Filed 1/5/24 Moorefield Construction v. Cooley Construction CA4/3

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

MOOREFIELD CONSTRUCTION, INC.,

 Plaintiff and Appellant,

v.

COOLEY CONSTRUCTION, INC.,

 Defendant and Respondent.

 G062153

 (Super. Ct. No. 30-2020-01130607)

 O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Nathan 

R. Scott, Judge. Affirmed.

Mahoney & Soll and Richard A. Soll for Plaintiff and Appellant.

Law Offices of Gregory J. Hout, Gregory J. Hout; Arias & Lockwood and 

Christopher D. Lockwood for Defendant and Respondent.

* * *
2

General contractor Moorefield Construction Inc. (Moorefield) hired 

subcontractor Cooley Construction Inc. (Cooley) to perform all the grading work on a 

construction project. Unforeseen issues arose, and the parties agreed Moorefield would 

hire a nonparty subcontractor to perform grading on the project in Cooley’s place. 

According to Moorefield, the nonparty subcontractor was only a temporary replacement. 

Cooley, however, believed the parties had agreed to terminate the grading subcontract 

and fully replace Cooley on the project with the new subcontractor. Moorefield later 

asked Cooley to return to the project and complete grading, but Cooley refused. 

Moorefield then sued Cooley for breach of contract for failing to complete the grading 

work. Cooley cross-complained based on Moorefield’s failure to make a retention 

payment owed under the grading subcontract. The trial court entered judgment in favor 

of Cooley on both the complaint and cross-complaint. We find substantial evidence 

supports the judgment and affirm.

I

FACTS AND PROCEDURAL HISTORY

A. The Construction Project

Moorefield was the general contractor on a shopping center project in Perris

(the project) owned by Nuevo Perris, LLC (the owner). It agreed to build the project on a 

cost-plus basis not to exceed $19,128,631.1 Moorefield subcontracted with Cooley to 

perform all the grading and demolition work on the project (the subcontract). Under the 

subcontract, it could terminate Cooley’s work on the project at any time and for any 

reason by written notice.

1

 Generally, “[i]n a ‘cost-plus’ contract, the contractor is paid the cost of its materials, 

labor, and overhead ‘plus’ either a fixed fee or a percentage of the cost of materials, 

labor, and overhead as ‘profit.’ It allows the contractor to pass-through to the owner the 

actual cost of construction while guaranteeing the contractor its profit margin.” (6 Miller 

& Starr, Cal. Real Estate Forms (2d ed. 2023) § 4:1.)
3

Moorefield agreed to pay Cooley $585,000 for its work. The subcontract

also specified that a percentage of this amount would be held as retention during 

construction. Moorefield would make the final retention payment to Cooley (the 

retention payment) upon the project’s completion and after Cooley had submitted “all

Release of Liens covering [its] work.” Several other paragraphs in the subcontract 

reiterate that Moorefield was not required to make the retention payment until Cooley 

gave the required releases.

As initially planned, Cooley’s work on the project was to occur in three 

separate mobilizations. Cooley would demobilize and pull off the job between each one. 

The initial schedule called for Cooley to be completely finished with the three 

mobilizations by May 30, 2019.

Unforeseen events altered the parties’ initial schedule. As a result, Cooley 

had to perform work on the project in smaller sections. It had already completed five 

mobilizations by early May 2019, with about 20 percent of the grading work left to 

complete.

Due to these delays, Moorefield’s project manager, Ted Johnson, spoke by 

phone with Cooley’s project manager, Michael Patten, on May 9, 2019. On the call, they 

discussed the impact of the delays and agreed it would be better for Moorefield to bring 

in another grading subcontractor, Novi Environmental (Novi), to continue the grading 

work on a time and materials basis. Cooley agreed to send over a credit proposal for the 

work it had not completed.

On May 10, 2019, Patten e-mailed Johnson a summary of their phone call

from the prior day. The e-mail explained how various unforeseen circumstances had 

altered the original grading plan and cost schedule. It explained, “To minimize these 

time and cost impacts, Moorefield Construction has requested that Cooley Construction 

provide a cost proposal to credit back the uncompleted work associated with their 

subcontract. This is so Moorefield Construction can address the remaining grading with 
4

their own team [(i.e., Novi]), which will work better with the current construction 

schedule. This decision is being made solely for the betterment of the project and does 

not reflect negatively towards Cooley Construction, for lack of performance or quality.”

Patten’s e-mail continued, “We are compiling our records for all remaining 

billable items for the work completed. We are also generating a list of incomplete items 

that will be included in the proposal for reduction in scope. . . . [¶] Once all items are 

deemed acceptable by both parties, we will issue one final billing to reflect all 

outstanding payments to include retention, which is payable upon receipt. [¶] We hope 

the project finishes well for your team and we look forward to work with Moorefield 

Construction on another project in the near future.”

Johnson replied the same day, writing, “Well stated and I agree with the 

status of the project. I will add there is no lack of effort on Cooley Construction but 

rather several unforeseen schedule changes due to delays in approvals from [local utility 

providers]. Please provide a comprehensive breakdown for the remaining work scope 

and cost.”

2

Novi commenced grading work on the project on May 10, 2019. The 

parties’ stories diverge from here. Moorefield claims Cooley was still under contract.

Novi was only a temporary fill-in while Cooley was unavailable, and it expected Cooley 

to return to the project to complete grading. In contrast, Cooley maintains the parties 

agreed to terminate the subcontract and completely replace Cooley on the project with 

Novi.

In June 2019, Moorefield asked Cooley to return to the project to complete 

grading. Cooley replied that the subcontract had been cancelled on May 10, 2019, and all 

2

 Johnson and Patten subsequently e-mailed back and forth regarding the amount of the 

credit Cooley would give Moorefield for the reduced scope of work. While their 

conversations were fruitful, it does not appear the parties ever agreed on the final credit 

amount.
5

its grading crews were committed to other jobs and could not return. On June 18, 2019, 

Moorefield sent Cooley a notice demanding it return to the project to complete grading 

within 48 hours. Cooley refused, and Moorefield used Novi to finish the grading work. 

Evidence in the record shows Moorefield paid Cooley $449,408 and Novi $560,000 for 

their work on the project.

Moorefield completed the entire project in November 2019. It billed the 

owner a total of $18,228,457, which was $900,174 less than the agreed-upon maximum 

price. However, Moorefield’s grading and demolitions costs were $362,241 overbudget. 

The budget to complete grading and demolition was $680,000, but the actual cost was 

$1,042,241.

In December 2019, Cooley billed Moorefield for the retention payment in 

the amount of $51,049.68. Moorefield did not pay.

B. The Lawsuits

In February 2020, Moorefield sued Cooley for breach of contract, among 

other claims, on the ground it had failed to perform all the grading work on the project. 

Cooley cross-complained for breach of contract based on Moorefield’s failure to make 

the retention payment.

Moorefield filed a motion to appoint a referee (the Referee) under Code of 

Civil Procedure section 639, which the court granted.

During discovery, Moorefield admitted the owner had paid its full bill for 

the project ($18,228,457), which included all of Moorefield’s grading and demolition

costs ($1,042,241). After learning this, Cooley sought the Referee’s permission to move 

for summary judgment on grounds Moorefield had not been damaged since all its grading 

and demolition costs had been paid.

In response, Moorefield asked for leave to amend the complaint. Its 

proposed amended complaint (FAC) asserted a single cause of action for breach of 
6

contract against Cooley. It alleged Cooley had breached the subcontract by 

“abandon[ing] the project and never complet[ing] all the work required under the 

Subcontract.” As a result of the alleged breach, Moorefield was required to hire Novi to 

complete the demolition and grading work, which “resulted in a cost overrun of $362,241 

. . . on the project.”

The FAC further clarified that while Moorefield had not been damaged, it 

was bringing a pass-through claim against Cooley on the owner’s behalf.

3

 It alleged, 

“[t]he owner paid [Moorefield] for the cost overrun but has demanded that [Moorefield] 

seek reimbursement of $362,241 from COOLEY for the damage that COOLEY caused 

by abandoning the project. The owner cannot sue COOLEY directly because the owner 

is not in privity of contract with COOLEY.” The FAC continued, “[t]o resolve the 

dispute, [Moorefield] agreed to prosecute this lawsuit against COOLEY on a passthrough basis, and that any amount that [Moorefield] recovers from COOLEY will be 

paid to the owner, less costs and expenses.” The FAC sought $362,241 in damages 

against Cooley on the owner’s behalf.

Cooley opposed the motion for leave to amend. Among other things, it 

asserted Moorefield had incurred no damages and could not bring a pass-through claim 

on the owner’s behalf as a matter of law.

The Referee granted Moorefield’s motion for leave to amend and deemed 

the FAC filed and served. But it instructed the parties that “[t]he issue of the ‘pass3

 Pass-through claims are normally asserted by a subcontractor against an owner. The 

subcontractor cannot sue the owner directly because they are not in privity of contract. 

The subcontractor’s contract is with the general contractor. “However, California law 

. . . provid[es] that a subcontractor’s claim ‘passes through’ the general contractor to the 

owner. [Citation.] Consequently, by contract or settlement agreement, a general 

contractor and a subcontractor can agree that the contractor will pass through the 

subcontractor’s claims against the contractor to the owner.” (Sehulster Tunnels/Pre-Con 

v. Traylor Brothers, Inc./Obayashi Corp. (2003) 111 Cal.App.4th 1328, 1348.) There 

does not appear to be any California authority on whether a contractor can bring a passthrough claim against a subcontractor on an owner’s behalf.
7

through’ claim that is addressed in the moving and opposing papers may be pursued as a 

Motion in Limine.” Neither party objected to this procedure.

Per the Referee’s order, Cooley reasserted its arguments in a motion in 

limine that sought to bar Moorefield from presenting any evidence on its breach of 

contract claim. The Referee granted the motion. He found that “[b]ased on the lack of 

any resultant damage to Moorefield, evidence of a breach of contract by Cooley is 

irrelevant as to the [FAC]. Therefore, Moorefield is also prohibited from presenting any 

evidence on its [FAC] of a breach of contract by Cooley.” Cooley then moved for 

judgment on the FAC under Code of Civil Procedure section 631.8, which the Referee

granted.

The case went to trial on Cooley’s cross-complaint in October 2022. In its 

trial brief, Moorefield asserted Cooley had forfeited the retention payment by (1) walking 

off the job and breaching the subcontract (i.e., the same theory as the FAC’s breach of 

contract claim), and (2) failing to submit its lien releases as required by the subcontract. 

As to the second argument, Cooley claimed it was unaware any lien releases were 

outstanding until it received Moorefield’s trial brief. It promptly sent three lien releases 

to Moorefield a few days before trial. During trial, Moorefield pivoted and asserted 

Cooley’s failure to timely submit the releases led to forfeiture of the retention payment.

After trial, the Referee issued a statement of decision finding in favor of 

Cooley. Among other things, the Referee found Cooley did not breach the subcontract 

because the parties had mutually terminated it in May 2019. The e-mail exchanges

between Patten and Johnson on May 10, 2019, satisfied the subcontract’s written notice 

requirement for termination. The Referee also found Moorefield suffered no prejudice by 

Cooley’s delay in submitting the lien releases. He explained, Moorefield “held the 

retention after being paid by the owner for over two years; . . . it never advised [Cooley] 

that the project was complete and accepted by the owner . . . or that [Cooley] should 

make a request for payment.”
8

Based on the Referee’s findings, the court entered judgment in favor of 

Cooley in the total amount of $185,204.34, comprised of (1) $61,088.69 for unpaid work, 

including the retention payment of $51,049.68, (2) $2,884.75 in prejudgment interest, 

(3) $36,723.40 in costs, and (4) $84,507.50 in attorney fees.4

Moorefield makes four arguments on appeal. First, the Referee erred by 

granting Cooley’s motion in limine, which barred Moorefield from presenting evidence 

of its pass-through claim for breach of contract. Second, the Referee’s finding that 

Cooley and Moorefield mutually terminated the subcontract is not supported by sufficient 

evidence. Third, Cooley was not entitled to the retention payment because it failed to 

timely submit the lien releases. Finally, if we reverse the judgment in favor of Cooley on 

the merits, we should also reverse the attorney fees and costs award.

II

DISCUSSION

A. The Subcontract’s Termination

We start by analyzing Moorefield’s claim there is insufficient evidence to 

support the Referee’s finding that the parties mutually terminated the subcontract. If this 

ruling is affirmed, then Moorefield’s challenge to the Referee’s motion in limine ruling is 

moot. Moorefield seeks reversal of the motion in limine ruling so it can present evidence 

on its breach of contract claim against Cooley. But Moorefield’s breach of contract claim

involves the same issue as its defense to Cooley’s claim for the retention payment: Did 

Cooley abandon the project in May 2019 and breach the subcontract? If the subcontract 

was mutually terminated, then Cooley did not breach it. Thus, any alleged error in 

4

 The judgment states the total amount is $185,204.32, which appears to be a typo.
9

granting the motion in limine would be harmless since Moorefield would have lost on its 

breach of contract claim even if the motion had been denied.

5

As both parties agree, we apply the substantial evidence standard to the 

Referee’s finding that the subcontract was mutually terminated. (See Vita Planning & 

Landscape Architecture, Inc. v. HKS Architects, Inc. (2015) 240 Cal.App.4th 763, 771-

772; DeLeon v. Verizon Wireless, LLC (2012) 207 Cal.App.4th 800, 813.) Under this 

standard, “‘[o]ur review is limited to a determination whether there is any substantial 

evidence, contradicted or uncontradicted, that supports the finding. [Citations.] In so 

reviewing, all conflicts must be resolved in favor of [the prevailing party] and all 

legitimate and reasonable inferences must be indulged to uphold the finding.’” (In re 

Marriage of Brandes (2015) 239 Cal.App.4th 1461, 1472.) “‘If such substantial evidence 

be found, it is of no consequence that the trial court believing other evidence, or drawing 

other reasonable inferences, might have reached a contrary conclusion.’” (Jameson v. 

Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143, italics omitted.)

Moorefield appears to argue there is no evidence it agreed to terminate the 

subcontract in May 2019. Rather, it believes the evidence only shows Cooley had a 

subjective belief the subcontract had been cancelled. We disagree. There is sufficient 

testimony and documents in the record to show both parties agreed to completely replace 

Cooley on the project and terminate the subcontract.

To begin, Patten (of Cooley) testified at trial that he spoke with Johnson (of 

Moorefield) on May 9, 2019, and they agreed to completely replace Cooley on the project 

with Novi due to unforeseen scheduling issues. In other words, there was evidence both 

5

 Moorefield’s opening brief also suggests Cooley breached the subcontract by 

performing defective work. But it has not cited anything in the record showing it ever 

intended to pursue this theory at trial. The FAC does not allege Cooley’s work was 

defective. Further, this theory is contradicted by Moorefield’s discovery responses, 

which stated: “There was no problem with Cooley Construction’s workmanship. The 

problem is that Cooley Construction refused to return to the jobsite to complete [the 

subcontract] and abandon[ed] the job.”
10

parties agreed to terminate the subcontract so Novi could finish the grading on the 

project.

The e-mails exchanged between Patten and Johnson on May 10, 2019, 

provide further evidence of such an agreement. Patten wrote that Johnson had requested 

a credit from Cooley “so Moorfield [sic] . . . can address the remaining grading with 

their own team [(i.e., Novi)], which will work better with the current construction 

schedule.” (Italics added.) The e-mail explained that once the scope of remaining work 

was agreed upon, Cooley would “issue one final billing to reflect all outstanding 

payments to include retention, which is payable upon receipt.” (Italics added.) The email closed with Patten stating, “We hope the project finishes well for your team and we 

look forward to work with Moorefield Construction on another project in the near 

future.” (Italics added.)

The above portions of the e-mail indicate the parties agreed to terminate the 

subcontract so Novi could finish the grading work on the project. The e-mail states 

Moorefield would “address the remaining grading” with their own team. (Italics added.) 

The use of the word “remaining,” without qualification, is evidence that Novi would 

finish the rest of the grading on the project and that Cooley’s work was complete. 

Further, Cooley would issue a “final billing,” implying there would be no other bills from 

Cooley because it was done with the project. Finally, the e-mail closes by Patten wishing 

Moorefield luck on the project and expressing a desire to work with Moorefield “on 

another project in the near future.” (Italics added.) The closing statement again indicates 

Cooley’s time on the project was done. There would be no need for these well wishes if 

there was any expectation that Cooley might return to the project in the future.

Johnson fully endorsed the above statements in his response. He replied, 

“Well stated and I agree with the status of the project.” Johnson did not mention Cooley 

returning to the project in the future. Significantly, he did not question Patten’s statement 

that Novi would “address the remaining” work on the project. Instead, his response 
11

indicates he agreed with Patten’s statements that Cooley’s work on the project was 

finished. Further, to the extent his response contains any ambiguity as to whether 

Moorefield had agreed to terminate the subcontract, we resolve it in favor of the 

Referee’s ruling. (In re Marriage of Brandes, supra, 239 Cal.App.4th at p. 1472.)

There is also evidence showing Moorefield agreed to terminate the 

subcontract in May 2019 and then tried to reverse course after its grading costs soared. 

Cooley’s president, Benjamin Cooley, testified Johnson called him in June 2019. 

Johnson asked if Cooley could return and finish the project because it was costing 

Moorefield a lot of money to finish the grading with Novi on a time and materials basis. 

Benjamin Cooley refused because his teams were already committed to other projects.

Likewise, Patten sent Johnson an e-mail on June 19, 2019, stating, “Due to 

the significant changes, delays, and re-phasing of this project, we agreed to cancel the 

balance of Cooley’s subcontract agreement on 10 May 2019 . . . . Since that time there 

has been other grader(s) who have worked at the site. Based on our agreement to cancel 

the remaining work, our crews are now committed to other jobs. [¶] On 13 June 2018, 

you contacted [Benjamin Cooley] by telephone and indicated that you now want Cooley 

back on the job and you have demanded that the grading be completed by the end of 

June. As a result of our agreement to terminate the remaining contract, it is not possible 

for us to return during that time frame.”

In response, Moorefield argues the e-mail exchanges between the parties 

are insufficient to meet the subcontract’s written notice requirement. Specifically, it 

contends that “[t]here is simply nothing in the email exchanges that say anything about 

Moorefield terminating the subcontract for convenience. [¶] At best, the oral and written 

communications between the parties amount to nothing more than an agreement to agree 

on a credit which is not binding.”

Moorefield has not shown the Referee erred by finding the e-mails from 

May 10, 2019, meet the subcontract’s written notice requirement. As set forth above, 
12

these e-mails reflect an agreement between the parties to terminate Cooley’s remaining 

obligations under the subcontract. The e-mails provided written notice to Cooley that the 

subcontract was being terminated and Novi would complete the “remaining grading” on 

the project. Moorefield appears to suggest the notice had to expressly state it was 

terminating the subcontract for convenience. But it has cited nothing in the subcontract 

nor any case law to support this argument.

Further, the subcontract’s written notice provision appears to be for the 

benefit of Cooley not Moorefield. The subcontract states that upon receipt of written 

notice, Cooley “shall, unless the notice directs otherwise, immediately discontinue 

[Cooley’s] work and placing of orders for materials, facilities and supplies in connection 

therewith, and shall, if requested, make every reasonable effort to procure cancellation of 

all existing orders or Contracts upon terms satisfactory to [Moorefield] . . . [or] give 

[Moorefield] the right to assume those obligations directly . . . . [Cooley] shall thereafter 

do only such work as may be necessary to preserve and protect portions of [Cooley’s] 

work already in progress and to protect materials and equipment on the Project site or in

transit thereto.”

Based on this language, the subcontract requires written notice to inform 

Cooley of how and when to stop work on the project. Thus, the specific content of the 

written notice is immaterial so long as it reflects an understanding of the parties as to how 

and when Cooley would stop work. The May 10, 2019, e-mail exchange between Patten 

and Johnson fulfills these goals. As discussed above, it records the parties’ written 

understanding that Cooley was being completely replaced on the project by Novi to 

complete “the remaining work” on the project.

B. The Retention Payment

Next, Moorefield argues Cooley’s timely submission of the lien releases 

was a condition precedent to receiving the retention payment. It contends Cooley did not 
13

meet this condition precedent and forfeited the retention payment because it untimely

submitted the releases. Specifically, it asserts Cooley only submitted the lien releases a 

few days before trial, which was nearly three years after Cooley billed Moorefield for the 

retention payment. We find Cooley timely submitted the releases.

Moorefield’s argument relies on a general provision in the subcontract 

stating, “Time is of the essence . . . .” It asserts this provision applies to Cooley’s 

obligation to submit the lien releases. However, the subcontract provides no specific 

submission deadline for the releases. Thus, the relevant question is whether Cooley 

provided the lien releases within a reasonable timeframe. (Civ. Code, § 1657 [“If no time 

is specified for the performance of an act required to be performed, a reasonable time is 

allowed”]; see Baypoint Mortgage Corp. v. Crest Premium Real Estate etc. Trust (1985) 

168 Cal.App.3d 818, 825–826 [“‘“[T]he intent to make a particular date, or time, ‘the 

essence of the contract must be clearly, unequivocally and unmistakably shown by an 

express declaration’”’”].) “‘[W]hat constitutes a reasonable time is a question of fact, 

depending upon the situation of the parties, the nature of the transaction, and the facts of 

the particular case.’” (Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 

Cal.4th 19, 30.) Finally, though the Referee did not expressly refer to reasonableness

when analyzing whether the lien releases were timely submitted, we presume he knew 

and applied the correct law. (McDermott Will & Emery LLP v. Superior Court (2017) 10 

Cal.App.5th 1083, 1103.)

Substantial evidence supports the Referee’s finding Cooley provided the 

lien releases within a reasonable time. (See Henry v. Sharma (1984) 154 Cal.App.3d 

665, 669-670 [applying substantial evidence standard].) In particular, there is evidence 

Cooley did not know any releases were missing until it received Moorefield’s trial brief. 

The record shows Cooley provided three lien releases after receiving Moorefield’s trial 

brief: a release for its own work and two releases from subcontractors Cooley had 

retained. But it had submitted the two releases from its own subcontractors in June 2019, 
14

months before the project’s completion. The evidence shows Cooley did not know 

Moorefield required the missing third release until it received the trial brief.

The record also shows Moorefield never informed Cooley the retention 

payment was being withheld due to a missing lien release until it filed its trial brief. And 

it had several chances to inform Cooley earlier. For example, Moorefield did not tell 

Cooley any lien releases were missing after Cooley submitted its invoice for the retention 

payment in December 2019. Nor did Moorefield tell Cooley any lien releases were 

missing after Cooley cross-complained for the retention payment in March 2020. Given 

this evidence, it was reasonable for Cooley to submit the missing release after it received 

Moorefield’s trial brief. Since Cooley provided the lien release within a reasonable 

timeframe, Moorefield was obligated to make the retention payment.6

Moorefield also appears to argue it was prejudiced by Cooley’s failure to 

submit the lien releases sooner. Moorefield claims it did not include the retention 

payment in its final bill to the owner because Cooley failed to timely submit the releases. 

Thus, Moorefield would have to pay the retention payment out-of-pocket with no 

reimbursement from the owner. But this argument asks us to reweigh the evidence, 

which we will not do when performing substantial evidence review. (Jameson v. Five 

Feet Restaurant, Inc., supra, 107 Cal.App.4th at p. 143.)

C. Attorney Fees and Costs

Since we have affirmed the judgment as to the parties’ respective claims for 

breach of contract, we also affirm the fees and costs award.

6

 Because we find Cooley met the condition precedent, we do not address Moorefield’s 

arguments that the court improperly excused the condition precedent.
15

III

DISPOSITION

The judgment is affirmed. Cooley is entitled to its costs on this appeal.

MOORE, J.

WE CONCUR:

O’LEARY, P. J.

GOODING, J.