Filed 9/25/13 National Security Systems v. Houalla Enterprises CA2/3 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

NATIONAL SECURITY SYSTEMS, INC.,
Plaintiff, Cross-defendant and Appellant,

v.
HOUALLA ENTERPRISES, LTD.,
Defendant, Cross-complainant and Respondent. B241674
(Los Angeles County Super. Ct. No. BC453387)

APPEAL from a judgment of the Su perior Court of Los Angeles County, Daniel J. Buckley, Judge. Affirmed. The Cigel Law Group, Rick A. Cigel and Michael B. Kadish for Plaintiff, Cross-defendant and Appellant. Fingal, Fahrney & Clark and Christ opher R. Clark for Defendant, Crosscomplainant and Respondent.

_____________ ____________2 Plaintiff, cross-defendant and appellant National Security Systems, Inc. (National), a subcontractor, appeals a net j udgment in the sum of $25,942.12 in favor of the general contractor, defendant, cr oss-complainant and respondent Houalla Enterprises, Ltd. dba Metro Builders & En gineers Group, Ltd. (Metro) following a
court trial. The essential issues presented are whet her the trial court erred in awarding Metro $10,083.86 in damages for prevailing wage violati ons, and $25,200 in damages for 21 days of delay (at th e rate of $1,200 per day). We perceive no error in the trial court’ s rulings and affirm the judgment in its entirety.
FACTUAL AND PROCED URAL BACKGROUND Metro was the general contractor on a construction project for the City of Los Angeles (City) known as the “Air Trea tment Facility ECIS – La Cienega and Jefferson,” located at 3410 La Cienega Boulev ard in Los Angeles. Because the City was the owner, this was a prevailing wage project. 1 On September 17, 2007, Metro and National, a commercial fire alarm installation company, entere d into a written subcontract whereby National agreed to provide and install fire alarm protection e quipment for the project. The subcontract amount, including change orders, was $93,860. In October 2010, a dispute arose betw een the parties over National’s work. Metro accused National of installing the syst em improperly. The parties failed to
resolve their differences and Metro removed National as the fire alarm subcontractor on the project. National served a stop notice on the City , and the City withheld funds in the sum of $18,670 from Metro.

1 Labor Code section 1774 states: “The contractor to whom the contract is awarded, and any subcontract or under him, shall pay not less than the specified prevailing rates of wages to all workmen em ployed in the execution of the contract.”3 On December 27, 2010, National filed suit against Metro for breach of contract, seeking to recover $18,670 fo r its work on the project. Metro answered and filed a cross-compla int against National. Metro alleged, inter alia, that National’s nonperformance , which required retention of another subcontractor to complete the work, delayed the entire project and cost Metro at least 40 days of compensation from the City at $1, 200 per day. In a ddition, on July 14, 2011, the City determined th at National failed to pay sp ecified wage rates to its workers on the project. National refused to pay wage restitution to its workers, and thereby caused $11,643 in damages to Metro “for the expense of having to cover this amount to the City.” In April 2012, the matter was tried to th e court without a jury. The trial court found National was entitled to damages in th e sum of $13,541.28 against Metro, and that Metro incurred damages against Nationa l in the sum of $39,483.40. Metro’s damages included delay damages of $25,200 for 21 days of delay at the rate of $1,200 per day, and $10,083.36 for th e wages and penalties paid to the City on account of
labor issues. The net award was in favor of Metro in the sum of $25,942.12. The trial
court further found that Metr o was the prevailing party. National filed a timely notice of appeal from the judgment.
CONTENTIONS
National contends the trial court committe d reversible error in awarding Metro $10,083 on account of the City’s prevailing wage demands, and $25,200 in liquidated damages on its delay claim.
DISCUSSION
1. Trial court properly aw arded Metro $10, 083.86 on account of the City’s prevailing wage demand

.

a. National’s arguments. National contends Metro failed to present any evidence at trial National was legally liable for the amounts demanded, no ev idence was introduced at trial that the City had filed a lawsuit or that any judi cial or administrative body had adjudicated4 National’s liability for the amount demande d, and the uncontroverted evidence establishes National was not legally liabl e for the amount demanded by the City. National’s arguments are unavailing.
b. Substantial evidence supports the award of $10,083.86 to Metro for wages and penalties it paid on National’s account

. (1) Factual summary

. In June 2011, the City’s Contract Compliance Department requested payroll
information from National with re spect to the project. Spec ifically, the City requested Certified Payroll Reports (CPR’s) for the projec t, as well as a fringe benefit statement and check numbers and “copies of cance lled checks corresponding to the CPRs.” On June 15, 2011, Metro sent an ema il to National requesting the information sought by the City. Chris Schroeder (Schroeder), president of National, emailed his staff as follows:

“ Don’t respond to this in any way .” (Italics added.) 2 On July 14, 2011, th e City sent a certified letter to Metro, with a copy to National, stating that Metro’s subcontractor, National, had failed to pay “the specified prevailing wage rates to workers employed in the execution of the above contract.”
The letter asserted the “ certified payroll records, inspec tor logs, and pertinent payroll documents submitted to our office, s ubstantiate an under payment of wages .” (Italics added.) The City’s letter advised that La bor Code sections 1774 and 1815 “specify that prevailing wage must be paid at all ti mes for public works pr ojects.” Further, any
contractor found to be in violation of u nderpayment “may be penalized according to
Sections 1775 and 1813 of the California Labor Code,” and that a “portion of your

2 At trial, Schroeder admitted he had inst ructed his staff not to respond to Metro, but Schroeder asserted the City never requested him to provide documents. The documentary evidence is to the contrary. The record reflects, inter alia, the City copied National on the July 14 , 2011 certified letter it sent to Metro. Schroeder also testified he did not recall whether he r eceived a vendor request for documents from Metro, dated June 15, 2011, wherein Metro reiterated a request for payroll documentation.5 retention payment may be withheld until this matter is satisfactorily resolved ,” pursuant to Labor Code section 1727. Atta ched to the July 14, 2011 letter from the City was a “Summary of Wage Restitution a nd Penalty Log” reflecting the total wage restitution and applicable penalties, wh ich amounted to $11,643.86 for five employees. 3 On July 14, 2011, Metro again emailed National, stating: “ We have repeatedly requested you to provide us or the Owner with missing contract compliance documentation. Your refusal to respond, left us, unfortunately, no choice but to inform the City that you are not cooperating on th is contractually binding matter. Public Works code and your subcontract agreement with us binds you to provide records requested by the Owner’s Contract Compli ance department. We will back charge you all fees, penalties, liquidated damages and any other expe nse we will incur by your noncompliance with this legal requirement .” (Italics added.) On July 20, 2011, Metro’s counsel sent a letter to National’s counsel, again requesting compliance with the City’s request for documentation, and attaching a copy of the City’s July 14, 2011 letter demanding wage restitution in excess of $11,000, to
no avail. On August 10, 2011, Metro paid the City a reduced pe nalty of $440 and also
issued checks to the five a ffected individual employees, for a total of $10,083.86 on
account of National’s failure to pay preva iling wages. At trial, National took the position it had du ly paid its employees and that it had supplied Metro with everything it needed to avoid the penalty. At the time of closing argument, the following co lloquy occurred between the trial court and National’s
counsel:

3 The July 14, 2011 letter, exhib it 86, was admitted in to evidence without objection. Although there was no testimony at trial showing how the City determined the amount of the underpaid wages set fort h in its demand letter, exhibit 86, which came in without objection, establishe s the amount of the City’s demand.6 “MR. CULLEN: Our client provided them with everything that they needed to avoid the penalty.
“THE COURT: How do I know that? “MR. CULLEN: Mr. Schroeder’s testimony. “THE COURT: Okay. But why aren’t ther e fax cover sheets? There’s just no
evidence whatsoever

. “MR. CULLEN: My client had some turn over at his office after this was over. As you heard Ms. Lewis was in charge of that. She no longer works for him.[ 4 ]
“THE COURT: But even if he supplied it, what I woul d call is a complete lack of cooperation, if he had looked around an d gotten his files and fo und what he showed me during the trial and sent it off to them because it was somewhat specific, no one
would have had to pay it; right?
“MR. CULLEN: That would be – that would probably be correct, Your
Honor.” (2) Trial court properly awarded Metr o $10,083.86, to compensate Metro for the amount it pai d on National’s account

. To recap, the City sent a deficiency notice to Metro, indicating that subcontractor, National, owed a total of $1 1,643.86 in unpaid wa ges and penalties. The City calculated that figure based on its review of payroll records that had been submitted to the City’s Office of Contract Compliance. Metro repeatedly requested National to furnish the payroll documentation which had been requested by the City. National failed to respond.

4 What the record does show is that on June 15, 2011, after National received a request from Metro for payroll documenta tion, Schroeder emailed Christine Lewis stating “Don’t respond to th is in any way.” National’s attempt to attribute its nonresponse to “turnover” at the office is inconsistent with Schroeder’s directive to Lewis not to respond to Metro’ s request for documentation.7 Metro, lacking documentation from National to refute th e City’s demand, and faced with the City’s threat to withhold payment from Metro , paid the amount demanded by the City, while managing to ha ve the penalty reduced to $440 from the original penalty amount of $2,000.
Metro then sued Nationa l to recover the $10,083.86 it paid on National’s

account. At trial, National contended the two Jo hn Does listed in the deficiency notice were not employees of National, and that it had fully paid the other three employees listed in the notice, namely, Ortega, Nevare z and Quintero. National also claimed it had supplied Metro with all the documentati on that it needed, or alternatively, that inadequate documentation was due to “some turnover at [its] office.”
The trial court held Metro was entitled to recover the $10,083.86 from National, stating: “[T]he court finds as to the penalties paid to th e City because of the labor issues, one, I do not think there is suffici ent proof that the documentation was fully and properly given to [Metro], but within any definition of reasonableness . . . , a simple followup by [National] could have and should have a nd would have provided the ability for [Metro] not to pay that amount.” Clearly, at the time the City attemp ted to ascertain whether National’s employees had been properly paid, National, as their employer, was in the best position to know and had the best access to ev idence on the issue, i. e., in the form of its own payroll records. Moreover, the subcontract ob ligated National to provide Metro with certified payroll reports. Metro was damaged by National’s failure to supply the pa yroll documentation that Metro requested. As the trial court found, a simple followup by National would have enabled Metro not to have to pay the amount demanded by the City. Leaving aside whether National actually had underp aid its employees, Metro was damaged by National’s refusal to controvert the City’s deficiency notice. Given the lack of any
documentation from National to refute the defi ciency notice, and the City’s threat to8 withhold funds due to Metro, Metro re asonably complied with the City’s demand for payment. We note that in addition to requiri ng National to pay pr evailing wages, the subcontract required National to provide pa yroll documentation, indemnify Metro for all claims arising out of National’s perform ance of the work, and allowed Metro to pay
and deduct amounts as a result of National’s failure to perform any provisions in the subcontract. To quote, “If the Sub-Contract or should neglect to prosecute the work properly or fail to perform any prov isions of this contract , . . . the Contractor after three days written notice to the Subcontr actor, shall take corrective measures and deduct the cost thereof fr om any payment then or th ereafter due to the SubContractor .” (Italics added.) Under these circumstances, the trial c ourt properly awarded Metro $10,083.86 to make it whole for the wages and pe nalties it paid on National’s account.

c. No merit to National’s arguments

. National’s arguments to the contrary ar e without merit. In attacking the damage award, National’s cont ention on appeal is that “ Metro failed to present any evidence that [National] was legally li able for the amounts the City demanded . No evidence was presented at trial th at the city filed a lawsuit or that either the Division of
Labor Standards Enforcement or the Offi ce of the Labor Commissioner adjudicated any wage claims. In fact, the uncontradicted evidence produced at trial established that [National] was not legally liable for the amount demanded by the City or voluntarily paid by Metro.” The City’s Office of Contract Complian ce made a determination, based on its review of payroll records that had been submitted to it, that National owed wage restitution and penalties totaling $11,643.86. The subcontract , in addition to requiring National to pay prevailing wa ges to its employees, obligated National to furnish documentation, including certified payroll re ports, to Metro. The subcontract also entitled Metro, upon three days notice to National, to “take corrective measures and deduct the cost thereof fr om any payment then or th ereafter due to the Sub-9 Contractor .” (Italics added.) The re cord reflects National fla tly refused to supply the necessary payroll documentation, despite re peated requests by Metro. Having failed to supply Metro with the reque sted payroll documents to demonstrate that National’s employees had been duly paid , National is not in a position to object to Metro’s payment of wage restitutio n and penalties totaling $10,083. 86 to National’s employees and to the City, as demanded by the City. 5
2. No error in trial court’s award of $2 5,200 to Metro as delay damages for 21 days of delay at the rate of $1,200 per day

. National contends the trial court erred in awarding delay damages to Metro because (1) the subcontract between Metro and National did not specify a completion date; and (2) Metro failed to prove at trial it was obligated under its agreement with the City to pay delay dama ges of $1,200 per day. National’s arguments are unavailing. Na tional’s focus on the terms of the subcontract is misplaced. As explained be low, National delayed the project, requiring
Metro to retain a new subcont ractor. Metro’s contract w ith the City entitled Metro to $1,200 per day for City-cau sed delays (as opposed to concurrent delays). Had National not delayed the project, Metro woul d have been able to recover for 21 additional days of delay by the City. Theref ore, the trial court pr operly awarded Metro delays damages for said 21 days.

5 In its appellant’s reply brief, Nationa l argues that neither Metro nor National was under any obligation to pa y the City the sums demanded by its letter, and that the prevailing wage statutory scheme requires an investigation, the with holding of contract funds, and the issuance of a formal wage and penalty assessment notice. (Appellant’s reply brief, pp. 7-10, citing Lab. Code, §§ 1726, 1771.6.) National asserts that by “voluntarily paying the sums demand, Metr o circumvented the procedural safeguards provide[d] by this scheme and assumed an unproven, unliquida ted debt it was not obligated to assume,” and because there wa s no evidence the sums paid by Metro on account of wage restitution and penalty asse ssments was in fact owed, the judgment should be reversed. National’s statutory argu ments, belatedly raised in the reply brief, require no discussion. ( Tisher v. Californ ia Horse Racing Bd . (1991) 231 Cal.App.3d 349, 361.)10 a. National delayed the project, forcing Metro to replace National with a
new subcontractor

. On September 17, 2010, Metro directed National to proceed with the final inspection on the fire alarm system for th e project, based on National’s confirmation the system had been tested and wa s “good to go” for the inspection. On September 30, 2010, National cont ended the “Fire alarm final failed because Metro Builders tamper ed with the fire alarm sy stem therefore damaging the system and voiding the system warranty.” Metro responded: “You state that in spection failed because of our actions, although no fire alarm insp ection even took place (the fire alarm inspection last request on record was for May ). [¶] We inspected the panels to see if there was any damage to them, and could not see any. We are hiring another fire alarm company to come and verify this.” The independent fire alarm company determined there was no wrongdoing by Metro “but instead outline[d] many items not in compliance with th e plan and with the
code.” On October 13, 2010, Metro advised Natio nal, “Now that we understand what needs to be done to comple te the job I will request you to complete this job and provide final inspection in the next 48 hrs. After this time I will hire all necessary recourses to complete the job and all co st incurred will be ch arged back to your company.”
National did not correct its work a nd on October 18, 20 10, Metro advised National it was being replaced by another su bcontractor “capable of completing the fire alarm system.” On December 17, 2010 , the Department of Buildin g and Safety approved the final inspection, and the fire marshal ga ve its approval on December 27, 2010.11 b. The contract between the City and Metro entitled Metro to $1,200 per day for City-caused delays; National’s delay created a pe riod of “concurrent” delay for which National was not compensated by the City; therefore, the trial court properly awarded delay damages to Metro fo r the period of delay caused by National.
The contract between Metro and the C ity provided that Metro would be compensated for City-caused dela ys at the rate of $1,200 per day. On the other hand, for “concurrent delay,” that is to say, those days during which both Metro and the City were delaying the project, Metro was not entitled to compen sation by the City. At trial, John Metoyer of Nitro Consu ltants, a construction management firm, testified that National caused 40 days of concurrent delay on th e project. Based thereon, Metro sought 40 days of delay damages from National, at the rate of $1,200 per day. The trial court found “there was so me delay but not 40 days.” The trial court ruled that Metro was entitled to delay damage s for 21 days of delay attributable to
National. Civil Code section 3300 provides, “For the breach of an obl igation arising from contract, the measure of damages, except where otherwise expre ssly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of th ings, would be likely to result therefrom.” Therefore, Metro wa s entitled to recover da mages to compensate it for the loss it incurred du e to National’s conduct. Here, the City compensated Metro fo r 219 days of delay. However, had National not delayed the project, Metro would have been en titled to numerous additional days of compensable delay. Metoyer’s testimony established that National’s conduct resulted in a period of “conc urrent delay,” as contrasted with Citycaused delay. Therefore, the trial court pr operly awarded delay damages to Metro for the period of delay caused by National, be cause National’s delay created a concurrent delay that was not compensable by the City.12 DISPOSITION The judgment is affirmed. Metro shall recover its costs on appeal, as well as reasonable attorney fees on appe al, pursuant to the subcontract.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KLEIN, P. J.

We concur:

CROSKEY, J.

KITCHING, J.