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G. Voskanian Construction, Inc v. Alhambra Unified School District

March 29, 2012

G. VOSKANIAN CONSTRUCTION, INC., PLAINTIFF, CROSS-DEFENDANT AND RESPONDENT,
v.
ALHAMBRA UNIFIED SCHOOL DISTRICT, DEFENDANT, CROSS-COMPLAINANT AND APPELLANT; FIDELITY & DEPOSIT COMPANY OF MARYLAND ET AL. CROSS-DEFENDANTS AND RESPONDENTS.



(Los Angeles County Super. Ct. No. BC378253) APPEAL from a judgment of the Superior Court of Los Angeles County, Morris B. Jones and Rita Miller, Judges. Affirmed.

The opinion of the court was delivered by: Klein, P. J.

CERTIFIED FOR PUBLICATION

Defendant, cross-complainant and appellant Alhambra Unified School District (the District) appeals a judgment following a jury verdict in favor of plaintiff, cross-defendant and respondent G. Voskanian Construction, Inc. (Voskanian), and cross-defendants and respondents Fidelity & Deposit Company of Maryland (Fidelity) and Old Republic General Insurance Corporation (Old Republic).

The essential issues presented relate to the right of Voskanian, a general contractor, to recover for extra work it performed on two public works contracts.

As to the first contract, the relocation contract, Voskanian is entitled to recover for its extra work because the District eventually issued written change orders authorizing the extra work.

As for the second contract, the fire alarm contract, notwithstanding the lack of a written change order, Voskanian is entitled to recover for the extra work that was required because its bid was based on misleading plans and specifications issued by the District. (Souza & McCue Const. Co. v. Superior Court (1962) 57 Cal.2d 508, 510 (Souza).)

Therefore, the judgment is affirmed.

FACTUAL AND PROCEDURAL BACKGROUND

1. Facts.

In June 2006, following competitive bidding, Voskanian and the District entered into a written contract (the first contract or the relocation contract), under which Voskanian was to serve as general contractor for the District and provide certain improvements as part of a project known as the Moor Field Program Relocation, for compensation of $989,000. Pursuant to the agreement, Voskanian was to move numerous portable buildings to the site of the Moor Field campus.

The first contract, as well as a subsequent contract (the second contract) provided at section 23 that "This Agreement and the other Project Documents can be modified only by an amendment in writing, signed by both parties and pursuant to action of the District's Governing Board." Further, section 24 of the contracts, captioned "Change Orders," stated that change orders submitted by the contractor may be approved by "the District's Assistant Superintendent of Business Services, or her designee." (Italics added.) The District's Assistant Superintendent of Business Services (Assistant Superintendent) was Cynthia Martin. The first and second contracts did not specify how a "designee" is appointed.

During the course of the project, Martin directed Voskanian to deal with Mark Edwards and James Courteau of BRJ & Associates (BRJ), the construction manager, to finalize changes orders with them, and then she would approve whatever they agreed to. The project was under time constraints and had to be completed before schoolchildren returned to school in early September. The relocation project had to be completed within 57 days, and the fire alarm project had to be completed within 45 days. The projects could not be halted for months until the District's board formally approved each change order. The District required the extra work to be completed immediately and then the change orders would be bunched together to be processed by the District.

During the course of the relocation contract, the District and its representatives asked Voskanian to make changes to remedy errors made by the District's architect when preparing the plans, to resolve problems that arose because the site conditions did not match what was contained in the plans, and because the District wanted work outside the scope of the plans.

During the course of the relocation contract it also became clear the architect neglected to include a fire alarm system for the relocated buildings. Therefore, the District prepared new plans and solicited bids for the new fire alarm project. Voskanian's bid was the lowest. Voskanian and the District then entered into the second contract, the $55,000 fire alarm contract, wherein Voskanian was to serve as the general contractor for the fire alarm project.

In accordance with the two contracts, Voskanian also obtained performance bonds from Fidelity.

In soliciting bids for the fire alarm system for the portable buildings that were part of the fire alarm project, the District required bidders to submit their bids based on the plans and specifications provided at the time of bidding. During the bidding process, Voskanian participated in a "job walk" arranged by the District, to ascertain the interior configurations of the buildings for the fire alarm project. However, because the walkthrough occurred while classes were in session, participants were allowed to view only two of the 16 buildings, and from the doorways only. Voskanian was given a set of the plans only after the job walk, and therefore did not have the benefit of the plans while conducting the job walk.

After Voskanian was awarded the fire alarm contract, it discovered that many of the portable buildings had more rooms than shown on the plans, thus requiring more alarm devices, conduit and wiring. For example, one of the buildings was shown on the plans as a single room with no interior walls; however, as built, that structure had six interior rooms. Due to the error in the plans, Voskanian requested that the District approve a change order for the extra devices that would be needed for the rooms not shown on the plans.

The District originally agreed to pay Voskanian $989,000 for the work performed on the relocation contract, not including the change orders. The District also agreed, before the error in the plans was discovered, to pay Voskanian $55,000 for the work performed on the fire alarm contract, not including the change orders.

Upon completion of the work, the District refused to pay Voskanian the full amount due.

In accordance with the contracts, Voskanian submitted a claim to the District pursuant to Government Code section 910 et seq.*fn1 Voskanian asserted that on the relocation contract, it was owed $206,367, including $106,225 in unpaid retention and $100,142 for extra work that was unpaid. Voskanian also sought $94,777 on the fire alarm contract, consisting of the entire contract amount of $55,000 plus $39,777 for extra work on that contract.

On September 11, 2007, the District rejected the claim. This litigation followed.

2. Proceedings.

On September 28, 2007, Voskanian filed suit against the District for breach of written contract and recovery of statutory penalties. On the relocation contract, Voskanian sought $106,225 in unpaid retention funds and $100,142 for extra work performed. On the fire alarm contract, Voskanian sought $55,000 for unpaid contract funds, progress payments and retention funds, as well as $39,777 for extra work.*fn2

The District filed a cross-complaint against Voskanian for breach of contract. The District's cross-complaint also named Fidelity and Old Republic, seeking to enforce the terms of two performance bonds issued by Fidelity and a contractor's license bond issued by Old Republic.

On July 28, 2009 through August 11, 2009, the matter was tried to a jury. The jury returned a special verdict awarding Voskanian $419,756, including penalties and interest, the precise amount Voskanian had requested at trial. The special verdict included the following findings: a portion of the relocation contract between the District and Voskanian was modified by an oral agreement; the oral modification was the designation of BRJ and James Courteau as "designee" of the District; the District breached the relocation contract by failing to pay Voskanian for work done and by failing to pay retention amounts due; Voskanian was entitled to recover $301,190 against the District on the relocation contract; the District also breached the fire alarm contract project; its breach consisted of nonpayment for work done by Voskanian and failing to respond to "requests for information" within a reasonable time; and Voskanian was entitled to recover $118,566 from the District on the fire alarm contract.*fn3

On October 5, 2009, the trial court entered judgment in favor of Voskanian in the principal sum of $419,756. On November 17, 2009, the trial court denied the District's motion for judgment notwithstanding the verdict (JNOV) and motion for new trial. On December 9, 2009, the District filed a timely notice of appeal from the October 5, 2009 judgment.

On March 24, 2010, the trial court granted Voskanian's motion for attorney fees. On April 20, 2010, the trial court entered an amended judgment which included the award to Voskanian of attorney fees in the sum of $207,295 as well as $79,506 in costs. On May 11, 2010, the District filed ...


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