Summary
In Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279 (Watson), the court stated: "[T]he fact that Watson's request [for prejudgment interest] was not labeled as [a] motion for new trial or as a motion for modification under Code of Civil Procedure section 657 does not render its format defective.
Summary of this case from Kivel v. McInerneyOpinion
F070067
08-09-2016
WATSON BOWMAN ACME CORPORATION, Plaintiff and Appellant, v. RGW CONSTRUCTION, INC., Defendant and Appellant.
Ralls Gruber & Niece, John W. Ralls and W. Samuel Niece for Defendant and Appellant. Lax & Stevens and Paul A. Lax, Los Angeles; McCormick, Barstow, Sheppard, Wayte & Carruth and Todd W. Baxter, Fresno, for Plaintiff and Appellant.
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 parts I, II.D and III of the Discussion.
Ralls Gruber & Niece, John W. Ralls and W. Samuel Niece for Defendant and Appellant.
Lax & Stevens and Paul A. Lax, Los Angeles; McCormick, Barstow, Sheppard, Wayte & Carruth and Todd W. Baxter, Fresno, for Plaintiff and Appellant.
OPINION
FRANSON, J. INTRODUCTION
RGW Construction, Inc. (RGW) was the successful low bidder on a California Department of Transportation (Caltrans) project for the construction of a Highway 99 overpass near Merced. RGW entered into a contract with Watson Bowman Acme Corp. (Watson) for the delivery of 146 sealed expansion joints for use on the overpass. Caltrans rejected Watson's two-cell expansion joint but subsequently approved Watson's larger, four-cell expansion joint for the project.
Watson and RGW disagreed on the compensation owed Watson for delivery of the four-cell expansion joints. Watson filed a breach of contract action, contending it was entitled to an adjustment of the price on RGW's original purchase order because the items ordered were changed. Watson argues that RGW's purchase order was ambiguous as to exactly what was ordered because the references to Caltrans's specifications were not consistent with the specific description that used the two-cell expansion joint's model number. Watson argues parol evidence showed it advised RGW that the two-cell expansion joint would not be approved by Caltrans and, despite this warning, RGW specifically requested a quote from Watson for the less expensive two-cell model. Thus, Watson argues that its subsequent delivery of a four-cell expansion joint to satisfy Caltrans's specifications should be regarded as a change order that entitles it to an adjustment of the contract price. RGW disagrees, arguing that the price quoted for the two-cell expansion joint was the applicable price because the purchase order, which Watson signed, unambiguously stated the expansions joints would conform to all of Caltrans's specifications.
The trial court concluded that RGW's purchase order was ambiguous and allowed the jury to decide what the contract meant and what price was appropriate. The jury decided in favor of Watson, finding the amount of the subject agreement was $605,990. After deductions for the amounts RGW previously paid on the contract and the amount owed RGW on its cross-complaint, the jury awarded Watson damages of $383,032.
On appeal, RGW contends its purchase order unambiguously included Watson's warranty that the proposed expansion joints would conform to Caltrans's specifications and, based on the unambiguous contract language, this court can reverse the jury's verdict and direct the entry of judgment in favor of RGW. In its cross-appeal, Watson contends the trial court erroneously denied its request for prejudgment interest under Civil Code section 3287.
We conclude the trial court correctly (1) determined that RGW's purchase order was ambiguous and (2) allowed the jury to evaluate the conflicting parol evidence before deciding the meaning of the contract. We further conclude that the price adjustment owed to Watson for the change in the order was sufficiently certain to meet the statutory requirements for an award of prejudgment interest.
We therefore affirm the judgment, except for its failure to award prejudgment interest to Watson.
FACTS
Parties
Plaintiff Watson designs, manufactures and supplies expansion joint components to the construction industry. Watson is owned by BASF Corporation.
Defendant RGW is a general contractor licensed by the State of California. About 90 percent of RGW's work is on public contracts. Robert Purdy, one of the principals of RGW, testified RGW had built more bridges than he could count and estimated the total volume at over $1.5 billion.
Caltrans is not a party to this litigation. It is an agency of the State of California that contracts for the construction of highways and related structures. In 2009, Caltrans presented to the public for competitive bidding a project located in Merced County and referred to as the Route 99 Undercrossing to Black Rascal Canal Bridge. Caltrans selected RGW as the qualified firm with the lowest, complete bid for the project. The contract between Caltrans and RGW was designated “Contract No. 10–0K0204.”
The trial court described the relationship among Watson, RGW and Caltrans by telling the jury that Caltrans was the owner of the project, RGW was the prime contractor, and Watson was a supplier to RGW.
Bid Documents
The notice to bidders issued by Caltrans consisted of four layers of documents: (1) the “STANDARD SPECIFICATIONS” issued by Caltrans in July 1999; (2) the standard plans dated 2004; (3) the project plans approved March 9, 2009; and (4) the bid book dated July 13, 2009. Section 51 of the Standard Specifications addressed concrete structures and stated that joints must be constructed in conformance with (1) the requirements of that section's provision addressing expansion joints and (2) the details shown on the plans. Pursuant to section 51 of the Standard Specifications, joints in concrete structures shall be sealed with “joint seals” or “joint seal assemblies.” Joint seal assemblies have a higher movement rating (over 50 mm) than the various types of joint seals. Joint seal assemblies shall consist of metal or metal and elastomeric assemblies that are anchored or cast into a recess in the concrete over the joint. A joint sealed by an assembly must resist the intrusion of foreign material and water and must provide traffic with a bump free passage. Pursuant to section 51–1.12F(3)(c) of the Standard Specifications, joint seal assemblies “shall be furnished and installed in joints in bridge decks as shown on the plans and as specified in the special provisions.” On August 28, 2009, Caltrans issued “Addendum No. 2” for the project, which revised certain special provisions, including the special provision in section 10–1.57 for the joint seal assemblies. The addendum also revised the “Bid Item List” in the bid book to include “Item 133,” which was described as “JOINT SEAL ASSEMBLY (MR 101 MM—160 MM).” Revised section 10–1.57 of the special provisions was a page and a half long and required the contractor to submit complete working drawings for each joint seal assembly to the Offices of Structure Design in conformance with the provisions of the Standard Specifications addressing plans and working drawings. “The Contractor shall allow [Caltrans's] Engineer 28 days to review the drawings after a complete set has been received.” After final working drawing approval, the contractor was required to provide a set of corrected prints of all working drawings to Caltrans's engineer.
Item 133 replaced Item 81, which had described a joint seal assembly with a movement rating of 100 millimeters. Initially, Watson submitted a quote on Item 81 that proposed delivering its “WaboStripSeal Type R” at a price of $238 per unit.
Watson's September Quotation
September 23, 2009, was bid day for the project. Watson sent RGW its quotation number 092698–02 for 146 units described as “JOINT SEAL ASSEMBLY (MR 101–106MM) [¶] WaboModular BET–1200 Strip Seal” at a unit price of $3,940, with estimated shipping and handling of $29,750 and one day of field service at $1,000 (Quote 02). Quote 02's total quote price was $605,990.
The second page of Quote 02 identified items or services included in the price and stated curb cover plates were excluded from the price. That page also stated: “Documents utilized to develop this quote: [¶]—plans and specs with addenda 1–4.”
Phone Discussions
In early October 2009, Caltrans awarded the contract to RGW, the low bidder. When Paul Biesinger, Watson's sales manager for the region that included California, learned RGW was the successful bidder, he contacted RGW to see if Watson would be selected to furnish joint seal assemblies for the project. Biesinger was directed to John Pitsch, a grading and paving estimator for RGW.
During the telephone conversation between Pitsch and Biesinger, Pitsch said that Watson's quote was very high or about twice the low number submitted. Biesinger tried to get more information from Pitsch about who the competitors were and what numbers they quoted, but Pitsch would not provide specific information. Biesinger thought the other quotes might be low because a skew angle was involved, which changes Caltrans's interpretation of the width of the joint's gap, and the competition might not have been aware of that fact. Skew refers to the angle of the joint seal assemblies in relation to the direction of vehicle travel. Biesinger described skew using a comparison to the hypotenuse of a right triangle. Measuring the gap created by a joint using a hypotenuse (i.e., a diagonal line across the gap) will yield a larger dimension than measuring straight across the gap. Biesinger testified that Caltrans treats the size of a joint as being bigger when the angle is skewed. Biesinger stated that he had been involved in jobs with one degree of skew and that small amount of skew was enough for Caltrans to change the size of the joint seal system. For this project, the skew angle was 61 degrees. Biesinger tried to explain skew to Pitsch and raised the possibility that the competitors were quoting a system that would be too small. Biesinger stated that Pitsch did not seem to understand the issue and did not want to listen to Biesinger's explanation, despite Biesinger's many past experiences with the issue.
Watson contends that Caltrans addendum No. 2 modified the requirements for the joint seal assemblies by showing that they were to be installed at a 61–degree angle across the roadway rather than perpendicular to the direction of travel.
Biesinger testified that Pitsch requested another “quote based on the description of the joint alone without skew angle involved, without the spec involved.” In this context, “description” referred to the joint's movement rating of 101 to 160 millimeters—roughly 4 to 6 inches. Biesinger testified that he then made a further attempt to explain skew and that a joint based on the bid item description would not be approved by Caltrans. Biesinger testified that Pitsch asked specifically for a quote based on the bid item—that is, based on the movement rating. Biesinger testified, “I gave him what he wanted. I went to my boss, asked for permission, explained the situation to him, which I've done many times.” Biesinger's boss gave him permission to submit another quote.
Pitsch's testimony provided a different version of the telephone conversation with Biesinger. Pitsch stated that, as a result of the conversation, he expected that Biesinger might submit a new quote for the joint seal assemblies. Pitsch did not expect Watson to submit a new quote for products that would not meet all the plans and specifications. Instead, he thought Watson would submit a quote for a joint seal assembly that would be accepted by Caltrans.
Watson's November Quotation
On November 12, 2009, Watson sent RGW a new quotation numbered 092598–06 (Quote 06). The quote offered to furnish 146 units of “JOINT SEAL ASSEMBLY (MR 101–106MM) [¶] WaboModular STM600 w/ bulkhead plates” at a price of $1,304 per unit, with an estimated shipping and handling charge of $15,867 and one day of field service at $1,000. The first paragraph of text in quotation began:
“We are pleased to submit this quotation for your acceptance. Any contract arising from this quotation shall be expressly limited to the WBA terms and conditions of sale available upon
request or by visiting our website at www.wbacorp.com. Your acceptance of this quotation shall be deemed an acceptance of these terms and conditions unless otherwise expressly consented to in writing by Watson.” (Some capitalization omitted.)
The second page of Quote 06 tracked language in Quote 02 by stating: “Documents utilized to develop this quote: [¶]—plans and specs with addenda 1–4.” The last page of Quote 06 included a signature block below a line stating “I have read and agree to all the terms of this agreement.” The paragraph below the signature block, stated in part:
“[Watson] MAKES NO REPRESENTATIONS, WARRANTIES, OR GUARANTEES OF ANY KIND, EITHER EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE with respect thereto, including, but not limited to, any inaccuracy or ambiguity, or any results to be obtained therefrom.”
Biesinger faxed Quote 06 to Pitsch and spoke with him by telephone. Pitsch told Biesinger he was not the one making the decisions on who RGW would use for expansion joints and told Biesinger to deal with David Aboujudom from that point on. Aboujudom, an estimating manager at RGW and a registered civil engineer, was Pitsch's superior. When Biesinger spoke with Aboujudom, Aboujudom had both Watson's Quote 02 for the four-cell system and Quote 06 for the two-cell system. Biesinger testified, “I started over again with the fact that I did not feel that that two-cell system would be approved. [¶] And he was in the same mindset as John Pitsch was. He just wanted movement rating alone. He didn't seem to understand the skew angle part of it changing the size of the system.”
Biesinger testified that he spoke with Aboujudom twice and explained both times about the skew angle, the difference between the two products quoted, and his expectation that Caltrans would not approve a two-cell joint. He stated that Aboujudom's response was to still want the quote based on the joint movement rating without considering the skew. We note that Aboujudom's approach may have been rational: Biesinger testified that his experience on Caltrans's projects included situations where a contractor took a joint that Biesinger did not believe would meet the specifications and, nevertheless, it was accepted by Caltrans. Thus, Aboujudom may have decided to run the two-cell model by Caltrans on the chance it might be approved, which would have saved RGW almost $400,000.
Aboujudom testified about the telephone conversations with Biesinger. When asked if he understood that Watson's quote would not meet all of the plans and specifications, Aboujudom answered, “No. Absolutely not.” Aboujudom also testified that he did not ask Biesinger why there was a $400,000 difference between Quote 02 and Quote 06 and that he did not recall discussing with Biesinger the skew involved in the design of the project.
RGW's Purchase Order
On November 15, 2009, Aboujudom signed a three-page purchase order (trial exhibit 412). Pitsch sent two original purchase orders to Biesinger, asking him to sign, initial and return one original while retaining the other for Watson's files. The purchase order stated that Watson, as seller, agreed to deliver 146 units of “Joint Seal Assembly (MR 101–106mm)” for a unit price of $1,304. The total amount of the purchase order, $222,957.68, including shipping, handling, field service and Merced County tax of 8.25 percent. Underneath the foregoing information, the purchase order included the following:
“Quote Number/Price confirmation Number—092598–06
“Shop drawings to be approved prior to fabrication.
“Wabco Modular STM600 w/bulkhead plates
“Price firm for delivery up to 6 months from quote date ” (Italics in original.)
The foregoing language, along with the line “Per Plans and specifications with addenda 1–4 ,” contained in Quote 06, is relevant to the interpretation of the contract formed by the parties and the dispute over what precisely Watson agreed to provide—a particular model number (STM600) or a product that complied with Caltrans's specifications.
The first page of the purchase order contained signature blocks at the bottom and, immediately above the signature blocks, the following paragraph:
“Acceptance copy must be signed and returned immediately. Seller by signing this order, by acknowledging the order or by delivering purchases described above, warrants that seller has read and
agrees to the terms and conditions on the face of and attached to this order; that seller has read and is familiar with the contract documents described above or otherwise incorporated herein as fully as if written herein; and that all purchases hereunder will be and are furnished in accordance with the terms of this order, the contract documents and seller's samples (if any) approved by the contractor.” (Some capitalization omitted and italics added.)
Provisions on the second and third page of the purchase order that are relevant to interpreting the parties' contract are in paragraphs numbered 8, 16, 17, 21 and 24. The text of those provisions is set forth in the parts of this opinion analyzing their meaning.
On December 18, 2009, Watson's controller, Michael Turchiarelli, countersigned and dated the purchase order. Watson contends the signed purchase order was returned to RGW with Watson's “Terms and Conditions of Sale” attached. Watson also contends its terms and conditions of sale became part of the contract because the purchase order incorporated Quote 06 and Quote 06 referred Watson's terms and conditions of sale and expressly disclaimed warranties of fitness for a particular purpose and warranties of merchantability.
Caltrans's Rejection of Two–Cell Model
After the purchase order was signed, Watson prepared shop drawings for submission to Caltrans for approval. In February 2010, Caltrans sent RGW a letter rejecting the shop drawings for the joint seal assembly and marking its reasons on the returned drawings. Those reasons referred to a maximum width, measured in the direction of vehicular traffic, of 75 millimeters and stated the submission was not adequate.
On March 1, 2010, RGW returned the rejected drawings to Watson with a cover letter directing Watson to revise and resubmit. In RGW's view, it simply was asking Watson to comply with the contract and submit drawings for a product that would satisfy Caltrans's specifications. In contrast, Watson now views the correspondence as written directions to provide a product different from the one described in the purchase order—in essence, a change order under paragraph 16 of the purchase order (see fn. 13, post [text of paragraph 16] ).
In response to RGW's direction, Watson resubmitted drawings for the four-cell system described in Quote 02. RGW presented the new drawings to Caltrans and the four-cell system was approved.
In September 2010, Watson resubmitted its Quote 02 and requested a change to the purchase order to reflect the original price in Quote 02 of $605,990. Eventually Watson manufactured four-cell joint seal assemblies for the project per the specifications contained in Quote 2.
In May 2011, Watson again informed RGW that Watson needed a change order before it would ship the joint seal assemblies. RGW responded with a letter stating that it expected delivery of the assemblies on or about June 1, 2011, at the executed purchase order price of $207,251. Watson did not deliver the assemblies and, on June 2, 2011, a law firm representing RGW sent Watson a letter stating: “If W[atson] continues to maintain that it is entitled to additional money for providing these joint seal assemblies, then W[atson's] claim should be arbitrated pursuant to Purchase Order Term and Condition No. 16. As stated therein, W[atson] ‘shall not delay performance pending determination of the amount of such an adjustment.’ ”
Watson's reply letter, dated June 8, 2011, stated its legal counsel had advised shipping the assemblies based on the express understanding the RGW would tender the amount of $222,957.68 to its lawyer's trust account and that amount would be payable to Watson unconditionally upon RGW's receipt of the first shipment of assemblies. The letter also stated that Watson was rescinding prior settlement offers and intended to pursue payment in full. In accordance with its letter, Watson shipped half of the assemblies in June 2011 and the rest in August 2011. There were some problems with the assemblies that resulted in project delays and repair costs, which RGW addressed in its cross-complaint.
PROCEDURAL HISTORY
Pleadings
In June 2012, Watson filed a complaint against RGW, Caltrans and an unnamed surety company. In October 2012, Watson filed a first amended complaint, which is the operative complaint in this litigation. Watson asserted causes of action against RGW for breach of contract and unjust enrichment.
Watson's breach of contract cause of action alleged that RGW revised its order by changing the joint seal assemblies for the project from the Model STM600 referred to in Quote 06—a quote that RGW requested—to the Model BET 1200 that Watson previously offered in Quote 02. Watson alleged RGW refused to pay the price of $605,990 quoted by Watson for the Model BET 1200 joint seal assemblies or any amount in excess of the $207,251 price quoted for the Model STM600 joint seal assemblies. Watson alleged it was damaged in the amount of $605,990 as a result of RGW refusal to pay.
Watson's unjust enrichment cause of action alleged it provided 146 units of the Model BET 1200 joint seal assemblies based on the reasonable belief that RGW had agreed to the quoted price of $605,990. Watson also alleged that RGW received a benefit from and was enriched by the assemblies provided by Watson and from withholding Watson's compensation for the assemblies. Watson estimated the benefit RGW received was no less than $605,990.
RGW's answer to Watson's first amended complaint denied liability. Also, RGW filed a cross-complaint alleging that Watson breached its obligations under the purchase order by delivering defective joint seal assemblies, which caused $134,810 in damages.
Jury Trial
The jury trial was held in April 2014. The special verdict form's sole question about Watson's complaint against RGW asked, “What was the amount of the subject agreement?” The jury found the amount was $605,990. On RGW's cross-complaint, the jury found that the joint seal assemblies furnished by Watson were defective and that RGW suffered $111,771.08 in damages as a result of those defects. Based on these figures and the parties' stipulation that RGW previously paid Watson $111,186.60, the jury determined the net amount owed by RGW to Watson was $383.032.32. RGW challenged the jury's verdict by filing a motion for judgment notwithstanding the verdict, or alternatively for a new trial. In June 2014, the court heard RGW's motions and Watson submitted a request to include prejudgment interest of over $136,000 in the final award.
The jury's resolution of the claims raised in RGW's cross-complaint are not challenged in the appeal or cross-appeal. Accordingly, the facts relevant to those claims are not described in this opinion.
RGW made two payments to Watson. The first was for $88,147. The second, made in November 2013, was for $23,039.60. The payments were intended to cover the difference between the price listed in the purchase order and RGW's damages for the cost of repairs and 16 days of delay.
In August 2014, the trial court issued two written orders. First, the court denied Watson's request for prejudgment interest, stating it was untimely because Watson had not made a motion prior to the entry of judgment or, alternatively, in the form of a motion for new trial. Second, the court denied RGW's motion for judgment notwithstanding the verdict and its motion for a new trial.
Later in August, RGW filed a notice of appeal from the judgment and the order denying its motion for judgment notwithstanding the verdict. Watson filed a notice of cross-appeal, challenging the denial of prejudgment interest and protecting itself on certain adverse evidentiary rulings made during the trial.
DISCUSSION
I. BREACH OF CONTRACT II. PREJUDGMENT INTEREST
See footnote *, ante .
Watson's cross-appeal challenges the trial court's order denying its request for prejudgment interest as untimely. Watson contends it made a timely request and the award of prejudgment interest was mandatory under Civil Code section 3287, subdivision (a).
A. Basic Legal Principles
1. Statutory Text
Civil Code section 3287, subdivision (a) provides: “A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt.” Under this provision, the trial court has no discretion—it must award prejudgment interest from the first day there exists both a breach and a liquidated claim. (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828, 76 Cal.Rptr.2d 743 (Rogers ).)
2. Interest as Damages
Conceptually, prejudgment interest is an element of damages, not a cost of litigation. (Rogers, supra, 65 Cal.App.4th at p. 830, 76 Cal.Rptr.2d 743.) Prejudgment interest compensates the plaintiff for the loss of the use of property or money during the period before the judgment is entered. (Id. at p. 828, 76 Cal.Rptr.2d 743.) This conceptual foundation affects the timing and manner for requesting an award of prejudgment interest.
3. The Certainty Requirement
From a plaintiff's perspective, prejudgment interest compensates for the loss of the use of the money during the period between the assertion of the claim and the rendition of judgment. (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906, 197 Cal.Rptr. 348 (Chesapeake ).) Obviously, the plaintiff loses the use of the money whether or not the amount owed is certain and, consequently, compensation was not the Legislature's sole consideration when it adopted Civil Code section 3287.
From the defendant's perspective, the certainty requirement promotes equity because liability for prejudgment interest occurs only when the defendant knows or can calculate the amount owed and does not pay. (Chesapeake, supra , 149 Cal.App.3d at p. 906, 197 Cal.Rptr. 348.) In Chesapeake, the court acknowledged the tension between compensating the plaintiff's loss and fairness to the defendant, stating:
“These competing policy considerations have led the courts to focus on the defendant's knowledge about the amount of the plaintiff's claim. The fact the plaintiff or some omniscient third party knew or could calculate the amount is not sufficient. The test we glean from prior decisions is: did the defendant actually know the amount owed or from reasonably available information could the defendant have computed that amount. Only if one of those two conditions is met should the court award prejudgment interest.” (Id. at p. 907, 197 Cal.Rptr. 348, italics omitted.)
Under this test for certainty as to amount, a dispute or denial of liability does not make the amount of damages uncertain. (Wisper Corp. v. California Commerc e Bank (1996) 49 Cal.App.4th 948, 958, 57 Cal.Rptr.2d 141.) As stated by our Supreme Court: “Generally, the certainty required of Civil Code section 3287, subdivision (a), is absent when the amounts due turn on disputed facts , but not when the dispute is confined to the rules governing liability.” (Olson v. Cory (1983) 35 Cal.3d 390, 402, 197 Cal.Rptr. 843, 673 P.2d 720, italics added.) In that case, the court determined the salary and pension benefits owed to the members of the plaintiff class were readily calculable amounts for purposes of awarding prejudgment interest. (Id. at p. 402, 197 Cal.Rptr. 843, 673 P.2d 720.)
Disputes about the amount owed do not automatically create uncertainty. The Supreme Court has “held that even a dispute as to the amount of alleged damages (from an earthquake) did not prevent those damages from ‘being made certain by calculation’ within the meaning of [Civil Code] section 3287 where the amount of recovery closely approximated plaintiff's claims.” (Leff v. Gunter (1983) 33 Cal.3d 508, 520, 189 Cal.Rptr. 377, 658 P.2d 740 (Leff ).) In that case, a readily ascertainable value of the plaintiff's share of a development project was established by (1) the difference between (a) an uncontested appraisal of the completed building and (b) the amount of the mortgage against the property (2) divided by plaintiff's conceded one-sixth share in the original venture. (Id. at p. 519, 189 Cal.Rptr. 377, 658 P.2d 740.) The court noted, “Defendants offered no evidence to contradict [the] valuations” of the three components used to calculate damages. (Id. at p. 520, 189 Cal.Rptr. 377, 658 P.2d 740.) Consequently, the court reversed the trial court's denial of prejudgment interest and remanded the case for the calculation and award of such interest. (Id. at pp. 520–521, 189 Cal.Rptr. 377, 658 P.2d 740.)
A general principle of practical import, not expressly adopted by our Supreme Court but easily inferred from its discussions of certainty, is that the manner in which a case is litigated can affect the ultimate resolution of the certainty question. (See Olson, supra, 35 Cal.3d at p. 402, 197 Cal.Rptr. 843, 673 P.2d 720 [“amounts due turn on disputed facts”]; Leff, supra, 33 Cal.3d at p. 520, 189 Cal.Rptr. 377, 658 P.2d 740 [no evidence contradicted components used in plaintiff's calculations; recovery closely approximated plaintiff's claims].) 4. Certainty and Changes to Construction Contracts
The certainty requirement has been applied to the amount owed under construction contracts for extra work or changes in the work. Such contracts might state the amount owed is (1) based on a cost-plus formula, (2) the reasonable value of the extra work done, or (3) based on the agreement of the parties. (See Macomber v. State (1967) 250 Cal.App.2d 391, 401, 58 Cal.Rptr. 393.) Generally, a cost-plus formula permits the damages to be made certain by calculation and prejudgment interest is recoverable under such contracts. (Anselmo v. Sebastiani (1933) 219 Cal. 292, 301–303, 26 P.2d 1 ; Schmidt v. Waterford Winery, Ltd. (1960) 177 Cal.App.2d 28, 34, 1 Cal.Rptr. 874 [amount due “might be made certain by reference to well-established value plus computation”].) Under contracts where the plaintiff is entitled to no more than the reasonable value of the extra work done, that value typically is ascertained by the trier of fact after considering conflicting evidence. (Macomber v. State, supra, at p. 401, 58 Cal.Rptr. 393.) Consequently, damages in such cases are regarded as unliquidated and prejudgment interest is not mandatory. (Ibid. ) Where the contractual amount owed is based on the agreement of the parties, the amount due may be made certain by the agreement of the parties or an admission. (Pilch v. Milikin (1962) 200 Cal.App.2d 212, 228, 19 Cal.Rptr. 334 [“defendant knew the amount of the sum owing, and he admitted the fact upon the trial”].)
5. Offsets Do Not Create Uncertainty as to the Balance Due
“ ‘Ordinarily, where the amount of a demand is sufficiently certain to justify the allowance of interest thereon, the existence of a set-off, counterclaim, or cross claim which is unliquidated will not prevent the recovery of interest on the balance of the demand found due from the time it became due.’ ” (Worthington Corp. v. El Chicote Ranch Properties, Limited (1967) 255 Cal.App.2d 316, 325, 63 Cal.Rptr. 203.) The phrase “the balance of the demand” means the liquidated sum minus the offset. (Burgermeister Brewing Corp. v. Bowman (1964) 227 Cal.App.2d 274, 285, 38 Cal.Rptr. 597.) Thus, prejudgment interest is calculated on the net amount owed and, therefore, the defendant is not required to pay interest on the portion of the debt rightfully withheld. (Id. at pp. 285–286, 38 Cal.Rptr. 597.) The rationale for this rule is that the plaintiff was never entitled to payment of more than the net amount and, therefore, was damaged only by the withholding of the net amount. (Id. at p. 286, 38 Cal.Rptr. 597.)
The application of the rule about offsets to RGW's successful cross-complaint is not a source of controversy. Thus, the calculation of any prejudgment interest owed to Watson must be based on the net amount owed under the contract—that is, $494,219 ($605,990 minus $111,771)—and must take into account the timing and amount of RGW's two payments. 6. Standard of Review
Where the facts are not in dispute or, alternatively, have been established by findings of the trial court supported by substantial evidence, appellate courts independently review whether and when the plaintiff's damages were made certain or capable of being made certain by calculation. (KGM Harvesting Co. v. Fresh Network (1995) 36 Cal.App.4th 376, 390–391, 42 Cal.Rptr.2d 286.) This standard of review can be phrased in terms of the test adopted in Chesapeake (see pt. II.A.3, ante ): “On appeal, we independently determine whether damages were ascertainable for purposes of the statute, absent a factual dispute as to what information was known or available to the defendant at the time.” (Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 151, 139 Cal.Rptr.3d 880.) B. Timeliness and Format of Request
1. Watson's Pleadings
Watson's initial complaint included a prayer for “interest as provided by law.” Watson first amended complaint reiterated the request for “interest as provided by law,” but addressed interest in more detail. Paragraph 32 of the first amended complaint stated that Watson “is entitled to the payments owed by RGW as well as interest on the money that RGW has wrongfully withheld at the statutory rate. The interest runs from the date that the payments became due until the date that they are paid.” These statements clearly notified RGW that Watson sought both prejudgment and postjudgment interest on the amount owed. (See Rogers, supra, 65 Cal.App.4th at p. 829, 76 Cal.Rptr.2d 743 [prayer seeking “ ‘ “such other and further relief as may be proper” ’ ” is adequate basis for award of prejudgment interest].)
We also note that the breach of contract cause of action in Watson's first amended complaint identified the price of $605,990 provided in Quote 02, alleged RGW had refused to pay that price, and alleged Watson “has been damaged in the amount of $605,990.”
2. Watson's Postjudgment Request
The following is the chronology of events surrounding Watson's written request for prejudgment interest:
April 21, 2014: The jury completed the special verdict form.
May 16, 2014: RGW filed a motion for judgment notwithstanding the verdict, or alternatively for a new trial.
June 11, 2014: Hearing on RGW's motion for judgment notwithstanding the verdict, or alternatively for a new trial.
June 19, 2014: The judgment was filed.
June 27, 2014: Watson filed its request for prejudgment interest.
July 18, 2014: Notice of entry of judgment was served on RGW by Watson's attorneys.
August 5, 2014: Order denying Watson's request for prejudgment interest was filed.
August 6, 2014: Order denying RGW's motion for judgment notwithstanding the verdict, or alternatively for a new trial was filed.
The proposed form of judgment was faxed to the court by Watson's attorneys. The proposed judgment did not explicitly refer to prejudgment interest, but provided for postjudgment interest at 10 percent and included the following item: “(4) Additional sums due, if any, are as follows: _________;”. Nothing in the record shows that Watson regarded this item as a request for prejudgment interest, much less communicated that intention to the court and RGW. The trial court struck the fourth item from the proposed judgment before signing, dating and filing the document as its judgment.
Later in August 2014, the parties filed their notices of appeal and cross-appeal. To summarize, Watson made its request for prejudgment interest eight days after the judgment was filed, which was before the 15–day period contained in Code of Civil Procedure section 659, subdivision (a)(2), expired.
Watson's request (1) referred to its complaint and a trial exhibit, (2) set forth the legal basis for the award of prejudgment interest, and (3) provided detailed calculations of prejudgment interest to August 2014. The calculation took into account the $111,771 awarded to RGW on this cross-complaint, RGW's payment of $88,147 to Watson in June 2013, and RGW's payment of $23,039.60 to Watson in November 2013.
3. Timing of Request for Prejudgment Interest
No statutes specify the timing or mechanism for seeking prejudgment interest. (Steiny & Co., Inc. v. California Electric Supply Co. (2000) 79 Cal.App.4th 285, 294, 93 Cal.Rptr.2d 920 (Steiny ).) Similarly, no rule of court specifies when prejudgment interest must be sought. (Ibid. ) California Rules of Court, rule 3.1802 states, “The clerk must include in the judgment any interest awarded by the court.” This rule imposes a mandatory duty on the clerk, but only tenuously implies that a request for prejudgment interest must be made before a judgment is entered.
In Steiny, the court concluded that the award of interest after entry of the judgment was proper where the complaint requested prejudgment interest and the parties stipulated that request for interest would be adjudicated in a postjudgment hearing. (Steiny, supra, 79 Cal.App.4th at p. 294, 93 Cal.Rptr.2d 920.) In Rogers, supra, 65 Cal.App.4th 824, 76 Cal.Rptr.2d 743, the court stated that, at the latest, a request for prejudgment interest could be pursued as part of a motion under Code of Civil Procedure section 657, subdivision 5, on the ground of “inadequate damages.” (Rogers, supra, at p. 830, 76 Cal.Rptr.2d 743.) The court stated such a motion would be timely if made within the “time limits for a motion for new trial (Code Civ. Proc., § 659 ).” (Ibid. )
In the present case, there is no dispute that Watson's request for prejudgment interest was made less than 15 days after the judgment was filed. As such, the request was made within the statutory time limit for motions under Code of Civil Procedure section 657. (Code Civ. Proc., § 659, subd. (a)(2).) Consequently, we conclude Watson's request for prejudgment interest was timely.
4. Proper Format of a Request for Prejudgment Interest
The trial court denied Watson's request for prejudgment interest “as untimely made.” The court then stated that requests “must be made by way of a motion prior to entry of judgment or in the form of a motion for new trial.” The court's order implies that it regarded the form of Watson's request as procedurally improper. Consequently, we consider whether the format of Watson's request rendered it defective. In particular, we consider whether the request qualifies as a motion under Code of Civil Procedure section 657.
Code of Civil Procedure section 657 covers motions for new trial and also authorizes a decision to “be modified” on the grounds specified in the subdivisions of that section. A request for prejudgment interest is not a request for a new trial (an opportunity to present evidence to a trier of fact), but a request to modify the decision to include an award of prejudgment interest. Consequently, we use the phrase “motion under Code of Civil Procedure section 657 ” rather than “motion for new trial” to describe a motion under that section seeking modification of a judgment to include prejudgment interest.
As a general rule, a new trial may be granted pursuant to Code of Civil Procedure section 657 only if the request conforms to the statutory procedures. (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 726, 60 Cal.Rptr.2d 698 (Shapiro ).) We interpret this general rule as applying not only to new trials but to requests for modification under Code of Civil Procedure section 657. The statutory procedures set forth in Code of Civil Procedure section 659 require the motion to (1) designate the grounds upon which it is made and (2) state “whether the same will be made upon affidavits or the minutes of the court, or both.” (Code Civ. Proc., § 659, subd. (a) ; see 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 48, pp. 634–635 [statutory requirements for motion for new trial].) First, the fact that Watson's request was not labeled as motion for new trial or as a motion for modification under Code of Civil Procedure section 657 does not render its format defective. (See Shapiro, supra, 52 Cal.App.4th at p. 728, 60 Cal.Rptr.2d 698 [styling a request as a motion to vacate, rather than a motion for new trial, was of no consequence]; see 8 Witkin, Cal. Procedure, supra , Attack on Judgment in Trial Court, § 47, pp. 632–634 [motion improperly labeled].)
Second, compliance (or substantial compliance) with the requirements of subdivision (a) of Code of Civil Procedure section 659, depends upon whether the request provides the relevant information to the opposing party and the court and gives the adverse party a reasonable opportunity to oppose the request on its merits. (Nichols v. Hast (1965) 62 Cal.2d 598, 600, 43 Cal.Rptr. 641, 400 P.2d 753 [J. Traynor] ; see Shapiro, supra, 52 Cal.App.4th at pp. 727–728, 60 Cal.Rptr.2d 698.) These functions are satisfied when the written request designates the grounds upon which it is made. Here, Watson's request clearly identified (1) the relief requested (i.e., the addition of prejudgment interest to the amount of the judgment) and (2) the grounds upon which the request was based—specifically, Civil Code section 3287, subdivision (a) and its contention that the damages were a liquidated sum. Furthermore, Watson provided RGW a sufficient opportunity to oppose the request, as is evident from the written opposition filed by RGW with the court. Consequently, we conclude Watson's request provided RGW with the sufficient notice and a reasonable opportunity for opposition, thus satisfying the purpose and requirements of Code of Civil Procedure section 659, subdivision (a).
Third, the requirement that a motion under Code of Civil Procedure section 657 designate “whether the same will be made upon affidavits or the minutes of the court, or both” (Code Civ. Proc., § 659, subd. (a) ), is not a jurisdictional. (Nichols v. Hast, supra, 62 Cal.2d at p. 600, 43 Cal.Rptr. 641, 400 P.2d 753.) Moreover, the specific statement of the grounds for Watson's request was sufficient to imply that it was made on the minutes of the court and the exhibits and testimony presented at trial. (Id. at p. 601, 43 Cal.Rptr. 641, 400 P.2d 753.) Therefore, we conclude that Watson's request substantially complied with the statute even though it did not expressly state whether it was “made upon affidavits or the minutes of the court, or both.” (Code Civ. Proc., § 659, subd. (a).) In summary, we conclude that the format of Watson's request for prejudgment interest was not defective and, therefore, we proceed to the merits of the request.
C. Watson's Claim That a Change Order Was Required
1. Watson's Theory of Liability
Watson's respondent's brief contends that after Caltrans rejected the two-cell joint seal assemblies, a change order for a different price was required pursuant to paragraph 16 of the purchase order. Watson also contends that “RGW refused to issue a change order and claimed it was only required to pay for the rejected joint seals ..., not for the joint seals it received and incorporated into the completed project.”
The foregoing contentions made by Watson are consistent with the arguments it pursued in the trial court. The trial court described Watson's contentions in the court's instructions to the jury by stating: “Watson Bowman claims that the original contract was modified or changed. Watson Bowman must prove that the parties agreed to the modification. RGW denies that the contract was modified.” The jury impliedly found Watson's theory of liability was correct and a change order for a different price was required when it answered the first question in the special verdict form in Watson's favor.
2. Watson's Theory of Damages
The jury's implied finding that a change order for a different price was required by the contract meant the jury also had to determine what that different price should have been. To assist the jury in making this determination, the trial court gave general instructions about the damages to be awarded in a breach of contract case, stating that if a party proved its breach of contract claim, “you also must decide how much money will reasonably compensate that party for the harm caused by the breach. This compensation is called damages. The purpose of such damages is to put the non-breaching party in as good a position as it would have been if the other party had performed as promised.” As to the amount, the court stated: “The non-breaching party also must prove the amount of its damages according to the following instructions. It does not have to prove the exact amount of damages. You must not speculate or guess in awarding damages.” The court then stated that Watson claimed damages for nonpayment. These instructions addressing damages were applied by the jury in answering the first question of the special verdict form. That question asked, “What was the amount of the subject agreement?” The jury found the amount was $605,990.
Thus, the court did not instruct the jury that if Watson proved the contract had been modified and RGW breached the modified contract, the jury must find the modified contract price was a particular amount. Similarly, the court did not instruct the jury to perform specific calculations or use a particular formula to determine Watson's damages for the alleged breach of contract
3. The Evidence and Arguments Presented to the Jury
Whether the change order price of $605,990 was sufficiently certain for purposes of awarding prejudgment interest must be evaluated in the context of not only the historical facts that occurred before the litigation, but also the arguments and evidence presented to the jury. (See Olson, supra, 35 Cal.3d at p. 402, 197 Cal.Rptr. 843, 673 P.2d 720 ; Leff, supra, 33 Cal.3d at p. 520, 189 Cal.Rptr. 377, 658 P.2d 740.) The foundation for the parties' arguments about whether a change order was contractually required and the amount of any such order was paragraph 16 of the purchase order. Paragraph 16 stated that if Watson furnished different or changed items by reason of written instructions from RGW, “the amount of the adjustment shall be by mutual agreement of the parties; however, if no such agreement is reached, the adjustment shall be determined by arbitration.” Paragraph 16 also addressed the possibility that a supplier might withhold delivery of the changed items during the negotiations of the price adjustment by providing: “Nothing provided herein shall excuse the Seller from proceeding with the furnishing of the items as changed.”
Watson and RGW never expressly agreed to the amount of the adjustment and never submitted the matter to arbitration pursuant to paragraph 16 of the purchase order. Thus, the amount owed by RGW to Watson for changing the order to four-cell joint seal assemblies was never rendered certain by an express agreement of the parties or by an arbitration award. The evidence relied upon by Watson for the amount owed on the contract was Quote 02, from September 2009, and its price of $605,990 for the 146 units of WaboModular BET–1200 joint seal assemblies. In September 2010, Watson requested a change to the purchase order to reflect the original price in Quote 02 of $605,990. RGW did not present evidence addressing the value of those units. Instead, RGW focused on the question of liability and its theory that there was no change order requiring a price adjustment.
During closing argument, counsel for Watson addressed how the jury should answer the question in the special verdict about the amount of the subject agreement. Counsel asked the jury to “[l]ook at their Paragraph 16, look at the terms, consider the revised and resubmit letter, and decide if a change order was merited, if a change order was deserved by Watson.” As to amount, he stated, “So I guess I would put in this one 605,990. That's the amount of the bid day quote. That's the cost of the four-cell joints.”
Counsel for RGW told the jury that the “fundamental issue here is whether Watson Bowman is going to be held to the terms of the contract it signed.” In other words, RGW argued that there had been no change order or modification of the contract formed when Watson Bowman signed the purchase order. As a result, counsel for RGW addressed the question in the special verdict form about “the amount of the subject agreement” by arguing the correct answer was $222,957.68—the amount typed on the first page of the purchase order.
The jury answered the first question on the special verdict form by finding the amount of the subject agreement was $605,990. This amount was (1) stated in Quote 02 in 2009, (2) requested by Watson in its request for a change order in 2010, (3) identified as the amount of Watson's damages in its first amended complaint in 2012 and (4) suggested by Watson's attorney in closing argument in 2014.
4. Analysis
Watson's entitlement to prejudgment interest under Civil Code section 3287, subdivision (a) depends on whether the compensation RGW owed Watson for delivering the four-cell joint seal assemblies was “certain, or capable of being made certain by calculation” for purposes of the statute. Based on the principles set forth in Olson and Leff, we conclude the requisite level of certainty was achieved and Watson is entitled to prejudgment interest.
Applying the test set forth in Chesapeake, supra, 149 Cal.App.3d 901, 197 Cal.Rptr. 348, we conclude that RGW could have determined the amount owed from “reasonably available information.” (Id. at p. 907, 197 Cal.Rptr. 348.) RGW had possession of Quote 02 and had been informed by Watson, in prelitigation correspondence and in later in pleadings, what Watson regarded as the appropriate price for the four-cell joint seal assemblies. RGW has argued the amount was uncertain, but has not identified any additional information about price or value that was not in its possession at the time the joint seal assemblies were delivered in August 2011. Moreover, like the defendants in Leff, RGW “offered no evidence to contradict” the amount asserted by Watson. (Leff, supra, 33 Cal.3d at p. 520, 189 Cal.Rptr. 377, 658 P.2d 740.) Therefore, as a practical matter, this case involved a dispute over liability and not a dispute about the amount owed in the event that RGW lost on the liability question. Consequently, it was not a case in which the “amounts due turn on disputed facts.” (Olson, supra, 35 Cal.3d at p. 402, 197 Cal.Rptr. 843, 673 P.2d 720 ; Leff, supra, at p. 520, 189 Cal.Rptr. 377, 658 P.2d 740 [no evidence contradicted components used in plaintiff's calculations].) Therefore, we conclude that the amount of damages awarded for RGW's breach of contract was sufficiently certain for purposes of Civil Code section 3287, subdivision (a). Consequently, Watson is entitled to prejudgment interest.
D. Paragraph 2 of the Purchase Order
See footnote *, ante .
--------
III. PROTECTIVE CROSS–APPEAL ***
DISPOSITION
The judgment is affirmed, except insofar as it failed to award Watson prejudgment interest. The case is remanded to the trial court for the purpose of calculating and awarding Watson prejudgment interest. Watson shall recover its costs on the appeal and cross-appeal.
WE CONCUR:
POOCHIGIAN, Acting P.J.
SMITH, J.