rat slab on this project.
Mock 4 took place on May 21, 2012, and was successful. As directed, Daum installed the rat slab and Visqueen to isolate the concrete from the adjacent soil and the cracking did not occur. Mock 4 used the same concrete mix used in the January 31, 2012 pour.
After mock 4, Nghiem concluded that the moisture barrier (i.e., the rat slab and Visqueen) prevented the water from escaping and the "concrete [had] a chance to harden." Thus, "the cracks didn't appear." Nghiem's ultimate conclusion was that "the adverse effects of the concrete [were] due to a rapid loss of water from fresh concrete into the soil." Duncan of KPFF agreed that the use of water barriers had eliminated the "subsidence that [they] had seen in the first three mock-ups." KPFF report 12 confirmed mock 4's success and "the pour plan and procedures used for ... mock-up [#4] appear to be acceptable for use on the remainder of the [foundations of the project]."
On October 18, 2012, KPFF sent a letter summarizing the events surrounding the mock pours, concluding: "[T]he foundation issues encountered at this site extended from an unfavorable reaction between the concrete and the soils. This is evident from the favorable results of Mock-up #4 where a barrier was placed between two materials. It is likely that the adverse effect on the concrete is due to the rapid loss of water from the fresh concrete into the soil."
Suffolk and Daum later claimed that the mock pour process proved the cracking was the result of a design error, because the rat slab and Visqueen sketches KPFF provided for mock 4 constituted a design change that was necessary to "correct" a design error.
LAUSD takes issue with Suffolk's portrayal of the rat slab and Visqueen additions in mock 4 as design changes, noting that the SSK produced by KPFF simply showed the placement of the Visqueen and mud slab on the original design sheet. KPFF's engineer testified that he issues supplementary drawings like SSK's for many reasons, and providing a diagram like the mock 4 SSK does not constitute a design change. Other KPFF engineers also testified that the SSK did not constitute a design change.
In addition, LAUSD points out that the use of Visqueen was not a design change because specification 03000 permits the use of Visqueen. LAUSD argues that the mud slab and Visqueen were remedial, but not probative, of the underlying cause of the cracking. LAUSD's alternate theories for the cause of the concrete cracking
Prior to the mock pours, KPFF had identified inadequate or improper vibration techniques as a common cause of the type of cracking observed. For the mock pours, KPFF recommended that Daum reconsider its vibration techniques, specifically, the failure to perform revibration. Daum did not act on this suggestion during the mock pours.
In a field report prepared on March 16, 2012, KPFF engineers Orue and Duncan noted that revibration had not occurred, despite KPFF's suggestion and referral to the ACI Standard Practices manual.
LAUSD also presented evidence suggesting that Daum's concrete mix was faulty. In support of this argument, LAUSD presented testimony from a concrete engineering and concrete mix expert, Mateusz Radlinski, Ph.D. Radlinski's analysis showed that Daum's concrete mix used more water than was necessary. Radlinski testified that "the vast majority of the batches with maybe the exception [of] two, ... significantly exceeded" the maximum water limit." Avi Mor, Daum's concrete expert, affirmed that the concrete mix Daum selected exceeded the water content maximum specified in the contract.
Garawi testified that the contractor was responsible for creating the concrete mixture.
LAUSD also presented evidence that Daum could have mitigated the effects of the excess water by adjusting other components of the concrete mix. The contract specifications gave Daum the option to use admixtures to reduce the potential for excess water bleeding. Daum could have offset excessive water with an air entraining admixture, which is a chemical that "generate[s] and introduce[s] small microscopic air bubbles into the concrete [and] increases the volume." Admixtures are "broadly recognized in the industry [to] significantly reduce[ ]bleeding of concrete." Radlinksi concluded that Daum should have modified the mix it selected to account for the excessive water.
In phase 2, LAUSD argued that it had a good faith basis to withhold retention funds because of its good faith belief that the concrete cracking was caused by contractor means and methods. LAUSD took the position that its good faith belief was based, in part, on Suffolk's failure to adjust its concrete mix through the use of an admixture or by adjusting the water content. LAUSD's expert, Hichborn, also testified that the water content in the mixture Daum used exceeded the maximum water content set by contract specifications.
Radlinski also testified that Daum's selected concrete mix failed to use the required aggregate composition. Radlinski testified that Daum "used incorrect size of the aggregate. Not the size that was specified in the concrete specification." Daum's own expert conceded that Daum failed to comply with the contract aggregate requirements. In phase 2, LAUSD presented testimony that during the initial January 2012 pour, there were "many areas at the elementary school [where] there was not cracking and there was no mud slab." LAUSD points out that, had a mud slab or Visqueen been necessary to ensure a proper foundation pour, all of the ES foundations would have exhibited the same cracking that occurred elsewhere.
Aggregates are small rocks or pebbles in the mix.
Other delay and TIA claims
During the project, Suffolk submitted four requests to extend the contract completion date, each submitted in the form of a TIA.
TIA 2—over-excavation
Early in the project, Suffolk submitted to LAUSD request for clarification (RFC) 62, dated October 25, 2011, to confirm direction to deepen or over-excavate certain areas of the footing excavation and then refill to the original five-foot excavation depth in areas where the soil was not sufficiently stable. On October 26, 2011, LAUSD responded, citing the geotechnical specifications: "[I]n accordance with the project geotechnical report, where the recommended lateral overexcavation of 5-feet beyond footings could not be performed, and footings were not designed for passive resistance, the footing excavation should be deepened to the competent alluvium found at or below a depth of 5 feet ...."
This response to RFC 62, which directed Suffolk to perform the over-excavation work, was approved and signed by the OAR, the SEOR, and Geocon West, Inc. (Geocon), the geotechnical engineer of record.
Suffolk asserts that uncertainty remained as to which areas of the footing the response to RFC 62 applied. In a supplemental response to RFC 62, KPFF and Geocon revised structural drawing sheet S201, giving more details on areas that required additional excavation work.
Suffolk's project manager, Armin Mumper, testified that the revised S201 drawing confirmed Geocon's direction and clarified the specific locations along the property line that required over-digging and then filling of the footings back to the designed five-foot depth. Mumper attested that the information in the RFC 62 supplement was necessary to proceed with and finish the open trenches where the footings would be poured.
On October 28, 2011, Suffolk provided to LAUSD an "Initial Notice of Issue/Event/Condition/Circumstance/Cause of Perceived Delay ..." regarding the over-excavation issue, which it referred to as "Event Number 1." On November 15, 2011, Suffolk retracted the "Initial Notice Event No. 1," stating: "This transmittal will serve as a formal notice the Initial Notice Event No1 dated Oct 28, 2011 for the additional over-ex, will be retracted by Suffolk. RFC0062 provide[s] sufficient direction to proceed with the over-ex at the footing. Please void the Initial Notice of Event No. 1 from your files."
LAUSD explains that the retraction was significant because the contract required Suffolk to submit an initial notice in order to assert a claim of delay. By voiding and retracting its Initial Notice No. 1, Suffolk communicated that it did not view RFC 62 as causing any delays.
Suffolk submitted contingency allocation proposal (CAP) 16 for direct cost to over-excavate beyond five feet and backfill the areas of the footings as specified by the response to RFC 62. Suffolk also submitted CAP 36 for additional payment for the extra time and delay required to get extra direction to perform the extra work. In response, LAUSD issued a change order in the form of contingency disbursement authorization (CDA) 12, approving $18,750 for the direct cost to perform the extra work related to the over-excavation issue (CAP 16), but did not approve CAP 36 for associated delays.
A CAP was a change order request, which Suffolk would submit for additional payments when extra work outside of the contract was necessary.
Suffolk submitted TIA 2 to request a time extension related to CAP 36. TIA 2 was submitted in August 2012 for work that had been performed in November 2011. LAUSD repudiated a negotiated change order for TIA 2 by never returning a copy executed by LAUSD management. Suffolk's TIA 2 delay claim at trial alleged that the plans and specifications were incorrect because Suffolk was required to perform over-excavation that was not described in the plans.
At trial, LAUSD pointed to evidence that the contract documents expressly stated that Suffolk should perform over-excavation at the property lines. Specifically, section 7.1.6 of the geotechnical investigation report required the depth of excavations along property lines to be increased: "Where excavation and compaction cannot be performed, such as adjacent to property lines, foundation should be deepened as necessary to bear in the undisturbed competent alluvium at or below a depth of five feet." The provision is repeated in section 7.4.6.
LAUSD claims the contract made it clear that the design drawings did not encompass every detail of potential over-excavation. Sections 3.1 and 3.2 of the general conditions state: "Any item of Work mentioned in the Specifications and not shown on the Drawings ... shall be provided by Contractor as if shown or mentioned in both," and "it is not the intent ... to show on the Drawings all items of the Work described or specified in the Specifications even if such items could have been shown and/or specified." Thus, LAUSD states it was not necessary for the drawings to delineate the specific property lines where over-excavation should be completed.
In addition, LAUSD presented evidence that undercut the credibility of Suffolk's TIA 2 claim by pointing out that Suffolk belatedly submitted TIA 2 in August 2012 for events that occurred in November 2011. Further, Suffolk claimed in TIA 2 that it had been unable to perform any foundation excavations for 17 days in November 2011 because it could not "proceed with excavation" absent "formal direction" on excavation requirements. Garawi responded to TIA 2 on September 5, 2012, providing photographs showing Suffolk had performed the very work it claimed it could not perform. On September 7, 2012, Garawi further responded to TIA 2, indicating "Contrary to Contractor's statement ... that Contractor ‘cannot proceed with excavation of the concrete foundations without formal direction’, on 10/28/11 concrete was paced at the two footings in question ... and Contractor continued to progress with the excavation of footing[s] for lockers/MPR ...." (Boldface and italics omitted.)
On September 12, 2012, Suffolk responded to Garawi that, while it continued with excavations in that area, it did not do so at the property line where the deepening of footings was in question. On September 14, Garawi responded with more photographs refuting Suffolk's claims, writing, "[T]ake a look at the attached photos on progress of footing excavation on 11/15/11 ... and let me know if you will be dropping this argument ...." Garawi testified at trial that the photographs showed that Suffolk was excavating the foundations along the property lines. Though Suffolk did not respond to Garawi, it instead resubmitted the same narrative in a revised TIA 2 claim approximately one year later.
TIA's 3 and 4—plumbing issues
At trial Suffolk asserted that it also encountered conflicts in LAUSD's drawings related to the plumbing underneath the floor slab for the ES. Mumper testified that the conflict was in LAUSD drawings, which showed plumbing pipes and concrete occupying the same spaces: "the plumbing pipes were going through the concrete foundations and the plans didn't make allowances for that to take place." Mumper testified he could not resolve this because "[w]e basically put the work in place as it's shown on the drawings."
Suffolk asserts that it submitted a number of RFC's seeking clarification on how LAUSD wanted to resolve the conflicts in the plans. For example, RFC 191 sought clarification for the "[w]ater closet [to be] relocated to clear the footing." Mumper testified that the designers "actually moved the entire toilet to get rid of the conflict," a solution that could only be made by the licensed designers for the project. In addition to changes in the various RFC's, LAUSD also issued a "bulletin" that showed changes to the underground plumbing system. Bulletin 2 was issued to resolve numerous issues, including all of the plumbing issues defined in the bulletin.
LAUSD states that bulletins "may contain numerous unrelated design revisions for different areas of the Project." Also the revisions in bulletin 2 addressed several separate parts of the design and project. LAUSD asserts that in many cases, the design revisions in bulletin 2 reduced Suffolk's scope of work or eliminated features from the design, adding that the fact that several design issues are grouped into a single bulletin or paid for by a single CAP does not indicate those design issues are identical.
Suffolk submitted CAP 106 for approximately $62,000 for direct costs for additional plumbing work required to address the changes in bulletins 1 and 2, among others. LAUSD approved CAP 106.
It is LAUSD's position that CAP 106 paid Suffolk's net increased direct costs for a broad range of changed work, reduced scope, and contained design-related clarifications on issues unrelated to any of the issues in TIA 3, TIA 4, or bulletin 2. Thus, LAUSD states, not all of the issues addressed in CAP 106 are identical, nor are they related to the same design issue or the same area of the project.
Suffolk submitted TIA's 3 and 4 to support time extension requests for the delay necessary to resolve and implement the underground plumbing changes, claiming it was unnecessary for Suffolk to divide the conflicts in plumbing drawings into two separate TIA's, but it did so based on the relevant time periods. TIA 3 addressed delays in December 2011 and TIA 4 addressed delays in January 2012.
LAUSD repudiated a negotiated change order it drafted for TIA's 3 and 4 by never executing the final change order.
At trial, the jury found that the claim for TIA 3 arose from incorrect plans and specifications, while the claim for TIA 4 did not. Suffolk asserts on appeal that the jury made inconsistent factual determinations based on the same evidence in finding that the claim for TIA 3 arose from incorrect plans and specifications while the claim for TIA 4 did not.
TIA 5—concrete footing delays
Suffolk submitted TIA 5 to LAUSD seeking a time extension for the delay from the discovery of the concrete cracking after the January 2012 pour, throughout the implementation of the four mock pours. Suffolk submitted CAP's 390R2 and 390.1 seeking roughly $3.3 million in additional costs and impacts arising from that issue.
CAP 390.1 included Suffolk's claims, while CAP 390 and its later iterations included subcontractor claims that were being passed through to LAUSD, including claims by Daum and Fisk. LAUSD rejected TIA 5, CAP 390 and CAP 391.
PROCEDURAL HISTORY
Pleadings and pretrial orders
Suffolk filed the original complaint in this action against LAUSD on April 1, 2014, alleging breach of contract, implied contractual indemnity and seeking declaratory relief. LAUSD's demurrer to all causes of action was overruled as to the breach of contract and indemnity claims.
On July 24, 2014, LAUSD filed its answer and asserted affirmative defenses claiming, in part, that Suffolk's alleged damages were the result of the conduct of Suffolk and its subcontractors. On November 14, 2014, Suffolk filed a first amended complaint adding Daum as a defendant and alleging contractual indemnity against Daum in the event LAUSD could prove its contention that the concrete cracking was caused by Daum's poor workmanship.
On January 2, 2015, Daum filed a cross-complaint against Suffolk for breach of contract, quantum meruit, open book account, and violation of prompt payment statutes.
On November 7, 2016, the trial court bifurcated trial, ordering a phase 1 trial to determine only liability for the concrete cracking. Phase 2 of trial was to cover damages for the concrete cracking issue, as well as liability and damages for all other claims.
Phase 1 of trial
Phase 1 of trial commenced on January 30, 2017. The jury returned a special verdict on February 15, 2017, finding that Suffolk did all, or substantially all, of the significant things required by its contract with LAUSD and that LAUSD breached the implied warranty of correctness of plans and specifications by providing project plans or specifications for the concrete footing design that were not correct.
LAUSD brought a motion for JNOV and a motion for new trial after the phase 1 verdict. In its JNOV motion, LAUSD argued that no substantial evidence supported the jury's special verdict on liability. On August 30, 2017, the trial court provided a written ruling rejecting this argument and denying the motion for JNOV. In its motion for new trial, LAUSD raised numerous claims including that the trial court erred by giving Suffolk's jury instruction regarding Public Contract Code section 1104 and failing to give LAUSD's proposed instruction on CACI 4510. The trial court rejected LAUSD's arguments and denied the motion for new trial.
Phase 2 of trial
Before a different jury and a different judge, phase 2 of the trial began on April 11, 2017. Two new parties participated in the phase 2 trial: Fisk and Maya Steel Fabrication, Inc. (Maya), each making pass-through claims.
On May 4, 2017, the jury rendered its special verdict that LAUSD did not breach the implied warranty of correctness of plans and specifications as to TIA 2 and TIA 4. The jury did find that LAUSD breached the implied warranty of correctness of plans and specifications as to TIA 3, but that the breach was not a substantial factor in causing harm to Suffolk.
As to LAUSD's withholding of $111,714 in retention from Suffolk, the jury found that in December 2013 LAUSD had a good faith basis to withhold the money from Suffolk.
The jury awarded Suffolk a total of $2,296,748.05 for TIA 5, which included all amounts properly passed through on behalf of subcontractors Fisk, Daum, and Maya. The jury allocated from its total award to the various subcontractors: $1,046,479 to Fisk; $699,635 to Daum; and $222,055 to Maya. The jury found that $624,559.63 of Fisk's award was not the responsibility of LAUSD. Similarly, the jury found that $147,658 of Daum's award was not the responsibility of LAUSD.
Suffolk filed motions for new trial and for JNOV.
The motion for new trial, among other grounds, was made on the ground that the phase 2 damage award was contrary to the phase 1 verdict and undisputed facts presented in the phase 2 trial. The trial court denied Suffolk's motion for new trial. Suffolk's JNOV motion was based in part on Suffolk's position that the jury erred in determining that LAUSD had a good faith basis to withhold the retention of $111,714 in professional services. The trial court granted this motion, finding that, while at the time of the initial pour there was uncertainty as to the cause of the concrete cracking, after the fourth mock pour, LAUSD could not reasonably believe that the problem arose from the contractor's means and methods. The trial court concluded that on this issue only a JNOV was appropriate.
Posttrial fee motions
Suffolk moved for attorney fees against LAUSD as the prevailing party on its prompt payment penalty claim, pursuant to Public Contract Code section 7107.
Daum moved for attorney fees against LAUSD and Suffolk under Public Contract Code section 7107 and section 8.6.2 of the subcontract.
On April 12, 2018, the trial court entered its "Order Re Attorneys’ Fees and Prejudgment Interest" (attorney fees order), finding that Suffolk was entitled to attorney fees from LAUSD under Public Contract Code section 7107, subdivision (f), in the amount of $400,000. The court awarded Daum the full amount of its requested attorney fees, $775,523, from Suffolk.
Phase 3 of trial
The issue in phase 3 was whether Suffolk could compel LAUSD to pay Daum's attorney fee award pursuant to Suffolk's implied contractual indemnity or breach of contract causes of action. The trial court determined that LAUSD was not liable to Suffolk for Daum's fees under either a theory of implied contractual indemnity or breach of contract. Accordingly, LAUSD's motion was granted, and Suffolk's motion was denied.
Notices of appeal
LAUSD filed a notice of appeal following phase 1 and the posttrial motions on September 8, 2017. This court stayed the appeal in a written order on December 15, 2017, to allow the trial court to resolve remaining issues.
Suffolk filed a notice of appeal from the April 12, 2018 phase 2 judgment on May 23, 2018.
On May 7, 2019, the trial court filed a final amended judgment on jury verdict and postverdict rulings.
Although both parties had previously appealed, both parties filed notices of appeal following the entry of the final amended judgment. Suffolk filed a notice of appeal from the amended judgment on June 24, 2019. LAUSD filed a notice of appeal of the amended judgment on June 26, 2019. DISCUSSION
I. LAUSD's direct appeal
LAUSD raises five issues in its appeal from the judgment, three issues concerning phase 1 of trial and two issues concerning phase 2 of trial. As to phase 1, LAUSD argues that the trial court erred when it refused to give its modified proposed jury instruction based on CACI No. 4510 concerning its affirmative defense that Suffolk failed to competently perform its work, and instead gave Suffolk's special Public Contract Code section 1104 ( section 1104 ) jury instruction concerning a public entity's responsibility for the completeness and accuracy of plans and specifications. In addition, LAUSD argues that substantial evidence did not support the phase 1 verdict.
As to phase 2, LAUSD argues that the trial court improperly precluded it from presenting certain expert testimony related to the good faith retention of funds and that the trial court erred by granting JNOV in favor of Suffolk on the part of the phase 2 verdict related to LAUSD's good faith retention of funds. Further, LAUSD argues that the trial court erred in declining to give LAUSD's proposed jury instruction regarding its defense related to Suffolk's licensure status.
We first address the issues concerning phase 1 of trial and conclude (1) the special section 1104 instruction was erroneous and prejudicial, therefore requiring retrial on the issue of liability for the concrete cracking; (2) the CACI No. 4510 instruction, if error, constituted harmless error; and (3) LAUSD's substantial evidence claim is moot, as the matter will be remanded for retrial.
We next address the issues concerning phase 2 of trial and conclude that the trial court erred in granting JNOV in favor of Suffolk on the part of the phase 2 verdict related to LAUSD's good faith retention of funds. We find no error in the trial court's refusal to give LAUSD's proposed jury instruction on Suffolk's licensure status.
A. Instructional error—phase 1
Instructional error is subject to a de novo standard of review. ( People v. Manriquez (2005) 37 Cal.4th 547, 581, 584, 36 Cal.Rptr.3d 340, 123 P.3d 614.) It is primarily a legal inquiry in which we need not give deference to the trial court's decision. ( People v. Waidla (2000) 22 Cal.4th 690, 733, 94 Cal.Rptr.2d 396, 996 P.2d 46.) "[W]here it is contended that the trial judge gave an erroneous instruction," we must "view the evidence in the light most favorable to the claim of instructional error." ( Mize-Kurzman v. Marin Community College Dist. (2012) 202 Cal.App.4th 832, 845, 136 Cal.Rptr.3d 259 ( Mize-Kurzman ).)
However, the giving of an erroneous jury instruction should not be disturbed unless, " ‘after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice.’ " ( Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 580, 34 Cal.Rptr.2d 607, 882 P.2d 298 ( Soule ).) Instructional error is prejudicial in a civil case where " " "it seems probable’ that the error ‘prejudicially affected the verdict." " " ( Mize-Kurzman, supra , 202 Cal.App.4th at p. 846, 136 Cal.Rptr.3d 259.)
1. Suffolk's special section 1104 jury instruction
a. Relevant factual background
One of LAUSD's defenses on the concrete cracking issue was that Suffolk was responsible for selecting the concrete mix using its ingenuity and experience. LAUSD's position was that if nondefective concrete was poured by Suffolk using a different concrete mix, the rat slab and Visqueen would have been unnecessary. LAUSD argued that Suffolk did not prove that it was impossible or impracticable to select a concrete mix that would not have cracked in the absence of a rat slab and Visqueen.
In support of this argument, LAUSD presented expert testimony from Radlinski, a concrete engineering and concrete mix expert, who testified that the concrete mix had more water than necessary and exceeded the maximum water limit. LAUSD also presented evidence that Daum could have used admixtures to reduce the cracking and failed to use the correct aggregate composition within the mix.
Thus, in avoiding liability on the issue of the concrete cracking, LAUSD relied in part on the premise that the selection of the concrete mix was Suffolk's responsibility and that the selection of concrete mix was faulty.
b. Special instruction and section 1104
Suffolk's special instruction No. 13 was based on section 1104. The instruction read: "No local public entity shall require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects."
Section 1104 states: "No local public entity, charter city, or charter county shall require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects, except on clearly designated design build projects. Nothing in this section shall be construed to prohibit a local public entity, charter city, or charter county from requiring a bidder to review architectural or engineering plans and specifications prior to submission of a bid, and report any errors and omissions noted by the contractor to the architect or owner. The review by the contractor shall be confined to the contractor's capacity as a contractor, and not as a licensed design professional."
Section 1104 was enacted to prohibit a public entity from transferring design responsibility to the contractor. The legislative history shows that the Legislature accepted the longstanding division of responsibilities on public construction projects set forth in United States v. Spearin (1918) 248 U.S. 132, 39 S.Ct. 59, 63 L.Ed. 166 ( Spearin ). However, the Legislature noted a "recent trend by local entities to utilize contract provisions to transfer design liability from architects to general contractors." (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1314 (1999-2000 Reg. Sess.) as amended Sept. 2, 1999, p. 3.) The Legislature noted that this trend ran "counter to the long-standing division of responsibilities on construction projects which was formally recognized by the U.S. Supreme Court in [ Spearin ]." ( Ibid. ) Due to this trend of contractual shifting of responsibilities, the Legislature enacted section 1104 to prohibit public entities from requiring bidders to assume such responsibilities. The purpose of section 1104 was thus to prevent public entities from attempting to contract around the Spearin doctrine.
Spearin is regarded as the seminal case setting forth the division of responsibilities between a public entity and a contractor. Spearin set forth the principle that "if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications." (Spearin, supra , 248 U.S. at p. 136, 39 S.Ct. 59.) This law is the foundation of the cause of action for breach of implied warranty of correctness of plans and specifications and is sometimes referred to as the Spearin doctrine.
Case law interpreting section 1104 is sparse. However, the few available cases support the premise that section 1104 is not relevant to a claim for breach of warranty of the correctness of plans and specifications. Instead, its purpose is to prevent public entities from attempting to contract around their obligation to provide correct plans and specifications. ( Thompson Pacific Construction, Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525, 553, 66 Cal.Rptr.3d 175 ( Thompson ) [" Section 1104 prevents the public entity from placing the risk of accuracy and completeness of the plans and specifications upon the contractor. It says nothing about the contractor's burden to prove that the public entity breached the warranty [of correctness]."].) In Thompson , a contractor hired by a city to construct a public project brought an action against the city to recover for extra work. When the city prevailed at trial, the contractor appealed, arguing, in part, that the trial court erred by declining to give the jury its proposed instruction based on section 1104. The Thompson court rejected the contractor's argument, finding that the trial court did not err in refusing this instruction. As the Thompson court noted, section 1104 is not relevant to a contractor's claim that a public entity breached the warranty of correctness. ( Thompson , at p. 553, 66 Cal.Rptr.3d 175.)
The contractor's proposed instruction read, " ‘[The city] had a duty to provide adequate plans and specifications. [Thompson] had no responsibility for the adequacy of [the city's] plans and specifications, nor any duty to supplement any inadequacy of those plans and specifications.’ " (Thompson, supra , 155 Cal.App.4th at p. 552, 66 Cal.Rptr.3d 175.)
In Los Angeles Unified School Dist. v. Great American Ins. Co. (2010) 49 Cal.4th 739, 112 Cal.Rptr.3d 230, 234 P.3d 490 ( Great American ), the Supreme Court addressed in detail the requirements for a contractor's claim against a public entity when the contractor is misled by incorrect plans and specifications and, as a result, submits a bid that is lower than the contractor would have otherwise made. The Great American court held that the contractor need not prove affirmative fraudulent intent to conceal in order to recover additional compensation for the public entity's failure to disclose material information. ( Id. at pp. 753-754, 112 Cal.Rptr.3d 230, 234 P.3d 490.) In explaining the effect of section 1104, the Great American court stated, "although ... section 1104 prohibits local public entities from requiring bidders to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications, public entities retain the power to contractually disclaim responsibility for assumptions a contractor might draw from the presence or absence of information." ( Great American , at p. 752, 112 Cal.Rptr.3d 230, 234 P.3d 490.) This language, which concerns a public entity's contractual powers, supports an interpretation of section 1104 that limits it to a formal or contractual shifting of responsibility.
The language of the statute, the legislative history, and the limited case law available suggest that section 1104 is applicable only where a public entity attempts, through contractual language or other formal means, to require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on a public works project. Suffolk has made no such claim in this case.
c. LAUSD's arguments
LAUSD argues that there was no basis for the trial court to give the section 1104 instruction, since LAUSD's contract did not transfer design responsibility to Suffolk. In fact, the instruction was irrelevant, as it has no application to a claim for breach of the implied warranty of correctness. ( Thompson, supra , 155 Cal.App.4th at p. 553, 66 Cal.Rptr.3d 175.) LAUSD argues that the broad instruction allowed Suffolk to argue that requiring Suffolk to competently choose an appropriate concrete mix violated section 1104. LAUSD argues that there is no legal precedent that prohibits a government agency from allowing the contractor the responsibility and flexibility to use its expertise to select a concrete mix that best suits its methods and the conditions of the project.
i. Irrelevance of section 1104
LAUSD argues that the contract specifications for the concrete mix, found in specifications 02317 and 03300, did not require Suffolk to assume responsibility for the correctness of LAUSD's design. Instead, these were proper objective performance standards, which allowed the contractor to select the proportions and ingredients in the concrete mix within the parameters of LAUSD's design. This allowed Suffolk, the entity with the most extensive expertise in performing concrete work, to select the appropriate concrete mix. LAUSD points to federal and foreign authority suggesting that the Spearin doctrine does not apply to performance specifications, but only to design specifications. LAUSD presented testimonial evidence that an experienced contractor will have a wealth of knowledge about the performance of different concrete mixes in different circumstances and that the contract gave the contractor leeway to determine the best mix for the construction. Suffolk did not claim that these contractual provisions regarding the parameters for the concrete mix violated section 1104. LAUSD argues that the instruction was not necessary to establish any of the elements of Suffolk's claim for breach of implied warranty of correctness of plans and specifications. Instead, as explained above, section 1104 was designed to prohibit "local entities [from] utili[zing] contract provisions to transfer design liability from architects to general contractors." (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1314 (1999-2000 Reg. Sess.) as amended Sept. 2, 1999, p. 3.) Thus, LAUSD argues, section 1104 was enacted to prevent public agencies from contracting around the implied warranty of correctness. It did not change the fundamental elements or scope of a claim for breach of implied warranty of correctness. ( Thompson, supra , 155 Cal.App.4th at p. 553, 66 Cal.Rptr.3d 175.)
LAUSD points to numerous contractual provisions that set general performance specifications for the concrete mix—not specific design formulas. specification 03300, section 1.2A.9, required compliance with ACI Publication 309, "Recommended Practice for Consolidation of Concrete." ACI 309.2R-98, section 2.2 states, "Specifications should be sufficiently broad in scope to permit adjustments of mixture proportions ... Accepted mixture proportions may need adjustments to produce the desired concrete characteristics and to minimize consolidation problems." Daum's concrete expert, Dr. Mor, testified that such performance specifications are preferred and agreed that the contract in this case gave parameters for the concrete mix, but still allowed the contractor to determine the overall mix. Specification 03300, section 1.5A, required Suffolk to use a "registered civil engineer with experience in concrete mix design [to] select the relative amounts of ingredients to be used as basic proportions of the concrete mixes proposed for use under the provisions of ACI 318 ...." Specification 03300, section 2.2D provided that "[p]roportions of materials shall provide workability and consistency to permit concrete to be placed readily into forms and around reinforcement under conditions of placement to be employed, without segregation or excessive bleeding." ACI 318-08, section 5.2.1, provides that concrete mix proportions "shall" provide workability "without segregation or excessive bleeding." The specifications also allowed Suffolk to use admixtures in the concrete mix and set ranges for the sizes of the aggregates.
"While there are two types of specifications, design and performance, only a design specification creates an implied warranty. [¶] Performance specifications ‘set forth an objective or standard to be achieved, and the successful bidder is expected to exercise his ingenuity in achieving [it].’ " (James Talcott Constr. Inc. v. United States (Ct.Cl. Mar. 4, 2019, No. 14-427C), 2019 WL 1040383, *4 ; see also Aleutian Constructors v. United States (Ct.Cl. 1991) 24 Cl.Ct. 372, 390 ; Haehn Management Co. v. United States (Ct.Cl. 1988) 15 Cl.Ct. 50, 56 ; District of Columbia v. District of Columbia Contract Appeals Bd. (D.C.App. 2016) 145 A.3d 523, 536 ; Florida Bd. of Regents v. Mycon Corp. (Fla.Dist.Ct.App. 1995) 651 So.2d 149, 153.)
The breach of implied warranty of correctness applies where plans and specifications include an incorrect representation. Under such circumstances, a contractor " ‘may recover ... for extra work or expenses necessitated by the conditions being other than as represented.’ " (Great American, supra , 49 Cal.4th at p. 748, 112 Cal.Rptr.3d 230, 234 P.3d 490.) "This rule is mainly based on the theory that the furnishing of misleading plans and specifications by the public body constitutes a breach of an implied warranty of their correctness." (Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510-511, 20 Cal.Rptr. 634, 370 P.2d 338.) The Souza court cited the seminal 1918 decision in Spearin, supra , 248 U.S. 132, 136-137, 39 S.Ct. 59.
ii. Prejudice
LAUSD argues that Suffolk improperly used the special section 1104 instruction in closing argument. Specifically, Suffolk argued: "This is a California statute, a code section, so the contract can't override it. Any provision that the school district stands up this afternoon and says, well, this requires the contractor to adjust the mix to fix this problem is in violation of the statute."
Suffolk continued that, "essentially, now [LAUSD is] saying the contractor should have designed the [concrete] mix," but "the public agency cannot transfer this design responsibility to the contractor."
LAUSD argues that Suffolk used its section 1104 instruction to argue that by not giving Suffolk a precise recipe for the concrete mix, LAUSD violated section 1104 by unlawfully requiring the contractor to assume responsibility for the completeness and accuracy of LAUSD's plans and specifications. LAUSD argues that this premise, and Suffolk's use of its section 1104 instruction, were improper and misstated the law.
d. Suffolk's counterarguments
Suffolk takes a broader interpretation of section 1104, arguing that it is not limited to a contractual shifting of responsibility for the completeness and accuracy of architectural or engineering plans and specifications. Suffolk argues that section 1104 places the burden on the public entity to issue correct and complete design plans and prohibits the public entity from requiring the bidder to assume responsibility for the completeness and accuracy of such plans and specifications. Suffolk takes the position that charging LAUSD with responsibility for design errors and omissions is consistent with section 1104, and the instruction was relevant to LAUSD's contention that Suffolk should have taken responsibility to develop a new concrete mix to solve the cracking problem. Suffolk points out that LAUSD argued that Suffolk had a responsibility to alter the concrete mix to attempt to fix the concrete cracking problem, but the cracking problem ultimately was resolved by the addition of a water barrier. Suffolk argues that this attempt to shift design responsibility to Suffolk was contrary to section 1104 and justified the need for the instruction.
With this argument, Suffolk essentially asks us to adopt its view of the facts—that the cracking was caused by a design flaw—specifically, the failure of LAUSD to include a rat slab and Visqueen in the design. However, it ignores LAUSD's factual argument below, which was that, had Suffolk provided a proper concrete mix, the rat slab and Visqueen would have been unnecessary. Suffolk cites no law suggesting that section 1104 rendered the contract provisions regarding Suffolk's flexibility to determine the proper concrete mix unlawful. Nor does it cite any law suggesting that placing the ultimate responsibility for the concrete mix on the contractor is an improper shifting of responsibility under section 1104.
Suffolk further points out that changes to the concrete mix in both mock 2 and mock 3 did not eliminate the cracking, thus the problem was not remedied by a mix alteration in any event. Again, Suffolk asks us to adopt its view of the facts and does not address the problem of whether inclusion of the section 1104 instruction, and Suffolk's improper use of the instruction, prevented the jury from placing the blame on Suffolk's selection of the concrete mix—which was one of LAUSD's main defenses to this factual conclusion.
Mock 2 changed only the concrete supplier, not the concrete mix. Mock 3 used a higher-strength concrete mixture that had been used for an adjacent parking structure. However, Suffolk points to no evidence in the record that mock 3 addressed the concerns set forth by LAUSD's experts concerning water content, possible use of an admixture, and aggregate level of the mix.
e. Analysis
The sole issue to be determined in phase 1 of trial was whether LAUSD breached the implied warranty. LAUSD is arguing that (1) the instruction was irrelevant, as section 1104 is not relevant to a claim of breach of implied warranty of correctness; and (2) the way that Suffolk used the instruction was misleading to the jury, and therefore prejudicial.
i. Relevance
Suffolk did not contend that the contract expressly declared Suffolk responsible for any architectural or engineering plans. Nor did Suffolk contend that those provisions of the contract, which gave Suffolk leeway to choose the concrete mix, violated section 1104. Instead, the only issue before the jury in phase 1 was whether LAUSD breached the implied warranty of correctness. Section 1104 is not relevant to such a claim. ( Thompson, supra , 155 Cal.App.4th at p. 553, 66 Cal.Rptr.3d 175.)
A trial court "has the duty to instruct on general principles of law relevant to the issues raised by the evidence." ( People v. Saddler (1979) 24 Cal.3d 671, 681, 156 Cal.Rptr. 871, 597 P.2d 130.) It has "the correlative duty ‘to refrain from instructing on principles of law which not only are irrelevant to the issues raised by the evidence but also have the effect of confusing the jury or relieving it from making findings on relevant issues.’ " ( Ibid. )
Section 1104 is not relevant to Suffolk's claim of breach of implied warranty, therefore the trial court committed error in giving the instruction. ( People v. Guiton (1993) 4 Cal.4th 1116, 1129, 17 Cal.Rptr.2d 365, 847 P.2d 45 ["It is error to give an instruction which, while correctly stating a principle of law, has no application to the facts of the case."].) However, such error is subject to reversal only if it was prejudicial to the appealing party. When a jury receives an improper instruction in a civil case, "prejudice will generally be found only " ‘[w]here it seems probable that the jury's verdict may have been based on the erroneous instruction ....’ " " ( Soule, supra , 8 Cal.4th at p. 574, 34 Cal.Rptr.2d 607, 882 P.2d 298.)
ii. Prejudice
Suffolk used section 1104 to declare that LAUSD alone was responsible for choosing the concrete mix and was not allowed to shift that burden to Suffolk. Suffolk essentially used the instruction to argue that LAUSD was breaking the law by suggesting Suffolk was responsible for choosing an appropriate concrete mix and that such action wrongly transferred design responsibility to the contractor.
In its closing argument, Suffolk argued: "And essentially, now they're saying the contractor should have designed the mix further to make up for the error that was left by KPFF. [¶] ... [¶]
"And there's a jury instruction that's right on point.
" ‘No local public entity shall require a bidder to assume responsibility for the completeness and accuracy of the engineering plans.’
"In other words, you the public agency cannot transfer this design responsibility to the contractor. Why? Because we want the smart people doing this. We want the people with the stamps doing this, not the contractors. These are public buildings used by the public and we don't want the designers to shirk their responsibilities and hand this off to the contractors.
"And this is a California statute, a code section, so the contract can't override it. Any provision that the school district stands up this afternoon and says, well, this requires the contractor to adjust the mix to fix this problem is in violation of the statute."
Suffolk emphasized again in its rebuttal:
"Clearly, we've seen there's a Public Contract Code section that says the contract—the owner can't shift it. And you know why that section exists? Why do we have any statute? It's to prevent people from doing things like they've been doing.
"The reason we have that statute is because owners have tried for years to shift that design responsibility to the contractor. And the state spoke and said you can't do that. The design must stay with the designers, the people with the stamps."
This argument is at odds with both the language of the contract and the testimony at trial—all of which suggested that Suffolk, not LAUSD, was responsible for choosing the concrete mix within the parameters set by LAUSD's designers and engineers. The testimony at trial, including testimony from Daum's own expert that it was acceptable, indeed "preferred," that the contractor be permitted to choose the specific concrete mix, undermines Suffolk's position on appeal that this responsibility was wrongly shifted to Suffolk. Suffolk's special section 1104 instruction allowed Suffolk to improperly argue that LAUSD's affirmative defense, which shifted blame to Suffolk for providing a faulty concrete mix, was in violation of the law. In reviewing instructional error, we must view the evidence in the light most favorable to the claim of instructional error. ( Mize-Kurzman, supra , 202 Cal.App.4th at p. 845, 136 Cal.Rptr.3d 259.) Here, the dispute between LAUSD and Suffolk was whether LAUSD breached the warranty of correctness by providing faulty plans. As part of its defense, LAUSD argued to the jury that it was not faulty plans, but faulty workmanship on the part of Suffolk, that caused the concrete cracking. Among its arguments that Suffolk's workmanship was at fault was LAUSD's claim that Suffolk provided an improper concrete mix. Through the use of the irrelevant special section 1104 instruction, Suffolk was permitted to argue that shifting responsibility for the concrete mix to Suffolk was illegal.
Daum's expert, Mor, testified that a performance specification is one that tells the concrete contractor, "You need to provide concrete that will do what—something that we want it to do. We don't tell you how to do that. For example, you can tell me, ‘I want concrete that is 4,000 PSI strong.’ I'm not telling you how to mix it. That's up to you." Mor was then asked, "And you believe that a performance specification is a beneficial, preferred way to have a concrete specification?" Mor responded, "I believe so, yes."
We conclude that it is probable that this error prejudicially affected the verdict. ( Mize-Kurzman, supra , 202 Cal.App.4th at p. 846, 136 Cal.Rptr.3d 259 [instructional error is prejudicial in a civil case where " " "it seems probable’ that the error ‘prejudicially affected the verdict" " "].) We must consider LAUSD's evidence on this point, which suggested an improper concrete mix, and view it in the light most favorable to LAUSD. ( Id. at p. 845, 136 Cal.Rptr.3d 259 ["Where it is contended that the trial judge gave an erroneous instruction," we must "view the evidence in the light most favorable to the claim of instructional error."].) We therefore assume the jury may have been persuaded by LAUSD's argument had it not been informed that it was illegal under section 1104. Therefore, not only was the instruction improper, we find it reasonably probable that the error affected the verdict.
Due to this instructional error, the phase 1 verdict must be reversed. However, for the benefit of the parties upon retrial, we review the other claimed instructional error in phase 1.
2. LAUSD's modified CACI No. 4510 instruction
See footnote *, ante .
See footnote *, ante .
See footnote *, ante .
DISPOSITION
The phase 1 verdict is reversed and remanded for retrial, as is the damages phase of trial for TIA 5, which was held in phase 2. The JNOV on the retention of funds issue is reversed, and the trial court is directed to enter judgment on that issue in keeping with the jury verdict. The remaining issues arising out of phase 2 are affirmed. The phase 3 judgment is reversed, to be reconsidered following the retrial of damages, as are the trial court's orders regarding attorney fees and prejudgment interest. Each party is to bear its own costs of appeal.
We concur:
LUI, P. J.,
ASHMANN-GERST, J.