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Cheema v. L.S. Trucking, Inc.

California Court of Appeals, First District, Fourth Division

September 17, 2019

JASWINDER CHEEMA, Plaintiff and Appellant,
L.S. TRUCKING, INC., Defendant and Appellant.

          Alameda County Superior Court No. HG12611230 Trial judge: Honorable Sandra K. Bean

          Counsel for plaintiff and appellant: Jewell J. Hargleroad

          Counsel for defendant and appellant: Paul Kleven

          POLLAK, P. J.

         After a bench trial, Jaswinder Cheema recovered damages from L.S. Trucking, Inc. (LS Trucking or LS) for having underpaid him and for having failed to make timely payments due him as a “subhauler” for LS Trucking, driving a Super Dump truck with an attached trailer (or “box”). In these cross-appeals, Cheema contends that the trial court erred in denying his request for prejudgment interest pursuant to Civil Code section 3287 and for penalty interest pursuant to Civil Code section 3322.[1] LS Trucking challenges the court's conclusion that the parties' oral agreement for Cheema to sell it the box, justifying its deductions for rental of the box from its payments to Cheema, was unenforceable, and it also contends that the amount of attorney fees awarded to Cheema is excessive.

         We conclude that the court erred only in refusing to award prejudgment interest and penalty interest to Cheema. We shall therefore remand for the court to calculate and award the proper amounts of prejudgment and penalty interest, and shall affirm the judgment and the order awarding attorney fees in all other respects.

         Factual and Procedural History

         The issues in dispute are, to say the least, somewhat complicated. LS Trucking is a trucking company that also operates as a broker of construction trucking services. Pursuant to a 2009 oral agreement between LS Trucking and Cheema, Cheema purchased a Super Dump Truck and a detachable box, with the understanding that LS would purchase the box from Cheema. Because LS Trucking owned the box, it would give priority to Cheema in dispatching assignments to Cheema as a subhauler.[2] The two parties entered a written “Subhauler and Trailer Rental Agreement” (the Agreement) under which Cheema would submit to LS Trucking completed freight bills (referred to as “truck tags”) for all hauling that he performed for LS, based on which LS would prepare statements showing the amount billed payable to Cheema, less (among other deductions) a 7.5 percent brokerage fee and, if the work was performed with a box owned by LS, a 17.5 percent rental fee. The Agreement contains a provision awarding reasonable attorney fees to the prevailing party in any action “arising from or [in] relation to this Agreement.”

         Cheema began providing hauling services with his Super Dump truck and the attached box in late September 2009, and received his first statement and payment for his services on November 5, 2009. From this and succeeding payments LS Trucking deducted the brokerage fee, which Cheema does not dispute, and a rental fee for the box.[3] Cheema contends that because LS Trucking failed to pay him the $32, 835.09 purchase price of the box as allegedly agreed, the box remained his, and LS was not entitled to deduct rental fees from the payments due him. LS Trucking did deduct rent from all payments to Cheema beginning in September 2009, but made no payment towards purchase of the box until June 15, 2010, when it began paying Cheema $1, 000 a month for nine months, noting on the checks that the payments were repayment of a “loan.” Cheema's amended complaint alleges not only that rent totaling $15, 168.24 was wrongly deducted from his payments over the period he worked for LS Trucking, [4] but also that LS “became increasingly late in its payments, ” so that, “[b]y December 2010, Cheema was being paid for work performed in August 2010.” He alleged that for 140 hours of work performed from December 2010 through March 12, 2011, he had not been paid at all.[5]

         LS Trucking cross-complained against Cheema alleging, among other things, that it “is the owner and entitled to possession of a super dump trailer” that it purchased from Cheema, that Cheema rented the trailer from LS, and that Cheema “terminated their rental agreement but failed and refused... to return the super dump trailer” to LS. As LS has stated on appeal, “The principal issue in the case was the effect of a verbal agreement between the parties under which LS Trucking agreed to purchase the box that was on a Super Dump truck that Cheema had purchased....”

         Following a nine-day bench trial, issuance of a tentative and proposed statement of decision and consideration of objections thereto, the court issued its statement of decision. The court concluded that “the parties' supposed agreement to sell the super dump box/trailer from Cheema to LS Trucking is not enforceable for two reasons. First, title exists only for the truck as a whole which shows the agreement to sell only the dump box/trailer had an illegal object.... If there is no legal means of obtaining title to only the dump box/trailer, then it is not possible to sell it without selling the whole truck and the parties' attempt to do so is void. [¶] Second, the court finds this supposed oral agreement to sell the dump box/trailer is too indefinite or uncertain to be enforceable. (See, e.g., ... § 1596.)... The complicated transaction involved Cheema paying ‘rent' to LS Trucking even though Cheema bought the truck[, ] and possession or title to it never passed to LS Trucking. LS Trucking also paid Cheema nine $1, 000 payments for the dump box/trailer, but there was never any clear and definite agreement between the parties that the dump box/trailer would transfer immediately to LS Trucking with LS Trucking's purchase price to be paid to Cheema in monthly installments. The court cannot enforce this uncertain and unduly complicated arrangement.” Since “there was no enforceable agreement to buy the dump box, then LS Trucking should not have charged Cheema ‘rent' for use of the trailer.”[6] The court held that Cheema was entitled to recover the amount that LS Trucking had deducted for trailer rent, plus the amount he was owed for unpaid truck tags, less the $9, 000 he had received in $1, 000 monthly payments, for a net amount of $19, 113.84.

         The court denied Cheema's request for penalties under section 3322 because “Cheema did not meet his burden of proof to trigger the protections of the statute. Cheema was required to submit ‘charges' including all necessary documentation for payment by the fifth day of the month following the date the work was performed. Cheema merely provided the court with Shipping Order and Freight Bills on LS Trucking forms. The court cannot determine the amount due and owing to Cheema, i.e., the ‘charges' from these forms for any of the jobs. The reference to ‘necessary documentation' requires at least an invoice that sets forth specific information about the job, the work performed, the hours worked, the pay rate, the distance driven, and the exact amount owed to the independent contractor.”

         The court rejected all of LS Trucking's claims because all were predicated on it having purchased the trailer, while “title to it never transferred to LS Trucking and it was not legally possible for [LS] to buy only the dump box by itself.” The court also held that Cheema was the prevailing party entitled to recover his attorney fees, and in subsequent proceedings awarded Cheema the full $100, 415 in fees that he requested.

         In a posttrial motion, Cheema claimed that he was entitled to prejudgment interest on the amount of his recovery. The court denied the request for mandatory prejudgment interest under section 3287, subdivision (a) “because his damages in this case were not certain or capable of being made certain until after trial where the court found that the agreement to sell Cheema's dump box/trailer to LS Trucking was not enforceable.... There was no certainty until after trial regarding how much Cheema was owed by LS Trucking, and Cheema did not show he was entitled to recover damages in an amount certain or in an amount capable of being made certain that vested on a particular day.”[7] The court also declined again to award 2 percent penalty interest under section 3322. It rejected Cheema's argument that “the only documents he was required to provide to LS Trucking were completed freight bills, ” repeating its finding that the freight bills “do not show Cheema's charges, including all necessary documentation.”

         Both parties have timely appealed. Cheema disputes the failure to award him prejudgment interest and penalties under section 3322. LS Trucking disputes the trial court's determination that the verbal agreement to sell the trailer was void, [8] and, in a separate appeal consolidated with ...

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