provided by that code the materials that were used in this project easily fall into that asphalt mix which is gravel in oil concrete predominantly services if it's predominantly goods then it's a contract and before your statute applies it's predominantly services then the two year statute  and and as the court knows in this case if it's determined it's a service contract then based on statute of limitations and more farms it doesn't have a case on the oral contract because more than two years had transpired before the oral contract was ninety nine point nine percent of the money that was and so all the focus has been on the on the oral contract plus the reserve i guess i didn't quite frankly was that ever at issue i mean is that agreed between the parties that it was a the written contract your original written contract was a was mixed but predominantly for goods or predominantly preserved those because it was just wasn't wasn't litigated because it's a written contract which gives you the four year statute and so we didn't have a statutory problem with that and so looking at what is predominantly good versus services we cited a number of cases in our brief and provided information under declaration from from the vice president of miller farms that for instance the asphalt the materials or goods of the asphalt cost three times as much as the labor in laying the asphalt the for some reason the district court judge gut and i'm not sure there was no evidence on this but in her brief not a brief but in her decision indicated that there would also be costs fo for equant rental and that kind of stuff while there was no evidence before her about hauling cos there was no evidence before her of equipment rental this equipment even though it hasn't been briefed in this case the equipment was all owned by  farms and and so mr sandberg in his declaration clearly stated the cost of the materials of the goods the asphalt three times the cost of labor with regard to the retaining wall that's made out of decorative wind stone blocks those blocks are twice the cost of the labor pool the retaining wall and the asphalt parking lot make up the majority the vast majority of the contract between these parties that that was orally greed upon the other item was the or another item that was a significant cost factor was the kirby concrete that's yet that's what the cases that i cited and there's no case in california that says that film service involves a material that was just a fraction of the cost of the labor it took remedies available to contractors that build on property by filing liens but this property was indian land set aside by the state of california which you can't the the tool to measure whether it's predominantly goods or services from services use the language or maybe the progeny of it but film services a contract for furnishing of asphalt providing asphalt which is laid out is a parking lot maybe i don't know whether that's a good their services but that's the written contract correct correct so then you move on to and so now there are various is the holding o something you're going to have what we have here is a mix of goods and services contract the rock was fall then under the written contract that was signed by the parties that has nothing to do with the asphalt and then that was hauled in also and the concrete that was hauled the end and the bricks or the concrete blocks that were hauled in also if i heard you to provide a retaining wall let's say i take it out of this and say i need a retaining wall on my property because i've got water you know i've got a hillside everything i'm assuming you're going to you know just use block this is not a design or wall  of the factual basis in film service and so so i don't see how the court can can separate i think you told me earlier that there was no california caves that found that the cost was really  best in construction in construction not field service is not a construction case i'm saying in construction there is no california cases are nat and that's why i went out of this  for additional cases to shed light on that as instructive and so i i think that in this case the goods clearly outweigh the services in c additional asphalt where there was an oral modification of the written agreement there wasn't additional lot as fault if i'm following the course question right the original content the written contract was for bringing in river round rock which was then place and yeah ok ok and that was compacted that then kind of forms the foundation of the parking lot on top of that then the gravel this place that gravel or the asphalt painting was then the oral contract along with a number of other things that we the new owner farms then brought in and was not paid for nasa dressed in my brief also and we argued oral modification but the judge said in the underlying air in the district court she says that something and i don't have it finally in my mind as they did last night so i'm trying to get sort of that was there an argument that some portion of the unpaid amount represented something that would be exempt from the statute of frauds because it was an oral modification of the written agreement yes ok and that was for what that was for the river run iraq that was brought in and in addition to the ten thousand and for which you were not paid for i think the court hit the nail on the head when it when they focus on film service which although it does not feel the construction contract case does state unequivocally that a contract for labor and materials is not a as far as the written contract is concerned the court may comment that's the all modification the only evidence before the court shows that the  one written contract that that mr nader guarded entry into was fully paid with a check in the amount of thirty five thousand some odd dollars that is the best evidence of whether or not that march one thousand nine hundred ninety eight written contract was fully performed through subsequent deliveries the sum of which were paid for i don't believe there's anything in the record showing subsequent deliveries that were paid for particularly not with what you do agree that under california law there can be an oral modification of a written contract i do agree with that proposition then it's just a question of fact or whether there's enough to get a jury trial on that's correct and i submit your honor that the evidence you just you didn't show the contract was a written contract was paid for you fine thank you very much the case just argued will be submitted i'm sorry i'm sorry you did save time i'm not trying to rush you i'm just you know short term memory problems  evidence of what was actually performed they said the essence of the contract in film service was to provide a service which resulted incidentally in the transfer of some tangible personal property personal property that was brought in i e the asphalt the concrete the decorative blocks the septic tanks etc and so so i believe film service interpreted  that the way that it does where the personal property was just a small fraction of the cost of the main costs was labor in film service then read fairly that farms entered into the written agreement that mr neta garden came back and said we need more rock for this we need more rocks for that and they continue holland in eight they hauled instead of ten thousand cubic yards they held hauled in excess of twenty thousand but the way he got into it was he was the contractor over the entire project and this this tribe had no money at all and so what they do is they go out and look for a the first is that the only changes at issue in this case are changes which were not initiated by the end and we can find that in the excerpt of record and the court's memorandum opinion at seven hundred five seven hours that were involved in this particular extra work but the appeal is based upon or what we contend are errors in the district court's interpretation of the contract regarding how you price those changes which were not initiated by the other and we begin with three very basic contractor patient principles which we all learned in law school and that the contract must be contrast provisions and avoids the construction that focuses only on a single provision stay with those principles in mind can i ask you to use or test the theory of my reading of the contract which i think any adjustment to the price or time for completion of the work shall be made or claimed solely in accordance with the a put global provisions of the contract otherwise on an agreed or equitable basis so from that one would in unit prices that any changes to the design or magnitude of scope of this project will be analyzed on the basis of cost conditions which are affected by these changes and it seems in my readings to define for purposes of cost there's an agreed schedule there of rates for the labor rate and then i turned to schedule  which talks about changes and it says in paragraph eight second bullet point it is agreed that should it become necessary for the subcontractor to perform additional work for the contractor or another since in this case that is not an owner initiated change such work shall be performed at cost plus a percentage of markup not to exceed fifteen percent and so on so when i go back to schedule a paragraph i find the word cost and i'm looking at the defined labor rate and i'm wondering why that doesn't give meaning to all of the contract and why it doesn't say with respect to these changes the parties agreed that when you're looking to cost the labor rate has been agreed to it was wrong with the reading because your honor and referring to excerpts of record six hundred which is  that is it says rates if you read the entirety of section a it says that the changes are going to be based on the following and the cost conditions which are far affected by these changes its mind about the nature in which the work is irrelevant it does not apply to the two changes which are not under initiated there's basically two different prices pricing mechanisms in the sub contract which is fairly typical in the construction industry you have one method for pricing changes w owner and those are typically based as here on unit prices not cost but unit prices that's what these are which are in schedule a and for changes which are not initiated by the other those which are initiated by the general contractor different but this seems to define at least for purposes of owner initiated changes the element of cost which is being defined as for the purpose of figuring the unit price there's specifying a labor rate now if there's an owner initiate proposal in five days you've waive your right to write and i think this really is where the district court became a little bit lost because what it is it looked to that provision it said i make a determination that i can't find a piece of paper that says and i just kind of played it change therefore that provision doesn't apply and i'm going to read out all the other clauses in schedule laugh and that is a fundamental flaw of contract information could you tell us where when and where you specify that the use of labor rates was inappropriate yes or any evidence of that will be it begins when and this is important understand it begins when the changes are issued if you look at there are i can give you the dates and the excerpt numbers there are letters of september questions then you get to talk ok ok just go back and tell me where on the record so you know read the language where you say use of the schedule a labor rates is an appropriate if we get to six thirty four accordingly under the guidelines of your some contract agreement i'm sorry but where does it say do not use these that's the rates you're using are inappropriate you're out of this is when the change was issued by the state but let me see if i can make a clearer request here maybe you're that i'm just trying to understand what the interplay is that you started out with the principles ok all right principles of contract interpretation are very lovely when they're stated in the abstract but trying to apply them i'm trying to give meaning to every word in the contract ok you've now said schedule is irrelevant here because that only applies to owner initiated changes we should be looking only at scheduling forget ok even the way talks about changes and if seems to be a modification o at and again i think it's important that the court understands that this issue the application of schedule after these particular changes at contemporaneous with the receipt of these proposals was discussed by struck house project manager way that you read them together is that you have a schedule f and the way to harmonize everything is that you have two different pricing mechanisms one pricing my condition which which deals with the issues that were before the district court changes not initiated b because they don't have to go go through the exercise of trying to determine what was the cost itself they'd rather find agree even paying a premium on a unit rate in order to just ease their change whatever seizures whereas the general contractor all these traditional i mean there's all sorts of varieties the contracts can be written and there's no i don't think it's a standard situation we have two tiers of pricing for change orders that's that's a traditional way to write contracts and all and fact if jones there's a change if you read it the way you don't want to read it in section eight f schedule f section eight they're really exposing themselves to kind of open ended change orders if they read that kind of if the contract is read the way they want to be read if it changes it are not initiated by the owner meaning changes that are negotiating by jones are going to be formed at cost then you don't have a but i think it was i think it was that the the provision actually below we argued that that section a i apply to all changes and what the judge what the district court judge ruled was based upon listening to extrinsic evidence based upon listening to the testimony of stroke else witnesses and jones witnesses the judge ruled that between these two plazas schedule a the court excerpt of record seven eighty eight line eighteen through one thousand which is a portion of the opinion the judge after going through the the background in the dispute states the court negotiations at the very beginning of the contract negotiations jones asked stroke cal to submit unit prices for change or to work through response was that cannot be done in our industry we don't price changes that way we will price changes based upon the cost conditions which are which affect us and we will use the following rates that's what ai is he was asked us for certain  court level there's no proof that they were initiated changes and we never agreed that they were on initiated changes and if you look at the testimony of mr make that will which is in response excerpts of record one through six mr mcdowell testified that you know there was never any discussion that some of the changes were passed through meaning owner initiated and some of them were non pass through meaning non owner initiated but that was something that never was discussed during the course of the trial or  paragraph twenty six for example shop labor field labor to be estimated with final reconciliation as am i reading that correctly that that is going to response to a p your i believe you are correct as a response to change or ten but what you talking about here is they're going through the way that we've prepared the summary you know or in here i don't think do they say you can't use the labor rates because you have to give us actual cost that was never a discussion that came up during the course of the project and it's not shown in the record anywhere and additionally this was also addressed by the district court judge where where he determined that the contract does not require struck out to submit it's actual cost records and in fact in the structural steel industry structural ste subcontractors do not keep what jones would consider kind of you know the actual cost records you don't keep a time card showing the man used twenty minutes to pick up one piece of steel and twenty minutes to pick up another piece of steel you just can't do it that way what stroke al does is come up with these labor rates forty five seventy and forty eight an hour which is based upon their experience based upon their evaluation of the business and they use those labor rates and that's the way it's done in this industry the judge specifically made reference to that in his opinion after listening to expert testimony the stroke i'll provide it so was there something else hours involved in fabricating an erection and then this procedure is in accordance with the ongoing practice in the steel fabrication and erection business as a stablished by the witnesses trail mcdowell schwartz and to some extent by jones's own construction manager get demands for caliper loose that's not the practice in the industry and nowhere in the contract does it say when you're pricing change or if you must produce to me your actual cost records including you know the time ticket showing change order the traditional way to do it would be for the contractor to say to the subcontractor i want you to change these fifteen beams on the floor give me a firm price to do it that's the traditional way to do it that's not actual costs it's an estimated cost that becomes the the the scope of the price for the scope of the work so cost certainly can mean the labor rate costs in ai another way through and through to read section after schedule after section eight to make it consistent and not read on the contract is to understand what it's really directed to it's really not directed to change or to work at all it's directed to additional work crane to hoist their materials to the roof for the fifth floor etc usually it's part of the contract that someone like stroke has to let these other subcontractors use their crane on certain schedule certain schedule time period what this is really directed to in my view is that kind of additional work it's not an owner change it's really not a change at all it's when jones comes to the contractor and says ok the guy with the mechanical equipment needs your crane to lift it up for the roof and for that kind of work we want you know that they just want to be done at a basic cost and i want too much mark up in there and they don't want stroke out to be able to say well i'll do it for you know two hundred bucks an hour they want you to additional work if there's there is not an odor initiated change right this heat if you get it's agreed it should become necessary for supper to perform additional work and if that additional work isn't something that the owner told you to do know that it's not an owner initiated change right ok because if the owner changes something then that would be an owner change yes but if the contractors have these kind of you scratch my back i'll scratch your situations come up that's what this is directed to jones wants to be able to have a provision such that they can have the contractors do some additional work to help another contractor out but not the kind of hole the other contractor blackmail by asking for an exorbitant price they have  of the recovery here is the cut is a recovery based upon the breach of contract action when the judge uses the quantum maryland language in his opinion he's using that just kind of in the sense of incorporating the phrase other agree equitable basis then he kind reasonable value here the reason of value is you know the actual you know how much of how much stroke out was really going to be affected by the cost impacts which is set forth in their l and i have nothing further there are ok thank you earlier web page seven ninety one seven ninety two records of time expended the court said no i'm going to find that you don't have to keep time sheets that has nothing to do with the mechanism for pricing my question was if i can certainly maybe you think you're therefore it was ambiguous therefore one has to go to quantum era what's going to quantum era i'm assuming now there has been no meaning of meeting of the minds the court then says look i've got a fax a rate here i look at the  evidence the plaintiff is telling me they don't keep the records that way i find that credible i don't have any how am i going to fix a rate i look to the contract and i say well for some purposes not binding here they fix this labor rate and what this court did instead of looking at the kind of the parties who are in this extra work where we have letters that say give us your added cost when we get proposals we say you're not following a contract provisions we have missed mcdowell struck house project manager admitting yes as soon as we submitted these proposals we were told schedule up applies and that's the dispute and that's why we're going to do it today two years later he didn't look at that contract instead he looked at conduct of three negotiated changes which didn't apply and which were owner initiated changes that would not be says clearly is when you have to look at context because you don't believe that the language of the contract is clear look at the conduct relating to the extras at issue and that was our second point and then the third was quite a merit if you can't ok  good and judge hard to do want to go more all right fine thank you thank you all counsel well argued appreciate on this case a million and we will be in recess