Filed 4/15/19 City of Imperial v. Ferguson Enterprises 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

CITY OF IMPERIAL,

Plaintiff and Appellant,

v.

FERGUSON ENTERPRISES, INC. et al.,

Defendant and Respondent.

D072737

(Super. Ct. No. 37-2014-00015675- CU-BC-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, John S. Meyer, Judge. Affirmed.

Niddrie Addams Fuller Singh, David A. Niddrie, John S. Addams; Wingert Grebing Brubaker & Juskie, Stephen C. Grebing, Andrew A. Servais and Mallory Holt for Plaintiff and Appellant.

DeSimone & Huxster, Gerald DeSimone; Ferguson Case Orr Paterson and Wendy C. Lascher for Defendant and Respondent Ferguson Enterprises, Inc.

The City of Imperial (the City) appeals following a jury trial in its lawsuit against Ferguson Enterprises, Inc. (Ferguson) in which it sought to recover damages resulting from a contract under which Ferguson provided the City with a defective automatic water meter reading system (AMR system) manufactured by Datamatic, Ltd. (Datamatic). In special verdict forms, the jury made findings establishing that Ferguson and Datamatic were liable to the City, but on the issue of damages, the jury was not asked to distinguish between the amount of damages for which Ferguson was responsible and the amount of damages for which Datamatic was responsible. Instead, the special verdict form simply specified the City’s “total damages,” and then broke down the cost of the AMR system by breaking down the cost of “product” and the cost of “installation.”

It was Ferguson’s position throughout the litigation that because of a contractual provision in the transactional documents that limited its liability to the City, Ferguson was legally responsible to the City only for damages associated with the cost of installing the AMR system, but not for any damages relating to Datamatic’s defective products. When, at the conclusion of trial, the parties could not agree on the amount of damages against Ferguson that the trial court should specify in a judgment based on the special verdict forms, the parties agreed that the trial court should simply enter a judgment which stated that “[j]udgment shall be according to the Special Verdict[],” which was attached to the judgment.

After expressly “reserv[ing] all rights to posttrial motions,” Ferguson brought a motion to set aside, vacate or modify the judgment or alternatively for partial judgment notwithstanding the verdict, in which it sought to have the trial court modify the judgment to clarify that Ferguson was liable only for the damages associated with the cost of installation of the AMR system. The trial court granted Ferguson’s motion and entered a modified judgment, which specified that Ferguson was liable for damages associated with installation of the AMR system in the amount of $626,232.50 (based on the amount corresponding to the installation-related damages specified in the special verdict form) but did not award any damages based on the cost of the Datamatic products themselves. The trial court later awarded prejudgment interest against Ferguson, but it denied the City’s motion for an award of attorney fees against Ferguson.

The City challenges the trial court’s ruling modifying the judgment to limit the award of damages against Ferguson to those associated with the installation of the AMR system. Specifically, the City argues that (1) the trial court’s ruling was procedurally improper because it invaded the province of the jury, which specified the City’s damages in the special verdict form; and (2) for several reasons, the contractual provision limiting Ferguson’s liability to the City does not prevent an award of damages against Ferguson that includes damages relating to the products comprising the AMR system. The City also contends that the trial court abused its discretion in denying its motion for an award of attorney fees. We conclude that the City’s arguments lack merit, and we accordingly affirm the judgment.

 

I.

FACTUAL AND PROCEDURAL BACKGROUND

A. Ferguson Installs a Defective AMR System for the City

The City supplies potable water to its residents, with the amount of the water bills based on the water use recorded on water meters installed at each residence. The City entered into an agreement with Ferguson—one of the world’s largest suppliers of water equipment—to install an AMR system that would allow the City to (1) remotely read each residential water meter, and (2) remotely shut off water to each residence through newly-installed remote shut off valves (RSVs). The City determined that the installation of the new system would save time and money because City employees would no longer be required to manually collect readings from water meters each month, and it would allow the City to more efficiently serve residents who needed their water to be turned on or off.

The AMR system that Ferguson installed for the City was comprised of components manufactured by Datamatic, consisting mainly of approximately (1) 4500 separate electronic units, known as “Firefly” units, that were installed at each residence to remotely communicate water meter data to the City; and (2) and 3600 RSVs to allow the City to remotely shut off water at each separate residence.

Ferguson and the City entered into a contract for the supply and installation of the AMR system and RSVs in September 2010 at a price of over $2 million. The price to be paid to Ferguson included the cost for the components manufactured by Datamatic, as well as $506,650 for professional installation services to be provided by Ferguson.

To memorialize the transaction, the City and Ferguson signed an Installation Services Agreement (Agreement). As relevant here, the Agreement sets forth the scope of the warranties that Ferguson (Seller) provided to the City (Buyer) in connection with its supply and installation of the AMR System.

Under the heading “Installation Warranty,” the Agreement stated:

“For those goods installed by Seller, for a period of one (1) year from installation or first occupancy by end user (whichever occurs later and in no event longer than eighteen (18) months from date of installation), Seller warrants that services performed by Seller hereunder shall be provided in a professional and workmanlike manner and in full compliance with local code. Upon receipt of notice from Buyer that installation services were not performed in accordance with the limited warranty herein, Seller shall re-perform the services. This Installation Warranty does not apply if there is evidence of abuse, acts of God or misuse by Buyer or a third party.”

Under the heading “Product Warranty,” the Agreement set forth a liability disclaimer (the liability disclaimer):

“The manufacturer[‘]s warranty shall be made available to Buyer or end user. Seller shall coordinate manufacturer warranty service with the end user at the Buyer’s request. The sole warranty applicable to installation service provided (as applicable) is delineated as Installation Warranty (see above). Product warranties are from the respective manufacturer. With respect to the underlying products, THE BUYER’S SOLE AND EXCLUSIVE WARRANTY IS THAT PROVIDED BY THE PRODUCT’S MANUFACTURER. SELLER HEREBY DISCLAIMS ALL EXPRESSED OR IMPLIED WARRANTIES, WHETHER IMPLIED BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS OR FITNESS FOR A PARTICULAR PURPOSE. UNDER NO CIRCUMSTANCES, AND IN NO EVENT, WILL SELLER BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE OR ANY OTHER LOSS, DAMAGE, COST OF REPAIRS OR INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES RELATED TO THE UNDERLYING PRODUCTS PROVIDED. The manufacturer’s warranty and service obligations shall be for the benefit of the Buyer or end user.”

Ferguson also supplied the City with a copy of the Datamatic product warranty that set forth a manufacturer’s warranty for the Firefly units, which covered defects in materials and workmanship and guaranteed 10 years of battery life. Datamatic also warranted the remaining components of the AMR system for one year. In addition, Datamatic directly entered into a contract with the City, in which Datamatic agreed to license its software to the City, among other things.

Ferguson began installing the AMR system in early 2011, and the installation was substantially complete by September 2011. Ferguson subcontracted the installation work to a separate company, Concord Environmental Energy, Inc. (Concord). Several problems arose during the installation. Among other things, certain Firefly units were installed at the wrong addresses so that residents received bills for someone else’s water usage, referred to as “misassociated” Firefly units. Also, water leaks were created during the installation, along with other problems caused by sloppy work. Concord was eventually terminated by Ferguson at the City’s request, and the City took over the remaining installation of the AMR system.

During testing of the system, problems quickly developed with the RSVs because certain valves would shut off and not come back on, leaving some residents without water. The City was also not satisfied with the response time required before the RSVs reacted to commands. The problem with the unwanted shutoffs of the RSVs was not solved, and the City eventually had to cut wires to make the RSVs inoperative.

By September 2011, problems also had developed with the Firefly units, in that many of them had stopped remotely communicating data so that the City had to manually read the data from the non-reporting meters. By November 2012, 813 Firefly units were not reporting any data. Ultimately, by the end of 2012, the problem was traced to Firefly units manufactured for Datamatic in Malaysia. The circuit boards from the Malaysian factory were improperly glued, allowing water intrusion and causing a short circuit. Eighty-four percent of the Firefly units installed in the City were manufactured in Malaysia.

Apparently due to financial problems, Datamatic began cutting off contact with the City in October 2012, and it eventually ceased operations and stopped manufacturing Firefly units. Until it pulled out of the project, Datamatic was honoring its warranty by repairing or replacing the City’s defective Firefly units. For a short period after Datamatic left the project, Ferguson attempted to refurbish the defective Firefly units for the City, but then it too stopped doing so.

As of April 2014, only 1200 Firefly units were reporting data, and the City was required to perform manual readings of approximately 2500 water meters. With so many Firefly units not reporting and Ferguson not providing any solution to the City that did not require the City to spend additional monies, the City stopped using the Ferguson-supplied AMR system in May 2014. The City ultimately paid another company approximately $1 million to install a functioning AMR system.

B. The City’s Lawsuit Against Ferguson and Datamatic

The City filed a lawsuit against Ferguson and Datamatic alleging several different causes of action for damages incurred by the City due to the failure of the AMR system installed by Ferguson. The operative Fourth Amended Complaint alleged causes of action against Ferguson for breach of contract, negligent misrepresentation, strict products liability, breach of express warranty, rescission, negligence, unfair competition (Bus. & Prof. Code, § 17200). Against Datamatic, the Fourth Amended Complaint alleged causes of action for negligent misrepresentation, strict products liability, breach of express warranty, and negligence. At trial, the City sought to recover from both Datamatic and Ferguson the entire price of the AMR system as well as other costs incurred by the City in connection with the system, which the City contended amounted to $3,892,839.

One question that arose at the beginning of trial was the extent to which the jury would hear evidence and argument about the liability disclaimer in Ferguson’s contract with the City. The City filed a motion in limine requesting that Ferguson be precluded from offering testimony and argument to the jury on that issue. The City proposed that, instead, the trial court should determine the enforceability of the contractual provisions disclaiming Ferguson’s liability “following the jury trial.” Ferguson agreed that there were “questions of law for the court to address” regarding the enforceability of the liability disclaimer provisions in its contract with the City, but it argued that “the court’s ruling should be done prior to the jury commencing any deliberations.” During the in limine hearing, the trial court deferred ruling on the motion, indicating that, based on the evidence presented at trial, it would “decide before the end of the trial whether that provision is unenforceable or enforceable” and would instruct the jury accordingly. Later during trial, the City prompted the trial court to make a ruling at the close of evidence on the enforceability of the liability disclaimer in Ferguson’s contract with the City by filing a written pleading requesting that the court instruct the jury that the disclaimer was unenforceable. While discussing jury instructions with counsel at the close of evidence, the trial court rejected the City’s request for the jury instruction, ruling that the liability disclaimer was enforceable to bar any contractual liability of Ferguson related to the products manufactured by Datamatic. The trial court stated, “I think it is enforceable as to the product. It’s limited.”

During trial, Ferguson and Datamatic both filed motions for nonsuit on the cause of action for strict products liability, which the trial court granted. Ferguson also brought a motion for a directed verdict on the causes of action for breach of contract, negligent misrepresentation and breach of express warranty, and Datamatic brought a motion for directed verdict on the causes of action for negligence and negligent misrepresentation. The only cause of action on which the trial court granted a directed verdict was the cause of action for breach of express warranty against Ferguson.

In six special verdict forms, the jury was asked to make factual findings on the elements pertaining to the causes of action for breach of contract, negligent misrepresentation and negligence as to Ferguson, and the causes of action for breach of express warranty, negligent misrepresentation and negligence as to Datamatic. In the special verdict forms the jury made findings on the elements necessary to establish (1) Ferguson’s liability for breach of contract and negligence, and (2) Datamatic’s liability for negligence. On the special verdict form pertaining to negligence, the jury was asked to specify the “percentage of responsibility” for the City’s harm attributable to Datamatic, Ferguson, and Concord. Ferguson was found to be 35 percent responsible.

The sixth special verdict form concerned “Damages.” The jury completed the special verdict form as follows:

“1. What are the CITY OF IMPERIAL’s total damages? Do not reduce the damages based on the fault, if any, of the CITY OF IMPERIAL or others.

“a. Cost of the AMR System:

Product: $ 1,538,709

Installation: $ 626,232.5[0]

“b. Labor expense relating to install, troubleshoot,

repair and removal of system: $ 236,566

“c. Property Damage: $ 0

“d. Administrative expense incurred by

CITY OF IMPERIAL: $ 401,051.75

“e. Costs associated with misallocations:[ ] $ 0”

Counsel for Ferguson argued to the jury in closing that it should not award any amount against Ferguson related to the cost of the products manufactured by Datamatic based on the liability disclaimer in the Agreement. However, the special verdict form was not designed in such a way to enable the jury to make that determination. Instead, the special verdict form on damages simply asked about the City’s “total damages” collectively pertaining to Datamatic and Ferguson.

After the jury returned its special verdicts, the trial court directed counsel for the City to prepare a proposed judgment. The City proposed a judgment indicating the joint and several liability of Datamatic and Ferguson in the total amount of $2,802,559.25. Ferguson objected in a pleading lodged with the trial court, which took the position that the liability disclaimer in its contract with the City precluded Ferguson from being held liable for the damages associated with the cost of the product manufactured by Datamatic. At Ferguson’s request, the cost associated with Datamatic’s product ($1,538,709) and the cost associated with Ferguson’s installation of the AMR system ($626,232.50) had been assigned separate line items in the special verdict form, and Ferguson contended that the judgment should reflect its liability only for the amount that the jury found to be attributable to the installation of the AMR system.

After an unreported telephone conference with the parties, the trial court instructed the City to prepare a new proposed judgment. Apparently unable to come to an agreement on the amount of damages that the judgment should award with respect to Ferguson, the parties agreed that the trial court should simply enter judgment that attached the special verdict forms and said nothing further about the amount of Ferguson’s liability. The trial court was expressly informed that counsel for Ferguson “reserve[d] all rights to posttrial motions.” The trial court accordingly entered a judgment (the original judgment) that did nothing more than state that “[j]udgment shall be entered according to the Special Verdict attached hereto as Exhibit ‘A’,” and attached the six special verdict forms.

Ferguson then filed a motion to set aside, vacate, or modify the original judgment and enter another and different judgment or to clarify judgment or, in the alternative, for a partial judgment notwithstanding the verdict. As the procedural basis for the motion, Ferguson cited (1) Code of Civil Procedure section 663, which gives the court authority to set aside and vacate a judgment based on a special verdict or decision by the court and enter a different judgment under certain circumstances; and (2) Code of Civil Procedure section 629, which gives the trial court authority to enter a judgment notwithstanding the verdict. Ferguson argued that based on the special verdict forms alone, the original judgment was unclear as to the amount of Ferguson’s liability. It contended that the trial court should accordingly set aside the original judgment and enter a new judgment specifying the amount of Ferguson’s liability, taking into account the trial court’s previous ruling that the liability disclaimer in Ferguson’s contract with the City was enforceable. Ferguson explained, “The instant motion does not seek to have the court change the amount of damages. It merely requests the court to clarify the damages attributable to the respective defendants, in light of the court’s previous . . . orders and the actual categorization of the damages between the actual product and the installation.” (Capitalization omitted.)

After considering the parties’ briefing and holding a hearing, the trial court granted the relief requested by Ferguson, citing Code of Civil Procedure section 663. The trial court entered a modified judgment awarding damages in the following amount:

“(1) $626,232.50 for installation damages only against Ferguson Enterprises Inc. Labor and administrative expenses are consequential damages and the contract excludes recovery of consequential damages; and

“(2) $2,802,559.25 against Defendant Datamatic, Ltd, which includes the total cost of the AMR System, as well as labor and administrative expenses proximately caused by the negligence in the sum of $236,566 and $401,051.75 respectively.”

The City filed a motion seeking an award of attorney fees against Ferguson pursuant to [Civil Code] section 1717. The City also sought an award of prejudgment interest. The trial court awarded prejudgment interest against Ferguson in the amount of $430,056.73, but it denied the attorney fees motion, concluding that no party prevailed in the breach of contract cause of action against Ferguson.

The City appeals from the judgment against Ferguson, arguing that the trial court improperly limited the damages against Ferguson to those associated with the installation of the AMR system and that the trial court improperly declined to award attorney fees against Ferguson.

II.

DISCUSSION

A. The City’s Challenge to the Modified Judgment Against Ferguson Lacks Merit

1. The Trial Court’s Entry of a Modified Judgment Was Procedurally Proper and Did Not Invade the Province of the Jury

In its first challenge to the trial court’s entry of a modified judgment as to Ferguson, the City argues the modified judgment was procedurally improper under Code of Civil Procedure section 663. According to the City, although Code of Civil Procedure section 663 authorizes a trial court to modify a judgment that was “not consistent with or not supported by the special verdict” (Code Civ. Proc., § 663, subd. (2)), the original judgment here was “wholly consistent with” and supported by the jury’s special verdict. Thus, according to the City, the trial court did not have authority under Code of Civil Procedure section 663 to modify the judgment, and the trial court improperly “inva[ded] the province of the jury.”

Section 663 provides as follows:

“A judgment or decree, when based upon a decision by the court, or the special verdict of a jury, may, upon motion of the party aggrieved, be set aside and vacated by the same court, and another and different judgment entered, for either of the following causes, materially affecting the substantial rights of the party and entitling the party to a different judgment:

“1. Incorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts; and in such case when the judgment is set aside, the statement of decision shall be amended and corrected.

“2. A judgment or decree not consistent with or not supported by the special verdict.” (Code Civ. Proc., § 663.)

In its minute order granting Ferguson’s motion to set aside, vacate or modify the judgment, the trial court quoted the portion of the statute allowing relief based on “a judgment or decree not consistent with or not supported by the special verdict.” (Code Civ. Proc., § 663, subd. (2).) The trial court stated that it was granting the motion for the purpose of “clarifying the damages attributable to the respective defendants.”

In arguing that a modification pursuant to Code of Civil Procedure section 663 was improper because there was no ground to conclude that the original judgment was “not consistent with or not supported by the special verdict” (Code Civ. Proc., § 663, subd. (2)) the City’s fundamental assumption is that the jury’s special verdict unambiguously awarded $2,802,559.25 in damages against Ferguson comprising all of the damages incurred by the City associated with the AMR system. The City argues that “the jury’s intent was clear” to award the full amount of $2,802,559.25 against Ferguson. The City contends that the jury’s intent was made clear by the fact that “[t]he jury could have denied [the City] any so-called product-related damages as requested by Ferguson. It did not.” Therefore, according to the City, it was “wholly consistent” with the special verdict for the original judgment to award $2,802,559.25 in damages against Ferguson, and it was improper for the trial court to modify the judgment to a different amount that reflected only damages associated with the installation of the AMR system.

The City’s argument fails because it depends on a mischaracterization of both the special verdict and the original judgment. As we have explained, the special verdict form did not ask the jury to make any findings regarding the damages for which Ferguson alone was liable. Instead, the special verdict simply asked the jury to set forth the City’s “total damages” associated with the AMR system, which were then broken down into subcategories, including the costs attributable to “installation” of the AMR system. Although counsel for Ferguson had argued to the jury that the liability disclaimer in Ferguson’s contract with the City meant that the jury should not award any damages against Ferguson for the cost of the AMR system, as opposed to the costs of installation, the special verdict form did not give the jury the opportunity to make a finding on that issue because it did not separately ask about damages against Ferguson and damages against Datamatic. Therefore, contrary to the City’s characterization, the special verdict does not specify that Ferguson is liable for $2,802,559.25 in damages and does not specify whether, due to the liability disclaimer in Ferguson’s contract with the City, Ferguson should be liable only for those damages associated with the installation of the system.

In addition to arguing that the modification of the judgment invaded the province of the jury, the City separately contends that in this case Code of Civil Procedure section 663 did not give the trial court the authority to modify the original judgment. As we will explain, we disagree.

Based on the procedural history we have detailed, there is no question that the original judgment, in the form entered by the trial court, was fundamentally flawed and needed to be corrected because the trial court did not follow the proper procedure for entering judgment following a jury trial in which a special verdict is used. Unlike a general verdict, a special verdict is not designed to stand alone as a finding on a defendant’s liability. “The verdict of a jury is either general or special. A general verdict is that by which they pronounce generally upon all or any of the issues, either in favor of the plaintiff or defendant; a special verdict is that by which the jury find the facts only, leaving the judgment to the Court. The special verdict must present the conclusions of fact as established by the evidence, and not the evidence to prove them; and those conclusions of fact must be so presented as that nothing shall remain to the Court but to draw from them conclusions of law.” (Code Civ. Proc., § 624.)

Here, the jury was asked to return numerous findings of fact on six special verdict forms. Although the special verdict made many factual findings as to the elements relating to the different causes of action and the amount of damages incurred by the City in different categories of harm, it did not, on its face, contain any legal conclusions about the liability of Ferguson and Datamatic with respect to any specific cause of action or with respect to the damages for which each party was legally liable. Using the special verdict as starting point, it was necessary for the trial court to take the jury’s findings of fact and, applying the operative legal principles, to reach conclusions of law about the liability of Ferguson and Datamatic. Here, however, in entering the original judgment the trial court failed to follow that approach. Instead of carrying out its duty to “draw . . . conclusions of law” based on the jury’s findings of fact, the trial court simply attached the special verdict forms to the judgment and stated that “[j]udgment shall be entered according to the Special Verdict attached hereto . . . .” That approach resulted in an incomplete and unintelligible judgment because it did not specify the causes of action on which the City had prevailed and did not specify the amount of damages for which Ferguson and Datamatic were separately liable.

Although no provision in the Code of Civil Procedure is expressly designed to provide a remedy for the unique problem with the original judgment that was created by the trial court here, Code of Civil Procedure section 663 appears to be the most appropriate provision for Ferguson to have cited in seeking to clarify the judgment. Section 663 allows the entry of a modified judgment when a judgment is “not consistent with or not supported by the special verdict.” (Code Civ. Proc., § 663, subd. (2).) Here, the original judgment was not “supported by” the special verdict because the special verdict itself did not make any of the necessary conclusions of law. Put another way, the special verdict could not “support” any judgment in and of itself because it did not specify the causes of action on which the City prevailed, and it did not set forth the amount of damages for which Ferguson and Datamatic were liable. The trial court was required to make its own conclusions of law based on the facts found by the jury. It failed to do so in the original judgment, but it properly remedied that error by vacating the original judgment and entering a modified judgment.

“[W]hen a party brings a timely posttrial motion, the trial court has broad discretion to determine the relief being requested.” (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 727.) Here, as the trial court indicated in its order granting Ferguson’s motion, it understood that by the manner in which it had entered the original judgment, it had created a situation in which the parties required clarification regarding “the damages attributable to the respective defendants.” Having so understood the relief sought by Ferguson, the trial court had the authority to remedy its error in entering the original judgment and to enter a modified judgment that followed the proper procedures for entry of a judgment following a special verdict. In so doing, the trial court clarified the amount of damages for which Ferguson and Datamatic were liable.

2. The Trial Court Properly Enforced the Liability Disclaimer in Ferguson’s Contract with the City

The City presents a series of arguments aimed at establishing that the liability disclaimer in the Agreement should not have been applied to preclude Ferguson’s liability for the damages relating to Datamatic’s defective products, either because the liability disclaimer does not apply to the breach of contract cause of action or because it is not enforceable.

As a preliminary matter, before considering each of the City’s arguments, we pause to set forth the legal principles that the parties agree are applicable to the Agreement’s liability disclaimer. The parties agree that the Agreement is a contract for the sale of goods covered by the California Uniform Commercial Code. The California Uniform Commercial Code allows parties to exclude or modify all express or implied warranties. (Cal. U. Com. Code, § 2316.) In this case, the liability disclaimer in the Agreement contains a warranty exclusion that comprehensively excludes any express or implied warranties with respect to Datamatic’s products and expressly limits the warranty provided by Ferguson to its installation services.

Further, although the code describes the remedies that are available to a buyer when a breach of contract for a sale of goods occurs (Cal. U. Com. Code, §§ 2711-2715), it also allows the parties to enter into an agreement to limit the remedies that will be available. The applicable provision allowing a limitation of remedies is California Uniform Commercial Code section 2719:

“(1) Subject to the provisions of subdivisions (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,

“(a) The agreement may provide for remedies in addition to or in substitution for those provided in this division and may limit or alter the measure of damages recoverable under this division, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

“(b) Resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.

“(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this code.

“(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is invalid unless it is proved that the limitation is not unconscionable. Limitation of consequential damages where the loss is commercial is valid unless it is proved that the limitation is unconscionable.” (Cal. U. Com. Code, § 2719.)

Here, the Agreement contains two substantive provisions relevant to this code provision.

First, in conformance with the provision that an “agreement may provide for remedies in addition to or in substitution for those provided in this division and may limit or alter the measure of damages recoverable under this division, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts” (Cal. U. Com. Code, § 2719, subd. (1)(a)), the installation warranty in the Agreement states that as a remedy for installation not performed by Ferguson in a professional and workmanlike manner, the remedy shall be a re-performance of those services by Ferguson. However, the Agreement contains no limited or exclusive remedy from Ferguson pertaining to any defective product. There is no limited remedy in the Agreement for the breach of any warranty on the products because Ferguson expressly disclaimed any warranty for Datamatic’s products.

Second, in conformance with the provision that “[c]onsequential damages may be limited or excluded unless the limitation or exclusion is unconscionable” (Cal. U. Com. Code, § 2719, subd. (3)), the Agreement states “IN NO EVENT, WILL SELLER BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE OR ANY OTHER LOSS, DAMAGE, COST OF REPAIRS OR INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES RELATED TO THE UNDERLYING PRODUCTS PROVIDED.” As this case does not concern a consumer goods transaction, to disqualify the consequential damages disclaimer in the Agreement it is the City’s burden to prove that the disclaimer is unconscionable. (Cal. U. Com. Code, § 2719, subd. (3) [“Limitation of consequential damages where the loss is commercial is valid unless it is proved that the limitation is unconscionable.”].) As we understand the City’s position, it has not undertaken to establish that the consequential damages disclaimer is unconscionable. Instead, the City makes a series of alternate arguments in an attempt to establish that the Agreement’s liability disclaimer should not have been applied by the trial court to limit the damages available in the breach of contract to those associated with the cost of installation of the AMR system. We now turn to those arguments.

 

a. The Liability Disclaimer Applies Even Though Ferguson Did Not Deliver an Operative AMR System

The City contends that the liability disclaimer should not apply because Ferguson promised not only to supply and install a product, but also to deliver an ” ‘excellent system’ ” and “a system that worked.” The City asserts because Ferguson promised an operational system, the City may recover damages caused by defects in Datamatic’s products under a breach of contract theory despite the liability disclaimer. In essence, the City’s view is that a failure of the AMR system is different from a failure of Datamatic’s products, and thus the liability disclaimer should not apply.

This argument improperly attempts to separate the AMR system from the products comprising it. In making this distinction, the City necessarily contends that even though the parties agreed that Ferguson was not warranting the Datamatic products against any product defects, and even though the parties agreed Ferguson would have no liability relating to the products themselves, the parties nevertheless agreed that if the entire AMR system failed because of product defects, the exclusions and disclaimers agreed to by the parties regarding product defects would not apply. We find no support for that view in the text of the Agreement itself.

The liability disclaimer is far reaching and clear: “With respect to the underlying products, THE BUYER’S SOLE AND EXCLUSIVE WARRANTY IS THAT PROVIDED BY THE PRODUCT’S MANUFACTURER. SELLER HEREBY DISCLAIMS ALL EXPRESSED OR IMPLIED WARRANTIES, WHETHER IMPLIED BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS OR FITNESS FOR A PARTICULAR PURPOSE. UNDER NO CIRCUMSTANCES, AND IN NO EVENT, WILL SELLER BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE OR ANY OTHER LOSS, DAMAGE, COST OF REPAIRS OR INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES RELATED TO THE UNDERLYING PRODUCTS PROVIDED.” The parties agreed to this provision in the Agreement, and it says nothing about carving out an exception that would create liability if, as here, the underlying products provided by Datamatic failed in such a manner that the entire AMR system became useless for the purpose that the City intended. To have the meaning that the City suggests, the language quoted above would have to be interpreted as stating that although Ferguson is providing no warranty as to the Datamatic products, it is nevertheless promising that the AMR system comprised of those products, will be functional, operative and free from defects. The language does not support such an interpretation. Because the AMR system is comprised of Datamatic’s products, if a failure of those products causes a failure of the system, the liability disclaimer applies by its clear terms.

As part of the same argument, the City devotes extensive attention in its opening brief to establishing the basic and undisputed legal concept that when a defendant fails to deliver a functional product covered by a warranty, in addition to bringing a breach of warranty cause of action, a plaintiff may also bring a breach of contract cause of action. (See, e.g., Webster v. Klassen (1952) 109 Cal.App.2d 583, 591.) The City then argues that “the limitation of liability [in the Agreement] only applies to breach of warranty claims.” We reject the argument, as the liability disclaimer agreed to by the parties is very broad and covers every type of cause of action that might arise from the Agreement, not just a breach of warranty claim. Specifically, the parties broadly agreed that “UNDER NO CIRCUMSTANCES, AND IN NO EVENT, WILL SELLER BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE OR ANY OTHER LOSS, DAMAGE, COST OF REPAIRS OR INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES RELATED TO THE UNDERLYING PRODUCTS PROVIDED.” This language plainly covers damages arising in a breach of contract cause of action when those damages relate to the underlying products provided by Ferguson as part of the Agreement.

The City cites two out-of-state cases arising in a consumer context in which, despite a warranty exclusion, the plaintiff was still able to recover damages for being sold a defective product. (Esquire Mobile Homes, Inc. v. Arrendale (Ga. Ct. App. 1987) 182 Ga.App. 528 [356 S.E.2d 250] (Arrendale) [plaintiffs who bought a defective mobile home from a dealership were entitled to revoke acceptance despite a warranty exclusion]; Murray v. D & J Motor Co., Inc. (Okla. Civ. App. 1998) 958 P.2d 823, 827, 829 (Murray) [a plaintiff who purchased a defective used van from a dealer that was sold ” ‘as is’ and ‘with all faults’ ” where the dealer disclaimed all express and implied warranties could nevertheless revoke her purchase for nonconformity due to a “warranty of description” that the seller was providing what it represented to be selling].) We express no view on whether the decisions relied upon by the City are a sound application of the UCC, as the cases are easily distinguished. Neither involved a contractual provision disclaiming liability for damages relating to the products at issue. Instead, both cases decided that when a seller expressly excluded all warranties but the product ended up having product defects, the buyer nevertheless had the right to revoke acceptance because the products did not conform to the buyer’s expectations. Here, however, in addition to excluding all warranties, the parties plainly and conspicuously agreed that Ferguson would not be liable for any damages relating to Datamatic’s products.

In its reply brief, the City cites PC COM, Inc. v. Proteon, Inc. (S.D.N.Y. 1995) 906 F.Supp. 894 to argue that the consequential damages disclaimer in the Agreement does not bar recovery for Ferguson’s failure to supply an operative AMR system. However, as we will explain, PC COM does not lend support because it does not concern a liability disclaimer for a defective product. Specifically, in PC COM, the defendant contracted to supply the plaintiff with computer network equipment to resell, but a pricing dispute arose and the defendant refused to continue to supply the equipment. (Id. at pp. 898-899.) The plaintiff sued for breach of contract, and on summary judgment, the defendant argued that a provision in the parties’ agreement precluded any consequential damages for breach of contract, even for nondelivery of the promised product. (Id. at p. 902.) Applying Massachusetts law, the court concluded there was a material dispute of fact about whether the parties intended to preclude consequential damages because such a provision could leave the buyer without an adequate remedy for the seller’s nonperformance. (Id. at pp. 902-903.) In so doing, the court expressly distinguished the circumstance where consequential damages stemmed from a breach based on the supply of defective goods, in which case law has allowed parties to disclaim consequential damages. (Id. at p. 903 [“This is not a case of defective goods, but one of nonperformance”].) Here, because the liability disclaimer in the Agreement concerned damages related to Ferguson’s supply of defective goods, PC COM does not apply.

As part of its argument that the breach of contract cause of action should not be subject to the liability disclaimer, the City claims that after Datamatic left the project, the City promised in a November 2012 e-mail that it would get the AMR system to a point where 98.5 percent of the meters were accurately reporting and it would thereafter fix the problem with the RSVs. Although the argument is somewhat undeveloped, the City appears to contend that Ferguson’s promise in the e-mail modified the Agreement, with the effect of negating the liability disclaimer for product defects. We disagree for two reasons. First, the Agreement expressly states that “[t]he terms and conditions contained herein may not be added to, modified, superseded or otherwise altered except by a written modification signed by the facility manager of [Ferguson’s] servicing location. All transactions shall be governed solely by the terms and conditions contained herein.” The purported agreement by Ferguson to obtain 98.5 percent meter reads and to fix the problems with the RSVs was not made in a signed written modification by Ferguson’s facility manager. As set forth in section 2209, subdivision (2), of the California Uniform Commercial Code, “[a] signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded.” Thus, the e-mail from Ferguson in November 2012 did not serve to modify the Agreement. Second, even if the November 2012 Agreement did somehow modify the Agreement, it said nothing about deleting the liability disclaimer in the Agreement. Thus, even if Ferguson promised to get the AMR system to a point where 98.5 percent of the meters were accurately reporting and to fix the problem with the RSVs, it did not agree to forego the protection of the liability disclaimer in the Agreement.

b. The Liability Disclaimer Applies Even Though the City Never Accepted the AMR System

The City next argues because the AMR System was never functioning to the point that 95 percent of the meters were reporting, the AMR system was never “delivered,” so that the liability disclaimer in the Agreement never went into effect. According to the City, “Ferguson could not disclaim liability until the system was turned over, rather than as soon as the products were installed.” As the City contends, because only delivery and acceptance of the system could trigger a warranty, the liability disclaimer was not triggered. As we will explain, we reject the argument.

The City’s contention that the AMR system was never delivered is based on the following provision in the Scope of Work: “Route turnover to City: Datamatic and Ferguson are committed to bringing [the City] an excellent system. When we reach 95% reads in a three day period we will turn each ‘route’ over to the city on a route to route basis.” According to the City, this provision means that the Datamatic products were not “delivered” until the AMR system as a whole was functional to the point that 95 percent of the meters were reliably responding. The Agreement does not support the City’s contention. The provision that the City cites is most reasonably interpreted as a commitment by Ferguson to stay on the job of installing and troubleshooting the system until it is operating to an acceptable level of 95 percent of meters reporting over a three-day period. The evidence at trial showed that all of Datamatic’s products were delivered to the City and installed long before the City began experiencing system failure due to the latent defects in the Datamatic Firefly units that were manufactured in Malaysia. The fact that the system never operated to the extent that 95 percent of the meters were reliably reporting does not mean that Ferguson failed to deliver and install the Datamatic products or the AMR system comprised of those products.

As another basis for its argument, the City points to the wording of the liability disclaimer, which states that the disclaimer applies to damages “related to the underlying products provided.” (Italics added.) The City contends the products could not be “provided” until the City formally accepted the system, and that the liability disclaimer would be ineffective until that occurred. We disagree. The liability disclaimer broadly states that “UNDER NO CIRCUMSTANCES, AND IN NO EVENT” will Ferguson be liable for damages related to the underlying products provided. It is factually undisputed that the Datamatic units were physically provided to the City, installed and put into operation before the system started to fail. The plain language of the liability disclaimer applies to the products provided, and does not state that it takes effect only after the entire AMR system has been proven to be operational on a consistent basis. Here, Ferguson “provided” the Datamatic products to the City by installing them, and that action triggered the liability disclaimer.

Next, premised on its incorrect assertion that the AMR system was not “delivered” the City cites several cases to support its contention that the liability disclaimer does not apply. The main case that the City relies upon in its opening brief is Hawaiian Telephone Co. v. Microform Data Systems, Inc. (9th Cir. 1987) 829 F.2d 919 (Hawaiian Telephone), in which the plaintiff contracted for the defendant to design and install a computerized directory system. The defendant was never able to design a satisfactory system within the applicable time parameters and thus never delivered and installed it. (Id. at p. 921.) The plaintiff sued for breach of contract, and the trial court awarded consequential damages for the breach. (Id. at pp. 921-922.) Applying California law, the Ninth Circuit affirmed the award of consequential damages despite the presence of a consequential damages disclaimer in the parties’ contract. Specifically, the disclaimer in Hawaiian Telephone stated: ” ‘THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS, AND ARE IN LIEU OF ALL OBLIGATIONS OR LIABILITIES ON THE PART OF MICROFORM FOR ANY CLAIMS, DAMAGES OR EXPENSES OF ANY KIND, WHETHER MADE OR SUFFERED BY CUSTOMER OR ANY OTHER PERSON, INCLUDING WITHOUT LIMITATION CONSEQUENTIAL DAMAGES EVEN IF MICROFORM HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.’ ” (Id. at p. 924, fn. 4.) The ” ‘FOREGOING WARRANTIES’ ” in the disclaimer referred to a warranty “that the equipment, when delivered and installed, will conform to the Equipment Specifications attached hereto and will be in good working order. For sixty (60) days following the date of acceptance pursuant to paragraph 3 hereof, [defendant] warrants each item of equipment to be free from defects in material and workmanship. [¶] In the event any item of equipment does not perform as expressly warranted, [defendant’s] sole obligation shall be to make necessary repairs, adjustments or replacements at no additional charge to Customer. Any major item of replacement equipment shall also be warranted for sixty (60) days from the date the replacement equipment was installed.” (Ibid., italics added.)

The Ninth Circuit explained that the liability disclaimer did not apply because it expressly pertained to a breach of the repair warranties. “By failing to deliver the system at all, however, the repair warranties were never triggered. They did not become operative and could not limit remedies to which they applied under the contract. . . . The limitation of liability for breach of the repair warranties was tied to the provision excluding consequential damages, and both were dependent on delivery of the system. This is not a case in which a delivered system failed to function as warranted. The system was never delivered at all.” (Hawaiian Telephone, supra, 829 F.2d at p. 924, citation omitted.) The court stated, “The contractual provision at issue in this case purports to exclude liability for consequential damages when the equipment is ‘delivered and installed.’ The provision applies only to consequential damages sustained after a system conforming to contract specifications is in place, and it does not otherwise foreclose an award of consequential damages. . . . Because this system was never installed, the limited repair remedy with its exclusion of consequential damages did not become applicable.” (Id. at p. 925, citation omitted.)

Hawaiian Telephone is inapposite here because the liability disclaimer in the Agreement is not tied to the delivery and installation by Ferguson of the AMR system; nor is it tied to the availability of any warranty remedy promised by Ferguson. Indeed, the Agreement’s liability disclaimer excludes all warranties relating to the Datamatic products, and it states that “UNDER NO CIRCUMSTANCES, AND IN NO EVENT” will liability arise for damages relating to the products provided.

In its reply brief, the City relies on Leanin’ Tree, Inc. v. Thiele Technologies, Inc. (10th Cir. 2002) 43 Fed.Appx. 318, 319, an unpublished decision from the Tenth Circuit Court of Appeals, in support of its contention that the consequential damages disclaimer is not applicable because the AMR system was not “delivered.” In Leanin’ Tree, the defendant agreed to manufacture an automatic packing machine for the plaintiff but was ultimately unable to design a satisfactory machine and therefore did not deliver one. (Id. at p. 320.) Relying on the specific wording of the contract’s liability disclaimer, the Tenth Circuit held the trial court properly awarded consequential damages to the plaintiff for breach of contract because the liability disclaimer was intended to protect the defendant seller from liability arising after the delivery of the product. “[W]e conclude that [the liability disclaimer] is focused on limiting [the defendant’s] liability for situations arising after delivery of a functioning machine. Because that never occurred here, the damage limitations do not apply.” (Id. at p. 326.) Here, in contrast, as we have explained, the liability disclaimer contains no language suggesting that the parties intended it to take effect only after delivery.

c. The City Has Not Defeated the Liability Disclaimer by Establishing That It is Unenforceable Under California Uniform Commercial Code § 2719

The City’s next group of arguments depends on the application of California Uniform Commercial Code section 2719, which states:

“(1) Subject to the provisions of subdivisions (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,

“(a) The agreement may provide for remedies in addition to or in substitution for those provided in this division and may limit or alter the measure of damages recoverable under this division, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

“(b) Resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.

“(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this code.

“(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is invalid unless it is proved that the limitation is not unconscionable. Limitation of consequential damages where the loss is commercial is valid unless it is proved that the limitation is unconscionable.” (Cal. U. Com. Code, § 2719.)

The City’s first argument focuses on the statutory language stating that an “agreement may provide for remedies in addition to or in substitution for those provided in this division and may limit or alter the measure of damages recoverable under this division, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts.” (Cal. U. Com Code, § 2719, subd. (1)(a).) The City interprets this language to mean that an agreement must provide for the remedy of either “return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts.” According to the City, the statute “requires” such a minimum remedy.

The statutory language does not support such an interpretation, and no California case law supports the City’s contention. The statute plainly provides a permissive opportunity for the parties to agree to provide for the limited remedy of “return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts.” In this case, the parties did not agree to such a remedy in the Agreement because there was no warranty on Datamatic products provided by Ferguson in the first place.

Next, the City contends that the remedy “fail[ed] of its essential purpose,” relying on subdivision (2) of California Uniform Commercial Code section 2719. That provision (taken verbatim from UCC section 2-719) states that “[w]here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act.” “[T]his provision ‘is not concerned with arrangements which were oppressive at their inception, but rather with the application of an agreement to novel circumstances not contemplated by the parties.’ ” (1 White, Summers, & Hillman, Uniform Commercial Code § 13:20 (6th ed.).) “The most frequent application of 2-719(2) occurs when under a limited ‘repair and replacement’ remedy, the seller is unwilling or unable to repair the defective goods within a reasonable period of time. . . . A remedy also fails when the seller is willing and able to repair but cannot perform the repairs, for example, because the goods have been destroyed.” (Ibid.)

The City’s contention is apparently that it was provided with a limited or exclusive remedy concerning the AMR system, which consisted of a warranty provided by Datamatic. Further, Datamatic was unable to fulfill its warranty obligations to repair or replace the defective Firefly units, and as a result, the City’s limited or exclusive remedy of relying on Datamatic to repair or replace the defective Firefly units failed of its essential purpose. According to the City, it should therefore be able to obtain all of the available statutory remedies against Ferguson despite Ferguson’s liability disclaimer. The argument is flawed because it is premised solely on the failure of a limited remedy provided by Datamatic, not Ferguson. (See City of New York v. Bell Helicopter Textron, Inc. (E.D.N.Y., June 16, 2015, No. 13CV 6848) 2015 WL 3767241, at *8-9; [when a helicopter manufacturer (Bell) sold a helicopter but disclaimed all warranties and all liability relating to the engine manufactured by a different party (Pratt), the City of New York could not prevail in a breach of contract claim against Bell for damages resulting from failure of the engine even though Pratt’s limited warranty on the engine might fail of its essential purpose because “[t]he possible failure of the City’s repair or replacement limited remedy from Pratt does not negate Bell’s valid disclaimers of liability”].) Ferguson did not provide any remedy with respect to product defects. Instead, it disclaimed all warranties or remedies concerning Datamatic’s products. And, as there was never any warranty for the products given by Ferguson, there was no limited remedy provided in the Agreement concerning those products. With no limited remedy concerning product defects appearing in the Agreement, the City cannot establish that any such non-existent limited remedy “failed of its essential purpose.”

Finally, even if the adequacy of the resort to Datamatic’s warranty was relevant in determining whether a limited remedy provided in the Agreement failed of its essential purpose, the City has not established that any remedy provided in Datamatic’s warranty failed of its essential purpose. In fact, the trial court entered judgment in favor of the City against Datamatic for breach of warranty in the amount of $2,802,559.25, which is the full amount of damages found by the jury to have arisen from the City’s contract to obtain the AMR system. Although the parties made vague references during posttrial motions that Datamatic’s bankruptcy might make it difficult for the City to recover the full amount from Datamatic’s insurance carrier, there is no evidence in the record to support such a finding.

d. Reliance Damages Were Not Available

The City argues that “[e]ven if the disclaimer for consequential damages was enforceable, the jury properly awarded reliance damages.” The City cites a jury instruction which stated, “If you decide that Ferguson breached the contract, [the City] may recover the reasonable amount of money that it spent in preparing for contract performance. These amounts are called ‘reliance damages.’ ”

However, the fact that the jury was instructed on reliance damages is not relevant. After the jury’s verdict, the trial court applied the liability disclaimer to reach conclusions of law about the amount of damages for which Ferguson was liable. The City provides no argument as to why the reliance damages would not fall into the scope of the liability disclaimer as “ANY OTHER LOSS, DAMAGE, COST OF REPAIRS OR INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES RELATED TO THE UNDERLYING PRODUCTS PROVIDED,” even if the jury’s finding regarding the City’s total damages included those amounts.

e. The Liability Disclaimer Did Not Violate Public Policy

Finally, relying on Tunkl v. Regents of University of Cal. (1963) 60 Cal.2d 92 (Tunkl), the City argues that the liability disclaimer is invalid because it violates public policy. In Tunkl, our Supreme Court held that an “exculpatory provision may stand only if it does not involve ‘the public interest.’ ” (Tunkl, at p. 96.) Specifically in considering “the validity of a release from liability for future negligence imposed as a condition for admission to a charitable research hospital,” Tunkl held that “an agreement between a hospital and an entering patient affects the public interest and that, in consequence, the exculpatory provision included within it must be invalid.” (Id. at p. 94.)

Tunkl set forth a list of factors constituting a “rough outline” for a court to consider in determining whether an exculpatory provision in a contract is invalid because it involves the public interest. (Tunkl, supra, 60 Cal.2d at p. 98.) “[T]he attempted but invalid exemption” will involve “a transaction which exhibits some or all of the following characteristics. It concerns a business of a type generally thought suitable for public regulation. The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public. The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence. Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.” (Id. at pp. 98-101, footnotes omitted.)

The City contends that some of the Tunkl factors are present here because the Agreement involves the provision of a public utility—residential water service—to citizens of the City. First we note that Ferguson was not the entity that directly provided a public utility to citizens. Instead, Ferguson supplied equipment to the City so that the City could upgrade the equipment that the City used to provide a public utility to the City’s residents. Further, by entering into the Agreement with the City, Ferguson provided an upgrade to certain features of the residential water delivery system, which provided convenience and cost-savings to the City, but the upgrade was not required for the City to be able to provide residential water service. However, even assuming that Ferguson was involved in the provision of a public utility to some extent by entering into the Agreement, the only two Tunkl factors that might be implicated by that circumstance are as follows: “It concerns a business of a type generally thought suitable for public regulation” and “[t]he party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.” (Tunkl, supra, 60 Cal.2d at pp. 98-99.)

None of the other factors set forth in Tunkl are present here. First, Ferguson did not hold itself out “as willing to perform this service for any member of the public who seeks it” (Tunkl, supra, 60 Cal.2d at p. 99), but instead entered into a negotiated contract that enabled the City to upgrade its meter reading capabilities. Second, Ferguson did not “possess[] a decisive advantage of bargaining strength against any member of the public who seeks [its] services.” (Ibid.) On the contrary, the City was an equal and sophisticated bargaining partner, which had its choice of other companies with which to contract for an AMR system. Third, because the City was an equal bargaining partner with the ability to look out for its own interests, Ferguson did not “exercis[e] a superior bargaining power” and in so doing “confront[] the public with a standardized adhesion contract of exculpation” which “[made] no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence.” (Id. at pp. 99-100.) Instead, the parties negotiated the terms of the Agreement through an extensive process, during which the City requested additional and different provisions than those proposed by Ferguson. Finally, this is not a situation in which “as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.” (Id. at p. 101.) The City was involved in the process of preparing for the installation of the AMR system, demanded the removal of the subcontractor Concord from the project when that entity did not perform adequately, and, at its own insistence, took over some of the installation.

This case does not involve the kind of exculpatory contract described in Tunkl. As Tunkl explains, “no public policy opposes private, voluntary transactions in which one party, for a consideration, agrees to shoulder a risk which the law would otherwise have placed upon the other party.” (Tunkl, supra, 60 Cal.2d at p. 101.) Ferguson and the City were equal bargaining partners who voluntarily and without any coercion agreed to enter into the Agreement. City officials, including the City Attorney, read and understood the liability disclaimer. The City could have demanded different terms concerning Ferguson’s liability, and if Ferguson did not agree, the City could have chosen not to enter into the Agreement. Thus, the public policy concerns identified in Tunkl do not apply to invalidate the liability disclaimer in the Agreement.

In sum, none of the City’s asserted grounds for attempting to invalidate the liability disclaimer apply here. Accordingly, we conclude that the trial court properly applied the liability disclaimer in the Agreement to modify the judgment to award only those damages found by the jury that related to the cost of the installation of the AMR system.

B. The Trial Court Did Not Abuse Its Discretion in Denying the City’s Motion for an Award of Attorney Fees Against Ferguson

The City’s final challenge is to the trial court’s order denying the City’s motion for an award of attorney fees against Ferguson.

The Agreement contains a provision stating that “[s]hould Seller pursue collections due to non-payment by Buyer, Buyer does hereby agree to reimburse Seller all costs of collection, including attorney fees.” Based on this provision, the City brought a motion for an award of attorney fees pursuant to Civil Code section 1717.

As provided in Civil Code section 1717, “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, § 1717, subd. (a).) Under this provision, “when a party litigant prevails in an action on a contract . . . section 1717 permits the party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.)

It is the role of the trial court to determine who is the prevailing party. (Civ. Code, § 1717, subd (b)(1) [“[t]he court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section”].) In making such a determination, “[t]he court may also determine that there is no party prevailing on the contract for purposes of this section.” (Civ. Code, § 1717, subd. (b)(1).) “[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’ ” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 (Hsu).) “If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine . . . neither party prevailed sufficiently to justify an award of attorney fees.” (Scott Co. of California v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.) “The prevailing party determination is to be made . . . by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’ ” (Hsu, at p. 876.)

In this case, the trial court denied the City’s motion for an award of attorney fees because it determined that there was no party prevailing on the contract. The trial court explained, “The results in this litigation as between [the City] and Ferguson is a mixed bag. [The City] sought the entire cost of [the] AMR System. . . . [The City] was only successful in recovering the installation costs from Ferguson.” The trial court stated that “[t]here was no purely good news for either party. [The City] did not obtain the amount it sought and Ferguson sought to avoid all contract damages.” Accordingly, the trial court concluded “there is no prevailing party on the contract.”

We apply an abuse of discretion standard of review. “The trial court exercises a particularly ‘wide discretion’ in determining who, if anyone, is the prevailing party for purposes of section 1717[, subdivision] (a). . . . To overturn that determination on appeal, the objecting party must demonstrate ‘a clear abuse of discretion.’ ” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894, citation omitted.)

As we will explain, the trial court was within its discretion to determine that there was no party prevailing on the City’s breach of contract cause of action against Ferguson. As expressed during its closing argument, the City’s objective in its breach of contract cause of action against Ferguson was to establish that the liability disclaimer in the Agreement was not applicable, and that, accordingly Ferguson should be liable for the City’s total damages associated with the AMR system, which it contended amounted to $3,892,839. Ferguson’s approach, as stated in its closing argument was that while the jury might justifiably award damages for costs associated with the installation of the AMR system, the liability disclaimer precluded any other damages relating to Datamatic’s products. The final judgment on the breach of contract cause of action was closer to the result advocated by Ferguson than by the City. Due to the applicability of the liability disclaimer in the Agreement, the City ended up recovering from Ferguson only $626,232.50 for damages associated with the installation of the AMR system.

” ‘[T]ypically, a determination of no prevailing party results when both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.’ ” (Hsu, supra, 9 Cal.4th at p. 875, italics added.) Here, the trial court reasonably concluded that because the City received only a fraction of the relief that it sought in its breach of contract action against Ferguson, and it failed to establish that the liability disclaimer was inapplicable, it was not a prevailing party.

DISPOSITION

The judgment is affirmed.

IRION, J.

WE CONCUR:

BENKE, Acting P. J.

GUERRERO, J.