Court Opinion

ID: 7801400
Source: CourtListenerOpinion
Date Created: 2022-08-17 17:03:00.228675+00
Date Added: 2024-06-11T16:29:16.903095
License: Public Domain

Filed 8/17/22 Arthur v. Dallaswhite Corp. CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

BRIDGET ARTHUR, as Personal                                          D078842
Representative, etc.,

         Plaintiff and Respondent,
                                                                     (Super. Ct. No. CIVDS1801578)
         v.

DALLASWHITE CORPORATION,

         Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of San Bernardino
County, David S. Cohn, Judge. Affirmed in part; denied in part.
         Von Esch Law Group, Robert Alexander Von Esch IV and David V. Luu
for Defendant and Appellant.
         Law Offices of Price K. Kent, Price K. Kent; Lack Law Group and
Rebecca D. Lack; Law Office of Mark A. Padilla and Mark A. Padilla for
Plaintiff and Respondent.
      Defendant Dallaswhite Corporation (Dallaswhite) appeals the

judgment for Mary Mowbray (Mary),1 following a bench trial in which the
court found Dallaswhite breached the parties’ written home repair
construction contract. The court, after making various setoffs, awarded Mary
compensatory damages of $16,803.57.
      For reasons we explain, we conclude the court erred in applying the
collateral source rule, thereby failing to reduce Mary’s damages by an
additional $5,675.49, based on a payment she and her late husband Edward
Mowbray (Edward) retained from their insurer. In all other respects, we
affirm the judgment.

            FACTUAL AND PROCEDURAL BACKGROUND2
                                   Overview
      The history of this case is multifaceted. Accordingly, we begin with an
overview of the litigation to provide context for our discussion of the issues on
appeal.

1      Because other witnesses share the same last name as Mary, we will
refer to her and those witnesses by their first name. Prior to oral argument,
this court was notified that Mary passed away while the appeal was pending.
On August 10, 2022, we granted an unopposed motion to substitute personal
representative Bridget Arthur, Mary’s adult daughter, for the decedent. (See
Code of Civ. Proc., § 377.31 [“On motion after the death of a person who
commenced an action or proceeding, the court shall allow a pending action or
proceeding that does not abate to be continued by the decedent’s personal
representative or, if none, by the decedent’s successor in interest.”]; Cal.
Rules of Court, rule 8.36(a) [“Substitution of parties in an appeal or original
proceeding must be made by serving and filing a motion in the reviewing
court. The clerk of that court must notify the superior court of any ruling on
the motion.”].)

2    We grant Mary’s July 19, 2021 opposed request to augment the record
on appeal, including the additional documents she submitted for
augmentation on September 13, 2021.

                                        2
      Mary and Edward (sometimes, the Mowbrays) were the sole trustees
and beneficiaries of the Mowbray family trust, which held title to a Big Bear
Lake cabin they mostly used as a rental property (Subject Property). On
August 9, 2012, a fire damaged the Subject Property. Because Mary and
Edward were both in their late 80’s and did not live in Big Bear, they gave
their adult son Patrick Mowbray (Patrick) a valid power of attorney (POA) to
“handle all decisions, transactions and claims in relation to the management,
rental, demolition, repairs and/or reconstruction” of the Subject Property.
      The Mowbrays submitted an insurance claim to Farmers Fire
Insurance Exchange (Farmers) for the fire damage. On August 31, 2012,
Farmers provided an estimate of damages and a scope of repairs. The
insured loss totaled $72,142.50.
      About a month later, Patrick entered into the home repair construction
contract with Dallaswhite. The amount due under the original contract
matched the loss estimated by Farmers. Although signed in late September
2012, Dallaswhite did not begin work on the Project for another nine months.
      On June 20, 2013, Dallaswhite prepared a scope of work designated by
the parties as “R-3,” to reflect that it was the third version to two earlier
draft scopes of work that the parties never adopted. R-3 included upgrades to
the Subject Property made by Patrick beyond the fire damage covered by
Farmers. These upgrades were memorialized in a change order signed by
Patrick and a Dallaswhite Project manager. Over the next couple months,
other changes were made to R-3 that also were memorialized in change
orders signed by the parties. Near the end of August 2013, the new contract
totaled $110,237.91.
      In mid-November 2013, Patrick left Big Bear, where he had been
temporarily living to manage the Project, and returned to his parents’ Orange

                                        3
County home. Around this time, Patrick ceased his involvement in the
Project for a “period of time.”
      At about this same time, Mary became very ill with shingles and
Edward on or about November 20, 2013 entered the hospital, where he
remained for about a week and, upon his discharge, spent another week in
aftercare for additional treatment. When Edward returned home, he was not
well and needed a caregiver, as Mary was still too ill to care for him.
      The Mowbrays’ adult daughter Bridget Arthur (Arthur) on November
24 emailed Dallaswhite’s president and owner, Brian Whiteway (Whiteway),
informing him of her parents’ illnesses and of Patrick’s absence. In this
email, Arthur claimed her brother allegedly had “relapse[d] in his drinking
problem”; that, because he allegedly refused to leave their parents’ home, she
had obtained a temporary restraining order against him; and that she was
taking “charge” of the Project and it was her “wish” to “put this house back
together as a rental, not a 5 star resort like Pat wanted.”
      About an hour later, Whiteway emailed Arthur, stating he was looking
forward to working with her to complete the Project, but needed “a copy of the
power of attorney ASAP so we can take directive from you moving forward.”
That same evening, Arthur and Whiteway spoke by telephone. Whiteway
informed Arthur that Dallaswhite was assigning Kent Riehm (Riehm) as the
new (and third) Project manager. Arthur thereafter took over the
management of the Project and modified R-3 by downgrading the Project in
several respects. She did so without a power of attorney.
      In mid-January 2014, Edward gave Riehm a cashier’s check for
$13,841.46. Edward believed this was the final payment due under the
contract.

                                       4
      On January 30, 2014, Arthur drove Edward to Big Bear. They, along
with Riehm and a few others, conducted a “walk-through” of the Subject
Property. At the completion of the walk-through, Edward signed a
Certificate of Completion and Satisfaction (Certificate of Completion)
providing he had reviewed, and was satisfied with, the work performed by
Dallaswhite.
      On or about March 6, 2014, Dallaswhite sent an invoice to the
Mowbrays demanding payment of $5,675.49, after Dallaswhite had billed
Farmers in this amount for additional costs it incurred on the Project (March
2014 Supplemental Invoice). Farmers approved the March 2014
Supplemental Invoice, but paid the money directly to the Mowbrays.
      In August 2014, Dallaswhite sued Edward (but not Mary) in small
claims court, seeking what was then the jurisdictional limit of $5,000, after
the Mowbrays refused to turn over any of the additional money they had
received from Farmers. Dallaswhite succeeded in small claims court.
Edward, however, appealed, leading to a trial de novo in April 2015 in which
Edward prevailed (as discussed post). Shortly thereafter, Edward died.
      In January 2018, Mary filed the lawsuit that is the subject of this
appeal. She alleged a single cause of action against Dallaswhite for breach of
contract. In September 2018, Mary amended her complaint to add causes of
action against Dallaswhite for breach of warranty, negligence, and financial
elder abuse.

                                       5
                           The Construction Contract
         Section 6 of the parties’ contract governed “changes” to the “Work” to be

performed by Dallaswhite.3 It provides in part: “Owner may make changes
in the Work. Owner and DALLASWHITE must agree, in writing, to the
scope of the changed work, the price of the changed work, any effect on any
payment terms or conditions, including the timing of payments and the time
necessary to complete the changed work (‘Change order’). Any Change Order
shall be executed in the form attached hereto as Exhibit ‘B.’ ”
         On June 20, 2013, Dallaswhite prepared scope of work “R-3,”
incorporating the renovations and improvements made by Patrick. R-3
became part of the contract by virtue of Change Orders 1 and 3, the latter of

which Patrick signed on June 27, 2013 as his parents’ POA.4 R-3 increased
the cost of the Project to $95,579.20, or $23,436.70 above the original contract
price.
         Change Order 4, dated July 12, 2013, increased the contract price by an
additional $1,500. Under this change order, Dallaswhite agreed to additional
renovations to the Subject Property including dropping the “ceiling in the
kitchen for hood vent install[ation].” Patrick also signed Change Order 4 in
his capacity as POA.
         The parties executed Change Order 5 on August 20, 2013. This change
order was for a roofing upgrade to the Subject Property required by the City

3     “Work” is defined in Section 1 of the contract to mean “all labor,
materials, equipment, supervision and contract administration to restore the
Property to its original condition immediately prior to the loss giving rise to
the Claim using like kind and quality of labor and materials.”

4        Change Order 2 was filled out but never signed by the parties.

                                         6
of Big Bear. Change Order 5 increased the contract by $13,161.71, for a new
total of $110,237.91.
      Josh Gonzalez (Gonzalez) was Dallaswhite’s Project manager when
Change Orders 1 and 3 were executed. Change Orders 4 and 5 were
submitted and signed on behalf of Dallaswhite by Preston Brant (Brant), who
replaced Gonzalez as Project manager. Brant left Dallaswhite toward the
end of 2013, after he became “frustrate[ed]” and experienced “problems” on
“every” Dallaswhite project.
                               Trial De Novo
      Edward’s appeal of the small claims case was heard on April 21, 2015
by San Bernardino Superior Court Judge Larry W. Allen. (See Dallaswhite
Corporation v. Mowbray, San Bernardino County Superior Court case
No. SMCVS1401539 (Trial De Novo).) Edward was represented by legal
counsel, while Riehm alone appeared on behalf of Dallaswhite. Patrick,
Edward, Mary and Riehm all testified at the Trial De Novo, and multiple
exhibits were admitted during the proceeding.
      In his opening statement, Riehm argued the case was limited to the
single issue of whether Dallaswhite was entitled to $5,000 of the $5,675.49
the Mowbrays had received from Farmers. Edward (through counsel) argued
the scope of the Trial De Novo included whether the Mowbrays were entitled
to claim offsets to any money allegedly owed Dallaswhite, based on
Dallaswhite’s performance (or lack thereof) of the contract.
      In support, Edward informed Judge Allen the Mowbrays had filed a
complaint against Dallaswhite with the Contractors State License Board
(CSLB); that CSLB investigator David Spiegel (Spiegel) had personally
inspected the Subject Property and had prepared a detailed report dated
October 26, 2014 summarizing his findings; and that Spiegel concluded

                                       7
Dallaswhite’s work fell below the “accepted trade standards for goods and
workman-like construction,” and estimated the “cost to correct the work” at
$25,651.89. Edward informed Judge Allen they intended to file a separate
lawsuit (i.e., the instant case) against Dallaswhite for breach of contract.
      It was then Judge Allen stated, “Well, Mr. Riehm, from what little I
know of the case, you should pause now and think about this. And I say—
this is entirely up to you.” Judge Allen explained that, because it appeared
additional litigation involving the Project was likely, Riehm should consider
whether it was in Dallaswhite’s best interest to proceed with the Trial De
Novo, given the Mowbrays were entitled to “claim offsets” to any payment
allegedly owed Dallaswhite. Riehm indicated he wanted to go forward with
the case, to which Judge Allen responded, “That’s fine.”
      Patrick’s Testimony
      Patrick signed the original contract with Dallaswhite on September 29,
2012. On or about June 4, 2013, Patrick emailed Dallaswhite, after learning
Gonzalez had obtained a check directly from Mary. Patrick wrote that, going
forward, Dallaswhite was not to contact Mary and Edward because they did
not “ ‘want any more involvement’ ” in the Project. Whiteway responded,
“ ‘Pat, thank you for your correspondence. Moving forward we will
correspond and deal directly with you as we have from the beginning.’ ”
Patrick explained to Judge Allen that, while Mary held the “checkbook,” he
was running the “job.”
      Patrick communicated with Gonzalez, the first Project manager, on
“almost . . . a daily basis.” Patrick complained to Gonzalez about the Project’s
long delay, testifying at one point he emailed Gonzalez that a claims adjuster
from Farmers had been “amazed” the Project was still ongoing.

                                        8
      Patrick emailed Gonzalez on June 18, 2013, identifying by model
number the upgraded appliances he had chosen for installation in the
kitchen. On or about June 20, 2013, these model numbers were incorporated
into R-3 and became part of the contract as a result of Change Orders 1 and
3. While on the witness stand, Patrick reviewed pictures of the various
upgraded kitchen appliances that were included in R-3, and compared them
to what he described as the substandard, “terrible” appliances Dallaswhite
instead had installed as substitutes in the Subject Property.
      At some point, Patrick learned Brant had replaced Gonzalez as the
Project manager. Patrick testified that he also communicated with Brant
regarding the Project almost “daily”; and that at one point the two of them
had gone “shopping” to multiple stores over about a three-day period,
identifying additional items for installation in the Subject Property. Patrick
testified Dallaswhite did not install these additional items, however, based on

changes to R-3 made by Arthur.5
      As noted, Riehm replaced Brant as the Project manager in late
November 2013. However, unlike Dallaswhite’s previous Project managers,
Patrick had no communication with Riehm. Patrick told Judge Allen that, as
of November 2013, he had been working for about 15 months on a Project
that was supposed to have taken only four; that he needed to return to
Orange County for some medical tests he had postponed due to his
involvement in the Project; and that when he left Big Bear, he had identified

5      By way of example only, Dallaswhite installed what Patrick claimed
was an “absolutely useless” 17-inch dishwasher in the kitchen in lieu of a
full-size, 24-inch dishwasher; four-feet of kitchen cabinets made of melamine
in place of 16 feet of wooden cabinets he and Brant had chosen; and carpet in
the downstairs living room instead of the laminate flooring they also had
chosen.

                                       9
and communicated to Dallaswhite, through its Project managers Gonzalez
and Brant and its owner Whiteway, “97 percent of everything” required to be
installed under R-3 and the various change orders.
      Patrick denied having a “drinking problem” as Arthur claimed in her
November 24 email to Whiteway. He also denied a restraining order was

issued against him, as Arthur also claimed in that email.6
      Edward’s Testimony
      Edward testified that on or about January 17, 2014, Riehm came to the
Mowbrays’ home in Orange County to obtain a cashier’s check made payable
to Dallaswhite. At the time, Riehm “assured”—and then “reassured”—
Edward that after this payment, Dallaswhite was owed no additional money
under the contract. Prior to making what Edward believed was this final
payment, Riehm had threatened to sue the Mowbrays and “destroy” their
credit.
      Edward was questioned about the Certificate of Completion he signed
on January 30, 2014. Edward told Judge Allen that he was unaware of the
terms of the contract when he signed the document, including the upgrades
Patrick had negotiated and the Mowbrays had paid for as provided in R-3
and the change orders; and that he had been unable to “give a good
inspection of the work” done by Dallaswhite because he was physically
“incapacit[ated]” and unable to climb the stairs to the second floor.
      Edward was asked about Riehm’s statements that the Mowbrays had
given Arthur the authority to modify R-3. Edward denied giving his

6     We note the record does not include a copy of any restraining order
issued against Patrick, or any paperwork to support such an order. At trial,
Arthur testified a temporary restraining order did issue against Patrick but
the court subsequently refused to make the order permanent.

                                       10
daughter such authority. On cross-examination, Edward reiterated that he
never told Riehm (his cross-examiner) that Dallaswhite was to follow the
“directives” of Arthur after November 2013. Edward also testified that
Patrick and not Arthur was in charge of the Project throughout the contract,
and that Dallaswhite should have taken direction from Patrick to complete
the Project.
      Additional Witness Testimony
      Mary also testified at the Trial De Novo, as did Riehm on behalf of
Dallaswhite. Like her husband, Mary testified Arthur had no “authority” to
modify the Project, and disputed that she and Edward had orally confirmed
in a meeting with Riehm that Dallaswhite could take direction from Arthur.
      Riehm in his testimony accused both Mary and Edward of “lying” about
Arthur’s lack of authority to modify R-3, claiming he had their “word” she
was in charge of the Project. Judge Allen assured Riehm he understood
Dallaswhite’s position in the case, and recognized the evidence was
conflicting on this point.
      On cross-examination, Riehm admitted that, once Arthur took over the
Project, none of the changes to R-3 were in writing. He also admitted
Dallaswhite allowed modifications to the Project despite Arthur’s lack of a
power of attorney, testifying Dallaswhite had “asked for one though.”
      Judge Allen’s Ruling
      At the end of the trial, Judge Allen from the bench ruled for Edward,
finding Dallaswhite was not owed any additional money under the contract.
A judgment was entered for Edward on July 23, 2015, which included an
award of $9.085.21 for his costs and attorney fees.

                                      11
                                Instant Lawsuit
      Mary filed this lawsuit against Dallaswhite on January 22, 2018,
seeking breach of contract damages of $57,250. Mary also requested the
court award her attorney fees and costs as provided in Section 12 of the

contract.7 Mary amended her complaint in September 2018, and, in addition
to general and special damages, sought punitive damages against
Dallaswhite under Welfare and Institutions Code section 15600 et seq. In
November 2018, Dallaswhite answered the FAC, asserting myriad
affirmative defenses.
      As discussed in more detail post, in late April 2019 Dallaswhite moved
ex parte to file what it claimed was a compulsory cross-complaint against
Arthur. Dallaswhite argued it was unaware Mary was disputing Arthur’s
authority to modify R-3 until it received Mary’s discovery responses earlier
that month. The court declined to grant Dallaswhite’s motion on an
expedited basis, and at a subsequent hearing denied the motion.
      In motions in limine, the court ruled to admit the transcript of, and the
exhibits introduced during, the (April 2015) Trial De Novo. At the same time,
the court ruled issue preclusion did not prevent Dallaswhite from relitigating
issues decided against it during that proceeding.
      The instant case came on for a bench trial in September 2019. Multiple
witnesses testified at the trial including Mary, who was then about 93 years

7       Section 12 provides in part: “The prevailing party in any action to
enforce this Contract or interpret its terms shall be entitled to an award of all
of its ‘costs,’ with ‘costs’ being defined as including attorney’s fees, expert and
consultant fees and other costs of litigation, including costs on appeal.”

                                        12
old, Arthur, Riehm, Whiteway and two experts called by Mary.8 The court
also considered the witness testimony from the Trial De Novo (including from
Patrick and Edward, who were both deceased), and the exhibits admitted in
that proceeding.
      There were two main issues at trial: (1) identifying the correct version
of the scope of work between the parties; and (2) whether Arthur was an
agent of her parents, and thus, had the legal authority to modify the Project
after she took over for Patrick. In response to these two issues, the court in
its lengthy statement of decision, as revised (SOD), found that R-3 was the
scope of work governing the Project; and that the “evidence” did not support a
finding Arthur was her parents’ agent.
      The court also found that Dallaswhite failed to fulfill its obligations
under the contract “in three general areas,” resulting in damages to Mary.
First, Dallaswhite failed to provide certain items called for in R-3, “either
because Dallaswhite provided the lower-cost items that Ms. Arthur orally
requested instead of those specified in R-3, or because Dallaswhite simply
failed to provide the specified item at all.” Second, Dallaswhite’s quality of
work was “substandard in numerous respects.” And third, R-3 contained
“minor duplications.”
      As noted, the court—after making various offsets (discussed post)—
awarded Mary compensatory damages of $16,803.57. The court also found
Mary’s breach of warranty claim duplicative of her breach of contract claim;
and found against her on her negligence and financial elder abuse claims.

8    Relevant portions of the witness testimony will be discussed post, in
connection with the issues raised on appeal.

                                       13
The SOD provided attorney fees would be “addressed in subsequent

proceedings.”9
      On appeal, Dallaswhite does not challenge the finding that R-3 was the
parties’ agreed-to scope of work. Instead, it primarily focuses on the court’s
agency finding, arguing that “substantial evidence” supports a finding Arthur
was in fact her parents’ agent; and therefore, that she had the legal authority
to modify R-3 and downgrade the Project. Based on this new finding of
agency in its favor, Dallaswhite then makes a series of legal arguments to
support reversal of the judgment. Alternatively, it contends the court erred
in refusing to make additional offsets to Mary’s damage award.
                                DISCUSSION
                   I. R-3 Establishes the Scope of Work
      We first address the court’s finding that R-3 governed the parties’ scope
of work of the Project, as this issue has significance on others raised by
Dallaswhite in this case.
      During discovery (in the instant case), Dallaswhite produced what the
parties and the court referred to as Exhibits 27 and 28. Exhibit 27 is a
change order, designated as Change Order 6 purportedly signed by Edward
on January 16, 2014, implementing Exhibit 28, an amended scope of work
designated as R-4. R-4 (1) shows the downgrades to the Project directed by
Arthur and (2) states a lowered contract price of $104,603.80. Whiteway at
trial testified R-4 reduced to writing all the oral modifications to R-3 made by
Arthur and Dallaswhite.

9      Other than Dallaswhite seeking a reversal of the judgment, the parties
have not addressed on appeal the issue of entitlement to, and/or any award
of, attorney fees and costs.

                                       14
      The court, however, found “convincing,” “uncontroverted” evidence that
Edward’s signature on Change Order 6 was forged. The court relied on the
testimony of Mike Wakshull (Wakshull), an expert “document examiner”
retained by Mary, whom the court found to be “highly credible.” Based on his
review of six of Edward’s signatures, Wakshull testified Edward’s signature
on Change Order 6 was a “ ‘replica,’ ” which Wakshull defined as a “digital
‘cut and paste’ of a ‘known’ authentic signature.”
      The court next addressed the question of “who” forged the signature,
“when, and why.”
      It found Dallaswhite never presented Change Order 6 in either the
small claims case or the subsequent Trial Do Novo, to show “documentation
for the downgrades.” The court found “credible” Whiteway’s denial that
neither he, nor someone at his direction from Dallaswhite, forged Edward’s
signature to “establish a false defense” to Mary’s lawsuit. Instead, it found
the more “plausible explanation” was that Riehm forged Edward’s signature,
“perhaps when he realized he had neglected to obtain a signed change order
for the downgrades selected by Ms. Arthur.” The court based this finding on
Riehm’s “credibility as a witness,” and its observation his “work was sloppy.”
      Regardless of who at Dallaswhite committed the forgery, the court
found “[s]omeone, acting on behalf of Dallaswhite, created the forged

                                      15
document.”10 The court thus found R-3 represented the scope of work agreed
to by the parties, with a contract price of $110,237.91.
                        II. Authority to Modify R-3
      A. Agency
      Turning to the main issue in this case, Dallaswhite contends the court
erred in concluding the evidence did not support a finding of agency in its

favor.11 Dallaswhite initially contends the court’s reasoning on agency is

10    The court raised the possibility that Arthur may have forged Edward’s
signature on Change Order 6 “rather than troubling him to obtain it.”
However, the court found no evidence to support “this speculation,” other
than the fact Arthur’s relationship with her parents was “strained.”
Moreover, the court noted that, if Arthur had forged her father’s signature on
Change Order 6, Dallaswhite “surely” would have produced this document
during the CSLB investigation and/or in connection with the small claims
action and/or the Trial De Novo. It thus rejected the possibility it was Arthur
that had forged her father’s signature on Change Order 6.

11     We note that at various points in its brief, Dallaswhite argues an
agency relationship existed between Arthur and both her parents
(Appellant’s Opening Brief (AOB), at p. 20 [“[T]he Trial Court erred in ruling
in Plaintiffs’ favor despite the substantial evidence of [Arthur’s] legal
authority to modify the contract as the Mowbrays’ agent” (italics added)]);
between her and Edward only (id. at p. 21 [“Edward was never prevented
from acting on his own behalf, nor did he lack the power to have Bridget
[Arthur] act as his agent” (italics added)]); and between her and Mary (id. at
p. 24 [“At trial, [Arthur] further testified the [November 24] email [to
Whiteway] was read to Mary before being sent. The only reasonable
conclusion is that Plaintiff knew, had no objections to, and agreed with
Bridget [Arthur] taking control over the project and advising Dallaswhite of
the same. This is substantial evidence of the agency relationship . . . .”
(Italics added.)].) Neither party on appeal raises the issue of whether Arthur,
if the agent of one but not both her parents, could legally act on their behalf,
given the Mowbrays’ family trust held title to the Subject Property, with
Mary and Edward as its sole trustees and beneficiaries. Because substantial
evidence supports the finding Arthur was not the agent of either of her
parents, we deem it unnecessary to address this issue.

                                       16
incorrect as a matter of law because the court in its SOD allegedly ruled
Arthur could not be her parents’ agent simply because she, unlike Patrick,
did not have a power of attorney. Dallaswhite is mistaken.
            1. The Court’s Agency Finding Was Based on the Evidence
      In reviewing the SOD, it is clear the court did not rest its agency
decision solely on whether Arthur was acting under a power of attorney. Of
course, if Arthur had received a valid power of attorney like her brother,
there is no question she would have been the attorney-in-fact, or agent, of her
parents, the principals, with the authority to manage the Project and modify

R-3 as provided under Section 6. (See Prob. Code, §§ 4401, 4402.)12 It was
precisely for this reason Whiteway responded to Arthur’s November 24 email
by requesting a power of attorney “ASAP.”
      Contrary to Dallaswhite’s argument on appeal, the SOD shows the
court found the “evidence” in this case did not “support a finding of agency.”
We recognize the court did not expressly state in its SOD the evidence on
which it relied to support this finding. Nonetheless, based on our review of
the record and as we discuss, we find more than sufficient evidence in the
record to support this finding. (See Brewer v. Murphy (2008) 161 Cal.App.4th

12     Probate Code section 4401 is the “statutory form power of attorney”
that is legally sufficient when the requirements of section 4402 of the Probate
Code are met. Pursuant to Probate Code section 4402, a statutory form
power of attorney is “legally sufficient” if (a) the wording of the form
“complies substantially” with Probate Code section 4401; (b) the “form is
properly completed”; and (c) the “signature of the principal is acknowledged.”

                                      17
928, 935-936 (Brewer) [evidence is “ ‘substantial’ ” “if it is ‘of “ponderable legal

significance,” “reasonable in nature, credible, and of solid value” ’ ”].)13
      In addition, the SOD makes clear the court’s agency finding arose as a
result of credibility determinations it made as trier of fact. (See Schmidt
v. Superior Court (2020) 44 Cal.App.5th 570, 582 (Schmidt) [the “fact finder’s
determination of the veracity of a witness is final”]; Cuiellette v. City of Los
Angeles (2011) 194 Cal.App.4th 757, 765 (Cuiellette) [“ ‘[w]e may not reweigh
the evidence and are bound by the trial court’s credibility determinations’ ”];
Pescosolido v. Smith (1983) 142 Cal.App.3d 964, 970 (Pescosolido) [the court
as the trier of fact “is the sole judge of the credibility of the witnesses”].)
      We therefore reject Dallaswhite’s contention the court allegedly based
its decision that Arthur was not an agent of her parents solely on the fact she
lacked a power of attorney.
             2. Dallaswhite Has Failed to Establish Arthur’s Agency as
                a Matter of Law

                   a. Standard of Review and Burden of Proof
      The existence of an agency relationship is a factual question for the
trier of fact. (Violette v. Shoup (1993) 16 Cal.App.4th 611, 619); Inglewood
Teachers Assn. v. Public Employment Relations Bd. (1991) 227 Cal.App.3d
767, 780 (Inglewood) [“Generally, the existence of an agency relationship and

13     As pointed out by Mary in her Respondent’s Brief, Dallaswhite in its
AOB omitted substantial portions of the evidence supporting the court’s no
agency finding, including evidence from the Trial De Novo summarized ante.
(See Cal. Rules of Court, rule 8.204(a)(2)(C) [requiring a party to “provide a
summary of the significant facts limited to matters in the record”]; see also
Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409 [recognizing a
“ ‘party who challenges the sufficiency of the evidence to support a particular
finding must summarize the evidence on that point, favorable and
unfavorable, and show how and why it is insufficient’ ”].)

                                         18
the extent of the authority of an agent are questions of fact, and the burden of
proving agency, as well as the scope of the agent’s authority, rests upon the
party asserting the existence of the agency and seeking to charge the
principal with the representation of the agent”].) “ ‘The law indulges in no
presumption that an agency exists, but instead presumes that a person is
acting for himself and not as agent for another.’ ” (K. King & G. Shuler Corp.
v. King (1968) 259 Cal.App.2d 383, 393.)
      “ ‘In a case where the trier of fact has determined that the party with
the burden of proof did not carry its burden and that party appeals, “it is
misleading to characterize the failure-of-proof issue as whether substantial
evidence supports the judgment.” [Citations.] Instead, “where the issue on
appeal turns on a failure of proof at trial, the question for a reviewing court
becomes whether the evidence compels a finding in favor of the appellant as a
matter of law.” [Citation.] Specifically, we ask “whether the appellant’s
evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of such a
character and weight as to leave no room for a judicial determination that it
was insufficient to support a finding.’ ” ’ [Citation.] This is ‘an onerous
standard’ [citation] and one that is ‘almost impossible’ for a losing [party] to
meet, because unless the trier of fact made specific factual findings in favor of
the losing [party], we presume the trier of fact concluded that ‘[the party’s]
evidence lacks sufficient weight and credibility to carry the burden of proof.’ ”
(Estes v. Eaton Corp. (2020) 51 Cal.App.5th 636, 651 (Estes), citing Ajaxo, Inc.
v. E*Trade Financial Corp. (2020) 48 Cal.App.5th 129, 163-164 and Bookout
v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th
1478, 1486.)
      Here, the court ruled Dallaswhite did not carry its evidentiary burden
to show Arthur was the agent of her parents. (See Inglewood, supra,

                                       19
227 Cal.App.3d at p. 780; see also J.M. Wildman, Inc. v. Stults (1959)
176 Cal.App.2d 670, 674 [the burden of proof to establish agency “rests with
the party asserting that the agent had authority to enter into the contract”].)
We therefore apply the standard set forth in Estes in determining whether,
on appeal, the evidence compels a finding of agency in Dallaswhite’s favor.
                  b. Agency Principles
      “An agent is one who represents another, called the principal, in

dealings with third persons.” (Civ. Code, § 2295.)14 Agency is “either actual
or ostensible.” (§ 2298.) An agency is “actual” “when the agent is really
employed by the principal.” (§ 2299.) Actual authority “is such as a principal
intentionally confers upon the agent, or intentionally, or by want of ordinary
care, allows the agent to believe himself to possess.” (§ 2316.)
      An agency is “ostensible” “when the principal intentionally, or by want
of ordinary care, causes a third person to believe another to be his agent who
is not really employed by him.” (§ 2300.) “Ostensible authority is such as a
principal, intentionally or by want of ordinary care, causes or allows a third
person to believe the agent to possess.” (§ 2317.)
                  c. Analysis
      Dallaswhite contends there was “substantial evidence” of an “agency
relationship” that allegedly was “never addressed” by the court in its SOD.
According to Dallaswhite, this evidence in part stems from Arthur’s
November 24 email to Whiteway that she was “now in charge of the Big Bear
Property”; and from her trial testimony that, before sending the November 24
email to Whiteway, she read it to Mary who approved it. According to
Dallaswhite, the “only reasonable conclusion” from this evidence is that Mary

14    All further undesignated statutory references are to the Civil Code.

                                       20
“had no objection to, and agreed with [Arthur] taking control over the
project.” We reject this contention for a number of reasons.
      First, Dallaswhite applies the wrong legal test in support of its claim of
error. The question is not whether there is record evidence to support an
agency finding contrary to the one made by the court. (See Eidsmore v. RBB,
Inc. (1994) 25 Cal.App.4th 189, 195 (Eidsmore) [on substantial evidence
review we “will not reweigh evidence, reappraise the credibility of witnesses,
or resolve factual conflicts contrary to the trial court’s findings, but only
decide whether there is substantial evidence to support these findings”].)
Instead, the question for our review is whether Dallaswhite’s evidence
compels a finding of agency in its favor. (See Estes, supra, 51 Cal.App.5th at
p. 651.)
      Second, we conclude Dallaswhite on appeal has not shown the evidence
compels a finding Arthur was the actual agent of her parents. (See § 2299.)
At the 2015 Trial De Novo, both Mary and Edward testified they never
authorized Dallaswhite, and Riehm in particular, to take “instruction” from
Arthur regarding the Project. Although Riehm during the Trial De Novo
accused Mary and Edward of “lying,” on further questioning they both
reiterated that neither of them had consented to Arthur having the
“authority” or “power” to modify the Project. The court as trier of fact in the
instant case was not required to believe Riehm. (See Stevens v. Parke, Davis
& Co. (1973) 9 Cal.3d 51, 67 (Stevens) [noting it is the “province of the [trier
of fact] to resolve the conflicts in the evidence and to pass upon the weight to
be given the evidence”].)
      In addition, Mary in discovery responses stated that she never
authorized Arthur to “manag[e] the reconstruction at the Subject Property”;

                                        21
that Patrick was the “only person” who had such authority; and that neither
she nor her husband “revoked” Patrick’s “written authority” to do so.
      But that’s not all. At trial in the instant case, Mary testified she never
authorized Arthur to send the November 24 email to Whiteway. Moreover,
Mary reiterated that she never consented to Arthur being in “charge of the
Big Bear property” and that Arthur had “no authority to make any decisions”
on her behalf.
      Arthur’s November 24 email to Whiteway also supports the court’s
agency finding. (See Brewer, supra, 161 Cal.App.4th at pp. 935-936.) In that
email, Arthur informed Whiteway that Mary was “not fit to make any
decisions” as a result of her suffering from shingles, which had left Mary
bedridden for weeks. (Italics added.) Arthur in her trial testimony confirmed
Mary was “very sick” in November 2013 and thereafter, and “wasn’t really
physically well enough to make decisions about rebuilding a house,”
testimony Mary herself confirmed at trial.
      Further support for the court’s agency finding is evidence that Arthur
disagreed with Patrick’s handling of the reconstruction Project. This
evidence supports the inference that she took over the Project to save her
parents money, as she believed her brother was turning what was a rental
property into a “5 star resort.”
      Moreover, that Arthur believed she had “authority” to manage the
Project and alter the scope of work and contract is not determinative. (See
South Sacramento Drayage Co. v. Campbell Soup Co. (1963) 220 Cal.App.2d
851, 856-857 [finding “the fact of belief is not enough” to create an agency as
there must be a showing that the belief was “engendered by conduct of the
principal,” and noting to hold otherwise “would give any agent, not the
authority, but the naked power to bind his principal to any contract within

                                       22
the general scope of duties, however fantastic or detrimental to the
principal’s interest such contract may be”].)
      Nor is the fact that Arthur was the daughter of the Mowbrays decisive
on agency. (See, e.g., Valentine v. Plum Healthcare Group, LLC (2019)
37 Cal.App.5th 1076, 1089 (Valentine) [noting an agency relationship “cannot
be implied from the marriage relationship alone,” and concluding the
patient’s husband was not her agent, despite his reasonable belief otherwise,
when he signed admission documents on his wife’s behalf that required any
claims against the defendant skilled nursing facility to be arbitrated]; van’t
Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 572 [“ ‘fact that
parties had a preexisting relationship is not sufficient to make one party the
agent for the other’ ”].)
      In sum, we conclude the finding that no actual agency existed between
Arthur and her parents is supported by substantial evidence (see Brewer,
supra, 161 Cal.App.4th at pp. 935-936); and therefore, that Dallaswhite on
appeal cannot show the evidence compels an opposite finding (see Estes,
supra, 51 Cal.App.5th at p. 651).
      Third, we conclude the evidence also does not compel a finding that
Arthur was the ostensible agent of the Mowbrays. (See § 2317.) “Ostensible
agency cannot be established by the representations or conduct of the
purported agent; the statements or acts of the principal must be such as to
cause the belief the agency exists.” (Valentine, supra, 37 Cal.App.5th at
p. 1087; see Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997)
59 Cal.App.4th 741, 747 [“ ‘ “Liability of the principal for the acts of an
ostensible agent rests on the doctrine of ‘estoppel,’ the essential elements of
which are representations made by the principal, justifiable reliance by a

                                        23
third party, and a change of position from such reliance resulting in
injury” ’ ”].)
       Here, at a minimum the evidence is controverted whether the conduct
of the Mowbrays engendered the belief on the part of Dallaswhite that Arthur
had the authority to orally modify R-3. (See Valentine, supra, 37 Cal.App.5th
at p. 1087.) As we have already noted, the evidence shows neither Mary nor
Edward were in a position at or near the time Arthur wrote the November 24
email, or thereafter, to convey to Dallaswhite a shared belief they approved of
Arthur modifying the Project.
       The instant matter is also unlike those cases in which an ostensible
agency was found to exist based on the parties’ past behavior, or prior
relationship or course of conduct. (See, e.g., Leavens v. Pinkham & McKevitt
(1912) 164 Cal. 242, 245-249 [concluding manager was packing house’s
ostensible agent to purchase fruit based on his prior authorized purchases
from plaintiff and others and the company’s failure to indicate in any manner
the manager lacked authority in those instances, given the manager was the
defendant’s “sole representative . . . in that locality,” was “acting within the
scope of a general employment to represent defendant in its business at that
place, and such business included . . . the purchase of fruit”]; Chicago Title
Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 408-409
[ostensible agency existed where insurance agent had previously bound
insurer to issue insurance 30 to 40 times despite express agreement denying
an agency relationship, and where insurer “never objected to that practice”];
Gulf Ins. Co. v. TIG Ins. Co. (2001) 86 Cal.App.4th 422, 435-437,
439 [insurance wholesaler was carrier’s ostensible agent where insurance
broker had historically filed claims with wholesaler].) Here, no prior
relationship or course of dealing existed between Arthur and Dallaswhite to

                                        24
support the inference it held a reasonable belief she was the agent of the
Mowbrays.
      In fact, the evidence is to the contrary. As noted, Whiteway in his
initial email to Arthur asked her to provide a power of attorney “ASAP.”
Whiteway’s request for a power of attorney further supports a finding that
he, as president and owner of Dallaswhite, wanted assurance that Arthur
had the requisite authority from her parents to take over the Project and
bind them to changes to R-3.
      This evidence is more than sufficient to support the finding that Arthur
was not the ostensible agent of the Mowbrays. (See Brewer, supra,
161 Cal.App.4th at pp. 935-936.) While there was evidence that could have
supported a contrary finding, the court as trier of fact was entitled to weigh
the evidence and consider the witnesses’ credibility (or lack thereof), which is
binding on this court under the appropriate standard of review. (See
Eidsmore, supra, 25 Cal.App.4th at p. 195; see also Estes, supra,
51 Cal.App.5th at p. 651.)
      Fourth, for similar reasons we conclude the evidence does not compel a
finding that the Mowbrays adopted or ratified as their own the acts of Arthur
in modifying R-3 and the contract. (See Rakestraw v. Rodrigues (1972)
8 Cal.3d 67, 73 [“ ‘Ratification is the voluntary election by a person to adopt
in some manner as his own an act which was purportedly done on his behalf
by another person, the effect of which, as to some or all persons, is to treat
the act as if originally authorized by him’ ”]; see also § 2307 [“An agency may
be created, and an authority may be conferred, by a precedent authorization
or a subsequent ratification”].)
      As summarized ante, Mary unambiguously testified she never would
have signed the Certificate of Completion on January 30, 2014, as

                                       25
Dallaswhite had neither made the agreed-to upgrades requested by Patrick
nor completed to her satisfaction its reconstruction work under the contract.
Mary made her feelings known to Whiteway in June 2014, after her first visit
to the Subject Property. She testified at the Trial De Novo she was
“appalled” by the quality of Dallaswhite’s work, as was Edward, who,
according to Mary, had called Dallaswhite “innumerable times leaving
messages” regarding his concerns over the Project.
      Moreover, at the Trial De Novo Edward testified that, when he signed
the Certificate of Completion, he was “incapacit[ated]”; that as a result, he
was unable to climb the stairs to the second floor to make a “good inspection”;
that he thus felt “unqualified” to sign the Certificate of Completion but did so
at the urging of Riehm; that he then was unaware of the terms of the Project
Patrick had negotiated, which included myriad upgrades priced into the
contract; and that, had he known what should have been installed in the
Subject Property, he never would have signed the Certificate of Completion.
The court credited this evidence when it rejected Dallaswhite’s contention
that Edward’s signature on the Certificate of Completion excused its failure

to obtain a proper change order for Arthur’s downgrade of the Project.15
      From the foregoing, we conclude substantial evidence supports the
finding that the Mowbrays did not ratify Arthur’s modification of R-3, such
that her acts would be treated as their own. (See Brewer, supra,
161 Cal.App.4th at pp. 935-936.) Such evidence precludes an agency finding

15    The court also credited evidence showing the Certificate of Completion
was merely a requirement by Farmers for “release of the balance of
reimbursement owed to the Mowbrays.” The court therefore found the
“Certificate of Completion . . . does not represent an agreement to modify the
contract, which, by its terms, could only be done in the particular form
specified in the contract [i.e., Section 6].”

                                       26
based on ratification in favor of Dallaswhite as a matter of law. (See Estes,
supra, 51 Cal.App.5th at p. 651.)
      Dallaswhite nonetheless contends Mary ratified Arthur’s conduct based
on Arthur’s trial testimony that, before she sent the November 24 email to
Whiteway, she cleared it with Mary. However, as noted ante, Mary disputed
that she authorized Arthur to send Whiteway this email, and that she had
ever authorized Arthur to take control of, and modify, the Project. As trier of
fact, the court was entitled to believe Mary and not Arthur. (See Stevens,
supra, 9 Cal.3d at p. 67.)
      Dallaswhite also references a meeting at the Mowbrays’ Orange County
home on January 16, 2014 (the day before Edward gave Riehm the cashier’s
check). This meeting was attended by Mary, Edward, Arthur, and Riehm.
According to Dallaswhite, during the meeting the Mowbrays “reviewed the
finished work with Mr. Riehm.” “The Mowbrays unquestionably knew about
the cabinets, appliances, floors, paints, and other materials selected and
installed at the Subject Property . . . and approved them.” (Italics added.)
      However, in her deposition Arthur testified that Mary was experiencing
“terrible headaches” and other severe health problems during the January 16
meeting; and that, while Arthur attempted to include her mother in the
meeting, because Mary was “so sick, . . . she might not have made the
decision that she would make when she was well.”
      Arthur also testified at her deposition that, because Edward was “hard
of hearing,” she had to go back and forth between Riehm and her father
during the January 16 meeting, as Riehm was showing “pictures of what he
had picked out” based on changes to R-3 unilaterally made by Arthur.
(Italics added.) According to Arthur, her father then agreed to downgrade the

                                      27
Subject Property, including the proposed changes to the kitchen appliances
and cabinets among other modifications.
      But Edward at the Trial De Novo testified differently, stating he never
agreed to these changes and, in fact, did not even know what was called for in
the scope of work and the various change orders when confronted with these
changes during this meeting. (See Stevens, supra, 9 Cal.3d at p. 67 [it is the
“province of the [trier of fact] to resolve the conflicts in the evidence”].) This
substantial evidence supports the finding that neither Mary nor Edward
ratified Arthur’s decision to modify R-3.
      B. Executed Oral Agreement
      As noted, Section 6 of the contract required all changes to the scope of
work be in writing on the change order form attached as an exhibit to the
contract. As also noted, before Arthur’s involvement in the Project in late
November 2014, the parties’ course of conduct had been to follow this Section,
as evidenced by Change Orders 1, 3, 4, and 5.
      Dallaswhite nonetheless contends the court erred in refusing to apply
section 1698, subdivision (b), which provides: “A contract in writing may be
modified by an oral agreement to the extent that the oral agreement is
executed by the parties.” Whether a writing has been modified by an
executed oral agreement is a question of fact. (Eluschuk v. Chemical
Engineers Termite Control, Inc. (1966) 246 Cal.App.2d 463, 469 (Eluschuk).)
“[T]he effect [of an executed modification] is to alter only those portions of the
written contract directly affected by the oral agreement leaving the
remaining portions intact.” (Ibid.)
      We find Dallaswhite’s contention unavailing.
      First, it improperly presumes that Arthur was the agent of her parents,
and thus, she was authorized to orally modify the contract.

                                        28
      Second, because Arthur was not the agent of the Mowbrays, she had no
authority to waive the requirement in Section 6 of the contract that changes
to the scope of work be in writing. Waiver of a contractual right is ordinarily
a question of fact to be determined by the trier of fact. (See Old Republic Ins.
Co. v. FSR Brokerage, Inc. (2000) 80 Cal.App.4th 666, 679 (Old Republic).)
“In the case of a true waiver implied in fact from conduct, the intent to waive
must be clearly manifested or the conduct must be such that an intent to
waive may be reasonably inferred.” (13 Williston Contracts (4th ed. 2015) §
39:28, p. 625, fns. omitted [waiver of contract rights may be express or
implied through conduct].)
      Here, prior to Arthur’s involvement, as we have noted the changes to R-
3 were all in writing. The parties’ course of dealing is thus contrary to a
finding of implied waiver of Section 6, as the trial court recognized when it
found Arthur “had no legal authority to modify the contract, which could only
be done by Mr. or Mrs. Mowbray or Patrick, in writing, as specified in the
contract.”
      Third, the court expressly considered and rejected the theory that there
was an executed oral agreement between the parties. It noted the “existence
of the forged Change Order 6 belies the possibility of [such an] oral
agreement,” adding: “[I]f there was an executed oral agreement between the
parties, there would be no need [of Dallaswhite] to forge a signature on
Change Order 6.” We agree with this reasoning, and for this separate reason
reject the argument the oral modification to R-3 was enforceable against the
Mowbrays. (See Eluschuk, supra, 246 Cal.App.2d at p. 469.)
      C. Waiver and Estoppel
      Dallaswhite next contends the court failed “to address the substantial
evidence that show[s] the Mowbrays knew and agreed to [Arthur] taking

                                       29
control from Patrick in the management of repairs to the Subject Property.”
It further contends this evidence supports a finding of waiver and/or estoppel
in its favor.
      “Under California law, a waiver is the intentional relinquishment or
abandonment of a known right or privilege.” (Smith v. Selma Community
Hospital (2008) 164 Cal.App.4th 1478, 1506 (Smith); see City of Hollister
v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 487 [“The essence of
waiver . . . is the voluntary relinquishment of a known right.”].) And, as
noted, waiver is a question of fact and is based on intent. (Old Republic,
supra, 80 Cal.App.4th at p. 679.) The intent to waive may be expressed in
words, either oral or written, or implied by a party’s conduct. (Waller
v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.)
      Here, as we have repeatedly noted, there is ample evidence to support a
finding that Mary never expressly or impliedly “agreed” to allow Arthur to
take over and modify the Project, as Mary testified at her deposition, the
Trial De Novo, and the trial in the instant case. Edward’s testimony at the
Trial De Novo was similar to Mary’s, as also summarized ante.
      Moreover, as we have also noted, substantial evidence supports the
court’s finding that both Mary and Edward were unable to make decisions
regarding the Project at or near the time Arthur sent the November 24 email
to Whiteway; and that neither of them were aware of the terms of the
contract Patrick had negotiated, as reflected in R-3 and the change orders,
including when Edward signed the Certificate of Completion on January 30,
2014 (as he so testified at the Trial De Novo). (See Brewer, supra, 161
Cal.App.4th at pp. 935-936.)
      The record also shows that shortly after the walk-through, which
neither Mary or Patrick attended, both Mary and Edward contacted

                                      30
Dallaswhite to complain about the renovation. This evidence is further
support for the finding that the Mowbrays did not expressly or impliedly
waive or relinquish any claim against Dallaswhite for its decision to follow
Arthur’s instructions to orally modify R-3. (See Smith, supra, 164
Cal.App.4th at p. 1506.)
      We also find the evidence does not support a finding that the
Mowbrays’ were estopped from asserting Arthur’s lack of authority to modify
R-3. “ ‘Generally speaking, four elements must be present in order to apply
the doctrine of equitable estoppel: (1) the party to be estopped must be
apprised of the facts; (2) he must intend that his conduct shall be . . . acted
upon, or must so act that the party asserting the estoppel had a right to
believe it was so intended; (3) the other party must be ignorant of the true
state of facts; and (4) he must rely upon the conduct to his injury.’ ”
(Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346,
1359 (Feduniak).) The existence of an estoppel is generally a factual
question. (Albers v. County of Los Angeles (1965) 62 Cal.2d 250, 266.)
      We conclude equitable estoppel does not apply in this case because at a
minimum, substantial evidence supports a finding the Mowbrays were not
“apprised of the facts” regarding the Project itself and Arthur’s changes to it.
(See Feduniak, supra, 148 Cal.App.4th at p. 1359.) The court found Mary
was unaware of the changes to the contract until she visited the Subject
Property in June 2014, as she was “not directly involved in the project, and
there is no evidence she knew anything about the details of R-3.”
      Similarly, Edward also did not know the scope of changes to the Project
made by Arthur and Dallaswhite, as he testified at the Trial De Novo, given
he, like his wife, was not involved in the negotiation of the contract or the
agreed-to scope of work. Moreover, at the time Arthur took over the Project,

                                        31
and thereafter until its completion in late January 2014, Edward was
“incapacitated.”
      Patrick also testified at the Trial De Novo that while Mary held the
“checkbook,” he ran the “job”; that he told Whiteway neither Mary nor
Edward wanted any involvement in the Project; and that Whiteway in
response confirmed Dallaswhite would “correspond and deal directly” with
Patrick as it had “from the beginning.”
      This evidence is more than sufficient to support a finding that the
Mowbrays were not “apprised of the facts” of the Project, including the
changes to it after Arthur took over; and therefore, that they were not
estopped from asserting Arthur’s lack of authority. (See Feduniak, supra,
148 Cal.App.4th at p. 1359.)
      Dallaswhite also argues that estoppel should apply based on the
maxim, “Where one of two innocent persons must suffer by the act of a third,

he, by whose negligence it happened, must be the sufferer.” (§ 3543.)16
Dallaswhite argues the court erred “in failing to consider the substantial
evidence” that it “acted innocently in following what it was led to believe were
the Mowbrays’ wishes.” (Italics added.)
      Again, Dallaswhite misconstrues the standard of review we must apply.
(See Brewer, supra, 161 Cal.App.4th at pp. 935-936; Estes, supra,
51 Cal.App.5th at p. 651.) In any event, as discussed ante the court found
someone at Dallaswhite forged Edward’s signature on Change Order 6, which
attempted to memorialize in R-4 the oral modifications made by Arthur and
Dallaswhite to R-3. And as also discussed, Dallaswhite did not contest this
finding on appeal. That someone at Dallaswhite forged Edward’s signature

16    Dallaswhite states this maxim a little differently, without citation to
section 3543.

                                      32
on this change order in an attempt to create a new scope of work, is strong
evidence that Dallaswhite was not an “innocent” party in this case. (See
§ 3543.)
                         III. Remaining Contentions
      A. Statute of Limitations
      Dallaswhite contends the court erred in finding the four-year statute of
limitations in Code of Civil Procedure section 337.1 was inapplicable to
Mary’s breach of contract claim, which she filed against Dallaswhite on
January 22, 2018.
             1. Guiding Principles
      Section 337.1, subdivision (a) of the Code of Civil Procedure provides in
relevant part: “Except as otherwise provided in this section, no action shall
be brought to recover damages from any person performing or furnishing the
design, specifications, surveying, planning, supervision or observation of
construction or construction of an improvement to real property more than
four years after the substantial completion of such improvement for any of
the following: [¶] (1) Any patent deficiency in the design, specifications,
surveying, planning, supervision or observation of construction or
construction of an improvement to, or survey of, real property; [¶] (2) Injury
to property, real or personal, arising out of any such patent deficiency.”
(Code Civ. Proc., § 337.1, subd. (a)(1)-(3).)
      Subdivision (e) of Code of Civil Procedure section 337.1 defines “patent
deficiency” to mean “a deficiency which is apparent by reasonable inspection.”
(Code Civ. Proc., § 337.1, subd. (e).)
      “Resolution of the statute of limitations is normally a question of fact.”
(Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810 (Fox); see Jolly
v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112 [same].)

                                         33
            2. Analysis
      For Dallaswhite to prevail on its contention Code of Civil Procedure
section 337.1, subdivision (a) barred Mary’s breach of contract claim, it must
show as a matter of law that Mary’s cause of action accrued on or before
January 21, 2014. (See Fox, supra, 35 Cal.4th at p. 810.)
      As noted, Arthur was not the agent of her parents and thus, any
knowledge on her part regarding changes she made to the contract cannot be
imputed to Mary. (See § 2332 [“As against a principal, both principal and
agent are deemed to have notice of whatever either has notice of, and ought,
in good faith and the exercise of ordinary care and diligence, to communicate
to the other”]; Estate of Cantor (1974) 39 Cal.App.3d 544, 549 [“The law
imputes knowledge of the agent . . . to the principal.”].)
      The court found Mary did not learn of the changes to the contract until
June 2014, within four years of filing her lawsuit, when she first visited the
Subject Property. Moreover, the record shows her husband Edward did not
sign the Certificate of Completion until January 30, 2014, again within four
years of his wife’s lawsuit against Dallaswhite.
      Dallaswhite nonetheless argues the statute of limitations commenced
on January 16, 2014, when Riehm came to the Mowbrays’ Orange County
home and during a meeting showed the Mowbrays “photos of the job status”
of the Project. According to Dallaswhite, any defects and deficiencies to the
Project then would have been readily “apparent by reasonable inspection” of
the “photos,” inasmuch as the “majority of defects” complained about were

“visible to the naked eye.”17 (See Code Civil Proc., § 337.1, subd. (e).)

17     Dallaswhite in its AOB did not identify these “photos” or give a record
cite for our review.

                                       34
        But as noted, during the January 16 meeting Mary was still “very sick”
and unable to make any decisions regarding the Project. The court also found
Mary then was unaware of the terms of the contract, as we also have noted.
This evidence precludes a finding as a matter of law in favor of Dallaswhite
that the applicable statute of limitations commenced to run on January 16,
2014.
        Dallaswhite also argues Patrick, as his parents’ agent, knew in early
June 2013 that Dallaswhite was in breach of the contract when he
complained of substantial delays in the Project; and his knowledge is imputed
to Mary. (See § 2332.) But the court found R-3, adopted by Change Orders 1
and 3, was not in existence when Patrick complained to Dallaswhite about
the delay. Moreover, the “breaches” to the contract found by the court were
“not based on delay.” And we add that, in June 2013, the Project also was not
“substantial[ly] complet[ed]” as required under subdivision (a) of Code of
Civil Procedure section 337.1.
        We therefore reject Dallaswhite’s contention the court erred in refusing
to find the applicable statute of limitations barred Mary’s breach of contract
claim.
        B. Denial of Leave to File a Cross-complaint Against Arthur
        Dallaswhite contends the court erred in denying its motion for leave to
file what it contended was a compulsory cross-complaint against Arthur,
citing to Code of Civil Procedure section 426.10. As noted ante, Dallaswhite
brought its motion in late April 2019, claiming it had just learned from
Mary’s discovery responses that she was disputing Arthur’s authority to
manage the Project, including changing the terms of the contract negotiated
by Patrick.

                                        35
      At a May 10 hearing, the court denied Dallaswhite’s motion. The court
found the cross-complaint was permissive and not compulsory; the indemnity
and contribution claims Dallaswhite sought to assert against Arthur had not
accrued because no judgment had been rendered against Dallaswhite; and
Arthur would suffer “significant prejudice” if its motion was granted because

trial was set to commence the following month.18
      On appeal, Dallaswhite contends the court erred because its complaint
against Arthur was compulsory, and there was no showing of bad faith on its
part. We disagree.
            1. Guiding Principles
      Code of Civil Procedure section 426.30 governs compulsory cross-
complaints. Subdivision (a) of this statute provides in relevant part: “[I]f a
party against whom a complaint has been filed and served fails to allege in a
cross-complaint any related cause of action which (at the time of serving his
answer to the complaint) he has against the plaintiff, such party may not
thereafter in any other action assert against the plaintiff the related cause of
action not pleaded.” (Code Civ. Proc., § 426.30, subd. (a), italics added.)
      Code of Civil Procedure section 428.10 governs permissive cross-
complaints. It provides in relevant part: “A party against whom a cause of
action has been asserted . . . may file a cross-complaint setting forth
[¶] . . . [¶] (b) Any cause of action he has against a person alleged to be liable
thereon, whether or not such person is already a party to the action, if the
cause of action asserted in his cross-complaint (1) arises out of the same

18   The court noted its ruling did not prevent Dallaswhite from filing a
separate action against Arthur, or waiting for the appropriate time to seek
indemnity and/or contributions from her, depending on the outcome of Mary’s
lawsuit.

                                        36
transaction, occurrence, or series of transactions or occurrences as the cause
brought against him.” (Code Civ. Proc., § 428.10, subd. (b), italics added.)
            2. Analysis
      We conclude as a matter of law that, because Arthur was not a
“plaintiff” in Mary’s action (see Code Civil Proc., §426.30, subd. (a)),
Dallaswhite’s proposed cross-complaint against Arthur was permissive and
not compulsory, inasmuch as it arose out of the “same transaction” or
“occurrence” as the “cause brought against [Dallaswhite].” (See § 428.10,
subd. (b); see White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 572 [a “ ‘statute’s
plain meaning controls the court’s interpretation unless its words are
ambiguous,’ ” and “ ‘[i]f the plain language of a statute is unambiguous, no
court need, or should, go beyond that pure expression of legislative intent’ ”].)
      Code of Civil Procedure section 428.50 governs the timing of the filing
of a permissive cross-complaint. As relevant here, subdivision (b) of this
statute provides a party may file a cross-complaint against a third party “at
any time before the court has set a date for trial.” (Code Civ. Proc., § 428.50,
subd. (b).) However, if a party fails to file a cross-complaint against a third
party before the date set for trial, as was the case here, the party “shall
obtain leave of court to file any cross-complaint” (id., subd. (c)); and “[l]eave
may be granted in the interest of justice at any time during the course of the
action” (ibid.). “Permission to file a permissive cross-complaint is solely
within the trial court’s discretion.” (Crocker Nat. Bank. v. Emerald (1990)
221 Cal.App.3d 852, 864 (Crocker); see Orient Handel v. United States Fid.
& Guar. Co. (1987) 192 Cal.App.3d 684, 701 [same].)
      We conclude the court did not abuse its discretion in denying
Dallaswhite’s motion. Dallaswhite’s explanation for its delay in seeking
permission to file the cross-complaint ignores Mary’s testimony from the

                                        37
April 2015 Trial De Novo that Arthur had no “authority” to manage the
Project. Riehm appeared at the Trial De Novo on behalf of Dallaswhite,
testified, and cross-examined Mary and Edward. During this proceeding, he
even accused Mary and Edward of “lying” when each denied representing to
him that Arthur had control of the Project. Thus, Dallaswhite knew Mary
disputed Arthur’s authority about four years before it sought to file its cross-
complaint.
      Under these circumstances, we conclude the court acted well within its
discretion in denying Dallaswhite leave to file its cross-complaint on the eve
of trial. (See Crocker, supra, 221 Cal.App.3d at p. 864.)
      C. Damages
             1. Additional Background
      In awarding Mary damages for Dallaswhite’s breach, the court
primarily relied on the trial testimony of Mary’s expert witness, David
Spiegel, who also had conducted the CSLB investigation of Dallaswhite in
2014. The court found Spiegel to be “knowledgeable,” “well-qualified,” and
“credible,” and noted Dallaswhite offered no expert testimony to counter his
opinions. Accepting Speigel’s opinions “in full,” the court determined the
“cost of corrective measures” to the Project totaled $39,593.64.
      The court also found that there were certain items called for in R-3 that
Dallaswhite failed to provide, as credibly testified to by Mary; and that
Whiteway admitted a small number of items included in R-3 were “duplicate
charges listed in error.” Together, when combined with charges for “tax,
overhead, and profit” on these items, they totaled $3,861.75, for a damage
award of $43,455.39.
      The court next turned to setoffs. It found Mary received $4,978.90 from
Dallaswhite pursuant to a settlement with the CSLB, after the agency had

                                       38
cited Dallaswhite, assessed a penalty, and ordered restitution to the
Mowbrays. The court also found Mary received $7,500 under Dallaswhite’s
construction bond. Finally, the court found $14,172.92 remained unpaid
under R-3, as adjusted by Change Orders 1, 3, 4, and 5. Applying the total
setoff of $26,652.82 to Mary’s damages of $43,455.39, the court awarded her
compensatory damages of $16,803.57.
             2. Failure to Mitigate
      Dallaswhite contends the court erred in awarding Mary’s damages
because she “offered no evidence to show she took steps to mitigate [her]
damages.” But the burden of pleading and proving a defense based on a
plaintiff’s failure to mitigate is on the defendant. (State Dept. of Health
Services v. Superior Court (2003) 31 Cal.4th 1026, 1043, 1049; see Cordero-
Sacks v. Housing Authority of City of Los Angeles (2011) 200 Cal.App.4th
1267, 1284 [recognizing “mitigation is an affirmative defense”]; Evid. Code,
§ 500 [“Except as otherwise provided by law, a party has the burden of proof
as to each fact the existence or nonexistence of which is essential to the claim
for relief or defense that he is asserting.”].)
      It was therefore Dallaswhite’s burden to proffer evidence that Mary
failed to mitigate her damages, including—as Dallaswhite argues—by
making repairs to the Subject Property sooner rather than later “so as to
avoid the increased cost of goods and materials resulting from inflation.” We
thus reject Dallaswhite’s contention the court should have reduced Mary’s
damage award (by some number) based on her failure to show she mitigated
damages.
             3. The March 2014 Supplemental Invoice
      Dallaswhite contends the court erred in refusing to offset from Mary’s
damages the $5,675.49 payment the Mowbrays received in 2014 from

                                         39
Farmers that was the subject of the Trial De Novo, discussed ante.
Dallaswhite contends the court erred in finding the collateral source rule
prevented this offset because this money was paid directly to the Mowbrays
by their insurer. We agree.
      Under the collateral source rule, “[w]here a person suffers personal
injury or property damage by reason of the wrongful act of another, an action
against the wrongdoer for the damages suffered is not precluded nor is the
amount of damages reduced by the receipt by him of payment for his loss
from a source wholly independent of the wrongdoer.” (Anheuser-Busch, Inc.
v. Starley (1946) 28 Cal.2d 347, 349; see Helfend v. Southern Cal. Rapid
Transit Dist. (1970) 2 Cal.3d 1, 6 [“The Supreme Court of California has long
adhered to the doctrine that if an injured party receives some compensation
for his injuries from a source wholly independent of the tortfeasor, such
payment should not be deducted from the damages which the plaintiff would
otherwise collect from the tortfeasor” (italics added).].)
      The “overwhelming weight of authority in California and other
jurisdictions has rejected the extension of the collateral source rule to breach
of contract. [Citations.] This limitation is traceable to the fundamental
differences between recovery in contract and tort. [¶] ‘ “Contract damages
are generally limited to those within the contemplation of the parties when
the contract was entered into or at least reasonably foreseeable by them at
that time; consequential damages beyond the expectation of the parties are
not recoverable. [Citations.] . . . .” [Citation.] “In contrast, tort damages are
awarded to [fully] compensate the victim for [all] injury suffered.” ’ ” (Plut
v. Fireman’s Fund Ins. Co. (2000) 85 Cal.App.4th 98, 108 (Plut).)
      Here, the court awarded Mary compensatory damages against
Dallaswhite for breach of contract. The record shows the March 2014

                                        40
Supplemental Invoice related to costs incurred by Dallaswhite in its
performance of the contract. Although Mary also asserted a negligence cause
of action against Dallaswhite, the court found against her on this claim.
Given Mary’s recovery was “ ‘limited to damages based on [her] actual loss
caused by the breach,’ and [her] recovery is reduced if the losses are avoided
or mitigated.” (see Plut, supra, 85 Cal.App.4th at p. 108, italics added), we
conclude Dallaswhite is entitled to an additional offset of $5,675.49.
            4. The Laundry Room
      Finally, Dallaswhite contends it is entitled to a further offset for its
work in installing a laundry room in the Subject Property, a cost estimated
by Whiteway to have been about $12,000. The court, however, found that
Dallaswhite agreed to install the laundry room at “ ‘no charge’ due to other
set-offs”; that any agreement regarding the laundry room “should have been,”
but was not, “properly documented” by Dallaswhite; and perhaps most
importantly, that “Dallaswhite failed to present any credible evidence of the
enhanced value of the cabin by virtue of the addition.” The court added,
“Although [it] found Mr. Whiteway to be a credible witness in general, his
testimony on this particular subject—the value of the laundry room—was
wholly unbelievable.”
      On review, we are bound by the credibility determinations made by the
trier of fact. (See Schmidt, supra, 44 Cal.App.5th at 582; Cuiellette, supra,
194 Cal.App.4th at p. 765; Pescosolido, supra, 142 Cal.App.3d at p. 970.)
Moreover, the issue of the amount of damages is a matter for determination
by the trier of fact, and we will “not question the discretionary
determinations of jury and judge, so long as they fall within a reasonable
range permitted by the evidence.” (Abbott v. Taz Express (1998)
67 Cal.App.4th 853, 857.) On this record, there is no basis to disturb the

                                       41
court’s decision refusing to award Dallaswhite an additional offset for its

construction of the laundry room.19
                               DISPOSITION
      The $16,803.57 in compensatory damages awarded to Mary is reduced
by $5,675.49 as a result of the Mowbrays’ retention of the payment from their
insurer in 2014. The trial court is directed to enter a new judgment for Mary,
awarding her damages of $11,128.08. In all other respects, the judgment is
affirmed. Mary to recover her costs of appeal.

                                                                   HALLER, J.

WE CONCUR:

HUFFMAN, Acting P. J.

IRION, J.

19    At various points in its AOB, Dallaswhite contends the court erred in
refusing to consider its objections to the tentative statement of decision
because the court found them untimely. We have reviewed those objections
and find Dallaswhite suffered no resulting prejudice, as the issues raised
therein were either considered by the court in issuing its SOD (as revised), or
have been considered and disposed of on the merits in this appeal.

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