Greg Opinski Construction, Inc. v. City of Oakdale
132 Cal. Rptr. 3d 170
Cal. Ct. App.2011Background
- Oakdale sued by city after bench trial over a building contract with Opinski; city awarded liquidated damages for late completion, defects, prejudgment interest, and attorneys’ fees; Opinski and surety’s cross-claims were rejected; contract required change orders or engineer-issued decisions to extend time; escrow retention under Public Contract Code §22300 governed by a 150% setoff rule under §7107; appellate issues included timing extensions, interest, and disposition of escrow funds; the court remanded and reversed prejudgment interest, directing disposition of any excess escrow funds to Opinski on remand.
- The project was to be completed in 300 days but substantial completion occurred September 30, 2005, with seven-plus months delay; retention was 10% of contract price deposited in escrow; stop notices claimed but not ultimately stated to reduce payment.
- The trial court’s statement of decision treated delays as non-justiciable for fault due to contract procedures; it relied on Civil Code §1511 and Peter Kiewit to enforce contract procedures for time extensions.
- The court ultimately awarded city $54,000 lateness, $3,266 defects, and $97,775 in fees, with escrow withheld; later rulings reversed prejudgment interest based on escrow dominion and remanded to determine the excess escrow funds.
- The narrow appellate issues focus on application of §1511 as amended, and the ownership/control of escrow funds affecting prejudgment interest and final disposition.
- The decision includes a remand instruction to determine the amount by which escrow retained funds exceed the city’s final award and to order payment of the difference to Opinski.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether liquidated damages were proper when delays were caused by the owner and not extended under contract procedures | Opinski—Peter Kiewit bars damages for owner-caused delay absent timely extensions | City—contract procedures must be followed to extend time; noncompliance forecloses extensions | Yes, reversed/affirmed as appropriate under §1511 amendment and contract terms |
| Whether Civil Code §1511 as amended allows reliance on owner-caused delay despite no timely extension | Opinski—owner-caused delay should excuse performance; Peter Kiewit applies | City—amendment permits contract-specifc notice and decisions to excuse delays | Yes, contract procedures control and preclude Peter Kiewit-based relief |
| Whether prejudgment interest on the city’s damages was proper given escrow retention | Opinski—escrow funds cannot support prejudgment interest if held by escrow | City—escrow terms show loss of dominion; interest improper | No; prejudgment interest reversed |
| Disposition of the escrow funds after reversal of prejudgment interest | Opinski—excess escrow should be released | City—escrow may be used to satisfy judgment | Remand to determine excess and order payment of difference to Opinski |
| Whether the trial court properly treated withholdings/stop notices and damages in light of escrow | Opinski—stop notices do not justify withholding beyond permitted limits | City—release/withholdings governed by escrow and Public Contract Code provisions | Remand/affirmed to the extent consistent with escrow disposition |
Key Cases Cited
- Peter Kiewit Sons’ Co. v. Pasadena City Junior College Dist., 59 Cal.2d 241 (1963) (owner may not be bonded by notice requirements to deny damages for owner-caused delays; §1511 amended to allow contract-based notices)
- Civil Code §1511 amendment (1965), — (1965) (expressly permits contract-provided notice to claim extensions; allocates delay risk)
- Buckman v. Tucker, 9 Cal.2d 403 (1937) (dominion and control for prejudgment interest when money is in possessor’s hands)
- Fassberg Construction Co. v. Housing Authority of City of Los Angeles, 152 Cal.App.4th 720 (2007) (equitable setoff; retention funds exceeding judgment must be released)
- General Insurance Co. v. Commerce Hyatt House, 5 Cal.App.3d 460 (1970) (pre-amendment §1511 considerations; notice requirements)
- Aetna Cas. & Surety Co. v. Bd. of Trustees, 223 Cal.App.2d 337 (1963) (pre-amendment law; contract-based delay relief)
- Insurance Co. of North America v. Bechtel, 36 Cal.App.3d 310 (1973) (illustrative precedent on prejudgment interest/escrow)