Court Opinion

ID: 4663475
Source: CourtListenerOpinion
Date Created: 2021-02-26 23:02:12.096097+00
Date Added: 2024-06-11T08:02:29.046405
License: Public Domain

Filed 2/26/21 Philadelphia Indemnity Ins. Co. v. Housing Authority etc. CA1/2
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                   DIVISION TWO

 PHILADELPHIA INDEMNITY
 INSURANCE COMPANY,
           Plaintiff and Appellant,                                     A157691

 v.                                                                     (San Francisco County
 HOUSING AUTHORITY OF THE                                               Super. Ct. No. CGC-16-555946)
 COUNTY OF ALAMEDA,
           Defendant and Respondent.

         This appeal is about the enforceability of a construction performance
bond for a public works contract.
         The Housing Authority of the County of Alameda (HACA) entered into
a construction agreement with a contractor for a rehabilitation project known
as the Emery Glen Project. The contractor, known to HACA from prior
business dealings, did business under the names “World Priority, LLC,”
“World Priority,” and “World Priority Construction.” HACA’s construction
agreement for the Emery Glen Project identified the contractor as “World
Priority, LLC.”
         HACA required a construction performance bond as a condition of
entering the agreement. The contractor submitted a bond issued by
Philadelphia Indemnity Insurance Company (PIIC) for the Emery Glen

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Project (Bond); the Bond identified the principal as “World Priority
Construction.”1 HACA accepted the Bond because HACA staff knew the
contractor also referred to itself by that name.
      Time passed, the contractor failed to complete the Emery Glen Project,
and HACA submitted a claim to PIIC on the Bond. But PIIC denied HACA’s
claim and eventually filed a complaint in superior court seeking a judicial
declaration that the Bond had no force or effect and that PIIC had no surety
obligations under the Bond to HACA. PIIC alleged it issued the Bond to
“World Priority Construction,” and “World Priority, LLC,” is a different
entity, a Wyoming limited liability company that is not licensed in California
and was never a PIIC principal. HACA filed a cross-complaint against PIIC
for breach of the Bond.
      Following a four-day bench trial on liability only, the trial court found
in favor of HACA. The trial court found the Bond was valid and enforceable
and that PIIC was equitably estopped from denying the validity and
enforceability of the Bond. The parties then stipulated to the amount of
damages and judgment was entered.
      PIIC appeals. Although it attacked the trial court’s findings in its
opening brief, PIIC concedes in its reply that the court’s finding of equitable
estoppel withstands a substantial evidence challenge. PIIC is left with a
contention it never made during trial or indeed in the 10 months following

      1 A performance bond creates a tripartite relationship among the surety
(the issuer of the bond), the surety’s principal (the contractor, who obtains
the bond from the surety), and the owner (also called the “obligee,” the party
that has hired the contractor). (Fort Bragg Unified School Dist. v. Colonial
American Casualty & Surety Co. (2011) 194 Cal.App.4th 891, 910.) The
purpose of the bond is to protect the owner as “ ‘ “the surety agrees to answer
for the debt, default, or miscarriage of the principal.” ’ ” (Cates Construction,
Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 38.)

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the close of evidence: that it has no obligation to pay under the Bond because
the underlying construction agreement between HACA and the contractor for
the Emery Glen Project is void under Business and Professions Code section
7028.15, subdivision (e) (§ 7028.15(e)). This statute provides that a bid
submitted by an unlicensed contractor to a public agency must be considered
nonresponsive and makes void any contract awarded by a public agency to an
unlicensed contractor. (§ 7028.15(e)).
      PIIC only raised section 7028.15(e) in a motion filed after the court
issued its final statement of decision. The trial court denied this posttrial
motion as untimely and dismissed the argument as without merit.
      PIIC has not shown error, and we affirm.
            FACTUAL AND PROCEDURAL BACKGROUND
HACA’s Dealings with the Contractor Known as “World Priority, LLC”
      Ed La Perle presented himself to HACA as the CEO of a construction
business he variously referred to as “World Priority, LLC,” “World Priority,”
and “World Priority Construction.”2 Whichever name he used to refer to his
business, La Perle always provided HACA the same address in Discovery
Bay, California, the same federal tax identification number, and the same
license number from the California Contractors State License Board (CSLB).
HACA staff checked the contractor’s license number La Perle provided and

      2For example, when La Perle attended a walk-through for a project in
Union City in October 2012, he signed in for “World Priority.” When he
submitted a bid for that project, the name on the bid was “World Priority,
LLC.” Invoices La Perle submitted for that project had a logo with the words
“World Priority,” a line, then “Construction” below the line, a symbol of a
globe under a magnifying glass to the right, and below that “World Priority,
LLC.” The HACA procurement analyst who prepared that contract (and later
prepared the Project agreement) testified she said to La Perle “ ‘You’ve got
two names on this invoice,’ and he said ‘It’s the same.’ ”

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confirmed it belonged to “World Priority.” HACA staff also knew the tax
identification number La Perle provided was associated with the name
“World Priority, LLC.” La Perle’s business did two small construction
projects for HACA before the Emery Glen Project, and in both cases the
service contracts identified the contractor as “World Priority, LLC.” Based on
La Perle’s conduct, HACA staff and its Executive Director believed the names
“World Priority, LLC,” “World Priority,” and “World Priority Construction” all
referred to one business entity.
      In May 2013, HACA published a notice inviting contractors to bid on
the Emery Glen Project. La Perle submitted a bid to complete the Emery
Glen Project for $411,000 under the name “World Priority.” La Perle’s bid
was determined to be the lowest, and in June HACA issued a notice of award
for the Emery Glen Project (Award Notice) to La Perle’s business using the
name “World Priority, LLC.” The procurement analyst who prepared the
Award Notice testified she used that name because it was “the legal name the
tax ID number was associated with.” La Perle subsequently delivered the
Bond (that is, the required performance bond issued by PIIC for the Emery
Glen Project) to HACA. HACA staff noticed the Bond named the principal
“World Priority Construction,” not “World Priority, LLC,” but they accepted
the Bond because they believed the two names referred to the same
business.3 In July 2013, HACA and La Perle executed the construction
agreement for the Emery Glen Project (Agreement). The Agreement—which
the Bond incorporated by reference (“hereby referred to and made a part

      3 The manager of the Project at HACA testified he knew “World
Priority,” “World Priority Construction,” and “World Priority, LLC,” all had
the same CSLB license number and tax identification number, and he
believed “it was all the same thing; one company.”

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thereof”)—identified the contractor as “World Priority, LLC,” and was signed
by La Perle as CEO. La Perle had signed the Bond as CEO of “World Priority
Construction.”
      The contractor did not finish the Emery Glen Project, and in June 2014,
HACA terminated the Agreement.
PIIC’s Issuance of a Performance Bond
      La Perle obtained the Bond through Surety Solutions Insurance
Services (Surety1), an insurance and surety bond broker and underwriter
that specializes in small and emerging contractors. According to Surety1’s
president, John Page, “World Priority Construction” was its customer. La
Perle provided Surety1 the same tax identification number and contractor’s
license number he used in his dealings with HACA. Page testified his office
verified “World Priority Construction” was licensed. In fact, supporting
documents in Surety1’s files showed that the California contractor’s license
number La Perle provided was associated with an entity called “World
Priority,” not “World Priority Construction.”
      Page testified that when his office received a copy of the Award Notice
for the Emery Glen Project in the name “World Priority, LLC,” this was “the
first time we had ever seen that name come to light.” But this testimony was
contradicted by documents in Surety1’s file for La Perle’s construction
business, which included a balance sheet and banking statements for “World
Priority, LLC.” La Perle provided these documents as financial information
to support his application for a performance bond for the Emery Glen Project,
and Page testified his office relied on these documents in deciding to issue the
Bond. After receiving the Award Notice and before the Bond was issued,
Page mentioned to La Perle at the end of an email (which otherwise
concerned a different matter), “We do need the contract name changed.” His

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office then issued the Bond to “World Priority Construction” and gave it to La
Perle with the intention that La Perle would use it to execute a construction
agreement with HACA for the Emery Glen Project. In response to a question
from the trial court, Page testified he was unaware of an entity called “World
Priority, LLC,” and he did not know whether such an entity had a
contractor’s license.
Trial and Statement of Decision
      Pursuant to stipulation, a bifurcated bench trial on liability was held
over four days in January 2018. The parties submitted competing proposed
statements of decision, and the court filed a tentative statement of decision
finding in favor of HACA in June 2018. PIIC filed additional briefing in July
and October 2018.4
      On November 5, 2018, the trial court filed a 22-page final statement of
decision finding in favor of HACA.
      The trial court found that HACA witnesses “testified credibly,” but
Page testified “untruthfully” when he said the Award Notice was the first
time he had seen the name “World Priority, LLC.” The court found that
HACA and La Perle’s construction business “whether known as World
Priority, World Priority Construction or World Priority LLC,” evidenced a
clear intent to enter a construction agreement for the Emery Glen Project. It
found that Page, acting as a broker agent to obtain bonding for La Perle’s
construction business and as an underwriter for PIIC, intended to act as
surety for La Perle’s business in connection with the Emery Glen Project.

      4 In July, PIIC filed a request for statement of decision asking the court
to provide “the factual and legal basis for its decision as to” 72 questions. In
October, PIIC filed a supplemental trial brief and a clarification to its
supplemental trial brief. (PIIC filed its initial trial brief in January before
the trial started.) PIIC never raised section 7028.15 in these filings.

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The court found no evidence that La Perle “was acting in a dual role for two
different companies.” Based on the evidence and principles of contract
interpretation, the court determined the names “World Priority, LLC” and
“World Priority Construction” referred to “the same contractor entity using
different names for purposes of” the Agreement and the Bond.
      The court further concluded the Bond was valid and PIIC was equitably
estopped from denying the validity and enforceability of the Bond.5 The court
determined, “HACA reasonably relied on the Bond to its detriment” and
“PIIC is liable to HACA and cannot now evade the obligations it owes to
HACA under the Bond.”6

      5Equitable “ ‘[e]stoppel is applicable where the conduct of one side has
induced the other to take such a position that it would be injured if the first
should be permitted to repudiate its acts.’ ” (DRG/Beverly Hills, Ltd. v.
Chopstix Dim Sum Cafe & Takeout III, Ltd. (1994) 30 Cal.App.4th 54, 59
(DRG).)
      6  In its discussion of equitable estoppel, the trial court cited DRG,
supra, and Busse v. Pacific Employers Ins. Co. (1974) 43 Cal.App.3d 558
(Busse). Busse applied equitable estoppel in the surety context and stated the
following rule. “Where a surety seeks to avoid liability on the ground that its
undertaking was delivered conditionally and the conditions were not
performed, the courts ordinarily apply one of two rules, depending on the
facts presented: ‘When the surety’s undertaking is complete and regular on
its face and the obligee has no notice of conditions imposed by the surety, the
surety will be liable; . . . on the other hand, when the undertaking is so
incomplete on its face as to suggest nonperformance of some condition
imposed by a surety, it carries notice to the obligee and relieves the surety.’ ”
(Busse, supra, 43 Cal.App.3d at pp. 568–569.)
      Applying Busse to the facts of this case, the trial court found PIIC was
seeking to avoid liability on the ground the Bond was conditioned on
changing the name in the underlying construction agreement to “World
Priority Construction” even though the Award Notice was to “World Priority,
LLC.” The trial court reasoned, “equitable estoppel should be applied in this
case. If the surety’s performance bond [was intended to] have no effect unless
the name on the . . . construction contract be changed[,] that should have

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      On December 14, 2018, the court set the trial for determination of
damages for June 11, 2019.
PIIC’s Post-Decision Motion
      On December 18, 2018, PIIC filed a “Motion for Judgment Under C.C.P.
§ 631.8 To All of PIIC’s Claims for Damages” and, two days later, filed a
corrected motion.7 PIIC argued that HACA failed to establish the Agreement
“is not void under Business and Professions Code § 7028.15(e), and as a
result, HACA has no claim against PIIC’s Performance Bond or PIIC.”
      The trial court denied PIIC’s motion on the grounds the motion was
untimely, and the statute cited did not apply.
                                DISCUSSION
      We begin with a brief review of appellate practice. “A judgment or
order of a lower court is presumed to be correct on appeal, and all
intendments and presumptions are indulged in favor of its correctness.” (In
re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) It is the appellant’s
burden to affirmatively show error—“ ‘This is not only a general principle of
appellate practice but an ingredient of the constitutional doctrine of
reversible error.’ ” (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)

been made known to HACA. The issuance of the bond for the named project,
delivered by the contractor obligated to produce the bond, in a name
associated with that contractor is a bond delivered complete and regular on
its face. PIIC is estopped from denying its validity and enforceability.”
      7 “After a party has completed his presentation of evidence in a trial by
the court, the other party, without waiving his right to offer evidence in
support of his defense or in rebuttal in the event the motion is not granted,
may move for a judgment. The court as trier of the facts shall weigh the
evidence and may render a judgment in favor of the moving party, in which
case the court shall make a statement of decision . . ., or may decline to
render any judgment until the close of all the evidence.” (Code Civ. Proc.,
§ 631.8, subd. (a).)

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      “This means an appellant must do more than assert error and leave it
to the appellate court to search the record and the law books to test his claim.
The appellant must present an adequate argument including citations to
supporting authorities and to relevant portions of the record.” (Yield
Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 557 (Yield
Dynamics).) “ ‘It is the duty of counsel to refer the reviewing court to the
portion of the record which supports appellant’s contentions on appeal.
[Citation.] If no citation ‘is furnished on a particular point, the court may
treat it as waived.’ ” (Guthrey v. State of California (1998) 63 Cal.App.4th
1108, 1115.)
      In a statement of decision, a trial court need not “ ‘address all the legal
and factual issues raised by the parties.’ [Citation.] It ‘is required only to set
out ultimate findings rather than evidentiary ones.’ ” (Yield Dynamics,
supra, 154 Cal.App.4th at p. 559.) A trial court’s findings of fact “must be
sustained if they are supported by substantial evidence, even though the
evidence could also have justified contrary findings. [Citations.] . . . [T]his
means an appellant who challenges a factual determination in the trial
court—a jury verdict, or a finding by the judge in a nonjury trial—must
marshal all of the record evidence relevant to the point in question and
affirmatively demonstrate its insufficiency to sustain the challenged finding.”
(Id. at p. 557.) “Trial judges and juries are the exclusive judges of credibility
and may disbelieve any witness. Trial courts are designed and responsible
for determining facts. Appellate courts are designed to review errors of law.”
(Rivard v. Board of Pension Commissioners (1985) 164 Cal.App.3d 405, 412.)
      PIIC has not met its burden of demonstrating error.
      In its opening brief, PIIC took the position that this court should review
the trial court’s decision de novo. PIIC proceeded to reargue its case and

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requested that we “perform that analysis and confirm that PIIC’s
Performance Bond never took effect and never provided any coverage for
HACA’s claims.” After considering HACA’s respondent’s brief, however, PIIC
concedes that it is not our role to reweigh the evidence that led the trial court
to find equitable estoppel applied in this case. In its reply, PIIC
“acknowledges that the trial court’s factual findings supporting its finding of
estoppel cannot be successfully attacked on appeal under the substantial
evidence rule.” This means PIIC no longer challenges the trial court’s
credibility and factual findings, including its determination that HACA staff
and PIIC were referring to “the same contractor entity using different names”
when HACA staff used the name “World Priority, LLC” in the Award Notice
and Agreement and Page used “World Priority Construction” in the Bond.
      Nonetheless, PIIC claims reversal is warranted because the Agreement
is void under section 7028.15(e).8 PIIC never argued this theory during the
trial on liability.9 Generally, “ ‘appealing parties must adhere to the theory

      8 Section 7028.15(e) provides that, with exceptions not applicable here,
“a bid submitted to a public agency by a contractor who is not licensed in
accordance with this chapter shall be considered nonresponsive and shall be
rejected by the public agency. . . . [A] local public agency shall, before
awarding a contract or issuing a purchase order, verify that the contractor
was properly licensed when the contractor submitted the bid.
Notwithstanding any other provision of law . . . the registrar may issue a
citation to any public officer or employee of a public entity who knowingly
awards a contract or issues a purchase order to a contractor who is not
licensed pursuant to this chapter. The amount of civil penalties, appeal, and
finality of such citations shall be subject to Sections 7028.7 to 7028.13,
inclusive. Any contract awarded to, or any purchase order issued to, a
contractor who is not licensed pursuant to this chapter is void.”
      9 PIIC did not cite section 7028.15(e) in any of its trial briefs, in its
opening statement or closing argument at trial, or in any of the documents it
filed before the final statement of decision was filed in November 2018.

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(or theories) on which their cases were tried. This rule is based on fairness—
it would be unfair, both to the trial court and the opposing litigants, to permit
a change of theory on appeal.’ ” (Nellie Gail Ranch Owners Assn. v. McMullin
(2016) 4 Cal.App.5th 982, 997.) Since PIIC did not argue section 7028.15(e)
rendered the Agreement void during trial, the trial court “was under no
obligation to address [the argument].” (Colony Ins. Co. v. Crusader Ins. Co.
(2010) 188 Cal.App.4th 743, 751.)
      PIIC did raise section 7028.15(e) in a motion ostensibly brought under
Code of Civil Procedure section 631.8 made after the trial court filed its final
statement of decision and nearly a year after the close of evidence. In a
bench trial, a party may move for judgment under section 631.8 after the
other party has completed its presentation of evidence. (Code Civ. Proc.,
§ 631.8, subd. (a).) “The purpose of section 631.8 is to enable the court, when
it finds at the completion of the plaintiff’s case that the evidence does not
justify requiring the defendant to produce evidence in defense, to weigh the
evidence and make findings of fact as in other trials.” (Conolley v. Bull (1968)
258 Cal.App.2d 183, 195.)
      Here, the trial court observed such a motion for judgment “should come
at the time in which the evidence was closed as to one party, and the motion
would be for judgment because you do not feel that that other party proved
their cause.” The litigation was “well beyond that” point, however, as the
bifurcated trial on liability had concluded and the parties were now in the
damages phase of trial. We agree with the trial court that PIIC’s motion was
untimely. (Cf. Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co.
(1996) 47 Cal.App.4th 464, 487 [issue decided in earlier phase of bifurcated
trial should not be relitigated; otherwise “bifurcation of trial issues would

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create duplication, thus subverting the procedure’s goal of efficiency”].) PIIC
does not claim otherwise.
      We have the discretion to address the application of purely legal
questions to undisputed facts (Colony Ins. Co. v. Crusader Ins. Co., supra, 188
Cal.App.4th at p. 751), but, here, we cannot say the facts pertaining to the
newly-raised statute are undisputed; HACA correctly observes that PIIC’s
failure to raise section 7028.15(e) at trial denied HACA an opportunity to
respond with evidence. Even assuming for the sake of argument the facts
were undisputed, we see no reason to exercise our discretion to consider
PIIC’s belated section 7028.15(e) argument in this case.
      In any event, we observe that PIIC’s new argument based on section
7028.15(e) cannot succeed on appeal in light of the trial court’s unchallenged
factual findings that HACA and PIIC were referring to the same contractor
entity when they used the names “World Priority, LLC” and “World Priority
Construction” respectively; that HACA requires a contractor’s license number
on bid forms, and LaPerle provided one; and that a HACA employee verified
on the CSLB’s website that the license number provided matched a name
(World Priority) by which World Priority, LLC was known to HACA. As
HACA argues, PIIC’s “various contract invalidity arguments based on there
being a distinction [between World Priority, LLC and World Priority
Construction] fall by the wayside” because the trial court found HACA and
PIIC were referring to the same contractor entity whether they used the
name “World Priority, LLC” or the name “World Priority Construction.”
                               DISPOSITION
      The judgment is affirmed. Costs on appeal are awarded to HACA.

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                                         _________________________
                                         Miller, J.

WE CONCUR:

_________________________
Richman, Acting P.J.

_________________________
Stewart, J.

A157691, Philadelphia Indemnity Insurance Co. v. Housing Authority of the
County of Alameda

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