Needles Boat & Rv Storage, LLC vs. Clovis Metal Buildings, Inc.

Motion in Limine

Cal. Super. - 4th Dist.August 1, 2014

1 2 3 4 5 6 7 8 g 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 138954 _1 MARK B. WILSON, P.C. - Bar No. 137400 KLEIN & WILSON A Partnership of Professional Corporations 4770 Von Karman Avenue Newport Beach, California 92660 (949) 631-3300; Facsimile (949) 631-3703 NEEDLES BOAT & RV STORAGE, LLC, Plaintiff, VS. CLOVIS METAL BUILDINGS, INC. and DOES 1 through 100, inclusive; Defendants. MICHELLE L. CARDER, ESQ. - Bar No. 174481 performance. 1. INTRODUCTION ou nt y of Or an ge 0 1 1 4 / 2 0 1 6 at 09 :5 5: 00 A Li E L E C T R O N I C A L L Y FI LE D Su pe ri or Co ur t of Ca li fo rn ia Cl er k of th e Su pe ri or Co ur t By Ol ga Lo pe z, D e p u t y Cl er k wilson@kleinandwilson.com; mcarder@kleinandwilson.com Attorneys for Defendant CLOVIS METAL BUILDINGS, INC. IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE, CENTRAL JUSTICE CENTER Case No. 30-2014-00737825 ASSIGNED FOR ALL PURPOSES TO: JUDGE LINDA MARKS, DEPT. C10 DEFENDANT CLOVIS METAL BUILDINGS, INC.’S MOTION IN LIMINE NO. 3 FOR AN ORDER EXCLUDING EVIDENCE REGARDING MODIFICATION; DECLARATION OF MICHELLE L. CARDER [Filed Separately]; REQUEST FOR JUDICIAL NOTICE [Filed Separately]; AND [PROPOSED] ORDER [Filed Separately] Complaint Filed: August 1, 2014 Trial Date: January 25, 2016 Defendant, Clovis Metal Buildings, Inc. (“CMB”) submits the following motion in limine no. 3 for an order excluding evidence the parties agreed to modify the project at issue or to extend the time of Needles Boat & RV Storage, LLC (“NBS”) based its breach of contract cause of action on one contract. At issue is a September 2007 contract setting forth a specific scope of work and a specific price. When steel prices increased, CMB warned NBS it would need to order the steel to avoid an 1 DEF’S MTN IN LIMINE NO. 3 Ce 0 NN o N nn RR W N N D N N N N N N N D e m e m pe d p m e m p m p m pe e ~~ A N Wn BR W N = O O N Y B R E W I N R O 28 138954 _1 increase in the contract price. (See, accompanying declaration of Michelle L. Carder [“Carder Decl.”], par. 3 and Exhibit 1 [63:3-13]) NBS did not order the steel, so CMB issued a change order increasing the contract price to accommodate the increased steel prices. (Carder Decl., Exhibit 1 [156:16-23, 159:3-160:8]) When steel prices increased again and CMB informed NBS there would be a $400,000 price increase, NBS put the project on hold. (Carder Decl., Exhibit 1 [90:3-13]) But no one knew how long the “hold” would last. NBS’s person most qualified testified it could have lasted three months or three years. (Carder Decl., Exhibit 1 [91:7-15]) And, no one knew when NBS built the project whether it would be the one described in the September 2007 contract or a modified, smaller-scale project. (Carder Decl., Exhibit 1 [131:2-6; 131:11-133:13]) NBS postulates about oral modifications to delay the contract and change the scope of work, but the oral modifications are not executed and not supported by consideration. The alleged agreements to delay the project indefinitely and modify the scope of work also are fatally uncertain. Testimony and evidence regarding any agreement between the parties other than the September 2007 contract - which is the only contract pled in NBS’s first amended complaint (“FAC”) - therefore, is not relevant for the purpose of proving breach of the September 2007 contract or modification of the September 2007 contract. 2. STATEMENT OF RELEVANT ALLEGATIONS AND PROCEDURAL HISTORY NBS owns raw land on which it planned to build a boat and RV storage facility. In its FAC, NBS alleges the contract at issue is a September 2007 written agreement by which CMB was supposed to install concrete footings and erect steel structures on NBS’s property. (See, Request for Judicial Notice [“RFIN”] Exhibit 1, pars. 5-8 and Carder Decl., Exhibit 1 [156:3-9]) The contract at issue consists of three documents, a document titled “Contract” to provide cement footings in exchange for $64,650.00 (“Cement Footings Contract”), a second identical document titled “Contract” setting forth a price of $1,330,628.00 for the metal buildings (“Metal Building Contract”), and a third document I y The evidence is, however, relevant and admissible to prove the parties mutually terminated the agreement. Civil Code section 1689. 2 DEF’S MTN IN LIMINE NO. 3 OC 0 1 A N hn Bs W N RN NN N N N N N N e e ee me p m pe d e d e d p d e a ~N O N nn R W ND = D O O N N N E W N = O 28 138954 1 specifying the breakdown of materials and costs titled “Phase 1 Scope” (“Phase 1 Scope”) (collectively the “contract). (See, Carder Decl., Exhibit 1 [156:3-9] and Exhibits 2-4) The Cement Footings Contract and Metal Building Contract state, “Any additions to or deductions from this contract must be approved by both Buyer and Seller.” (Carder Decl., Exhibits 3 and 4) The Phase 1 Scope, which NBS concedes is part of the contract documents, states NBS will pay $1,330,628 in exchange for specified buildings of specified size and materials. (Carder Decl., Exhibit 2) The Phase 1 Scope also states, “Typical delivery schedule: 6-8 weeks for approval drawings and 5-6 weeks for delivery from approval date.” (lbid.) However, the contract does not specify the time for CMB to complete performance which, according to NBS, included construction of the project and not Just the delivery of materials. Yet, NBS’s person most qualified, Christopher Hoskins (“Hoskins”), testified the parties expected to break ground on the storage facility within six months of the contract and expected the project to be completed within a year. (Carder Decl., Exhibit 1 [34:2-21]) Despite this, NBS alleges CMB breached the contract by failing to install the concrete footings and erect steel structures in November 2011. (RFJN Exhibit 1, par. 8) The FAC does not allege the parties modified the contract. Nor does it allege the parties entered into any contract other than the contract. Putting together the pieces of NBS’s story, it appears to contend the parties modified the contract by extending the time of performance indefinitely when NBS concluded it could not accept two change orders increasing the contract price due to an increase in steel prices. Hoskins, testified NBS put the project on hold after determining it was no longer economically feasible due to an increase in steel prices. (Carder Decl., Exhibit 1 [46:2-24, 86:18-87:23, 98:6-20, 156:3-9]) According to Hoskins, the economy was starting to “stumble” and NBS believed it could delay and “drag its feet” in completing the project until steel prices went down. (Carder Decl., Exhibit 1 [53:8-25, 87:1-90:13]) Yet, it is not clear what project NBS contends the parties agreed to build. Hoskins testified NBS concluded as of November 2010 that the larger scale project set forth in the contract was not economically feasible, but that a scaled-back, smaller project done in phases would be feasible. (Carder Decl., Exhibit 1 [94:2-96:1, 96:2-6, 97:9-14, 98:6-16, 98:17-20]) As of October 18, 2011, NBS “had been on hold now for a couple of years and [was] looking at other options on, you know, okay, do we do 3 DEF’S MTN IN LIMINE NO. 3 Ce 0 NY Dn Rs W N NO RN N N N N Y D N m s me m he m e m e e e m ee e d pe d ee N R B R I I R E Z T E L D E E S L D S 28 138954 1 a bigger one or do we -- do we do a smaller one . . . and what would that look like.” (Carder Decl., Exhibit 1 [101:25-102:6]) As for the smaller scale project, Hoskins admitted there was never a plan. Rather, NBS “just talked about the concept of, hey, let’s start with something smaller and then we’ll expand.” (Carder Decl., Exhibit 1 [102:12-16]) Hoskins admitted CMB and NBS never reached an agreement for a specified scope of work at a lesser price and that this was just an idea that was “floated.” (Carder Decl., Exhibit 1 [129:20-130:10]) Despite this, NBS contends CMB was obligated to build the smaller scale project. (Carder Decl., Exhibit 1 [130:11-25]) NBS will argue CMB agreed to put the project on hold. As demonstrated by the following testimony, it is clear no one had any idea what the project or revised contract would look like or even if there would be a revised contract. “Q. Did they make an agreement that they were going to do a specific scope of work for a lesser price? A. No. Q. Then I'm trying to understand, what agreement did you believe Clovis violated by failing to deliver steel? A. Well, the understanding is once we get the project back on track, we would just keep going down the road with -- you know, if we did build a full-size one, we’d just keep going down the road as if, you know, everybody -- I don’t know -- took a break for a few years. But then if came back, “No, we didn’t take a break for two years. We're done.” Or a few years. “We're done. We're -- we're not doing anything else under -- under this deal.” Q. So your testimony was, at this point in time, you were talking about the smaller-scaled project; correct? A. As -- as recently as two months ago we were talking about a smaller-scaled project. Q. And since you decided to put the project on hold, the conversations have always been about a potentially smaller-scale project; correct? A. No. Hock ok 4 DEF’S MTN IN LIMINE NO. 3 Oo 0 9 NN nn BA W N ND N N N N N N N m m e m he m be m em be d e d p e p m pe e J O N nn kA W N = D O O 0 N Y Re W N OO 28 138954 _1 111 I /11 111 I I I We’ve -- we’ve had conversations about a smaller-scale project, and we’ve also had conversations about, “Well, we’re just still on hold, you know, on -- on the full-scale project.” The smaller-scaled project is one where I thought that would be a -- a -- a great way to get back in -- you know, get something out of the ground. Are you able to point to any document or any conversation that you believe was an agreement between Needles and Clovis to do a smaller-scaled project? No. We only had conversations about it. And the failure to deliver steel to the site, can you point to any specific conversation or document that you believed required Clovis to deliver steel to the site? I think that would be a question for Greg. I think he had conversations with Ric Justus about that. Okay. Well, I mean, this is -- you're the Person Most Knowledgeable -- Sure. -- and this is encompassed by a number of the topics, so I need an answer from you. Were they obligated to deliver steel for a smaller project? No. Is that the question? Did I get that right? Well, the question was: Are you able to point to any document or conversation that you believe obligated them to deliver steel to the site? No.” (Carder Decl., Exhibit 1 [131:11-133:13]) 5 DEF’S MTN IN LIMINE NO. 3 OO 00 3 O N n t B L N = N N N N N N N N N mm e m em em e m e m e d e m e m ~~ NN nh RR W N = O O N Y R W = O 28 138954 1 The parties also apparently had no idea when they would build the project. Hoskins testified he “had no idea” how long the project would be on hold. He “assumed that the project would be on hold for an undetermined amount of time; again, three months, three years, I don’t know, but then once we're ready to go again, we’d just fire things back up again.”? (Carder Decl., Exhibit 1 [93:8-20]) 3. THERE IS NO AGREEMENT TO MODIFY THE SCOPE OF THE PROJECT, NO MANIFESTATION OF ASSENT, AND SUCH AGREEMENT IS FATALLY UNCERTAIN Code of Civil Procedure section 592 requires rulings on issues of law in a breach of contract action to be made prior to trial of the case before the jury. “It is... solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.” Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865. A contract must be definite as to all material terms. Patch, et al. v. Anderson, et al. (1944) 66 Cal.App.2d 63, 65. “‘Preliminary negotiations or an agreement for future negotiations are not the 3 functional equivalent of a valid, subsisting agreement.” Beck v. American Health Group International, Inc., et al. (1989) 211 Cal.App.3d 1555, 1562. There must be mutual consent for an agreement to be enforceable. Weddington Productions, Inc. v. Flick, et al. (1998) 60 Cal. App.4th 793, 811. Unexecuted oral modifications to a written agreement must be supported by consideration. Civil Code section 1698. Hoskins admitted in deposition the parties did not reach any agreement to change the scope of the project. His testimony establishes the parties did not know the scope of the project after NBS put it on hold. The parties’ preliminary conversations about scaling back the project are unenforceable agreements, and there is no manifestation of assent. Furthermore, there is no evidence both parties consented to the same scope of work, or any scope of work, involving a project for anything other than that set forth in the contract and the FAC does not plead any such agreement. Evidence and testimony on this subject, therefore, is irrelevant to prove breach of contract. Evidence Code sections 210 and 350. 111 117 J In discovery, NBS produced its own November 11, 2010 meeting minutes stating the partners “determined that NBRV will go vertical within the next 3-5 years.” or, in other words, sometime between November 2013 and November 2015. (Carder Decl., par. 7 and Exhibit 7) 6 DEF’S MTN IN LIMINE NO. 3 OO 0 N a A N Dn Re W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 138954 1 4. THERE IS NO AGREEMENT TO MODIFY OR EXTEND THE TIME OF PERFORMANCE, NO MANIFESTATION OF ASSENT ON THIS ISSUE, AND THE ALLEGED AGREEMENT IS TOO UNCERTAIN TO BE ENFORCED In the absence of consideration, a gratuitous oral promise to postpone performance pursuant to an existing contract is unenforceable under Civil Code section 1698. An unexecuted oral agreement altering a written contract by extending the time for performance is void. Morton v. Albers Bros. Milling Co. (1924) 66 Cal. App. 391, 397 [holding oral agreement to extend time for delivery under written contract was void]; see also, Battaglia v. Winchester Dried Fruit Co., et al. (1939) 32 Cal. App.2d 436, 437. The contract does not specify a duration for performance. NBS, therefore, cannot contend it orally waived a written provision in the contract inserted for its benefit. Hoskins, however, testified the parties expected to complete construction within a year of the contract, or, by September 2008. This did not happen. Testimony and evidence that the parties orally agreed to delay performance is irrelevant. According to Hoskins’ indisputable testimony, at the time the parties supposedly agreed to delay performance and the project, NBS did not know if the project would be delayed for three months or three years. NBS cannot establish the parties executed a definite promise to indefinitely delay performance. And there is no evidence of any consideration supporting this alleged oral modification of the contract. “A promise made without consideration is not binding.” Smith v. Parlier Winery (1935) 7 Cal. App.2d. 357, 361 [holding an agreement for the extension of time was not a valid promise, and would not bind the plaintiff to forbear suit upon a note during the time specified in the agreement. ]. Finally, the alleged conversations about indefinitely delaying the project cannot possibly meet the requirement that a contract be sufficiently certain to enforce. “To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.” Ladas, et al. v. California State Automobile Association, et al. (1993) 19 Cal.App.4th 761, 770. Vague, amorphous, and precatory statements or promises do not meet this requirement. Id. at 771-772. 11! 7 DEF’S MTN IN LIMINE NO. 3 Oo 0 NN O N Wn RE W N N N N N N N N N m m e m e e e m e m p m pe NN O N Dn kA WLW = O O N N R W = O 28 138954 _1 By what standard would the jury determine when CMB was supposed to perform, let alone what it was supposed to perform? What would happen if the steel prices increased or decreased when NBS decided to build? Who would pay for the increase? Would the contract price be decreased if prices went down? By how much? What would be the new contract price? How would the impact of time on the cost of other materials and labor impact the contract price? Would CMB be required to “fire things back up again” based simply on NBS’s announcement that it was ready to end the indefinite hold on the indefinite project? What would be the new schedule? What would happen if the engineers providing CMB services necessary for it to perform the contract changed their pricing? Simply put, there is a total lack of specific contractual terms which might evidence an agreement to put the project and contract on hold. Ladas v. California State Automobile Association, supra, 19 Cal. App.4th 771-772. “Companies, like people, change direction.” Id. at 773. CMB cannot be required to perform a contract with a scope of work and price no one contemplated or understood. 3, CONCLUSION The court cannot enforce a contract that has no agreed price, no time for performance, and no scope of work. NBS cannot mask this deficiency with an argument that the parties orally modified the contract. There is no evidence establishing what CMB agreed to modify (i.e. how long it agreed to delay performance), and the alleged modifications are not executed by both parties and not supported by consideration. While the evidence is admissible to prove the parties abandoned the contract, the evidence is inadmissible to prove modification or breach of the contract. KLEIN & WILSON Date: January > ,2016 By: Michelle L. Carder, Esq. Attorneys for Defendant Clovis Metal Buildings, Inc. 8 DEF’S MTN IN LIMINE NO. 3