CDC SAN FRANCISCO, LLC, Plaintiff and Appellant, v. CRITCHFIELD MECHANICAL INC., Defendant and Respondent.
A168357
(San Francisco County Super. Ct. No. CGC-18-563971)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
Filed 1/9/25
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
BACKGROUND
CDC owns the InterContinental San Francisco Hotel, a 33-story, high-rise hotel located in San Francisco, California. Critchfield is a heating ventilation and air conditioning (HVAC) contractor that installed the hotel‘s HVAC system.
The hotel‘s HVAC system “consists of several different systems,” including a four-pipe fan coil system for heating and cooling guestrooms. The
At some point after installation, CDC discovered a water leak in the hot water supply risers on the 21st floor of the hotel, which CDC later found impacted the 21st and 22nd floors of the hotel, causing several guestrooms to be removed from service. CDC operations personnel subsequently learned the water leak was “considerable and extensive, spanning multiple floors and damaging other aspects” of the hotel‘s infrastructure. Thus, on January 30, 2018, CDC sued Critchfield for breach of contract and negligence, alleging Critchfield failed to properly design and construct the hotel‘s HVAC system. The defective HVAC system allegedly caused damage to the hotel‘s framing, shear walls, drywall, paint, flooring, and piping, although CDC‘s “investigation of the latent defects” was ongoing.
In January 2023, the action proceeded to a jury trial, which “lasted for over six weeks, spanned 26 witnesses, including about 19 expert witnesses.” CDC‘s expert, James Howard, proposed a “full horizontal replacement” of the risers, costing $24,570,800, plus “other costs” of $2,830,315, for a total of $27,401,115.
On the other hand, Critchfield‘s experts testified to different remediation plans, including a “full vertical replacement” estimated by William Ivey to cost $15,655,991, and another by Jeff Harris to cost $15,532,232.89. Alternatively, Critchfield expert John Littrell proposed a “band-aid repair” for $5,019,547, which would fix only “the two hot water
The jury returned a verdict for CDC, awarding past economic damages of $457,000 and future economic damages of $17,913,077 for a total award of $18,370,077.1 The court reduced the award to $17,370,077 based on CDC‘s settlements with other parties and entered judgment on April 17, 2023.
CDC then moved for prejudgment interest pursuant to
CDC also pointed to its November 8, 2018 demand for $16 million, which represented “the dollar value of the labor and materials needed to replace the system“; an April 30, 2020 document production to Critchfield containing “bids, plans, prior repair invoices, estimates, testing information, leak charts, occupancy reports, and CDC‘s P&Ls“; a June 16, 2020 “full-day
In opposition, Critchfield argued the parties disputed “the nature, extent and computation of [CDC‘s] alleged damages” throughout the litigation. Thus, according to Critchfield, “the amount of damages was not only in serious dispute but . . . the dispute could not be resolved except by verdict or judgment,” making damages uncertain and not amenable to an award of prejudgment interest pursuant to section 3287(a).
On reply, CDC asserted that Critchfield‘s dispute concerned “the scope” of repairs, which “does not mean that the dollar amount of the repair is incapable of calculation.” “What is relevant,” CDC argued, “is that the varying options [for repair or replacement of the HVAC systems] were calculated or could be calculated.”
The court ultimately denied CDC‘s motion for prejudgment interest, explaining that “the amount of damages was in serious dispute” and the jury‘s award “was roughly $16 million less than the amount [CDC] sought to prove at the commencement of trial.”
CDC timely appealed.
DISCUSSION
“California cases uniformly have interpreted the ‘vesting’ requirement as being satisfied at the time that the amount of damages become certain or capable of being made certain, not the time liability to pay those amounts is determined.” (Evanston Ins. Co. v. OEA, Inc. (9th Cir. 2009) 566 F.3d 915, 921, citing Hartford Accident & Indem. Co. v. Sequoia Ins. Co. (1989) 211 Cal.App.3d 1285, 1291, 1307, and Overholser v. Glynn (1968) 267 Cal.App.2d 800, 809-810; see also Levy-Zentner Co. v. Southern Pac. Transportation Co. (1977) 74 Cal.App.3d 762, 798-799.)
“Damages are certain or capable of being made certain by calculation, or ascertainable, for purposes of the statute if the defendant actually knows the amount of damages or could calculate that amount from information reasonably available to the defendant.” (Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 150-151.) Thus, the “focus [is] on the defendant‘s knowledge about the amount of the plaintiff‘s claim.” (Chesapeake, supra, 149 Cal.App.3d at p. 907; see also Children‘s Hospital & Medical Center v. Bontá (2002) 97 Cal.App.4th 740, 774 (Children‘s Hospital).)
“Under this test for certainty as to amount, a dispute or denial of liability does not make the amount of damages uncertain.” (Watson, supra,
“Where the facts are not in dispute or, alternatively, have been established by findings of the trial court supported by substantial evidence, appellate courts independently review whether and when the plaintiff‘s damages were made certain or capable of being made certain by calculation.” (Watson, supra, 2 Cal.App.5th at p. 296; see also KGM Harvesting Co. v. Fresh Network (1995) 36 Cal.App.4th 376, 390-391, fn. 8 [rejecting abuse of discretion standard].)
Here, we have no difficulty affirming the trial court‘s denial of prejudgment interest. CDC seeks prejudgment from January 30, 2018, the date CDC filed its complaint, through entry of judgment on April 17, 2023. However, CDC offers no evidence that damages were certain or capable of being made certain as of January 30, 2018.
First, CDC suggests that Critchfield could calculate the damages because it “is not only in the business of preparing such estimates, but built the HVAC system in this [hotel].” However, the complaint does not provide sufficient information to calculate damages with the requisite certainty. For example, CDC affirmatively asserted that its “investigation of the latent defects is ongoing” and the defects alleged in its complaint “may not be exhaustive.” The complaint also included general allegations of damage to “other aspects” of the hotel‘s infrastructure without identifying what those other aspects were.
An April 3, 2018 letter to Critchfield highlights the lack of sufficient information at the time CDC filed its complaint. In the letter, CDC explains that leaks “are being discovered several times per month by Hotel guests
CDC‘s argument that it made a demand of $16,000,000 in November 2018, nearly a year after filing the complaint, fails for the same reason. A plaintiff must do more than merely claim damages to recover prejudgment interest; ” ‘the plaintiff must supply [the defendant] with a statement and supporting data so that defendant can ascertain the damages.’ ” (KGM Harvesting Co. v. Fresh Network, supra, 36 Cal.App.4th at p. 391, quoting Polster, Inc. v. Swing (1985) 164 Cal.App.3d 427, 435.) While CDC notes that it “provided numerous documents to Critchfield‘s [insurance] carriers,” this occurred in April 2020, years after CDC filed its complaint.
Similarly, CDC‘s reliance on Critchfield‘s own calculations as evidence of certainty is unavailing since—as CDC asserted below—Critchfield‘s experts were “not hired . . . until just a few months before trial.” Indeed, one cost of repair estimate is dated January 18, 2023, while another is dated January 11, 2021. Thus, neither would support an award of prejudgment interest from January 30, 2018.
CDC also argues that the trial court erred in relying on the parties’ “serious dispute” over damages as evidence of uncertainty. While it is true that “a dispute as to the amount of alleged damages” does not necessarily preclude certainty (Leff v. Gunter, supra, 33 Cal.3d at p. 520), here, the various damage calculations were based upon disputed facts, not “alternative theories of liability.” (Children‘s Hospital, supra, 97 Cal.App.4th at pp. 772-773.) CDC asserted a single theory of liability that “the HVAC system [was] not properly designed and constructed by Critchfield,” and the parties
Additionally, CDC argues that the trial court erred in considering the amount CDC requested in its opening statement ($34.5 million) as compared to the jury‘s award. Again, while “a slight difference between the amount of damages claimed and the amount awarded does not preclude an award of prejudgment interest,” the discrepancy must be minor, for example, “the erroneous omission of a few matters from the account or erroneous calculation of the costs . . . .” (Coleman Engineering Co. v. North American Aviation, Inc. (1966) 65 Cal.2d 396, 408-409.) Here, the difference is not slight; rather, as the trial court noted, the jury awarded “roughly $16 million less than the amount [CDC] sought to prove at the commencement of trial.”
Ultimately, CDC bore the burden of proving that damages were certain or capable of being made certain and the right to recover vested on a particular day. (
Because we find damages uncertain, we do not address Critchfield‘s argument that “[f]uture damages are ineligible for § 3287(a) mandatory interest because the future is inherently uncertain and . . . future damages have yet to occur as of judgment.”
DISPOSITION
The order denying prejudgment interest is affirmed. Critchfield is entitled to recover costs of appeal. (
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DESAUTELS, J.
We concur:
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RICHMAN, ACTING P. J.
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MILLER, J.
CDC San Francisco, LLC v. Critchfield Mechanical Inc. (A168357)